Security Agreement - AnnTaylor Global Sourcing Inc. and The Hongkong and Shanghai Banking Corp. Ltd.

                              AMENDED AND RESTATED SECURITY AGREEMENT

        
         AMENDED  AND  RESTATED  SECURITY AGREEMENT  dated  as  of
September  20,  1996  between  ANNTAYLOR  GLOBAL  SOURCING,  INC.
(formerly  known as CAT US, Inc.), a Delaware corporation  having
an  office  at  142 West 57th Street, New York,  NY   10019  (the
'Company')  and  THE  HONGKONG AND SHANGHAI  BANKING  CORPORATION
 -------
LIMITED,  a  foreign banking corporation acting through  its  New
York Branch (the 'Bank').
                  ----
                     
                     
                     W I T N E S S E T H :
        
         WHEREAS,  the Company has provided a collateral  security
interest  to  the  Bank under a General Security Agreement  dated
August 4, 1995 (the 'Original Agreement');
                     ------------------
        
        
         WHEREAS,  the  Company has requested  that  the  Original
Agreement be restated in its entirety to reflect the amendment of
certain provisions thereof; and
        
        
         WHEREAS,  the  Company and the Bank  are  parties  to  an
Amended  and Restated Credit Agreement dated as of September  20,
1996  (as  modified and supplemented and in effect from  time  to
time,  the  'Credit Agreement'), providing, subject to the  terms
             ----------------
and  conditions  thereof, for extensions of  credit  (by  issuing
letters of credit and making loans) to be made by the Bank to the
Company  in  an aggregate face or principal amount not  exceeding
$40,000,000.
        
        
         NOW,  THEREFORE,  to induce the Bank to  enter  into  the
Credit  Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Company  has agreed to continue to pledge and to grant a security
interest  in the Collateral (as hereinafter defined) as  security
for   the   Secured   Obligations   (as   hereinafter   defined).
Accordingly, the parties hereto agree that the Original Agreement
is hereby amended and restated in its entirety as follows:
         Section 1.     Definitions.  Terms defined in the Credit  Agreement
                        -----------
are used herein as defined therein.  In addition, as used herein:
         'Accounts'  shall  have the meaning  ascribed  thereto  in
          --------
Section 3(d) hereof.

         'Collateral'  shall have the meaning ascribed  thereto  in
          ----------
Section 3 hereof.
       
         'Documents'  shall  have the meaning ascribed  thereto  in
          ---------
Section 3(i) hereof.
       
         'Equipment'  shall  have the meaning ascribed  thereto  in
          ---------
Section 3(g) hereof.

===========================================================================
       
         'Instruments' shall have the meaning ascribed  thereto  in
          -----------
Section 3(e) hereof.
       
         'Inventory'  shall  have the meaning ascribed  thereto  in
          ---------
Section 3(f) hereof.
        
         'Issuers'   shall  mean,  collectively,  the   respective
          -------
corporations  identified in Annex 1 hereto  under  the  caption
  
'Issuers'.
 -------
         'Pledged Stock' shall have the meaning ascribed thereto in
          -------------
Section 3(a) hereof.
       
         'Secured  Obligations' shall mean, collectively,  (a)  the
          --------------------
principal  of  and interest on the Loans made by the  Bank  to,
and  the  Note held by the Bank of, the Company, and all  other
amounts  from  time to time owing to the Bank  by  the  Company
  
under the Credit Agreement or the Note, (b) all obligations  of
the  Company to the Bank hereunder, and (c) all obligations  of
the  Company  under any other Credit Document to  which  it  is
party.
        
         'Stock Collateral' shall mean, collectively, the
          ----------------
Collateral  described in clauses (a) through (c) of  Section  3
  
hereof  and  the proceeds of and to any such property  and,  to
the  extent related to any such property or such proceeds,  all
  
books,  correspondence,  credit files,  records,  invoices  and
  
other papers.
        
         'Uniform Commercial Code'  shall  mean   the   Uniform
          -----------------------
Commercial  Code  as in effect in the State of  New  York  from
time to time.
              
         Section 2.     Representations and Warranties.    The   Company
                        ------------------------------
represents and warrants to the Bank that:
         (a)  the  Company  is  the sole beneficial  owner  of  the
  
Collateral  and  no  Lien  exists  or  will  exist   upon   any
  
Collateral  at  any  time  (and,  with  respect  to  the  Stock
Collateral,  no right or option to acquire the same  exists  in
favor  of  any other Person), except for Liens permitted  under
Section 8.06 of the Credit Agreement and except for the  pledge
and  security interest in favor of the Bank created or provided
for  herein  which pledge and security interest  constitutes  a
first  priority perfected pledge and security interest  in  and
to all of the Collateral;
         (b)  the  Pledged  Stock  evidenced  by  the  certificates
identified  in  Annex 1 hereto is, and all other Pledged  Stock
  
will  be,  duly  authorized, validly  issued,  fully  paid  and
nonassessable  and none of such Pledged Stock  is  or  will  be
subject  to  any  contractual restriction, or  any  restriction
under the charter or by-laws of the respective Issuers of  such
Pledged  Stock, upon the transfer of such Pledged Stock (except
for  any  such  restriction contained herein or in  the  Credit
Agreement);

===========================================================================
         (c)  the  Pledged  Stock  evidenced  by  the  certificates
identified   in  Annex  1  hereto  constitutes  the   indicated
percentage  of  the  total  issued and  outstanding  shares  of
capital  stock  of any class of the Issuers beneficially  owned
by  the  Company on the date hereof (whether or not  registered
in  the  name  of  the  Company) and  said  Annex  1  correctly
identifies,  as at the date hereof, the respective  Issuers  of
such  Pledged Stock, the respective class and par value of  the
shares  comprising such Pledged Stock and the respective number
of  shares  (and  registered owner thereof) evidenced  by  each
such certificate; and
         (d)  any goods now or hereafter produced by the Company or
any  of  its Subsidiaries included in the Collateral have  been
and  will  be  produced in compliance with the requirements  of
the Fair Labor Standards Act, as amended.
         Section 3.     Collateral.  As collateral security for  the  prompt
                        ----------
payment  in  full  when  due  (whether  at  stated  maturity,  by
acceleration  or  otherwise)  of  the  Secured  Obligations,  the
Company  hereby  continues to pledge and  grant  to  the  Bank  a
security  interest  in  all  of the Company's  right,  title  and
interest  in  the following property, whether now  owned  by  the
Company  or  hereafter  acquired  and  whether  now  existing  or
hereafter coming into existence, and wherever located (all  being
collectively referred to herein as 'Collateral'):
                                    ----------
         (a)  the  respective shares of common/preferred  stock  of
the  Issuers evidenced by the certificates identified in  Annex
  
1  hereto  and  all other shares of capital stock  of  whatever
class  of  the Issuers, now or hereafter owned by the  Company,
together  with  in  each case the certificates  evidencing  the
same (collectively, the 'Pledged Stock');
                         -------------
         (b)  all   shares,   securities,   moneys   or   property
representing  a  dividend  on any  of  the  Pledged  Stock,  or
representing  a distribution or return of capital  upon  or  in
respect  of  the Pledged Stock, or resulting from  a  split-up,
revision, reclassification or other like change of the  Pledged
Stock  or  otherwise  received in exchange  therefor,  and  any
subscription warrants, rights or options issued to the  holders
of, or otherwise in respect of, the Pledged Stock;
         (c)  without  affecting the  obligations  of  the  Company
under  any provision prohibiting such action hereunder or under
the  Credit  Agreement, in the event of  any  consolidation  or
merger  in  which any Issuer is not the surviving  corporation,
all  shares of each class of the capital stock of the successor
corporation  (unless such successor corporation is the  Company
itself)  formed  by  or  resulting from such  consolidation  or
merger;
         (d)  all accounts and general intangibles (each as defined
  
in  the  Uniform  Commercial Code) of the Company  constituting
any  right to the payment of money, including (but not  limited
to)  all moneys due and to become due to the Company in respect
of  any  loans or advances for the purchase price of  Inventory
or  Equipment  or  other goods sold or leased or  for  services

========================================================================

rendered,  all  moneys due and to become  due  to  the  Company
under  any  guarantee (including a letter  of  credit)  of  the
purchase  price of Inventory or Equipment sold by  the  Company
and  all  tax  refunds (such accounts, general intangibles  and
moneys  due  and to become due being herein called collectively
'Accounts');
 --------
         (e)  all  instruments, chattel paper or letters of  credit
(each  as  defined  in  the  Uniform Commercial  Code)  of  the
Company  evidencing, representing, arising from or existing  in
respect  of, relating to, securing or otherwise supporting  the
payment  of,  any of the Accounts, including (but  not  limited
to)  promissory  notes,  drafts, bills of  exchange  and  trade
acceptances (herein collectively called 'Instruments');
                                         -----------
            
         (f)  all  inventory (as defined in the Uniform  Commercial
Code)  of  the  Company, all goods obtained by the  Company  in
exchange  for  such  inventory,  and  any  products   made   or
processed  from  such inventory including  all  substances,  if
any, commingled   therewith   or   added   thereto   (herein
collectively called 'Inventory');
                     ---------
            
         (g)  all  equipment (as defined in the Uniform  Commercial
Code) of the Company (herein collectively called 'Equipment');
                                                  ---------
         (h)  each  contract  and other agreement  of  the  Company
  
relating  to  the  sale or other disposition  of  Inventory  or
Equipment;
            
         (i)  all  documents  of title (as defined in  the  Uniform
Commercial  Code)  or other receipts of the  Company  covering,
evidencing  or  representing  Inventory  or  Equipment  (herein
collectively called 'Documents');
                     ---------
            
         (j)  all  rights,  claims  and  benefits  of  the  Company
against  any  Person  arising  out  of,  relating  to   or   in
connection  with  Inventory  or  Equipment  purchased  by   the
Company,  including,  without  limitation,  any  such   rights,
claims  or  benefits against any Person storing or transporting
such Inventory or Equipment; and
            
         (k)  all  other  tangible or intangible  property  of  the
  
Company,  including, without limitation, all proceeds, products
and  accessions  of and to any of the property of  the  Company
described  in clauses (a) through (j) above in this  Section  3
(including,  without  limitation,  any  proceeds  of  insurance
thereon),  and, to the extent related to any property described
in  said clauses or such proceeds, products and accessions, all
books,  correspondence,  credit files,  records,  invoices  and
other  papers,  including without limitation all tapes,  cards,
computer  runs and other papers and documents in the possession
or  under the control of the Company or any computer bureau  or
service company from time to time acting for the Company.

===========================================================================
         Section 4.     Further Assurances; Remedies.  In furtherance of the
                        ----------------------------
grant  of the pledge and security interest pursuant to Section  3
hereof, the Company hereby agrees with the Bank as follows:
         4.01      Delivery and Other Perfection.  The Company shall:
                   -----------------------------
         (a)  if  any  of  the above-described shares,  securities,
monies or property required to be pledged by the Company  under
clauses  (a), (b) and (c) of Section 3 hereof are  received  by
the  Company, forthwith either (x) transfer and deliver to  the
Bank  such  shares  or securities so received  by  the  Company
(together  with  the  certificates  for  any  such  shares  and
securities  duly  endorsed in blank or accompanied  by  undated
stock  powers  duly executed in blank) all of which  thereafter
shall  be  held  by  the Bank, pursuant to the  terms  of  this
Agreement,  as  part of the Collateral or (y) take  such  other
action as the Bank shall deem necessary or appropriate to  duly
record  the  Lien created hereunder in such shares, securities,
monies  or  property referred to in said clauses (a),  (b)  and
  
(c);
             
         (b)  deliver  and  pledge  to  the  Bank  any   and   all
Instruments,  endorsed and/or accompanied by  such  instruments
of  assignment and transfer in such form and substance  as  the
Bank  may  request; provided, that so long as no Default  shall
have  occurred  and be continuing, the Company may  retain  for
collection  in the ordinary course any Instruments received  by
it  in  the  ordinary course of business and  the  Bank  shall,
promptly   upon  request  of  the  Company,  make   appropriate
arrangements  for making any other Instrument  pledged  by  the
Company  available  to  it  for  purposes   of   presentation,
collection or renewal (any such arrangement to be effected,  to
the  extent  deemed  appropriate by  the  Bank,  against  trust
receipt or like document);
             
         (c)  give,  execute,  deliver,  file  and/or  record  any
financing  statement, notice, instrument,  document,  agreement
or  other  papers  that may be necessary or desirable  (in  the
judgment  of the Bank) to create, preserve, perfect or validate
any  security interest granted pursuant hereto or to enable the
Bank  to exercise and enforce its rights hereunder with respect
to  such  security  interest,  including,  without  limitation,
causing  any  or all of the Stock Collateral to be  transferred
of  record  into the name of the Bank or its nominee  (and  the
Bank  agrees  that if any Stock Collateral is transferred  into
its  name  or the name of its nominee, the Bank will thereafter
promptly  give  to  the  Company  copies  of  any  notices  and
communications  received  by  it  with  respect  to  the  Stock
Collateral),  provided  that  notices  to  account  debtors  in
respect of any Accounts or Instruments shall be subject to  the
provisions of clause (g) below;
            
         (d)  upon  the  acquisition after the date hereof  by  the
  
Company  of any Equipment covered by a certificate of title  or
ownership,  cause  the Bank to be listed as the  lienholder  on
  
=======================================================================  
  
  
such   certificate  of  title  and  within  120  days  of   the
acquisition thereof deliver evidence of the same to the Bank;
         (e)  keep full and accurate books and records relating  to
the  Collateral,  and stamp or otherwise mark  such  books  and
records  in  such manner as the Bank may reasonably require  in
order  to  reflect  the  security  interests  granted  by  this
Agreement;
            
         (f)  permit  representatives of the Bank, upon  reasonable
notice,  at  any time during normal business hours  to  inspect
and  make  abstracts from its books and records  pertaining  to
the  Collateral, and permit representatives of the Bank  to  be
present  at  the Company's place of business to receive  copies
of   all   communications  and  remittances  relating  to   the
Collateral,   and   forward   copies   of   any   notices    or
communications  by the Company with respect to the  Collateral,
all in such manner as the Bank may require; and
         (g)  upon the occurrence and during the continuance of any
Default,  upon  request of the Bank, promptly notify  (and  the
Company  hereby authorizes the Bank so to notify) each  account
debtor  in  respect  of any Accounts or Instruments  that  such
Collateral  has been assigned to the Bank hereunder,  and  that
any   payments  due  or  to  become  due  in  respect  of  such
Collateral are to be made directly to the Bank.

         4.02      Other Financing Statements and Liens.  Without  the
                   ------------------------------------
prior written consent of the Bank, the Company shall not file  or
suffer to be on file, or authorize or permit to be filed or to be
on  file,  in any jurisdiction, any financing statement  or  like
instrument  with respect to the Collateral in which the  Bank  is
not named as the sole secured party.
             
         4.03      Preservation  of  Rights.  The  Bank  shall  not  be
                   ------------------------
required  to take steps necessary to preserve any rights  against
prior parties to any of the Collateral.
            
         4.04      Special Provisions Relating to Stock Collateral.
                   -----------------------------------------------
            
         (a)  The  Company  will  cause  the  Stock  Collateral  to
constitute  at all times the percentage indicated  on  Annex  1
hereto  of the total number of shares of each class of  capital
stock of each Issuer then outstanding.
            
         (b)  So  long  as no Event of Default shall have  occurred
and  be  continuing,  the  Company  shall  have  the  right  to
exercise  all voting, consensual and other powers of  ownership
pertaining  to  the  Stock  Collateral  for  all  purposes  not
inconsistent  with  the  terms of this  Agreement,  the  Credit
Agreement,  the  Notes  or  any other instrument  or  agreement
referred  to  herein  or  therein, provided  that  the  Company
agrees  that  it  will  not vote the Stock  Collateral  in  any
manner  that is inconsistent with the terms of this  Agreement,

===========================================================================

the  Credit  Agreement, the Notes or any such other  instrument
or  agreement;  and the Bank shall execute and deliver  to  the
Company  or  cause to be executed and delivered to the  Company
all  such  proxies,  powers  of attorney,  dividend  and  other
orders,  and  all  such instruments, without recourse,  as  the
Company may reasonably request for the purpose of enabling  the
Company  to exercise the rights and powers which it is entitled
to exercise pursuant to this Section 4.04(b).

         (c)  Unless and until an Event of Default has occurred and
is  continuing,  the Company shall be entitled to  receive  and
retain  any dividends on the Stock Collateral paid in cash  out
of earned surplus.
            
         (d)  If any Event of Default shall have occurred, then  so
long  as  such Event of Default shall continue, and whether  or
not  the  Bank  or  any Bank exercises any available  right  to
declare  any  Secured Obligation due and payable  or  seeks  or
pursues  any  other  relief or remedy  available  to  it  under
applicable  law or under this Agreement, the Credit  Agreement,
the  Notes  or  any other agreement relating  to  such  Secured
Obligation, all dividends and other distributions on the  Stock
Collateral  shall be paid directly to the Bank and retained  by
it  as  part of the Stock Collateral, subject to the  terms  of
this  Agreement, and, if the Bank shall so request in  writing,
the   Company  agrees  to  execute  and  deliver  to  the  Bank
appropriate additional dividend, distribution and other  orders
and  documents  to  that end, provided that if  such  Event  of
Default   is   cured,   any  such  dividend   or   distribution
theretofore  paid  to  the  Bank shall,  upon  request  of  the
Company  (except  to  the  extent theretofore  applied  to  the
Secured Obligations) be returned by the Bank to the Company.
         4.05      Events  of  Default, etc.  During the period  during
                   -------------------------
which an Event of Default shall have occurred and be continuing:
                      
                   (i)  the  Company shall, at the request  of  the
         Bank,  assemble the Collateral owned by it at  such  place
         or  places, reasonably convenient to both the Bank and the
         Company, designated in its request;
                      
                   (ii)      the Bank may make any reasonable compromise
         or  settlement deemed desirable with respect to any of the
         Collateral  and  may extend the time of  payment,  arrange
         for  payment  in  installments, or  otherwise  modify  the
         terms of, any of the Collateral;
                   (iii)     the  Bank shall have all of the rights  and
         remedies  with  respect  to the Collateral  of  a  secured
         party  under the Uniform Commercial Code (whether  or  not
         said  Code  is  in  effect in the jurisdiction  where  the
         rights  and  remedies  are asserted) and  such  additional
         rights  and remedies to which a secured party is  entitled

==========================================================================
         under  the  laws in effect in any jurisdiction  where  any
         rights  and remedies hereunder may be asserted, including,
         without  limitation,  the right,  to  the  maximum  extent
         permitted  by law, to exercise all voting, consensual  and
         other powers of ownership pertaining to the Collateral  as
         if  the Bank were the sole and absolute owner thereof (and
         the  Company  agrees to take all such  action  as  may  be
         appropriate to give effect to such right);
                      
                   (iv)      the Bank in its discretion may, in its name
       
         or  in  the name of the Company or otherwise, demand,  sue
       
         for,  collect or receive any money or property at any time
       
         payable  or  receivable on account of or in  exchange  for
       
         any  of  the  Collateral, but shall be under no obligation
       
         to do so; and

                   (v)       the  Bank may, upon 10 Business Days' prior
         written notice to the Company of the time and place,  with
         respect to the Collateral or any part thereof which  shall
         then  be  or  shall thereafter come into  the  possession,
         custody  or  control of the Bank, or any  of  its  agents,
         sell, lease, assign or otherwise dispose of all or any  of
         such  Collateral,  at such place or  places  as  the  Bank
         deems  best,  and  for  cash or on credit  or  for  future
         delivery  (without thereby assuming any credit  risk),  at
         public  or private sale, without demand of performance  or
         notice of intention to effect any such disposition  or  of
         time  or  place thereof (except such notice as is required
         above  or by applicable statute and cannot be waived)  and
         the  Bank  or  anyone  else may be the purchaser,  lessee,
         assignee  or recipient of any or all of the Collateral  so
         disposed  of  at  any  public  sale  (or,  to  the  extent
         permitted  by  law, at any private sale),  and  thereafter
         hold the same absolutely, free from any claim or right  of
         whatsoever  kind,  including  any  right  or   equity   of
         redemption  (statutory or otherwise), of the Company,  any
         such  demand,  notice  or right and  equity  being  hereby
         expressly  waived  and released.  The  Bank  may,  without
         notice or publication, adjourn any public or private  sale
         or  cause  the same to be adjourned from time to  time  by
         announcement  at the time and place fixed  for  the  sale,
         and  such  sale may be made at any time or place to  which
         the same may be so adjourned.

The  proceeds of each collection, sale or other disposition under
this  Section  4.05 shall be applied in accordance  with  Section
4.09 hereof.

         The  Company  recognizes  that,  by  reason  of  certain
prohibitions contained in the Securities Act of 1933, as amended,
and  applicable state securities laws, the Bank may be compelled,
with respect to any sale of all or any part of the Collateral, to
limit purchasers to those who will agree, among other things,  to
acquire the Collateral for their own account, for investment  and
not  with  a  view  to the distribution or resale  thereof.   The
Company acknowledges that any such private sales may be at prices
and  on  terms  less favorable to the Bank than those  obtainable
through   a   public   sale  without  such   restrictions,   and,
notwithstanding such circumstances, agrees that any such  private
sale  shall  be  deemed  to  have been  made  in  a  commercially
reasonable  manner and that the Bank shall have no obligation  to
engage in public sales and no obligation to delay the sale of any
Collateral  for  the  period  of time  necessary  to  permit  the
respective Issuer thereof to register it for public sale.

             
         4.06      Deficiency.  If the proceeds of sale, collection  or
                   ----------
other  realization of or upon the Collateral pursuant to  Section
4.05  hereof are insufficient to cover the costs and expenses  of
such   realization  and  the  payment  in  full  of  the  Secured
Obligations, the Company shall remain liable for any deficiency.
             
         4.07      Removals, etc.   Without at  least  30  days  prior
                   -------------
written  notice to the Bank, the Company shall not  (i)  maintain
any of its books or records with respect to the Collateral at any
office  or  maintain its chief executive office or its  principal
place  of  business  at  any place, or permit  any  Inventory  or
Equipment  to  be  located anywhere other  than  at  the  address
indicated  beneath  the signature of the Company  to  the  Credit
Agreement or at one of the locations identified in Annex 2 hereto
or  in  transit from one of such locations to another  (or,  with
respect to Inventory, in transit from one of such locations to  a
customer  of the Company) or (ii) change its corporate  name,  or
the name under which it does business, from the name shown on the
signature page hereto.

            
         4.08      Private Sale.  The Bank shall incur no liability as a
                   ------------
result of the sale of the Collateral, or any part thereof, at any
private  sale  pursuant  to Section 4.05 hereof  conducted  in  a
commercially  reasonable manner.  The Company hereby  waives  any
claims  against the Bank arising by reason of the fact  that  the
price  at  which  the Collateral may have been  sold  at  such  a
private  sale  was  less  than the price which  might  have  been
obtained  at a public sale or was less than the aggregate  amount
of  the  Secured Obligations, even if the Bank accepts the  first
offer received and does not offer the Collateral to more than one
offeree.
             
         4.09      Application of Proceeds.  Except as otherwise herein
                   -----------------------
expressly provided, the proceeds of any collection, sale or other
realization of all or any part of the Collateral pursuant hereto,
and  any  other  cash  at the time held by the  Bank  under  this
Section 4, shall be applied by the Bank:
       
       
         First,  to the payment of the costs and expenses  of  such
         -----
collection,  sale  or  other realization, including  reasonable
out-of-pocket costs and expenses of the Bank and the  fees  and
expenses  of  its  agents and counsel, and  all  expenses,  and
advances made or incurred by the Bank in connection therewith;

         Next,  to  the payment in full of the Secured Obligations; and
         ----

==========================================================================

         Finally,  to the payment to the Company, or its successors
         -------
or  assigns,  or  as  a  court  of competent  jurisdiction  may
direct, of any surplus then remaining.

As  used  in this Section 5, 'proceeds' of Collateral shall  mean
                              --------
cash,  securities and other property realized in respect of,  and
distributions  in  kind  of, Collateral,  including  any  thereof
received  under any reorganization, liquidation or adjustment  of
debt  of  the Company or any issuer of or obligor on any  of  the
Collateral.
             
         4.10      Attorney-in-Fact.  Without limiting  any  rights  or
                   ----------------
powers  granted by this Agreement to the Bank while no  Event  of
Default  has occurred and is continuing, upon the occurrence  and
during the continuance of any Event of Default the Bank is hereby
appointed the attorney-in-fact of the Company for the purpose  of
carrying  out  the provisions of this Section 4  and  taking  any
action  and  executing any instruments which the  Bank  may  deem
necessary  or advisable to accomplish the purposes hereof,  which
appointment  as attorney-in-fact is irrevocable and coupled  with
an  interest.  Without limiting the generality of the  foregoing,
so  long  as the Bank shall be entitled under this Section  4  to
make  collections in respect of the Collateral,  the  Bank  shall
have  the  right  and power to receive, endorse and  collect  all
checks made payable to the order of the Company representing  any
dividend,  payment,  or  other distribution  in  respect  of  the
Collateral or any part thereof and to give full discharge for the
same.
             
         4.11      Perfection.   Prior  to  or  concurrently  with  the
                   ----------
execution  and delivery of this Agreement, the Company shall  (i)
file  such  financing  statements and  other  documents  in  such
offices as the Bank may request to perfect the security interests
granted by Section 3 of this Agreement, and (ii) deliver  to  the
Bank  all  certificates identified in Annex 1 hereto, accompanied
by undated stock powers duly executed in blank.

            
         4.12      Termination.  When all Secured Obligations shall have
                   -----------
been paid in full and the Facilities of the Bank under the Credit
Agreement  shall have expired or been terminated, this  Agreement
shall  terminate,  and  the  Bank shall  forthwith  cause  to  be
assigned, transferred and delivered, against receipt but  without
any   recourse,   warranty  or  representation  whatsoever,   any
remaining Collateral and money received in respect thereof, to or
on  the  order of the Company.  The Bank shall also  execute  and
deliver  to  the  Company  upon  such  termination  such  Uniform
Commercial   Code   termination   statements   and   such   other
documentation as shall be reasonably requested by the Company  to
effect   the  termination  and  release  of  the  Liens  on   the
Collateral.
             
         4.13      Expenses.  The Company agrees to pay to the Bank all
                   --------
out-of-pocket expenses (including reasonable expenses  for  legal
services  of  every kind) of, or incident to, the enforcement  of
any  of  the provisions of this Section 4, or performance by  the
Bank  of  any  obligations  of the  Company  in  respect  of  the
Collateral which the Company has failed or refused to perform, or
any  actual  or  attempted  sale, or any  exchange,  enforcement,

============================================================================

collection,  compromise or settlement in respect of  any  of  the
Collateral,  and for the care of the Collateral and defending  or
asserting  rights and claims of the Bank in respect  thereof,  by
litigation or otherwise, including expenses of insurance, and all
such  expenses shall be Secured Obligations to the  Bank  secured
under Section 3 hereof.

             
         4.14      Further  Assurances.  The Company agrees that,  from
                   -------------------
time  to  time upon the written request of the Bank, the  Company
will execute and deliver such further documents and do such other
acts and things as the Bank may reasonably request in order fully
to effect the purposes of this Agreement.

         4.15      Collateral   Audit.   The  Company   shall   permit
                   ------------------
representatives of the Bank to undertake an annual audit  of  the
Collateral, and the Company agrees to pay all reasonable expenses
of the Bank incurred in connection therewith.
            
         Section 5.     Miscellaneous.
                        -------------
            
         5.01      No Waiver.  No failure on the part of the Bank or any
                   ---------
of  its agents to exercise, and no course of dealing with respect
to,  and  no  delay  in exercising, any right,  power  or  remedy
hereunder shall operate as a waiver thereof; nor shall any single
or  partial  exercise by the Bank or any of  its  agents  of  any
right,  power or remedy hereunder preclude any other  or  further
exercise  thereof or the exercise of any other  right,  power  or
remedy.  The remedies herein are cumulative and are not exclusive
of any remedies provided by law.
            
         5.02      Governing Law.   This Agreement shall be governed by,
                   -------------
and  construed in accordance with, the law of the  State  of  New
York.
            
         5.03      Notices.  All notices, requests, consents and demands
                   -------
hereunder   shall   be   in  writing  and  telexed,   telecopied,
telegraphed, cabled or delivered to the intended recipient at its
address  or telex number specified pursuant to Section  10.02  of
the  Credit Agreement and shall be deemed to have been  given  at
the times specified in said Section 10.02.
             
         5.04      Waivers,  etc.  The terms of this Agreement  may  be
                   --------------
waived, altered or amended only by an instrument in writing  duly
executed  by  the  Company and the Bank.  Any such  amendment  or
waiver shall be binding upon the Bank, each holder of any Secured
Obligation and the Company.
             
         5.05      Successors  and  Assigns.  This Agreement  shall  be
                   ------------------------
binding   upon  and  inure  to  the  benefit  of  the  respective
successors and assigns of the Company, the Bank, and each  holder
of  the  Secured Obligations (provided, however, that the Company
shall  not  assign or transfer its rights hereunder  without  the
prior written consent of the Bank).
             
===========================================================================
             
         5.06      Counterparts.  This Agreement may be executed in any
                   ------------
number  of  counterparts, all of which together shall  constitute
one  and  the same instrument and any of the parties  hereto  may
execute this Agreement by signing any such counterpart.

         5.07      Agents.    The   Bank   may   employ   agents   and
                   ------
attorneys-in-fact  in  connection  herewith  and  shall  not   be
responsible  for the negligence or misconduct of any such  agents
or attorneys-in-fact selected by it in good faith.
            
         5.08      Severability.  If any provision hereof is invalid and
                   ------------
unenforceable  in any jurisdiction, then, to the  fullest  extent
permitted by law, (i) the other provisions hereof shall remain in
full force and effect in such jurisdiction and shall be liberally
construed  in  favor  of  the Bank in  order  to  carry  out  the
intentions of the parties hereto as nearly as may be possible and
(ii)  the invalidity or unenforceability of any provision  hereof
in   any   jurisdiction  shall  not  affect   the   validity   or
enforceability of such provision in any other jurisdiction.
                                             
                          --------------                   
                          
=========================================================================

                                             
                                             _
         IN  WITNESS WHEREOF, the parties hereto have caused  this
Security  Agreement to be duly executed as of the  day  and  year
first above written.

                           ANNTAYLOR GLOBAL SOURCING, INC.

                           By /s/
                             _________________________
                           Name:
                           Title:
                           
                           Address for Notices:
                           142 West 57th Street
                           New York, NY  10019
                           Telecopy: (212)

                           THE HONGKONG AND SHANGHAI BANKING
                           CORPORATION LIMITED, NEW YORK BRANCH

                           By /s/
                             _______________________
                           Name:     Ian Wright
                           Title:    Vice President
                           
                           Address for Notices:
                           140 Broadway
                           New York, NY  10005
                           Attention:     NYK CBU TRS
                           
                           Telecopy: (212) 658-2813
                                                          
                                                          
============================================================================
                                                          
                                                           ANNEX 1

     
                        LIST OF PLEDGED STOCK
                               NONE






============================================================================
                                                          
                                                           ANNEX 2

                       LIST OF LOCATIONS

AnnTaylor Global Sourcing, Inc.
414 Chapel Street
New Haven, CT  06511

Louisville Distribution Center
7101 Distribution Drive
Louisville, KY  40258

Flag Trucking Services Company
5 Dwight Place
Fairfield, NJ  07006

SSCI
1072 West Side Avenue
Jersey City, NJ  07306

Summit Transportation
Building 40
Hackensack Avenue
Kearny, NJ  07032

AnnTaylor Global Sourcing, Inc.
1372 Broadway
New York, New York  10018

AnnTaylor Global Sourcing, Inc.
142 West 57th Street
New York, NY  10019

Freight-A-Ranger
3275 Alum Creek Drive
Columbus, OH  43207

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