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Separation Agreement - AnnTaylor Inc. and Barry I. Shapiro

          142 West 57th St.
          New York, NY

          212 541.3519
          212 541.3316

                                                        J. PATRICK SPAINHOUR
                                                        Chairman & Chief Executive Officer

                           PERSONAL & CONFIDENTIAL

July 15, 1997

Mr. Barry I. Shapiro
17 Fleetwood Road
Commack, NY  11725

Dear Barry:

This will confirm the agreement between you and AnnTaylor, Inc. (hereafter
referred to as the 'Company') regarding your separation from the Company.

1.      We agree that your date of separation from employment with the
        Company will be July 15, 1997 (the 'Separation Date') and,
        effective as of the Separation Date, you hereby resign from your
        positions as an officer and/or director of the Company and any
        of the Company's subsidiaries.

2.      In consideration of your consent to the release set forth in 
        paragraph 4 and the representations and agreements set forth
        in this letter agreement, including those set forth in
        paragraph 5 hereof, the Company agrees to pay you the severance
        compensation described in pargraph 3 below, subject to the
        terms and conditions set forth in this letter.

3.      Subject to this letter agreement becoming effective and to your
        compliance with the terms hereof, your severance compensation
        shall consist of the following:

        (a)     Cash compensation of up to $175,000.00, less all
                applicable federal, state and local withholding taxes
                ('Taxes'), payable in up to fourteen equal semi-monthly
                installments of $12,500.00 (less Taxes), commencing
                on the Effective Date of this letter agreement (as
                defined in paragraph 11 below), and continuing through
                the earlier of (i) the seven-month anniversary of such
                date and (ii) such time as you procure other full time
                employment.  The foregoing notwithstanding, the 

Mr. Barry I. Shapiro
July 15, 1997
Page 2

                installment payments referenced above shall be reduced
                by the amount of any compensation you receive from
                other sources for part-time employment, consulting
                engagements, or otherwise prior to procuring full-time
                employment.  You agree that you will provide the Company
                prompt written notice of the amounts of any such other 
                compensation and, if you procure other full time
                employment prior to the fourteenth payment referenced
                above, you will provide the Company prompt written
                notice of such other employment.

        (b)     The Company shall permit you to continue your 
                participation in its medical and dental insurance
                programs at the associate rate of contribution, from the
                Separation Date throughout the period during which you
                are receiving severance compensation pursuant to paragraph
                3(a) above.  At the end of that period, you shall be 
                entitled to participate in such programs in accordance with
                the applicable COBRA regulations.

4.      In consideration of the compensation described in paragraph 3 above,
        you voluntarily, knowingly and willingly release and forever 
        discharge the Company, its parents, subsidiaries and affiliates,
        together with its and their respective officers, directors, partners, 
        shareholders, employees, successors and assigns (collectively, the
        'Related Persons'), from any and all charges, complaints, claims,
        promises, agreements, controversies, causes of action and demands of
        any nature whatsoever which against any of them you or your heirs,
        executors, administrators, successors or assigns ever had, now have
        or hereafter can, shall or may have by reason of any matter, cause
        or thing whatsoever arising to the time you sign this agreement.  This
        release includes,but is not limited to, any rights or claims relating
        in any way to your employment relationship with the Company, or the
        termination thereof, or under any Statute, including the federal Age
        Discrimination in Employment Act, Title VII of the Civil Rights Act,
        The Americans With Disabilities Act, the New York Human Rights Law,
        and any other federal, state or local law.

5.      You represent that you have not filed against the Company or the 
        Company's parents, subsidiaries, affiliates or any Related Persons, 
        any complaints, charges or law suits arising out of your employment
        by the Company, or any other matter arising on or prior to the date
        hereof.  You covenant and agree that you will not seek recovery

Mr. Barry I. Shapiro
July 15, 1997
Page 3

        against the Company or any of its parents, subsidiaries, affiliates
        or any Related Person arising out of any of the matters set forth in
        this paragraph or in paragraph 4.

6.      Nothing set forth in this agreement shall prevent you from enforcing
        the terms of this agreement, nor do you waive or lose any rights 
        that you have to compensation for vested accrued unused 1997 vacation,
        or any rights that you have as a former employee under the Company's
        stock option plans, stock purchase plan, or retirement or insurance
        plans, as applicable.

7.      You represent that you have returned or will immediately return to
        the Company all confidential information of the Company ('Company
        Information' ), and you will not retain any copies, reproductions or
        excerpts thereof, including without limitation business plans and
        projections, strategic planning documentation, reports, files,
        memoranda, records, mailing lists, customer lists, credit cards,
        door and file keys, training manuals, and other physical or personal
        property which you received or prepared or helped prepare in
        connection with your employment by the Company, and other technical,
        business or financial information or trade secrets the use or
        disclosure of which might reasonably be construed to be contrary
        to the interests of the Company or any Related Person.

8.      In the course of your employment with the Company you acquired 
        confidential Company Information.  You understand and agree that such
        Company Information was disclosed to you in confidence and for the
        benefit and use of only the Company.  You acknowledge that you
        have no ownership right or interest in any Company Information
        used or developed during the course of your employment.  You
        understand and agree that (a) you will keep such Company Information
        confidential at all times after your employment with the Company and
        (b) you will not make use of Company Information on your own behalf or
        on behalf of any third party.

9.      You agree that, from the date hereof through July 15, 1998, you will
        not solicit, entice, persuade, induce or influence any individual
        who is an employee of the Company to terminate his or her employment
        with the Company or to become employed by any other individual or
        entity, and you shall not approach any such employee for any such
        purpose.  Any breach of the terms of this paragraph shall result in 
        your automatic forfeiture of the severance compensation set forth in
        paragraph 3 above.

Mr. Barry I. Shapiro
July 15, 1997
Page 4

10.     The Company advises you to consult with an attorney of your choosing
        prior to signing this agreement.  You confirm that you have the
        right and have been given the opportunity to review this agreement
        and, specifically, the release set forth in paragraph 4 and the
        representations and agreements set forth in paragraph 5, with an
        attorney of your choice.  You also understand and agree that the Company
        is under no obligation to offer you the severance compensation set
        forth in paragraph 3 and that you are under no obligation to consent
        to the release set forth in paragraph 4 and the representations and
        agreements set forth in paragraph 5, and that you have entered into
        this agreement freely and voluntarily.

11.     You may have forty-five days to consider the terms of this agreement.
        Furthermore, once you have signed this agreement, you will have seven
        additional days from the date you sign it to revoke your consent.  To
        revoke this agreement you must clearly communicate your decision to do
        so to the Senior Vice President - Human Resources of the Company
        (212-541-3361) within the seven day period.  This agreement will not
        become effective until seven days after the date you have signed it, as
        indicated on the last page hereof.  Such seventh day is considered to
        be the 'Effective Date' of this agreement.

12.     You agree to keep the terms of your severance compensation and this 
        agreement confidential, other than as necessary to consult with
        your legal or tax advisors.

13.     The terms in this letter constitute the entire agreement between us
        and may not be altered or modified other than in a writing signed
        by you and the Company.  You represent that in executing this letter
        agreement you do not rely and have not relied upon any representation
        or statement not set forth herein made by the Company or any of its
        agents, representatives, attorneys or Related Persons with respect
        to the subject matter, basis or effect of this letter agreement, or

Mr. Barry I. Shapiro
July 15, 1997
Page 5

14.     This agreement will be governed by the laws of the State of New
        York, without reference to its choice of law rules.

If this letter correctly sets forth our understanding, please so signify
by signing and dating the enclosed copy of this letter and returning it
to the Senior Vice President - Human Resources, AnnTaylor, Inc., 142
West 57th Street, New York, New York 10019.

Very truly yours,

AnnTaylor, Inc.

By:  /s/ J. Patrick Spainhour
         Chairman & CEO


/s/Barry I. Shapiro
   Barry I. Shapiro
Dated:  August 14, 1997

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