JONES APPAREL GROUP, INC. DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS

1.

Effective Date. The Plan originally was established effective as of January 1, 2003 with respect to Fees payable for periods beginning on and after January 1, 2003. This document sets forth the terms of the Plan as amended and restated effective as of January 1, 2005 to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").
 

2.

Participation. Each non-employee Director ("Eligible Director") may elect to defer all or a portion of his or her Fees in accordance with Section 4 of the Plan. Each Eligible Director who makes any such election shall be a Plan Participant.
 

3.

Administration. The Board's Compensation Committee shall act as the administrator of the Plan (the "Administrator"). The Administrator shall have the power and authority to administer, construe and interpret the Plan and to correct any defect or supply any omission or reconcile any inconsistency in the Plan as, in its sole discretion, it deems necessary or desirable. All actions and determinations of the Administrator shall be final, conclusive and binding on all parties concerned. The Administrator shall not be liable for any act done or determination made in good faith. The expense of administering the Plan shall be borne by the Company and shall not be charged against benefits payable hereunder. The Administrator may employ agents and delegate to them such administrative duties as the Administrator sees fit. Notwithstanding the foregoing provisions of this Section 3, the Board may exercise any power or perform any function of the Administrator, in which case any applicable reference to Administrator shall be deemed to refer to the Board.
 

4.

Deferral of Compensation.
 

(a)

Deferral Election. Prior to the first day of each calendar year (or such earlier date as the Administrator may determine from time to time), an Eligible Director may elect to defer all or a portion of the Fees otherwise payable to that Eligible Director (a "Deferral Election") for such calendar year (the "Plan Year") by executing a Deferral Election Form in the form prescribed by the Administrator. In the event that an Eligible Director first becomes eligible to participate during a Plan Year, he or she may make a Deferral Election within thirty (30) days of becoming eligible to participate in the Plan with respect to Fees earned in such calendar year following the submission of the Deferral Election Form.
 

(b)

Investment Election. In addition to electing to defer Fees, the Deferral Election Form for each Plan Year will require the Eligible Director to elect to have the deferred Fees credited on the Company's books in the form of (i) share units ("Share Units"), with each unit representing a share of common stock, par value $0.01, of the Company ("Common Stock"), (ii) cash units ("Cash Units"), the value of which shall be determined as set forth below in Section 5(a) of this Plan, or (iii) such other investment unit alternatives as the Board may make available from time to time ("Other Investment Units").

(c)

General Rules Applicable to Elections. Deferral Elections shall be made in the form, manner, and in accordance with the notice requirements, prescribed by the Administrator. Except as otherwise provided in this Plan, the elections made by a Participant with respect to Fees for a Plan Year shall become irrevocable as of the last date on which such election can be made for the Plan Year pursuant to this Section 4.
 

(d)

Cancellation of Deferral Election. The Administrator may permit a Participant to cancel a deferral election during a Plan Year if it determines the Participant has had an "unforeseeable emergency" as defined in Section 7 below.
 

5.

Participant Accounts.
 

(a)

Crediting to Participant Accounts. An account (an "Account") shall be established on the Company's books to record a Participant's deferrals, which shall be credited in the form of Cash Units, Share Units and/or Other Investment Units, as the case may be. Each Participant Account shall be credited with an amount equivalent to the Fees that would have otherwise been paid to the Participant, such credit to be made on the date on which the Fees would have been paid absent a Deferral Election. The number of Share Units to be credited to a Participant's Account shall be determined by dividing the dollar amount of the deferred Fees by the Market Value of the Common Stock on the date the Fees would have otherwise been paid. The "Market Value" of the Common Stock as of a given date means the closing price of the Common Stock on the New York Stock Exchange (as reported in the Eastern Edition of The Wall Street Journal) on such given date or, if shares were not traded on such date, on the next preceding date on which shares were traded; provided that, if the Common Stock is traded on an exchange or market in which prices are reported on a bid and asked price basis, "Market Value" shall mean the average of the mean between the bid and the asked price for the Common Stock at the close of trading for the ten consecutive trading days immediately preceding such given date; and provided further that, if the Common Stock is not listed on a national securities exchange nor traded on the over-the-counter market, the ″Market Value″ shall be determined by the Administrator in good faith.
 

(b)

Dividend and Interest Credits. Each Account that holds Share Units shall be adjusted appropriately by the Administrator for any dividends on the Common Stock as of the dividend payment date, which adjustment shall be in the form of additional Share Units determined by multiplying the number of Share Units then credited to the Account by the ratio of the dollar amount of the dividend per share over the current Market Value of the Common Stock. The Administrator shall also adjust appropriately the number of Share Units in each Account for any stock dividend, split, combination or other change in the Common Stock (including, without limitation, pursuant to any merger, acquisition or other transaction). Cash Units credited to an Account shall accrue interest compounded on the last day of each calendar month based on the weighted-average U.S. Treasury bill interest rate during the applicable month.
 

(c)

No Transfers Among Investment Units. A Participant may not transfer or reallocate existing amounts in his or her Account among Share Units, Cash Units or any Other Investment Units.

(d)

Account Vesting. A Participant shall be fully vested in his or her Account at all times.
 

(e)

No Attendant Rights from Share Units. Except as provided in Section 5(b), a Participant shall not have any of the attendant rights of a holder of a share of Common Stock in connection with Share Units allocated to his or her Account, including the right to vote and the right to receive dividends provided to holders of actual shares of Common Stock.

6.

Payment of Accounts.
 

(a)

Time of Payment. At the time of making the initial Deferral Election pursuant to Section 4(a), a Participant shall elect the date and form of payment of the Participant's Account balance on a Payment Election Form in the form prescribed by the Administrator. Subject to Section 8, payment of a Participant's Account balance will commence as soon as practicable following the earlier of:
 

(i)

the Participant's separation from service as a director on the Board (provided that the Participant is not then serving as a director on the board of directors of any "Related Company") (a "Separation from Service"); or
 

(ii)

the date elected by the Participant on the Payment Election Form, which date shall be the first day of a month elected by the Participant that is more than six (6) months following the date of election.
 

The term "Related Company" means any corporation which is included in a controlled group of corporations (as defined in Section 414(b) of the Code), which includes the Company or any trade or business (whether or not incorporated) which is under common control (as defined in Section 414(c) of the Code) with the Company.
 

(b)

Form of Payment. Payment of a Participant's Account balance will be made in a lump-sum payment, unless the Participant elects on a Payment Election Form to receive the amounts in annual installments over a period of time not to exceed ten (10) years. Accounts shall be paid to Participants in the form of cash.
 

(i)

Lump-Sum Payment.
 

(A)

Valuation Upon Separation from Service. If a lump sum payment is made upon Separation from Service, the Participant's Account shall be valued on the date of such Separation from Service by determining the value of Share Units based on the Market Value of Common Stock on such date, by crediting interest to Cash Units at the applicable rate from the end of the preceding month to the date of the Participant's Separation from Service and by determining the value of Other Investment Units on such date in accordance with procedures established by the Administrator.
 

(B)

Valuation in Connection with an Elected Date. If a lump-sum payment is made at an elected distribution date, the Participant's Account balance shall be valued on the last day of the calendar month coincident with or next preceding the date elected by the Participant by determining the value of Share Units based on the Market Value of Common Stock on that date, by crediting interest to Cash Units at the applicable rate through that date and by determining the value of Other Investment Units on that date in accordance with procedures established by the Administrator.
 

(ii)

Installment Payment.
 

(A)

Installment Amount. If the annual installment method is elected, the amount of each annual payment will be determined by dividing the Account (as determined below) on the Payment Date by the remaining number of installment payments (e.g., if 10 installments are elected, the first payment would be equal to 1/10 of the balance on the first Payment Date, the second payment would be equal to 1/9 of the balance on the second Payment

Date, and so on), with the full Account balance being distributed on the last Payment Date. For purposes of this Plan, the first ″Payment Date″ shall be the earlier of (1) the first day of the month elected by the Participant in his or her Payment Election Form in accordance with Section 5(a), if any, or (2) the first day of the month following the Participant's Separation from Service, and each subsequent "Payment Date" shall be on the annual anniversary of the first Payment Date.
 

(B)

Valuation for Installment Method. If payments are made using the installment method, the Participant's Account shall be valued as of the end of the month preceding each Payment Date (the "Valuation Date") by determining the value of Share Units based on the Market Value of Common Stock on the Valuation Date, by crediting interest to Cash Units at the applicable rate through the Valuation Date and by determining the value of Other Investment Units on the Valuation Date in accordance with procedures established by the Administrator. For purposes of Section 409A of the Code, a Participant's right to a series of payments using the installment m