Stock and Asset Purchase Agreement - Cygne Designs Inc., Cygne Group (F.E.) Ltd., AnnTaylor Stores Corp. and AnnTaylor Inc.


                       STOCK AND ASSET PURCHASE AGREEMENT

                                BY AND BETWEEN

                             CYGNE DESIGNS, INC.,

                        CYGNE GROUP (F.E.) LIMITED,

                        ANNTAYLOR STORES CORPORATION

                                   AND

                             ANNTAYLOR, INC.

                           DATED AS OF JUNE 7, 1996


                              TABLE OF CONTENTS

                                                               PAGE

          I.  TRANSFER OF ASSETS AND LIABILITIES  . . . . . . .   2
                    1.1  Assets to be Sold  . . . . . . . . . .   2
                    1.2  Consideration  . . . . . . . . . . . .   8
                    1.3  Closing  . . . . . . . . . . . . . . .  10
                    1.4  Deliveries by Seller . . . . . . . . .  10
                    1.5  Deliveries by Buyer  . . . . . . . . .  12
                    1.6  Post-Closing Adjustments . . . . . . .  14
                    1.7  Allocation of Purchase Price . . . . .  19
                    1.8  Assumed Liabilities  . . . . . . . . .  20

          II.  RELATED MATTERS  . . . . . . . . . . . . . . . .  20
                    2.1  Ancillary Agreements . . . . . . . . .  20
                    2.2  Receivables Settlement . . . . . . . .  22
                    2.3  Finished Goods . . . . . . . . . . . .  22
                    2.4  Joint Venture Agreement  . . . . . . .  23
                    2.5  Leases . . . . . . . . . . . . . . . .  23
                    2.6  Meyer Employment Agreement . . . . . .  23
                    2.7  Mail Received After Closing  . . . . .  24
                    2.8  Employees, Benefit Plans . . . . . . .  24

          III.  REPRESENTATIONS AND WARRANTIES OF SELLER  . . .  30
                    3.1  Organization of Seller and CAT;
                         Authority  . . . . . . . . . . . . . .  30
                    3.2  No Violation; Consents and Approvals .  32
                    3.3  Seller Financial Statements  . . . . .  36
                    3.4  CAT Financial Statements.  . . . . . .  37
                    3.5  Combined Entity Financial Statements .  39
                    3.6  Absence of Seller Undisclosed
                         Liabilities  . . . . . . . . . . . . .  42
                    3.7  Absence of CAT Undisclosed Liabilities  42
                    3.8  Absence of Division Undisclosed
                         Liabilities  . . . . . . . . . . . . .  42
                    3.9  Absence of Certain Changes or Events .  43
                    3.10  Title to CAT Shares . . . . . . . . .  43
                    3.11  Title to Assets; Leased Property  . .  45
                    3.12  Litigation/Claims . . . . . . . . . .  50
                    3.13  Employee Benefit Plans  . . . . . . .  51
                    3.14  Certain Contracts and Arrangements  .  52
                    3.15  Compliance with Laws; Licenses  . . .  55
                    3.16  Insurance . . . . . . . . . . . . . .  56
                    3.17  Labor Matters . . . . . . . . . . . .  57
                    3.18  Assets of the Division Business . . .  59
                    3.19  Disclosure  . . . . . . . . . . . . .  59
                    3.20  Environmental Matters . . . . . . . .  60
                    3.21  Opinion of Financial Advisor  . . . .  62
                    3.22  Brokers . . . . . . . . . . . . . . .  62
                    3.23  Intellectual Property . . . . . . . .  63
                    3.24  Absence of Violations of Quotas and
                          Visas . . . . . . . . . . . . . . . .  63
                    3.25  No Tariffs or Duties  . . . . . . . .  63
                    3.26  Compliance with U.S. Customs and
                          Trade Laws  . . . . . . . . . . . . .  64
                    3.27  SEC Documents . . . . . . . . . . . .  64
                    3.28  Compliance with Laws by CAT; Licenses  65
                    3.29  CAT Taxes . . . . . . . . . . . . . .  66
                    3.30  Acquisition of the ATSC Common
                          Stock for Investment; Securities Act   68
                    3.31  Suppliers . . . . . . . . . . . . . .  69
                    3.32  Disclaimer of Other Representations
                          and Warranties  . . . . . . . . . . .  69

          IV.  REPRESENTATIONS AND WARRANTIES OF ATSC AND BUYER  70
                    4.1  Organization of ATSC and Buyer;
                         Authority  . . . . . . . . . . . . . .  70
                    4.2  No Violation; Consents and Approvals .  72
                    4.3  Litigation/Claims  . . . . . . . . . .  75
                    4.4  SEC Documents and Other Reports  . . .  76
                    4.5  Capital Stock  . . . . . . . . . . . .  77
                    4.6  Absence of Certain Changes or Events .  78
                    4.7  Information Supplied . . . . . . . . .  78
                    4.8  Brokers  . . . . . . . . . . . . . . .  78
                    4.9  Disclaimer of Other Representations
                         and Warranties . . . . . . . . . . . .  79

          V.  COVENANTS OF THE PARTIES  . . . . . . . . . . . .  79
                    5.1  Conduct of the Division Business . . .  79
                    5.2  Access to Information; Confidentiality  83
                    5.3  Financial Statements . . . . . . . . .  84
                    5.4  Reasonable Best Efforts  . . . . . . .  87
                    5.5  Consents . . . . . . . . . . . . . . .  87
                    5.6  Antitrust Notification . . . . . . . .  88
                    5.7  Public Announcements . . . . . . . . .  88
                    5.8  Access to Books and Records Following
                         the Closing  . . . . . . . . . . . . .  89
                    5.9  Other Transactions . . . . . . . . . .  89
                    5.10  Discharge of Liens  . . . . . . . . .  90
                    5.11  Resignations  . . . . . . . . . . . .  90
                    5.12  Insurance . . . . . . . . . . . . . .  90
                    5.13  Supplementary Disclosure  . . . . . .  91
                    5.14  Brazil Sourcing . . . . . . . . . . .  91
                    5.15  Letters of Credit . . . . . . . . . .  92
                    5.16  Amendment . . . . . . . . . . . . . .  92
                    5.17  Proxy Statement; Stockholder Approval  93
                    5.18  Occupancy . . . . . . . . . . . . . .  95
                    5.19  Transfer Taxes  . . . . . . . . . . .  96
                    5.20  Conduct of ATSC Business  . . . . . .  96

          VI.  CONDITIONS TO OBLIGATIONS OF BOTH PARTIES  . . .  97
                    6.1  Conditions . . . . . . . . . . . . . .  97

          VII.  CONDITIONS TO OBLIGATIONS OF SELLER . . . . . .  98
                    7.1  Conditions . . . . . . . . . . . . . .  98

          VIII.  CONDITIONS TO OBLIGATIONS OF BUYER . . . . . . 100
                    8.1  Conditions . . . . . . . . . . . . . . 100

          IX.  TERMINATION, AMENDMENT AND WAIVER  . . . . . . . 102
                    9.1  Termination  . . . . . . . . . . . . . 102
                    9.2  Procedure and Effect of Termination  . 103
                    9.3  Other Remedies . . . . . . . . . . . . 104

          X.  SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION  . . 104
                    10.1  Survival of Representations . . . . . 104
                    10.2  Seller's Agreement to Indemnify . . . 104
                    10.3  Seller's Limitation of Liability  . . 106
                    10.4  Buyer's Agreement to Indemnify  . . . 108
                    10.5  Buyer's Limitation of Liability . . . 109
                    10.6  Conditions of Indemnification . . . . 110
                    10.7  Exclusive Remedies  . . . . . . . . . 112
                    10.8  Transfer Pricing  . . . . . . . . . . 113
                    10.9  Claims Against CAT Directors and
                          Officers  . . . . . . . . . . . . . . 113

          XI.  MISCELLANEOUS  . . . . . . . . . . . . . . . . . 113
                    11.1  Fees and Expenses . . . . . . . . . . 113
                    11.2  Further Assurances  . . . . . . . . . 114
                    11.3  Notices . . . . . . . . . . . . . . . 114
                    11.4  Entire Agreement  . . . . . . . . . . 116
                    11.5  Severability  . . . . . . . . . . . . 116
                    11.6  Binding Effect; Assignment  . . . . . 116
                    11.7  Amendment, Modification and Waiver  . 117
                    11.8  Third-Party Beneficiaries . . . . . . 117
                    11.9  Counterparts  . . . . . . . . . . . . 118
                    11.10  Bulk Sales . . . . . . . . . . . . . 118
                    11.11  Interpretation . . . . . . . . . . . 118
                    11.12  Governing Law  . . . . . . . . . . . 119

                              Annexes and Exhibits

          Annex I . . . . . . . . . . . . . .  Division Fabric and Trim

          Annex II  . . . . . . . . . . . . . . . .   Assumed Contracts

          Annex III . . . . . . . . . . . . . . . . .  Net Fixed Assets

          Annex IV  . . . . . . . . . . . . . . . . . .  Lease Deposits

          Exhibit A   . . . . . . . . . . . . . . . . . .  Bill of Sale

          Exhibit B . . . . . . .   Assignment and Assumption Agreement

          Exhibit C . . . . . . . . . . . . . . . . . . .   Undertaking

          Exhibit D . . . . . . . . . . . . . . . .  Advance Instrument

          Exhibit E . . . . . . . . . . . . . . . . .  Pledge Agreement

          Exhibit F . . . . . . . . .  NY Transition Services Agreement

          Exhibit G . . . . . . .   Miami Transition Services Agreement

          Exhibit H . . . . . . . . . . .   Manuel Consulting Agreement

          Exhibit I . . . . . . . . . . .   Benson Consulting Agreement

          Exhibit J . . . . . . . . . . . . . .  Stockholders Agreement

          Exhibit K . . . . . . . . . . . . . . . . . .  Florence Lease

          Exhibit L . . . . . . . . .  Legal Opinion of Buyer's Counsel

          Exhibit M . . . . . . . .   Legal Opinion of Seller's Counsel

                                    GLOSSARY
                                                                   PAGE

          Agreement . . . . . . . . . . . . . . . . . . . . . . .     1
          Seller  . . . . . . . . . . . . . . . . . . . . . . . .     1
          CGFE  . . . . . . . . . . . . . . . . . . . . . . . . .     1
          ATSC  . . . . . . . . . . . . . . . . . . . . . . . . .     1
          Buyer . . . . . . . . . . . . . . . . . . . . . . . . .     1
          Joint Venture Agreement . . . . . . . . . . . . . . . .     1
          CAT-US  . . . . . . . . . . . . . . . . . . . . . . . .     1
          CAT-Far East  . . . . . . . . . . . . . . . . . . . . .     1
          CAT . . . . . . . . . . . . . . . . . . . . . . . . . .     1
          Division  . . . . . . . . . . . . . . . . . . . . . . .     1
          Division Business . . . . . . . . . . . . . . . . . . .     1
          CAT US Shares . . . . . . . . . . . . . . . . . . . . .     2
          CAT Far East Shares . . . . . . . . . . . . . . . . . .     2
          CAT Shares  . . . . . . . . . . . . . . . . . . . . . .     2
          Closing . . . . . . . . . . . . . . . . . . . . . . . .     2
          Liens . . . . . . . . . . . . . . . . . . . . . . . . .     3
          Inventory . . . . . . . . . . . . . . . . . . . . . . .     3
          Division Fabric and Trim  . . . . . . . . . . . . . . .     3
          Capital Leases  . . . . . . . . . . . . . . . . . . . .     3
          Contracts . . . . . . . . . . . . . . . . . . . . . . .     3
          NY Facility . . . . . . . . . . . . . . . . . . . . . .     4
          NY Lease  . . . . . . . . . . . . . . . . . . . . . . .     4
          FWM Lease . . . . . . . . . . . . . . . . . . . . . . .     4
          CAT Sublease  . . . . . . . . . . . . . . . . . . . . .     4
          Net Fixed Assets  . . . . . . . . . . . . . . . . . . .     4
          Intellectual Property . . . . . . . . . . . . . . . . .     6
          Books and Records . . . . . . . . . . . . . . . . . . .     6
          Assets  . . . . . . . . . . . . . . . . . . . . . . . .     6
          Bill of Sale  . . . . . . . . . . . . . . . . . . . . .     7
          Subleases . . . . . . . . . . . . . . . . . . . . . . .     7
          Assignment and Assumption Agreements  . . . . . . . . .     7
          Other Instruments . . . . . . . . . . . . . . . . . . .     7
          ATSC Common Stock . . . . . . . . . . . . . . . . . . .     8
          Stock Consideration . . . . . . . . . . . . . . . . . .     9
          Average Trading Price . . . . . . . . . . . . . . . . .     9
          Inventory Consideration . . . . . . . . . . . . . . . .     9
          Fixed Asset Consideration . . . . . . . . . . . . . . .     9
          Purchase Price  . . . . . . . . . . . . . . . . . . . .     9
          Undertaking . . . . . . . . . . . . . . . . . . . . . .     9
          Accounts Payable  . . . . . . . . . . . . . . . . . . .    10
          Advance Instrument  . . . . . . . . . . . . . . . . . .    10
          Advances  . . . . . . . . . . . . . . . . . . . . . . .    10
          Liabilities . . . . . . . . . . . . . . . . . . . . . .    10
          Closing Date  . . . . . . . . . . . . . . . . . . . . .    10
          Bank Account  . . . . . . . . . . . . . . . . . . . . .    13
          GAAP  . . . . . . . . . . . . . . . . . . . . . . . . .    14
          Estimated Amount  . . . . . . . . . . . . . . . . . . .    14
          Net Fixed Asset Value . . . . . . . . . . . . . . . . .    14
          Initial Payment Amount  . . . . . . . . . . . . . . . .    14
          Pledged Amount  . . . . . . . . . . . . . . . . . . . .    15
          Seller Statement  . . . . . . . . . . . . . . . . . . .    15
          Statement of Objection  . . . . . . . . . . . . . . . .    15
          Closing Date Statement  . . . . . . . . . . . . . . . .    15
          Reviewing Accountants . . . . . . . . . . . . . . . . .    16
          Accountant Statement  . . . . . . . . . . . . . . . . .    16
          Adjusted Net Book Value . . . . . . . . . . . . . . . .    17
          Pledge Agreement  . . . . . . . . . . . . . . . . . . .    18
          Code  . . . . . . . . . . . . . . . . . . . . . . . . .    19
          IRS . . . . . . . . . . . . . . . . . . . . . . . . . .    20
          Stockholders Agreement  . . . . . . . . . . . . . . . .    21
          Florence Facility . . . . . . . . . . . . . . . . . . .    21
          Florence Lease  . . . . . . . . . . . . . . . . . . . .    21
          Ancillary Agreements  . . . . . . . . . . . . . . . . .    21
          Accounts Receivable Estimate  . . . . . . . . . . . . .    22
          Receivables Payment Amount  . . . . . . . . . . . . . .    22
          Employment Agreements . . . . . . . . . . . . . . . . .    24
          Affected Employees  . . . . . . . . . . . . . . . . . .    24
          CAT Employees . . . . . . . . . . . . . . . . . . . . .    24
          Hired Employees . . . . . . . . . . . . . . . . . . . .    25
          Continued Employees . . . . . . . . . . . . . . . . . .    25
          Prior Welfare Plans . . . . . . . . . . . . . . . . . .    26
          Replacement Welfare Plans . . . . . . . . . . . . . . .    26
          COBRA . . . . . . . . . . . . . . . . . . . . . . . . .    26
          Material Adverse Effect . . . . . . . . . . . . . . . .    31
          Seller Disclosure Schedule  . . . . . . . . . . . . . .    31
          Seller Related Instruments  . . . . . . . . . . . . . .    31
          Governmental Entities . . . . . . . . . . . . . . . . .    34
          HSR Act . . . . . . . . . . . . . . . . . . . . . . . .    34
          Exchange Act  . . . . . . . . . . . . . . . . . . . . .    34
          1996 Balance Sheet  . . . . . . . . . . . . . . . . . .    36
          Audited Financial Statements  . . . . . . . . . . . . .    36
          Financial Statements  . . . . . . . . . . . . . . . . .    36
          CAT 1996 Balance Sheet  . . . . . . . . . . . . . . . .    37
          CAT Audited Financial Statements  . . . . . . . . . . .    38
          CAT Financial Statements  . . . . . . . . . . . . . . .    38
          Combined Entity . . . . . . . . . . . . . . . . . . . .    39
          Combined Entity 1996 Balance Sheet  . . . . . . . . . .    39
          Combined Entity Audited Financial Statements  . . . . .    39
          Combined Entity Unaudited Financial Statements  . . . .    40
          Combined Entity Financial Statements  . . . . . . . . .    40
          Permitted Liens . . . . . . . . . . . . . . . . . . . .    46
          Miami Lease . . . . . . . . . . . . . . . . . . . . . .    47
          Leases  . . . . . . . . . . . . . . . . . . . . . . . .    47
          Miami Facility  . . . . . . . . . . . . . . . . . . . .    47
          Leased Properties . . . . . . . . . . . . . . . . . . .    47
          Plans . . . . . . . . . . . . . . . . . . . . . . . . .    51
          ERISA Affiliate . . . . . . . . . . . . . . . . . . . .    51
          ERISA . . . . . . . . . . . . . . . . . . . . . . . . .    51
          Division Contracts  . . . . . . . . . . . . . . . . . .    53
          Permits . . . . . . . . . . . . . . . . . . . . . . . .    56
          Environmental Laws  . . . . . . . . . . . . . . . . . .    60
          Environmental Claim . . . . . . . . . . . . . . . . . .    60
          Hazardous Materials . . . . . . . . . . . . . . . . . .    61
          PCBs  . . . . . . . . . . . . . . . . . . . . . . . . .    62
          SEC . . . . . . . . . . . . . . . . . . . . . . . . . .    64
          Seller SEC Documents  . . . . . . . . . . . . . . . . .    64
          Securities Act  . . . . . . . . . . . . . . . . . . . .    64
          Tax . . . . . . . . . . . . . . . . . . . . . . . . . .    67
          Taxes . . . . . . . . . . . . . . . . . . . . . . . . .    67
          Tax Return  . . . . . . . . . . . . . . . . . . . . . .    68
          Buyer Related Instruments . . . . . . . . . . . . . . .    71
          Buyer Disclosure Schedule . . . . . . . . . . . . . . .    75
          ATSC SEC Documents  . . . . . . . . . . . . . . . . . .    76
          Confidentiality Agreements  . . . . . . . . . . . . . .    84
          Combined Entity 1994 Audited Financial Statements . . .    85
          Subsequent Monthly Financial Statements . . . . . . . .    85
          CAT Subsequent Monthly Financial Statements . . . . . .    85
          Combined Entity Subsequent Monthly Financial
               Statements . . . . . . . . . . . . . . . . . . . .    85
          Subsequent Quarterly Financial Statements . . . . . . .    85
          CAT Subsequent Quarterly Financial Statements . . . . .    85
          Combined Entity Subsequent Quarterly Financial
               Statements . . . . . . . . . . . . . . . . . . . .    85
          Subsequent Financial Statements . . . . . . . . . . . .    85
          CAT Subsequent Financial Statements . . . . . . . . . .    86
          Combined Entity Subsequent Financial Statements . . . .    86
          Exclusivity Period  . . . . . . . . . . . . . . . . . .    89
          Existing Gordon Agreement . . . . . . . . . . . . . . .    92
          Commission  . . . . . . . . . . . . . . . . . . . . . .    93
          Preliminary Proxy Materials . . . . . . . . . . . . . .    93
          Annual Meeting  . . . . . . . . . . . . . . . . . . . .    93
          Proposal  . . . . . . . . . . . . . . . . . . . . . . .    93
          Proxy Statement . . . . . . . . . . . . . . . . . . . .    94
          Transfer Taxes  . . . . . . . . . . . . . . . . . . . .    96
          Buyer Group . . . . . . . . . . . . . . . . . . . . . .   104
          Damages . . . . . . . . . . . . . . . . . . . . . . . .   105
          Seller Claims . . . . . . . . . . . . . . . . . . . . .   106
          Buyer's Deductible  . . . . . . . . . . . . . . . . . .   107
          Seller Group  . . . . . . . . . . . . . . . . . . . . .   108
          Buyer Claims  . . . . . . . . . . . . . . . . . . . . .   109
          Claims  . . . . . . . . . . . . . . . . . . . . . . . .   109
          Seller's Deductible . . . . . . . . . . . . . . . . . .   110
          Failure of Condition  . . . . . . . . . . . . . . . . .   112
          Waiving Party . . . . . . . . . . . . . . . . . . . . .   112
          person  . . . . . . . . . . . . . . . . . . . . . . . .   118
          affiliate . . . . . . . . . . . . . . . . . . . . . . .   119


                       STOCK AND ASSET PURCHASE AGREEMENT

                    STOCK AND ASSET PURCHASE AGREEMENT, dated as of
          June 7, 1996 (the "Agreement"), by and between CYGNE DE-
          SIGNS, INC., a Delaware corporation ("Seller"), CYGNE GROUP
          (F.E.) LIMITED, a Hong Kong corporation and a wholly owned
          subsidiary of Seller ("CGFE"), ANNTAYLOR STORES CORPORATION,
          a Delaware corporation ("ATSC"), and ANNTAYLOR, INC., a
          Delaware corporation and a wholly owned subsidiary of ATSC
          ("Buyer").

                               W I T N E S S E T H

                    WHEREAS, pursuant to that certain Agreement, dated
          July 13, 1993 (the "Joint Venture Agreement"), by and among
          Seller, CGFE, CAT US, Inc., a Delaware corporation ("CAT-
          US"), C.A.T. (Far East) Limited, a Hong Kong corporation
          ("CAT-Far East" and, together with CAT-US, "CAT"), and 
          Buyer, Seller and Buyer own 60% and 40%, respectively, of
          the outstanding capital stock of CAT, which serves as a
          fully dedicated direct sourcing capability for Buyer; 

                    WHEREAS, Seller, through its AnnTaylor Woven
          Division (the "Division"), serves as a private label design-
          er, merchandiser and manufacturer of women's apparel for Ann
          Taylor (the "Division Business");

                    WHEREAS, Seller desires to sell to Buyer and Buyer
          desires to acquire from Seller (i) all of the shares of
          common stock, par value $.01 per share, of CAT-US owned by
          Seller (the "CAT US Shares"); and (ii) certain of the assets
          of the Division as more fully described herein; and

                    WHEREAS, CGFE desires to sell to Buyer and Buyer
          desires to acquire from CGFE all the shares of common stock,
          par value $1 HK per share, of CAT-Far East owned by CGFE
          (the "CAT Far East Shares" and, together with the CAT US
          Shares, the "CAT Shares").

                    NOW, THEREFORE, in consideration of the foregoing
          and of the representations, warranties, covenants, agree-
          ments and conditions contained herein, and intending to be
          legally bound hereby, the parties agree as follows:

          I.  TRANSFER OF ASSETS AND LIABILITIES.

                    1.1  Assets to be Sold.

                         (a)  Upon the terms and subject to the condi-
          tions of this Agreement, at the closing provided for in
          Section 1.3 hereof (the "Closing"), Seller shall sell,
          convey, assign, transfer and deliver to Buyer, and Buyer
          shall purchase, acquire and accept from Seller, the follow-
          ing:

                              (i)  all right, title and interest in
          and to the CAT US Shares, free and clear of all liens,
          encumbrances, security interests, mortgages, pledges,
          claims, options or restrictions of any kind, other than
          restrictions on transfer imposed under federal and state
          securities laws (collectively, "Liens");

                             (ii)  the following items of inventory
          (the "Inventory"): (x) fabric and trim owned by Seller for
          use by the Division in the production of merchandise for
          Buyer ("Division Fabric and Trim") as of February 3, 1996
          and identified on Annex I hereto to the extent not used as
          of the Closing Date in the production of merchandise for
          Buyer; (y) Division Fabric and Trim purchased since February
          3, 1996 pursuant to written commitments or purchase orders
          issued by Buyer to the extent not used as of the Closing
          Date in the production of merchandise for Buyer and (z)
          work-in-progress owned by Seller for use by the Division in
          the production of merchandise for Buyer pursuant to purchase
          orders issued by Buyer;

                            (iii)  the capital leases and other agree-
          ments relating to equipment located on the fifth, sixth and
          nineteenth floors of Seller's facility located at 1372
          Broadway, New York City, New York (the "NY Facility") and at
          the Florence Facility (as hereinafter defined), to the
          extent they relate to the Division Business and are listed
          on and marked with an asterisk on Annex II hereto (collec-
          tively, the "Capital Leases") and other contracts, personal
          property leases and other commitments to which Seller is a
          party to the extent they relate to the Division Business and
          are listed on Annex II hereto (collectively with the Capital
          Leases, the "Contracts");

                             (iv)  Seller's or its affiliate's rights
          as tenant in accordance with Section 1.1(b) hereof (A) with
          respect to the sixth floor of the NY Facility under the
          Agreement of Lease, dated August 7, 1991, between Seller, as
          tenant, and Nineteen New York Properties Limited Partner-
          ship, as landlord, as amended (as it relates to the sixth
          floor only, the "NY Lease"), and (B) with respect to the
          fifth and nineteenth floors of the NY Facility under the
          Agreement of Lease, dated June 24, 1994, between Fenn,
          Wright and Manson, Incorporated, as tenant, and Nineteen New
          York Properties Limited Partnership, as landlord (as it
          relates to the fifth and nineteenth floors only, the "FWM
          Lease"), as amended by that certain sublease, dated February
          28, 1995, between Fenn, Wright and Manson Incorporated, as
          sublessor, and CAT US, Inc., as sublessee (the "CAT Sub-
          lease");

                              (v)  all leasehold improvements, furni-
          ture, fixtures and equipment that meet all of the following
          conditions:  (x) are owned by Seller or subject to a Capital
          Lease, (y) relate to and are used exclusively or primarily
          in the Division Business and (z) are located on the fifth,
          sixth or nineteenth floor of the NY Facility or at the
          Florence Facility on the Closing Date (the "Net Fixed As-
          sets"), including those listed on Annex III hereto;

                             (vi)  all licenses, permits, registra-
          tions, renewals thereof and applications therefor, varianc-
          es, exemptions, orders, approvals and authorizations issued
          by any governmental, regulatory or administrative agency or
          authority (domestic or foreign), held by Seller or any
          affiliate of Seller of or relating to the Division Business,
          including all quota allocations for the export of goods to
          the United States and elsewhere, necessary or desirable for
          the lawful conduct of the Division Business, to the extent
          transferable under applicable law;

                            (vii)  all purchase orders, bills of
          lading, trust receipts, warehouse receipts and other docu-
          ments of title of whatever kind and description relating to
          the Inventory;

                           (viii)  all rights under insurance policies
          covering Inventory in transit and all rights and claims
          under insurance policies for damage to any Assets to the
          extent not repaired or replaced prior to the Closing;

                             (ix)  all goodwill, intellectual property
          rights, patents, trademarks, service marks, copyrights
          (including all copyrights in computer software and databas-
          es), licenses and applications therefor (if any), know-how,
          processes, methods, techniques, formulae, designs, drawings,
          patterns, trade secrets, proprietary information, sketches,
          technical information, computer software, databases and
          other proprietary or confidential information of or relating
          to the Division Business and all rights in any licenses to
          or from any third party of or for the foregoing (collective-
          ly, the "Intellectual Property"), it being understood,
          however, that the rights to the Intellectual Property shall
          be non-exclusive unless such Intellectual Property relates
          solely to the Division Business and Seller's rights therein
          are exclusive;

                              (x)  all intangible assets of or relat-
          ing to the Division Business, including claims against third
          parties; and

                             (xi)  all books and records (including
          all computerized records and storage media and associated
          software) of CAT, and those relating solely to the Division
          Business and, to the extent practicable, those portions of
          Seller's other books and records that relate to the Division
          Business (collectively, "Books and Records"), including,
          without limitation, (a) all Books and Records relating to
          the employees of, and the purchase of materials, supplies
          and services for, the Division Business or CAT, but not
          including the tax returns, general ledger or corporate
          minute books and capital stock books of Seller, and (b) the
          tax returns, general ledger and corporate minute books and
          capital stock books of CAT-US and CAT-Far East (together
          with the items listed in clauses (ii)-(x) above, the "As-
          sets").

                         (b)  Such sale, conveyance, assignment,
          transfer and delivery shall be effected by delivery by
          Seller to Buyer or its designees of (i) stock certificates
          representing the CAT US Shares, duly endorsed or accompanied
          by stock powers duly executed in blank with appropriate
          transfer stamps, if any, affixed, and any other documents
          that are necessary to transfer title to the CAT US Shares to
          Buyer, (ii) a duly executed bill of sale in substantially
          the form of Exhibit A hereto (the "Bill of Sale"), (iii) a
          mutually satisfactory sublease agreement with respect to
          each of the NY Lease and the FWM Lease (the "Subleases") or,
          alternatively, newly negotiated leases between Buyer and the
          landlord of the NY Facility relating to the premises subject
          to the NY Lease and the FWM Lease, respectively, (iv) duly
          executed assignment and assumption agreements in substan-
          tially the form of Exhibit B hereto (the "Assignment and
          Assumption Agreements") with respect to each of the Con-
          tracts, and (v) such other good and sufficient instruments
          of conveyance and transfer (collectively, the "Other Instru-
          ments") as shall be reasonably necessary to vest in Buyer
          good and valid title to the CAT US Shares and the Assets,
          free and clear of all Liens, other than the Permitted Liens
          (as hereinafter defined).

                         (c)  Upon the terms and subject to the condi-
          tions of this Agreement, at the Closing, CGFE shall sell,
          convey, assign, transfer and deliver to Buyer, and Buyer
          shall purchase, acquire and accept from CGFE, all right,
          title and interest in and to the CAT Far East Shares, free
          and clear of all Liens.  Such sale, conveyance, assignment,
          transfer and delivery shall be effected by delivery by CGFE
          to Buyer or its designees of stock certificates representing
          the CAT Far East Shares, duly endorsed or accompanied by
          stock powers duly executed in blank with appropriate trans-
          fer stamps, if any, affixed, and any other documents that
          are necessary to transfer title to the CAT Far East Shares
          to Buyer.

                    1.2  Consideration.

                         (a)  Upon the terms and subject to the condi-
          tions of this Agreement, in consideration of the aforesaid
          sale, conveyance, assignment, transfer and delivery of the
          CAT Shares and the Assets, Buyer shall, in accordance with
          the terms of this Agreement, deliver or cause to be deliv-
          ered to Seller, on its own behalf and on behalf of CGFE, as
          their respective interests may appear, in full payment for
          the aforesaid sale, conveyance, assignment, transfer and
          delivery of the CAT Shares and the Assets:

                              (i)  the number of validly issued, fully
          paid and nonassessable shares of common stock, par value
          $.0068 per share, of ATSC ("ATSC Common Stock"), rounded to
          the nearest whole share, equal to the quotient obtained by
          dividing (a) $36.0 million by (b) the Average Trading Price
          of the ATSC Common Stock (the "Stock Consideration"); pro-
          vided, however, that the number of shares of ATSC Common
          Stock to be issued shall in no event exceed 2.5 million
          shares.  As used in this Agreement, the "Average Trading
          Price" shall mean the average of the high and low sale
          prices of the ATSC Common Stock on the New York Stock Ex-
          change Composite Tape (or as reported on any other exchange
          on which the ATSC Common Stock is then listed) on each of
          the 10 consecutive trading days ending on the trading day
          immediately prior to the Closing Date;

                             (ii)  a dollar amount in cash equal to
          the Adjusted Net Book Value (as hereinafter defined) of the
          Inventory determined in accordance with Section 1.6 hereof
          (the "Inventory Consideration");

                            (iii)  a dollar amount in cash equal to
          the lesser of (x) the Net Fixed Asset Value (as hereinafter
          defined) and (y) $2,646,000 (the "Fixed Asset Consideration"
          and, together with the Inventory Consideration and the Stock
          Consideration, the "Purchase Price");

                             (iv)  the Subleases, if applicable;

                              (v)  the Assignment and Assumption
          Agreements;

                             (vi)  an undertaking substantially in the
          form of Exhibit C hereto (the "Undertaking") evidencing the
          assumption by Buyer of accounts payable associated with the
          Inventory (the "Accounts Payable"); and

                            (vii)  an instrument, substantially in the
          form of Exhibit D hereto (the "Advance Instrument"), evi-
          dencing the forgiveness by Buyer of $7,985,000 of outstand-
          ing advances (the "Advances" and, collectively with the
          Capital Leases and the Accounts Payable, the "Liabilities")
          made to Seller by Buyer.

                    1.3  Closing.  The Closing of the transactions
          contemplated by this Agreement shall take place at the
          offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
          Avenue, New York, New York, at 10:00 a.m., Eastern time, on
          the first business day following the Annual Meeting (as
          hereinafter defined) or, if the conditions to Closing set
          forth in Articles VI, VII and VIII hereof shall not have
          been satisfied or waived by such date, as soon as practica-
          ble after such conditions shall have been satisfied or
          waived, or such other place, date and time as shall be
          agreed upon in writing by the parties hereto.  The date on
          which the Closing actually occurs is referred to herein as
          the "Closing Date".

                    1.4  Deliveries by Seller.  At the Closing, Seller
          and CGFE, as applicable, shall deliver or cause to be deliv-
          ered to Buyer (unless delivered previously) the following:

                         (a)  the stock certificates representing the
          CAT Shares, duly endorsed or accompanied by stock powers
          duly executed in blank with appropriate transfer stamps, if
          any, affixed, and any other documents that are reasonably
          necessary to transfer title to the CAT Shares to Buyer;

                         (b)  the Bill of Sale;

                         (c)  the Subleases, if applicable;

                         (d)  the Assignment and Assumption Agreements;

                         (e)  the Pledge Agreement (as hereinafter defined);

                         (f)  the resignations of certain officers and
          directors of CAT referred to in Section 5.11 hereof;

                         (g)  the compliance certificate referred to
          in Subsection 8.1(c) hereof;

                         (h)  the opinion of counsel to Seller re-
          ferred to in Subsection 8.1(d) hereof;

                         (i)  duly executed counterparts of any con-
          sent or approval referred to in Subsection 8.1(g) hereof;

                         (j)  the Ancillary Agreements (as hereinafter
          defined); and

                         (k)  all other documents, certificates,
          instruments or writings required to be delivered by Seller
          at or prior to the Closing pursuant to this Agreement or
          otherwise reasonably required in connection herewith.

                    1.5  Deliveries by Buyer.  At the Closing, Buyer
          shall deliver or cause to be delivered to Seller (unless
          delivered previously) the following:

                         (a)  a stock certificate or stock certifi-
          cates representing the shares of ATSC Common Stock to be
          delivered to Seller in payment of the Stock Consideration,
          free and clear of all Liens other than as set forth in, and
          bearing the legend set forth in, the Stockholder's Agreement
          (as hereinafter defined);

                         (b)  a wire transfer of Federal or other
          immediately available funds in an amount equal to the Ini-
          tial Payment Amount (as hereinafter defined); 

                         (c)  a wire transfer of Federal or other
          immediately available funds in amount equal to the Fixed
          Asset Consideration; 

                         (d)  a wire transfer of Federal or other
          immediately available funds in an amount equal to the Re-
          ceivables Payment Amount (as hereinafter defined); 

                         (e)  a wire transfer of Federal or other
          immediately available funds in an amount equal to the depos-
          its under the Leases (as hereinafter defined) listed on
          Annex IV hereto;

                         (f)  a wire transfer of Federal or other
          immediately available funds in an amount equal to the
          Pledged Amount (as hereinafter defined) to a bank account in
          the name of Buyer (the "Bank Account");

                         (g)  the Pledge Agreement;

                         (h)  the Subleases, if applicable;

                         (i)  the Assignment and Assumption Agreements;

                         (j)  the Undertaking;

                         (k)  the Advance Instrument;

                         (l)  the officer's certificate referred to in
          Subsection 7.1(c) hereof;

                         (m)  the opinion of counsel to Buyer referred
          to in Subsection 7.1(d) hereof;

                         (n)  the Ancillary Agreements;

                         (o)  evidence that Buyer has substituted
          letters of credit or provided an alternative form of finan-
          cial support for the letters of credit listed on the sched-
          ule delivered pursuant to Section 5.15 hereof; and

                         (p)  all other documents, certificates,
          instruments or writings reasonably required to be delivered
          by Buyer at or prior to the Closing pursuant to this Agree-
          ment or otherwise required in connection herewith.

                    The wire transfers pursuant to subparagraphs (b)
          (c) (d) and (e) above shall be made by a single wire trans-
          fer to an account designated in writing at least two (2)
          business days prior to the Closing Date by Seller.

                    1.6  Post-Closing Adjustments.

                         (a)  At least five (5) business days prior to
          the Closing Date, Seller shall prepare and deliver to Buyer
          (i) a good faith estimate, prepared in accordance with
          United States generally accepted accounting principles
          ("GAAP"), applied in a manner consistent with the prepara-
          tion of the financial statements referred to in Section 3.5
          hereof, except as otherwise expressly provided below, and
          accompanied by a certificate of the chief financial officer
          of Seller to that effect, of the aggregate amount of the
          Adjusted Net Book Value of the Inventory determined in
          accordance with clause (f) below (the "Estimated Amount") as
          of the Closing Date, (ii) a statement, prepared in good
          faith in a manner consistent with the preparation of the
          Company's books and records during the periods reflected in
          the financial statements referred to in Section 3.5 hereof
          and accompanied by a certificate of the chief financial
          officer of Seller to that effect, of the aggregate amount of
          the net book value of the Net Fixed Assets as of the Closing
          Date (the "Net Fixed Asset Value"), and (iii) a schedule of
          all open purchase orders of Seller relating to the Division.

                         (b)  At Closing, Buyer shall (i) deliver to
          Seller an amount equal to 80% of the Estimated Amount (the
          "Initial Payment Amount") and (ii) cause the Bank Account to
          be credited with an amount equal to 20% of the Estimated
          Amount (the "Pledged Amount").

                         (c)  Beginning two (2) days prior to the
          Closing Date, Seller and Buyer shall jointly conduct, or
          shall cause to be jointly conducted by their respective
          independent public accountants, a physical count of all
          Inventory as of the Closing Date.  The physical count of the
          Inventory shall be conducted in accordance with procedures
          to be mutually agreed upon by the parties' respective inde-
          pendent public accountants.  As promptly as practicable
          thereafter, but in no event more than thirty (30) days
          following the Closing Date, Seller shall prepare or cause to
          be prepared and shall deliver to Buyer a reasonably detailed
          statement setting forth the Adjusted Net Book Value of the
          Inventory, determined in accordance with clause (f) below
          (the "Seller Statement").  Unless within thirty (30) days
          after its receipt of the Seller Statement Buyer shall deliv-
          er to Seller a reasonably detailed statement describing its
          objections to the Seller Statement (a "Statement of Objec-
          tion"), the amount of the Adjusted Net Book Value of the
          Inventory determined in accordance with this clause (c)
          shall be final and binding on the parties hereto and the
          Seller Statement shall be the final statement hereunder (the
          "Closing Date Statement").  Buyer may include in its State-
          ment of Objection one or more objections to items included
          by Seller in the Inventory that, in Buyer's good faith
          determination, were not properly included as Inventory
          pursuant to Section 1.1(a)(ii) hereof;

                         (d)  If Buyer shall deliver to Seller a
          timely Statement of Objection, Buyer and Seller and their
          respective independent accountants shall negotiate in good
          faith and use reasonable best efforts to resolve any dis-
          putes.  If a resolution is reached, such resolution shall be
          final and binding on the parties and Buyer and Seller shall
          set forth the Adjusted Net Book Value of the Inventory on a
          mutually acceptable statement and such statement shall be
          the Closing Date Statement.  If a final resolution is not
          reached within fifteen (15) days after Buyer has submitted
          its Statement of Objection, any remaining disputes shall be
          resolved by a third firm of independent accountants (the
          "Reviewing Accountants") selected jointly by the parties'
          independent accounting firms.  The Reviewing Accountants
          shall be instructed to resolve any matters in dispute as
          promptly as practicable, but in no event more than thirty
          (30) days, and set forth their resolution in a statement
          setting forth the Net Book Value of the Inventory (the
          "Accountant Statement").  In such event, the determination
          of the Reviewing Accountants shall be final and binding on
          the parties hereto and the Accountant Statement shall be the
          Closing Date Statement.

                         (e)  Seller and Buyer each shall pay one-half
          of the fees and expenses of the Reviewing Accountants. 
          Seller and the Buyer shall cooperate with each other and the
          Reviewing Accountants in connection with the matters contem-
          plated by this Section 1.6, including Seller's preparation
          of and Buyer's review of the Closing Date Statement, includ-
          ing by furnishing such information and access to books,
          records (including accountants' work papers), personnel and
          properties as may be reasonably requested.

                         (f)  The "Adjusted Net Book Value" shall be
          equal to the tangible net book value of the Inventory, less
          the amount of the Liabilities, as set forth on the Closing
          Date Statement.  The Closing Date Statement shall be pre-
          pared in accordance with GAAP applied in a manner consistent
          with the financial statements referred to in Section 3.5
          hereof, except as otherwise expressly set forth in this
          Section 1.6, and except that Inventory shall be valued at
          cost, not the lower of cost or market.  For purposes of this
          Section 1.6, the Inventory, regardless of condition, shall
          be valued as follows:  (i) raw materials shall be valued at
          cost, including, without limitation, to the extent actually
          incurred:  FOB or CF purchase price, as the case may be;
          inspection costs; re-dyeing and/or refinishing charges;
          duty; freight and brokerage charges; fabric commission;
          insurance; and storage charges; provided, however, that such
          valuation applies only to raw materials available to Buyer
          (i.e., excludes shrinkage); and (ii) work-in-progress shall
          include (A) raw material costs as determined above; and (B)
          making charges to the extent such charges have been paid by
          Seller.  Notwithstanding the foregoing, finished goods
          rejected or canceled by Buyer prior to the Closing Date
          shall not be included in the Assets and such finished goods
          shall remain in Seller's possession.

                         (g)  At the Closing, Buyer shall pledge the
          Bank Account to Seller as security for its interest under
          this Section 1.6 pursuant to a Pledge Agreement in substan-
          tially the form of Exhibit E hereto (the "Pledge Agree-
          ment").  Upon delivery of the Closing Date Statement, Seller
          hereby releases its right and security interest in the Bank
          Account (but not in the proceeds thereof, to the extent such
          proceeds are due to Seller pursuant to this Section 1.6)
          automatically and without any further action required on the
          part of Seller.

                         (h)  If the Adjusted Net Book Value set forth
          in the Closing Date Statement exceeds the Initial Payment
          Amount, Buyer shall distribute to Seller in cash out of the
          Pledged Amount the amount of such excess.  Buyer shall
          retain the remainder, if any, of the Pledged Amount.  Buyer
          shall distribute interest earned on the Pledged Amount in
          the Bank Account to Seller, or shall retain such interest,
          in proportion to the amount of the Pledged Amount distributed
          or retained, as the case may be, by each.

                         (i)  If the Adjusted Net Book Value set forth
          in the Closing Date Statement is less than the Initial
          Payment Amount, Seller shall pay the difference to Buyer in
          immediately available funds, plus interest on such amount
          from the Closing Date to the date of payment at the rate of
          8% per annum.  In such event, Buyer shall retain the Pledged
          Amount and all interest earned thereon.

                         (j)  If the Adjusted Net Book Value set forth
          in the Closing Date Statement exceeds the Estimated Amount,
          then, in addition to distribution of the Pledged Amount
          pursuant to clause (h) above, Buyer shall pay the difference
          to Seller in immediately available funds, plus interest on
          such amount from the Closing Date to the date of payment at
          the rate of 8% per annum.

                    1.7  Allocation of Purchase Price.  Prior to the
          Closing, the parties shall agree to the appropriate alloca-
          tion of the Purchase Price and the Liabilities among the CAT
          Shares and Assets, which allocation shall comply with Sec-
          tion 1060 of the Internal Revenue Code of 1986, as amended
          (the "Code").  The parties hereby agree that such allocation
          shall be conclusive and binding on each of them for purposes
          of federal and, where applicable, state and local tax re-
          turns and that they will not voluntarily take any position
          inconsistent therewith.  The parties hereby agree to prepare
          and timely file all applicable Internal Revenue Service
          ("IRS") and other governmental authority forms, to cooperate
          with each other in the preparation of such forms, and to
          furnish each other with a copy of such forms prepared in
          draft, within a reasonable period prior to the filing due
          date thereof.

                    1.8  Assumed Liabilities.  Except for liabilities
          and obligations expressly assumed in this Agreement, Buyer
          has not agreed to pay, shall not be required to assume and
          shall have no liability or obligation with respect to, and
          Seller shall indemnify and hold Buyer harmless from and
          against, any liability or obligation, direct or indirect,
          absolute or contingent, of Seller, the Division or any of
          their affiliates.

          II.  RELATED MATTERS.

                    2.1  Ancillary Agreements.

                         (a)  At the Closing, Seller and Buyer shall
          enter into (i) a mutually satisfactory transition services
          agreement relating to the CAD-CAM work stations located at
          the NY Facility with substantially the terms set forth on
          Exhibit F hereto and (ii) a mutually acceptable transition
          services agreement relating to the Miami Facility (as here-
          inafter defined) with substantially the terms set forth on
          Exhibit G hereto.

                         (b)  At the Closing, Seller and Buyer shall
          enter into a consulting agreement in substantially the form
          of Exhibit H hereto, relating to the services of Mr. Bernard
          M. Manuel.

                         (c)  At the Closing, Seller and Buyer shall
          enter into a consulting agreement in substantially the form
          of Exhibit I hereto, relating to the services of Mr. Irving
          Benson.

                         (d)  At the Closing, Seller and Buyer shall
          enter into a stockholders agreement (the "Stockholders
          Agreement") relating to the shares of ATSC Common Stock
          issued to Seller pursuant to Subsection 1.2(a)(i) hereof in
          substantially the form of Exhibit J hereto.

                         (e)  At the Closing, Seller or an affiliate
          of Seller and Buyer shall enter into a mutually satisfactory
          lease whereby Buyer shall lease certain real property in
          Florence, Italy (the "Florence Facility") from Seller or
          such affiliate with substantially the terms set forth on
          Exhibit K hereto (the "Florence Lease" and, collectively
          with the agreements listed in paragraphs (a)-(d) above, the
          "Ancillary Agreements").

                    2.2  Receivables Settlement.  At least five (5)
          business days prior to the Closing Date, Seller shall deliv-
          er to Buyer a detailed schedule setting forth Seller's good
          faith estimate (the "Accounts Receivable Estimate"), accom-
          panied by a certificate of the chief financial officer of
          Seller to that effect, of the dollar amount of the accounts
          receivable of Seller from Buyer and CAT for finished goods
          that have been received, quality checked and accepted.  At
          the Closing, Buyer shall deliver to Seller (a) a detailed
          statement describing its disputes, if any, to the Accounts
          Receivable Estimate, and (b) a wire transfer of immediately
          available funds in an amount equal to the Accounts Receiv-
          able Estimate not so disputed (the "Receivables Payment
          Amount").  Buyer and Seller agree to negotiate in good faith
          to resolve any dispute of the Accounts Receivable Estimate. 
          If any such dispute is not resolved by the parties and their
          respective independent accountants within ten (10) business
          days after the Closing, such dispute shall be resolved by
          the Reviewing Accountants as promptly as practicable, and
          such resolution shall be final and binding on the parties. 
          The expenses of the Reviewing Accountants shall be paid one
          half by each of Seller and Buyer.

                    2.3  Finished Goods.  All finished goods other
          than those referred to in Section 2.2 hereof shall be
          shipped and paid for in the ordinary course of business in
          accordance with the relevant purchase orders; provided,
          however, that Seller shall pay all costs incurred or to be
          incurred in delivering finished goods to Buyer.

                    2.4  Joint Venture Agreement.  The execution and
          delivery of this Agreement by each of Seller, CGFE, ATSC and
          Buyer shall not be construed to defeat, impair or limit in
          any way the rights, obligations, claims or remedies of
          Seller, CGFE or Buyer under the Joint Venture Agreement,
          including, without limitation, under Section 5 thereof. 
          Upon consummation of the Closing, the Joint Venture Agree-
          ment shall terminate automatically and be of no further
          force or effect.

                    2.5  Leases.  In the event Buyer enters into the
          Subleases at the time of Closing, (i) at Seller's election
          at any time within two (2) years after the Closing Date,
          Buyer shall assume those obligations of Seller under the
          NY Lease or the FWM Lease, as the case may be, that relate
          to the subleased premises, and (ii) the Subleases shall
          contain the consents of the respective landlords to the
          assignment described in clause (i) above.

                    2.6  Meyer Employment Agreement.  Buyer shall (i)
          pay to Mr. Dwight Meyer any amount payable to him as a
          result of the consummation of transactions contemplated by
          this Agreement under his existing employment agreement with
          CAT-US and (ii) use reasonable best efforts to cause Mr.
          Meyer to execute and deliver a full release of all of
          Seller's, Buyer's and CAT's obligations to Mr. Meyer in
          respect of his employment by CAT prior to the Closing Date.

                    2.7  Mail Received After Closing.  On and after
          the Closing, Buyer may receive and open all mail addressed
          to former employees of Seller who are Continuing Employees
          and deal with the contents thereof in its discretion to the
          extent that such mail and the contents thereof relate to the
          Division, the Division Business, CAT, the Assets or any of
          the Liabilities.  Buyer agrees to deliver, or to cause to be
          delivered, promptly to Seller all other mail received.

                    2.8  Employees, Benefit Plans.

                         (a)  Hiring of Employees.  Buyer shall not
          have any obligation to assume or honor any employment agree-
          ment ("Employment Agreements") between Seller and any cur-
          rent or former employee of Seller.  As of the Closing Date,
          Seller shall terminate the employment of, and Buyer shall
          offer employment to, employees of Seller or its affiliates
          who are actively employed immediately prior to the Closing
          Date, whose primary employment is with the Division and who
          have been identified to Seller in writing by Buyer as em-
          ployees to whom Buyer shall offer employment ("Affected
          Employees").  CAT employees who are employed by CAT immedi-
          ately prior to the Closing Date shall remain employees of
          CAT following the Closing Date ("CAT Employees").  All
          Affected Employees who accept employment with Buyer ("Hired
          Employees") and CAT Employees who continue employment by CAT
          immediately following the Closing Date, shall be referred
          to, collectively, as "Continued Employees".

                         (b)  Wages.  Buyer shall pay or cause to be
          paid when due to the Hired Employees the amount of all
          wages, salary, bonuses, commissions, incentive payments and
          other compensation (including, without limitation, any
          vacation and sick pay) or any other benefit, perquisite,
          cost, expense, liability or obligation attributable to
          services provided on and after the Closing Date.  Seller
          shall pay or cause to be paid all amounts due to employees
          of Seller engaged in the Division Business, including Hired
          Employees, for wages, salary, bonuses, commissions, incen-
          tive payments and other compensation (including, without
          limitation, any vacation and sick pay) or any other benefit,
          perquisite, cost, expense, liability or obligation attribut-
          able to services provided prior to the Closing Date.  Prior
          to the Closing Date, Seller shall allow (and Seller repre-
          sents and warrants to Buyer that it has allowed) the Hired
          Employees the opportunity to use all accrued or earned
          vacation; provided, however, that if any vacation time
          remains owed to the Hired Employees as of the Closing Date,
          Seller shall pay any and all such amounts to the Hired
          Employees.

                         (c)  Welfare Plans.  As of the Closing Date,
          Continued Employees shall cease to participate in the em-
          ployee welfare benefit plans (as such term is defined in
          ERISA) maintained or sponsored by Seller or its affiliates
          (the "Prior Welfare Plans") and shall commence to partici-
          pate in welfare benefit plans of Buyer or its affiliates
          (the "Replacement Welfare Plans"), in accordance with the
          terms of such plans.  Seller shall be responsible for any
          claims by Continued Employees for benefits relating to
          claims incurred prior to the Closing Date (regardless of
          when reported) and Buyer or CAT shall be responsible for any
          claims incurred by Continued Employees on or after the
          Closing Date.

                         (d)  Workmen's Compensation Liability.  Any
          payments to be made on or after the Closing Date relating to
          workmen's compensation claims of Continued Employees pending
          at the time of Closing or arising from services provided
          prior to Closing shall be made by Seller or its insurance
          carrier.

                         (e)  COBRA Coverage.  To the extent required
          by law, Seller shall give the Affected Employees and their
          spouses notice of their rights to continuation coverage
          under Section 4980B of the Code ("COBRA") in accordance with
          applicable law.  Seller shall continue to be responsible at
          all times after the Closing Date for continuation coverage
          under COBRA with respect to all Affected Employees, former
          CAT Employees and their present or former dependents. 
          Seller hereby agrees to indemnify and hold harmless Buyer
          against any and all losses which the Buyer may incur in
          respect of any of the foregoing.

                         (f)  Employment Law Liabilities.

                              (i)  Seller hereby agrees to indemnify
          Buyer and its affiliates against, and agrees to hold them
          harmless from, any and all claims, losses, damages and
          expenses (including, without limitation, reasonable
          attorneys' fees) and other liabilities and obligations
          incurred or suffered as a result of any claim by any employ-
          ee of Seller, including any Hired Employee, that arises
          under federal, state or local statute (including, without
          limitation, Title VII of the Civil Rights Act of 1964, the
          Civil Rights Act of 1991, the Age Discrimination in Employ-
          ment Act of 1990, the Equal Pay Act, the Americans with
          Disabilities Act of 1990, the Employee Retirement Income
          Security Act of 1974 and all other statutes regulating the
          terms and conditions of employment), regulation or ordi-
          nance, under the common law or in equity (including any
          claims for wrongful discharge or otherwise), or under any
          policy, agreement, understanding or promise, written or
          oral, formal or informal, between Seller and the employee,
          arising out of actions, events or omissions that occurred
          (or, in the case of omissions, failed to occur) on or prior
          to the Closing Date; and 

                             (ii)  Buyer hereby agrees to indemnify
          Seller and its affiliates against, and agrees to hold them
          harmless from, any and all claims, losses, damages and
          expenses (including, without limitation, reasonable
          attorneys' fees) and other liabilities and obligations
          incurred or suffered as a result of any claim by any Hired
          Employee that arises under federal, state or local statute
          (including, without limitation, Title VII of the Civil
          Rights Act of 1964, the Civil Rights Act of 1991, the Age
          Discrimination in Employment Act of 1990, the Equal Pay Act,
          the Americans with Disabilities Act of 1990, the Employee
          Retirement Income Security Act of 1974 and all other stat-
          utes regulating the terms and conditions of employment),
          regulation or ordinance, under the common law or in equity
          (including any claims for wrongful discharge or otherwise),
          or under any policy, agreement, understanding or promise,
          written or oral, formal or informal, between Buyer and such
          Hired Employee, arising out of actions, events or omissions
          that occurred (or, in the case of omissions, failed to
          occur) subsequent to the Closing Date.

                         (g)  WARN Act Liabilities.  Seller shall
          bear, and indemnifies and holds harmless Buyer and its
          affiliates from and against, all direct and indirect costs,
          claims, losses, damages, expenses and other liabilities and
          obligations arising from or relating to claims made by or on
          behalf of the Affected Employees relating to the termination
          of any such person's employment by Seller or its affiliates
          prior to or on the Closing Date, including, but not limited
          to, claims in respect of the Worker Adjustment and Retrain-
          ing Notification Act of 1988, severance pay, salary continu-
          ation and similar obligations.  Buyer agrees to bear, and
          indemnify and hold harmless Seller from and against, all
          direct and indirect costs, claims, losses, damages, expenses
          and other liabilities and obligations arising from or relat-
          ing to claims made by or on behalf of the Continued Employ-
          ees relating to the termination of any such person's employ-
          ment by Buyer or CAT after the Closing Date, except for
          claims in respect of the Worker Adjustment and Retraining
          Notification Act of 1988 which would not have arisen but for
          aggregation with terminations by Seller prior to the Closing
          Date.

                         (h)  No Third-Party Beneficiaries.  Nothing
          in this Section 2.8 is intended, or shall be construed, to
          confer upon any person, other than the parties hereto and
          their successors and permitted assigns, any rights or reme-
          dies by reason of this Section 2.8.

          III.  REPRESENTATIONS AND WARRANTIES OF SELLER.

                    Seller represents and warrants to Buyer as fol-
          lows:

                    3.1  Organization of Seller and CAT; Authority.

                         (a)  Each of Seller, CAT-US and CAT-Far East
          is a corporation duly organized, validly existing and in
          good standing under the laws of its jurisdiction of organi-
          zation and has all requisite corporate power and authority
          to own, lease and operate its properties and assets and to
          conduct its business as it is now being conducted, includ-
          ing, without limitation, in the case of Seller, the Divi-
          sion.  Each of Seller, CAT-US and CAT-Far East is duly
          qualified or licensed to do business as a foreign corpora-
          tion and is in good standing in each jurisdiction in which
          the property or assets owned, leased or operated by it or
          the nature of the business conducted by it makes such quali-
          fication necessary, except in those jurisdictions where the
          failure to have such power and authority or to be so duly
          qualified or licensed and in good standing would not, indi-
          vidually or in the aggregate, reasonably be expected to have
          a material adverse effect on the business, properties,
          assets, results of operations or financial condition (a
          "Material Adverse Effect") of the Division, CAT-US or CAT-
          Far East.  Except as set forth in Section 3.1 of the Disclo-
          sure Schedule being delivered by Seller to Buyer concurrent-
          ly herewith (the "Seller Disclosure Schedule"), Seller does
          not have any subsidiaries or equity interests in any busi-
          ness entity engaged in the Division Business.

                         (b)  Each of Seller and CGFE has all requi-
          site corporate power and authority to enter into this Agree-
          ment and any instruments and agreements contemplated herein
          required to be executed and delivered by it pursuant to this
          Agreement (including, without limitation, as applicable, the
          Ancillary Agreements, the Bill of Sale, the Assignment and
          Assumption Agreements, and any Other Instruments, which are
          referred to collectively herein as the "Seller Related
          Instruments") and to consummate the transactions contemplat-
          ed hereby and thereby.  The execution, delivery and perfor-
          mance of this Agreement and the Seller Related Instruments
          and the consummation of the transactions contemplated hereby
          and thereby have been duly authorized by all necessary
          corporate action on the part of each of Seller and CGFE,
          other than approval of Seller's stockholders.  This Agree-
          ment has been, and each of the Seller Related Instruments
          when executed and delivered will be, duly executed and
          delivered by Seller and CGFE, as applicable, and this Agree-
          ment constitutes, and each of the Seller Related Instruments
          to which it is a party will, when executed and delivered,
          constitute a valid and binding obligation of Seller or CGFE,
          as applicable, enforceable against Seller or CGFE, as appli-
          cable, in accordance with its terms, except that (i) such
          enforcement may be subject to any bankruptcy, insolvency,
          reorganization, moratorium, or other laws, now or hereafter
          in effect, relating to or limiting creditors' rights gener-
          ally and (ii) the remedy of specific performance and injunc-
          tive and other forms of equitable relief may be subject to
          equitable defenses and to the discretion of the court before
          which any proceeding therefor may be brought.  Each of
          Seller and CGFE shall deliver to Buyer true, correct and
          complete copies of resolutions duly and validly adopted by
          its board of directors, evidencing the authorization of the
          execution and delivery of this Agreement and the Seller
          Related Instruments, as applicable, and the consummation of
          the transactions contemplated hereby and thereby.  

                    3.2  No Violation; Consents and Approvals.

                         (a)  Except as set forth in Section 3.2(a) of
          the Seller Disclosure Schedule, the execution and delivery
          of this Agreement and the Seller Related Instruments do not,
          and the consummation of the transactions contemplated hereby
          or thereby and compliance with the terms hereof or thereof
          will not, (i) conflict with, or result in any violation of
          or default under, (A) any provision of the charter or by-
          laws of Seller or CGFE, or (B) any judgment, order or de-
          cree, or statute, law, ordinance, rule or regulation of any
          Governmental Entity (as hereinafter defined) applicable to
          Seller, CGFE, CAT, the Division or the Assets; or (ii)
          conflict with, or result in any breach or violation of or
          constitute a default (or an event or condition which, with
          notice or lapse of time or both, would constitute a default)
          under, or result in the termination of, or accelerate the
          performance required by, or cause the acceleration of any
          maturity of any liability or obligation pursuant to, or
          result in the creation or imposition of any Lien under, any
          note, bond, mortgage, indenture, license, contract, agree-
          ment, lease or other instrument or obligation to which
          Seller, CGFE or CAT is a party or by which Seller, CGFE or
          CAT may be bound or affected or to which any of the Assets
          may be subject, except where the conflict, violation, de-
          fault, breach, termination, acceleration, creation or impo-
          sition would not reasonably be expected to have a Material
          Adverse Effect on the Division or CAT, would not prevent or
          delay Seller's ability, or, to the best knowledge of Seller,
          Buyer's ability, to consummate the transactions contemplated
          hereby, would not impair in any material respect Buyer's
          ability to operate CAT or the Division Business as currently
          operated or would not result in any liability, cost or
          expense of Seller (other than the Liabilities or other
          liabilities and obligations not in excess of $50,000 in the
          aggregate) being incurred by Buyer.

                         (b)  Except as set forth in Section 3.2(b) of
          the Seller Disclosure Schedule, no consent, approval, order
          or authorization of, or registration, declaration or filing
          with, any court, administrative agency or commission or
          other governmental entity, authority or instrumentality,
          domestic or foreign (collectively, "Governmental Entities"),
          is required to be obtained or made by or with respect to
          Seller, CGFE or CAT in connection with the execution and
          delivery by Seller or CGFE of this Agreement or any Seller
          Related Instrument or the consummation by Seller or CGFE of
          the transactions contemplated hereby or thereby, or compli-
          ance by Seller or CGFE with the terms hereof or thereof,
          other than (i) compliance with and filings under the Hart-
          Scott-Rodino Antitrust Improvements Act of 1976, as amended
          (the "HSR Act"), (ii) compliance with and filings under
          Sections 13(a) and (d) of the Securities Exchange Act of
          1934, as amended (the "Exchange Act"), and (iii) those the
          failure of which to obtain would not reasonably be expected
          to have a Material Adverse Effect on the Division or CAT,
          would not prevent or delay Seller's ability, or, to the best
          knowledge of Seller, Buyer's ability, to consummate the
          transactions contemplated hereby, would not impair in any
          material respect Buyer's ability to operate CAT or the
          Division Business as currently operated or would not result
          in any liability, cost or expense of Seller (other than the
          Liabilities or other liabilities and obligations not in
          excess of $50,000 in the aggregate) being incurred by Buyer.

                         (c)  Except for the approval of Seller's
          stockholders, and as set forth in Section 3.2(c) of the
          Seller Disclosure Schedule, no consent, approval, order or
          authorization of, notice to, or registration, declaration or
          filing with, any third party is required to be obtained or
          made by Seller, CGFE or CAT in connection with the execution
          and delivery by Seller or CGFE of this Agreement or any
          Seller Related Instrument, or the consummation by Seller or
          CGFE of the transactions contemplated hereby or thereby or
          compliance by Seller or CGFE with the terms hereof or there-
          of, except where the failure to obtain any consent, approv-
          al, order or authorization, or to give notice, or to make
          any registration, declaration or filing would not reasonably
          be expected to have a Material Adverse Effect on the Divi-
          sion or CAT, would not prevent or delay Seller's ability,
          or, to the best knowledge of Seller, Buyer's ability, to
          consummate the transactions contemplated hereby, would not
          impair in any material respect Buyer's ability to operate
          CAT or the Division Business as currently operated or would
          not result in any liability, cost or expense of Seller
          (other than the Liabilities or other liabilities and obliga-
          tions not in excess of $50,000 in the aggregate) being
          incurred by Buyer.

                    3.3  Seller Financial Statements.

                         (a)  Seller has delivered to Buyer true,
          correct and complete copies of the audited, consolidated
          balance sheets of Seller as of January 29, 1994, January 28,
          1995, and February 3, 1996 (the "1996 Balance Sheet") and
          the audited, consolidated income statements and statements
          of cash flows of Seller for the fiscal years ended Janu-
          ary 29, 1994, January 28, 1995 and February 3, 1996, accom-
          panied, in each case, by an unqualified report of Seller's
          independent public accountants, Ernst & Young, LLP (collec-
          tively, the "Audited Financial Statements").

                         (b)  As used in this Agreement, the term
          "Financial Statements" means, collectively, the Audited
          Financial Statements and the Subsequent Financial Statements
          (as hereinafter defined).

                         (c)  The balance sheets included in the
          Audited Financial Statements present, and the balance sheets
          included in the Subsequent Financial Statements will pres-
          ent, fairly the financial position of Seller as of the
          respective dates thereof; provided, however, that the Subse-
          quent Financial Statements will be subject to normal year-
          end adjustments and will lack footnotes.  The statements of
          income and statements of cash flows included in the Audited
          Financial Statements present, and the statements of income
          and statements of cash flows included in the Subsequent
          Financial Statements will present, fairly the results of
          operations and cash flows of Seller for the respective
          periods indicated; provided, however, that the Subsequent
          Financial Statements will be subject to normal year-end
          adjustments and will lack footnotes.

                         (d)  The Audited Financial Statements were
          and the Subsequent Financial Statements will have been,
          based on the accounting books and records of Seller and have
          been prepared or will be prepared in accordance with GAAP
          applied on a consistent basis throughout the periods pre-
          sented in the Financial Statements; provided, however, that
          the Subsequent Financial Statements will be subject to
          normal year-end adjustments and will lack footnotes.

                    3.4  CAT Financial Statements.

                         (a)  Seller has delivered to Buyer true,
          correct and complete copies of the audited, combined balance
          sheets of CAT as of January 29, 1994, January 28, 1995 and
          February 3, 1996 (the "CAT 1996 Balance Sheet") and the
          audited, combined income statements and statements of cash
          flows of CAT for the fiscal years ended January 29, 1994,
          January 28, 1995 and February 3, 1996, accompanied, in each
          case, by an unqualified report of CAT's independent public
          accountants, Ernst & Young, LLP (collectively, the "CAT
          Audited Financial Statements").

                         (b)  As used in this Agreement, the term "CAT
          Financial Statements" means, collectively, the CAT Audited
          Financial Statements and the CAT Subsequent Financial State-
          ments (as hereinafter defined).

                         (c)  The balance sheets included in the CAT
          Audited Financial Statements present, and the balance sheets
          included in the CAT Subsequent Financial Statements will
          present, fairly the financial position of CAT as of the
          respective dates thereof; provided, however, that the CAT
          Subsequent Financial Statements will be subject to normal
          year-end adjustments and will lack footnotes.  The state-
          ments of income and statements of cash flows included in the
          CAT Audited Financial Statements present, and the statements
          of income and statements of cash flows included in the CAT
          Subsequent Financial Statements will present, fairly the
          results of operations and cash flows of CAT for the respec-
          tive periods indicated; provided, however, that the CAT
          Subsequent Financial Statements will be subject to normal
          year-end adjustments and will lack footnotes.

                         (d)  The CAT Audited Financial Statements
          were, and the CAT Subsequent Financial Statements will have
          been, based on the accounting books and records of CAT and
          have been prepared or will have been prepared in accordance
          with GAAP applied on a consistent basis throughout the
          periods presented in the CAT Financial Statements; provided,
          however, that the CAT Subsequent Financial Statements will
          be subject to normal year-end adjustments and will lack
          footnotes.

                    3.5  Combined Entity Financial Statements.

                         (a)  Seller has delivered to Buyer true,
          correct and complete copies of the following:

                    (i)  the audited combined balance sheets of CAT
                         and the Division (the "Combined Entity") as
                         of February 3, 1996 (the "Combined Entity
                         1996 Balance Sheet") and the audited combined
                         income statements and statements of cash
                         flows of the Combined Entity for the fiscal
                         year ended February 3, 1996, accompanied, in
                         each case, by an unqualified report of
                         Seller's independent public accountants,
                         Ernst & Young, LLP (collectively, the "Com-
                         bined Entity Audited Financial Statements");
                         and

                    (ii) the unaudited combined balance sheets of the
                         Combined Entity as of January 28, 1995 and
                         the unaudited combined income statements and
                         statements of cash flows of the Combined
                         Entity for the fiscal year ended January 28,
                         1995 (collectively, the "Combined Entity
                         Unaudited Financial Statements").

                         (b)  As used in this Agreement, the term
          "Combined Entity Financial Statements" means, collectively,
          the Combined Entity Audited Financial Statements, the Com-
          bined Entity Unaudited Financial Statements and the Combined
          Entity Subsequent Financial Statements (as hereinafter
          defined).

                         (c)  The balance sheets included in the
          Combined Entity Audited Financial Statements and the Com-
          bined Entity Unaudited Financial Statements present, and the
          balance sheets included in the Combined Entity Subsequent
          Financial Statements will present, fairly the pro forma
          financial position of the Combined Entity as of the respec-
          tive dates thereof, based upon the assumption set forth
          therein and the notes thereto; provided, however, that the
          Combined Entity Unaudited Financial Statements are, and the
          Combined Entity Subsequent Financial Statements (other than
          the Combined Entity 1994 Audited Financial Statements) will
          be, subject to normal year-end adjustments and will lack
          footnotes.  The statements of income and statements of cash
          flows included in the Combined Entity Audited Financial
          Statements and the Combined Entity Unaudited Financial
          Statements present, and the statements of income and state-
          ments of cash flows included in the Combined Entity Subse-
          quent Financial Statements will present, fairly the pro
          forma results of operations and cash flows of the Combined
          Entity for the respective periods indicated, based on the
          assumptions set forth therein and the notes thereto; provid-
          ed, however, that the Combined Entity Unaudited Financial
          Statements are, and the Combined Entity Subsequent Financial
          Statements (other than the Combined Entity 1994 Audited
          Financial Statements) will be, subject to normal year-end
          adjustments and will lack footnotes.

                         (d)  The Combined Entity Audited Financial
          Statements and the Combined Entity Unaudited Financial
          Statements were, and the Combined Entity Subsequent Finan-
          cial Statements will have been, based on the accounting
          books and records of the Combined Entity, subject to the
          assumptions set forth in such financial statements and the
          notes thereto, and have been prepared or will be prepared in
          accordance with GAAP applied on a consistent basis through-
          out the periods presented in the Combined Entity Financial
          Statements, subject to the assumptions set forth in such
          financial statements and the notes thereto; provided, howev-
          er, that the Combined Entity Unaudited Financial Statements
          are, and the Combined Entity Subsequent Financial Statements
          (other than the Combined Entity 1994 Audited Financial
          Statements) will be, subject to normal year-end adjustments
          and will lack footnotes.

                    3.6  Absence of Seller Undisclosed Liabilities. 
          Except for (a) liabilities and obligations set forth in
          Section 3.6 of the Seller Disclosure Schedule or reflected
          on the 1996 Balance Sheet or (b) liabilities and obligations
          incurred in the ordinary course of business consistent with
          past practice since the date of the 1996 Balance Sheet,
          Seller has incurred no liabilities or obligations relating
          to the Division in excess of $50,000 in the aggregate
          (whether absolute, accrued, contingent or otherwise, and
          whether due or to become due).

                    3.7  Absence of CAT Undisclosed Liabilities.  To
          the best knowledge of Seller, except for (a) liabilities and
          obligations set forth in Section 3.7 of the Seller Disclo-
          sure Schedule or reflected on the CAT 1996 Balance Sheet or
          (b) liabilities and obligations incurred in the ordinary
          course of business consistent with past practice since the
          date of the CAT 1996 Balance Sheet, CAT has incurred no
          liabilities or obligations in excess of $50,000 in the
          aggregate (whether absolute, accrued, contingent or other-
          wise, and whether due or to become due).

                    3.8  Absence of Division Undisclosed Liabilities. 
          Except for (a) liabilities and obligations set forth in
          Section 3.8 of the Seller Disclosure Schedule or reflected
          on the Division 1996 Balance Sheet or (b) liabilities and
          obligations incurred in the ordinary course of business
          consistent with past practice since the date of the Division
          1996 Balance Sheet, the Division has incurred no liabilities
          or obligations in excess of $50,000 in the aggregate (wheth-
          er absolute, accrued, contingent or otherwise, and whether
          due or to become due).

                    3.9  Absence of Certain Changes or Events.  Except
          as set forth in Section 3.9 of the Seller Disclosure Sched-
          ule, since February 3, 1996, (a) there has not been
          any Material Adverse Effect on the Division Business; and
          (b) neither Seller nor CAT has taken any action, no event
          has occurred and no condition exists that is identified in
          Section 5.1 hereof.

                    3.10  Title to CAT Shares.

                         (a)  Seller has good and valid title to the
          CAT US Shares, free and clear of all Liens, other than (i)
          Liens arising under the Joint Venture Agreement and (ii)
          Liens in favor of The HongKong and Shanghai Banking Corpora-
          tion.  Upon delivery to Buyer at the Closing of certificates
          representing the CAT US Shares, duly endorsed by Seller for
          transfer to Buyer or accompanied by stock powers duly exe-
          cuted in blank, and upon delivery by Buyer in accordance
          with the terms hereof of the consideration provided for in
          Section 1.2 hereof, assuming Buyer has purchased the CAT US
          Shares in good faith without notice of an adverse claim (as
          such term is defined in Section 8-302 of the Uniform Commer-
          cial Code as currently in effect in the State of New York)
          and has not been a party to any fraud or illegality affect-
          ing such shares, good and valid title to the CAT US Shares
          will pass to Buyer, free and clear of any Liens.  Other than
          under this Agreement, the Joint Venture Agreement and
          Seller's agreements with The HongKong and Shanghai Banking
          Corporation, the CAT US Shares are not subject to any voting
          trust agreement or other contract, agreement, arrangement,
          commitment or understanding, including any such agreement,
          arrangement, commitment or understanding restricting or
          otherwise relating to the voting, dividend rights or dispo-
          sition of the CAT US Shares.

                         (b)  CGFE has good and valid title to the CAT
          Far East Shares, free and clear of all Liens, other than (i)
          Liens arising under the Joint Venture Agreement and (ii)
          Liens in favor of The HongKong and Shanghai Banking Corpora-
          tion.  Upon delivery to Buyer at the Closing of certificates
          representing the CAT Far East Shares, duly endorsed by CGFE
          for transfer to Buyer or accompanied by stock powers duly
          executed in blank, and upon delivery by Buyer in accordance
          with the terms hereof of the consideration provided for in
          Section 1.2 hereof, assuming Buyer has purchased the CAT Far
          East Shares in good faith without notice of an adverse claim
          (as such term is defined in Section 8-302 of the Uniform
          Commercial Code as currently in effect in the state of New
          York) and has not been a party to any fraud or illegality
          affecting such shares, good and valid title to the CAT Far
          East Shares will pass to Buyer, free and clear of any Liens. 
          Other than under this Agreement, the Joint Venture Agreement
          and Seller's agreements with The HongKong and Shanghai
          Banking Corporation, the CAT Far East Shares are not subject
          to any voting trust agreement or other contract, agreement,
          arrangement, commitment or understanding, including any such
          agreement, arrangement, commitment or understanding re-
          stricting or otherwise relating to the voting, dividend
          rights or disposition of the CAT Far East Shares.

                    3.11  Title to Assets; Leased Property.

                         (a)  Except as set forth in Section 3.11(a)
          of the Seller Disclosure Schedule, Seller has (i) good and
          valid title to all of the Assets which are owned by Seller
          as of the date hereof and valid leasehold interests in, or
          other rights to use, all of the Assets which are not owned
          by Seller, free and clear of all Liens other than Permitted
          Liens and (ii) Seller will have good and valid title to all
          of the Assets which will be owned by Seller as of the Clos-
          ing Date and will have valid leasehold interests in, or
          other rights to use, all of the Assets which will not be
          owned by Seller as of the Closing Date, excluding Assets
          sold or otherwise disposed of in the ordinary course of
          business and including Assets purchased, leased or licensed,
          as the case may be, between the date hereof and the Closing
          Date.  As used in this Agreement, the term "Permitted Liens"
          means (i) mechanics', carriers', workmen's, repairmen's or
          other like liens arising or incurred in the ordinary course
          of business, (ii) liens for taxes, assessments and other
          governmental charges which are not due and payable or which
          may hereafter be paid without penalty or which are being
          contested in good faith by appropriate proceedings (for
          which adequate reserves have been made in the Combined
          Entity Financial Statements in accordance with GAAP) and
          (iii) other imperfections of title or encumbrances, if any,
          which imperfections of title or other encumbrances, individ-
          ually or in the aggregate, would not reasonably be expected
          to have a Material Adverse Effect on the Division Business,
          would not prevent or delay Seller's ability, or, to the best
          knowledge of Seller, Buyer's ability, to consummate the
          transactions contemplated hereby, would not impair in any
          material respect Buyer's ability to operate the Division
          Business as currently operated or would not result in any
          liability, cost or expense (other than liabilities and
          obligations not in excess of $50,000 in the aggregate) to
          Buyer or any of its affiliates, CAT or the Division.

                         (b)  Set forth on Annex IV hereto is a true
          and correct listing of the portions of the deposits under
          the NY Lease and the FWM Lease relating to premises to be
          occupied by Buyer after the Closing Date.  Seller has deliv-
          ered to Buyer true, correct and complete copies of the NY
          Lease and all amendments thereto, the FWM Lease and all
          amendments thereto, including the CAT Sublease, and the
          Business Lease, dated January 21, 1992, among Seller, as
          tenant, and David Schaecter and Marvis Schaecter, as land-
          lord (the "Miami Lease" and, collectively with the NY Lease
          and the FWM Lease, the "Leases"), relating to Seller's
          facility located at 4915 NW 159th Street, Miami Lakes,
          Florida (the "Miami Facility") and all amendments thereto. 
          For purposes of this Section 3.11, the term Seller shall
          include Seller's wholly owned subsidiary Fenn, Wright and
          Manson, Incorporated, as applicable.  Seller or CAT, as the
          case may be, has a valid and subsisting leasehold estate
          with respect to each of the properties subject to a Lease
          (the "Leased Properties").  Except as set forth in Section
          3.11(b) of the Seller Disclosure Schedule, to the best
          knowledge of Seller, (i) each of the Leases is in full force
          and effect and (ii) none of the Leases has been modified or
          amended.  Neither Seller nor CAT, as the case may be, has
          given or received a written notice of default under any of
          the Leases which remains uncured, and, to the best knowledge
          of Seller, there exists no event of default, event, occur-
          rence or act which, with the giving of notice, the lapse of
          time, or both, or the happening of a further event or condi-
          tion, would result in a default under any of the Leases by
          Seller or CAT, as the case may be, or, to the best knowledge
          of Seller, the applicable landlord under any such Leases. 
          There are no pending unresolved material disputes with any
          landlord under any of the Leases.  All security deposits
          required under the Leases have been paid to the applicable
          landlord under the Leases in compliance with the applicable
          Lease.  Except as set forth in Section 3.11(b) of the Seller
          Disclosure Schedule, there are no subtenants occupying any
          portion of the Leased Properties other than CAT and, except
          for Seller, to the best knowledge of Seller, no other person
          or entity has any right to occupy or possess any portion of
          the Leased Properties other than affiliates of Seller claim-
          ing by, through or under Seller who shall (except for CAT)
          vacate their respective premises on or prior to the Closing
          Date.  Except as set forth in Section 3.11(b) of the Seller
          Disclosure Schedule, as to the Leases, (i) none of Seller's
          or CAT's interests in any of the Leases has been assigned,
          pledged, hypothecated or otherwise encumbered in any manner;
          (ii) no written waiver, indulgence or postponement of the
          applicable landlord's obligations under any of the Leases
          has been granted by Seller or CAT; (iii) neither Seller nor
          CAT has any right or option to purchase or otherwise acquire
          any of the Leased Properties or any portion thereof; and
          (iv) neither Seller nor CAT has given any notices to any
          landlord indicating that Seller or CAT either will or will
          not (A) be exercising any extension or renewal options, or
          any right or option to purchase any of the Leased Properties
          or any portion thereof, (B) abandon any of the Leased Prop-
          erties or any portion thereof, or (C) terminate any of the
          Leases.

                         (c)  Except as set forth in Section 3.11(c)
          of the Seller Disclosure Schedule, (i) to the best knowledge
          of Seller, the building and structure at the Florence Facil-
          ity are structurally sound and are free from defects (ordi-
          nary wear and tear excepted) and are adequate for the uses
          to which they are being put, and (ii) all machinery and
          equipment owned, leased or used by Seller in the conduct of
          the Division Business are free from defects (ordinary wear
          and tear excepted) and are in good and normal operating
          condition and repair (ordinary wear and tear excepted), and
          are adequate for the uses to which they are being put, in
          each case, except for defects which, individually or in the
          aggregate, would not reasonably be expected to have a Mate-
          rial Adverse Effect on the Division Business, would not
          impair in any material respect Buyer's ability to operate
          the Division Business as currently operated or would not
          result in any liability, cost or expense to Buyer or any of
          its affiliates (other than the Liabilities or other liabili-
          ties and obligations not in excess of $50,000 in the aggre-
          gate).

                         (d)  Except as set forth in Section 3.11(d)
          of the Seller Disclosure Schedule, upon Closing in accor-
          dance with the terms of this Agreement, Buyer shall receive
          from Seller good and valid title to all of the Assets, free
          and clear of all Liens, other than Permitted Liens.

                    3.12  Litigation/Claims.

                         (a)  Section 3.12(a) of the Seller Disclosure
          Schedule sets forth a true, complete and correct list of any
          and all claims, actions, suits and proceedings pending or,
          to the best knowledge of Seller, threatened, and, to the
          best knowledge of Seller, any investigations or inquiries
          pending or threatened, against Seller which relate to the
          Division or CAT.

                         (b)  Except as set forth in Section 3.12(b)
          of the Seller Disclosure Schedule, there is (i) no claim,
          action, suit or proceeding pending or, to the best knowledge
          of Seller,  threatened, and (ii) to the best knowledge of
          Seller, no investigation or inquiry pending or threatened,
          by or before any Governmental Entity, or by or on behalf of
          any third party, which challenges the validity of this
          Agreement or any Seller Related Instrument or which, if
          adversely determined, would, individually or in the aggre-
          gate, reasonably be expected to have a Material Adverse
          Effect on the Division Business, prevent or delay Seller's
          ability, or, to the best knowledge of Seller, Buyer's abili-
          ty, to consummate the transactions contemplated hereby,
          impair in any material respect Buyer's ability to operate
          the Division Business as currently operated, or result in
          any liability, cost or expense to Buyer or any of its affil-
          iates (other than the Liabilities or other liabilities and
          obligations not in excess of $50,000 in the aggregate).

                    3.13  Employee Benefit Plans.  (a)  With respect
          to each employee benefit plan, arrangement or agreement that
          is maintained, or was maintained at any time during the five
          (5) calendar years preceding the date of this Agreement (the
          "Plans"), by either Seller or CAT or by any trade or busi-
          ness, whether or not incorporated (an "ERISA Affiliate"),
          which together with either Seller or CAT would be deemed a
          "single employer" within the meaning of Section 4001 of the
          Employment Retirement Income Security Act of 1974, as amend-
          ed ("ERISA"):

                              (i)  each of the Plans that is subject
          to ERISA has been maintained and administered in all materi-
          al respects in compliance with ERISA and each of the Plans
          intended to be "qualified" within the meaning of Section
          401(a) of the Code is so qualified;

                             (ii)  no Plan has an accumulated or
          waived funding deficiency within the meaning of Section 412
          of the Code;

                            (iii)  no Plan is a multiemployer plan
          (within the meaning of Section 4001(a)(3) of ERISA) and no
          Plan is a multiple employer plan as defined in Section 413
          of the Code; and

                             (iv)  no Plan that is or was maintained
          by CAT is subject to Article IV of ERISA.

                         (b)  Neither Seller nor CAT has any obliga-
          tions with respect to medical benefits for retired employees
          of the Division or CAT.

                         (c)  Neither Seller nor CAT has any obliga-
          tions to the Affected Employees with respect to any 401(k)
          plan or pension plan.

                    3.14  Certain Contracts and Arrangements.  

                         (a) Except as set forth in Section 3.14(a) of
          the Seller Disclosure Schedule, there are no binding oral
          agreements to which Seller is a party relating to the Divi-
          sion or the Assets or to which the Division or any of the
          Assets is subject.  Section 3.14(b) of the Seller Disclosure
          Schedule sets forth a true, correct and complete list of all
          written agreements, contracts and commitments to which
          Seller is a party and to which the Division or any of the
          Assets is subject (the "Division Contracts"), including,
          without limitation:

                              (i)  employment agreements or severance
          agreements;

                             (ii)  covenants not to compete;

                            (iii)  agreements or contracts with any
          affiliate of Seller;

                             (iv)  agreements or contracts under which
          Seller has borrowed or loaned money, or any note, bond,
          indenture or other evidence of indebtedness or any guarantee
          of indebtedness, agreements with factors or trade credit
          agreements;

                              (v)  "open purchase orders", "take-or-
          pay" agreements or any other agreements with suppliers, but
          excluding purchase orders which relate to specific goods
          made for Buyer in the ordinary course of business;

                             (vi)  agreements or contracts with any
          cutting room operator;

                            (vii)  agreements or contracts with con-
          tract manufacturers or factory operators;

                           (viii)  all real property leases to which
          Seller is a party and which relate to the Division Business;
          or

                             (ix)  other agreements, contracts, leas-
          es, licenses, commitments or instruments to which the Seller
          is a party, which relate, directly or indirectly, to the
          Division or any Asset; provided, however, that (x) purchase
          orders and written fabric commitments accepted from Buyer
          and the fabric commitments related to the fabric listed on
          Annex I hereto and (y) such agreements, contracts or commit-
          ments as may be terminated by Buyer at any time after the
          Closing without liability, penalty or premium upon notice of
          three months or less or which will not result in future
          annual expenditures or receipts by the Division at any time
          of $50,000 or more need not be and are not listed in Section
          3.14 of the Seller Disclosure Schedule.  Seller and, to the
          best knowledge of Seller, no other party to any Division
          Contract is in breach thereof or in default thereunder,
          which breach or default would, individually or in the aggre-
          gate, reasonably be expected to have a Material Adverse
          Effect on the Division Business, prevent or delay Seller's
          ability, or, to the best knowledge of Seller, Buyer's abili-
          ty, to consummate the transactions contemplated hereby,
          impair in any material respect Buyer's ability to operate
          the Division Business as currently operated or result in any
          liability, cost or expense to Buyer or any of its affiliates
          (other than the Liabilities or other liabilities and obliga-
          tions not in excess of $50,000 in the aggregate).  Subject
          to obtaining any requisite consents of third parties, the
          enforceability of the Division Contracts will not be affect-
          ed in any material respect by the execution and delivery of
          this Agreement or the consummation of the transactions
          contemplated hereby.  To the best knowledge of Seller, there
          have been no threatened cancellations of, or any dispute
          under, any Division Contract.

                         (b)  All amounts due and payable by Seller or
          an affiliate of Seller under the Contracts as of the date
          hereof have been paid in full by Seller or such affiliate,
          and all amounts due and payable by Seller or an affiliate of
          Seller under the Contracts as of the Closing Date shall have
          been paid in full by Seller or such affiliate.

                    3.15  Compliance with Laws; Licenses.  Except as
          set forth in Section 3.15(a) of the Seller Disclosure Sched-
          ule, the Division has been, and is being, operated in com-
          pliance with all applicable laws, statutes, ordinances,
          rules, regulations and orders of all Governmental Entities,
          except for laws the violation of which, individually or in
          the aggregate, would not reasonably be expected to have a
          Material Adverse Effect on the Division Business, would not
          prevent or delay Seller's ability, or, to the best knowledge
          of Seller, Buyer's ability, to consummate the transactions
          contemplated hereby, would not impair in any material re-
          spect Buyer's ability to operate the Division Business as
          currently operated or would not result in any liability,
          cost or expense to Buyer or any of its affiliates (other
          than the Liabilities or other liabilities and obligations
          not in excess of $50,000 in the aggregate).  Section 3.15(b)
          of the Seller Disclosure Schedule sets forth a true, correct
          and complete list of all permits, certificates, licenses,
          approvals and other authorizations of Governmental Entities
          ("Permits") possessed by Seller or any affiliate of Seller
          in connection with the operation of the Division as current-
          ly operated and ownership of the Assets, which are all the
          Permits required in connection with the operation of the
          Division as currently operated and ownership of the Assets
          under applicable laws, statutes, ordinances, rules, regula-
          tions and orders, except where the failure to possess such
          Permits, individually or in the aggregate, would not reason-
          ably be expected to have a Material Adverse Effect on the
          Division Business, would not prevent or delay Seller's
          ability, or, to the best knowledge of Seller, Buyer's abili-
          ty, to consummate the transactions contemplated hereby,
          would not impair in any material respect Buyer's ability to
          operate the Division Business as currently operated or would
          not result in any liability, cost or expense to Buyer or any
          of its affiliates (other than the Liabilities or other
          liabilities and obligations not in excess of $50,000 in the
          aggregate).

                    3.16  Insurance.  Section 3.16 of the Seller
          Disclosure Schedule sets forth a true, correct and complete
          list of all policies of fire, medical, life, liability,
          product liability, workmen's compensation, libel, health and
          other forms of insurance presently in effect with respect to
          the Division or CAT.  All such policies are in full force
          and effect, all premiums due and payable with respect there-
          to have been paid, and no notice of cancellation or termina-
          tion has been received with respect to any such policy.  All
          such policies are sufficient for compliance in all material
          respects with all requirements of law and the terms of the
          Leases and are valid, outstanding and enforceable and will
          remain in full force and effect through the Closing Date. 
          Except as set forth in Section 3.16 of the Seller Disclosure
          Schedule, no risks with respect to the Division or CAT have
          been designated by Seller as being self-insured.  Except as
          set forth in Section 3.16 of the Seller Disclosure Schedule,
          Seller has not been refused any insurance in connection with
          the Division or CAT, nor has any coverage been limited by
          any insurance carrier to which Seller has applied for such
          insurance or with which Seller has carried such insurance in
          the last three years.

                    3.17  Labor Matters.  Except as set forth in
          Section 3.17 of the Seller Disclosure Schedule, with respect
          to the Division, (a) Seller is in compliance in all material
          respects with all applicable laws regarding employment and
          employment practices, terms and conditions of employment,
          wages, hours of work and occupational safety and health, (b)
          Seller is not a party to or bound by any collective bargain-
          ing agreement or similar agreement with any labor organiza-
          tion, and, to the best knowledge of Seller, no union claims
          to represent Division employees, (c) there is no unfair
          labor practice charge or complaint against Seller pending
          or, to the best knowledge of Seller, threatened before the
          National Labor Relations Board or any similar state or
          foreign agency, nor is there any grievance or any arbitra-
          tion proceeding arising out of or under any collective
          bargaining agreement pending or, to the best knowledge of
          Seller, threatened against Seller, (d) there is no labor
          strike, slowdown, work stoppage or lockout pending or, to
          the best knowledge of Seller, threatened against Seller and
          (e) there is no charge or complaint pending or, to the best
          knowledge of Seller, threatened against Seller before the
          Equal Employment Opportunity Commission or any state, local
          or foreign agency responsible for the prevention of unlawful
          employment practices.  Except as set forth in Section 3.17
          of the Seller Disclosure Schedule, Seller has not received
          written notice of the intent of any federal, state, local or
          foreign agency responsible for the enforcement of labor or
          employment laws to conduct an investigation of or relating
          to Seller with respect to the Division, and, to the best
          knowledge of Seller, no such investigation is in progress or
          threatened.

                    3.18  Assets of the Division Business.  All of the
          Assets are used exclusively or primarily in the conduct of
          the Division Business other than the CAT Shares and certain
          Intellectual Property.

                    3.19  Disclosure.  No representation or warranty
          by Seller contained in this Agreement, and no statement
          contained in any document (including, without limitation,
          the Seller Related Instruments, the Financial Statements,
          the CAT Financial Statements, the Division Financial State-
          ments and the Seller Disclosure Schedule), list, certificate
          or other writing furnished or to be furnished by or on
          behalf of Seller to Buyer or any of its representatives
          pursuant to this Agreement, contains or will contain any
          untrue statement of a material fact, or omits or will omit
          to state any material fact necessary, in the light of the
          circumstances under which it was or will be made, in order
          to make the statements herein or therein not misleading, or
          necessary in order to fully and fairly provide the informa-
          tion required to be provided in any such document, list,
          certificate or other writing.

                    3.20  Environmental Matters.

                         (a)  Except as set forth in Section 3.20(a)
          of the Seller Disclosure Schedule, Seller is in compliance
          in all material respects with all applicable federal, state,
          local and foreign laws and regulations relating to pollution
          or protection of human health or the environment ("Environ-
          mental Laws") with respect to the Division (which compliance
          includes, but is not limited to, the possession by Seller of
          all permits and other governmental authorizations required
          under applicable Environmental Laws with respect to the
          Division, and compliance with the terms and conditions
          thereof).

                         (b)  Except as set forth in Section 3.20(b)
          of the Seller Disclosure Schedule, there is no Environmental
          Claim pending or, to the best knowledge of Seller, threat-
          ened against Seller relating to the Division or, to the best
          knowledge of Seller, against any person or entity whose
          liability for any Environmental Claim the Division has or
          may have retained or assumed either contractually or by
          operation of law which would reasonably be expected to
          result in a Material Adverse Effect on the Division Business
          or would result in any liability, cost or expense to Buyer
          or any of its affiliates (other than the Liabilities or
          other liabilities and obligations not in excess of $50,000
          in the aggregate).  As used herein, "Environmental Claim"
          means any claim, action, cause of action, investigation or
          notice (written or oral) by any person or entity alleging
          potential liability arising out of, based on or resulting
          from (i) the presence, or release, spill, discharge, emis-
          sion, leaching or migration into the indoor or outdoor
          environment, of any Hazardous Materials at any location,
          whether or not owned or operated by Seller, or (ii) circum-
          stances forming the basis of any violation, or alleged
          violation, of any Environmental Law.

                         (c)  Except as set forth in Section 3.20(c)
          of the Seller Disclosure Schedule, the Seller has not and,
          to the best knowledge of Seller, no other person has placed,
          stored, deposited, discharged, buried, dumped or disposed of
          substances defined as Hazardous Substances, Oils, Pollutants
          or Contaminants in the National Oil and Hazardous Substances
          Pollution Contingency Plan, 40 C.F.R. SECTION 300.5, or defined as
          such by, or regulated as such under, any Environmental Law
          ("Hazardous Materials") or any other wastes produced by, or
          resulting from, any business, commercial or industrial
          activities, operations or processes, on, beneath or adjacent
          to any property currently or formerly owned, operated or
          leased by the Seller for use in the Division, except for
          inventories of such substances to be used, and wastes gener-
          ated therefrom, in the ordinary course of business of Seller
          (which inventories and wastes, if any, were and are stored
          or disposed of in accordance in all material respects with
          applicable Environmental Laws and in a manner such that
          there has been no Release of any such substances into the
          indoor or outdoor environment in violation of Environmental
          Laws).

                         (d)  Without limiting the generality of the
          foregoing, except as set forth in Section 3.20(d) of the
          Seller Disclosure Schedule, to the best knowledge of Seller,
          none of the properties owned, operated or leased by Seller
          and used by the Division contain any: underground storage
          tanks; asbestos; polychlorinated biphenyls ("PCBs"); or
          septic tanks or waste disposal pits in which process
          wastewater or any Hazardous Materials have been discharged
          or disposed.

                    3.21  Opinion of Financial Advisor.  Seller has
          received an opinion from Ladenburg, Thalmann & Co., Inc. to
          the effect that the consideration to be received by Seller
          represents reasonable equivalent value and fair consider-
          ation for the CAT Shares and the Assets and a copy of such
          opinion has been provided to ATSC.

                    3.22  Brokers.  No broker, finder or financial
          advisor or other person is entitled to any brokerage fees,
          commissions, finders' fees or financial advisory fees in
          connection with the transactions contemplated hereby by
          reason of any action taken by Seller or any of its affili-
          ates, employees, representatives or agents.

                    3.23  Intellectual Property.  Seller has no regis-
          tered patents, trademarks, copyrights, service marks, or
          applications therefor relating to the Division Business. 
          Except as set forth in Section 3.23 of the Seller Disclosure
          Schedule, Seller (a) owns or licenses the Intellectual
          Property related to or used in the conduct of the Division
          Business free and clear of all Liens, (b) Seller has the
          right to transfer its interest in the Intellectual Property
          to Buyer, (c) no claims have been asserted or, to the best
          knowledge of Seller, threatened against Seller with respect
          to the ownership, use or transfer by Seller of the Intellec-
          tual Property, and (d) to the best knowledge of Seller, no
          third party is in violation of any of Seller's rights in the
          Intellectual Property.

                    3.24  Absence of Violations of Quotas and Visas. 
          Except as set forth in Section 3.24 of the Seller Disclosure
          Schedule, Seller, with respect to the Division Business, is
          not in violation in any material respect of any visa or
          quota restrictions under any trade agreements, including,
          without limitation, the Multifiber Arrangement or other
          arrangements under the General Agreement on Tariffs and
          Trade.

                    3.25  No Tariffs or Duties.  With respect to the
          Division Business, Seller's payment of all tariffs and
          duties are current in all jurisdictions, and Seller does not
          owe any tariffs or duties other than those incurred in the
          ordinary course of business (a) under any trade agreements,
          including, without limitation, The North American Free Trade
          Agreement, Caribbean Basin Economic Recovery or the Jackson-
          Vanik Amendment to the Trade Act of 1974; and (b) to the
          U.S. Customs Service.

                    3.26  Compliance with U.S. Customs and Trade Laws. 
          Seller, with respect to the Division Business, is not in
          violation in any material respect of any U.S. Customs or
          trade laws, including, without limitation, laws pertaining
          to country-of-origin, marking or labeling.

                    3.27  SEC Documents.  Seller has filed all docu-
          ments required to be filed by it with the Securities and
          Exchange Commission (the "SEC") since January 1995 (the
          "Seller SEC Documents").  As of their respective dates, the
          Seller SEC Documents complied in all material respects with
          the requirements of the Securities Act of 1933, as amended
          (the "Securities Act"), or the Exchange Act, as the case may
          be, and none of Seller's SEC Documents contained any untrue
          statement of a material fact or omitted to state any materi-
          al fact required to be stated therein or necessary to make
          the statements therein, in light of the circumstances under
          which they were made, not misleading.  The consolidated
          financial statements of Seller included in the Seller SEC
          Documents complied as to form in all material respects with
          the applicable accounting requirements and the published
          rules and regulations of the SEC with respect thereto. 
          Since January 28, 1995, Seller has not made any change in
          the accounting practices or policies applied in the prepara-
          tion of its financial statements.

                    3.28  Compliance with Laws by CAT; Licenses. 
          Except as set forth in Section 3.28(a) of the Seller Disclo-
          sure Schedule, CAT has been, and is being, operated in
          compliance with all applicable laws, statutes, ordinances,
          rules, regulations and orders of all Governmental Entities,
          except for laws the violation of which, individually or in
          the aggregate, would not reasonably be expected to have a
          Material Adverse Effect on CAT, would not prevent or delay
          Seller's ability, or, to the best knowledge of Seller,
          Buyer's ability, to consummate the transactions contemplated
          hereby, would not impair in any material respect Buyer's
          ability to operate CAT as currently operated, or would not
          result in any liability, cost or expense of CAT being in-
          curred by Buyer or any of its affiliates, or the Division. 
          Section 3.28(b) of the Seller Disclosure Schedule sets forth
          a true, correct and complete list of all Permits possessed
          by Seller or CAT in connection with the operation of CAT as
          currently operated, which are all the Permits required in
          connection with the operation of CAT as currently operated
          under applicable laws, statutes, ordinances, rules, regula-
          tions and orders, except where the failure to possess such
          Permits, individually or in the aggregate, would not reason-
          ably be expected to have a Material Adverse Effect on CAT,
          would not prevent or delay Seller's ability, or, to the best
          knowledge of Seller, Buyer's ability, to consummate the
          transactions contemplated hereby, would not impair in any
          material respect Buyer's ability to operate CAT as currently
          operated or would not result in any liability, cost or
          expense (other than liabilities and obligations not in
          excess of $50,000 in the aggregate) of CAT being incurred by
          Buyer.

                    3.29  CAT Taxes.

                         (a)  CAT and any affiliated group, within the
          meaning of Section 1504 of the Code (or similar provision of
          state law), of which CAT is or has been a member, have,
          except as set forth in Section 3.29 of the Seller Disclosure
          Schedule, (i) duly filed with the appropriate federal,
          state, local and foreign taxing authorities all Tax Returns
          (as hereinafter defined) required to be filed by or with
          respect to CAT and such Tax Returns are true, correct and
          complete in all material respects; (ii) paid in full or have
          made adequate provision on their balance sheets (in accor-
          dance with GAAP) for all Taxes (as hereinafter defined)
          shown to be due on such tax returns; and (iii) satisfied in
          full all withholding tax requirements.  There are no Liens
          for Taxes upon the assets of CAT except for statutory liens
          for current taxes not yet due and payable or which may
          hereafter be paid without penalty or which are being con-
          tested in good faith by appropriate proceedings.  Except as
          set forth in Section 3.29 of the Seller Disclosure Schedule,
          there is not in force any extension of time with respect to
          the due date for the filing of any Tax Return of, or with
          respect to, CAT or any waiver or agreement for any extension
          of time for the assessment or payment of any Tax of, or with
          respect to, CAT, and CAT has not received any notice of
          deficiency or assessment from any federal, state, local or
          foreign taxing authority with respect to liabilities for
          Taxes of CAT which has not been fully paid or finally set-
          tled.

                         (b)  For purposes of this Agreement, "Tax" or
          "Taxes" shall mean (i) any tax of any kind, including,
          without limitation, all income, property, sales, use, occu-
          pation, franchise, excise, value added, employees' income
          withholding and social security taxes, and related to such
          taxes, charges, fees, levies, penalties or other assess-
          ments, imposed by the United States or by any foreign coun-
          try or by any state, municipality, subdivision or instrumen-
          tality of the United States or of any foreign country, or by
          any other taxing authority and (ii) any interest thereon.

                         (c)  For purposes of this Agreement, "Tax
          Return" shall mean any return, report, information return or
          other document (including any related or supporting informa-
          tion) with respect to Taxes.

                    3.30  Acquisition of the ATSC Common Stock for
          Investment; Securities Act.  Seller is acquiring the shares
          of ATSC Common Stock to be issued pursuant to Section 1.2(a)
          hereof for investment purposes only and not with a view
          toward, or for sale in connection with, any distribution
          thereof, nor with any present intention of distributing or
          selling such shares in violation of federal, state or other
          securities laws.  Seller agrees that it will not sell,
          transfer, offer for sale, pledge, hypothecate or otherwise
          dispose of such shares of ATSC Common Stock in violation of
          any federal, state or other securities laws.  Seller ac-
          knowledges that the ATSC Common Stock is subject to market
          and other conditions beyond the control of ATSC and agrees
          that neither ATSC nor any of its agents, representatives,
          employees or affiliates has or shall have any liability or
          responsibility whatsoever to Seller on any basis (including,
          without limitation, in contract or tort, under federal or
          state securities laws, or otherwise), except as and to the
          extent expressly set forth herein and subject to the limita-
          tions and restrictions contained herein.  The foregoing
          shall not be deemed a waiver of or a limitation on Seller's
          rights as a stockholder of ATSC with regard to circumstances
          or events occurring after the Closing Date and bearing no
          relation to the acquisition by Seller of shares of ATSC
          Common Stock pursuant to this Agreement.

                    3.31  Suppliers.  Section 3.31 of the Seller
          Disclosure Schedule sets forth (i) a list of all suppliers
          of each of CAT and the Division to whom CAT or Seller made
          payments in excess of $250,000 during the fiscal year ended
          February 3, 1996 and (ii) the dollar amount of payments made
          to each such supplier in such fiscal year.  No supplier
          required to be listed in Section 3.31 of the Seller Disclo-
          sure Schedule has (i) given notice to either CAT or Seller
          that it intends to terminate its relationship with CAT or
          Seller, as the case may be, or (ii) threatened in writing to
          terminate its relationship with CAT or Seller, as the case
          may be.  To the best knowledge of Seller, no supplier re-
          quired to be listed in Section 3.31 of the Seller Disclosure
          Schedule is likely to pursue a course of action having
          either the purpose or effect of terminating its relationship
          with either CAT or the Division if the transactions contem-
          plated by this Agreement are consummated.

                    3.32  Disclaimer of Other Representations and
          Warranties.  Except as expressly set forth in this Article
          III, Seller makes no representation or warranty, express or
          implied, at law or in equity, in respect of CAT, the Assets,
          the Division or the Division Business, including, without
          limitation, with respect to merchantability or fitness for
          any particular purpose or the future performance of CAT or
          the Division Business, and any such other representations or
          warranties are hereby expressly disclaimed.

          IV.  REPRESENTATIONS AND WARRANTIES OF ATSC AND BUYER.

                    ATSC and Buyer hereby represent and warrant to
          Seller as follows:

                    4.1  Organization of ATSC and Buyer; Authority.

                         (a)  Each of ATSC and Buyer is a corporation
          duly organized, validly existing and in good standing under
          the laws of the State of Delaware.  Each of ATSC and Buyer
          has all requisite corporate power and authority to own,
          lease and operate its properties and assets and to conduct
          its business as it is now being conducted.  Each of ATSC and
          Buyer is duly qualified or licensed to do business as a
          foreign corporation and is in good standing in each juris-
          diction in which the property or assets owned, leased or
          operated by it or the nature of the business conducted by it
          makes such qualifications necessary, except in those juris-
          dictions where the failure to have such power and authority
          or to be so duly qualified or licensed and in good standing
          would not, individually or in the aggregate, reasonably be
          expected to have a Material Adverse Effect on ATSC or Buyer,
          respectively.  

                         (b)  Each of ATSC and Buyer has all requisite
          corporate power and authority to enter into this Agreement
          and any instruments and agreements contemplated herein
          required to be executed and delivered by it pursuant to this
          Agreement (including, without limitation, as applicable, the
          Ancillary Agreements, the Assignment and Assumption Agree-
          ments, the Undertaking and the Advance Instrument) (collec-
          tively, the "Buyer Related Instruments") and to consummate
          the transactions contemplated hereby and thereby.  The
          execution, delivery and performance of this Agreement and
          the Buyer Related Instruments to which it is a party and the
          consummation of the transactions contemplated hereby and
          thereby, have been duly authorized by all necessary corpo-
          rate action on the part of each of ATSC and Buyer.  This
          Agreement has been, and each of the Buyer Related Instru-
          ments to which it is a party, when executed and delivered
          will be, duly executed and delivered by each of ATSC and
          Buyer and this Agreement constitutes, and each of the Buyer
          Related Instruments to which it is a party will, when exe-
          cuted and delivered, constitute, a valid and binding obliga-
          tion of each of ATSC and Buyer, enforceable against each of
          ATSC and Buyer in accordance with its terms, except that (a)
          such enforcement may be subject to any bankruptcy, insolven-
          cy, reorganization, moratorium, or other laws, now or here-
          after in effect, relating to or limiting creditors' rights
          generally and (b) the remedy of specific performance and
          injunctive and other forms of equitable relief may be sub-
          ject to equitable defenses and to the discretion of the
          court before which any proceeding therefor may be brought. 
          Each of ATSC and Buyer shall deliver to Seller true, correct
          and complete copies of resolutions duly and validly adopted
          by their respective board of directors, evidencing the
          authorization of the execution and delivery of this Agree-
          ment and the Buyer Related Instruments, as applicable, to
          which it is a party and the consummation of the transactions
          contemplated hereby and thereby.

                    4.2  No Violation; Consents and Approvals.

                         (a)  Subject to the consents, approvals or
          filings referred to in Section 4.2(b) and Section 4.2(c)
          hereof, the execution and delivery of this Agreement by each
          of ATSC and Buyer and the Buyer Related Instruments to which
          it is a party do not, and the consummation of the transac-
          tions contemplated hereby or thereby and compliance with the
          terms hereof or thereof will not, (i) conflict with, or
          result in any violation of or default under, (A) any provi-
          sion of the charter or by-laws of either ATSC or Buyer or
          (B) any judgment, order or decree, or statute, law, ordi-
          nance, rule or regulation of any Governmental Entity appli-
          cable to either ATSC or Buyer, or the assets of either ATSC
          or Buyer; or (ii) conflict with, or result in any breach or
          violation of or constitute a default (or an event or condi-
          tion which, with notice or lapse of time or both, would
          constitute a default) under, or result in the termination
          of, or accelerate the performance required by, or cause the
          acceleration of any maturity of any liability or obligation
          pursuant to, or result in the creation or imposition of any
          Lien under, any note, bond, mortgage, indenture, license,
          contract, agreement, lease or other instrument or obligation
          to which either ATSC or Buyer is a party or by which either
          may be bound or affected, except where the conflict, viola-
          tion, default, breach, termination, acceleration, creation
          or imposition would not reasonably be expected to have a
          Material Adverse Effect on ATSC or Buyer, would not prevent
          or delay ATSC's or Buyer's ability, or, to the best knowl-
          edge of ATSC and Buyer, Seller's ability, to consummate the
          transactions contemplated hereby or would not result in any
          liability, cost or expense to Seller or any of its affili-
          ates (other than liabilities and obligations not in excess
          of $50,000 in the aggregate).

                         (b)  No consent, approval, order or authori-
          zation of, or registration, declaration or filing with, any
          Governmental Entity is required to be obtained or made in
          connection with the execution and delivery by ATSC or Buyer
          of this Agreement or the Buyer Related Instruments to which
          each is a party, or the consummation by ATSC or Buyer of the
          transactions contemplated hereby or thereby or compliance by
          ATSC and Buyer with the terms hereof or thereof, other than
          (i) compliance with and filings under the HSR Act, (ii)
          compliance with and filings under Section 13(a) of the
          Exchange Act and (iii) those the failure of which to obtain
          would not reasonably be expected to have a Material Adverse
          Effect on ATSC or Buyer, would not prevent or delay ATSC's
          or Buyer's ability, or, to the best knowledge of ATSC and
          Buyer, Seller's ability, to consummate the transactions
          contemplated hereby or would not result in any liability,
          cost or expense to Seller or any of its affiliates (other
          than liabilities and obligations not in excess of $50,000 in
          the aggregate).

                         (c)  Except for the consent of the lenders
          under Buyer's existing credit facility, no consent, approv-
          al, order or authorization of, notice to or registration,
          declaration or filing with, any third party is required to
          be obtained or made by or with respect to Buyer or ATSC in
          connection with the execution and delivery by either ATSC or
          Buyer of this Agreement or any Buyer Related Instrument, or
          the consummation of the transactions contemplated hereby or
          thereby or compliance by ATSC or Buyer of the terms hereof
          or thereof, except where the failure to obtain any consent,
          approval, order or authorization, or to give notice, or to
          make any registration, declaration or filing would not
          reasonably be expected to have a Material Adverse Effect on
          ATSC or Buyer, would not prevent or delay ATSC's or Buyer's
          ability, or, to the best knowledge of ATSC and Buyer,
          Seller's ability, to consummate the transactions contemplat-
          ed hereby or would not result in any liability, cost or
          expense to Seller (other than liabilities and obligations
          not in excess of $50,000 in the aggregate).

                    4.3  Litigation/Claims.  Except as set forth in
          Section 4.3 of the Disclosure Schedule being delivered by
          Buyer to Seller concurrently herewith (the "Buyer Disclosure
          Schedule"), there is (i) no claim, action, suit or proceed-
          ing pending or, to the best knowledge of ATSC or Buyer,
          threatened and (ii) to the best knowledge of ATSC and Buyer,
          no investigations or inquiries pending or threatened by or
          before any Governmental Entity, or by or on behalf of any
          third party, in either case, which challenges the validity
          of this Agreement or any Buyer Related Instrument or which,
          if adversely determined, would, individually or in the
          aggregate, reasonably be expected to have a Material Adverse
          Effect on ATSC or Buyer, or would adversely affect the
          ability of ATSC or Buyer to consummate the transactions
          contemplated by this Agreement and the Buyer Related Instru-
          ments or comply with the terms hereof or thereof.

                    4.4  SEC Documents and Other Reports.  ATSC has
          filed all documents required to be filed by it with the SEC
          since January 1995 (the "ATSC SEC Documents").  As of their
          respective dates, the ATSC SEC Documents complied in all
          material respects with the requirements of the Securities
          Act or the Exchange Act, as the case may be, and none of the
          ATSC SEC Documents contained any untrue statement of a
          material fact or omitted to state any material fact required
          to be stated therein or necessary to make the statements
          therein, in light of the circumstances under which they were
          made, not misleading.  The consolidated financial statements
          of ATSC included in the ATSC SEC Documents complied as to
          form in all material respects with the applicable accounting
          requirements and the published rules and regulations of the
          SEC with respect thereto, have been prepared in accordance
          with GAAP (except, in the case of the unaudited statements,
          as permitted by Form 10-Q of the SEC) applied on a consis-
          tent basis during the periods involved (except as may be
          indicated therein or in the notes thereto) and fairly pres-
          ent the consolidated financial position of ATSC and its
          consolidated subsidiaries as at the respective dates thereof
          and the consolidated results of their operations and their
          consolidated cash flows for the respective periods then
          ended (subject, in the case of the unaudited statements, to
          normal year-end audit adjustments and to any other adjust-
          ments described therein and the absence of footnotes). 
          Since January 28, 1995, ATSC has not made any change in the
          accounting practices or policies applied in the preparation
          of its financial statements.

                    4.5  Capital Stock.

                         (a)  ATSC's authorized capitalization is as
          set forth in the ATSC SEC Documents.  All of ATSC's issued
          and outstanding capital stock has been duly authorized,
          validly issued and is fully paid and nonassessable.

                         (b)  The ATSC Common Stock to be issued to
          Seller has been duly and validly authorized for issuance by
          ATSC and ATSC has the corporate power and authority to
          issue, sell and deliver the ATSC Common Stock to be sold by
          it hereunder; and, when the ATSC Common Stock is issued and
          delivered to Seller against payment therefor as provided by
          this Agreement, the shares of ATSC Common Stock issued to
          Seller hereunder will have been validly issued, fully paid
          and nonassessable, and the issuance of such shares will not
          be subject to any preemptive or similar rights.

                         (c)  The shares of ATSC Common Stock to be
          issued to Seller at the Closing will be duly approved for
          listing on the New York Stock Exchange or such other securi-
          ties exchange on which the ATSC Common Stock is then listed,
          subject to official notice of issuance.

                    4.6  Absence of Certain Changes or Events.  Since
          February 3, 1996, (a) there has not been any Material Ad-
          verse Effect on ATSC or Buyer and (b) neither ATSC nor Buyer
          has taken any action, no event has occurred and no condition
          exists that would violate Section 5.20 hereof.

                    4.7  Information Supplied.  None of the informa-
          tion supplied or to be supplied by ATSC or Buyer in writing
          for inclusion in the Proxy Statement (as hereinafter de-
          fined) relating to the Annual Meeting will, at the time of
          mailing of the Proxy Statement to stockholders of Seller and
          at the time of the Annual Meeting to be held in accordance
          with Section 5.17, contain any untrue statement of a materi-
          al fact or omit to state any material fact required to be
          stated therein or necessary in order to make the statements
          therein, in light of the circumstances under which they are
          made, not misleading.

                    4.8  Brokers.  No broker, finder or financial
          advisor or other person is entitled to any brokerage fees,
          commissions, finders' fees or financial advisory fees in
          connection with the transactions contemplated hereby by
          reason of any action taken by Buyer or any of its directors,
          officers, employees, representatives or agents.

                    4.9  Disclaimer of Other Representations and
          Warranties.  Except as expressly set forth in this Article
          IV, neither ATSC nor Buyer makes any representation or
          warranty, express or implied, at law or in equity, in re-
          spect of ATSC or Buyer, including, without limitation, with
          respect to the future market value of the ATSC Common Stock
          issued to Seller pursuant to Section 1.2(a)(i) hereof.

          V.  COVENANTS OF THE PARTIES

                    5.1  Conduct of the Division Business.  Except as
          expressly permitted by this Agreement, during the period
          from the date of this Agreement to the Closing Date, Seller
          shall conduct the Division Business, and shall cause CAT to
          conduct the business of CAT, in the ordinary course consis-
          tent with past practice and use its reasonable best efforts
          to preserve their respective current relationships with
          suppliers, contract manufacturers, factors and others having
          business dealings with them.  Without limiting the generali-
          ty of the foregoing, except as set forth in Section 5.1 of
          the Seller Disclosure Schedule, during the period from the
          date of this Agreement to the Closing Date, without the
          prior written consent of Buyer, Seller, with respect to the
          Division, shall not, and shall cause CAT not to:

                         (a)  cause CAT or the Division, as the case
          may be, to incur any liabilities, obligations or indebted-
          ness of any nature (whether absolute, accrued, contingent or
          otherwise and whether due or to become due), except items
          incurred in the ordinary course of business and consistent
          with past practice, none of which shall exceed, except in
          connection with the manufacture of women's apparel for Buyer
          pursuant to purchase orders and/or written fabric commit-
          ments provided by Buyer (as to which there shall not be any
          such dollar limitation), $50,000 (counting liabilities or
          obligations arising from one transaction or a series of
          related transactions, and all periodic installments or
          payments under any lease or other agreement providing for
          periodic installments or payments, as a single obligation or
          liability);

                         (b)  permit, allow or suffer any of the
          Assets or any assets of CAT, as the case may be, to be
          subjected to any Lien, restriction or charge of any kind,
          other than Permitted Liens and Liens in favor of The
          HongKong and Shanghai Banking Corporation, Mitsubishi Corpo-
          ration and Mitsubishi International Corporation existing on
          the date hereof;

                         (c)  fail to maintain the properties, machin-
          ery and equipment of CAT or the Division, as the case may
          be, in good operating condition and repair (ordinary wear
          and tear excepted);

                         (d)  fail to maintain all policies of insur-
          ance listed in Section 3.16 of the Seller Disclosure Sched-
          ule and all policies of insurance relating to CAT, as the
          case may be, in full force and effect, at least at such
          levels as are in effect on the date hereof, through and
          including the Closing Date; or take, or fail to take, any
          action that would enable the insurers under such policies to
          avoid liability for claims arising out of occurrences prior
          to the Closing;

                         (e)  revise, amend or enter into any employ-
          ment agreement or arrangement or pay any bonus or increase
          the rate of compensation of, or pay or agree to pay any
          benefit to, including, without limitation, severance bene-
          fits, any CAT Employee or any Affected Employee, as the case
          may be, except as may be required by any Plan or by applica-
          ble law; provided, however, that Seller may implement
          planned annual increases in the rates of compensation in the
          ordinary course of business consistent with past practice,
          provided that such increases are disclosed to Buyer prior to
          becoming effective;

                         (f)  enter into, adopt or amend any Plan,
          except as may be required by applicable law;

                         (g)  sell any inventory other than to Buyer
          in the ordinary course of business or inventory rejected by
          Buyer in the ordinary course of business, or sell, lease,
          transfer or otherwise dispose of any other Asset or any
          asset of CAT, as the case may be, other than in the ordinary
          course of business;

                         (h)  acquire or agree to acquire on behalf of
          CAT or the Division, as the case may be, any assets which
          are material, individually or in the aggregate, to CAT or
          the Division, as the case may be, other than fabric and
          other apparel components necessary to manufacture women's
          apparel pursuant to purchase orders issued by Buyer;

                         (i)  modify, amend or terminate any Lease or
          any Contract required to be listed in Section 3.14 of the
          Seller Disclosure Schedule or to which CAT is a party, as
          the case may be, or enter into any other contract, agreement
          or commitment by which CAT or the Division, as the case may
          be, or any Asset or any asset of CAT, as the case may be,
          may be bound, and, in the case of the Division, which would
          have been required to be listed in Section 3.14 of the
          Seller Disclosure Schedule had such agreement been entered
          into prior to the date of this Agreement, other than pur-
          chase and sale orders entered into in connection with the
          manufacture of women's apparel for Buyer pursuant to pur-
          chase orders issued by Buyer;

                         (j)  fail to maintain (i) the accounts and
          Books and Records of the Division and (ii) the accounts and
          books and records of CAT, as the case may be, in the usual,
          regular and ordinary manner on a basis consistently applied;

                         (k)  terminate, discontinue, close or dispose
          of any facility or business operation of CAT or the Divi-
          sion, as the case may be;

                         (l)  make any capital expenditure or any
          commitment for capital expenditures with respect to CAT or
          the Division, as the case may be, for additions to property,
          plant, equipment or intangible capital assets, which indi-
          vidually exceeds $50,000 or, in the aggregate, exceeds
          $250,000;

                         (m)  cancel any debt or waive any claim or
          right of substantial value with respect to CAT or the Divi-
          sion, as the case may be;

                         (n)  pay, loan or advance any amount to, or
          sell, transfer or lease any property or asset (real, person-
          al or mixed, tangible or intangible) to, any affiliate of
          Seller; or enter into any contract, agreement or commitment
          with any affiliate of Seller; or

                         (o)  agree, whether in writing or otherwise,
          to do any of the foregoing.

                    5.2  Access to Information; Confidentiality.

                         (a)  During the period from the date of this
          Agreement through the Closing Date, the parties hereto shall
          afford each other and their respective authorized represen-
          tatives such access during regular business hours to all
          plants, offices, warehouses, facilities and books and re-
          cords as each party and their respective representatives may
          reasonably request; provided, however, each party shall
          schedule their access and visits through a designated repre-
          sentative of the other party and in such a way as to avoid
          disrupting the normal business of the other party.

                         (b)  Each of ATSC, Buyer, Seller and CGFE
          shall hold, and shall cause its controlled affiliates,
          consultants and advisors to hold, any information which it
          receives in connection with the transactions contemplated by
          this Agreement in confidence in accordance with and subject
          to the terms of (i) the letter of confidentiality between
          Seller and ATSC, dated March 15, 1996, and (ii) the letter
          of confidentiality between Seller and ATSC, dated April 18,
          1996 (collectively, the "Confidentiality Agreements").

                    5.3  Financial Statements.

                         (a)  On or before June 10, 1996, Seller shall
          deliver to Buyer, the audited combined balance sheets of the
          Combined Entity as of January 28, 1995 and the audited
          combined income statements and statements of cash flows of
          the Combined Entity for the fiscal year ended January 28,
          1995 accompanied, in each case, by an unqualified report of
          Seller's independent public accountants, Ernst & Young, LLP
          (collectively, the "Combined Entity 1994 Audited Financial
          Statements"); and

                         (b)  Until the Closing, on or before the 30th
          day of each month beginning with the month following the
          execution of this Agreement, Seller shall deliver to Buyer
          unaudited balance sheets and income statements of Seller
          (the "Subsequent Monthly Financial Statements"), CAT (the
          "CAT Subsequent Monthly Financial Statements") and the
          Combined Entity (the "Combined Entity Subsequent Monthly
          Financial Statements"), as at and for the monthly period
          ending the last day of the preceding month, and as soon as
          available, but not later than 45 days after the end of each
          fiscal quarter, Seller shall deliver to Buyer unaudited
          balance sheets as of the end of such fiscal quarter and
          unaudited income statements and statements of cash flows for
          the three-month and year-to-date periods then ended, of
          Seller (the "Subsequent Quarterly Financial Statements"),
          CAT (the "CAT Subsequent Quarterly Financial Statements")
          and the Combined Entity (the "Combined Entity Subsequent
          Quarterly Financial Statements").  The Subsequent Monthly
          Financial Statements and the Subsequent Quarterly Financial
          Statements are referred to, collectively herein, as the
          "Subsequent Financial Statements".  The CAT Subsequent
          Monthly Financial Statements and the CAT Subsequent Quarter-
          ly Financial Statements are referred to, collectively,
          herein as the "CAT Subsequent Financial Statements".  The
          Combined Entity 1995 Audited Financial Statements, Combined
          Entity Subsequent Monthly Financial Statements and the
          Combined Entity Subsequent Quarterly Financial Statements
          are referred to, collectively, herein as the "Combined
          Entity Subsequent Financial Statements".  The Subsequent
          Financial Statements, the CAT Subsequent Financial State-
          ments and the Combined Entity Subsequent Financial State-
          ments shall be prepared in a format consistent with the
          Audited Financial Statements, the CAT Financial Statements
          and the Combined Entity Financial Statements, respectively.

                         (c)  Until the Closing, on or before the 30th
          day of each month beginning with the month following the
          execution of this Agreement, ATSC shall deliver to Seller
          unaudited consolidated balance sheets and income statements
          of ATSC, as at and for the monthly period ending the last
          day of the preceding month, and as soon as available, but
          not later than 45 days after the end of each fiscal quarter,
          ATSC shall deliver to Seller unaudited consolidated balance
          sheets as of the end of such fiscal quarter and unaudited
          income statements and statements of cash flows for the
          three-month and year-to-date periods then ended of ATSC. 
          Such financial statements shall be prepared in a manner
          consistent with ATSC's financial statements included in the
          ATSC SEC Documents.

                    5.4  Reasonable Best Efforts.  Subject to the
          terms and conditions of this Agreement, each of the parties
          hereto shall use its reasonable best efforts to take, or
          cause to be taken, all action, and to do, or cause to be
          done, all things necessary, proper or advisable under appli-
          cable laws and regulations to consummate the transactions
          contemplated by this Agreement no later than August 15,
          1996.  Each of the parties will use its reasonable best
          efforts to take all action and to do all things necessary,
          proper, or advisable in order to consummate and make effec-
          tive the transactions contemplated by this Agreement (in-
          cluding satisfaction, but not waiver, of the Closing condi-
          tions set forth in Articles VI, VII and VIII hereof).

                         5.5  Consents.  Without limiting the generality of
               Section 5.4 hereof, each of the parties hereto shall use its
               reasonable best efforts to obtain all licenses, permits,
               authorizations, consents and approvals of all third parties
               and Governmental Entities necessary in connection with the
               consummation of the transactions contemplated by this Agree-
               ment prior to the Closing, and shall use reasonable best
               efforts to obtain estoppel certificates from the landlords
               under the NY Lease and the FWM Lease.  Notwithstanding the
               foregoing, neither Buyer nor Seller shall have any obliga-
               tion to pay any fee to any third party for the purpose of
               obtaining any consent or approval or any costs and expenses
               of any third party resulting from the process of obtaining
               such consent or approval.  Each of the parties hereto shall
               make or cause to be made all filings and submissions under
               laws and regulations applicable to it as may be required for
               the consummation of the transactions contemplated by this
               Agreement.  Buyer and Seller shall coordinate and cooperate
               with each other in exchanging such information and assis-
               tance as any of the parties hereto may reasonably request in
               connection with the foregoing.

                         5.6  Antitrust Notification.  Buyer and Seller
               shall use their respective reasonable best efforts to obtain
               all authorizations or waivers required under the HSR Act to
               consummate the transactions contemplated hereby, including,
               without limitation, making all filings required in connec-
               tion therewith.

                         5.7  Public Announcements.  Neither Seller nor
               Buyer shall issue any report, statement or press release, or
               otherwise make any public statement, with respect to this
               Agreement or the Ancillary Agreements and the transactions
               contemplated hereby or thereby, without prior consultation
               with and approval of the other parties, except as may be
               required by federal, state, local or foreign securities laws
               or stock exchange rules, or as may be necessary in order to
               discharge its reporting or disclosure obligations under such
               laws or rules; provided, however, that Buyer may communicate
               with the Employees regarding its offer of employment pursu-
               ant to Section 2.8 hereof.

                         5.8  Access to Books and Records Following the
               Closing.  Following the Closing, Buyer shall permit Seller
               and its authorized representatives, during normal business
               hours and upon reasonable notice, to have reasonable access
               to, and examine and make copies of, all books and records
               which relate to transactions or events occurring prior to
               the Closing or transactions or events occurring subsequent
               to the Closing which are related to or arise out of transac-
               tions or events occurring prior to the Closing.  Buyer shall
               retain all books and records for a period of three years
               following the Closing.

                         5.9  Other Transactions.  Neither Seller nor any
               of its affiliates, whether acting directly or through any
               authorized agent, attorney or representative, shall, from
               the date hereof through the Closing Date (the "Exclusivity
               Period"), solicit, encourage or entertain any offers from
               any party other than Buyer, nor shall they, during the
               Exclusivity Period, initiate or enter into any form of
               preliminary discussion, negotiation for a purchase (or other
               acquisition), merger, share exchange or other consolidation,
               sale of stock or other equity securities or any other form
               or manner of transaction, howsoever described or denominat-
               ed, involving any material interest in CAT or the Division
               or any option or other contractual right with respect to any
               of the foregoing.  In the event Seller or any of its affili-
               ates receives any offer or proposal to enter into any such
               negotiations or other communication with a party other than
               Buyer during the Exclusivity Period, Seller will provide
               prompt notice of the same to Buyer.

                         5.10  Discharge of Liens.  Seller shall cause all
               Liens (other than Permitted Liens) on any real or personal
               property owned or leased by Seller which is included in the
               Assets to be terminated or otherwise discharged at or prior
               to the Closing.

                         5.11  Resignations.  At or prior to the Closing
               Date, each officer and director of CAT designated by Seller
               shall execute and deliver to Buyer a letter of resignation,
               effective at the Closing Date, as an officer or director of
               CAT.

                         5.12  Insurance.  From the date hereof through and
               including the Closing Date, Seller shall, at its sole ex-
               pense, maintain in full force and effect the insurance
               policies listed in Section 3.16 of the Seller Disclosure
               Schedule and such additional insurance policies as may be
               necessary to comply in all material respects with all re-
               quirements of law and the Leases.  As of the Closing, Seller
               hereby assigns to Buyer any and all assignable rights which
               Seller may have under such insurance policies covering
               claims related to the Assets or the Assumed Liabilities for
               the period on or prior to the Closing Date.

                         5.13  Supplementary Disclosure.  Seller shall
               promptly supplement or amend the Seller Disclosure Schedule
               and Buyer shall promptly supplement or amend the Buyer
               Disclosure Schedule with respect to any matter hereafter
               arising or discovered which, if existing or known at the
               date of this Agreement, would have been required to be set
               forth or listed in the Seller Disclosure Schedule or Buyer
               Disclosure Schedule, respectively; provided, however, that
               for the purpose of the rights and obligations of the parties
               hereunder, any such supplemental or amended disclosure shall
               not affect the other party's ability to rely on the condi-
               tion set forth in Section 7.1(a) or 8.1(a), as the case may
               be, unless so agreed to in writing by Buyer, as to the
               Seller Disclosure Schedule, or Seller, as to the Buyer
               Disclosure Schedule.

                         5.14  Brazil Sourcing.  Buyer shall use (i) rea-
               sonable best efforts to enter into a new consulting agree-
               ment with John Peter M. Gordon, the head of Seller's Brazil-
               ian sourcing operations, pursuant to which Buyer shall
               compensate Mr. Gordon in the amount of $240,000 per year
               through July 31, 1998, and (ii) reasonable best efforts to
               cause Seller and its affiliates to be released from their
               obligations under the Consulting Agreement, dated
               February 1, 1995, between Tralee, S.A., an affiliate of
               Seller, and Mr. Gordon (the "Existing Gordon Agreement"). 
               Buyer shall not assume the Existing Gordon Agreement or any
               of Seller or its affiliate's obligations thereunder.

                         5.15  Letters of Credit.  

                              (a)  At least ten (10) business days prior to
               Closing, Seller shall provide a schedule of all letters of
               credit as of the Closing Date (i) for raw materials and
               making charges relating to fabric and work-in-progress
               included in the Assets and (ii) securing Seller's or its
               affiliate's obligations under the NY Lease.  At the Closing,
               Buyer shall substitute letters of credit or provide an
               alternative form of financial support; provided, that Buyer
               shall replace only that portion of the letters of credit for
               the NY Lease that relate to the sixth floor of the leased
               premises.

                              (b)  Seller shall reimburse Buyer for all
               finance charges incurred by CAT as the result of the opening
               of letters of credit by CAT for the benefit of Seller in
               connection with piece goods purchases, FOB garment purchases
               and CMT purchases relating to certain products of the Divi-
               sion pursuant to Buyer purchase orders.

                         5.16  Amendment.  At the election of Buyer, this
               Agreement shall be amended in a manner reasonably acceptable
               to Seller to provide for (i) the transfer and sale of the
               Assets to CAT and assumption of the Liabilities by CAT prior
               to Closing, and (ii) the subsequent purchase of the CAT
               Shares by Buyer for the Purchase Price, provided that Seller
               determines in good faith that such amendment will not have a
               material adverse tax or other material economic consequences
               to it.

                         5.17  Proxy Statement; Stockholder Approval.

                              (a)  Seller, acting through its Board of
               Directors, shall, subject to and in accordance with applica-
               ble law and its Certificate of Incorporation, as amended,
               and its By-Laws, (i) file with the Securities and Exchange
               Commission (the "Commission") its preliminary proxy materi-
               als (the "Preliminary Proxy Materials") relating to the
               Annual Meeting as soon as possible; (ii) promptly and duly
               call, give notice of, convene and hold an annual meeting of
               stockholders of Seller ("Annual Meeting") and shall hold
               such meeting not later than twenty-three (23) days subse-
               quent to the date on which the Proxy Statement (as hereinaf-
               ter defined) is cleared with the Commission (provided that,
               if such day is not a business day, then the Annual Meeting
               shall be held on the next business day); (iii) at such
               Annual Meeting, introduce a proposal (the "Proposal") to
               approve and adopt this Agreement and the transactions con-
               templated hereby, and recommend approval and adoption of
               this Agreement and the transactions contemplated hereby by
               the stockholders of Seller and include in the definitive
               proxy statement relating to the Annual Meeting (the "Proxy
               Statement") such recommendation; and (iv) take all reason-
               able action to solicit and obtain such approval.

                              (b)  Seller, as promptly as practicable,
               shall cause the Proxy Statement to be mailed to its stock-
               holders.  Seller shall not take any action that would re-
               quire the Proxy Statement to be delayed or recirculated
               under circumstances which would, in the reasonable judgment
               of Buyer, delay the occurrence of the Closing beyond     
               August 15, 1996.

                              (c)  Seller shall supply ATSC with copies of
               (i) the Preliminary Proxy Materials at least ten (10) busi-
               ness days in advance of filing with the Commission, (ii)
               copies of all correspondence with the Commission relating to
               the Preliminary Proxy Materials promptly upon receipt or
               delivery, as the case may be, by Seller, and (iii) copies of
               the Proxy Statement at least one (1) business day in advance
               of mailing to Seller's stockholders; provided, that in the
               cases of each clause (i)-(iii) above, Seller shall provide
               ATSC and its counsel with a reasonable opportunity for
               review thereof and comment thereon, such review to be con-
               ducted and such comments to be delivered with reasonable
               promptness.

                              (d)  On the date hereof, Mr. Bernard M.
               Manuel, Mrs. Isabelle Manuel, Mr. Irving Benson, Mrs. Dianne
               Benson and Mr. Roy E. Green, as trustee of the Bernard
               Manuel 1992 Irrevocable Trust for Children, are each execut-
               ing and delivering to Buyer a Proxy entitling Paul E. Fran-
               cis, Walter J. Parks and Jocelyn F.L. Barandiaran, each an
               officer of ATSC and Buyer to vote all shares of capital
               stock of Seller over which such person or entity has voting
               authority (i) for the approval and adoption of this Agree-
               ment and the transactions contemplated hereby and any and
               all related agreements and (ii) against any other transac-
               tion or proposal that could (x) prevent or delay the consum-
               mation of the transactions contemplated by this Agreement or
               (y) frustrate the purposes of this Agreement (each, a
               "Proxy").  On or before June 30, 1996, Seller shall deliver
               to Buyer executed Proxies from each of GJM International
               Limited, Fenn, Wright and Manson (Antilles) N.V., and Cleve-
               land Investment Limited, with respect to the shares of
               capital stock of Seller owned by such entities.  Seller
               shall use its reasonable best efforts to obtain a Proxy from
               Limited Direct Associates L.P. with respect to the shares of
               capital stock of Seller owned by it.

                         5.18  Occupancy.  Certain employees of Buyer and
               CAT are occupying the fifth and sixth floors of Seller's
               leased facility in New York City, New York.  Commencing the
               earlier of April 15, 1996 or the date on which such employ-
               ees began to occupy such floors, Seller shall charge Buyer
               and CAT, determined based upon head-count, a pro rata por-
               tion of the cash rental, rental tax and cleaning service
               costs.

                         5.19  Transfer Taxes.  Buyer shall be responsible
               for the timely payment of all transfer taxes and stamp duty
               taxes attributable to the transactions effected pursuant to
               this Agreement which are not measured by gain or income
               realized by Seller ("Transfer Taxes").  Upon Buyer's request
               on or after the Closing Date, Seller shall pay to Buyer an
               amount equal to 50% of all Transfer Taxes paid or to be paid
               by Buyer.  Buyer shall prepare or cause to be prepared and
               timely file or cause to be timely filed all tax returns
               required to be filed in respect of Transfer Taxes (other
               than any notices required to be given under any applicable
               bulk sales laws) and, to the extent that Buyer so requests,
               Seller shall sign such tax returns and notices and fully
               cooperate with Buyer in connection with such filings.

                         5.20  Conduct of ATSC Business.  Except as ex-
               pressly permitted by this Agreement, during the period from
               the date of this Agreement to the Closing Date, ATSC (a)
               shall conduct its business in the ordinary course consistent
               with past practice and use its reasonable best efforts to
               preserve its current relationships with suppliers, contract
               manufacturers, factors and others having business dealings
               with it, (b) shall not effect a stock split or combination
               with respect to, declare a stock dividend on or engage in a
               recapitalization of, the ATSC Common Stock or (c) shall not,
               and shall not permit any of its affiliates to, take any
               action which would reasonably be expected to have a Material
               Adverse Effect on CAT or the Division Business.

               VI.  CONDITIONS TO OBLIGATIONS OF BOTH PARTIES.

                         6.1  Conditions.  The respective obligations of
               each party to effect the transactions contemplated by this
               Agreement shall be subject to the satisfaction or waiver of
               the following conditions:

                              (a)  the stockholders of Seller shall have
               approved the transactions contemplated by this Agreement.

                              (b)  No statute, rule, regulation, order,
               decree or injunction shall have been enacted, entered,
               promulgated or enforced by a Governmental Entity which
               prohibits the consummation of the transactions contemplated
               by this Agreement and shall be in effect; provided, that the
               parties shall use their reasonable best efforts to have any
               such injunction lifted.

                              (c)  The waiting period under the HSR Act
               with respect to the transactions contemplated by this Agree-
               ment shall have expired or been terminated.

                              (d)  Each of Mitsubishi International Corpo-
               ration, Mitsubishi Corporation and HongKong and Shanghai
               Banking Corporation shall have consented to the transactions
               contemplated by this Agreement and released any Liens held
               by them on the Assets and the CAT Shares not later than
               June 30, 1996.  Seller and Buyer shall use reasonable best
               efforts to cause the consents required by this Subsection
               6.1(d) to include an acknowledgment of fair value, a waiver
               of any fraudulent transfer claims and a waiver of any right
               to participate in any recovery of fraudulent transfer claims
               brought by the debtor in possession or trustee.

                              (e)  Landlords' Consents.  In the event Buyer
               enters into the Subleases at the time of Closing, then
               Seller shall have obtained from the landlords under the NY
               Lease and the FWM Lease its consent to such Subleases.

               VII.  CONDITIONS TO OBLIGATIONS OF SELLER.

                         7.1  Conditions.  The obligations of Seller to
               consummate the transactions contemplated by this Agreement
               are subject to the fulfillment at or prior to the Closing of
               each of the following conditions (any or all of which, to
               the extent permitted by law, may be waived in whole or in
               part by Seller):

                              (a)  Representations and Warranties.  The
               representations and warranties of Buyer in this Agreement
               qualified as to materiality shall be true, complete and
               correct in all respects, and those not so qualified shall be
               true, complete and correct in all material respects, as of
               the date when made and at and as of the Closing Date, as
               though such representations and warranties were made at and
               as of the Closing Date.

                              (b)  Performance.  Buyer shall have performed
               and complied with, in all material respects, all agreements,
               obligations, covenants and conditions required by this
               Agreement to be so performed or complied with by Buyer at or
               prior to the Closing.

                              (c)  Officer's Certificate.  Buyer shall have
               delivered to Seller a duly executed certificate, dated as of
               the Closing Date, certifying the fulfillment of the condi-
               tions specified in Subsections 7.1(a) and 7.1(b) hereof.

                              (d)  Opinion of Counsel.  Buyer shall have
               delivered to Seller an opinion of legal counsel of Buyer,
               dated the Closing Date, in substantially the form of Exhib-
               it L hereto.

                              (e)  Documents.  Seller shall have received
               the Instruments of Assignment, the Pledge Agreement, the
               Undertaking and the Ancillary Agreements, in each case, duly
               executed by each party thereto (other than Seller).

                              (f)  Release.  Seller shall have been re-
               leased from its obligations in respect of CAT's credit
               facility with HongKong and Shanghai Banking Corporation.

                              (g)  Material Change.  No event, occurrence,
               fact, condition, change or development shall have occurred
               or come to exist which, individually or in the aggregate,
               has had or resulted in, or would reasonably be expected to
               have or result in, a Material Adverse Effect on ATSC.

               VIII.  CONDITIONS TO OBLIGATIONS OF BUYER.

                         8.1  Conditions.  The obligations of Buyer to
               consummate the transactions contemplated by this Agreement
               are subject to the fulfillment at or prior to the Closing of
               each of the following conditions (any or all of which, to
               the extent permitted by law, may be waived in whole or in
               part by Buyer):

                              (a)  Representations and Warranties.  The
               representations and warranties of Seller in this Agreement
               qualified as to materiality shall be true, complete and
               correct in all respects, and those not so qualified shall be
               true, complete and correct in all material respects, as of
               the date when made and at and as of the Closing Date, as
               though such representations and warranties were made at and
               as of the Closing Date.

                              (b)  Performance.  Seller shall have per-
               formed and complied with, in all material respects, all
               agreements, obligations, covenants and conditions required
               by this Agreement to be so performed or complied with by
               Seller at or prior to the Closing.

                              (c)  Officer's Certificate.  Seller shall
               have delivered to Buyer a duly executed certificate, dated
               as of the Closing Date, certifying the fulfillment of the
               conditions specified in Subsections 8.1(a) and 8.1(b) here-
               of.

                              (d)  Opinion of Counsel.  Seller shall have
               delivered to Buyer an opinion of legal counsel to Seller,
               dated as of the Closing Date, in substantially the form of
               Exhibit M hereto.

                              (e)  Documents.  Buyer shall have received
               the Instruments of Assignment, the Pledge Agreement and the
               Ancillary Agreements, in each case, duly executed by each
               party thereto (other than Buyer);

                              (f)  CAT Credit Agreement.  HongKong and
               Shanghai Banking Corporation shall have entered into an
               amended and restated credit agreement with CAT on substan-
               tially the terms set forth in (or terms no less favorable to
               CAT than those set forth in) the Commitment Letter, dated
               April 22, 1996, the terms of which are satisfactory to ATSC
               and Buyer.

                              (g)  Lenders' Consent.  Buyer shall have
               obtained the consent of the lenders under Buyer's Second
               Amended and Restated Credit Agreement, dated as of September
               29, 1996, among Buyer and the Lenders named therein to the
               transactions contemplated by this Agreement.

                              (h)  Material Change.  No event, occurrence,
               fact, condition, change or development shall have occurred
               or come to exist which, individually or in the aggregate,
               has had or resulted in, or would reasonably be expected to
               have or result in, a Material Adverse Effect on the Division
               Business or on CAT.

                              (i)  Employment Agreements.  CAT shall have
               entered into a new employment agreement reasonably satisfac-
               tory to Buyer with Mr. Dwight Meyer.

               IX.  TERMINATION, AMENDMENT AND WAIVER.

                         9.1  Termination.  This Agreement may be terminat-
               ed and the transactions contemplated hereby may be abandoned
               at any time prior to the Closing:

                              (a)  by mutual written agreement of Buyer and
               Seller;

                              (b)  at any time after August 30, 1996 by
               either Buyer or Seller, if the Closing shall not have oc-
               curred, unless the Closing has not occurred due to the
               failure of such party to perform or comply with any of the
               agreements or covenants hereof to be performed or complied
               with by such party prior to the Closing; or

                              (c)  by either Buyer or Seller, if (i) the
               stockholders of Seller fail to approve the transactions
               contemplated by this Agreement at the Annual Meeting, or
               (ii) any event, fact or condition shall occur or exist that
               makes it impossible to satisfy a condition to such party's
               obligations to consummate the transactions contemplated by
               this Agreement, unless the occurrence or existence of such
               event, fact or condition shall be due to the failure of such
               party to perform or comply with any of the agreements or
               covenants hereof to be performed or complied with by such
               party prior to the Closing.

                         9.2  Procedure and Effect of Termination.  In the
               event of the termination of this Agreement and the abandon-
               ment of the transactions contemplated hereby pursuant to
               Section 9.1(b) or (c) hereof, written notice thereof shall
               forthwith be given by the party so terminating to the other
               party, and this Agreement shall terminate, and the transac-
               tions contemplated hereby shall be abandoned, without fur-
               ther action by Seller or Buyer.  If this Agreement is termi-
               nated pursuant to Section 9.1 hereof:

                              (a)  All confidential information received by
               the parties shall be treated in accordance with Section 5.2
               hereof and the Confidentiality Agreements referred to in
               such Section;

                              (b)  all filings, applications and other
               submissions made pursuant to Sections 5.4, 5.5 and 5.6
               hereof shall, to the extent practicable, be withdrawn from
               the agency or other person to which made; and

                              (c)  the obligations provided for in this
               Section 9.2, Article X, Sections 11.1 and 11.12 hereof, the
               confidentiality provision contained in Section 5.2 hereof
               and the Confidentiality Agreements referred to in such
               Section shall survive any termination of this Agreement.

                         9.3  Other Remedies.  In no event shall termina-
               tion of this Agreement limit or restrict the rights and
               remedies of any party hereto against any other party which
               has willfully breached the terms of this Agreement prior to
               termination hereof.

               X.  SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.

                         10.1  Survival of Representations.  The represen-
               tations and warranties in this Agreement and in any other
               document delivered in connection herewith shall survive the
               Closing hereunder regardless of any investigation made by or
               on behalf of any party hereto; provided, however, that all
               representations and warranties in this Agreement and in any
               other document delivered herewith relating to CAT (other
               than Section 3.10 relating to title to the CAT Shares) shall
               not survive the Closing.

                         10.2  Seller's Agreement to Indemnify.  Upon the
               terms and subject to the conditions of this Article X,
               Seller shall indemnify, defend and hold harmless Buyer and
               its affiliates, and its and their directors, officers,
               employees and agents (collectively, the "Buyer Group"), at
               any time after the Closing, from and against all demands,
               claims, actions or causes of action, assessments, losses,
               damages, liabilities, costs and expenses, including, without
               limitation, interest, penalties and reasonable fees and
               expenses of attorneys and other professionals (collectively,
               "Damages"), asserted against, resulting to, imposed upon or
               incurred by the Buyer Group or any member thereof, directly
               or indirectly, by reason of or resulting from:  (a) liabili-
               ties, obligations or claims of or against Seller or any
               affiliate of Seller other than CAT (whether absolute, ac-
               crued, contingent or otherwise) existing as of the Closing
               Date or arising out of facts, conditions or circumstances
               occurring at or prior thereto (excluding the Liabilities),
               whether or not such liabilities, obligations or claims were
               known at the time of Closing; (b) a breach of any represen-
               tation, warranty, covenant or agreement of Seller contained
               in or made pursuant to this Agreement or any Seller Related
               Instrument or any facts or circumstances constituting such a
               breach; (c) each item listed in Section 3.20 of the Seller
               Disclosure Schedule; (d) the violation of any Environmental
               Law prior to the Closing Date (or allegation of same), by
               Seller or the Division, or any other Damages arising under
               Environmental Laws; (e) any tax or related claim asserted
               against the Buyer Group or any member thereof relating to
               the operations or properties of the Division with respect to
               any period ending on or prior to or including the Closing
               Date; (f) any failure to comply with any "bulk sales" laws
               applicable to the transactions contemplated hereby; and (g)
               all Damages arising out of or relating to any Plans or CAT
               Plans, including, without limitation, all benefits accrued
               by any employees under the Plans and CAT Plans and any
               liability arising under Section 4980B of the Code (collec-
               tively, "Seller Claims").

                         10.3  Seller's Limitation of Liability.

                              (a)  Anything in this Agreement to the con-
               trary notwithstanding, the liability of Seller to indemnify
               the Buyer Group pursuant to Section 10.2(b) hereof against
               any Damages sustained by reason of any Seller Claim thereun-
               der for a breach of any representation and warranty of
               Seller shall be limited to Seller Claims as to which any
               member of the Buyer Group has given Seller written notice on
               or prior to April 30, 1997, whether or not any Damages have
               then actually been sustained; provided, however, that,
               notwithstanding the foregoing, the liability of Seller to
               indemnify the Buyer Group against any Damages sustained by
               reason of any Seller Claim for a breach of any of the repre-
               sentations and warranties set forth in Section 3.10 and the
               first sentence of Section 3.11 hereof shall not be so limit-
               ed.

                              (b)  Other than with respect to the represen-
               tations and warranties set forth in Section 3.10 and the
               first sentence of Section 3.11 hereof, the provisions in
               Section 10.2(b) hereof for indemnity by Seller of the Buyer
               Group against Damages sustained by reason of any Seller
               Claim thereunder for a breach of any representation or
               warranty of Seller shall be effective only after the aggre-
               gate amount of all such Seller Claims for which Seller is
               liable exceeds $500,000, and then only to the extent of such
               excess (the "Buyer's Deductible").  With respect to any
               breach by Seller of the representation and warranty set
               forth in the first sentence of Section 3.11 hereof, if such
               breach relates to Seller's title to any of the Inventory or
               the Net Fixed Assets, Seller's indemnity obligations hereun-
               der shall be limited to the amount of the Inventory Consid-
               eration or the Fixed Asset Consideration, respectively. 
               Notwithstanding the foregoing, in no event shall Seller's
               indemnity obligations under this Agreement exceed $3.6
               million.

                              (c)  The liability of Seller to indemnify the
               Buyer Group against any Damages sustained by reason of any
               Seller Claim for a breach of any covenant or agreement shall
               not be limited in any manner and shall not be subject to the
               Buyer's Deductible, provided, however, that Seller shall not
               be liable for breach of any covenant or agreement contained
               in Section 5.1 hereof if the transactions contemplated
               hereby are consummated unless such breach also constitutes a
               breach of a representation or warranty for which Buyer would
               otherwise be entitled to indemnification hereunder.

                              (d)  Seller may satisfy its indemnification
               obligations hereunder either by the payment of cash or by
               delivering shares of ATSC Common Stock having a fair market
               value equal to the amount of the claim.  For purposes of
               this Section 10.3(d), fair market value shall mean the
               average high and low sale price of the ATSC Common Stock on
               the New York Stock Exchange Composite Tape (or as reported
               on any other exchange on which the ATSC Common Stock is then
               listed) on each of the ten (10) consecutive trading days
               ending on the trading day immediately preceding the payment
               date.

                         10.4  Buyer's Agreement to Indemnify.  Upon the
               terms and subject to the conditions of this Article X, Buyer
               shall indemnify, defend and hold harmless the Seller and its
               affiliates, and its and their directors, officers, employees
               and agents (collectively, the "Seller Group"), at any time
               after the Closing, from and against all Damages asserted
               against, resulting to, imposed upon or incurred by the
               Seller Group or any member thereof, directly or indirectly,
               by reason of or resulting from:  (a) a breach of any repre-
               sentation, warranty, covenant or agreement of Buyer con-
               tained in or made pursuant to this Agreement or any Buyer
               Related Instrument or any facts or circumstances constitut-
               ing such a breach; or (b) the Liabilities ("Buyer Claims"
               and, collectively with Seller Claims, "Claims").

                         10.5  Buyer's Limitation of Liability.

                              (a)  Anything in this Agreement to the con-
               trary notwithstanding, the liability of Buyer to indemnify
               the Seller Group pursuant to Section 10.4(a) hereof against
               any Damages sustained by reason of any Buyer Claim thereun-
               der for a breach of any representation and warranty of Buyer
               shall be limited to Buyer Claims as to which any member of
               the Seller Group has given Buyer written notice on or prior
               to April 30, 1997, whether or not any Damages have then
               actually been sustained; provided, however, that notwith-
               standing the foregoing, the liability of Buyer to indemnify
               the Seller Group against any Damages sustained by reason of
               any Buyer Claim for a breach of any of the representations
               and warranties set forth in Section 4.5(b) hereof shall not
               be so limited.

                              (b)  Other than with respect to the represen-
               tations and warranties set forth in Section 4.5(b), the
               provisions in Section 10.4(a) for indemnity by Buyer of the
               Seller Group against Damages sustained by reason of any
               Buyer Claim thereunder for a breach of any representation
               and warranty of Buyer shall be effective only after the
               aggregate amount of all such Buyer Claims for which Seller
               is liable exceeds $500,000, and then only to the extent of
               such excess (the "Seller's Deductible").  Notwithstanding
               the foregoing, in no event shall Buyer's indemnity obliga-
               tions under this Agreement exceed $3.6 million.

                              (c)  The liability of Buyer to indemnify the
               Seller Group against any Damages sustained by reason of any
               Buyer Claim for a breach of any covenant or agreement shall
               not be limited in any manner and shall not be subject to
               Seller's Deductible, provided, however, that Buyer shall not
               be liable for breach of any covenant or agreement contained
               in Section 5.20 hereof if the transactions contemplated
               hereby are consummated unless such breach also constitutes a
               breach of a representation or warranty for which Seller
               would otherwise be entitled to indemnification hereunder.

                         10.6  Conditions of Indemnification.  The obliga-
               tions and liabilities of the Seller Group and Buyer Group
               with respect to Claims made by third parties shall be sub-
               ject to the following terms and conditions:

                              (a)  The indemnified party will give the
               indemnifying party prompt notice of any such Claim, and the
               indemnifying party shall have the right to undertake the
               defense thereof by representatives chosen by it;

                              (b)  If the indemnifying party undertakes the
               defense of any such Claim, the indemnified party shall, to
               the best of its ability, assist the indemnifying party, at
               the expense of the indemnifying party, in the defense of
               such Claim, and shall promptly send to the indemnifying
               party, at the expense of the indemnifying party, copies of
               any documents received by the indemnified party which relate
               to such Claim; provided, however, that the indemnified party
               shall have no such obligation if and to the extent that such
               third-party Claim arises out of or relates to facts, events
               or circumstances which may also give rise to a separate
               Claim by the indemnified party against the indemnifying
               party;

                              (c)  If the indemnifying party, within a
               reasonable time after notice of any such Claim, fails to
               defend the indemnified party against which such Claim has
               been asserted, the indemnified party shall (upon further
               notice to the indemnifying party) have the right to under-
               take the defense, compromise or settlement of such Claim on
               behalf of and for the account and risk of the indemnifying
               party, subject to the right of the indemnifying party to
               assume the defense of such Claim at any time prior to set-
               tlement, compromise or final determination thereof; and

                              (d)  Anything in this Article X to the con-
               trary notwithstanding, (i) if there is a reasonable proba-
               bility that a Claim may materially and adversely affect the
               indemnified party other than as a result of money damages or
               other money payments, the indemnified party shall have the
               right, at its own cost and expense, to defend, compromise or
               settle such Claim; and (ii) the indemnifying party shall
               not, without the written consent of the indemnified party,
               settle or compromise any Claim or consent to the entry of
               any judgment which does not include as an unconditional term
               thereof the giving by the claimant or the plaintiff to the
               indemnified party a release from all liability with respect
               to such Claim.

                              (e)  Notwithstanding anything to the contrary
               contained herein, if the conditions of Subsection 7.1(a) or
               (b) or Subsection 8.1(a) or (b) are not satisfied as of the
               Closing Date (a "Failure of Condition"), and the party for
               whose benefit such condition exists (the "Waiving Party")
               elects to proceed with the Closing notwithstanding such
               Failure of Condition, then such condition shall be deemed to
               be satisfied and the Waiving Party shall not bring any Claim
               for indemnity hereunder or any other Claim arising out of
               the facts or circumstances causing such Failure of Condi-
               tion.

                         10.7  Exclusive Remedies.  The remedies provided
               herein shall be the exclusive remedies of each of the par-
               ties hereto with respect to any Claims or Damages arising
               out of the transactions contemplated by this Agreement,
               including, without limitation, any Claim in tort or under
               any federal or state securities laws; provided, however,
               that the parties hereto shall be entitled to an injunction
               or other equitable relief to prevent breaches of this Agree-
               ment, to enforce specifically the terms and provisions of
               this Agreement or seek any other remedy to which they are
               entitled in equity in any court of the United States located
               in the State of New York or in New York State court.

                         10.8  Transfer Pricing.  Seller and Buyer acknowl-
               edge and agree that the buying agent fees and other pricing
               arrangements between CAT-US and CAT-Far East were estab-
               lished in good faith and in accordance with industry stan-
               dards.

                         10.9  Claims Against CAT Directors and Officers. 
               Buyer hereby agrees that it will not, and will not permit
               any of its affiliates, including CAT, to, bring any claim
               against any of Messrs. Bernard Manuel, Irving Benson or Roy
               Green for any action taken or failed to be taken by such
               person in his capacity as an officer or director of CAT,
               other than any such claim for fraud or intentional miscon-
               duct.

               XI.  MISCELLANEOUS.

                         11.1  Fees and Expenses.  Whether or not the
               transactions contemplated hereby or by the Ancillary Agree-
               ments are consummated pursuant hereto or thereto, each of
               Seller and Buyer shall pay all fees and expenses incurred by
               it or on its behalf in connection with or in anticipation of
               this Agreement and such related instruments and the consum-
               mation of the transactions contemplated hereby and thereby.

                         11.2  Further Assurances.  From time to time after
               the Closing Date, at the request of any party hereto and at
               the expense of the party so requesting, Buyer and Seller
               shall execute and deliver to such requesting party such
               documents and take such other action as such requesting
               party may reasonably request in order to consummate more
               effectively the transactions contemplated hereby, including,
               without limitation, such documents or actions as Buyer may
               require for the purpose of enabling the recordation of any
               Instrument of Assignment.

                         11.3  Notices.  All notices, requests, demands,
               waivers and other communications required or permitted to be
               given under this Agreement shall be in writing and shall be
               deemed to have been duly given if delivered by hand, by mail
               (certified or registered mail, return receipt requested), by
               reputable overnight courier or by facsimile transmission
               (receipt of which is confirmed):

                              (a)  If to Buyer or ATSC, to:

                                   AnnTaylor Stores Corporation
                                   142 West 57th Street
                                   New York, New York  10019
                                   Attention:  General Counsel
                                   Facsimile:  (212) 541-3299

                                   with a copy to:

                                   Skadden, Arps, Slate, Meagher & Flom
                                   One Rodney Square
                                   Wilmington, Delaware  19801
                                   Attention:  Patricia Moran Chuff, Esq.
                                   Facsimile:  (302) 651-3001

                              (b)  If to Seller, to:

                                   Cygne Designs, Inc.
                                   1372 Broadway
                                   New York, New York  10018
                                   Attention:  General Counsel
                                   Facsimile:  (212) 536-4174

                                   with a copy to:

                                   Fulbright and Jaworski, L.L.P.
                                   666 Fifth Avenue
                                   New York, New York  10103
                                   Attention:  Roy L. Goldman, Esq.
                                   Facsimile:  (212) 752-5958

               or to such other person or address as any party shall
               specify by notice in writing, given in accordance with
               this Section 11.3, to the other parties hereto.  All such
               notices, requests, demands, waivers and communications
               shall be deemed to have been given on the date on which so
               hand-delivered, on the third business day following the
               date on which so mailed, on the next business day follow-
               ing the date on which delivered to such overnight courier
               and on the date of such facsimile transmission and confir-
               mation, except for a notice of change of person or ad-
               dress, which shall be effective only upon receipt thereof.

                         11.4  Entire Agreement.  This Agreement, the 
               Seller Disclosure Schedule, the Buyer Disclosure Schedule,
               and the Annexes, Exhibits and other documents referred to
               herein which form a part hereof (including, without limi-
               tation, the Confidentiality Agreements referred to in
               Section 5.2 hereof) contain the entire understanding of
               the parties hereto with respect to the subject matter
               hereof.  This Agreement supersedes all prior agreements
               and understandings, oral and written, with respect to its
               subject matter.

                         11.5  Severability.  Should any provision of
               this Agreement, or any part thereof, for any reason be
               declared invalid or unenforceable, such declaration shall
               not affect the validity or enforceability of any other
               provision of this Agreement, or any other part thereof,
               all of which other provisions, and parts, shall remain in
               full force and effect, and the application of such invalid
               or unenforceable provision, or such part thereof, to per-
               sons or circumstances other than those as to which it is
               held invalid or unenforceable shall be valid and be en-
               forced to the fullest extent permitted by law.

                         11.6  Binding Effect; Assignment.  This Agree-
               ment and all of the provisions hereof shall be binding
               upon and inure to the benefit of the parties hereto and
               their respective heirs, executors, successors and permit-
               ted assigns, but except as contemplated herein, neither
               this Agreement nor any of the rights, interests or obliga-
               tions hereunder shall be assigned, directly or indirectly,
               by Buyer or Seller without the prior written consent of
               the other parties hereto; provided, however, that ATSC or
               Buyer may assign any or all of its rights, interests or
               obligations hereunder to any one or more direct or indi-
               rect wholly owned subsidiaries of ATSC or Buyer, provided,
               however, that no such assignment by ATSC or Buyer shall
               limit or affect ATSC or Buyer's obligations hereunder.

                         11.7  Amendment, Modification and Waiver.  This
               Agreement may be amended, modified or supplemented at any
               time by written agreement of the parties hereto.  Any
               failure by Seller, on the one hand, or ATSC or Buyer, on
               the other hand, to comply with any term or provision of
               this Agreement may be waived by ATSC or Buyer or Seller,
               respectively, at any time by an instrument in writing
               signed by or on behalf of ATSC, Buyer or Seller, but such
               waiver or failure to insist upon strict compliance with
               such term or provision shall not operate as a waiver of,
               or estoppel with respect to, any subsequent or other fail-
               ure to comply.

                         11.8  Third-Party Beneficiaries.  Except as
               otherwise expressly provided herein, this Agreement is not
               intended, and shall not be deemed, to confer upon or give
               any person except the parties hereto and their respective
               successors and permitted assigns, any remedy, claim, lia-
               bility, reimbursement, cause of action or other right
               under or by reason of this Agreement.

                         11.9  Counterparts.  This Agreement may be exe-
               cuted in counterparts, each of which shall be deemed an
               original, but all of which together shall constitute one
               and the same instrument.

                         11.10  Bulk Sales.  Without limiting Seller's
               obligations under Section 10.2(f) hereof, each of Buyer
               and Seller hereby waive compliance by the other with the
               "bulk sales" provisions of Article 6 of the Uniform Com-
               mercial Code as may be in effect in the jurisdictions
               where the Assets are located and any other similar provi-
               sion of applicable law as may be in effect in any such
               jurisdiction.

                         11.11  Interpretation.  The article and section
               headings contained in this Agreement are solely for the
               purpose of reference, are not part of the agreement of the
               parties and shall not in any way affect the meaning or
               interpretation of this Agreement.  As used in this Agree-
               ment, the term "person" shall mean and include an individ-
               ual, a partnership, a joint venture, a corporation, a
               trust, an unincorporated organization and a government or
               any department or agency thereof.  As used in this Agree-
               ment, the term "affiliate" shall have the meaning set
               forth in Rule 12b-2 of the General Rules and Regulations
               under the Securities Exchange Act of 1934, as amended.

                         11.12  Governing Law.  This Agreement shall be
               governed by the laws of the State of New York, without
               regard to the principles of conflicts of law thereof.


                         IN WITNESS WHEREOF, the parties hereto have
               executed this Stock and Asset Purchase Agreement as of the
               day and year first above written.

                                        CYGNE DESIGNS, INC.

                                        By: /s/ Bernard M. Manuel
                                           Name:  Bernard M. Manuel
                                           Title: Chairman

                                        CYGNE GROUP (F.E.) LIMITED

                                        By: /s/ Bernard M. Manuel
                                           Name:  Bernard M. Manuel
                                           Title: Director

                                        ANNTAYLOR STORES CORPORATION

                                        By:/s/ J. Patrick Spainhour
                                           Name:  J. Patrick Spainhour
                                           Title: President

                                        ANNTAYLOR, INC.

                                        By: /s/ J. Patrick Spainhour
                                           Name:  J. Patrick Spainhour
                                           Title: President




                                                          EXHIBIT A
                                 BILL OF SALE

                    THIS BILL OF SALE (the "Bill of Sale") is
          executed as of ______, 1996 by CYGNE DESIGNS, INC., a
          Delaware corporation ("Seller"), in favor of ANNTAYLOR,
          INC., a Delaware corporation ("Buyer"), in connection
          with the transactions contemplated by the Stock and Asset
          Purchase Agreement dated as of       , 1996 (the "Pur-
          chase Agreement") by and between Seller, Buyer, ANNTAYLOR
          STORES CORPORATION, a Delaware corporation and holder of
          all of the outstanding capital stock of Buyer ("ATSC"),
          and CYGNE GROUP (F.E.) LIMITED, a Hong Kong corporation
          and a wholly owned subsidiary of Seller.  Capitalized
          terms used and not otherwise defined herein shall have
          the respective meanings ascribed to them in the Purchase
          Agreement.

                    INTENDING TO BE LEGALLY BOUND, and for good and
          valuable consideration, sufficiency and receipt of which
          are hereby acknowledged, Seller hereby sells, transfers,
          conveys, assigns and delivers unto Buyer, its successors
          and assigns, forever, all of Seller's right, title and
          interest in and to the assets of the Division listed and
          described on ANNEX I hereto (collectively, the "Assets").

                    Notwithstanding the foregoing, nothing herein
          is intended to, nor shall this Bill of Sale, constitute
          or evidence the sale, transfer, conveyance, assignment or
          delivery to Buyer of any assets not listed or described
          on ANNEX I hereto.

                    Seller hereby authorizes Buyer to take any
          appropriate action to protect the right, title and inter-
          est in the Assets hereby sold, conveyed, assigned, trans-
          ferred and delivered to Buyer, in the name of Seller or
          Buyer or any other name (for the benefit of Buyer and its
          successors and assigns) against each and every person or
          persons whomsoever claiming or asserting any claim
          against any or all of the same.

                    Seller hereby covenants and agrees, pursuant to
          Section 1.1(b) of the Purchase Agreement, to execute and
          deliver all such Other Instruments and all such other
          notices, releases, acquittances, consents and powers of
          attorney as may be necessary more fully to sell, trans-
          fer, convey and assign to Buyer, or its successors or
          permitted assigns, all of Seller's right, title and
          interest in and to the Assets therein and hereby sold,
          transferred, conveyed and assigned to Buyer; and in case
          of conflict, such specific instrument shall control with
          respect to the Assets sold, transferred, conveyed or
          assigned thereby.  

                    Seller hereby further covenants and agrees that
          in the event Buyer shall acquire title to any of the
          Assets subject to any Lien, other than those expressly
          permitted by the Purchase Agreement, Seller shall prompt-
          ly cause such Lien to be terminated, released or other-
          wise discharged.


                    IN WITNESS WHEREOF, Seller has caused this Bill
          of Sale to be executed as of the date first above written.

                                   CYGNE DESIGNS, INC.

                                   By: _______________________________
                                       Name:
                                       Title:


                                                           ANNEX I TO 
                                                          BILL OF SALE

                                   THE ASSETS

                    The following property and assets of Seller com-
          prise the Assets to be purchased by Buyer:

                    (a)  the following items of inventory (the "Inven-
          tory"): (x) fabric and trim owned by Seller for use by the
          Division in the production of merchandise for Buyer (the
          "Division Fabric and Trim") as of February 3, 1996 and
          identified on Attachment A hereto to the extent not used as
          of the Closing Date in the production of merchandise for
          Buyer; (y) Division Fabric and Trim purchased since February
          3, 1996 pursuant to written commitments or purchase orders
          issued by Buyer to the extent not used as of the Closing
          Date in the production of merchandise for Buyer and (z)
          work-in-progress owned by Seller for use by the Division in
          the production of merchandise for Buyer pursuant to purchase
          orders issued by Buyer;

                    (b)  all leasehold improvements, furniture, fix-
          tures and equipment that (x) are owned by Seller or subject
          to a Capital Lease (y) relate to and are used exclusively or
          primarily in the Division Business and (z) are located on
          the fifth, sixth or nineteenth floor of the NY Facility or
          at the Florence Facility on the Closing Date, including
          those listed on Attachment B to this Annex I; 

                    (c)  all licenses, permits, registrations, renew-
          als thereof and applications therefor, variances, exemp-
          tions, orders, approvals and authorizations issued by any
          governmental, regulatory or administrative agency or author-
          ity (domestic or foreign), held by Seller or any affiliate
          of Seller of or relating to the Division Business, including
          all quota allocations for the export of goods to the United
          States and elsewhere, necessary or desirable for the lawful
          conduct of the Division Business to the extent transferrable
          under applicable law;

                    (d)  all purchase orders, bills of lading, trust
          receipts, warehouse receipts and other documents of title of
          whatever kind and description relating to the Inventory;

                    (e)  all rights under insurance policies covering
          Inventory in transit and all rights and claims under insur-
          ance policies for damage to any Assets to the extent not
          repaired or replaced prior to the Closing;

                    (f)  all goodwill, intellectual property rights,
          patents, trademarks, service marks, copyrights (including
          all copyrights in computer software and databases), licenses
          and applications therefor (if any), know-how, processes,
          methods, techniques, formulae, designs, drawings, patterns,
          trade secrets, proprietary information, sketches, technical
          information, computer software, databases and other propri-
          etary or confidential information of or relating to the
          Division Business and all rights in any licenses to or from
          any third party of or for the foregoing, it being under-
          stood, however, that the rights to the Intellectual Property
          shall be non-exclusive unless such Intellectual Property
          relates solely to the Division Business and Seller's rights
          therein are exclusive;

                    (g)  all intangible assets of or relating to the
          Division Business, including claims against third parties;
          and

                    (h)  all books and records (including all comput-
          erized records and storage media and associated software) of
          CAT, and those relating solely to the Division Business and,
          to the extent practicable, those portions of Seller's other
          books and records that relate to the Division Business,
          including, without limitation, (a) all Books and Records
          relating to the employees of and the purchase of materials,
          supplies and services for the Division Business or CAT, but
          not including the tax returns, general ledger or corporate
          minute books and capital stock books of Seller, and (b) the
          tax returns, general ledger and corporate minute books and
          capital stock books of CAT-US and CAT-Far East.



                                                          EXHIBIT B

                     ASSIGNMENT AND ASSUMPTION AGREEMENT

                                 (Contracts)

                    THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the
          "Assignment Agreement"), dated as of       , 1996, is
          made by and between Cygne Designs, Inc., a Delaware
          corporation ("Assignor"), and AnnTaylor, Inc., a Delaware
          corporation ("Assignee").

                             W I T N E S S E T H

                    WHEREAS, Assignor is a party to certain con-
          tracts and obligations and all amendments and supplements
          thereto identified on Schedule I attached hereto and
          incorporated by reference herein (the "Contracts").

                    WHEREAS, Assignor and Assignee are parties to
          the Stock and Asset Purchase Agreement, dated as of June
          7, 1996 (the "Purchase Agreement") by and between Assign-
          or, Assignee, AnnTaylor Stores Corporation, a Delaware
          corporation and holder of all of the outstanding capital
          stock of Assignee, and Cygne Group (F.E.) Limited, a Hong
          Kong Corporation and a wholly owned subsidiary of Assign-
          or, pursuant to which Assignor agreed to sell and Assign-
          ee agreed to purchase, among other things, certain assets
          of Assignor, all in accordance with the terms and condi-
          tions set forth in the Purchase Agreement.  Capitalized
          terms used and not otherwise defined herein shall have
          the respective meanings ascribed to such terms in the
          Purchase Agreement.

                    WHEREAS, in connection with the transactions
          contemplated by the Purchase Agreement, and pursuant
          thereto, among other things, Assignor has agreed to enter
          into this Assignment Agreement to assign all of
          Assignor's right, title, interest, duties and obligations
          in and to the Contracts to Assignee and, in partial
          consideration therefor, among other things, Assignee has
          agreed to accept such assignment of the Contracts and
          assume the duties and obligations of Assignor under the
          Contracts arising from and after the date hereof.  Seller
          shall be responsible for and retains all liabilities for
          duties and obligations incurred under the Contracts prior
          to the date hereof.  

                    NOW, THEREFORE, in consideration of the forego-
          ing and of the mutual covenants and agreements set forth
          herein and in the Purchase Agreement, the parties hereto
          agree as follows:

                    1.   Assignment.  Assignor does hereby sell,
          transfer, convey, assign and deliver to Assignee all of
          Assignor's right, title, interest, duties and obligation
          in and to the Contracts.

                    2.   Acceptance and Assumption.  (a) Assignee
          does hereby irrevocably accept such sale, transfer,
          conveyance, assignment and delivery of all of Assignor's
          right, title, interest, duties and obligations in and to
          the Contracts, and does hereby assume all duties and
          obligations of Assignor under the Contracts arising from
          and after the date hereof.  Seller shall be responsible
          for and retains all liabilities for all duties and obli-
          gations incurred prior to the date hereof.

                         (b)  Assignee covenants and agrees to pay,
          perform, discharge and satisfy when due all of Assignor's
          covenants, agreements and obligations under the Contracts
          arising from and after the date hereof pursuant to, and
          in accordance with, the terms and conditions of the
          respective Contracts.

                    3.   Effective Time.  The assignment of the
          Contracts by Assignor, and the acceptance of such assign-
          ment and the assumption of the duties and obligations of
          Assignor under the Contracts by Assignee, all pursuant to
          this Assignment Agreement, shall be effective as of the
          date hereof.

                    4.   Amendment, Modification and Waiver.  This
          Assignment Agreement may be amended, modified or supple-
          mented at any time by written agreement of the parties
          hereto.  Any failure by Assignor, on the one hand, or
          Assignee, on the other hand, to comply with any term or
          provision of this Assignment Agreement may be waived by
          Assignee or Assignor, respectively, at any time by an
          instrument in writing signed by or on behalf of Assignee
          or Assignor, but such waiver or failure to insist upon
          strict compliance with such term or provision shall not
          operate as a waiver of, or estoppel with respect to, any
          subsequent or other failure to comply.

                    5.   Notices.  All notices, requests, demands,
          waivers and other communications required or permitted to
          be given under this Assignment Agreement shall be in
          writing and shall be deemed to have been duly given if
          delivered personally, by mail (certified or registered
          mail, return receipt requested), by reputable overnight
          courier or by facsimile transmission (receipt of which is
          confirmed):

                         (a)  If to Assignee, to:

                              AnnTaylor Stores Corporation
                              142 West 57th Street
                              New York, New York  10019
                              Attention:  General Counsel
                              Facsimile:  (212) 541-3299

                              with a copy to:

                              Skadden, Arps, Slate, Meagher & Flom
                              One Rodney Square
                              Wilmington, Delaware  19801
                              Attention:  Patricia Moran Chuff, Esq.
                              Facsimile:  (302) 651-3001

                         (b)  If to Assignor, to:

                              Cygne Designs, Inc.
                              1372 Broadway
                              New York, New York  10018
                              Attention:  General Counsel
                              Facsimile:  (212) 536-4174

                              with a copy to:

                              Fulbright and Jaworski L.L.P.
                              666 Fifth Avenue
                              New York, New York  10103
                              Attention:  Roy L. Goldman, Esq.
                              Facsimile:  (212) 752-5958

          or to such other person or address as any party shall
          specify by notice in writing, given in accordance with
          this Section 5, to the other parties hereto.  All such
          notices, requests, demands, waivers and communications
          shall be deemed to have been given on the date on which so
          hand-delivered, on the third business day following the
          date on which so mailed, on the next business day follow-
          ing the date on which delivered to such overnight courier
          and on the date of such facsimile transmission and confir-
          mation, except for a notice of change of person or ad-
          dress, which shall be effective only upon receipt thereof.

                    6.   Third-Party Beneficiaries.  Except as oth-
          erwise expressly provided herein, this Assignment Agree-
          ment is not intended, and shall not be deemed, to confer
          upon or give any person except the parties hereto and
          their respective successors and permitted assigns, any
          remedy, claim, liability, reimbursement, cause of action
          or other right under or by reason of this Assignment
          Agreement.

                    7.   Governing Law.  This Assignment Agreement
          shall be governed by the laws of the State of New York,
          without regard to the principles of conflicts of law
          thereof.

                    8.   Counterparts.  This Assignment Agreement
          may be executed in counterparts, each of which shall be
          deemed an original, but all of which together shall con-
          stitute one and the same instrument.

                    9.   Interpretation.  The section headings con-
          tained in this Assignment Agreement are solely for the
          purpose of reference, are not part of the agreement of the
          parties and shall not in any way affect the meaning or
          interpretation of this Assignment Agreement.  As used in
          this Assignment Agreement, the term "person" shall mean
          and include an individual, a partnership, a joint venture,
          a corporation, a trust, an unincorporated organization and
          a government or any department or agency thereof.  

                    10.  Binding Effect; Assignment.  This Assign-
          ment Agreement and all of the provisions hereof shall be
          binding upon and inure to the benefit of the parties here-
          to and their respective heirs, executors, successors and
          permitted assigns, but except as contemplated herein,
          neither this Assignment Agreement nor any of the rights,
          interests or obligations hereunder shall be assigned,
          directly or indirectly, by Assignee or Assignor without
          the prior written consent of the other party hereto; pro-
          vided, however, that Assignee may assign any or all of its
          rights, interests or obligations hereunder to any one or
          more wholly owned subsidiary of AnnTaylor Stores Corpora-
          tion, provided, however, that no such assignment by As-
          signee shall limit or affect Assignee's obligations here-
          under.


                    IN WITNESS WHEREOF, the parties hereto have
          caused this Assignment Agreement to be duly executed as of
          the day and year first set forth above.

                                   ASSIGNOR:

                                   CYGNE DESIGNS, INC.

                                   By:_____________________________
                                      Name:
                                      Title:

                                   ASSIGNEE:

                                   ANNTAYLOR, INC.

                                   By:_____________________________
                                      Name:
                                      Title:


                                                                EXHIBIT C

                                 UNDERTAKING

                    THIS UNDERTAKING ("Undertaking"), is executed
          and delivered on this      day of      , 1996, by
          AnnTaylor, Inc., a Delaware corporation ("Buyer"), in
          favor of Cygne Designs, Inc., a Delaware corporation
          ("Seller").

                             W I T N E S S E T H:

                    WHEREAS, pursuant to the Stock and Asset Pur-
          chase Agreement dated as of June 7, 1996 (the "Purchase
          Agreement") by and between Buyer, Seller, AnnTaylor
          Stores Corporation, a Delaware corporation and holder of
          all of the outstanding capital stock of Buyer, and Cygne
          Group (F.E.) Limited, a Hong Kong corporation and wholly
          owned subsidiary of Seller, Seller has, among other
          things, concurrently herewith sold, conveyed, assigned,
          transferred and delivered to Buyer all of Seller's
          rights, title and interest in and to certain of the
          assets of Seller.  

                    WHEREAS, in partial consideration therefor, the
          Purchase Agreement requires that Buyer undertake to
          assume and to agree to perform, pay or discharge or cause
          to be performed, paid or discharged certain liabilities
          and obligations of Seller.

                     NOW, THEREFORE, in consideration of these
          premises and for other good and valuable consideration,
          the receipt and sufficiency of which are hereby acknowl-
          edged, Buyer agrees as follows (capitalized terms used
          but not otherwise defined herein having the respective
          meanings ascribed to them in the Purchase Agreement):

                    1.   Buyer hereby undertakes, assumes and
          agrees to pay or discharge in accordance with their
          terms, to the extent not heretofore paid or discharged
          and subject to the limitations contained in this Under-
          taking and to the terms of the Purchase Agreement, the
          Accounts Payable of Seller which are listed or described
          in Annex I hereto.

                    2.   The assumption by Buyer of the liabilities
          and obligations set forth in this Undertaking shall not
          be construed to defeat, impair or limit in any way the
          rights, claims or remedies of Buyer under the Purchase
          Agreement.

                    3.   Other than as expressly set forth in this
          Undertaking, the Purchase Agreement or any Instruments of
          Assignment, Buyer assumes no liability or obligation of
          any kind, character or description of Seller or any other
          person.

                    4.   This Undertaking shall be enforceable
          against the successors and assigns of Buyer and shall
          inure to the benefit of the successors and assigns of
          Seller.

                    IN WITNESS WHEREOF, this Undertaking has been
          duly executed and delivered by the duly authorized offi-
          cers of AnnTaylor, Inc. on the date first above written.

                                   ANNTAYLOR, INC.

                                   By:                        
                                      Name:
                                      Title:


           ANNEX I TO
           UNDERTAKING

                             ASSUMED LIABILITIES


                                                              EXHIBIT D

                              ADVANCE INSTRUMENT

                    THIS ADVANCE INSTRUMENT (the "Advance Instru-
          ment"), dated as of          , 1996, is executed and
          delivered by AnnTaylor, Inc. ("Ann Taylor") in favor of
          Cygne Designs, Inc., a Delaware corporation ("Cygne").

                             W I T N E S S E T H

                    WHEREAS, Ann Taylor and Cygne are parties to a
          Letter Agreement, dated as of February 10, 1995, pursuant
          to which Ann Taylor made cash advances to Cygne in the
          amount of $5,000,000 (the "Advance").

                    WHEREAS, Ann Taylor made certain additional
          cash advances to Cygne in the amount of $2,985,000 (the
          "Additional Advances").

                    WHEREAS, Cygne is party to a Stock and Asset
          Purchase Agreement, dated as of June 7, 1996 (the "Pur-
          chase Agreement") by and among Cygne, Cygne Group (F.E.)
          Limited, a Hong Kong corporation and wholly owned subsid-
          iary of Cygne, AnnTaylor Stores Corporation, a Delaware
          corporation and holder of all of the outstanding capital
          stock of Ann Taylor ("ATSC"), and Ann Taylor, pursuant to
          which Buyer is purchasing from Seller and Seller is
          selling to Buyer certain assets of Seller.

                    WHEREAS, in connection with the transactions
          contemplated by the Purchase Agreement, and pursuant
          thereto, among other things, ATSC has agreed to cause Ann
          Taylor to enter into this Advance Instrument to forgive,
          release and discharge the Advance and the Additional
          Advances.

                    NOW, THEREFORE, in consideration of the premis-
          es contained herein and for other good and valuable
          consideration, the receipt and sufficiency of which are
          hereby acknowledged, the parties hereto agree as follows:

                    1.   Release and Discharge.  Ann Taylor, for
          itself and its successors and assigns, does hereby for-
          give, release and discharge Cygne from any and all of
          Cygne's obligations for the repayment of the Advance and
          the Additional Advances and from any and all manner of
          actions and causes of action, claims and demands, suits,
          damages, costs, legal fees, expenses, debts, dues, ac-
          counts, bonds, covenants, contracts, agreements and
          compensation whatsoever, in law or in equity, whether the
          same are known or unknown, accrued or unaccrued, fixed or
          contingent ("Claims") which Ann Taylor now has or may
          hereafter have against Cygne in as much as such Claims
          relate to repayment of the Advance or the Additional
          Advances. 

                    2.   Amendment, Modification and Waiver.  This
          Advance Instrument may be amended, modified or supple-
          mented at any time by written agreement of the parties
          hereto.  Any failure by Cygne, on the one hand, or Ann
          Taylor, on the other hand, to comply with any term or
          provision of this Advance Instrument may be waived by Ann
          Taylor or Cygne, respectively, at any time by an instru-
          ment in writing signed by or on behalf of Ann Taylor or
          Cygne, but such waiver or failure to insist upon strict
          compliance with such term or provision shall not operate
          as a waiver of, or estoppel with respect to, any subse-
          quent or other failure to comply.

                    3.   Notices.  All notices, requests, demands,
          waivers and other communications given under this Advance
          Instrument shall be in writing and shall be deemed to
          have been duly given if delivered personally, by mail
          (certified or registered mail, return receipt requested),
          by reputable overnight courier or by facsimile transmis-
          sion (receipt of which is confirmed):

                         (a)  If to Ann Taylor, to:

                              AnnTaylor, Inc.
                              142 West 57th Street
                              New York, New York  10019
                              Attention:  General Counsel
                              Facsimile:  (212) 541-3299

                              with a copy to:

                              Skadden, Arps, Slate, Meagher & Flom
                              One Rodney Square
                              Wilmington, Delaware  19801
                              Attention:  Patricia Moran Chuff, Esq.
                              Facsimile:  (302) 651-3001

                         (b)  If to Cygne, to:

                              Cygne Designs, Inc.
                              1372 Broadway
                              New York, New York  10018
                              Attention:  General Counsel
                              Facsimile:  (212) 536-4174

                              with a copy to:

                              Fulbright and Jaworski L.L.P.
                              666 Fifth Avenue
                              New York, New York  10103
                              Attention:  Roy L. Goldman, Esq.
                              Facsimile:  (212) 752-5958

          or to such other person or address as any party shall
          specify by notice in writing, given in accordance with
          this Section 3, to the other parties hereto.  All such
          notices, requests, demands, waivers and communications
          shall be deemed to have been given on the date on which so
          hand-delivered, on the third business day following the
          date on which so mailed, on the next business day follow-
          ing the date on which delivered to such overnight courier
          and on the date of such facsimile transmission and confir-
          mation, except for a notice of change of person or ad-
          dress, which shall be effective only upon receipt thereof.

                    4.   Third-Party Beneficiaries.  Except as oth-
          erwise expressly provided herein, this Advance Instrument
          is not intended, and shall not be deemed, to confer upon
          or give any person except the parties hereto and their
          respective successors and permitted assigns, any remedy,
          claim, liability, reimbursement, cause of action or other
          right under or by reason of this Advance Instrument.

                    5.   Governing Law.  This Advance Instrument
          shall be governed by the laws of the State of New York,
          without regard to the principles of conflicts of law
          thereof.

                    6.   Counterparts.  This Advance Instrument may
          be executed in counterparts, each of which shall be deemed
          an original, but all of which together shall constitute
          one and the same instrument.

                    7.   Interpretation.  The section headings con-
          tained in this Advance Instrument are solely for the pur-
          pose of reference, are not part of the agreement of the
          parties and shall not in any way affect the meaning or
          interpretation of this Advance Instrument.  As used in
          this Advance Instrument, the term "person" shall mean and
          include an individual, a partnership, a joint venture, a
          corporation, a trust, an unincorporated organization and a
          government or any department or agency thereof.  

                    8.   Binding Effect; Assignment.  This Advance
          Instrument and all of the provisions hereof shall be bind-
          ing upon and inure to the benefit of the parties hereto
          and their respective heirs, executors, successors and
          permitted assigns, but except as contemplated herein,
          neither this Advance Instrument nor any of the rights,
          interests or obligations hereunder shall be assigned,
          directly or indirectly, by Ann Taylor or Cygne without the
          prior written consent of the other party hereto; provided,
          however, that Ann Taylor may assign any or all of its
          rights, interests or obligations hereunder to any one or
          more wholly owned subsidiary of ATSC, provided, however,
          that no such assignment by Ann Taylor shall limit or af-
          fect Ann Taylor's obligations hereunder.


                    IN WITNESS WHEREOF, the parties have caused this
          Advance Instrument to be duly executed as of the day and
          year first above written.

                                   ANNTAYLOR, INC.

                                   By:_____________________________
                                      Name:
                                      Title:

                                   CYGNE DESIGNS, INC.

                                   By:_____________________________
                                      Name:
                                      Title:


                                                          EXHIBIT E

                               PLEDGE AGREEMENT

                    This PLEDGE AGREEMENT (the "Pledge Agreement"),
          dated           , 1996, is made by and between Cygne
          Designs, Inc. ("Seller") and AnnTaylor, Inc., a Delaware
          corporation ("Buyer") (the "Pledge Agreement").  Capital-
          ized terms used and not otherwise defined herein shall
          have the respective meanings set forth in the Stock and
          Asset Purchase Agreement, dated             , 1996, by
          and among the parties hereto and AnnTaylor Stores Corpo-
          ration, a Delaware corporation and holder of all of the
          outstanding capital stock of Buyer, and Cygne Group
          (F.E.) Limited ("CGFE"), a Hong Kong corporation and a
          wholly owned subsidiary of Seller (the "Purchase Agree-
          ment").

                             W I T N E S S E T H

                    WHEREAS, the parties hereto have entered into
          the Purchase Agreement providing for, among other things,
          the sale by Seller to Buyer of the Assets and the sale by
          Seller and CGFE to Buyer of the CAT Shares owned by it,
          for the Purchase Price specified in the Purchase Agree-
          ment;

                    WHEREAS, under the terms of the Purchase Agree-
          ment, a portion of the estimated Cash Consideration is to
          be deposited by Buyer in an account in the name of Buyer,
          subject to the security interest of Seller, at [Bank]
          pending final resolution of the amount of the Cash Con-
          sideration, which account and security shall be pledged
          upon consummation of the Closing by Buyer to Seller,
          pursuant to this Pledge Agreement;

                    WHEREAS, Buyer has caused to be opened Account
          No. _________ (the "Bank Account") with [Bank] at its
          office at [Address], in the name of Buyer, as pledgor,
          subject to the security interest of Seller, as pledgee,
          and has caused such account to be credited with
          ___________ [$ amount equal to 20% of the Estimated
          Amount] in immediately available funds (the "Pledged
          Amount"); and

                    WHEREAS, Buyer wishes to pledge and to grant a
          security interest in the Bank Account and the Pledged
          Amount to Seller as herein provided;

                    NOW, THEREFORE, in consideration of the premis-
          es contained herein and for other good and valuable
          consideration, the receipt and sufficiency of which are
          hereby acknowledged, the parties hereto agree as follows:

                    SECTION 1.  Pledge.  Buyer hereby pledges and
          grants to Seller a security interest in the following
          collateral (the "Collateral"):

                    (a)  the Bank Account and all certificates and
               instruments, if any, from time to time representing
               or evidencing the Bank Account;

                    (b)  the Pledged Amount and all certificates
               and instruments, if any, from time to time repre-
               senting or evidencing the Pledged Amount;

                    (c)  all interest, cash, instruments and other
               property from time to time received, receivable or
               otherwise distributed in respect of or in exchange
               for any or all of the then existing Collateral or
               otherwise credited to the Bank Account; and

                    (d)  all proceeds of any and all of the forego-
               ing Collateral.

                    SECTION 2.  Security for Obligations.  This
          Pledge Agreement and the security interest in and pledge
          of the Collateral hereunder secures the payment to Seller
          of all obligations of Buyer owed to Seller now or hereaf-
          ter existing under the Purchase Agreement and any fees
          and expenses (including attorney's fees) incurred in
          connection with the successful exercise by the secured
          party of any of its remedies hereunder (all such obliga-
          tions of Buyer being referred to hereinafter as the
          "Obligations").

                    SECTION 3.  Maintaining the Account.  Title to
          the Bank Account and the Pledged Amount shall remain and
          reside in Buyer but subject to the rights of Seller
          hereunder, until the proceeds of the Pledged Amount are
          distributed to the parties, as their interests may ap-
          pear, pursuant to the terms of the Purchase Agreement. 
          So long as any Obligations of Buyer are outstanding, it
          shall be a term and condition of the Bank Account, except
          as otherwise provided by the provisions of Section 8 of
          this Pledge Agreement, that no amount (including interest
          on the Bank Account) shall be paid or released to or for
          the account of or withdrawn by or for the account of
          Buyer or any other person or entity from the Bank Ac-
          count.

                    SECTION 4.  Investing of Amounts in the Ac-
          count.  Buyer may from time to time (i) invest amounts on
          deposit in the Bank Account in such notes, certificates
          of deposit and other debt instruments as Buyer may select
          and Seller may approve ("Permitted Investments") and (ii)
          invest interest paid on the Permitted Investments re-
          ferred to in clause (i) above, and reinvest other pro-
          ceeds of any such Permitted Investments which may mature
          or be sold, in each case in such Permitted Investments as
          Buyer may select and Seller may approve.  Seller hereby
          approves any U.S. Treasury security having a remaining
          maturity of 30 days or less.  Interest and proceeds that
          are not invested or reinvested in Permitted Investments
          as provided above shall be deposited and held in the Bank
          Account.

                    SECTION 5.  Representations and Warranties.  

                    (a)  Buyer represents that it is the legal and
          beneficial owner of the Collateral free and clear of any
          lien, security interest, option or other charge or encum-
          brance except for the security interest created by this
          Pledge Agreement.

                    (b)  Buyer represents that the pledge of the
          Collateral pursuant to this Pledge Agreement creates a
          valid and perfected first priority security interest in
          the Collateral, securing the payment of the Obligations.

                    (c)  Buyer represents that no consent of any
          other person or entity and no authorization, approval, or
          other action by, and no notice to or filing with, any
          governmental authority or regulatory body is required (i)
          for the pledge by Buyer of the Collateral pursuant to
          this Pledge Agreement or for the execution, delivery or
          performance of this Pledge Agreement by Buyer, (ii) for
          the perfection or maintenance of the security interest
          created hereby (including the first priority nature of
          such security interest) or (iii) for the exercise by
          Seller of its rights and remedies hereunder.

                    (d)  Buyer and Seller represent that there are
          no conditions precedent to the effectiveness of this
          Pledge Agreement that have not been satisfied or waived.

                    SECTION 6.  Further Assurances.  Seller and
          Buyer agree that at any time and from time to time, at
          the expense of Seller and Buyer, Seller and Buyer will
          promptly execute and deliver all further instruments and
          documents, and take all further action, that may be
          necessary or desirable, or that Seller may reasonably
          request, in order to perfect and protect any security
          interest granted or purported to be granted hereby or to
          enable Seller to exercise and enforce its rights and
          remedies hereunder with respect to any Collateral.

                    SECTION 7.  Transfers and Other Liens.  Buyer
          agrees that it will not (i) sell, assign (by operation of
          law or otherwise) or otherwise dispose of, or grant any
          option with respect to, any of the Collateral or (ii)
          create or permit to exist any lien, security interest
          option or other charge or encumbrance upon or with re-
          spect to any of the Collateral except for the security
          interest under this Pledge Agreement.

                    SECTION 8.  Withdrawals Upon Final Determina-
          tion of the Purchase Price Adjustment.  Upon the final
          determination of the Purchase Price pursuant to Section
          1.6 of the Purchase Agreement, (i) Seller hereby releases
          its  right and security interest in the Pledged Amount
          (but not in the proceeds thereof, to the extent such
          proceeds are due to Seller pursuant to said Section 1.6)
          without any further action required on the part of Sell-
          er, (ii) Buyer shall retain any amounts to which it is
          entitled under Section 1.6 of the Purchase Agreement and
          (iii) Buyer shall deliver to Seller the remaining amount
          in the Pledged Amount, if any.

                    SECTION 9.  Remedies.  Seller shall have all
          rights and remedies available to a secured creditor under
          the New York Uniform Commercial Code (the "Code").

                    SECTION 10.  Expenses.  Notwithstanding any-
          thing in this Pledge Agreement to the contrary, whether
          or not the transactions contemplated by this Pledge
          Agreement shall be consummated, each party hereto shall
          pay its own expenses incident to preparing for, entering
          into and carrying out this Pledge Agreement, except to
          the extent provided in Section 2 hereof.

                    SECTION 11.  Amendments, Etc.  No amendment or
          waiver of any provision of this Pledge Agreement, and no
          consent to any departure by Buyer herefrom shall in any
          event be effective unless the same shall be in writing
          and signed by Seller, and then such waiver or consent
          shall be effective only in the specific instance and for
          the specific purpose for which given.

                    SECTION 12.  Addresses for Notices.  All notic-
          es and other communications provided for hereunder shall
          be in writing and shall be deemed given upon receipt by
          the parties at the following addresses (or at such other
          address for a party as shall be specified by like no-
          tice):

                    (a)  if to Buyer, to:

                         AnnTaylor, Inc.
                         142 West 57th Street
                         New York, New York  10016
                         Attention:  Paul E. Francis
                         Telecopy:  (212) 541-3299

                         with a copy to:

                         AnnTaylor, Inc.
                         142 West 57th Street
                         New York, New York  10016
                         Attention:  Jocelyn F.L. Barandiaran
                         Telecopy: (212) 541-3299

                         and a further copy to:

                         Skadden, Arps, Slate, Meagher & Flom
                         One Rodney Square
                         7th Floor
                         Wilmington, DE  19801
                         Attention:  Patricia Moran Chuff
                         Telecopy:   302-651-3001

                         and

                    (b)  if to Seller, to:

                         Cygne Designs, Inc.
                         1372 Broadway
                         New York, New York
                         Attention:  Bernard M. Manuel
                         Telecopy:  (212) 921-8318

                         with a copy to:

                         Cygne Designs, Inc.
                         1372 Broadway
                         New York, New York
                         Attention:  Paul D. Baiocchi
                         Telecopy: (212) 921-8318

                         and a further copy to:

                         Fulbright & Jaworski L.L.P.
                         666 Fifth Avenue
                         New York, New York  10103
                         Attention:  Roy L. Goldman
                         Telecopy:  (212) 752-5958

                    SECTION 13.  Continual Security Interest;
          Termination.  This Pledge Agreement shall create a con-
          tinuing security interest in the Collateral and shall (i)
          remain in full force and effect until the payment in full
          of the Obligations and all other amounts payable under
          this Pledge Agreement, (ii) be binding upon Buyer, its
          successors and assigns, and (iii) inure to the benefit
          of, and be enforceable by, Seller and its respective
          successors, transferees and assigns.

                    SECTION 14.  Governing Law; Terms.  This Pledge
          Agreement shall be governed by and construed in accor-
          dance with the laws of the State of New York without
          regard to any applicable principles of conflicts of law. 
          Unless otherwise defined herein or in the Purchase Agree-
          ment, terms defined in Article 9 of the Code are used
          herein as therein defined.

                    IN WITNESS WHEREOF, Buyer and Seller have
          caused this Pledge Agreement to be duly executed and
          delivered by their respective officers thereunto duly
          authorized as of the date first above written.

                              ANNTAYLOR, INC.

                              By:                             
                                 Name:
                                 Title:

                              CYGNE DESIGNS, INC.

                              By:                            
                                 Name:
                                 Title:



                                                               EXHIBIT F

                                   TERM SHEET

                        NY Transition Services Agreement

          Access to CAM-CAD Equipment    Buyer shall allow up to two
                                         (2) of Seller's employees
                                         access to the CAM-CAD mark-
                                         ing and grading work sta-
                                         tions free of charge from
                                         the date of the Closing
                                         through the end of fiscal
                                         1996.

          Option to Purchase             Seller shall have the option
                                         to purchase the CAM-CAD
                                         equipment at the end of fis-
                                         cal 1996 at its net book
                                         value.

          Access to Sample Room and      Buyer shall allow up to
          Equipment                      three (3) patternmakers and
                                         up to six (6) sewers to use
                                         the sample room and related
                                         equipment free of charge
                                         from the date of the Closing
                                         through the sixty (60)-day
                                         period following the date of
                                         the Closing.



                                                         EXHIBIT G

                                   TERM SHEET

                       Miami Transition Services Agreement

           Warehouse Rental Payment      Buyer shall pay to Seller
                                         $40,000 per year (represent-
                                         ing 50% of the amount of the
                                         rent paid by Seller under
                                         the Miami Lease applicable
                                         to the portion of the Miami
                                         Facility relating to the
                                         trim and consolidation ware-
                                         house) for a period of two
                                         (2) years from the Closing
                                         Date.

           Warehouse Labor Payments      Seller shall provide to Buy-
                                         er trim and consolidation
                                         services of five (5) employ-
                                         ees of Seller at the Miami
                                         Facility and Buyer shall pay
                                         to Seller an amount equal to
                                         50% of the labor costs asso-
                                         ciated with such employees
                                         for a period of two (2)
                                         years from the Closing Date,
                                         subject to earlier termina-
                                         tion by Buyer upon ninety
                                         (90) days' notice to Seller.

           Expiration of Miami Lease     Upon expiration of the cur-
                                         rent term of the Miami Lease
                                         on January 20, 1997: (i)
                                         in the event that Seller
                                         does not renew the Miami
                                         Lease and ceases its Miami
                                         trim and consolidation oper-
                                         ations, then the Miami Tran-
                                         sition Services Agreement
                                         shall terminate; and (ii) in
                                         the event that Seller does
                                         not renew the Miami Lease
                                         but relocates and continues
                                         the Miami trim and consoli-
                                         dation operations in another
                                         facility, then the Miami
                                         Transition Services Agree-
                                         ment shall apply to the new
                                         facility.



                                                          EXHIBIT H

                             CONSULTING AGREEMENT

                    THIS CONSULTING AGREEMENT is made and entered
          into as of the ___ day of August, 1996, by and between
          AnnTaylor Stores Corporation, a Delaware corporation
          ("ATSC"), AnnTaylor, Inc., a Delaware corporation and
          wholly owned subsidiary of ATSC ("ATI" and, together with
          ATSC, "Ann Taylor"), Cygne Designs, Inc., a Delaware
          corporation ("Cygne"), and Mr. Bernard M. Manuel ("Con-
          sultant").

                             W I T N E S S E T H:

                    WHEREAS, pursuant to that certain Stock and
          Asset Purchase Agreement, dated as of June 7, 1996, among
          ATSC, ATSI, Cygne and Cygne Group (F.E.) Limited, a
          Hong Kong corporation and wholly owned subsidiary of
          Cygne ("CGFE"), ATI acquired from Cygne (i) all of the
          shares of common stock, par value $.01 per share, of CAT
          US, Inc., a Delaware corporation ("CAT-US"), owned by
          Cygne; and (ii) certain of the assets of Cygne's
          AnnTaylor Woven Division (the "Division");

                    WHEREAS, pursuant to the Purchase Agreement,
          ATI acquired from CGFE all of the shares of common stock,
          par value $1 HK per share, of C.A.T. (Far East) Limited,
          a Hong Kong corporation ("CAT-Far East" and, together
          with CAT-US, "CAT"), owned by CGFE;

                    WHEREAS, CAT serves as a fully dedicated
          sourcing capability for ATI;

                    WHEREAS, prior to the date hereof, Cygne,
          through the Division, served as a private label designer,
          merchandiser and manufacturer of women's apparel for ATI;

                    WHEREAS, Consultant is the Chairman and Chief
          Executive Officer of Cygne with particular expertise
          regarding sourcing of fabric and materials, particularly
          with respect to suppliers and factories in Hong Kong and
          Asia; and

                    WHEREAS, Ann Taylor, as partial consideration
          for the transactions contemplated by the Purchase Agree-
          ment, desires to obtain, and Cygne and Consultant desire
          that Consultant provide, information, consultation,
          advice and other services in aid of Ann Taylor's busi-
          ness, all subject to the terms and conditions hereinafter
          set forth.

                    NOW, THEREFORE, in consideration of the forego-
          ing and of the representations, warranties, covenants,
          agreements and conditions contained herein, Ann Taylor,
          Cygne and Consultant, intending to be legally bound,
          agree as follows:

                    1.   Engagement of Consultant.

                         (a)  Cygne hereby covenants and agrees to
          make Consultant available to provide services to Ann
          Taylor upon the terms and conditions set forth herein. 
          Consultant hereby agrees to act as a consultant to and on
          behalf of Ann Taylor in accordance with the terms and
          conditions set forth herein.  Cygne, Consultant and Ann
          Taylor agree that Consultant will provide services to Ann
          Taylor not in excess of thirty percent (30%) of his
          business time and that Consultant will continue his
          duties as Chairman and Chief Executive Officer of Cygne. 
          Cygne agrees to allow Consultant reasonable time to
          perform his duties as a consultant to Ann Taylor on a
          timely basis, provided, however, that the performance of
          such duties shall be at mutually agreeable times that do
          not unreasonably interfere with Consultant's continuing
          obligations to Cygne.

                         (b)  Cygne shall cause Consultant to, at
          the request of the President of Ann Taylor, provide Ann
          Taylor information, consultation and advice on fabric and
          material sourcing, particularly with respect to suppliers
          and factories in Hong Kong and Asia.

                         (c)  Cygne shall cause Consultant, and
          Consultant hereby agrees, to diligently and faithfully
          serve Ann Taylor and to devote his reasonable best ef-
          forts, his highest talents and skills, and all necessary
          time and attention in providing the information, consul-
          tation and advice requested pursuant to paragraph (b) of
          this Section 1; provided that Consultant shall not,
          without the consent of Cygne and Consultant, be required
          to travel outside HongKong.  Cygne hereby consents to the
          allocation of up to thirty percent (30%) of Consultant's
          business time to perform services under this Agreement.

                    2.   Term of Agreement.  Unless terminated at
          an earlier date in accordance with Section 4 of this
          Agreement, the term of this Agreement shall commence on
          the date of this Agreement and shall end on the third
          anniversary thereof (the "Expiration Date").

                    3.   Payment for Services.

                         (a)  Consultant's Fee.  In consideration
          of Cygne causing Consultant to perform the services
          provided for in this Agreement, Ann Taylor shall pay to
          Cygne, at such time and in the manner as set forth in
          Section 3(b) hereof, a fee of $225,000 per year (the
          "Consultant's Fee").  Ann Taylor shall not provide Con-
          sultant with any compensation or benefits, including, but
          not limited to, medical or pension benefits, bonuses or
          vacation, holiday or sick pay.

                         (b)  Time of Payment.  The Consultant's
          Fee shall be due and payable to Cygne by Ann Taylor in
          quarterly installments commencing on the date hereof;
          provided, however, that the first installment shall be
          prorated to reflect the remaining days of the current
          fiscal quarter.

                         (c)  Reimbursement of Expenses.  Ann
          Taylor shall reimburse Cygne or Consultant, as the case
          may be, for all reasonable out-of-pocket expenses in-
          curred by Cygne or Consultant in connection with the
          performance of Consultant's services hereunder in accor-
          dance with AnnTaylor's travel policies.

                    4.   Termination.

                         (a)  Death.  This Agreement shall termi-
          nate upon the Consultant's death.

                         (b)  Termination by Default.  Each of the
          following shall constitute, without limitation or re-
          striction, an event of default under this Agreement, in
          which case, the non-defaulting party may give the other
          notice that this Agreement shall terminate on the date
          selected by the non-defaulting party and set forth in
          such notice (the "Termination Date"), unless cured as
          specified below: 

                              i)  If either Ann Taylor or
               Cygne shall, whether by action or inaction,
               breach in any material respect any obligation
               under this Agreement, including a material
               failure by Consultant to perform his duties and
               responsibilities hereunder, and such breach is
               not remedied within thirty (30) days after
               written notice thereof from the non-defaulting
               party;

                              ii)  If, for any reason, Consul-
               tant shall be convicted of a felony; or if
               Consultant shall be convicted of any other
               crime as a result of which his ability to per-
               form the services described in Section 1 hereof
               is materially impaired;

                              iii)  If there has been fraud,
               bad faith or willful misconduct on the part of
               Cygne or Consultant in connection with the
               performance of Consultant's duties and respon-
               sibilities hereunder;

                              iv)  If Ann Taylor institutes pro-
               ceedings relief under the United States Bankruptcy
               Code or any similar law, or consents to entry of an
               order for relief against it in any bankruptcy or
               insolvency proceeding or similar proceeding, or
               files a petition or answer or consent for reorgani-
               zation or other relief under any bankruptcy act or
               similar law, or consents to the filing against it,
               of any petition for the appointment of a receiver,
               liquidator, assignee, trustee, sequestrator (or
               other similar official) of it, or of any substantial
               part of its property, or makes an assignment for the
               benefit of creditors, or admits in writing its
               inability to pay its debts as they become due, or
               fails to pay its debts as they become due or takes
               any action in furtherance of the foregoing; or 

                              v)   If Cygne or Consultant breaches
               in any manner Section 5 hereof.

                         (c)  Effect of Termination.  Upon termina-
          tion of this Agreement, Cygne's obligation to cause
          Consultant to provide services to Ann Taylor hereunder,
          and Ann Taylor's obligation to make payment to Cygne
          under Section 3 hereof, shall terminate, except that
          AnnTaylor shall be obligated to reimburse all expenses
          incurred through the termination date in accordance with
          Section 3(b) hereof.

                    5.   Confidentiality.

                         (a)  Proprietary Information.  Each of
          Cygne and Consultant acknowledges and agrees that during
          the course of the provision of Consultant's services to
          Ann Taylor, Consultant may be exposed to sensitive data
          and information concerning the business and affairs of
          Ann Taylor, including, without limitation, fabric, prod-
          uct and merchandise designs, and that all of such data
          and information, financial plans, financial results,
          quantity or assortment of merchandise orders or plans and
          inventory levels (collectively, the "Proprietary Informa-
          tion") are vital, sensitive, confidential and proprietary
          to Ann Taylor.

                         (b)  Consultant's Agreement.  In consider-
          ation of the Purchase Price (as defined in the Purchase
          Agreement) to be paid by Ann Taylor to Cygne in connec-
          tion with the transactions contemplated by the Purchase
          Agreement, Consultant agrees to the covenants and re-
          strictions set forth in this Section 5.

                         (c)  Cygne's Agreement.  In consideration
          of the Purchase Price to be paid by Ann Taylor to Cygne
          in connection with the transactions contemplated by the
          Purchase Agreement, Cygne agrees to the covenants and
          restrictions set forth in this Section 5.

                         (d)  Trade Secret Status.  Each of Cygne
          and Consultant expressly acknowledges the trade secret
          status of the Proprietary Information and acknowledges
          that the Proprietary Information constitutes a
          protectable business interest of Ann Taylor, and cove-
          nants and agrees that during the term of the engagement
          hereunder and at all times after the expiration or termi-
          nation of such engagement, neither Cygne nor Consultant
          shall, directly or indirectly, whether, in the case of
          Consultant, individually, as a director, stockholder,
          owner, partner, employee, principal or agent of or con-
          sultant to any business, or in any other capacity, make
          known, disclose, furnish, make available or utilize any
          of the Proprietary Information, other than in the proper
          performance of the duties contemplated herein during the
          term of the engagement hereunder.  Cygne's and
          Consultant's obligations under this Section 5(d) with
          respect to particular Proprietary Information shall
          terminate only at such time (if any) as the Proprietary
          Information in question becomes generally known to the
          public other than through a breach of either Cygne's or
          Consultant's obligations hereunder.

                         (e)  Return of Proprietary Information. 
          Each of Cygne and Consultant acknowledges and agrees that
          all records or documents containing Proprietary Informa-
          tion prepared by Consultant or coming into his possession
          by virtue of the engagement are and shall remain the
          property of Ann Taylor and that, upon termination or
          expiration of this engagement, Consultant shall return
          immediately to Ann Taylor all such items in his posses-
          sion, together with all copies and extracts, and will
          destroy all summaries thereof and any such information
          stored electronically on tapes, computer disks or in any
          other manner.

                         (f)  Consultant Non-Solicitation.  Consul-
          tant agrees that during the term of this Agreement and
          for a period of one (1) year thereafter he shall not,
          directly or indirectly, induce or solicit (or authorize
          or assist in the taking of any such actions by any third
          party) any employee or consultant of Ann Taylor to leave
          his or her business association with Ann Taylor.

                         (g)  Cygne Non-Solicitation.  Cygne agrees
          that during the term of this Agreement and for a period
          of one (1) year thereafter it shall not, directly or
          indirectly, induce or solicit (or authorize or assist in
          the taking of any such actions by any third party) any
          employee or consultant of Ann Taylor to leave his or her
          business association with Ann Taylor.

                         (h)  Ann Taylor Non-Solicitation.  Ann
          Taylor agrees that during the term of this Agreement and
          for a period of one (1) year thereafter it shall not, di-
          rectly or indirectly, induce or solicit (or authorize or
          assist in the taking of any such actions by any third
          party) any employee or consultant of Cygne to leave his
          or her business association with Cygne.

                         (i)  Acknowledgment.  Consultant and Cygne
          acknowledge and agree that the covenants set forth in
          this Section 5 and each subsection hereof are reasonable
          and necessary for the protection of Ann Taylor's business
          interests, that irreparable injury will result to
          Ann Taylor if Consultant or Cygne breaches any of the
          terms of said covenants, and that in the event of
          Consultant's or Cygne's actual or threatened breach of
          any such covenants, Ann Taylor will have no adequate
          remedy at law.  Cygne and Consultant accordingly agree
          that in the event of any actual or threatened breach by
          Consultant of any of said covenants, Ann Taylor shall be
          entitled to immediate injunctive and other equitable
          relief without bond and without the necessity of showing
          actual monetary damages.  Cygne accordingly agrees that
          in the event of any actual or threatened breach by Cygne
          of any of said covenants, Ann Taylor shall be entitled to
          immediate injunctive and other equitable relief without
          bond and without the necessity of showing actual monetary
          damages.  Notwithstanding the provisions of Section 9
          hereof, such equitable relief may be sought in any court
          of competent jurisdiction.  Nothing contained herein
          shall be construed as prohibiting Ann Taylor from pursu-
          ing any other remedies available to it for such breach or
          threatened breach, including the recovery of any damages
          which it is able to prove.

                         (j)  The provisions of this Section 5
          shall survive the expiration or termination of this
          Agreement, and any of the arrangements contained herein,
          and shall be binding upon Consultant's, Cygne's and
          Ann Taylor's corporate or personal successors and as-
          signs.

                    6.   Representations and Warranties of Consul-
          tant.  Consultant represents and warrants to Cygne and
          Ann Taylor that he has full legal power and authority to
          enter into this Agreement, perform all of his obligations
          hereunder and to consummate the transactions contemplated
          hereby.

                    7.   Consultant's Independence and Discretion.

                         (a)  Nothing herein contained shall be
          construed to constitute the parties hereto as partners or
          as joint venturers, or as agent of the others, or, as
          between Ann Taylor and Consultant, as employer and em-
          ployee.  By virtue of the relationship described herein,
          Consultant's relationship to Ann Taylor during the term
          of this Agreement shall only be that of an independent
          contractor and the Consultant shall perform all services
          pursuant to this Agreement as an independent contractor. 
          The Consultant shall not provide any services under
          Ann Taylor's business name and shall not present himself
          as an agent or employee of Ann Taylor and shall have no
          authority to enter into any binding obligation on behalf
          of Ann Taylor.

                         (b)  Subject to the terms of this Agree-
          ment, the manner, means, details or methods by which the
          Consultant performs his obligations under this Agreement
          shall be determined by Cygne, subject to the reasonable
          satisfaction of Ann Taylor.

                         (c)  Each of Cygne and Consultant acknowl-
          edges and agrees that Ann Taylor shall not provide to
          Consultant any unemployment, disability, workers' compen-
          sation or medical insurance or any other employee bene-
          fits.  Payments to Cygne under Section 3 hereof shall not
          be subject to withholding taxes or other employment
          taxes.

                    8.   Arbitration.  Any controversy or claim
          arising out of or relating to this Agreement, or the
          breach thereof, shall be settled by arbitration before
          three (3) arbitrators selected in accordance with the
          Commercial Arbitration Rules of the American Arbitration
          Association in the City of New York.  Arbitration as
          provided herein shall be the exclusive means for determi-
          nation of all matters as above provided, and any decision
          and award of the arbitrators shall be final, binding and
          conclusive upon the parties and such decision and award
          may be entered as a final judgment in any court of compe-
          tent jurisdiction.  Except as provided in Section 5(j)
          hereof, none of the parties shall institute any action or
          proceeding in any court of law or equity, state or feder-
          al, other than as may be necessary for purposes of en-
          forcement of the arbitrators' decision and award hereun-
          der.

                    9.   Consultant's Employment.  Cygne and Con-
          sultant hereby acknowledge that Consultant's execution of
          this Agreement is a condition to Consultant's continued
          employment with Cygne.

                    10.  Notices.  All notices, requests, demands,
          waivers and other communications required or permitted to
          be given under this Agreement shall be in writing and
          shall be deemed to have been duly given if delivered
          personally, by mail (certified or registered mail, return
          receipt requested), by reputable overnight courier or by
          facsimile transmission (receipt of which is confirmed):

                         (a)  If to ATSC or ATI, to:

                              AnnTaylor Stores Corporation
                              142 West 57th Street
                              New York, New York  10019
                              Attention:  General Counsel
                              Facsimile:  (212) 541-3299

                              with a copy to:

                              Skadden, Arps, Slate, Meagher & Flom
                              One Rodney Square
                              Wilmington, Delaware  19801
                              Attention:  Patricia Moran Chuff, Esq.
                              Facsimile:  (302) 651-3001

                         (b)  If to Cygne, to:

                              Cygne Designs, Inc.
                              1372 Broadway
                              New York, New York  10018
                              Attention:  General Counsel
                              Facsimile:  (212) 536-4174

                              with a copy to:

                              Fulbright and Jaworski, L.L.P.
                              666 Fifth Avenue
                              New York, New York  10103
                              Attention:  Roy L. Goldman, Esq.
                              Facsimile:  (212) 752-5958

                         (c)  If to Consultant, to:

                              Cygne Designs, Inc.
                              1372 Broadway
                              New York, New York  10018
                              Attention:   Bernard M. Manuel 
                              Facsimile:   (212) 536-4174

          or to such other person or address as any party shall
          specify by notice in writing, given in accordance with
          this Section 10 to the other parties hereto.  All such
          notices, requests, demands, waivers and communications
          shall be deemed to have been given on the date on which so
          hand-delivered, on the third business day following the
          date on which so mailed, on the next business day follow-
          ing the date on which delivered to such overnight courier
          and on the date of such facsimile transmission and confir-
          mation, except for a notice of change of person or ad-
          dress, which shall be effective only upon receipt thereof.

                    11.  Entire Agreement.  This Agreement contains
          the entire understanding of the parties hereto with re-
          spect to the subject matter hereof.  This Agreement super-
          sedes all prior agreements and understandings, oral and
          written, with respect to its subject matter.

                    12.  Severability.  Should any provision of this
          Agreement, or any part thereof, for any reason be declared
          invalid or unenforceable, such declaration shall not af-
          fect the validity or enforceability of any other provision
          of this Agreement, or any other part thereof, all of which
          other provisions, and parts, shall remain in full force
          and effect, and the application of such invalid or unen-
          forceable provision, or such part thereof, to persons or
          circumstances other than those as to which it is held
          invalid or unenforceable shall be valid and be enforced to
          the fullest extent permitted by law.

                    13.  Binding Effect; Assignment.  This Agreement
          and all of the provisions hereof shall be binding upon and
          inure to the benefit of the parties hereto and their re-
          spective heirs, executors, successors and permitted as-
          signs, but, except as contemplated herein, neither this
          Agreement nor any of the rights, interests or obligations
          hereunder shall be assigned, directly or indirectly, by
          ATSC, ATI, Cygne or Consultant without the prior written
          consent of the other parties hereto; provided, however,
          that ATSC or ATI may assign any or all of its rights,
          interests or obligations hereunder to any one or more,
          direct or indirect, wholly owned subsidiaries of ATSC or
          ATI, provided, however, that no such assignment by ATSC or
          ATI shall limit or affect ATSC's or ATI's obligations
          hereunder; provided, further, however, that this Agreement
          shall automatically be assigned to and assumed by Consul-
          tant in the event that (i) Consultant's employment with
          Cygne is terminated; or (ii) Cygne is liquidated or dis-
          solved, whether through Chapter 7 of the U.S. Bankruptcy
          Laws or otherwise; provided, however, that Consultant
          hereby agrees, in the event of any such assignment by
          Cygne and assumption by Consultant, to assume and perform
          all of Cygne's obligations hereunder, to the extent appli-
          cable.

                    14.  Amendment, Modification and Waiver.  This
          Agreement may be amended, modified or supplemented at any
          time by written agreement of the parties hereto.  Any
          failure by Cygne or Consultant, on the one hand, or ATSC
          or ATI, on the other hand, to comply with any term or
          provision of this Agreement may be waived by ATSC, ATI,
          Cygne or Consultant, respectively, at any time by an in-
          strument in writing signed by or on behalf of ATSC, ATI,
          Cygne or Consultant, but such waiver or failure to insist
          upon strict compliance with such term or provision shall
          not operate as a waiver of, or estoppel with respect to,
          any subsequent or other failure to comply.

                    15.  Third-Party Beneficiaries.  Except as oth-
          erwise expressly provided herein, this Agreement is not
          intended, and shall not be deemed, to confer upon or give
          any person except the parties hereto and their respective
          successors and permitted assigns, any remedy, claim, lia-
          bility, reimbursement, cause of action or other right
          under or by reason of this Agreement.

                    16.  Counterparts.  This Agreement may be exe-
          cuted in counterparts, each of which shall be deemed an
          original, but all of which together shall constitute one
          and the same instrument.

                    17.  Interpretation.  The section headings con-
          tained in this Agreement are solely for the purpose of
          reference, are not part of the agreement of the parties
          and shall not in any way affect the meaning or interpreta-
          tion of this Agreement.  As used in this Agreement, the
          term "person" shall mean and include an individual, a
          partnership, a joint venture, a corporation, a trust, an
          unincorporated organization and a government or any de-
          partment or agency thereof. 

                    18.  Governing Law.  This Agreement shall be
          governed by the laws of the State of New York, without
          regard to the principles of conflicts of law thereof.


                    IN WITNESS WHEREOF, the parties hereto have duly
          executed this Agreement as of the date and year first
          above written.

                                      ANNTAYLOR STORES CORPORATION

                                      By:                            
                                         Name: 
                                         Title:

                                      ANNTAYLOR, INC.

                                      By:__________________________
                                         Name:
                                         Title:

                                      CYGNE DESIGNS, INC.

                                      By:__________________________
                                         Name:
                                         Title:

                                      CONSULTANT

                                                                     
                                      Bernard M. Manuel 
                                      Consultant





                                                          EXHIBIT I

                             CONSULTING AGREEMENT

                    THIS CONSULTING AGREEMENT is made and entered
          into as of the ___ day of August, 1996, by and between
          AnnTaylor Stores Corporation, a Delaware corporation
          ("ATSC"), AnnTaylor, Inc., a Delaware corporation and
          wholly owned subsidiary of ATSC ("ATI" and, together with
          ATSC, "Ann Taylor"), Cygne Designs, Inc., a Delaware
          corporation ("Cygne"), and Mr. Irving Benson ("Consul-
          tant").

                             W I T N E S S E T H:

                    WHEREAS, pursuant to that certain Stock and
          Asset Purchase Agreement, dated as of June 7, 1996, among
          ATSC, ATSI, Cygne and Cygne Group (F.E.) Limited, a
          Hong Kong corporation and wholly owned subsidiary of
          Cygne ("CGFE"), ATI acquired from Cygne (i) all of the
          shares of common stock, par value $.01 per share, of CAT
          US, Inc., a Delaware corporation ("CAT-US"), owned by
          Cygne; and (ii) certain of the assets of Cygne's
          AnnTaylor Woven Division (the "Division");

                    WHEREAS, pursuant to the Purchase Agreement,
          ATI acquired from CGFE all of the shares of common stock,
          par value $1 HK per share, of C.A.T. (Far East) Limited,
          a Hong Kong corporation ("CAT-Far East" and, together
          with CAT-US, "CAT"), owned by CGFE;

                    WHEREAS, CAT serves as a fully dedicated
          sourcing capability for ATI;

                    WHEREAS, prior to the date hereof, Cygne,
          through the Division, served as a private label designer,
          merchandiser and manufacturer of women's apparel for ATI;

                    WHEREAS, Consultant is the President and Vice
          Chairman of Cygne with particular expertise regarding
          design, merchandising and product development; and

                    WHEREAS, Ann Taylor, as partial consideration
          for the transactions contemplated by the Purchase Agree-
          ment, desires to obtain, and Cygne and Consultant desire
          that Consultant provide, information, consultation,
          advice and other services in aid of Ann Taylor's busi-
          ness, all subject to the terms and conditions hereinafter
          set forth.

                    NOW, THEREFORE, in consideration of the forego-
          ing and of the representations, warranties, covenants,
          agreements and conditions contained herein, Ann Taylor,
          Cygne and Consultant, intending to be legally bound,
          agree as follows:

                    1.   Engagement of Consultant.

                         (a)  Cygne hereby covenants and agrees to
          make Consultant available to provide services to Ann
          Taylor upon the terms and conditions set forth herein. 
          Consultant hereby agrees to act as a consultant to and on
          behalf of Ann Taylor in accordance with the terms and
          conditions set forth herein.  Cygne, Consultant and Ann
          Taylor agree that Consultant will provide services to Ann
          Taylor not in excess of thirty percent (30%) of his
          business time and that Consultant will continue his
          duties as President and Vice Chairman of Cygne.  Cygne
          agrees to allow Consultant reasonable time to perform his
          duties as a consultant to Ann Taylor on a timely basis,
          provided, however, that the performance of such duties
          shall be at mutually agreeable times that do not unrea-
          sonably interfere with Consultant's continuing obliga-
          tions to Cygne.

                         (b)  Cygne shall cause Consultant to, at
          the request of the President of Ann Taylor, provide Ann
          Taylor information, consultation and advice on design,
          merchandising and product development.

                         (c)  Cygne shall cause Consultant, and
          Consultant hereby agrees, to diligently and faithfully
          serve Ann Taylor and to devote his reasonable best ef-
          forts, his highest talents and skills, and all necessary
          time and attention in providing the information, consul-
          tation and advice requested pursuant to paragraph (b) of
          this Section 1; provided that Consultant shall not,
          without the consent of Cygne and Consultant, be required
          to travel outside New York.  Cygne hereby consents to the
          allocation of up to thirty percent (30%) of Consultant's
          business time to perform services under this Agreement.

                    2.   Term of Agreement.  Unless terminated at
          an earlier date in accordance with Section 4 of this
          Agreement, the term of this Agreement shall commence on
          the date of this Agreement and shall end on the third
          anniversary thereof (the "Expiration Date").

                    3.   Payment for Services.

                         (a)  Consultant's Fee.  In consideration
          of Cygne causing Consultant to perform the services
          provided for in this Agreement, Ann Taylor shall pay to
          Cygne, at such time and in the manner as set forth in
          Section 3(b) hereof, a fee of $225,000 per year (the
          "Consultant's Fee").  Ann Taylor shall not provide Con-
          sultant with any compensation or benefits, including, but
          not limited to, medical or pension benefits, bonuses or
          vacation, holiday or sick pay.

                         (b)  Time of Payment.  The Consultant's
          Fee shall be due and payable to Cygne by Ann Taylor in
          quarterly installments commencing on the date hereof;
          provided, however, that the first installment shall be
          prorated to reflect the remaining days of the current
          fiscal quarter.

                         (c)  Reimbursement of Expenses.  Ann
          Taylor shall reimburse Cygne or Consultant, as the case
          may be, for all reasonable out-of-pocket expenses in-
          curred by Cygne or Consultant in connection with the
          performance of Consultant's services hereunder in accor-
          dance with AnnTaylor's travel policies.

                    4.   Termination.

                         (a)  Death.  This Agreement shall termi-
          nate upon the Consultant's death.

                         (b)  Termination by Default.  Each of the
          following shall constitute, without limitation or re-
          striction, an event of default under this Agreement, in
          which case, the non-defaulting party may give the other
          notice that this Agreement shall terminate on the date
          selected by the non-defaulting party and set forth in
          such notice (the "Termination Date"), unless cured as
          specified below: 

                              i)  If either Ann Taylor or
               Cygne shall, whether by action or inaction,
               breach in any material respect any obligation
               under this Agreement, including a material
               failure by Consultant to perform his duties and
               responsibilities hereunder, and such breach is
               not remedied within thirty (30) days after
               written notice thereof from the non-defaulting
               party;

                              ii)  If, for any reason, Consul-
               tant shall be convicted of a felony; or if
               Consultant shall be convicted of any other
               crime as a result of which his ability to per-
               form the services described in Section 1 hereof
               is materially impaired;

                              iii)  If there has been fraud,
               bad faith or willful misconduct on the part of
               Cygne or Consultant in connection with the
               performance of Consultant's duties and respon-
               sibilities hereunder;

                              iv)  If Ann Taylor institutes pro-
               ceedings relief under the United States Bankruptcy
               Code or any similar law, or consents to entry of an
               order for relief against it in any bankruptcy or
               insolvency proceeding or similar proceeding, or
               files a petition or answer or consent for reorgani-
               zation or other relief under any bankruptcy act or
               similar law, or consents to the filing against it,
               of any petition for the appointment of a receiver,
               liquidator, assignee, trustee, sequestrator (or
               other similar official) of it, or of any substantial
               part of its property, or makes an assignment for the
               benefit of creditors, or admits in writing its
               inability to pay its debts as they become due, or
               fails to pay its debts as they become due or takes
               any action in furtherance of the foregoing; or 

                              v)   If Cygne or Consultant breaches
               in any manner Section 5 hereof.

                         (c)  Effect of Termination.  Upon termina-
          tion of this Agreement, Cygne's obligation to cause
          Consultant to provide services to Ann Taylor hereunder,
          and Ann Taylor's obligation to make payment to Cygne
          under Section 3 hereof, shall terminate, except that
          AnnTaylor shall be obligated to reimburse all expenses
          incurred through the termination date in accordance with
          Section 3(b) hereof.

                    5.   Confidentiality.

                         (a)  Proprietary Information.  Each of
          Cygne and Consultant acknowledges and agrees that during
          the course of the provision of Consultant's services to
          Ann Taylor, Consultant may be exposed to sensitive data
          and information concerning the business and affairs of
          Ann Taylor, including, without limitation, fabric, prod-
          uct and merchandise designs, and that all of such data
          and information, financial plans, financial results,
          quantity or assortment of merchandise orders or plans and
          inventory levels (collectively, the "Proprietary Informa-
          tion") are vital, sensitive, confidential and proprietary
          to Ann Taylor.

                         (b)  Consultant's Agreement.  In consider-
          ation of the Purchase Price (as defined in the Purchase
          Agreement) to be paid by Ann Taylor to Cygne in connec-
          tion with the transactions contemplated by the Purchase
          Agreement, Consultant agrees to the covenants and re-
          strictions set forth in this Section 5.

                         (c)  Cygne's Agreement.  In consideration
          of the Purchase Price to be paid by Ann Taylor to Cygne
          in connection with the transactions contemplated by the
          Purchase Agreement, Cygne agrees to the covenants and
          restrictions set forth in this Section 5.

                         (d)  Trade Secret Status.  Each of Cygne
          and Consultant expressly acknowledges the trade secret
          status of the Proprietary Information and acknowledges
          that the Proprietary Information constitutes a
          protectable business interest of Ann Taylor, and cove-
          nants and agrees that during the term of the engagement
          hereunder and at all times after the expiration or termi-
          nation of such engagement, neither Cygne nor Consultant
          shall, directly or indirectly, whether, in the case of
          Consultant, individually, as a director, stockholder,
          owner, partner, employee, principal or agent of or con-
          sultant to any business, or in any other capacity, make
          known, disclose, furnish, make available or utilize any
          of the Proprietary Information, other than in the proper
          performance of the duties contemplated herein during the
          term of the engagement hereunder.  Cygne's and
          Consultant's obligations under this Section 5(d) with
          respect to particular Proprietary Information shall
          terminate only at such time (if any) as the Proprietary
          Information in question becomes generally known to the
          public other than through a breach of either Cygne's or
          Consultant's obligations hereunder.

                         (e)  Return of Proprietary Information. 
          Each of Cygne and Consultant acknowledges and agrees that
          all records or documents containing Proprietary Informa-
          tion prepared by Consultant or coming into his possession
          by virtue of the engagement are and shall remain the
          property of Ann Taylor and that, upon termination or
          expiration of this engagement, Consultant shall return
          immediately to Ann Taylor all such items in his posses-
          sion, together with all copies and extracts, and will
          destroy all summaries thereof and any such information
          stored electronically on tapes, computer disks or in any
          other manner.

                         (f)  Consultant Non-Solicitation.  Consul-
          tant agrees that during the term of this Agreement and
          for a period of one (1) year thereafter he shall not,
          directly or indirectly, induce or solicit (or authorize
          or assist in the taking of any such actions by any third
          party) any employee or consultant of Ann Taylor to leave
          his or her business association with Ann Taylor.

                         (g)  Cygne Non-Solicitation.  Cygne agrees
          that during the term of this Agreement and for a period
          of one (1) year thereafter it shall not, directly or
          indirectly, induce or solicit (or authorize or assist in
          the taking of any such actions by any third party) any
          employee or consultant of Ann Taylor to leave his or her
          business association with Ann Taylor.

                         (h)  Ann Taylor Non-Solicitation.  Ann
          Taylor agrees that during the term of this Agreement and
          for a period of one (1) year thereafter it shall not, di-
          rectly or indirectly, induce or solicit (or authorize or
          assist in the taking of any such actions by any third
          party) any employee or consultant of Cygne to leave his
          or her business association with Cygne.

                         (i)  Acknowledgment.  Consultant and Cygne
          acknowledge and agree that the covenants set forth in
          this Section 5 and each subsection hereof are reasonable
          and necessary for the protection of Ann Taylor's business
          interests, that irreparable injury will result to
          Ann Taylor if Consultant or Cygne breaches any of the
          terms of said covenants, and that in the event of
          Consultant's or Cygne's actual or threatened breach of
          any such covenants, Ann Taylor will have no adequate
          remedy at law.  Cygne and Consultant accordingly agree
          that in the event of any actual or threatened breach by
          Consultant of any of said covenants, Ann Taylor shall be
          entitled to immediate injunctive and other equitable
          relief without bond and without the necessity of showing
          actual monetary damages.  Cygne accordingly agrees that
          in the event of any actual or threatened breach by Cygne
          of any of said covenants, Ann Taylor shall be entitled to
          immediate injunctive and other equitable relief without
          bond and without the necessity of showing actual monetary
          damages.  Notwithstanding the provisions of Section 9
          hereof, such equitable relief may be sought in any court
          of competent jurisdiction.  Nothing contained herein
          shall be construed as prohibiting Ann Taylor from pursu-
          ing any other remedies available to it for such breach or
          threatened breach, including the recovery of any damages
          which it is able to prove.

                         (j)  The provisions of this Section 5
          shall survive the expiration or termination of this
          Agreement, and any of the arrangements contained herein,
          and shall be binding upon Consultant's, Cygne's and
          Ann Taylor's corporate or personal successors and as-
          signs.

                    6.   Representations and Warranties of Consul-
          tant.  Consultant represents and warrants to Cygne and
          Ann Taylor that he has full legal power and authority to
          enter into this Agreement, perform all of his obligations
          hereunder and to consummate the transactions contemplated
          hereby.

                    7.   Consultant's Independence and Discretion.

                         (a)  Nothing herein contained shall be
          construed to constitute the parties hereto as partners or
          as joint venturers, or as agent of the others, or, as
          between Ann Taylor and Consultant, as employer and em-
          ployee.  By virtue of the relationship described herein,
          Consultant's relationship to Ann Taylor during the term
          of this Agreement shall only be that of an independent
          contractor and the Consultant shall perform all services
          pursuant to this Agreement as an independent contractor. 
          The Consultant shall not provide any services under
          Ann Taylor's business name and shall not present himself
          as an agent or employee of Ann Taylor and shall have no
          authority to enter into any binding obligation on behalf
          of Ann Taylor.

                         (b)  Subject to the terms of this Agree-
          ment, the manner, means, details or methods by which the
          Consultant performs his obligations under this Agreement
          shall be determined by Cygne, subject to the reasonable
          satisfaction of Ann Taylor.

                         (c)  Each of Cygne and Consultant acknowl-
          edges and agrees that Ann Taylor shall not provide to
          Consultant any unemployment, disability, workers' compen-
          sation or medical insurance or any other employee bene-
          fits.  Payments to Cygne under Section 3 hereof shall not
          be subject to withholding taxes or other employment
          taxes.

                    8.   Arbitration.  Any controversy or claim
          arising out of or relating to this Agreement, or the
          breach thereof, shall be settled by arbitration before
          three (3) arbitrators selected in accordance with the
          Commercial Arbitration Rules of the American Arbitration
          Association in the City of New York.  Arbitration as
          provided herein shall be the exclusive means for determi-
          nation of all matters as above provided, and any decision
          and award of the arbitrators shall be final, binding and
          conclusive upon the parties and such decision and award
          may be entered as a final judgment in any court of compe-
          tent jurisdiction.  Except as provided in Section 5(j)
          hereof, none of the parties shall institute any action or
          proceeding in any court of law or equity, state or feder-
          al, other than as may be necessary for purposes of en-
          forcement of the arbitrators' decision and award hereunder.

                    9.   Consultant's Employment.  Cygne and Con-
          sultant hereby acknowledge that Consultant's execution of
          this Agreement is a condition to Consultant's continued
          employment with Cygne.

                    10.  Notices.  All notices, requests, demands,
          waivers and other communications required or permitted to
          be given under this Agreement shall be in writing and
          shall be deemed to have been duly given if delivered
          personally, by mail (certified or registered mail, return
          receipt requested), by reputable overnight courier or by
          facsimile transmission (receipt of which is confirmed):

                         (a)  If to ATSC or ATI, to:

                              AnnTaylor Stores Corporation
                              142 West 57th Street
                              New York, New York  10019
                              Attention:  General Counsel
                              Facsimile:  (212) 541-3299

                              with a copy to:

                              Skadden, Arps, Slate, Meagher & Flom
                              One Rodney Square
                              Wilmington, Delaware  19801
                              Attention:  Patricia Moran Chuff, Esq.
                              Facsimile:  (302) 651-3001

                         (b)  If to Cygne, to:

                              Cygne Designs, Inc.
                              1372 Broadway
                              New York, New York  10018
                              Attention:  General Counsel
                              Facsimile:  (212) 536-4174

                              with a copy to:

                              Fulbright and Jaworski, L.L.P.
                              666 Fifth Avenue
                              New York, New York  10103
                              Attention:  Roy L. Goldman, Esq.
                              Facsimile:  (212) 752-5958

                         (c)  If to Consultant, to:

                              Cygne Designs, Inc.
                              1372 Broadway
                              New York, New York  10018
                              Attention:   Irving Benson
                              Facsimile:   (212) 536-4174

          or to such other person or address as any party shall
          specify by notice in writing, given in accordance with
          this Section 10 to the other parties hereto.  All such
          notices, requests, demands, waivers and communications
          shall be deemed to have been given on the date on which so
          hand-delivered, on the third business day following the
          date on which so mailed, on the next business day follow-
          ing the date on which delivered to such overnight courier
          and on the date of such facsimile transmission and confir-
          mation, except for a notice of change of person or ad-
          dress, which shall be effective only upon receipt thereof.

                    11.  Entire Agreement.  This Agreement contains
          the entire understanding of the parties hereto with re-
          spect to the subject matter hereof.  This Agreement super-
          sedes all prior agreements and understandings, oral and
          written, with respect to its subject matter.

                    12.  Severability.  Should any provision of this
          Agreement, or any part thereof, for any reason be declared
          invalid or unenforceable, such declaration shall not af-
          fect the validity or enforceability of any other provision
          of this Agreement, or any other part thereof, all of which
          other provisions, and parts, shall remain in full force
          and effect, and the application of such invalid or unen-
          forceable provision, or such part thereof, to persons or
          circumstances other than those as to which it is held
          invalid or unenforceable shall be valid and be enforced to
          the fullest extent permitted by law.

                    13.  Binding Effect; Assignment.  This Agreement
          and all of the provisions hereof shall be binding upon and
          inure to the benefit of the parties hereto and their re-
          spective heirs, executors, successors and permitted as-
          signs, but, except as contemplated herein, neither this
          Agreement nor any of the rights, interests or obligations
          hereunder shall be assigned, directly or indirectly, by
          ATSC, ATI, Cygne or Consultant without the prior written
          consent of the other parties hereto; provided, however,
          that ATSC or ATI may assign any or all of its rights,
          interests or obligations hereunder to any one or more,
          direct or indirect, wholly owned subsidiaries of ATSC or
          ATI, provided, however, that no such assignment by ATSC or
          ATI shall limit or affect ATSC's or ATI's obligations
          hereunder; provided, further, however, that this Agreement
          shall automatically be assigned to and assumed by Consul-
          tant in the event that (i) Consultant's employment with
          Cygne is terminated; or (ii) Cygne is liquidated or dis-
          solved, whether through Chapter 7 of the U.S. Bankruptcy
          Laws or otherwise; provided, however, that Consultant
          hereby agrees, in the event of any such assignment by
          Cygne and assumption by Consultant, to assume and perform
          all of Cygne's obligations hereunder, to the extent appli-
          cable.

                    14.  Amendment, Modification and Waiver.  This
          Agreement may be amended, modified or supplemented at any
          time by written agreement of the parties hereto.  Any
          failure by Cygne or Consultant, on the one hand, or ATSC
          or ATI, on the other hand, to comply with any term or
          provision of this Agreement may be waived by ATSC, ATI,
          Cygne or Consultant, respectively, at any time by an in-
          strument in writing signed by or on behalf of ATSC, ATI,
          Cygne or Consultant, but such waiver or failure to insist
          upon strict compliance with such term or provision shall
          not operate as a waiver of, or estoppel with respect to,
          any subsequent or other failure to comply.

                    15.  Third-Party Beneficiaries.  Except as oth-
          erwise expressly provided herein, this Agreement is not
          intended, and shall not be deemed, to confer upon or give
          any person except the parties hereto and their respective
          successors and permitted assigns, any remedy, claim, lia-
          bility, reimbursement, cause of action or other right
          under or by reason of this Agreement.

                    16.  Counterparts.  This Agreement may be exe-
          cuted in counterparts, each of which shall be deemed an
          original, but all of which together shall constitute one
          and the same instrument.

                    17.  Interpretation.  The section headings con-
          tained in this Agreement are solely for the purpose of
          reference, are not part of the agreement of the parties
          and shall not in any way affect the meaning or interpreta-
          tion of this Agreement.  As used in this Agreement, the
          term "person" shall mean and include an individual, a
          partnership, a joint venture, a corporation, a trust, an
          unincorporated organization and a government or any de-
          partment or agency thereof. 

                    18.  Governing Law.  This Agreement shall be
          governed by the laws of the State of New York, without
          regard to the principles of conflicts of law thereof.


                    IN WITNESS WHEREOF, the parties hereto have duly
          executed this Agreement as of the date and year first
          above written.

                                      ANNTAYLOR STORES CORPORATION

                                      By:                            
                                         Name: 
                                         Title:

                                      ANNTAYLOR, INC.

                                      By:__________________________
                                         Name:
                                         Title:

                                      CYGNE DESIGNS, INC.

                                      By:__________________________
                                         Name:
                                         Title:

                                      CONSULTANT

                                                                     
                                      Irving Benson
                                      Consultant



                                                          EXHIBIT J

                            STOCKHOLDERS AGREEMENT

                    STOCKHOLDERS AGREEMENT, dated as of August __,
          1996 (the "Agreement"), among AnnTaylor Stores Corpora-
          tion, a Delaware corporation (the "Company"), Cygne
          Designs, Inc., a Delaware corporation ("Cygne"), and
          Cygne Group ( F.E.) Limited, a Hong Kong corporation and
          wholly owned subsidiary of Cygne ("CGFE" and, together
          with Cygne, "Holder").

                    WHEREAS, pursuant to that certain Stock and
          Asset Purchase Agreement, dated as of June ___, 1996 (the
          "Purchase Agreement"),  the Company has acquired (the
          "Acquisition") from Holder (i) all of the shares of
          common stock, par value $.01 per share, of  CAT US, Inc.,
          a Delaware corporation, and all of the HK $1 ordinary
          shares of C.A.T. (Far East) Limited, a Hong Kong corpora-
          tion, owned by Holder and (ii) certain of the assets of
          Cygne's AnnTaylor Woven Division;

                    WHEREAS, in consideration for the Acquisition,
          the Company has, among other things, issued to Holder
          ______ shares of common stock, par value $.0068 per share
          (the "Common Stock"), of the Company (the shares of
          Common Stock issued to Holder in consideration for the
          Acquisition are hereinafter referred to as the "Acquisi-
          tion Shares"); and

                    WHEREAS, the Company and Holder have determined
          that it is in their best interests that certain aspects
          of their relationship be regulated according to the terms
          and provisions of this Agreement.

                    NOW, THEREFORE, in consideration of the mutual
          covenants and agreements set forth herein and for good
          and valuable consideration, the receipt and sufficiency
          of which are hereby acknowledged, the parties agree as
          follows:

                                  ARTICLE I
                             CERTAIN DEFINITIONS

          Section 1.01  Definitions.

                    As used in this Agreement, the following terms
          shall have the following meanings:

                    The term "Acquisition" shall have the meaning
          ascribed to it in the second paragraph of the preamble.

                    The term "Acquisition Shares" shall have the
          meaning ascribed to it in the third paragraph of the
          preamble.

                    The term "Affiliate" shall have the meaning
          ascribed to it in Rule 12b-2 of the General Rules and
          Regulations under the Exchange Act.

                    The term "Agreement" shall have the meaning
          ascribed to it in the first paragraph of the preamble.

                    The term "Common Stock" shall have the meaning
          ascribed to it in the third paragraph of the preamble.

                    The term "Company" shall have the meaning
          ascribed to it in the first paragraph of the preamble.

                    The term "Company Offering" shall mean the sale
          of equity securities of the Company, or securities con-
          vertible into or exchangeable or exercisable for equity
          securities of the Company, pursuant to a registration
          statement filed by the Company under the Securities Act
          (other than (i) a registration statement filed on Form S-
          4 or any successor form or (ii) a registration statement
          filed on Form S-8 or any successor form) respecting an
          underwritten offering, whether primary or secondary, that
          is declared effective by the SEC.

                    The term "Company Subsidiary" shall mean any
          Person the majority of the outstanding voting securities
          or interests of which are owned by the Company, and shall
          include AnnTaylor Stores Corporation Finance Trust.

                    The term "Effective Date" shall have the mean-
          ing ascribed to it in Section 2.02.

                    The term "Exchange Act" shall mean the Securi-
          ties Exchange Act of 1934, as amended, and the rules and
          regulations of the SEC promulgated thereunder.

                    The term "Holder" shall have the meaning as-
          cribed to it in the first paragraph of the preamble.

                    The term "Losses" shall have the meaning as-
          cribed to it in Section 2.06(a).

                    The term "Person" shall mean an individual,
          trustee, corporation, partnership, business trust, limit-
          ed liability company, limited liability partnership, 
          joint stock company, trust, unincorporated association,
          union, business association, firm or other entity.

                    The term "Purchase Agreement" shall have the
          meaning ascribed to it in the second paragraph of the
          preamble.

                    The term "Registration Expenses" shall have the
          meaning ascribed to it in Section 2.05.

                    The term "Rule 144" shall mean Rule 144 promul-
          gated under the Securities Act (or any successor rule).

                    The term "Rule 415 Offering" shall have the
          meaning ascribed to it in Section 2.01(a).

                    The term "SEC" shall mean the Securities and
          Exchange Commission.

                    The term "Securities Act" shall mean the Secu-
          rities Act of 1933, as amended, and the rules and regula-
          tions of the SEC promulgated thereunder.

                    The term "Shelf Registration Statement" shall
          have the meaning ascribed to it in Section 2.01(a).

                    The term "Transfer" shall mean any attempt to,
          directly or indirectly, offer, sell, assign, transfer,
          grant a participation in, pledge or otherwise dispose of
          any of the Acquisition Shares, or the consummation of any
          such transactions, or the soliciting of any offers to
          purchase or otherwise acquire, or take a pledge of any of
          the Acquisition Shares.

                                  ARTICLE II
                            REQUIRED REGISTRATION

          Section 2.01  Required Registration.

                    (a)  Form S-3.  As promptly as practicable, but
          in no event later than fifteen (15) business days after
          the date on which the Acquisition closes, the Company
          shall use reasonable best efforts to prepare and file
          with the SEC a registration statement (the "Shelf Regis-
          tration Statement") on Form S-3 or another appropriate
          form permitting registration of the Acquisition Shares so
          as to permit promptly the resale of the Acquisition
          Shares by Holder pursuant to an offering on a delayed or
          continuous basis pursuant to Rule 415 (or any successor
          rule) under the Securities Act (a "Rule 415 Offering")
          and shall use reasonable best efforts to cause the Shelf
          Registration Statement to be declared effective by the
          SEC as promptly as practicable.

                    (b)  Effectiveness.  The Company shall use
          reasonable best efforts to keep the Shelf Registration
          Statement continuously effective under the Securities Act
          until the date that is the earliest to occur of (i) the
          date that all Acquisition Shares covered by the Shelf
          Registration Statement have been sold, (ii) the third
          anniversary of the date hereof and (iii) when, in the
          written opinion of counsel to the Company, all outstand-
          ing Acquisition Shares held by persons which are not
          Affiliates of the Company may be resold without registra-
          tion under the Securities Act pursuant to Rule 144(k)
          under the Act or any successor provision thereto.

                    (c)  Amendments/Supplements.  The Company shall
          amend and supplement the Shelf Registration Statement and
          the prospectus contained therein if required by the
          rules, regulations or instructions applicable to the
          registration form used by the Company for such Shelf
          Registration Statement or if required by the Securities
          Act; provided, however, that the Company may delay the
          filing of any such amendment or supplement for up to 90
          days if the Company in good faith has a valid business
          reason for such delay.

                    (d)  Offerings.  At any time after the effec-
          tive date of the Shelf Registration Statement, Holder,
          subject to the restrictions and conditions contained
          herein, and to compliance which all applicable state and
          federal securities laws, shall have the right to dispose
          of all or any portion of the Acquisition Shares from time
          to time in negotiated or market transactions (which may
          include delivery to class action plaintiffs or a distri-
          bution to Holder's stockholders).

          Section 2.02   Holdback Agreement.

                     From and after the first anniversary of the
          date on which the Shelf Registration Statement is de-
          clared effective by the SEC (the "Effective Date"), upon
          the request of the Company, Holder shall not effect any
          public sale or distribution (including sales pursuant to
          Rule 144) of Acquisition Shares, during the ten (10)-day
          period prior to the date on which the Company has noti-
          fied Holder that the Company intends to commence a Compa-
          ny Offering through the filing of a registration state-
          ment with the Securities and Exchange Commission, through
          the one hundred twenty (120)-day period immediately
          following the closing date of such Company Offering;
          provided, however, that Holder shall not be obligated to
          comply with this Section 2.02 on more than one (1) occa-
          sion in any twelve (12)-month period.

          Section 2.03   Blackout Provisions.

                    The Company shall be deemed not to have used
          its reasonable best efforts to keep the Shelf Registra-
          tion Statement effective during the requisite period if
          the Company voluntarily takes any action that would
          result in Holder not being able to offer and sell any
          Acquisition Shares during that period, unless (i) such
          action is required by applicable law, (ii) upon the
          occurrence of any event contemplated by Section
          2.04(a)(8)  below, such action is taken by the Company in
          good faith and for valid business reasons or (iii) the
          continued effectiveness of the Shelf Registration State-
          ment would require the Company to disclose a material
          financing, acquisition or other corporate development,
          and the proper officers of the Company shall have deter-
          mined in good faith that such disclosure is not in the
          best interests of the Company and its stockholders, and,
          in the case of clause (ii) above, the Company thereafter
          promptly comply with the requirements of Section
          2.04(a)(8) below; provided that the Company takes the
          same action in respect of the Shelf Registration State-
          ment filed pursuant to that certain Registration Rights
          Agreement, dated as of April 25, 1996, between the Compa-
          ny and the Initial Purchasers named therein.

          Section 2.04   Registration Procedures.

                    (a)  Procedures.  In connection with the regis-
          tration of the Acquisition Shares pursuant to this Agree-
          ment, the Company shall use reasonable best efforts to
          effect the registration and sale of the Acquisition
          Shares in accordance with Holder's intended method of
          disposition thereof and, in connection therewith, the
          Company shall as expeditiously as practicable:

                         (1)  prepare and file with the SEC
               the Shelf Registration Statement and use rea-
               sonable best efforts to cause the Shelf Regis-
               tration Statement to become and remain effec-
               tive in accordance with Section 2.01(a) and (b)
               above;

                         (2)  prepare and file with the SEC
               amendments and supplements to the Shelf Regis-
               tration Statement and the prospectuses used in
               connection therewith in accordance with Section
               2.01(c) above;

                         (3)  before filing with the SEC the
               Shelf Registration Statement or prospectus or
               any amendments or supplements thereto, the
               Company shall furnish to one counsel selected
               by Holder and one counsel for the underwriter
               or sales or placement agent, if any, in connec-
               tion therewith, drafts of all such documents
               proposed to be filed and provide such counsel
               with a reasonable opportunity for review there-
               of and comment thereon, such review to be con-
               ducted and such comments to be delivered with
               reasonable promptness;

                         (4)  promptly (i) notify Holder of
               each of (x) the filing and effectiveness of the
               Shelf Registration Statement and each prospec-
               tus and any amendments or supplements thereto,
               (y) the receipt of any comments from the SEC or
               any state securities law authorities or any
               other governmental authorities with respect to
               any such Shelf Registration Statement or pro-
               spectus or any amendments or supplements there-
               to, and (z) any oral or written stop order with
               respect to such registration, any suspension of
               the registration or qualification of the sale
               of the Acquisition Shares in any jurisdiction
               or any initiation or threatening of any pro-
               ceedings with respect to any of the foregoing
               and (ii) use reasonable best efforts to obtain
               the withdrawal of any order suspending the
               registration or qualification (or the effec-
               tiveness thereof) or suspending or preventing
               the use of any related prospectus in any juris-
               diction with respect thereto;

                         (5)  furnish to Holder, the under-
               writers or the sales or placement agent, if
               any, and one counsel for each of the foregoing,
               a conformed copy of the Shelf Registration
               Statement and each amendment and supplement
               thereto (in each case, including all exhibits
               thereto) and such additional number of copies
               of such Shelf Registration Statement, each
               amendment and supplement thereto (in such case,
               without such exhibits), the prospectus (includ-
               ing each preliminary prospectus) included in
               such Shelf Registration Statement and prospec-
               tus supplements and all exhibits thereto and
               such other documents as Holder, underwriter,
               agent or such counsel may reasonably request in
               order to facilitate the disposition of the
               Acquisition Shares by Holder;

                         (6)  if requested by Holder or the
               managing underwriter or underwriters of a Rule
               415 Offering, subject to approval of counsel to
               the Company in its reasonable judgment, prompt-
               ly incorporate in a prospectus, supplement or
               post-effective amendment to the Shelf Registra-
               tion Statement such information concerning
               underwriters and the plan of distribution of
               the Acquisition Shares as such managing under-
               writer or underwriters or Holder reasonably
               shall furnish to the Company in writing and
               request be included therein, including, without
               limitation, information with respect to the
               number of Acquisition Shares being sold by
               Holder to such underwriter or underwriters, the
               purchase price being paid therefor by such
               underwriter or underwriters and with respect to
               any other terms of the underwritten offering of
               the Acquisition Shares to be sold in such of-
               fering; and make all required filings of such
               prospectus, supplement or post-effective amend-
               ment as soon as reasonably practicable after
               being notified of the matters to be incorporat-
               ed in such prospectus, supplement or post-ef-
               fective amendment;

                         (7)  use reasonable best efforts to
               register or qualify the Acquisition Shares
               under such securities or "blue sky" laws of
               such jurisdictions as Holder reasonably re-
               quests and do any and all other acts and things
               which may be reasonably necessary or advisable
               to enable Holder to consummate the disposition
               in such jurisdictions in which the Acquisition
               Shares are to be sold and keep such registra-
               tion or qualification in effect for so long as
               the Shelf Registration Statement remains effec-
               tive under the Securities Act (provided that
               the Company shall not be required to (i) quali-
               fy generally to do business in any jurisdiction
               where it would not otherwise be required to
               qualify but for this paragraph, (ii) subject
               itself to taxation in any such jurisdiction
               where it would not otherwise be subject to
               taxation but for this paragraph or (iii) con-
               sent to the general service of process in any
               jurisdiction where it would not otherwise be
               subject to general service of process but for
               this paragraph);

                         (8)  notify Holder, at any time when
               a prospectus relating to the Shelf Registration
               Statement is required to be delivered under the
               Securities Act, upon the discovery that, or of
               the happening of any event as a result of
               which, the Shelf Registration Statement, as
               then in effect, contains an untrue statement of
               a material fact or omits to state any material
               fact required to be stated therein or any fact
               necessary to make the statements therein not
               misleading, and, subject to Section 2.03 above,
               promptly prepare and furnish to the Holder a
               supplement or amendment to the prospectus con-
               tained in the Shelf Registration Statement so
               that the Shelf Registration Statement shall
               not, and such prospectus as thereafter deliv-
               ered to the purchasers of such Acquisition
               Shares shall not, contain an untrue statement
               of a material fact or omit to state any materi-
               al fact required to be stated therein or any
               fact necessary to make the statements therein
               not misleading;

                         (9)  cause all of the Acquisition
               Shares to be listed on each national securities
               exchange and included in each established over-
               the-counter market on which or through which
               the Common Stock is then listed or traded;

                         (10) make available for inspection by
               Holder, any underwriter participating in any
               disposition pursuant to the Shelf Registration
               Statement, and any attorney, accountant or
               other agent retained by Holder or underwriter,
               all reasonably requested financial and other
               records, pertinent corporate documents and
               properties of the Company, and cause the
               Company's officers, directors, employees, at-
               torneys and independent accountants to supply
               all information reasonably requested by Hold-
               er, underwriters, attorneys, accountants or
               agents in connection with the Shelf Registra-
               tion Statement; information which the Company
               determines, in good faith, to be confidential
               shall not be disclosed by such persons unless,
               subject to Section 2.03 above, (i) the disclo-
               sure of such information is required by appli-
               cable federal securities laws or is necessary
               to avoid or correct a misstatement or omission
               in such Shelf Registration Statement or (ii)
               the release of such information is ordered
               pursuant to a subpoena or other order from a
               court of competent jurisdiction; Holder agrees,
               on its own behalf and on behalf of all of its
               underwriters, accountants, attorneys and
               agents, that the information obtained by any of
               them as a result of such inspections shall be
               deemed confidential unless and until such is
               made generally available to the public; Holder
               further agrees, on its own behalf and on behalf
               of all of its underwriters, accountants, attor-
               neys and agents, that it will, upon learning
               that disclosure of such information is sought
               in a court of competent jurisdiction, give
               notice to the Company and allow the Company, at
               its expense, to undertake appropriate action to
               prevent disclosure of the information deemed
               confidential; nothing contained herein shall
               require the Company to waive any attorney-cli-
               ent privilege or disclose attorney work prod-
               uct;

                         (11) use reasonable best efforts to
               comply with all applicable laws related to the
               Shelf Registration Statement and offering and
               sale of securities and all applicable rules and
               regulations of governmental authorities in
               connection therewith (including, without limi-
               tation, the Securities Act and the Exchange
               Act, and the rules and regulations promulgated
               by the Commission) and make generally available
               to its security holders as soon as practicable
               (but in any event not later than fifteen (15)
               months after the effectiveness of the Shelf
               Registration Statement) an earnings statement
               of the Company and the Company Subsidiaries
               complying with Section 11(a) of the Securities
               Act;

                         (12) use reasonable best efforts to
               furnish to Holder a signed counterpart of (x)
               an opinion of counsel for the Company and (y) a
               "comfort" letter signed by the independent
               public accountants who have certified the
               Company's financial statements included or
               incorporated by reference in such registration
               statement, covering such matters with respect
               to such registration statement and, in the case
               of the accountants' comfort letter, with re-
               spect to events subsequent to the date of such
               financial statements as are customarily covered
               in opinions of issuer's counsel and in
               accountants' comfort letters delivered to the
               underwriters in underwritten public offerings
               of securities for the account of, or on behalf
               of, a holder of common stock, such opinion and
               comfort letters to be dated the date that such
               opinion and comfort letters are customarily
               dated in such transactions; and

                         (13) take other actions as Holder or
               the underwriters, if any, reasonably request in
               order to expedite or facilitate the disposition
               of the Acquisition Shares.

                    (b)  Further Agreements.  Without limiting any
          of the foregoing, in the event that the sale of Acquisi-
          tion Shares is to be made by or through an underwriter,
          the Company shall enter into an underwriting agreement
          with a managing underwriter or underwriters selected by
          Holder containing representations, warranties, indemni-
          ties and agreements customarily included (but not incon-
          sistent with the agreements contained herein) by an
          issuer of common stock in underwriting agreements with
          respect to offerings of common stock for the account of,
          or on behalf of, holders of common stock; provided,
          however, that the Holder shall not utilize the Shelf
          Registration Statement for more than one underwritten
          offering during the term of this Agreement.  In connec-
          tion with the sale of Acquisition Shares hereunder,
          Holder may, at its option, require that any and all
          representations and warranties by, and the other agree-
          ments of, the Company to or for the benefit of such
          underwriter or underwriters (or which would be made to or
          for the benefit of such an underwriter or underwriter if
          such sale of Acquisition Shares were pursuant to a cus-
          tomary underwritten offering) be made to and for the
          benefit of Holder and that any or all of the conditions
          precedent to the obligations of such underwriter or
          underwriters (or which would be so for the benefit of
          such underwriter or underwriters under a customary under-
          writing agreement) be conditions precedent to the obliga-
          tions of Holder in connection with the disposition of its
          securities pursuant to the terms hereof.  In connection
          with any offering of Acquisition Shares registered pursu-
          ant to this Agreement, the Company shall, upon receipt of
          duly endorsed certificates representing the Acquisition
          Shares, (x) furnish to the underwriter, if any (or, if no
          underwriter, Holder), unlegended certificates represent-
          ing ownership of Acquisition Shares being sold, in such
          denominations as requested, and (y) instruct any transfer
          agent and registrar of the Acquisition Shares to release
          any stop transfer order with respect thereto.

                    Holder agrees that upon receipt of any notice
          from the Company of the happening of any event of the
          kind described in paragraph (8) of Section 2.04(a),
          Holder shall forthwith discontinue its disposition of
          Acquisition Shares pursuant to the Shelf Registration
          Statement and prospectus relating thereto until its
          receipt of the copies of the supplemented or amended
          prospectus contemplated by paragraph (8) of Section
          2.04(a) and, if so directed by the Company, deliver to
          the Company all copies, other than permanent file copies,
          then in Holder's possession of the prospectus current at
          the time of receipt of such notice relating to the Acqui-
          sition Shares.

          Section 2.05   Registration Expenses.

                    All expenses incidental to the Company's per-
          formance of, or compliance with, its obligations under
          this Agreement including, without limitation, all regis-
          tration and filing fees, all fees and expenses of compli-
          ance with securities and "blue sky" laws (including,
          without limitation, the fees and expenses of counsel for
          underwriters or placement or sales agents in connection
          with "blue sky" law compliance), all printing and copying
          expenses, all messenger and delivery expenses, all rea-
          sonable out-of-pocket expenses of underwriters and sales
          and placement agents in connection therewith (excluding
          discounts and commissions and the fees and expenses of
          counsel therefor), all fees and expenses of the Company's
          independent certified public accountants and counsel
          (including, without limitation, with respect to "comfort"
          letters and opinions) and other Persons retained by the
          Company in connection therewith (collectively, the "Reg-
          istration Expenses"), shall be borne by the Company.  The
          Company shall not be responsible for and shall not pay
          the fees and expenses of legal counsel, accountants,
          agents or experts retained by Holder in connection with
          the sale of the Acquisition Shares.  The Company will pay
          its internal expenses (including, without limitation, all
          salaries and expenses of its officers and employees
          performing legal or accounting duties, the expense of any
          annual audit and the expense of any liability insurance)
          and the expenses and fees for listing the Acquisition
          Shares on the New York Stock Exchange.

          Section 2.06   Indemnification.

                    (a)  By the Company.  The Company agrees to
          indemnify Holder, its officers, directors, employees and
          agents and each Person who controls (within the meaning
          of Section 15 of the Securities Act or Section 20 of the
          Exchange Act) Holder or such other indemnified Person
          against all losses, claims, damages, liabilities and
          expenses (collectively, the "Losses") caused by, result-
          ing from or relating to any untrue or alleged untrue
          statement of material fact contained in the Shelf Regis-
          tration Statement, any prospectus or preliminary prospec-
          tus or any amendment thereof or supplement thereto or any
          omission or alleged omission of a material fact required
          to be stated therein or necessary to make the statements
          therein not misleading, except insofar as the same are
          caused by or contained in, or alleged to be omitted from,
          any information furnished in writing to the Company by
          Holder or its underwriter or other agent expressly for
          use therein or by Holder's failure to deliver, or its
          underwriter's or other agent's failure to deliver, a copy
          of the Shelf Registration Statement or prospectus or any
          amendments or supplements thereto after the Company has
          furnished Holder with the requested number of copies of
          the same.  In connection with an underwritten offering
          and without limiting any of the Company's other obliga-
          tions under this Agreement, the Company shall indemnify
          such underwriters, their officers, directors, employees
          and agents and each Person who controls (within the
          meaning of Section 15 of the Securities Act or Section 20
          of the Exchange Act) such underwriters or such other
          indemnified Person to the same extent as provided above
          with respect to the indemnification of Holder.

                    (b)  By Holder.  In connection with the Shelf
          Registration Statement, Holder shall furnish to the
          Company in writing information regarding  Holder's owner-
          ship of Acquisition Shares and its intended method of
          distribution thereof and shall indemnify the Company, its
          directors, officers, employees and agents and each Person
          who controls (within the meaning of Section 15 of the
          Securities Act or Section 20 of the Exchange Act) the
          Company or such other indemnified Person against all
          Losses caused by, resulting from or relating to any
          untrue or alleged untrue statement of material fact
          contained in the Shelf Registration Statement, any pro-
          spectus or preliminary prospectus or any amendment there-
          of or supplement thereto or any omission or alleged
          omission of a material fact required to be stated therein
          or necessary to make the statements therein not mislead-
          ing, but only to the extent that such untrue statement or
          omission or  alleged untrue statement or omission (i) is
          caused by, results from or relates to, or is alleged to
          be omitted from, such information so furnished in writing
          by Holder or (ii) arises out of or results from Holder's
          failure to deliver, or its underwriter's or other agent's
          failure to deliver, a copy of the Shelf Registration
          Statement or prospectus or any amendments or supplements
          thereto after the Company has furnished Holder with the
          requested number of copies of the same; provided, howev-
          er, that Holder shall not be liable for any claims here-
          under in excess of the amount of net proceeds received by
          Holder from the sale of Acquisition Shares pursuant to
          the Shelf Registration Statement.  In connection with an
          underwritten offering and without limiting any of
          Holder's other obligations under this Agreement, (i)
          Holder shall indemnify such underwriters, their officers,
          directors, employees and agents and each Person who
          controls (within the meaning of Section 15 of the Securi-
          ties Act or Section 20 of the Exchange Act) such under-
          writers or such other indemnified Person to the same
          extent as provided above with respect to the indemnifica-
          tion of the Company and (ii) Holder shall cause each
          underwriter of an underwritten offering to indemnify the
          Company, its directors, officers, employees and agents
          and each Person who controls (within the meaning of
          Section 15 of the Securities Act or Section 20 of the
          Exchange Act) the Company or such indemnified Person
          against all Losses caused by, resulting from or relating
          to any untrue or alleged untrue statement of material
          fact contained in the Shelf Registration Statement, any
          prospectus or preliminary prospectus or any amendment
          thereof or supplement thereto or any omission or alleged
          omission of a material fact required to be stated therein
          or necessary to make the statements therein not mislead-
          ing, but only to the extent that such untrue statement or
          omission or alleged untrue statement or omission (x) is
          caused by, results from or relates to, or is alleged to
          be omitted from, such information furnished in writing by
          such underwriter or (y) arises out of or results from
          such underwriter's failure to delivery a copy of the
          Shelf Registration Statement or prospectus or any amend-
          ments or supplements thereto after the Company has fur-
          nished such underwriter with the requested number of
          copies of the same.

                    (c)  Notice.  Any Person entitled to indemnifi-
          cation hereunder shall give prompt written notice to the
          indemnifying party of any claim with respect to which it
          seeks indemnification; provided, however, the failure to
          give such notice shall not release the indemnifying party
          from its obligation, except to the extent that the indem-
          nifying party has been prejudiced by such failure to
          provide such notice.

                    (d)  Defense of Actions.  In any case in which
          any such action is brought against any indemnified party,
          and it notifies an indemnifying party of the commencement
          thereof, the indemnifying party shall be entitled to
          participate therein, and, to the extent that it may wish,
          jointly with any other indemnifying party similarly
          notified, to assume the defense thereof, with counsel
          reasonably satisfactory to such indemnified party, and
          after notice from the indemnifying party to such indemni-
          fied party of its election so to assume the defense
          thereof, the indemnifying party shall not (so long as it
          shall continue to have the right to defend, contest,
          litigate and settle the matter in question in accordance
          with this paragraph) be liable to such indemnified party
          hereunder for any legal or other expense subsequently
          incurred by such indemnified party in connection with the
          defense thereof other than reasonable costs of investiga-
          tion, supervision and monitoring (unless such indemnified
          party reasonably objects to such assumption on the
          grounds that there may be defenses available to it which
          are different from or in addition to the defenses avail-
          able to such indemnifying party, in which event the
          indemnified party shall be reimbursed by the indemnifying
          party for the reasonable expenses incurred in connection
          with retaining one separate legal counsel).  An indemni-
          fying party shall not be liable for any settlement of an
          action or claim effected without its consent.  The indem-
          nifying party shall lose its right to defend, contest,
          litigate and settle a matter if it shall fail to dili-
          gently contest such matter (except to the extent settled
          in accordance with the next following sentence).  No
          matter shall be settled by an indemnifying party without
          the consent of the indemnified party unless such settle-
          ment contains a full and unconditional release of the
          indemnified party.

                    (e)  Survival.  The indemnification provided
          for under this Agreement shall remain in full force and
          effect regardless of any investigation made by or on
          behalf of the indemnified Person and will survive the
          transfer of the Registrable Securities.

                    (f)  Contribution.  If recovery is not avail-
          able under the foregoing indemnification provisions for
          any reason or reasons other than as specified therein,
          any Person who otherwise would be entitled to indemnifi-
          cation by the terms thereof shall nevertheless be enti-
          tled to contribution with respect to any Losses with
          respect to which such Person would be entitled to such
          indemnification but for such reason or reasons.  In
          determining the amount of contribution to which the
          respective Persons are entitled, there shall be consid-
          ered the Persons' relative knowledge and access to infor-
          mation concerning the matter with respect to which the
          claim was asserted, the opportunity to correct and pre-
          vent any statement or omission, and other equitable
          considerations appropriate under the circumstances.  It
          is hereby agreed that it would not necessarily be equita-
          ble if the amount of such contribution were determined by
          pro rata or per capita allocation.  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 found guilty of
          such fraudulent misrepresentation.

          Section 2.07   Transferability of Registration Rights.

                    The rights and obligations of Holder under this
          ARTICLE II may not be transferred or assigned without the
          prior written consent of the Company; provided, however,
          that such rights and obligations may be assigned by
          Holder in connection with a pledge of the Acquisition
          Shares in a bona fide transaction to secure indebtedness
          of Cygne for borrowed money to a lender that agrees in a
          writing reasonably satisfactory to the Company to be
          subject to the terms of this Agreement.

                                 ARTICLE III
                            STANDSTILL PROVISIONS

          Section 3.01   Certain Prohibited Actions.

                    During the term of this Agreement, without the
          prior written consent of the Company, neither Cygne nor
          CGFE shall, and each shall cause each of its Affiliates
          not to, singly or as part of a "group", directly or
          indirectly, through one or more intermediaries or other-
          wise (i) make, or in any way participate, directly or
          indirectly, in, any "solicitation" of "proxies" (as such
          terms are defined or used in Regulation 14A under the
          Exchange Act) with respect to the Common Stock or any
          securities of the Company Subsidiaries (including by the
          execution of actions by written consent), become a "par-
          ticipant" in any "election contest" (as such terms are
          defined or used in Rule 14a-11 under the Exchange Act)
          with respect to the Company or seek to advise or influ-
          ence any person or entity with respect to the voting of
          any shares of Common Stock or any securities of the
          Company Subsidiaries; (ii) initiate, propose, or partici-
          pate in the solicitation of stockholders for the approval
          of one or more stockholder proposals with respect to the
          Company, as described in Rule 14a-8 under the Exchange
          Act, or induce or encourage any other individual or
          entity to initiate any stockholder proposal relating to
          the Company; (iii) form, join, influence or participate
          in a "group", or act in concert with any other person or
          entity, for the purpose of acquiring, holding, voting or
          disposing of any securities of the Company or the Company
          Subsidiaries or taking any other actions prohibited under
          this Section 3.01; (iv) hold any discussions with another
          Person regarding, make any proposal to or  any public
          announcement relating to a tender or exchange offer for
          any securities of the Company or the Company Subsidiar-
          ies, or a merger, business combination, sale of assets,
          liquidation, restructuring, recapitalization or other
          extraordinary corporate transaction relating to the
          Company or any of the Company Subsidiaries or its or
          their material assets or take any action which might
          require the Company to make a public announcement regard-
          ing any of the foregoing; (v) cause the merger of Cygne
          or CGFE with or into, the consolidation of the Cygne or
          CGFE with, or the sale of the business or assets of Cygne
          or CGFE substantially as an entirety to, any other Person
          unless (A) Cygne or CGFE, as the case may be,  is the
          surviving Person or the surviving Person agrees in writ-
          ing to be bound by this Agreement and (B) within 120 days
          after consummation of the transaction, the surviving
          Person disposes of all shares of Common Stock owned by it
          (in excess of those owned by Cygne or CGFE, as the case
          may be, prior to consummation of the transaction);
          (vi) act, alone or in concert with others (including by
          providing financing for another party), to seek or offer
          to control the Company; (vii) deposit any Acquisition
          Shares in a voting trust or subject any Acquisition
          Shares to any arrangement or agreement with respect to
          the voting thereof (except pursuant to Section 3.03
          below); (viii) execute any written consents; (ix) enter
          into any discussions, negotiations, arrangements or
          understandings with or provide any information to any
          third party with respect to any of the foregoing;
          (x) disclose any intention, plan or arrangement inconsis-
          tent with the foregoing prohibitions or advise or assist
          any other Person in connection with any activity included
          in the foregoing prohibitions; or (xi) seek, request, or
          propose any waiver, modification, amendment or termina-
          tion of any provision of this Section 3.01 (other than
          any request or proposal made or solicited by the Company).

          Section 3.02   Transferability of Acquisition Shares.

                    (a)  Lock-up Period.  Except pursuant to a
          pledge in a bona fide transaction to secure indebtedness
          of Cygne for borrowed money to a lender that agrees in a
          writing reasonably acceptable to the Company to be sub-
          ject to the terms of this Agreement, Holder may not
          Transfer any of the Acquisition Shares prior to the
          Effective Date.

                    (b)  Permitted Transfers.  From and after the
          Effective Date, Holder may not Transfer the Acquisition
          Shares except in the following circumstances:

                         (i)        to the Company or with the
               Company's prior written consent;

                         (ii)       pursuant to a pledge in a
               bona fide transaction to secure indebtedness of
               Cygne for borrowed money to a lender that
               agrees in a writing reasonably acceptable to
               the Company to be subject to the terms of this
               Agreement;

                         (iii)     to an Affiliate that agrees
               in a writing reasonably acceptable to the Com-
               pany to be bound by the terms of this Agreement;

                         (iv) pursuant to a tender offer made
               by a person with respect to which the Company
               does not recommend rejection;

                         (v)  pursuant to a settlement with
               the plaintiffs in the class action  Veronica
               Zucker v. Sasaki, et al.;

                         (vi) pursuant to a pro rata dividend
               or other pro rata distribution to all of 
               Cygne's stockholders, upon liquidation of Cygne
               or otherwise; or

                         (vii)     pursuant to Rule 144 or
               otherwise pursuant to the Shelf Registration
               Statement;

          provided, however, that, other than pursuant to clauses
          (iv)-(vi) above or pursuant to an underwritten public
          offering, no Transfers of more than two percent (2%) of
          the Company's then outstanding shares of Common Stock may
          be made in any two (2)-week period; and provided, fur-
          ther, that any underwriter of a public offering or any
          placement agent, broker or other agent shall be instruct-
          ed that (x) no Transfers of any Acquisition Shares may
          knowingly be made to any person who beneficially owns in
          excess of five percent (5%) of the then outstanding
          shares of Common Stock, and (y) no Transfer of more than
          two percent (2%) of the Company's then outstanding Common
          Stock may knowingly be made to a single purchaser (or
          group of related purchasers).

          Section 3.03   Voting.

                    During the term of this Agreement, the Holder
          (i) shall be present in person or represented by proxy at
          all stockholder meetings of the Company so that all
          Acquisition Shares then beneficially owned by Holder
          shall be counted for the purpose of determining the
          presence of a quorum at such meetings, and (ii) shall
          vote, or act by consent with respect to, all Acquisition
          Shares then beneficially owned by Holder pro rata in the
          same proportion as the votes cast by all other stockhold-
          ers of the Company.

                                  ARTICLE IV
                                MISCELLANEOUS

          Section 4.01   Effectiveness of Agreement.

                    The provisions of this Agreement shall be
          effective as of the date hereof.

          Section 4.02   Restrictive Legends.

                    Holder hereby acknowledges and agrees that,
          during the term of this Agreement, each of the certifi-
          cates representing Acquisition Shares shall be subject to
          stop transfer instructions and shall include the follow-
          ing legend:

                    "THE SHARES REPRESENTED BY THIS CERTIFICATE
          HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. 
          THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
          TRANSFERRED WHETHER BY SALE, ASSIGNMENT, PLEDGE, ENCUM-
          BRANCE, GIFT, BEQUEST, APPOINTMENT OR OTHERWISE, AND
          ANNTAYLOR STORES CORPORATION (THE "COMPANY")  WILL NOT
          REGISTER THE TRANSFER OF SUCH SHARES, EXCEPT PURSUANT AND
          SUBJECT TO THAT CERTAIN STOCKHOLDERS AGREEMENT DATED
          AUGUST __, 1996, AS MAY BE AMENDED FROM TIME TO TIME,
          BETWEEN ATSC AND CYGNE DESIGNS, INC.  A COPY OF SUCH
          AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY."

          Section 4.03   Recapitalization.

                    In the event that any capital stock or other
          securities are issued as a dividend or distribution on,
          in respect of, in exchange for, or in substitution of,
          any Acquisition Shares, such securities shall be deemed
          to be Acquisition Shares for all purposes under this
          Agreement.

          Section 4.04   Notices.  

                    All notices, requests, demands, waivers and
          other communications required or permitted to be given
          under this Agreement shall be in writing and shall be
          deemed to have been duly given if delivered personally,
          by mail (certified or registered mail, return receipt
          requested), by reputable overnight courier or by facsimi-
          le transmission (receipt of which is confirmed):

                         (a)  If to the Company, to:

                              AnnTaylor Stores Corporation
                              142 West 57th Street
                              New York, New York  10019
                              Attention:  General Counsel
                              Facsimile:  (212) 541-3299

                              with a copy to:

                              Skadden, Arps, Slate, Meagher & Flom
                              One Rodney Square
                              Wilmington, Delaware  19801
                              Attention:  Patricia Moran Chuff, Esq.
                              Facsimile:  (302) 651-3001

                         (b)  If to Holder, to:

                              Cygne Designs, Inc.
                              1372 Broadway
                              New York, New York  10018
                              Attention:  General Counsel
                              Facsimile:  (212) 536-4174

                              with a copy to:

                              Fulbright and Jaworski, L.L.P.
                              666 Fifth Avenue
                              New York, New York  10103
                              Attention:  Roy L. Goldman, Esq.
                              Facsimile:  (212) 752-5958

          or to such other person or address as any party shall
          specify by notice in writing, given in accordance with
          this Section 4.04, to the other parties hereto.  All such
          notices, requests, demands, waivers and communications
          shall be deemed to have been given on the date on which so
          hand-delivered, on the third business day following the
          date on which so mailed, on the next business day follow-
          ing the date on which delivered to such overnight courier
          and on the date of such facsimile transmission and confir-
          mation, except for a notice of change of person or ad-
          dress, which shall be effective only upon receipt thereof.

          Section 4.05   Entire Agreement.  

                    This Agreement contains the entire understanding
          of the parties hereto with respect to the subject matter
          hereof.  This Agreement supersedes all prior agreements
          and understandings, oral and written, with respect to its
          subject matter.

          Section 4.06   Severability. 

                    Should any provision of this Agreement, or any
          part thereof, for any reason be declared invalid or unen-
          forceable, such declaration shall not affect the validity
          or enforceability of any other provision of this Agree-
          ment, or any other part thereof, all of which other provi-
          sions, and parts, shall remain in full force and effect,
          and the application of such invalid or unenforceable pro-
          vision, or such part thereof, to persons or circumstances
          other than those as to which it is held invalid or unen-
          forceable shall be valid and be enforced to the fullest
          extent permitted by law.

          Section 4.07   Binding Effect; Assignment.  

                    This Agreement and all of the provisions hereof
          shall be binding upon and inure to the benefit of the
          parties hereto and their respective heirs, executors,
          successors and permitted assigns, but, except as expressly
          contemplated herein, neither this Agreement nor any of the
          rights, interests or obligations hereunder shall be as-
          signed, directly or indirectly, by the Company or Holder
          without the prior written consent of the other.  Upon any
          such assignment, this Agreement shall be amended to sub-
          stitute the assignee as a party hereto in a writing rea-
          sonably acceptable to the other party.

          Section 4.08   Amendment, Modification and Waiver.  

                    This Agreement may be amended, modified or sup-
          plemented at any time by written agreement of the parties
          hereto.  Any failure by Holder, on the one hand, or the
          Company, on the other hand, to comply with any term or
          provision of this Agreement may be waived by the Company
          or Holder, respectively, at any time by an instrument in
          writing signed by or on behalf of the Company and Holder,
          but such waiver or failure to insist upon strict compli-
          ance with such term or provision shall not operate as a
          waiver of, or estoppel with respect to, any subsequent or
          other failure to comply.

          Section 4.09   Third-Party Beneficiaries.  

                    This Agreement is not intended, and shall not be
          deemed, to confer upon or give any person except the par-
          ties hereto and their respective successors and permitted
          assigns, any remedy, claim, liability, reimbursement,
          cause of action or other right under or by reason of this
          Agreement.

          Section 4.10   Counterparts.  

                    This Agreement may be executed in counterparts,
          each of which shall be deemed an original, but all of
          which together shall constitute one and the same instrument.

          Section 4.11   Interpretation.  

                    The article and section headings contained in
          this Agreement are solely for the purpose of reference,
          are not part of the agreement of the parties and shall not
          in any way affect the meaning or interpretation of this
          Agreement.  

          Section 4.12   Governing Law.  

                    This Agreement shall be governed by the laws of
          the State of New York, without regard to the principles of
          conflicts of law thereof.

          Section 4.13   Termination; Restrictive Legend.

                    This Agreement shall terminate on the third
          anniversary of the date hereof; provided, however, that
          the provisions of Section 2.06 hereof shall survive termi-
          nation of this Agreement.  It is understood and agreed
          that any restrictive legends set forth on any Acquisition
          Shares shall be removed by delivery of substitute certifi-
          cates without such legends and such Acquisition Shares
          shall no longer be subject to the terms of this Agreement,
          upon the resale of such Acquisition Shares in accordance
          with the terms of this Agreement (other than pursuant to
          Section 3.02(b) (i), (ii) or (iii)) or, if not theretofore
          removed, on the third anniversary of the date hereof.

                    IN WITNESS WHEREOF, the undersigned hereby agree
          to be bound by the terms and provisions of this Stockhold-
          ers Agreement as of the date first above written.

                                   ANNTAYLOR STORES CORPORATION

                                   By:_________________________
                                      Name:
                                      Title:

                                   CYGNE DESIGNS, INC.

                                   By:_________________________
                                      Name:
                                      Title:

                                   CYGNE GROUP (F.E.) LIMITED

                                   By:_________________________
                                      Name:
                                      Title:


                                                             EXHIBIT K

                                   TERM SHEET

                                 Florence Lease

                
                Lease               Seller shall lease to Buyer the
                                    second floor of the Florence
                                    Facility.

                Term                Five (5) years, subject to can-
                                    cellation at any time by either
                                    party upon six (6) months' no-
                                    tice of termination.  In the
                                    event of termination by Seller,
                                    Seller shall purchase the
                                    leasehold improvements from
                                    Buyer at their then net book
                                    value.

                Rent                $6,666.67 per month (which
                                    Seller represents is equivalent
                                    to the current intercompany
                                    charge for rent of the Florence
                                    Facility from an affiliate of
                                    Seller).


                                                          EXHIBIT L

               Skadden, Arps, Slate, Meagher & Flom, special
     counsel to Buyer and ATSC, shall render its opinion to
     the following effect in a form reasonably acceptable to
     Buyer (capitalized terms used herein and not otherwise
     defined shall have the meanings set forth in the Stock
     and Asset Purchase Agreement):

               1.   Each of Buyer and ATSC are corporations
     validly existing and in good standing under the laws of
     the State of Delaware.  Each of Buyer and ATSC is quali-
     fied to do business and is in good standing as a foreign
     corporation under the laws of the State of New York.

               2.   Buyer has all requisite corporate power
     and authority to execute, deliver and perform all of its
     obligations under (i) the Agreement, (ii) the Assignment
     and Assumption Agreement, (iii) the Undertaking, (iv) the
     Manuel Consulting Agreement, (v) the Benson Consulting
     Agreement, (vi) [the Subleases], (vii) the Pledge Agree-
     ment and (viii) the Florence Lease.  (The agreements
     listed in clauses (ii)-(viii) are hereinafter collective-
     ly referred to as the "Buyer Transaction Documents.") 
     The execution and delivery of each of the Agreement and
     the Buyer Transaction Documents, and the consummation by
     Buyer of the transactions contemplated thereby, have been
     duly authorized by all requisite corporate action on the
     part of Buyer.

               3.   ATSC has all requisite corporate power and
     authority to execute, deliver and perform all of its
     obligations under (i) the Agreement and (ii) the Stock-
     holders Agreement.  The execution and delivery of the
     Agreement and the Stockholders Agreement, and the consum-
     mation of the transactions contemplated thereby, have
     been duly authorized by all requisite corporate action on
     the part of ATSC.

               4.   Each of the Agreement and the Buyer Trans-
     action Documents have been duly and validly executed and
     delivered by Buyer and (assuming each of the Agreement
     and the Buyer Transaction Documents is a valid and bind-
     ing obligation of each of the other parties thereto) each
     constitutes the valid and binding obligation of Buyer
     enforceable against Buyer in accordance with its terms,
     except that the enforceability thereof may be limited by
     (i) bankruptcy, insolvency, reorganization, fraudulent
     transfer, equity of redemption, moratorium or other
     similar laws now or hereafter in effect relating to
     creditors' rights generally, and (ii) general principles
     of equity (regardless of whether enforceability is con-
     sidered in a proceeding in equity or at law).

               5.   Each of the Agreement and the Stockholders
     Agreement has been duly and validly executed and deliv-
     ered by ATSC and (assuming each of the Agreement and the
     Stockholders Agreement is a valid and binding obligation
     of each of the other parties thereto) each constitutes
     the valid and binding obligation of ATSC enforceable
     against ATSC in accordance with its terms, except that
     the enforceability thereof may be limited by (i) bank-
          ruptcy, insolvency, reorganization, fraudulent transfer,
     equity of redemption, moratorium or other similar laws
     now or hereafter in effect relating to creditors' rights
     generally, and (ii) general principles of equity (regard-
     less of whether enforceability is considered in a pro-
     ceeding in equity or at law).

               6.   The execution and delivery by Buyer of
     each of the Agreement and the Buyer Transaction Documents
     and the performance of its obligations under each of the
     Agreement and the Buyer Transaction Documents, each in
     accordance with its terms, do not (i) conflict with the
     Certificate of Incorporation or By-laws of Buyer, (ii)
     constitute a violation of, or a default under, any Appli-
     cable Contract (as hereinafter defined) or (iii) cause
     the creation of any security interest or lien upon any
     property of Buyer pursuant to any Applicable Contract. 
     As used in such counsel's opinion, "Applicable Contracts"
     shall mean those agreements or instruments set forth on a
     Schedule to such opinion and which have been identified
     to such counsel as all the agreements and instruments
     which are material to the business or financial condition
     of ATSC and its subsidiaries, taken as a whole.

               7.   The execution and delivery by ATSC of each
     of the Agreement and the Stockholders Agreement and the
     performance of its obligations under each of the Agree-
     ment and the Stockholders Agreement, each in accordance
     with its terms, do not (i) conflict with the Certificate
     of Incorporation or By-laws of ATSC, (ii) constitute a
     violation of, or a default under, any Applicable Contract
     or (iii) cause the creation of any security interest or
     lien upon any property of ATSC pursuant to any Applicable
     Contract.

               8.   The shares of ATSC Common Stock to be
     delivered to Seller in payment of the Stock Consideration
     have been duly authorized and, upon issuance of certifi-
     cates therefor conforming to the specimen examined by
     such counsel, against delivery of the CAT shares and the
     Assets for such ATSC Common Stock in accordance with the
     terms of the Agreement, will be validly issued, fully
     paid and non-assessable shares of common stock of ATSC.

               9.   No Governmental Approval (as hereinafter
     defined), which has not been obtained or taken and is not
     in full force and effect, is required to authorize or is
     required in connection with the execution, delivery or
     performance of the Agreement or the Buyer Transaction
     Documents by Buyer.

               10.  No Governmental Approval, which has not
     been obtained or taken and is not in full force and
     affect, is required to authorize or is required in con-
     nection with the execution, delivery or performance of
     the Agreement or the Stockholders Agreement by ATSC.

               11.  Neither the execution, delivery or perfor-
     mance by Buyer of the Agreement and the Buyer Transaction
     Documents nor the compliance by Buyer with the terms and
     provisions thereof will contravene any provision of any
     Applicable Law.

               12.  Neither the execution, delivery or perfor-
     mance by ATSC of the Agreement and the Stockholders
     Agreement nor the compliance by ATSC with the terms and
     provisions thereof will contravene any provision of any
     Applicable Law.

               As used in such counsel's opinion, (i) "Govern-
     mental Approval" shall mean any consent, approval, li-
     cense, authorization or validation of, or filing, record-
     ing or registration with, any Governmental Authority
     pursuant to any Applicable Law, (ii) "Governmental Au-
     thority" shall mean any Delaware, New York or federal
     executive, legislative, judicial, administrative or
     regulatory body under any Applicable Law, and (iii)
     "Applicable Law" shall mean any law of the State of New
     York, the General Corporation Law of the State of Dela-
     ware or any law of the United States, which, in such
     counsel's experience, are normally applicable to transac-
     tions of the type contemplated by the Agreement, the
     Buyer Transaction Documents and the Stockholders Agree-
     ment.




                                                          EXHIBIT M

                    Fulbright & Jaworski, special counsel to Seller
          and CGFE, shall render its opinion to the following
          effect in a form reasonably acceptable to Buyer (capital-
          ized terms used herein and not otherwise defined shall
          have the meanings set forth in the Stock and Asset Pur-
          chase Agreement):

                    1.   Each of Seller, CGFE, CAT-US and CAT-Far
          East is a corporation validly existing and in good stand-
          ing under the laws of its jurisdiction of organization. 
          Each of Seller and CAT-US is qualified to do business and
          is in good standing as a foreign corporation under the
          laws of the State of New York, and, in the case of Sell-
          er, the laws of the State of Florida.

                    2.   Seller has all requisite corporate power
          and authority to execute, deliver and perform all of its
          obligations under (i) the Agreement, (ii) the Assignment
          and Assumption Agreement, (iii) the Bill of Sale,
          (iv) the Manuel Consulting Agreement, (v) the Benson
          Consulting Agreement, (vi) the [Subleases], (vii) the
          Pledge Agreement, (viii) the Florence Lease and (ix) the
          Stockholders Agreement.  (The agreements listed in claus-
          es (ii)-(ix) are hereinafter collectively referred to as
          the "Seller Transaction Documents".)  The execution and
          delivery of each of the Agreement and the Seller Transac-
          tion Documents, and the consummation by Seller of the
          transactions contemplated thereby, have been duly autho-
          rized by all requisite corporate action on the part of
          Seller.

                    3.   CGFE has all requisite corporate power and
          authority to execute, deliver and consummate the transac-
          tions contemplated by the Agreement and the Stockholders
          Agreement.  The execution and delivery of the Agreement
          and the Stockholders Agreement, and the consummation of
          the transactions contemplated thereby, have been duly
          authorized by all requisite corporate action on the part
          of CGFE.

                    4.   Each of the Agreement and the Seller
          Transaction Documents has been duly and validly executed
          and delivered by Seller, and (assuming each of the Agree-
          ment and the Seller Transaction Documents is a valid and
          binding obligation of each of the other parties thereto)
          each constitutes the valid and binding obligation of
          Seller enforceable against Seller in accordance with its
          terms, except that the enforceability thereof may be
          limited by (i) bankruptcy, insolvency, reorganization,
          fraudulent transfer, equity of redemption, moratorium or
          other similar laws now or hereafter in effect relating to
          creditors' rights generally, and (ii) general principles
          of equity (regardless of whether enforceability is con-
          sidered in a proceeding in equity or at law).

                    5.   Each of the Agreement and the Stockholders
          Agreement has been duly and validly executed and deliv-
          ered by CGFE and (assuming each of the Agreement and the
          Stockholders Agreement is a valid and binding obligation
          of each of the other parties thereto) each constitutes
          the valid and binding obligation of CGFE enforceable
          against CGFE in accordance with its terms, except that
          the enforceability thereof may be limited by (i) bank-
          ruptcy, insolvency, reorganization, fraudulent transfer,
          equity of redemption, moratorium or other similar laws
          now or hereafter in effect relating to creditors' rights
          generally, and (ii) general principles of equity (regard-
          less of whether enforceability is considered in a pro-
          ceeding in equity or at law).

                    6.   The certificates representing the CAT US
          Shares are listed on Schedule I hereto.  Assuming that
          Buyer acquired its interest in the CAT US Shares in good
          faith and without notice of any adverse claims (within
          the meaning of Section 8-302 of the New York Uniform
          Commercial Code) and has not been a party to any fraud or
          illegality affecting such shares, upon delivery to Buyer
          at the Closing in the State of New York of the CAT US
          Shares, duly endorsed to Buyer or accompanied by stock
          powers duly executed in blank, Buyer will acquire all of
          Seller's rights in the CAT US Shares free of any adverse
          claims (within the meaning of Section 8-302 of the New
          York Uniform Commercial Code).

                    7.   The certificates representing the CAT-Far
          East Shares are listed on Schedule II hereto.  Assuming
          that Buyer acquired its interest in the CAT-Far East
          Shares in good faith and without notice of any adverse
          claims (within the meaning of Section 8-302 of the New
          York Uniform Commercial Code) and has not been a party to
          any fraud or illegality affecting such shares, upon
          delivery to Buyer at the Closing in the State of New York
          of the CAT-Far East Shares, duly endorsed to Buyer or
          accompanied by stock powers duly executed in blank, Buyer
          will acquire all of CGFE's rights in the CAT-Far East
          Shares free of any adverse claims (within the meaning of
          Section 8-302 of the New York Uniform Commercial Code).

                    8.   No Governmental Approval (as hereinafter
          defined), which has not been obtained or taken and is not
          in full force and effect, is required to authorize or is
          required in connection with the execution, delivery or
          performance of the Agreement or the Seller Transaction
          Documents by Seller.

                    9.   No Foreign Governmental Approval (as
          hereinafter defined), which has not been obtained or
          taken and is not in full force and effect, is required to
          authorize or is required in connection with the execu-
          tion, delivery or performance of the Agreement or the
          Stockholders Agreement by CGFE.  As used in such
          counsel's opinion, "Foreign Governmental Approval" shall
          mean any consent, approval, license, authorization or
          validation of, or filing, recording or registration with,
          any governmental authority pursuant to the laws of Hong
          Kong to the extent specifically referred to herein.

                    10.  The execution and delivery by Seller of
          each of the Agreement and the Seller Transaction Docu-
          ments and the performance by Seller of its obligations
          under each of the Agreement and the Seller Transaction
          Documents, each in accordance with its terms, do not (i)
          violate the Certificate of Incorporation or By-laws of
          Seller, (ii) constitute a violation of or a default under
          any Applicable Contract or (iii) cause the creation of
          any security interest or lien upon any of the property of
          Seller pursuant to any Applicable Contract.  As used in
          such counsel's opinion, "Applicable Contracts" shall mean
          those agreements or instruments set forth on a Schedule
          to such opinion and which have been identified to such
          counsel as all the agreements and instruments which are
          material to the business or financial condition of Seller
          and its subsidiaries taken as a whole.

                    11.  The execution and delivery by CGFE of each
          of the Agreement and the Stockholders Agreement and the
          performance by CGFE of its obligations under each of the
          Agreement and the Stockholders Agreement, each in accor-
          dance with its terms, do not (i) violate the organiza-
          tional documents of CGFE, (ii) constitute a violation of
          or a default under any Applicable Contract or (iii) cause
          the creation of any security interest or lien upon any of
          the property of CGFE pursuant to any Applicable Contract.

                    12.  Neither the execution, delivery or perfor-
          mance by Seller of the Agreement and the Seller Transac-
          tion Documents nor the compliance by Seller with the
          terms and provisions thereof will contravene any Applica-
          ble Law.

                    13.  Neither the execution, delivery or perfor-
          mance by CGFE of the Agreement and the Stockholders
          Agreement nor the compliance by CGFE with the terms and
          provisions thereof will contravene any provision of any
          Applicable Law.

                    As used in such counsel's opinion, (i) "Govern-
          mental Approval" shall mean any consent, approval, li-
          cense, authorization or validation of, or filing, record-
          ing or registration with, any Governmental Authority
          pursuant to any Applicable Law, (ii) "Governmental Au-
          thority" shall mean any Delaware, New York or federal
          executive, legislative, judicial, administrative or
          regulatory body under any Applicable Law, and (iii)
          "Applicable Law" shall mean any law of the State of New
          York, the General Corporation Law of the State of Dela-
          ware or any law of the United States, which, in such
          counsel's experience, are normally applicable to transac-
          tions of the type contemplated by the Agreement and the
          Seller Transaction Documents.

                         Grunfeld, Desiderio, Lebowitz & Silverman
          LLP, customs counsel to Seller and CGFE, shall render its
          opinion to the following effect in a form reasonably
          acceptable to Buyer (capitalized terms used herein and
          not otherwise defined shall have the meanings set forth
          in the Stock and Asset Purchase Agreement):

                    1.   Seller has all licenses, permits, con-
          sents, orders, approvals and other authorizations neces-
          sary under the customs and trade laws of the United
          States of America, including, without limitation, bilat-
          eral trade agreements (collectively, "Customs Laws"), to
          carry on the Division Business as currently being con-
          ducted, except where the failure to have such licenses,
          permits, consents, orders, approvals or other authoriza-
          tions would not have a Material Adverse Effect on Seller,
          CAT or the Division.

                    2.   The execution and delivery by Seller of
          the Agreement and the Seller Transaction Documents do
          not, and the consummation by Seller of the transactions
          contemplated thereby will not, (a) result in any viola-
          tion of or default under, or to our knowledge the cre-
          ation of any Lien, charge or encumbrance upon any of the
          Assets of Seller related to the Division Business under,
          any law or any rule or regulation known to us, or any
          judgment, decree or order of any Governmental Authority
          known to us, in each case under the Customs Laws, to
          which Seller is a party or to which any property or asset
          related to the Division Business is subject; or (b)
          result in any suspension, revocation, impairment, forfei-
          ture or nonrenewal of any license under the Customs Laws.