Purchase and Sale Agreement - AnnTaylor Inc. and AnnTaylor Funding Inc.

                   PURCHASE AND SALE AGREEMENT


                   Dated as of January 27, 1994


                             between


                         ANNTAYLOR, INC.



                               and


                     ANNTAYLOR FUNDING, INC.



                        TABLE OF CONTENTS
                        -----------------

                                                             PAGE
                                                             ----
ARTICLE I     AGREEMENT TO PURCHASE AND SELL  . . . . . . .    3

    1.1       Agreement to Purchase and Sell  . . . . . . .    4
    1.2       Timing of Purchases . . . . . . . . . . . . .    4
    1.3       Consideration for Purchases . . . . . . . . .    4
    1.4       Purchase and Sale Termination Date  . . . . .    4

ARTICLE II    CALCULATION OF PURCHASE PRICE . . . . . . . .    4

    2.1       Calculation of Purchase Price . . . . . . . .    4

ARTICLE III   PAYMENT OF PURCHASE PRICE . . . . . . . . . .    6

    3.1       Initial Purchase Price Payment  . . . . . . .    6
    3.2       Subsequent Purchase Price Payments  . . . . .    6
    3.3       Settlement as to Specific Receivables . . . .    7
    3.4       Settlement as to Dilution . . . . . . . . . .    7

ARTICLE IV    CONDITIONS OF PURCHASES . . . . . . . . . . .    8

    4.1       Conditions Precedent to Initial Purchase  . .    8
    4.2       Certification as to Representations
                and Warranties  . . . . . . . . . . . . . .   10

ARTICLE V     REPRESENTATIONS AND WARRANTIES OF
                 ANNTAYLOR  . . . . . . . . . . . . . . . .   10

    5.1       Organization and Good Standing  . . . . . . .   10
    5.2       Due Qualification . . . . . . . . . . . . . .   10
    5.3       Power and Authority; Due Authorization  . . .   11
    5.4       Valid Sale; Binding Obligations . . . . . . .   11
    5.5       No Violation  . . . . . . . . . . . . . . . .   11
    5.6       Proceedings . . . . . . . . . . . . . . . . .   11
    5.7       Bulk Sales Act  . . . . . . . . . . . . . . .   12
    5.8       Government Approvals  . . . . . . . . . . . .   12
    5.9       Financial Condition . . . . . . . . . . . . .   12
    5.10      Licenses, Contingent Liabilities,
                 and Labor Controversies  . . . . . . . . .   12
    5.11      Margin Regulations  . . . . . . . . . . . . .   12
    5.12      Quality of Title  . . . . . . . . . . . . . .   12
    5.13      Accuracy of Information . . . . . . . . . . .   13
    5.14      Offices . . . . . . . . . . . . . . . . . . .   13
    5.15      Trade Names . . . . . . . . . . . . . . . . .   13
    5.16      Taxes . . . . . . . . . . . . . . . . . . . .   14
    5.17      Compliance with Applicable Laws . . . . . . .   14
    5.18      Reliance on Separate Legal Identity . . . . .   14
    5.19      Receivables . . . . . . . . . . . . . . . . .   14




                               -i-



ARTICLE VI    COVENANTS OF ANNTAYLOR  . . . . . . . . . . .   15

    6.1       Affirmative Covenants . . . . . . . . . . . .   15
    6.2       Reporting Requirements  . . . . . . . . . . .   17
    6.3       Negative Covenants  . . . . . . . . . . . . .   18

ARTICLE VII   ADDITIONAL RIGHTS AND OBLIGATIONS IN
              RESPECT OF THE RECEIVABLES  . . . . . . . . .   18

    7.1       Rights of the Company . . . . . . . . . . . .   18
    7.2       Responsibilities of AnnTaylor . . . . . . . .   19
    7.3       Further Action Evidencing Purchases . . . . .   19
    7.4       Application of Collections  . . . . . . . . .   20

ARTICLE VIII  INDEMNIFICATION . . . . . . . . . . . . . . .   20

    9.1       Indemnities by AnnTaylor  . . . . . . . . . .   20

ARTICLE X     MISCELLANEOUS . . . . . . . . . . . . . . . .   22

    10.1      Amendments, Etc . . . . . . . . . . . . . . .   22
    10.2      Notices, Etc  . . . . . . . . . . . . . . . .   23
    10.3      No Waiver; Cumulative Remedies  . . . . . . .   23
    10.4      Binding Effect; Assignability . . . . . . . .   23
    10.5      Governing Law . . . . . . . . . . . . . . . .   23
    10.6      Costs, Expenses and Taxes . . . . . . . . . .   23
    10.7      Submission to Jurisdiction  . . . . . . . . .   24
    10.8      Waiver of Jury Trial  . . . . . . . . . . . .   24
    10.9      Captions and Cross References;
                Incorporation by Reference  . . . . . . . .   24
    10.10     Execution in Counterparts . . . . . . . . . .   24
    10.11     Acknowledgment and Agreement  . . . . . . . .   24






















                               -ii-





EXHIBIT A - Form of Purchase Report

EXHIBIT B - Form of the Company Note

EXHIBIT C - Form of Opinion of AnnTaylor's Counsel

EXHIBIT D - Form of Subscription Agreement

EXHIBIT E - Office Locations

EXHIBIT F - Form of In-House Counsel's Opinion

Schedule 4.1(k)  Data Processing Reports

Schedule 5.14    Trade Names




































                              -iii-



                   PURCHASE AND SALE AGREEMENT


     THIS PURCHASE  AND SALE AGREEMENT  (as amended, supplemented
or modified  from time  to time, this  "Agreement"), dated  as of
                                        ---------
January 27,  1994,  is   between  ANNTAYLOR,  INC.,   a  Delaware
corporation ("AnnTaylor"), as seller and ANNTAYLOR FUNDING, INC.,
              ---------
a Delaware corporation (the "Company"), as purchaser.
                             -------


                           Definitions
                           -----------

     Unless   otherwise  indicated,   certain   terms  that   are
capitalized and  used throughout  this Agreement  are defined  in
Appendix  A to the  Receivables Financing Agreement  of even-date
- -----------
herewith (as,  amended  supplemented or  otherwise modified,  the
"Receivables Financing Agreement"), among the Company, AnnTaylor,
 -------------------------------
as initial  Servicer, CLIPPER RECEIVABLES  CORPORATION, as lender
("Lender"),   STATE  STREET   BOSTON   CAPITAL  CORPORATION,   as
  ------
administrator  for  Lender   under  the  Program   Administration
Agreement  (the   "Administrator")   and   PNC   BANK,   NATIONAL
                   -------------
ASSOCIATION,  as referral agent for Lender under the Relationship
Bank  Agreement (in such  capacity, together with  any successors
thereto  in such  capacity, the  "Relationship Bank"  and in  its
                                  -----------------
individual  capacity, "PNC Bank").  The following terms  have the
                       --------
respective meanings indicated hereinbelow:

    Adverse  Claim means  a lien,  security  interest, charge  or
    --------------
encumbrance, or similar right or claim of any Person.

    Company Note shall have the  meaning assigned to such term in
    ------------
Section 3.1 hereof.
- -----------

    Deemed Collection means amounts payable by AnnTaylor pursuant
    -----------------
to Section 3.3 or 3.4.
   -----------    ---

    Funding  Account means  the bank  account  maintained by  the
    ----------------
Company  as  specified  by  the  Company  to  AnnTaylor  and  the
Administrator  from time  to  time;  provided,  that  during  the
                                     --------
continuance of  an Event  of Default, such  account shall  be the
Lock-Box Account.

    Ineligible Purchased Receivable  means a Receivable purchased
    -------------------------------
hereunder  that  does  not  comply  with  any  of  the  following
conditions in any material respect

              (a)   was generated  by AnnTaylor  in the  ordinary
    course of its business;

              (b)   may be sold hereunder without contravening or
    conflicting any laws;



              (c)   arises under  an Eligible  Contract that  has
    been  duly  authorized  by  the  parties  thereto  and  that,
    together with  such Receivable, is  in full force  and effect
    and  constitutes the legal,  valid and binding  obligation of
    the  Obligor  of  such Receivable  enforceable  against  such
    Obligor in accordance with its terms except as enforceability
    may be limited  by bankruptcy, insolvency, reorganization  or
    other similar  laws affecting  the enforcement of  creditors'
    rights  generally  and  by  general  principles   of  equity,
    regardless  of whether such enforceability is considered in a
    proceeding of equity or at law;

              (d)    which, together  with  the Contract  related
    thereto,  does not  contravene in  any  material respect  any
    laws,  rules or  regulations  applicable thereto  (including,
    without  limitation, laws, rules  and regulations relating to
    usury, truth  in lending,  fair credit  billing, fair  credit
    reporting,  equal credit  opportunity,  fair debt  collection
    practices and privacy) and with  respect to which no party to
    the Contract related thereto is in violation of any such law,
    rule or regulation in any material respect if  such violation
    would impair the collectability of such Receivable; and

              (e)   satisfies all applicable requirements  of the
    Credit and Collection Policy.

    Initial Closing  Date shall have the meaning assigned to such
    ---------------------
term in Section 1.2 hereof.
        -----------

    Initial Cut-Off Date means December 24, 1993.
    --------------------

    Initial Posting Date means January 24, 1994.
    --------------------

    Initial Reporting Period  shall have the meaning  assigned to
    ------------------------
such term in Section 2.1 hereof.
             -----------

    Lock-Box Accounts means one or more lock-box accounts held in
    -----------------
Lock-Box Banks for receiving Collections from Pool Receivables.

    Payment Day means (i) the  Initial Closing Date and (ii) each
    -----------
Business Day thereafter that AnnTaylor is open for business.

    Purchase  and Sale Indemnified Amounts shall have the meaning
    --------------------------------------
assigned to such term in Section 8.1 hereof.
                         -----------

    Purchase  and Sale Indemnified  Party shall have  the meaning
    -------------------------------------
assigned to such term in Section 9.1 hereof.
                         -----------

    Purchase and  Sale Termination  Date shall  have the  meaning
    ------------------------------------
assigned to such term in Section 1.4 hereof.
                         -----------




                               -2-



    Purchase Facility  shall have  the meaning  assigned to  such
    -----------------
term in Section 1.1 hereof.
        -----------

    Purchase Price shall  have the meaning assigned to  such term
    --------------
in Section 2.1 hereof.
   -----------

    Purchase Report shall have the meaning assigned  to such term
    ---------------
in Section 2.1 hereof.
   -----------

    Receivables  Review shall have  the meaning assigned  to such
    -------------------
term in Section 6.1(c) hereof.
        --------------

    Related Rights shall  have the meaning assigned to  such term
    --------------
in Section 1.1 hereof.
   -----------

    Seller Material  Adverse Effect  means, with  respect to  any
    -------------------------------
event or circumstance, a material adverse effect on:

              (i)   the  business,  assets, financial  condition,
    operations or prospects of AnnTaylor, as seller;

              (ii)    the  ability of  AnnTaylor  to  perform its
    obligations under  this  Agreement or  any other  Transaction
    Document to  which AnnTaylor, as  seller, in its  capacity as
    such, is a party;

              (iii)   the  validity or enforceability  as against
    AnnTaylor of this Agreement or any other Transaction Document
    to which AnnTaylor, as seller, in its capacity as such, is  a
    party;

              (iv)  the  status, existence, perfection,  priority
    or   enforceability  of   the  Company's   interest  in   the
    Receivables assets described in Section 1.1; or
                                    -----------

              (v)  the collectability of a significant portion of
    the Pool Receivables.

    Subscription  Agreement  means  the  Subscription  Agreement,
    -----------------------
dated as of January 24,  1994, between the Company and AnnTaylor,
in the form of  Exhibit D, as it may be  amended, supplemented or
                ---------
modified from time to time.


                            Background
                            ----------

     1.    The Company is  a limited purpose corporation,  all of
the issued and  outstanding shares of capital stock  of which are
wholly-owned by AnnTaylor.





                               -3-



     2.    AnnTaylor   is   concurrently   transferring   certain
Receivables  and Related  Rights to  the Company  as part  of the
capitalization of the Company.

     3.    In  order to finance its business, AnnTaylor wishes to
sell  Receivables and  Related  Rights to  the  Company, and  the
Company is  willing, on the  terms and subject to  the conditions
set forth herein, to purchase Receivables and Related Rights from
AnnTaylor.

     4.    The Company intends to borrow from Lender from time to
time pursuant to the Receivables Financing Agreement in  order to
finance, in part,  its purchases of such Receivables  and Related
Rights hereunder.

     NOW, THEREFORE,  in consideration  of the  premises and  the
mutual agreements herein  contained, the parties hereto  agree as
follows:


                            ARTICLE I

                  AGREEMENT TO PURCHASE AND SELL

     1.1.    Agreement  to Purchase and  Sell.  On  the terms and
             --------------------------------
subject to the conditions set forth in this Agreement  (including
Article V), and in consideration of the Purchase Price, AnnTaylor
- ---------
agrees to sell, assign and transfer, and does hereby sell, assign
and transfer to the Company,  and the Company agrees to purchase,
and  does hereby  purchase, from  AnnTaylor,  all of  AnnTaylor's
right, title and interest in and to:

     (a)   each  Receivable of  AnnTaylor  that  existed and  was
           owing  to AnnTaylor  as of  the  close of  AnnTaylor's
           business on the Initial Cut-Off Date;

     (b)   each  Receivable created  or  originated by  AnnTaylor
           from  the close of AnnTaylor's business on the Initial
           Cut-Off Date, to  and including the Purchase  and Sale
           Termination  Date and  all Finance  Charge Receivables
           relating   to   Receivables  that   were   created  or
           originated prior to the Purchase  and Sale Termination
           Date;

     (c)   all  rights to,  but not  the  obligations under,  the
           Contracts and all Related Security;

     (d)   all monies due or to become due with respect thereto;

     (e)   all books and records related to any of the foregoing;
           and



                               -4-



     (f)   all  proceeds thereof (as defined in the UCC) received
           on  or  after  the  date  hereof   including,  without
           limitation,  all funds  which either  are received  by
           AnnTaylor,  the Company  or the  Servicer  from or  on
           behalf of the  Obligors in payment of any amounts owed
           (including,  without   limitation,  finance   charges,
           interest  and  all   other  charges)  in  respect   of
           Receivables,  or are applied  to such amounts  owed by
           the Obligors (including, without limitation, insurance
           payments, if any,  that AnnTaylor or the  Servicer (if
           other than  AnnTaylor) applies in  the ordinary course
           of  its business  to  amounts owed  in respect  of any
           Receivable).

All purchases hereunder shall be made without recourse, but shall
be  made pursuant to  and in  reliance upon  the representations,
warranties and covenants of AnnTaylor, in its capacity as seller,
set forth  in each Transaction Document.  The Company's foregoing
commitment  to purchase  such Receivables  and  the proceeds  and
rights described  in subsections  (c), (d), (e)  and (f)  of this
                     ----------------  ---  ---      ---
Section 1.1 (collectively, the "Related Rights") is herein called
- -----------                     --------------
the "Purchase Facility".
     -----------------

     1.2.  Timing of Purchases.
           -------------------

     (a)   Initial Closing Date  Purchases.  On January  __, 1994
           -------------------------------
(the "Initial  Closing Date") AnnTaylor shall sell to the Company
      ---------------------
in  part, and contribute to the Company, in part, and the Company
shall  purchase and acquire, pursuant to Section 1.1, AnnTaylor's
                                         -----------
entire  right, title  and  interest in  (i) each  Receivable that
existed and was owing to AnnTaylor as of the close of AnnTaylor's
business  on the  Initial  Cut-Off  Date,  (ii)  all  Receivables
created by AnnTaylor from and  including the close of AnnTaylor's
business on the Initial Cut-Off Date to and including the Initial
Closing Date, and (iii) all Related Rights.

     (b)   Regular  Purchases.  After  the Initial  Closing Date,
           ------------------
each  Receivable  and  Related Rights  created  or  originated by
AnnTaylor  and described in Section 1.1(b)  hereof shall be owned
                            --------------
by the Company (without any  further action) upon the creation or
origination of such Receivable.

     1.3.  Consideration for Purchases.  On the terms and subject
           ---------------------------
to the conditions set forth in this Agreement, the Company agrees
to make  all Purchase Price  payments to AnnTaylor  in accordance
with Article III.
     -----------

     1.4.  Purchase and Sale Termination Date.  The "Purchase and
           ----------------------------------        ------------
Sale Termination Date"  shall be the Final Payout  Date under the
- ---------------------
Receivables Financing Agreement.




                               -5-



                            ARTICLE II

                  CALCULATION OF PURCHASE PRICE

     2.1.  Calculation of Purchase Price.  On each Reporting Date
           -----------------------------
(commencing February 7, 1994), the  Servicer shall deliver to the
Company, the Administrator, the Relationship  Bank, and AnnTaylor
(if  the  Servicer   is  other  than   AnnTaylor)  a  report   in
substantially  the form  of  Exhibit A  (each  such report  being
                             ---------
herein called a "Purchase Report")  with respect to the Company's
                 ---------------
purchases of Receivables from AnnTaylor

     (a)   that arose on or prior to the Initial Posting Date (in
     the case  of  the  first Purchase  Report  to  be  delivered
     hereunder) or

     (b)   that arose  during the  Settlement Period  immediately
     preceding  such  Reporting   Date  (in  the  case   of  each
     subsequent Purchase Report).

The "Purchase Price" (to be  paid to AnnTaylor in accordance with
     --------------
the terms  of Article  III) for the  Receivables and  the Related
              ------------
Rights  shall  be  determined in  accordance  with  the following
formula:


     PP    =  AUB X FMVD

     where:
     -----

     PP    =  Purchase  Price   (to  be  paid  to   AnnTaylor  in
              accordance  with  the  terms  of  Article  III)  as
                                                ------------
              calculated on the relevant Reporting Date

     AUB   =  (i)   for  purposes  of  calculating  the  Purchase
              Price on  the initial Reporting Date, the aggregate
              Unpaid Balance of all Receivables that  existed and
              were  owing  to  AnnTaylor as  measured  as  at the
              Initial Cut-Off  Date  plus  the  aggregate  Unpaid
                                     ----
              Balance  of all  Receivables that  were created  or
              originated by  AnnTaylor from  the Initial  Cut-Off
              Date,  to  and including  the close  of AnnTaylor's
              business on the Initial Posting Date (excluding, in
              each  case, all Receivables  that had  been written
              off the books of  AnnTaylor as uncollectible), less
                                                             ----
              an amount  equal to  the sum  of (A)  the aggregate
              Unpaid Balance  of all  Receivables that  comprised
              the capital contribution  made by AnnTaylor  to the
              Company  on the Initial  Closing Date, and  (B) the
              aggregate Collections  received by  AnnTaylor after




                               -6-



              the  Initial Cut-Off  Date  to  and  including  the
              Initial Posting Date,

              (ii)  for  purposes  of  calculating  the  Purchase
              Price for Receivables on the second Reporting Date,
              the  aggregate Unpaid  Balance  of the  Receivables
              that  were   generated  by  AnnTaylor   during  the
              immediately  preceding Settlement  Period less  the
                                                        ----
              aggregate  Collections received  by AnnTaylor  from
              but  excluding  the  Initial Posting  Date  to  but
              excluding the Initial Closing Date, and

              (iii)   for purposes  of  calculating the  Purchase
              Price  for  Receivables  on   each  Reporting  Date
              thereafter,  the aggregate  Unpaid  Balance of  the
              Receivables described in Section 1.1(b) hereof that
              were generated by AnnTaylor  during the immediately
              preceding Settlement Period.

     FMVD  =  Fair   Market   Value   Discount   Factor  on   the
              determination date, which  is the  quotient of  (i)
              one divided by (ii) an amount equal to 1+ (90/365 x
              ABR), where ABR  is the Alternate Base Rate plus 2%
              on such day, expressed as a fraction.


                           ARTICLE III

                    PAYMENT OF PURCHASE PRICE

     3.1.    Initial Purchase  Price  Payment.    On the  Initial
             --------------------------------
Closing Date, AnnTaylor  shall, and hereby does contribute to the
capital of the  Company, Receivables and Related  Property Rights
with respect thereto  consisting of each Receivable  described in
Section  1.1(a)  hereof   beginning  with  the  oldest   of  such
Receivables and  continuing chronologically thereafter and all or
an  undivided interest  in the  most recent  of such  contributed
Receivables such that  the aggregate Unpaid  Balance of all  such
contributed Receivables  shall be equal  to $1,800,000.   On  the
terms and subject to the  conditions set forth in this Agreement,
the Company  agrees to  pay to AnnTaylor  on the  Initial Closing
Date a portion  of the Purchase Price for the purchase to be made
from AnnTaylor with respect to  Receivables existing on or  prior
to the Initial  Posting Date  (a) in  cash in the  amount of  the
proceeds of  the Loans made to the Company on the Initial Closing
Date under  the Receivables  Financing Agreement  and (b)  by the
issuance of a subordinated promissory note in the form of Exhibit
                                                          -------
B  to AnnTaylor  (such promissory  note,  as it  may be  amended,
- -
supplemented, indorsed or otherwise modified from time to time in
substitution therefor or  renewal thereof in accordance  with the
Transaction Documents, being  herein called a "Company  Note") in
                                               -------------



                               -7-



the initial principal amount equal to $5,412,000.  The portion of
the Purchase Price paid to AnnTaylor  pursuant to the immediately
preceding sentence  shall be  adjusted on  the initial  Reporting
Date  by the amount  of the difference,  if any,  between (x) the
Purchase  Price calculated on the initial Reporting Date pursuant
to  Section 2.1  hereof  and  (y) the  amount  paid to  AnnTaylor
    -----------
pursuant  to the immediately  preceding sentence.   If the amount
described in clause  (x) is greater than the  amount described in
             -----------
clause (y), the Company shall  pay to AnnTaylor the difference by
- ----------
increasing  the principal  amount outstanding  under the  Company
Note,  effective as  of the  last day  of the  related Settlement
Period.  If the amount described  in clause (x) is less than  the
                                     ----------
amount  described  in clause  (y),  AnnTaylor  shall  pay to  the
                      -----------
Company the difference by a  reduction in the principal amount of
the  Company Note, effective  as of the  last day  of the related
Settlement  Period; provided, however,  that if  at any  time the
                    --------  -------
unpaid principal amount  of the Company Note has  been reduced to
zero,  AnnTaylor shall  pay the  Company the remainder  owed with
respect thereto  in immediately  available funds  to the  Funding
Account.

     3.2.   Subsequent Purchase Price Payments.  On each Business
            ----------------------------------
Day after the Initial Closing  Date until the termination of this
Agreement pursuant to  Section 9.4 hereof, the  Company shall pay
                       -----------
to  AnnTaylor a  portion of  the Purchase  Price due  pursuant to
Section 2.1 by  depositing into such  account as AnnTaylor  shall
- -----------
specify immediately available funds  from monies then held by  or
on behalf of the Company  from Collections or Deemed Collections,
solely  to  the  extent  that  such   monies  do  not  constitute
Collections that  are required to  be segregated and held  by the
Servicer pursuant to the Receivables Financing Agreement or to be
distributed  to the  Administrator  pursuant to  the  Receivables
Financing Agreement on the next Settlement Date or required to be
paid to the Servicer as the Servicer's Fee on the next Settlement
Date, or required to be deposited into the Spread Account or paid
as a reimbursement to the issuer of the Letter of Credit pursuant
to the  Receivables Financing  Agreement on  the next  Settlement
Date,  or  otherwise necessary  to  pay current  expenses  of the
Company (in its discretion) and provided that AnnTaylor  has paid
all amounts  then owing  by it  hereunder.   The  portion of  the
Purchase Price  paid  to  AnnTaylor shall  be  adjusted  on  each
Settlement Date (beginning on March 5, 1994) by the amount of the
difference,  if  any,  between  (x) the  amount  due  pursuant to
Section 2.1 with respect to all Receivables created or originated
- -----------
by  AnnTaylor  that  arose during  the  corresponding  Settlement
Period  and  (y)  the  amount   paid  to  AnnTaylor  during  such
Settlement Period  pursuant to  the foregoing  sentence for  such
Receivables.   If the amount  described in clause (x)  is greater
                                           ----------
than the amount described in clause (y), the Company shall pay to
                             ----------
AnnTaylor  the difference  by  increasing  the  principal  amount
outstanding under the Company Note,  effective as of the last day



                               -8-



of the  related Settlement  Period.  If  the amount  described in
clause  (x) is  less than  the  amount described  in clause  (y),
- -----------                                          -----------
AnnTaylor shall pay to the  Company the difference by a reduction
in the principal amount of the Company Note,  effective as of the
last day  of the  related Settlement  Period; provided,  however,
                                              --------   -------
that  if at any time  the unpaid principal  amount of the Company
Note has  been reduced to  zero, AnnTaylor shall pay  the Company
the  remainder owed with respect thereto in immediately available
funds to the  Funding Account.   On each  Settlement Date, if  no
Event  of Default under  the Receivables Financing  Agreement has
occurred and is  continuing and payment of the  Company Note will
not result in an Event of Default under the Receivables Financing
Agreement,  the Servicer will, upon the direction of the Company,
make a  payment on  the Company  Note to  AnnTaylor in  an amount
equal  to  the amount  of  Collections  (not previously  paid  to
AnnTaylor  hereunder) that  are available  to  the Company  under
Section 3.01(b) of the Receivables Financing Agreement.

     Servicer shall  make all appropriate record  keeping entries
with  respect to  the Company  Note  to reflect  payments by  the
Company thereon and Servicer's books and records shall constitute
rebuttable  presumptive evidence of  the principal amount  of and
accrued  interest  on   the  Company  Note.     AnnTaylor  hereby
irrevocably authorizes Servicer to return the Company Note to the
Company upon the final payment  thereof after the termination  of
this Agreement pursuant to Section 9.4 hereof.
                           -----------

     3.3.   Settlement as  to Specific  Receivables.   Subject to
            ---------------------------------------
Section  7.2(a)  hereof,  if  an  officer  of  AnnTaylor  obtains
knowledge   or  receives   notice  from   the   Company  or   the
Administrator that (a) on  the day that any  Receivable purchased
hereunder  was  created or  originated  by AnnTaylor  any  of the
representations or warranties  set forth in Section  5.11 was not
                                            -------------
true with respect  to such Receivable, or such  Receivable was an
Ineligible Purchased Receivable or, (b) as a result of any action
or inaction of  AnnTaylor, on any day any  of the representations
or  warranties set forth  in Section 5.11 is  no longer true with
                             ------------
respect  to a Receivable,  then AnnTaylor forthwith  shall reduce
the Purchase Price with respect to Receivables that  arose during
the same Settlement Period in which such knowledge is obtained or
notification is received by an amount equal to the Unpaid Balance
of such Receivable; provided, however, that if there have been no
                    --------  -------
purchases of  Receivables (or  insufficiently large purchases  of
Receivables to create a Purchase  Price large enough to so reduce
by the amount  of such net reduction) from  AnnTaylor during such
Settlement Period,  any amount owed  by which the  Purchase Price
payable  to  AnnTaylor would  have been  reduced pursuant  to the
immediately preceding  clause of this  sentence shall be  paid by
either  (at the  option of  AnnTaylor,  unless the  Company will,
absent such  payment in cash,  be unable to meet  its obligations
under the Receivables  Financing Agreement on the  next occurring



                               -9-



Settlement  Date,  in which  case  AnnTaylor  shall make  a  cash
payment) a reduction in the  principal amount of the Company Note
(but not below zero) or by payment within two Business Days after
the  related Report Date  in cash by AnnTaylor  to the Company by
deposit  in  the Funding  Account  of same  day  funds; provided,
                                                        --------
further,  that  if  the Company  thereafter  receives  payment on
- -------
account of Collections due with  respect to such Receivable,  the
Company promptly shall deliver such funds to AnnTaylor.

     3.4.  Settlement as to Dilution.  Each Purchase Report shall
           -------------------------
include,  in respect of  the Receivables previously  generated by
AnnTaylor (including  those Receivables that were  contributed to
the  capital of  the  Company  on the  Initial  Closing Date),  a
calculation  of  the  aggregate net  reduction  in  the aggregate
Unpaid Balance of such Receivables owed by particular Obligors on
account of  any defective,  rejected or  returned merchandise  or
services, any  cash discount,  or any  incorrect billings,  other
adjustments,  or   setoffs  in  respect  of  any  claims  by  the
Obligor(s) thereof  against AnnTaylor  or any  of its  Affiliates
(other than  the Company) (whether  such claims arise out  of the
same or  a related  or unrelated transaction),  or any  rebate or
refund during the  most recent month.  Subject  to Section 7.2(a)
                                                   --------------
hereof,  the Purchase  Price  to  be paid  to  AnnTaylor for  the
Receivables generated during the Settlement Period for which such
Purchase Report is delivered shall  be decreased by the amount of
such net reduction; provided, however, that if there have been no
                    --------  -------
purchases  of Receivables  (or insufficiently large  purchases of
Receivables to create a Purchase  Price large enough to so reduce
by the amount  of such net reduction) from  AnnTaylor during such
Settlement Period,  any amount owed  by which the  Purchase Price
payable  to AnnTaylor  would have  been  reduced pursuant  to the
immediately preceding clause  of this sentence  shall be paid  by
either  (at the  option of  AnnTaylor, unless  the Company  will,
absent such  payment in cash,  be unable to meet  its obligations
under the Receivables  Financing Agreement on the  next occurring
Settlement  Date,  in  which case  AnnTaylor  shall  make  a cash
payment) a reduction in the  principal amount of the Company Note
(but not below zero) or by payment within two Business Days after
the  related Report Date in  cash by AnnTaylor  to the Company by
deposit in the Funding Account of same day funds.

     3.5.    Reconveyance of  Receivables.    In the  event  that
             ----------------------------
AnnTaylor has paid to the Company the full Unpaid  Balance of any
Receivable pursuant  to Section  3.3  or 3.4,  the Company  shall
                        ------------     ---
reconvey such Receivable to  AnnTaylor, without representation or
warranty, but free and clear of all liens created by the Company.








                               -10-



                            ARTICLE IV


                     CONDITIONS OF PURCHASES

     4.1.  Conditions Precedent to Initial Purchase.  The initial
           ----------------------------------------
purchase hereunder is subject to the condition precedent that the
Company shall  have received,  on or  before the Initial  Closing
Date,  the following, each (unless otherwise indicated) dated the
Initial Closing Date, and each in form, substance and date satis-
factory to the Company:

           (a)    A copy  of  the  resolutions  of the  Board  of
     Directors of AnnTaylor  approving the Transaction  Documents
     to  be delivered  by it  and  the transactions  contemplated
     hereby  and thereby, certified by the Secretary or Assistant
     Secretary of AnnTaylor;

           (b)   Good standing  certificates for AnnTaylor issued
     as of a recent date by the Secretary of State of Delaware;

           (c)    A  certificate of  the  Secretary  or Assistant
     Secretary   of  AnnTaylor  certifying  the  names  and  true
     signatures of the officers authorized  on Anntaylor's behalf
     to sign the Transaction Documents  to be delivered by it (on
     which  certificate the Company  and Servicer (if  other than
     AnnTaylor)  may conclusively  rely until  such  time as  the
     Company  and the  Servicer shall  receive  from AnnTaylor  a
     revised  certificate  meeting   the  requirements  of   this
     subsection (c));
     --------------

           (d)   The certificate  of incorporation of  AnnTaylor,
     duly certified by the Secretary of State of Delaware as of a
     recent  date,  together  with  a  copy  of  the  by-laws  of
     AnnTaylor,  each duly  certified  by  the  Secretary  or  an
     Assistant Secretary of AnnTaylor;

           (e)  Copies  of the proper financing  statements (Form
     UCC-1) that  have been duly  executed and name  AnnTaylor as
     the assignor and the Company  as the assignee (and Lender as
     assignee of  the Company)  of the  Receivables generated  by
     AnnTaylor or other, similar instruments or documents, as may
     be  necessary  or,  in Servicer's  or  the  Administrators's
     opinion,  desirable  under   the  UCC  of   all  appropriate
     jurisdictions  or  any  comparable  law of  all  appropriate
     jurisdictions to perfect the Company's ownership interest in
     all Receivables and such other rights, accounts, instruments
     and moneys (including, without limitation, Related Security)
     in  which  an  ownership  interest may  be  assigned  to  it
     hereunder;

           (f)     A  written   search  report   from  a   Person
     satisfactory to Servicer and  the Administrator listing  all
     effective financing statements that name AnnTaylor as debtor



                               -11-



     or assignor and that are filed in the jurisdictions in which
     filings were made pursuant to the  foregoing subsection (e),
                                                  --------------
     together with copies  of such financing statements  (none of
     which,  except   for  those  described   in  the   foregoing
     subsection  (f), shall  cover any  Receivable  or any  right
     ---------------
     related to any  Receivable that is of the  type described in
     Section 1.1) which  is to be sold to  the Company hereunder,
     -----------
     and  tax  and judgment  lien  search reports  from  a Person
     satisfactory  to Servicer and  the Administrator  showing no
     evidence of such liens filed against AnnTaylor;

           (g)   A  favorable opinion  of  Skadden, Arps,  Slate,
     Meagher & Flom,  counsel  to  AnnTaylor,  in  the  form  of
     Exhibit C   and   a  favorable   opinion  of   Jocelyn  F.L.
     ---------
     Barandiaran, in the form of Exhibit F;
                                 ---------

           (h)   Evidence  (i) of the  execution and  delivery by
     each of the parties thereto of each of the other Transaction
     Documents  to  be  executed   and  delivered  in  connection
     herewith and (ii) that  each of the conditions  precedent to
     the  execution,  delivery and  effectiveness  of  such other
     Transaction Documents  has been  satisfied to the  Company's
     satisfaction;

           (i)   The  Company Note  in favor  of AnnTaylor,  duly
     executed by the Company;

           (j)  A certificate from an officer of AnnTaylor to the
     effect that Servicer and  AnnTaylor have placed on  the most
     recent, and  have taken  all steps  reasonably necessary  to
     ensure that  there shall  be placed  on subsequent,  summary
     master control data processing reports the following  legend
     (or the  substantive equivalent thereof):   "THE RECEIVABLES
     DESCRIBED HEREIN HAVE  BEEN SOLD TO ANNTAYLOR  FUNDING, INC.
     PURSUANT  TO  A PURCHASE  AND  SALE AGREEMENT,  DATED  AS OF
     JANUARY 27,  1994, AS  AMENDED,  BETWEEN ANNTAYLOR  FUNDING,
     INC. AND  ANNTAYLOR, INC.;  AND A  SECURITY INTEREST  IN THE
     RECEIVABLES  DESCRIBED HEREIN  HAS BEEN  GRANTED TO  CLIPPER
     RECEIVABLES CORPORATION, PURSUANT TO A RECEIVABLES FINANCING
     AGREEMENT, DATED  AS OF  JANUARY 27,  1994, AMONG  ANNTAYLOR
     FUNDING,   INC.,   ANNTAYLOR,  INC.,   CLIPPER   RECEIVABLES
     CORPORATION, STATE STREET BOSTON CAPITAL CORPORATION, AS THE
     ADMINISTRATOR, AND  PNC BANK,  NATIONAL ASSOCIATION, AS  THE
     RELATIONSHIP BANK; and

           (k)  A  duly executed counterpart of  the Subscription
     Agreement from each party thereto.

     4.2.  Certification  as to  Representations and  Warranties.
           -----------------------------------------------------
AnnTaylor,  by accepting  the  Purchase  Price  related  to  each
purchase  of  Receivables  (and  Related  Rights)   generated  by
AnnTaylor,  shall   be  deemed   to  have   certified  that   the
representations  and warranties contained  in Article V  are true
                                              ---------
and correct on and as of such day, with the same effect as though
made on and as of such day.




                               -12-



                            ARTICLE V

           REPRESENTATIONS AND WARRANTIES OF ANNTAYLOR

     In order to induce the  Company to enter into this Agreement
and to  make purchases hereunder,  AnnTaylor, in its  capacity as
seller under this Agreement, hereby makes the representations and
warranties set forth in this Article V.
                             ---------

     5.1.   Organization and  Good Standing.   AnnTaylor has been
            -------------------------------
duly organized and  is validly existing as a  corporation in good
standing under the  laws of the state of  its incorporation, with
power  and authority  to own  its properties  and to  conduct its
business as such properties are presently owned and such business
is presently conducted.

     5.2.   Due  Qualification.   AnnTaylor is  duly  licensed or
            ------------------
qualified  to  do  business  as a  foreign  corporation  in  good
standing in all jurisdictions in which (a) the ownership or lease
of  its property  or the  conduct of  its business  requires such
licensing or qualification and (b)  the failure to be so licensed
or  qualified has  not had  and will not  have a  Seller Material
Adverse Effect.

     5.3.  Power and Authority; Due Authorization.  AnnTaylor has
           --------------------------------------
(a) all necessary power, authority and legal right (i) to execute
and  deliver, and perform its obligations under, each Transaction
Document to which it is a party, as seller, and (ii) to generate,
own, sell and assign  Receivables on the terms and subject to the
conditions herein and therein  provided; and (b) duly  authorized
such execution and delivery and  such sale and assignment and the
performance  of  such  obligations  by  all  necessary  corporate
action.

     5.4.    Valid Sale;  Binding  Obligations.    Each  sale  of
             ---------------------------------
Receivables and Related Rights made by AnnTaylor pursuant to this
Agreement shall constitute a valid sale, transfer, and assignment
thereof to  the Company,  enforceable against  creditors of,  and
purchasers from,  AnnTaylor; and this Agreement  constitutes, and
each other  Transaction Document  to be  signed by  AnnTaylor, as
seller,  when duly  executed and  delivered,  will constitute,  a
legal, valid, and binding obligation of AnnTaylor, enforceable in
accordance  with its  terms,  except  as  enforceability  may  be
limited  by  bankruptcy,  insolvency,  reorganization,  or  other
similar  laws  affecting  the  enforcement  of creditors'  rights



                               -13-



generally  and by  general principles  of  equity, regardless  of
whether  such enforceability  is considered  in  a proceeding  in
equity or at law.

     5.5.  No  Violation.  The  consummation of the  transactions
           -------------
contemplated  by  this   Agreement  and  the   other  Transaction
Documents  to which  AnnTaylor  is  a party  as  seller, and  the
fulfillment of the terms hereof  or thereof will not (a) conflict
with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a
default under (i) AnnTaylor's certificate of incorporation or by-
laws, or  (ii) any indenture,  loan agreement, mortgage,  deed of
trust, or other agreement or instrument to which it is a party or
by  which it  is bound,  except  where such  conflict, breach  or
default has not had and  will not have a Seller Material  Adverse
Effect, (b) result  in the creation or imposition  of any Adverse
Claim upon  any of its  properties pursuant to  the terms of  any
such indenture, loan agreement, mortgage, deed of trust, or other
agreement or instrument, other than the Transaction Documents, or
(c) violate any law or  any order, rule, or regulation applicable
to it of any court or of any federal, state or foreign regulatory
body,  administrative agency,  or  other governmental  instrumen-
tality  having jurisdiction  over it  or any  of  its properties,
except  where such  violation has  not had  and will  not  have a
Seller Material Adverse Effect.

     5.6.  Proceedings.  There  is no action, suit, proceeding or
           -----------
investigation   pending  before   any  court,   regulatory  body,
arbitrator,   administrative   agency,  or   other   tribunal  or
governmental instrumentality (a) asserting the invalidity  of any
Transaction Document to which AnnTaylor is a party as seller, (b)
seeking to prevent the sale of Receivables to the  Company or the
consummation of any of the other transactions contemplated by any
Transaction Document to which AnnTaylor  is a party as seller, or
(c) seeking any determination or ruling that could reasonably  be
expected to have a Seller Material Adverse Effect.

     5.7.  Bulk  Sales Act.   No transaction contemplated  hereby
           ---------------
requires compliance with any bulk sales act or similar law.

     5.8.   Government Approvals.   Except for the filing  of the
            --------------------
UCC financing statements referred to in Article IV, all of which,
                                        ----------
at the time required in Article IV, shall have been duly made and
                        ----------
shall be in  full force and effect, no  authorization or approval
or other action  by, and no notice to or filing with, any govern-
mental authority or  regulatory body is required  for AnnTaylor's
due  execution,  delivery  and  performance  of  any  Transaction
Document to which it is a party, as seller.

     5.9.  Financial Condition.  On the date hereof AnnTaylor is,
           -------------------
and on the  date of each transfer  of a new  Receivable hereunder



                               -14-



(both before and after giving effect to such transfer), AnnTaylor
shall be solvent.

     5.10.  Margin Regulations.  No use of  any funds acquired by
            ------------------
AnnTaylor under this  Agreement will conflict with  or contravene
any  of Regulations  G, T, U  and X  promulgated by the  Board of
Governors of the Federal Reserve System from time to time.

     5.11.  Quality of Title.
            ----------------

           (a)    Each  Receivable  (together  with  the  Related
     Security for  such Receivable)  which is to  be sold  to the
     Company  hereunder is or  shall be owned  by AnnTaylor, free
     and clear of  any Adverse Claim,  except as provided  herein
     and  in the Receivables  Financing Agreement.   Whenever the
     Company makes a  purchase hereunder, it shall  have acquired
     and shall continue to have maintained a valid and  perfected
     ownership  interest (free  and clear  of  any Adverse  Claim
     created  by  AnnTaylor)  in  all  Receivables  generated  by
     AnnTaylor  and  all  Collections  related  thereto,  and  in
     AnnTaylor's  entire right, title and interest  in and to the
     Related Security with respect thereto.

           (b)    No  effective   financing  statement  or  other
     instrument  similar   in  effect  covering   any  Receivable
     generated by  AnnTaylor or  any  right related  to any  such
     Receivable that is  of the type described in  Section 1.1 is
                                                   -----------
     on  file in any recording office except such as may be filed
     in favor of the Company or AnnTaylor, as the case may be, in
     accordance with this Agreement or  in favor of the Lender in
     accordance with  the Receivables  Financing Agreement  or in
     favor   of  Bank  of  America  National  Trust  and  Savings
     Association  for  which  AnnTaylor  has  delivered  executed
     partial  releases  (UCC-3  statements) on  or  prior  to the
     Initial Closing Date.

     5.12.     Accuracy  of  Information.    No  factual  written
               -------------------------
information heretofore or contemporaneously  furnished in writing
(and  prepared) by  AnnTaylor,  as seller,  to  the Company,  the
Lender or the Administrator for purposes of or in connection with
any Transaction Document  or any transaction  contemplated hereby
or  thereby is,  and no  other such  factual written  information
hereafter  furnished (and prepared)  by AnnTaylor, as  seller, to
the Company, the  Lender, or the Administrator pursuant  to or in
connection  with any Transaction  Document will be  inaccurate in
any material respect  (in light of the  circumstances under which
such information was furnished and taken as a whole together with
all  other  information   previously  furnished  or   then  being
furnished)  as  of  the  date  it was  furnished  or  (except  as
otherwise disclosed to the  Company at or prior to  such time) as
of the date as of which  such information is dated or  certified.



                               -15-



No  information contained  in any  report  delivered pursuant  to
Section 6.2 or in any  Purchase Report shall contain any material
- -----------
misstatement  of  fact or  omitted  or  will  omit to  state  any
material fact necessary  to make such information  not materially
misleading on  the date as of which  such information is dated or
certified.

     5.13.  Offices.  AnnTaylor's principal place of business and
            -------
chief executive office is located  at the address set forth under
AnnTaylor's  signature hereto,  and the  offices where  AnnTaylor
keeps  all  its  books,  records  and  documents  evidencing  the
Receivables,  the  related  Contracts and  all  other  agreements
related   to  such  Receivables  are  located  at  the  addresses
specified in Exhibit  E (or at such other  locations, notified to
             ----------
Servicer  (if  other  than AnnTaylor)  and  the  Administrator in
accordance with Section 6.1(f), in jurisdictions where all action
                --------------
required by Section 7.3 has been taken and completed).
            -----------

     5.14.  Trade  Names.  Except as disclosed  on Schedule 5.15,
            ------------                           -------------
AnnTaylor  does not  use any  trade  name other  than its  actual
corporate name.  From and after the date that fell five (5) years
before the date hereof, AnnTaylor has not been known by any legal
name other than its corporate name as of the date hereof, nor has
AnnTaylor  been the  subject  of any  merger  or other  corporate
reorganization except as disclosed on Schedule 5.14.
                                      -------------

     5.15.   Taxes.   AnnTaylor  has  filed all  tax returns  and
             -----
reports required by law to have been filed by it and has paid all
taxes and governmental charges thereby shown  to be owing, except
any  such  taxes  which  are  not yet  delinquent  or  are  being
diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with generally accepted
accounting principles shall have been set aside on its books.

     5.16.   Compliance  with Applicable Laws.   AnnTaylor  is in
             --------------------------------
compliance,  in all material  respects, with the  requirements of
all  applicable laws,  rules,  regulations,  and  orders  of  all
governmental   authorities   (including,    without   limitation,
Regulation  Z, laws,  rules and  regulations  relating to  usury,
truth in  lending, fair  credit billing,  fair credit  reporting,
equal  credit  opportunity, fair  debt  collection practices  and
privacy and all other consumer laws applicable to the Receivables
and related Contracts), a breach of any of which, individually or
in the  aggregate, would  be reasonably likely  to have  a Seller
Material Adverse Effect.

     5.17.  Reliance  on Separate Legal  Identity.  AnnTaylor  is
            -------------------------------------
aware  that Lender, the  Relationship Bank and  the Administrator
are entering  into the  Transaction Documents to  which they  are
parties in reliance upon the Company's identity as a legal entity
separate from AnnTaylor.



                               -16-




                            ARTICLE VI

                     COVENANTS OF ANNTAYLOR

     6.1.  Affirmative Covenants.  From the date hereof until the
           ---------------------
first  day  following  the Purchase  and  Sale  Termination Date,
AnnTaylor  will, unless the  Company, the Administrator,  and the
Relationship Bank shall otherwise consent in writing:

           (a)    Compliance  with  Laws,  Etc.    Comply in  all
                  -----------------------------
     material   respects  with   all   applicable  laws,   rules,
     regulations  and  orders  with  respect to  the  Receivables
     generated  by  it  and the  Contracts  and  other agreements
     related thereto, except where such noncompliance has not had
     and will not have a Seller Material Adverse Effect.

           (b)   Preservation of  Corporate Existence.   Preserve
                 ------------------------------------
     and maintain its corporate existence, rights, franchises and
     privileges  in  the jurisdiction  of its  incorporation, and
     qualify and remain  qualified in good standing as  a foreign
     corporation  in  each  jurisdiction  where  the  failure  to
     preserve and  maintain such  existence, rights,  franchises,
     privileges and  qualification would have  a Seller  Material
     Adverse Effect.

           (c)   Receivables Review.   (i) At  any time  and from
                 ------------------
     time  to time during regular business hours, upon reasonable
     notice and in a manner designed not to  unreasonably disrupt
     the  normal business  operations  of  AnnTaylor, permit  the
     Company,  the Collateral  Agent,  the Administrator  and the
     Relationship   Bank   or   their   respective   agents    or
     representatives, (A) to examine, to audit and make copies of
     and  abstracts  from   all  books,  records  and   documents
     (including, without limitation, computer tapes and disks) in
     the possession or under the control of AnnTaylor relating to
     the  Receivables   generated  by   it,  including,   without
     limitation,  the  Contracts  and  other  agreements  related
     thereto, and (B) to visit AnnTaylor's offices and properties
     for the purpose of examining such materials described in the
     foregoing  clause (A) and discussing matters relating to the
                ----------
     Receivables   generated   by    AnnTaylor   or   AnnTaylor's
     performance  hereunder with any of the officers or employees
     of  AnnTaylor   having knowledge  of such matters;  and (ii)
     without  limiting the provisions  of clause (i)  next above,
                                          ----------
     from  time  to  time  on  request of  Administrator  or  the
     Relationship Bank,  permit certified  public accountants  or
     other  auditors acceptable to the Administrator to conduct a
     review  of its books  and records; provided,  however, that,
                                        --------   -------
     unless an Event  of Default has occurred  and is continuing,



                               -17-



     AnnTaylor  shall  not  be  obligated to  pay  for  any  such
     reviews,  which together with  reviews conducted pursuant to
     Section 7.01(c) of the  Receivables Financing Agreement, are
     done more frequently  than three times per year  by internal
     auditors  of the Administrator or the Relationship Bank (and
     such expenses  shall be subject  to Section 14.05(a)  of the
     Receivables Financing Agreement).

           (d)     Keeping  of  Records  and  Books  of  Account.
                   ---------------------------------------------
     Maintain  an  ability  to recreate  records  evidencing  the
     Receivables generated by it in the  event of the destruction
     of the originals thereof.

           (e)  Performance  and Compliance with Receivables  and
                -------------------------------------------------
     Contracts.   Timely and  fully perform  and comply  with all
     ---------
     provisions, covenants  and  other promises  required  to  be
     observed by it under the Contracts and all other  agreements
     related to the Receivables.

           (f)  Location of Records.  Keep its principal place of
                -------------------
     business and chief  executive office, and the  offices where
     it keeps its  records concerning or related  to Receivables,
     at  the address(es)  referred to  in Exhibit  E or,  upon 30
                                          ----------
     days'   prior  written  notice   to  the  Company   and  the
     Administrator,  at  such  other locations  in  jurisdictions
     where all  action required  by Section 7.3  shall have  been
                                    -----------
     taken and completed.

           (g)   Credit and  Collection Policies.  Comply in  all
                 -------------------------------
     material respects with  its Credit and Collection  Policy in
     connection  with the Receivables  that it generates  and all
     Contracts related thereto.

           (h)    Separate Corporate  Existence  of the  Company.
                  ----------------------------------------------
     Take such actions as shall be required in order that:

              (i)   the Company's  operating expenses (other than
           certain organization expenses and expenses incurred in
           connection  with  the   preparation,  negotiation  and
           delivery  of the  Transaction Documents)  will not  be
           paid by AnnTaylor;

              (ii)    the  Company's books  and  records  will be
           maintained separately from those of AnnTaylor;

              (iii)  All financial  statements of  AnnTaylor that
           are consolidated to  include the Company and  are used
           other than for  internal purposes by AnnTaylor  or any
           Affiliate thereof will  contain detailed notes clearly
           stating that (A) all of the Company's assets are owned
           by  the Company,  and (B)  the Company  is a  separate



                               -18-



           corporate  entity  with  creditors who  have  received
           security interests in the Company's assets;

              (iv)   AnnTaylor  will  strictly observe  corporate
           formalities in its dealing with the Company;

              (v)  AnnTaylor  shall not commingle its  funds with
           any  funds of the Company; provided that AnnTaylor and
                                      --------
           the Company acknowledge that some Obligors  make their
           payments to AnnTaylor's  stores or headquarters, which
           in-store collections are subject to the provisions  of
           Section 7.2(a) hereof;
           --------------

              (vi)    AnnTaylor    will   maintain  arm's  length
           relationships with  the Company, and AnnTaylor will be
           compensated  at  market  rates  for  any  services  it
           renders or otherwise furnishes to the Company; and

              (vii)   AnnTaylor will  not be,  and will  not hold
           itself out to  be, responsible  for the  debts of  the
           Company or the decisions or actions in respect  of the
           daily business and affairs of the Company.

     6.2.   Reporting Requirements.   From the date  hereof until
            ----------------------
the first day following the  Purchase and Sale Termination  Date,
AnnTaylor  will, unless  the Administrator  and the  Relationship
Bank shall  otherwise consent in writing, furnish to the Company,
the Administrator, and the Relationship Bank:

           (a)   Proceedings.   As  soon as  possible and  in any
                 -----------
     event  within  three  Business   Days  after  AnnTaylor  has
     knowledge  thereof,  written  notice  to  the  Company,  the
     Administrator and  the Relationship Bank of  (i) all pending
     proceedings  and  investigations of  the  type described  in
     Section 5.6 not  previously disclosed to the  Company and/or
     -----------
     the Administrator and (ii) all material adverse developments
     that  have occurred with respect to any previously disclosed
     proceedings and investigations; and

           (b)  Other.   Promptly, from time to  time, such other
                -----
     information, documents,  records or  reports respecting  the
     Receivables or  AnnTaylor's performance as  seller hereunder
     that the Company, the Administrator or the Relationship Bank
     may from time to time reasonably request in order to protect
     the interests of the Company, the Lender, the Administrator,
     the Relationship Bank, or any  other Affected Party under or
     as contemplated by the Transaction Documents.

     6.3.   Negative Covenants.   From the date hereof  until the
            ------------------
date  following the Purchase and Sale Termination Date, AnnTaylor




                               -19-



agrees  that, unless the Administrator, and the Relationship bank
shall otherwise consent in writing, it shall not:

           (a)   Sales, Liens, Etc.  Except as otherwise provided
                 -----------------
     herein  or in any  other Transaction Document,  sell, assign
     (by operation of law or  otherwise) or otherwise dispose of,
     or create or  suffer to exist any Adverse Claim upon or with
     respect  to, any Receivable  or related Contract  or Related
     Security,  or  any  interest  therein,  or  any  Collections
     thereon, or  assign any right  to receive income  in respect
     thereof.

           (b)  Change in Credit and Collection Policy.  Make any
                --------------------------------------
     change in the Credit and Collection Policy that would not be
     permitted under Section 7.04(c) of the Receivables Financing
     Agreement.

           (c)   Receivables Not  to be  Evidenced by  Promissory
                 ------------------------------------------------
     Notes.   Take any action  to cause or permit  any Receivable
     -----
     generated by it to become evidenced  by any "instrument" (as
     defined  in the applicable  UCC), except as  contemplated by
     Section 6.01(u) of the Receivables Financing Agreement.


                           ARTICLE VII

               ADDITIONAL RIGHTS AND OBLIGATIONS IN
                    RESPECT OF THE RECEIVABLES

     7.1.   Rights of the  Company.  AnnTaylor  hereby authorizes
            ----------------------
the Company and  the Servicer (if other than  AnnTaylor) or their
respective designees  to take  any and  all steps in  AnnTaylor's
name necessary  or desirable, in their  respective determination,
to  collect  all  amounts  due  under  any and  all  Receivables,
including,  without  limitation,  endorsing  AnnTaylor's name  on
checks  and   other  instruments  representing   Collections  and
enforcing  such Receivables  and the  provisions  of the  related
Contracts  that concern payment  and/or enforcement of  rights to
payment.

     7.2.  Responsibilities of AnnTaylor.  Anything herein to the
           -----------------------------
contrary notwithstanding:

           (a)    Collection  Procedures.    AnnTaylor agrees  to
                  ----------------------
     direct  its respective Obligors in the billing statements to
     make  payments of Receivables directly to a Lock-Box Account
     at a Lock-Box  Bank.  AnnTaylor  further agrees to  transfer
     any  Collections   that  it  receives   (including,  without
     limitation, in-store and  headquarters payments) directly to
     Servicer (for  deposit to  the Funding  Account) within  two
     Business Days of  receipt thereof, and agrees  that all such



                               -20-



     Collections shall be deemed to  be received in trust for the
     Company;  provided that, to the extent permitted pursuant to
               --------
     Section  3.2, AnnTaylor  may retain  such  Collections as  a
     ------------
     portion of  the Purchase  Price then payable  or apply  such
     Collections to the  reduction of the outstanding  balance of
     the  Company  Note.   AnnTaylor  agrees  to pay  all  Deemed
     Collections payable pursuant to Section 3.3 or 3.4; provided
                                     -----------    ---
     that,  notwithstanding anything  to the  contrary  set forth
     therein,  if   requested   by  the   Administrator  or   the
     Relationship  Bank during  the continuance  of  an Event  of
     Default,  AnnTaylor shall pay such Deemed Collections to the
     Servicer  for deposit to the Lock-Box  Account on the second
     Business Day following the day on which they arise.

           (b)     AnnTaylor   shall   perform  its   obligations
     hereunder, and the exercise by  the Company or its  designee
     of its  rights hereunder  shall not  relieve AnnTaylor  from
     such obligations.

           (c)   AnnTaylor hereby  grants to  Servicer (if  other
     than  AnnTaylor) an irrevocable power of attorney, with full
     power  of substitution, coupled with an interest, to take in
     the name of  AnnTaylor all steps  necessary or advisable  to
     indorse,  negotiate or otherwise  realize on any  writing or
     other right of any kind  held or transmitted by AnnTaylor or
     transmitted or received by the Company (whether or not  from
     AnnTaylor) in connection with any Receivable.

     7.3.  Further Action Evidencing Purchases.  AnnTaylor agrees
           -----------------------------------
that from time to time, at  its expense, it will promptly execute
and deliver all  further instruments and documents, and  take all
further  action that the Company  may reasonably request in order
to perfect, protect  or more fully evidence  the Receivables (and
the  Related Rights) purchased  by the  Company hereunder,  or to
enable  the Company  to exercise  or  enforce any  of its  rights
hereunder  or  under  any other  Transaction  Document.   Without
limiting the generality of the foregoing, upon the request of the
Company, AnnTaylor will:

           (a)  execute  and file such financing  or continuation
     statements, or  amendments thereto  or assignments  thereof,
     and such other  instruments or notices, as  may be necessary
     or appropriate; and

           (b)  mark  the summary master control  data processing
     records with the legend set forth in Section 4.1(j).
                                          --------------

AnnTaylor  hereby authorizes the Company or  its designee to file
one  or more financing or continuation statements, and amendments
thereto and  assignments thereof, relative  to all or any  of the
Receivables  (and the Related  Rights) now existing  or hereafter



                               -21-



generated by AnnTaylor.  If AnnTaylor fails to perform any of its
agreements  or obligations under  this Agreement, the  Company or
its designee may  (but shall not be required  to) itself perform,
or  cause performance of,  such agreement or  obligation, and the
expenses of the  Company or its  designee incurred in  connection
therewith   shall  be  payable   by  AnnTaylor  as   provided  in
Section 9.6.
- -----------

     7.4.  Application of Collections.  Any payment by an Obligor
           --------------------------
in respect of any indebtedness owed by it to AnnTaylor in respect
of  any  Contract shall,  except as  otherwise specified  by such
Obligor  or otherwise  required  by contract  or law,  be applied
first,  as  a Collection  of  any  Finance  Charge Receivable  or
- -----
Receivables of  such Obligor,  in the  order of  the age  of such
Finance  Charge Receivables,  starting with  the  oldest of  such
Finance  Charge Receivables,  second, to  the  collection of  any
                              ------
Principal  Receivable or  Receivables  then  outstanding of  such
Obligor in  the order of  the age of such  Principal Receivables,
starting  with  the  oldest of  such  Principal  Receivables, and
third, to any other indebtedness of such Obligor.
- -----


                           ARTICLE VIII

                         INDEMNIFICATION

     8.1.   Indemnities by AnnTaylor.  Without limiting any other
            ------------------------
rights which the  Company may have hereunder  or under applicable
law, AnnTaylor hereby agrees to indemnify the Company and each of
its assigns, officers,  directors, employees and agents  (each of
the foregoing Persons  being individually called a  "Purchase and
                                                     ------------
Sale Indemnified Party"),  forthwith on demand, from  and against
- ----------------------
any and all  damages, losses, claims, judgments,  liabilities and
related  costs and expenses, including reasonable attorneys' fees
and disbursements (all of the foregoing being collectively called
"Purchase  and Sale  Indemnified  Amounts")  awarded  against  or
 ----------------------------------------
incurred by  any of them  arising out  of or as  a result  of the
following:

           (a)  the  transfer by AnnTaylor of an  interest in any
     Receivable or  Related Right  to any  Person other than  the
     Company;

           (b)   without duplication  of amounts  paid as  Deemed
     Collections, the  breach of  any representation  or warranty
     made by AnnTaylor under or in connection with this Agreement
     or any  other Transaction  Document, or  any information  or
     report delivered  by AnnTaylor  pursuant  hereto or  thereto
     which shall  have been  false or incorrect  in any  material
     respect when made or deemed made;




                               -22-



           (c)   the  failure  by AnnTaylor  to  comply with  any
     applicable  law,  rule  or regulation  with  respect  to any
     Receivable generated  by AnnTaylor or the  related Contract,
     or  the   nonconformity  of  any   Receivable  generated  by
     AnnTaylor or the  related Contract with any  such applicable
     law, rule or regulation;

           (d)   the failure to  vest and maintain vested  in the
     Company  an ownership interest  in the Receivables generated
     by AnnTaylor free and clear of any Adverse Claim, other than
     an Adverse Claim arising solely as a result of an act of the
     Company, whether  existing at the  time of  the purchase  of
     such Receivables or at any time thereafter;

           (e)  the failure of  AnnTaylor to file with respect to
     itself,  or any  delay in  filing,  financing statements  or
     other similar instruments or documents under the UCC of  any
     applicable  jurisdiction  or  other  applicable  laws   with
     respect   to  any   Receivables  or   purported  Receivables
     generated by AnnTaylor, whether at the  time of any purchase
     or at any subsequent time;

           (f)   without duplication  of amounts  paid as  Deemed
     Collections, any  dispute, claim,  offset or  defense (other
     than discharge in bankruptcy) of the Obligor  to the payment
     of  any  Receivable  or purported  Receivable  generated  by
     AnnTaylor (including, without limitation, a defense based on
     such Receivables or the related Contracts not being a legal,
     valid  and binding  obligation of  such  Obligor enforceable
     against it in accordance with its terms), or any other claim
     resulting from the  services related to any  such Receivable
     or the furnishing of or failure to furnish such services;

           (g)  any product liability  claim arising out of or in
     connection  with  services  that  are  the  subject  of  any
     Receivable generated by AnnTaylor; and

           (h)  any tax or governmental fee or charge (other than
     any tax excluded pursuant to  clause (iii) in the proviso to
                                   ------------
     the preceding sentence), all  interest and penalties thereon
     or with  respect thereto,  and all  out-of-pocket costs  and
     expenses,  including  the reasonable  fees  and  expenses of
     counsel  in defending against  the same, which  may arise by
     reason  of  the  purchase or  ownership  of  the Receivables
     generated by AnnTaylor  or any Related Right  connected with
     any such Receivables;

excluding,  however, (i) Purchase and Sale Indemnified Amounts to
- ---------   -------
the  extent resulting from gross negligence or willful misconduct
on the part of such Purchase and Sale Indemnified Party, (ii) any
indemnification  which has the effect of recourse for non-payment



                               -23-



of the Receivables to AnnTaylor (except as otherwise specifically
provided under this Section  8.1) and (iii) any tax based upon or
                    ------------
measured by net income.

     If for any reason the indemnification provided above in this
Section 8.1  is unavailable  to a  Purchase and  Sale Indemnified
- -----------
Party  or  is  insufficient  to  hold  such   Purchase  and  Sale
Indemnified Party  harmless, then  AnnTaylor shall contribute  to
the amount paid or payable  by such Purchase and Sale Indemnified
Party to the maximum extent permitted under applicable law.


                            ARTICLE IX

                          MISCELLANEOUS

     9.1.  Amendments, etc.
           ---------------

           (a)  The provisions of this Agreement may from time to
     time  be amended,  modified or  waived,  if such  amendment,
     modification or  waiver is in  writing and  consented to  by
     AnnTaylor, the Company,  the Administrator, the Relationship
     Bank and the Servicer (if other than AnnTaylor).

           (b)  No  failure or delay on the part  of the Company,
     Servicer,  AnnTaylor  or  any  third  party  beneficiary  in
     exercising any power or  right hereunder shall operate as  a
     waiver thereof, nor shall any  single or partial exercise of
     any  such  power  or right  preclude  any  other or  further
     exercise  thereof or  the  exercise of  any  other power  or
     right.  No notice to or demand  on the Company, Servicer, or
     AnnTaylor  in any  case shall  entitle it  to any  notice or
     demand  in similar  or other  circumstances.   No waiver  or
     approval by  the Company  or Servicer  under this  Agreement
     shall, except as  may otherwise be stated in  such waiver or
     approval,  be  applicable  to subsequent  transactions.   No
     waiver  or approval under  this Agreement shall  require any
     similar  or dissimilar waiver  or approval thereafter  to be
     granted hereunder.

     9.2.  Notices,  etc.  All  notices and other  communications
           -------------
provided  for hereunder shall, unless otherwise stated herein, be
in  writing (including  facsimile  communication)  and  shall  be
personally delivered  or sent  by express mail  or courier  or by
certified mail, postage-prepaid, or by facsimile, to the intended
party at the address  or facsimile number of such party set forth
under its  name on the  signature pages  hereof or at  such other
address or facsimile number as  shall be designated by such party
in  a  written notice  to  the other  parties  hereto.   All such
notices  and communications shall be effective, (i) if personally
delivered  or sent  by express  mail  or courier  or  if sent  by



                               -24-



certified  mail,  when  received,  and  (ii)  if  transmitted  by
facsimile,   when  sent,  receipt   confirmed  by   telephone  or
electronic means.

     9.3.   No Waiver; Cumulative  Remedies.  The remedies herein
            -------------------------------
provided  are  cumulative  and  not  exclusive  of  any  remedies
provided by law.

     9.4.  Binding  Effect; Assignability.  This  Agreement shall
           ------------------------------
be  binding  upon  and  inure  to the  benefit  of  the  Company,
AnnTaylor and  its respective successors  and permitted  assigns.
AnnTaylor may  not assign its  rights hereunder  or any  interest
herein   without  the   prior  consent   of   the  Company,   the
Administrator  and the Relationship  Bank.  This  Agreement shall
create and constitute  the continuing obligations of  the parties
hereto in  accordance with  its terms, and  shall remain  in full
force  and effect  until the  date  after the  Purchase and  Sale
Termination Date  on which AnnTaylor has received payment in full
for  all  Receivables  and Related  Rights  conveyed  pursuant to
Section 1.1 hereof.  The rights and  remedies with respect to any
- -----------
breach  of  any  representation and  warranty  made  by AnnTaylor
pursuant  to   Article V  and  the  indemnification  and  payment
               ---------
provisions  of Article VIII  and Section 9.6 shall  be continuing
               ------------      -----------
and shall survive any termination of this Agreement.

     9.5.  Governing  Law.  THIS AGREEMENT SHALL  BE GOVERNED BY,
           --------------
AND CONSTRUED IN  ACCORDANCE WITH, THE  LAWS OF THE STATE  OF NEW
YORK.

     9.6.    Costs, Expenses  and  Taxes.    In addition  to  the
             ---------------------------
obligations  of AnnTaylor under  Article VIII and  subject to any
                                 ------------
limitations agreed to  in writing by any Affected  Party prior to
the date hereof, AnnTaylor agrees to pay on demand:

           (a)  all  reasonable costs and expenses  in connection
     with  the  enforcement  of  this  Agreement  and  the  other
     Transaction Documents executed by AnnTaylor as seller; and

           (b)   all  stamp  and  other similar  taxes  and  fees
     payable or determined  to be payable in connection  with the
     execution,  delivery, filing and recording of this Agreement
     or  the other Transaction Documents, and agrees to indemnify
     each  Purchase   and  Sale  Indemnified  Party  against  any
     liabilities with  respect to or resulting from  any delay in
     paying or omission to pay such taxes and fees.

     9.7.  Submission to Jurisdiction.   EACH PARTY HERETO HEREBY
           --------------------------
IRREVOCABLY  (a) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
NEW  YORK STATE  OR UNITED  STATES FEDERAL  COURT SITTING  IN THE
BOROUGH  OF MANHATTAN,  STATE OF  NEW  YORK, OVER  ANY ACTION  OR
PROCEEDING   ARISING  OUT  OF  OR  RELATING  TO  ANY  TRANSACTION



                               -25-



DOCUMENT; (b) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY  BE HEARD AND  DETERMINED IN SUCH STATE  OR UNITED
STATES FEDERAL  COURT; (c) WAIVES,  TO THE FULLEST EXTENT  IT MAY
EFFECTIVELY DO  SO  UNDER  APPLICABLE  LAW,  THE  DEFENSE  OF  AN
INCONVENIENT  FORUM  TO   THE  MAINTENANCE  OF  SUCH   ACTION  OR
PROCEEDING; (d) CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN
ANY SUCH ACTION  OR PROCEEDING BY THE  MAILING OF COPIES  OF SUCH
PROCESS TO SUCH PERSON AT  ITS ADDRESS SPECIFIED IN SECTION 10.2;
                                                    ------------
AND  (e)  TO THE  EXTENT  ALLOWED  BY LAW,  AGREES  THAT  A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER  MANNER PROVIDED BY LAW.    NOTHING IN  THIS SECTION
                                                          -------
10.7 SHALL AFFECT  THE COMPANY'S RIGHT TO SERVE  LEGAL PROCESS IN
- ----
ANY  OTHER MANNER  PERMITTED BY  LAW OR  TO BRING  ANY ACTION  OR
PROCEEDING AGAINST ANNTAYLOR OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTIONS.

     9.8.   Waiver of  Jury Trial.   EACH PARTY  HERETO EXPRESSLY
            ---------------------
WAIVES ANY  RIGHT TO A TRIAL BY JURY  IN ANY ACTION OR PROCEEDING
TO ENFORCE OR  DEFEND ANY RIGHTS UNDER THIS  AGREEMENT, ANY OTHER
TRANSACTION  DOCUMENT,  OR  UNDER  ANY AMENDMENT,  INSTRUMENT  OR
DOCUMENT DELIVERED  OR WHICH  MAY IN THE  FUTURE BE  DELIVERED IN
CONNECTION  HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT,
AND  AGREES THAT  ANY SUCH  ACTION OR  PROCEEDING SHALL  BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.

     9.9.    Captions  and  Cross  References;  Incorporation  by
             ----------------------------------------------------
Reference.   The various captions (including, without limitation,
- ---------
the  table  of  contents)  in  this  Agreement  are included  for
convenience   only  and   shall  not   affect   the  meaning   or
interpretation of any provision of this Agreement.  References in
this Agreement to any underscored  Section or Exhibit are to such
Section or Exhibit  of this Agreement, as  the case may be.   The
Exhibits hereto  are hereby  incorporated by  reference into  and
made a part of this Agreement.

     9.10.  Execution  in Counterparts.   This  Agreement may  be
            --------------------------
executed  in any number of counterparts  and by different parties
hereto in separate  counterparts, each of which when  so executed
shall be deemed  to be an  original and all  of which when  taken
together shall constitute one and the same Agreement.

     9.11.   Acknowledgment and  Agreement.  By  execution below,
             -----------------------------
AnnTaylor  expressly  acknowledges  and agrees  that  all  of the
Company's rights,  title, and  interests in,  to, and  under this
Agreement shall be assigned by the Company to the Lender pursuant
to the Receivables Financing Agreement, and AnnTaylor consents to
such assignment.   Each  of the parties  hereto acknowledges  and
agrees that the  Administrator, the Lender, and  the Relationship
Bank are third  party beneficiaries of the rights  of the Company
arising  hereunder and under  the other Transaction  Documents to
which AnnTaylor is a party as seller.


                               -26-



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


                         ANNTAYLOR FUNDING INC.


                         By
                           --------------------------------
                           Title:  Vice President

                         414 Chapel Street
                         New Haven, CT  06511
                         Attention: Bert A. Tieben
                         Vice President
                         Facsimile: (203) 865-0811


                         ANNTAYLOR, INC.


                         By________________________________
                           Title:  Senior Vice President

                         142 West 57th Street
                         New York, NY  10019
                         Attention:  Jocelyn Barandiaran, Esq.
                         Vice President/Secretary and General Counsel
                         Facsimile: (212) 541-3299

                         With a copy to:
                         AnnTaylor, Inc.
                         414 Chapel Street
                         New Haven, CT  06511

                         Facsimile:  (203) 865-2756
                         Attention:  Walter Parks
                         Vice President/Financial Reporting





                                                         Exhibit A

                     ANNTAYLOR FUNDING, INC.
                RECEIVABLES REPORT AS OF 12/24/93
                            FOR Dec-93

Portfolio Information

     I.  Outstanding Principal                       $________

    II.  Beginning Receivables Balance               $________

   III.  New Receivables to add                      $________

    IV.  Collections to deduct                       $________

     V.  Defaulted Receivables to deduct             $________

    VI.  +/-Other Adjustments                        $________

   VII.  Delinquent Receivables to deduct            $________

  VIII.  Other Ineligible Receivables to deduct      $________
 
         (Not including Defaulted Receivables)

    IX.  Aging Schedule

Current    Age 1 Age 2 Age 3 Age 4 Age 5  Age 6 Age 7+





                                             EXHIBIT B
                                                 to
                                      Purchase and Sale Agreement



                   SUBORDINATED PROMISSORY NOTE
                         (NON-NEGOTIABLE
                          COMPANY NOTE)

                                               New York, New York
                                                 January   , 1994
                                                         --


     FOR VALUE RECEIVED, the undersigned, ANNTAYLOR FUNDING,
INC., a Delaware corporation ( the "Company"), promises to pay to
                                    -------
ANNTAYLOR, INC., a Delaware corporation ("AnnTaylor"), on the
                                          ---------
terms and subject to the conditions set forth herein and in the
Purchase and Sale Agreement referred to below, the sum of (i) the
aggregate unpaid Purchase Price of all Receivables purchased by
the Company from AnnTaylor pursuant to such Purchase and Sale
Agreement, as such unpaid Purchase Price is shown in the records
of Servicer plus (ii) any capitalized interest pursuant to
            ----
Section 4 hereof as shown on the records of AnnTaylor.
- ---------

     1.   Purchase and Sale Agreement.  This promissory note
          ---------------------------
(this "Company Note") is the Company Note described in, and is
       ------------
subject to the terms and conditions set forth in, that certain
Purchase and Sale Agreement of even date herewith (as the same
may be amended or otherwise modified from time to time, the
"Purchase and Sale Agreement"), between AnnTaylor and the
 ---------------------------
Company.  Reference is hereby made to the Purchase and Sale
Agreement for a statement of certain other rights and obligations
of AnnTaylor and the Company.

     2.   Definitions.  Capitalized terms used (but not defined)
          -----------
herein have the meanings assigned thereto in Appendix A to the
                                             ----------
Receivables Financing Agreement dated as of even date herewith
among AnnTaylor, as Servicer, the Company, Clipper Receivables
Corporation, as Lender, State Street Boston Capital Corporation,
as Administrator, and PNC Bank, National Association, as
Relationship Bank (as may be amended or otherwise modified from
time to time, the "Receivables Financing Agreement").  In
                   -------------------------------
addition, as used herein, the following terms have the following
meanings:

          "Bankruptcy Proceedings" has the meaning set forth
           ----------------------
     in clause (b) of paragraph 9 hereof.
        ----------    -----------

          "Final Maturity Date" means the second Business Day
           -------------------
     after a demand for payment has been made by AnnTaylor,
     but in no event earlier than the Settlement Date
     immediately following the date on which one hundred



     twenty one (121) days have elapsed since the date the
     Senior Interests have been paid in full.

          "Interest Period" means the period from and
           ---------------
     including a Report Date (or, in the case of the first
     Interest Period, the date hereof) to but excluding the
     next Report Date.

          "Senior Interests" means, collectively, (i) the
           ----------------
     aggregate unpaid principal amount of the Loans, (ii)
     accrued interest on the aggregate unpaid principal
     amount of the Loans, (iii) all fees payable pursuant to
     the Receivables Financing Agreement, (iv) any
     Indemnified Amounts, (v) unpaid Servicer's Fees,
     provided that AnnTaylor is not the Servicer, and (vi)
     --------
     all other obligations of the Company that are due and
     payable to any Affected Party, together with all
     interest accruing on any such amounts after the
     commencement of any Bankruptcy Proceedings,
     notwithstanding any provision or rule of law that might
     restrict the rights of any Senior Interest Holder, as
     against the Company or anyone else, to collect such
     interest.

          "Senior Interest Holders" means, collectively, the
           -----------------------
     Lender, the Administrator, the Relationship Bank, the
     other Affected Parties and the Indemnified Parties.

          "Subordination Provisions" means, collectively,
           ------------------------
     clauses (a) through (l) of paragraph 9 hereof.
     -----------         ---    -----------

     3.   Interest.  Subject to the Subordination Provisions set
          --------
forth below, the Company promises to pay interest on this Company
Note as follows:

          (a)  Prior to the Final Maturity Date, the
     aggregate unpaid Purchase Price from time to time
     outstanding during any Interest Period shall bear
     interest at a rate per annum equal to the Alternate Base
                        --- -----
     Rate plus 3% as in effect from time to time as
     determined by Servicer; and

          (b)  From (and including) the Final Maturity Date
     to (but excluding) the date on which the entire
     aggregate unpaid Purchase Price is fully paid, the
     aggregate unpaid Purchase Price from time to time
     outstanding shall bear interest at a rate per annum
                                               --- -----
     equal to the Alternate Base Rate as in effect from time
     to time, plus 5%, as determined by Servicer.

     4.   Interest Payment Dates.  Subject to the
          ----------------------
Subordination Provisions set forth below, the Company shall
pay accrued interest on this Company Note on each Settlement
Date, and shall pay accrued interest on the amount of each



                               -2-



principal payment made in cash on a date other than a
Settlement Date at the time of such principal payment;
provided, however, that unless AnnTaylor instructs the
- --------  -------
Company otherwise, such interest may be paid by means of an
increase in the amount of the unpaid principal amount hereof
by an amount equal to the interest being so paid.

     5.   Basis of Computation.  Interest accrued hereunder
          --------------------
shall be computed for the actual number of days elapsed on
the basis of a 365- or 366-day year.

     6.   Principal Payment Dates.  Subject to the
          -----------------------
Subordination Provisions set forth below, payments of the
principal amount of this Company Note shall be made as
follows:

          (a)  The principal amount of this Company Note
     shall be reduced from time to time pursuant to
     Sections 3.2,  3.3, 3.4 and 7.2 of the Purchase and Sale
     -------------- ---  ---     ---
     Agreement; and

          (b)  The entire remaining unpaid Purchase Price of
     all Receivables purchased by the Company from AnnTaylor
     pursuant to the Purchase and Sale Agreement shall be
     paid on the Final Maturity Date.

Subject to the Subordination Provisions set forth below, the
principal amount of and accrued interest on this Company Note
may be prepaid on any Business Day without premium or
penalty.

     7.   Payments.  All payments of principal and interest
          --------
hereunder are to be made in lawful money of the United States
of America.

     8.   Enforcement Expenses.  In addition to and not in
          --------------------
limitation of the foregoing, but subject to the Subordination
Provisions set forth below and to any limitation imposed by
applicable law, the Company agrees to pay all expenses,
including reasonable attorneys' fees and legal expenses,
incurred by AnnTaylor in seeking to collect any amounts
payable hereunder which are not paid when due.

     9.   Subordination Provisions.  The Company covenants
          ------------------------
and agrees, and AnnTaylor, by its acceptance of this Company
Note, likewise covenants and agrees on behalf of itself and
any holder of this Company Note, that the payment of the
principal amount of and interest on this Company Note is
hereby expressly subordinated in right of payment to the
payment and performance of the Senior Interests to the extent




                               - 3 -



and in the manner set forth in the following clauses of this
paragraph 9:
- -----------

          (a)  No payment or other distribution of the
     Company's assets of any kind or character, whether in
     cash, securities, or other rights or property, shall be
     made on account of this Company Note except to the
     extent such payment or other distribution is permitted
     under the Purchase and Sale Agreement and Section 3.01
                                               ------------
     of the Receivables Financing Agreement;

          (b)  In the event of any dissolution, winding up,
     liquidation, readjustment, reorganization or other
     similar event relating to the Company, whether voluntary
     or involuntary, partial or complete, and whether in
     bankruptcy, insolvency or receivership proceedings, or
     upon an assignment for the benefit of creditors, or any
     other marshalling of the assets and liabilities of the
     Company or any sale of all or substantially all of the
     assets of the Company (such proceedings being herein
     collectively called "Bankruptcy Proceedings"), the
                          ----------------------
     Senior Interests shall first be paid and performed in
     full and in cash before AnnTaylor shall be entitled to
     receive and to retain any payment or distribution in
     respect of this Company Note.  In order to implement the
     foregoing:  (i) all payments and distributions of any
     kind or character in respect of this Company Note to
     which AnnTaylor would be entitled except for this clause
                                                       ------
     (b) shall be made directly to the Administrator (for the
     ---
     benefit of the Senior Interest Holders); (ii) AnnTaylor
     shall promptly file a claim or claims, in the form
     required in any Bankruptcy Proceedings, for the full
     outstanding amount of this Company Note, and shall use
     commercially reasonable efforts to cause said claim or
     claims to be approved and all payments and other
     distributions in respect thereof to be made directly to
     the Administrator (for the benefit of the Senior
     Interest Holders) until the Senior Interests shall have
     been paid and performed in full and in cash; and (iii)
     AnnTaylor hereby irrevocably agrees that the
     Administrator, in the name of AnnTaylor or otherwise,
     may demand, sue for, collect, receive and receipt for
     any and all such payments or distributions, and file,
     prove and vote or consent in any such Bankruptcy
     Proceedings with respect to any and all claims of
     AnnTaylor relating to this Company Note, in each case
     until the Senior Interests shall have been paid and
     performed in full and in cash;

          (c)  In the event that AnnTaylor receives any
     payment or other distribution of any kind or character



                               - 4 -



     from the Company or from any other source whatsoever, in
     respect of this Company Note, other than as expressly
     permitted by the terms of this Company Note, such
     payment or other distribution shall be received for the
     sole benefit of the Senior Interest Holders and shall be
     turned over by AnnTaylor to the Administrator (for the
     benefit of the Senior Interest Holders) forthwith.
     AnnTaylor will mark its books and records so as clearly
     to indicate that this Company Note is subordinated in
     accordance with the terms hereof.  All payments and
     distributions received by the Administrator in respect
     of this Company Note, to the extent received in or
     converted into cash, may be applied by the Administrator
     (for the benefit of the Senior Interest Holders) first
     to the payment of any and all expenses (including
     reasonable attorneys' fees and legal expenses) paid or
     incurred by the Senior Interest Holders in enforcing
     these Subordination Provisions, or in endeavoring to
     collect or realize upon this Company Note, and any
     balance thereof shall, solely as between AnnTaylor and
     the Senior Interest Holders, be applied by the
     Administrator toward the payment of the Senior
     Interests; but as between the Company and its creditors,
     no such payments or distributions of any kind or
     character shall be deemed to be payments or
     distributions in respect of the Senior Interests;

          (d)  Notwithstanding any payments or distributions
     received by the Senior Interest Holders in respect of
     this Company Note, while any Bankruptcy Proceedings are
     pending AnnTaylor shall not be subrogated to the then
     existing rights of the Senior Interest Holders in
     respect of the Senior Interests until the Senior
     Interests have been paid and performed in full and in
     cash;

          (e)  These Subordination Provisions are intended
     solely for the purpose of defining the relative rights
     of AnnTaylor, on the one hand, and the Senior Interest
     Holders on the other hand.  Nothing contained in these
     Subordination Provisions or elsewhere in this Company
     Note is intended to or shall impair, as between the
     Company, its creditors (other than the Senior Interest
     Holders) and AnnTaylor, the Company's obligation, which
     is unconditional and absolute, to pay AnnTaylor the
     principal of and interest on this Company Note as and
     when the same shall become due and payable in accordance
     with the terms hereof or to affect the relative rights
     of AnnTaylor and creditors of the Company (other than
     the Senior Interest Holders);




                               - 5 -



          (f)  AnnTaylor shall not, until the Senior
     Interests have been paid and performed in full and in
     cash, (i) cancel, waive, forgive, transfer or assign, or
     commence legal proceedings to enforce or collect, or
     subordinate to any obligation of the Company, howsoever
     created, arising or evidenced, whether direct or
     indirect, absolute or contingent, or now or hereafter
     existing, or due or to become due, other than the Senior
     Interests, this Company Note or any rights in respect
     hereof (except as set forth in Section 12 hereof) or
                                    ----------
     (ii) convert this Company Note into an equity interest
     in the Company, unless AnnTaylor shall have received the
     prior written consent of the Administrator and the
     Relationship Bank in each case;

          (g)  AnnTaylor shall not, without the advance
     written consent of the Administrator and the
     Relationship Bank, commence, or join with any other
     Person in commencing, any Bankruptcy Proceedings with
     respect to the Company until at least one year and one
     day shall have passed since the Senior Interests shall
     have been paid and performed in full and in cash;

          (h)  If, at any time, any payment (in whole or in
     part) of any Senior Interest is rescinded or must be
     restored or returned by a Senior Interest Holder
     (whether in connection with Bankruptcy Proceedings or
     otherwise), these Subordination Provisions shall
     continue to be effective or shall be reinstated, as the
     case may be, as though such payment had not been made;

          (i)  Without affecting the rights and restrictions
     set forth in the Transaction Documents, each of the
     Senior Interest Holders may, from time to time, at its
     sole discretion, without notice to AnnTaylor, and
     without waiving any of its rights under these
     Subordination Provisions, take any or all of the
     following actions:  (i) retain or obtain an interest in
     any property to secure any of the Senior Interests; (ii)
     retain or obtain the primary or secondary obligations of
     any other obligor or obligors with respect to any of the
     Senior Interests; (iii) extend or renew for one or more
     periods (whether or not longer than the original
     period), alter or exchange any of the Senior Interests,
     or release or compromise any obligation of any nature
     with respect to any of the Senior Interests; (iv) amend,
     supplement, amend and restate, or otherwise modify any
     Transaction Document; and (v) release its security
     interest in, or surrender, release or permit any
     substitution or exchange for all or any part of any
     rights or property securing any of the Senior Interests,



                               - 6 -



     or extend or renew for one or more periods (whether or
     not longer than the original period), or release,
     compromise, alter or exchange any obligations of any
     nature of any obligor with respect to any such rights or
     property;

          (j)  AnnTaylor hereby waives:  (i) notice of
     acceptance of these Subordination Provisions by any of
     the Senior Interest Holders; (ii) notice of the
     existence, creation, non-payment or non-performance of
     all or any of the Senior Interests; and (iii) all
     diligence in enforcement, collection or protection of,
     or realization upon, the Senior Interests, or any
     thereof, or any security therefor;

          (k)  Each of the Senior Interest Holders may, from
     time to time, on the terms and subject to the conditions
     set forth in the Transaction Documents to which such
     Persons are party, but without notice to AnnTaylor,
     assign or transfer any or all of the Senior Interests,
     or any interest therein; and, notwithstanding any such
     assignment or transfer or any subsequent assignment or
     transfer thereof, such Senior Interests shall be and
     remain Senior Interests for the purposes of these
     Subordination Provisions, and every immediate and
     successive assignee or transferee of any of the Senior
     Interests or of any interest of such assignee or
     transferee in the Senior Interests shall be entitled to
     the benefits of these Subordination Provisions to the
     same extent as if such assignee or transferee were the
     assignor or transferor; and

          (l)  These Subordination Provisions constitute a
     continuing offer from the holder of this Company Note to
     all Persons who become the holders of, or who continue
     to hold, Senior Interests; and these Subordination
     Provisions are made for the benefit of the Senior
     Interest Holders, and the Administrator or the Lender
     may proceed to enforce such provisions on behalf of each
     of such Persons.

     10.  General.  No failure or delay on the part of
          -------
AnnTaylor in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power
or right.  No amendment, modification or waiver of, or
consent with respect to, any provision of this Company Note
shall in any event be effective unless (i) the same shall be
in writing and signed and delivered by the Company and
AnnTaylor and (ii) all consents required for such actions



                               - 7 -



under the Transaction Documents shall have been received by
the appropriate Persons.

     12.  No Negotiation.  This Company Note is not
          --------------
negotiable; provided, AnnTaylor may pledge this Company Note
            --------
to the agent for the benefit of the lenders under the
AnnTaylor Credit Agreement.

     13.  Governing Law.  THIS PROMISSORY NOTE SHALL BE
          -------------
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK.

     14.  Captions.  Paragraph captions used in this Company
          --------
Note are for convenience only and shall not affect the
meaning or interpretation of any provision of this Company
Note.


                              ANNTAYLOR FUNDING, INC.



                              By:___________________________

                              Title:________________________

                              Pay to the order of Bank of
                              America National Trust and
                              Savings Association, as Agent


                              ANNTAYLOR, INC.



                              By:___________________________
                              Title:  Senior Vice President

















                               - 8 -







                                                         Exhibit C



                              January 27, 1994



The Persons Listed on
Schedule I Hereto

          Re:  Receivables Facility of
               AnnTaylor, Inc. and
               AnnTaylor Funding, Inc.
               -----------------------

Ladies and Gentlemen:

          We have acted as special counsel to AnnTaylor
Funding, Inc., a Delaware corporation (the "Company"),
and AnnTaylor, Inc., a Delaware corporation ("AnnTaylor",
and together with the Company, the "Credit Parties") in
connection with the preparation, execution and delivery
of (i) the Purchase and Sale Agreement dated as of
January 27, 1994 (the "Purchase Agreement") between the
Company, as purchaser and AnnTaylor, as seller, (ii) the
Receivables Financing Agreement, dated as of January 27,
1994 (the "Receivables Financing Agreement"), among the
Company, Clipper Receivables Corporation (the "Lender"),
AnnTaylor, as Servicer, State Street Boston Capital
Corporation (the "Administrator"), and PNC Bank, National
Association (the "Relationship Bank"), and (iii) certain
other agreements, instruments and documents related to
the Purchase Agreement and the Receivables Financing
Agreement.  This opinion is being delivered pursuant to
Section 4.1(h) of the Purchase Agreement and Section
5.01(h)(i) of the Receivables Financing Agreement.  Capi-
talized terms used herein and not otherwise defined
herein shall have the same meanings herein as set forth
in Appendix A to the Receivables Financing Agreement.

          In our examination we have assumed the genuine-
ness of all signatures including endorsements, the legal
capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as
facsimile, certified or photostatic copies, and the au-
thenticity of the originals of such copies.  As to any
facts material to this opinion which we did not indepen-





The Persons listed on
Schedule I hereto
January 27, 1994
Page 2

dently establish or verify, we have relied upon state-
ments and representations of the Credit Parties and their
respective officers and other representatives and of
public officials, including the facts set forth in the
Company's Certificate and AnnTaylor's Certificate, each
as described below.

          In rendering opinions set forth herein, we have
examined and relied on originals or copies of the follow-
ing:
               (a)  the Receivables Financing Agreement;

               (b)  the Purchase Agreement;

               (c)  the Spread Account Agreement;

               (d)  the Note;

               (e)  the Company Note (as defined in the
Purchase Agreement);

               (f)  the Fee Letter;

               (g)  the certificate of the Company exe-
cuted by an officer of the Company dated the date hereof,
a copy of which is attached as Exhibit A hereto (the
"Company's Certificate");

               (h)  the certificate of AnnTaylor executed
by an officer of AnnTaylor, dated the date hereof, a copy
of which is attached as Exhibit B hereto ("AnnTaylor's
Certificate");

               (i)  the Certificate of Incorporation and
By-laws of each of the Credit Parties;

               (j)  certain resolutions of the Board of
Directors of the Company adopted by unanimous written
consent on January 24, 1994;

               (k)  certain resolutions of the Board of
Directors of AnnTaylor adopted on January 19, 1994;





The Persons listed on
Schedule I hereto
January 27, 1994
Page 3

               (l)  signed, unfiled copies of financing
statements under the Uniform Commercial Code as in effect
in the State of New York, naming (i) AnnTaylor as the
debtor, the Company as secured party and the Lender as
the assignee and (ii) the Company as debtor and the
Lender as the secured party, which we understand and have
assumed in each case will be filed within ten days of the
assignment of Pool Receivables from AnnTaylor to the
Company and the transfer of the security interest therein
from the Company to the Lender in the offices of the
Secretary of State of the State of New York and the City
Register of New York County, New York (the "Filing Offic-
es") (such financing statements, the "Financing State-
ments");

               (m)  search reports provided by Lexis
Document Services, (i) dated January 25, 1994 and cover-
ing the period through December 17, 1993 listing financ-
ing statements that name AnnTaylor as debtor and that are
filed in the Secretary of State of the State of New York
and (ii) dated January 24, 1994, and covering the period
through December 17, 1993, listing financing statements
that name the Company as debtor and that are filed in the
Secretary of State of the State of New York, together
with copies of such financing statements, a summary of
which search reports are attached as Exhibit C hereto
(the "Search Reports");

               (n)  a certificate from the Secretary of
State of the State of Delaware as to the good standing of
the Company in such jurisdiction; and

               (o)  such other documents as we have
deemed necessary or appropriate as a basis for the opin-
ions set forth below.

          Unless otherwise indicated, references in this
opinion to the "New York UCC" shall mean the Uniform Com-
mercial Code as in effect on the date hereof in the State
of New York.  The documents listed in paragraphs (a)
through (f) above shall hereinafter be referred to col-
lectively as the "Documents."





The Persons listed on
Schedule I hereto
January 27, 1994
Page 4

          Members of our firm are admitted to the bar of
the State of New York.  We express no opinion as to the
laws of any jurisdiction other than (i) the laws of the
State of New York, (ii) the General Corporation Law of
the State of Delaware (the "DGCL"), and (iii) the federal
laws of the United States of America to the extent spe-
cifically referred to herein.

          The opinions set forth below are subject to the
following qualifications:

                    (i)  enforcement of each of the
     Documents and of any interests created thereby may
     be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws
     affecting creditors' rights generally and by general
     principles of equity (regardless of whether enforce-
     ment is sought in equity or at law);

                    (ii)  certain of the remedial provi-
     sions with respect to the security including waivers
     with respect to the exercise of remedies against the
     collateral contained in each of the Documents may be
     unenforceable in whole or in part, but the inclusion
     of such provisions does not affect the validity of
     the Documents, each taken as a whole, and, subject
     to the other qualifications and exceptions contained
     in this opinion, each of the Documents, each taken
     as a whole, together with applicable law, contains
     adequate provisions for the practical realization of
     the benefits of the security created thereby;

                    (iii)  we express no opinion as to
     any provision with respect to governing law to the
     extent that it purports to affect the choice of law
     governing perfection and the effect of perfection
     and non-perfection of the security interests.

                    (iv)  enforcement of the Documents
     may be subject to the terms of instruments, leases,
     contracts or other agreements between the Credit
     Parties and the other parties to such agreements,





The Persons listed on
Schedule I hereto
January 27, 1994
Page 5

     the rights of such other parties and any claims or
     defenses of such other parties against the Credit
     Parties arising under or outside such instruments,
     leases or contracts or other agreements; and

                    (v)  we express no opinion as to the
     enforceability of any rights to contribution or
     indemnification provided for in the Documents which
     are violative of the public policy underlying any
     law, rule or regulation (including any federal or
     state securities law, rule or regulation).

          We have assumed for the purpose of the opinions
set forth herein that the assignment from AnnTaylor to
the Company pursuant to the Purchase Agreement consti-
tutes the sale of (and not a lien upon) the assets pur-
ported to be conveyed thereby.  We call to your attention
that we have delivered an opinion to you on even date
herewith with respect to the characterization of such
assignment in the event that AnnTaylor were to become a
debtor under the United States Bankruptcy Code, 11 U.S.C.
Sec. 101 et. seq. (the "Bankruptcy Code").

          Based upon the foregoing and subject to the
limitations, qualifications, exceptions and assumptions
set forth herein, we are of the opinion that:

          1.   The Company has been incorporated and is
validly existing and is in good standing under the laws
of the State of Delaware.

          2.   Each of the Credit Parties has the corpo-
rate power and corporate authority to execute, deliver
and perform all of its obligations under each of the
Documents to which it is a party.  The execution and
delivery by each of the Credit Parties of each of the
Documents to which it is a party and the consummation of
the transactions contemplated thereby have been duly
authorized by all requisite corporate action on the part
of each such Credit Party.  Each of the Documents has
been duly executed and delivered by each Credit Party
which is a party thereto.





The Persons listed on
Schedule I hereto
January 27, 1994
Page 6

          3.   Each of the Documents constitutes the
valid and binding obligation of each Credit Party that is
a party thereto enforceable against such Credit Party in
accordance with its terms.

          4.   The execution and delivery by each of the
Credit Parties of each of the Documents to which it is a
party and the performance by each such Credit Party of
its obligations under each such Document, each in accor-
dance with its terms, do not (i) conflict with the Cer-
tificate of Incorporation or By-laws of such Credit
Party, (ii) constitute a violation of or a default under
any Applicable Contract (as hereinafter defined) or (iii)
cause the creation of any security interest or lien
(other than the liens granted under, created by or per-
mitted by the Documents) upon any of the property of such
Credit Party pursuant to any Applicable Contracts.  We do
not express any opinion, however, as to whether the
execution, delivery or performance by any Credit Party of
any Document to which it is a party will constitute a
violation of or a default under any covenant, restriction
or provision with respect to financial ratios or tests or
any aspect of the financial condition or results of
operations of such Credit Party or the effect of any such
violation or default on the opinions expressed herein.
For purposes of this paragraph 4, "Applicable Contracts"
means those agreements or instruments set forth on Sched-
ule I to the Company's Certificate with respect to the
Company and on Schedule I to AnnTaylor's Certificate with
respect to AnnTaylor and which have been identified to us
as all the agreements and instruments (other than the
Documents) which are material to the business or finan-
cial condition of the Company and AnnTaylor respectively.

          5.   Neither the execution, delivery or perfor-
mance by any Credit Party of any of the Documents to
which it is a party nor the compliance by such Credit
Party with the terms and provisions thereof will contra-
vene any provision of any Applicable Law (as hereinafter
defined).  For purposes of this paragraph 5 and para-
graph 6, "Applicable Laws" means the DGCL and those laws,
rules and regulations of the State of New York and of the





The Persons listed on
Schedule I hereto
January 27, 1994
Page 7

United States of America (including, without limitation,
Regulations G, U and X of the Federal Reserve Board)
which, in our experience, are normally applicable to
transactions of the type contemplated by the Documents
and are not the subject of a specific opinion herein
referring expressly to a particular law or laws.

          6.   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 any of the Documents by any Credit Party
except the filing of the Financing Statements in the
Filing Offices, the filing of financing statements in the
State of Connecticut and the filing of partial releases
(UCC-3 statements) with respect to security interests of
the Bank of America National Trust and Savings Associa-
tion, as agent (the "Bank of America Release State-
ments").  For the purposes of this paragraph 6, the term
"Governmental Approval" means any consent, approval,
license, authorization or validation of, or filing,
recording or registration with, any Governmental Authori-
ty pursuant to Applicable Laws, and for the purposes of
this paragraph 6 and paragraph 7, the term "Governmental
Authority" means any federal, New York or, to the extent
relating to the DGCL, Delaware executive, legislative,
judicial, administrative or regulatory body.

          7.   Neither the execution, delivery or perfor-
mance by any Credit Party of its obligations under the
Documents to which it is a party nor compliance by such
Credit Party with the terms thereof will contravene any
Applicable Order (as hereinafter defined) against such
Credit Party.  For purposes of this paragraph 7, the term
"Applicable Orders" means those orders or decrees of
Governmental Authorities identified on Schedule II to the
Company's Certificate with respect to the Company and on
Schedule II to AnnTaylor's Certificate with respect to
AnnTaylor.

          8.   The provisions of the Purchase Agreement
are effective to create, in favor of the Company, a valid





The Persons listed on
Schedule I hereto
January 27, 1994
Page 8

security interest (as such term is defined in Section 1-
201 of the New York UCC) in that portion of the Pool
Receivables of AnnTaylor constituting accounts (as such
term is defined in Section 9-106 of the New York UCC)
(the "Accounts Property"), and the proceeds thereof.  We
call to your attention that the term security interest as
defined in Section 1-201 of the New York UCC includes the
sale of accounts.  We express no opinion with respect to
the nature or extent of the obligations being secured by
the security interest granted to the Company.

          9.   While there is no case law precisely on
point and the issue is not free from doubt, based upon
our review of relevant case law authority in New York,
including Stathos v. Murphy, 26 App. Div. 2d 500, 276
          -----------------
N.Y. Supp. 2d 727, aff'd 19 N.Y.2d 883, 281 N.Y. Supp. 2d
81 (1967), and the principles set forth in Restatement of
                                           --------------
Contracts 2d (1981), the provisions of the Purchase
- ------------
Agreement are effective to create, in favor of the Compa-
ny, a valid interest under the common law of the State of
New York in that portion (if any) of the Pool Receivables
of AnnTaylor constituting general intangibles (as such
term is defined in Section 9-106 of the New York UCC)
(the "General Intangibles Property," and together with
the Accounts Property, the "Receivables Property") that
is enforceable against subsequent creditors of or pur-
chasers from AnnTaylor.  We note, however, that unless
the Obligor in respect of a Pool Receivable has received
notice of such sale, bona fide payments made by such
Obligor to AnnTaylor or to a subsequent assignee of such
Pool Receivable as to which the Obligor has received
notice of such assignment will discharge such Obligor's
obligations to the extent of such payment, and such
payment will be recoverable only from AnnTaylor or such
assignee.

          The opinions expressed in paragraphs 8 and 9
are subject to the following qualifications:

               (a)  we have assumed that the Receivables
Property exists and that AnnTaylor has sufficient rights
in the Receivables Property for the interest of the





The Persons listed on
Schedule I hereto
January 27, 1994
Page 9

Company to attach, and we express no opinion as to the
nature or extent of any of AnnTaylor's rights in or title
to any Receivables Property;

               (b)  we call to your attention that Sec-
tion 552 of the Bankruptcy Code limits the extent to
which property acquired by a debtor after the commence-
ment of a case under the Bankruptcy Code may be subject
to a security interest arising from a security agreement
entered into by such debtor before the commencement of
such case;

               (c)  we call to your attention that the
security interest of the Company in proceeds of the
Accounts Property is limited to the extent set forth in
Section 9-306 of the New York UCC and to property of a
type subject to the New York UCC;

               (d)  we have assumed that there are no
agreements between AnnTaylor and any account debtor
prohibiting, restricting or conditioning the assignment
of any portion of the Receivables Property;

               (e)  we call to your attention that the
interest of the Company in the Receivables Property may
be subject to the rights of account debtors, claims and
defenses of account debtors and the terms of agreements
with account debtors;

               (f)  we express no opinion regarding the
interest of the Company in any of the Receivables Proper-
ty consisting of claims against any government or gov-
ernmental agency (including, without limitation, the
United States of America or any state thereof or any
agency or department of the United States of America or
any state thereof); and

               (g)  in the case of any account or general
intangible which is itself secured by other property, we
express no opinion with respect to the rights of the
Company in and to such underlying property.





The Persons listed on
Schedule I hereto
January 27, 1994
Page 10

          10.  The provisions of the Receivables Financ-
ing Agreement are effective to create, in favor of the
Lender, as security for the obligations of the Company
described in Section 9.01 thereof, a valid security
interest in that portion of the Pool Receivables consti-
tuting accounts or general intangibles (as each such term
is defined in Section 9-106 of the New York UCC) (the
"Receivables Collateral"), and the proceeds thereof.

          The opinions expressed in paragraph 10 are sub-
ject to the qualifications to opinion paragraphs 8 and 9
set forth above and to the following qualifications:

               (a)  we have assumed that the Receivables
Collateral exists and the Company has sufficient rights
in the Receivables Collateral for the security interest
of the Lender to attach, and, except to the extent set
forth in opinion paragraphs 8 and 9 above, we express no
opinion as to the nature or extent of the Company's
rights in or title to any Receivables Collateral;

               (b)  we call to your attention that Sec-
tion 552 of the Bankruptcy Code limits the extent to
which property acquired by a debtor after the commence-
ment of a case under the Bankruptcy Code may be subject
to a security interest arising from a security agreement
entered into by such debtor before the commencement of
such case;

               (c)  we call to your attention that the
security interest of the Lender in proceeds is limited to
the extent set forth in Section 9-306 of the New York UCC
and to property of a type subject to the New York UCC;

               (d)  we call to your attention that the
security interest of the Lender may be subject to the
rights of account debtors, claims and defenses of account
debtors and the terms of agreements with account debtors;

               (e)  we express no opinion regarding the
security interest of the Lender in any of the Receivables
Collateral consisting of claims against any government or





The Persons listed on
Schedule I hereto
January 27, 1994
Page 11

governmental agency (including, without limitation, the
United States of America or any state thereof or any
agency or department of the United States of America or
any state thereof); and

               (f)  in the case of any account or general
intangible which is itself secured by other property, we
express no opinion with respect to the rights of the
Lender in and to such underlying property.

          11.  The Financing Statements are in appropri-
ate form for filing in each of the Filing Offices under
the New York UCC.

          12.  The security interest in favor of the
Company in the Accounts Property described in the Financ-
ing Statements naming AnnTaylor as debtor (the "Article 9
Filing Property") will be perfected upon the filing of
such Financing Statements in the respective Filing Offic-
es, and no other security interest of any other transfer-
ee of AnnTaylor is equal or prior to the security inter-
est of the Company in such Article 9 Filing Property.

          13.  If the chief executive office of the
Company is located in the State of New York for the
purposes of the New York UCC, the security interest in
favor of the Lender in the Receivables Collateral de-
scribed in the Financing Statements naming the Company as
debtor (the "Article 9 Filing Collateral") will be per-
fected upon the filing of such Financing Statements in
the respective Filing Offices, and no other security
interest of any other transferee from the Company is
equal or prior to the security interest of the Lender in
such Article 9 Filing Collateral.

          The opinions expressed in paragraphs 11, 12 and
13 are subject to the qualifications to opinion para-
graphs 8, 9 and 10 set forth above and to the following
qualifications:

          (a)  we have assumed based upon AnnTaylor's
Certificate that, for the purposes of the New York UCC,





The Persons listed on
Schedule I hereto
January 27, 1994
Page 12

the chief executive office of AnnTaylor as of the date of
filing of the Financing Statements is located in New York
County in the State of New York;

          (b)  we have assumed based upon the Company's
Certificate that, for the purposes of the New York UCC,
the chief executive office of the Company as of the date
of filing of the Financing Statements is located either
in New York County in the State of New York or in the
State of Connecticut, and we express no opinion with
respect to the perfection or priority of the security
interest of the Lender in the Receivables Collateral to
the extent that the chief executive office of the Company
is located in the State of Connecticut;

          (c)  we call to your attention that the perfec-
tion and the effect of perfection and nonperfection of
the security interest of the Company in the Article 9
Filing Property and the security interest of the Lender
in the Article 9 Filing Collateral may be governed by
laws other than those of the New York UCC to the extent
that the chief executive office of either AnnTaylor or
the Company respectively is or becomes located in a
jurisdiction other than New York;

          (d)  we call to your attention that (i) the
perfection of the security interest of the Company as to
the Article 9 Filing Property and the Lender as to the
Article 9 Filing Collateral will be terminated as to any
such property acquired by AnnTaylor or the Company re-
spectively more than four months after AnnTaylor or the
Company respectively changes its name, identity, or
corporate structure so as to make the applicable Financ-
ing Statements seriously misleading unless new appropri-
ate financing statements indicating the new name, identi-
ty or corporate structure of AnnTaylor or the Company, as
the case may be, are properly filed before the expiration
of such four months, and (ii) the New York UCC requires
the filing of continuation statements within the period
of six months prior to the expiration of five years from
the date of the filing of the original Financing State-
ments or the filing of any continuation statements in





The Persons listed on
Schedule I hereto
January 27, 1994
Page 13

order to maintain the effectiveness of the original
Financing Statements;

          (e)  we express no opinion with respect to any
of the Accounts Property consisting of accounts or gener-
al intangibles arising from or relating to the sale of
farm products by a farmer, consumer goods in the hands of
AnnTaylor, crops growing or to be gown, timber to be cut
or minerals or the like (including oil and gas) or ac-
counts subject to subsection 5 of Section 9-103 of the
New York UCC;

          (f)  we express no opinion with respect to any
of the Receivables Collateral consisting of accounts or
general intangibles arising from or relating to the sale
of farm products by a farmer, consumer goods in the hands
of the Company, crops growing or to be grown, timber to
be cut or minerals or the like (including oil and gas) or
accounts subject to subsection 5 of Section 9-103 of the
New York UCC;

          (g)  we express no opinion as to the priority
of the security interest of the Company in the Article 9
Filing Property or the Lender in the Article 9 Filing
Collateral against:  (i) any liens, claims or other
interests that arise by operation of law and do not
require any filing or possession in order to take priori-
ty over security interests perfected through the filing
of a financing statement; (ii) any lien, claim or encum-
brance in favor of the United States of America or any
state, or any agency or instrumentality of any of them or
any other governmental entity (including, without limita-
tion, federal tax liens, liens arising under the Employee
Retirement Income Security Act of 1974, as amended, or
claims given priority pursuant to 31 U.S.C. Sec. 3713);
(iii) a lien creditor who attached or levied prior to the
perfection of the security interest of the Company or the
Lender, as the case may be; (iv) a lien creditor with
respect to future advances to the extent set forth in
Section 9-301(4) of the New York UCC; (v) another secured
creditor with respect to any future advances to the
extent set forth in Section 9-312(7) of the New York UCC;





The Persons listed on
Schedule I hereto
January 27, 1994
Page 14

(vi) a security interest perfected under the laws of
another jurisdiction to the extent that either AnnTaylor
or the Company had its chief executive office in such
jurisdiction within four months prior to the date of the
perfection of the security interest of the Company or the
Lender, as the case may be; (vii) a security interest
perfected without filing any financing statement pursuant
to Section 9-302(1) of the New York UCC; (viii) a secu-
rity interest perfected by filing a financing statement
naming AnnTaylor or the Company as debtor using a trade
name, fictitious name or previous name; (ix) the holder
of a perfected "purchase money security interest" as such
term is defined in Section 9-107 of the New York UCC;
(x) another secured party with a perfected security
interest in other property of AnnTaylor or the Company to
the extent the Pool Receivables are proceeds of such
other creditor's collateral; (xi) any person who has en-
tered into a subordination or intercreditor agreement
with the Company with respect to the Accounts Property or
with the Lender with respect to the Receivables Collat-
eral; (xii) any claim for wages, salary or other compen-
sation; (xiii) a purchaser of accounts purchased as part
of the sale of the business out of which they arose;
(xiv) an assignment of accounts for purposes of collec-
tion only or a transfer of a single account; (xv) any
claim arising out of tort or any surety who is subrogated
to the rights of AnnTaylor or the Company, as the case
may be; or (xvi) the security interest of a creditor who
filed a financing statement based on a prior or incorrect
location of the chief executive office of AnnTaylor or
the Company to the extent such other financing statement
would be effective under Section 9-401(2) or (3) of the
New York UCC;

          (h)  we have assumed that (i) all financing
statements presented for filing prior to the effective
date of the applicable search report in which each of
AnnTaylor and the Company is named as debtor have been
properly filed, indexed and recorded with the Secretary
of State of the State of New York and are identified in
the appropriate Search Report and (ii) no financing
statements naming AnnTaylor or the Company as debtor were





The Persons listed on
Schedule I hereto
January 27, 1994
Page 15

filed with Secretary of State of the State of New York
between the effective date of the Search Reports and the
date of the filing of the applicable Financing Statements
in such Filing Office; and we call to your attention that
we did not review any search report with respect to any
financing statements naming AnnTaylor or the Company as
debtor filed with the City Register of New York County,
New York; and

          (i)  we have assumed that the Bank of America
Release Statements will be filed on or prior to the date
of the filing of the Financing Statements.

          14.  No registration of AnnTaylor or the Compa-
ny under the Investment Company Act of 1940, as amended,
is required in connection with the initial assignment
under the Purchase Agreement or the initial borrowing
under the Receivables Financing Agreement, respectively.

          In rendering the foregoing opinions, we have
assumed, with your consent, that:

               (a)  AnnTaylor has been incorporated in
     the State of Delaware and is validly existing and in
     good standing under the laws of all jurisdictions in
     which it owns or leases property of a nature, or
     transacts business of a type, that would make such
     qualification necessary;

               (b)  the execution, delivery and perfor-
     mance of each Credit Party's obligations under the
     Documents to which it is a party does not and will
     not conflict with, contravene, violate or constitute
     a default under (i) any lease, indenture, instrument
     or other agreement to which such Credit Party or its
     property is subject (other than the Applicable
     Contracts, as to which we make no such assumption),
     (ii) any rule, law or regulation to which such
     Credit Party is subject (other than Applicable Laws,
     as to which we make no such assumption), or (iii)
     any judicial or administrative order or decree of





The Persons listed on
Schedule I hereto
January 27, 1994
Page 16

     any governmental authority (other than Applicable
     Orders, as to which we make no such assumption); and

                    (c)  no authorization, consent or
     other approval of, notice to or filing with any
     court, governmental authority or regulatory body
     (other than Governmental Approvals, as to which we
     make no such assumption) is required to authorize or
     is required in connection with the execution, deliv-
     ery or performance by any Credit Party of any Docu-
     ment to which it is a party or the transactions
     contemplated thereby.

          Our opinions are also subject to the following
assumptions and qualifications:

               (a)  we have assumed each of the Documents
     constitutes the legal, valid and binding obligation
     of each party to such Document (other than the
     Credit Parties) enforceable against such party in
     accordance with its terms; and

                    (b)  we express no opinion as to the
     effect on the opinions expressed herein of (i) the
     compliance or noncompliance of the Administrator,
     the Relationship Bank, the Collateral Agent, the
     Credit Bank, the Liquidity Bank, the Lock-Box Bank,
     the Lender or any other party (other than the Credit
     Parties) to the Documents with any state, federal or
     other laws or regulations applicable to them or (ii)
     the legal or regulatory status or the nature of the
     business of any such Person.

          This opinion is being furnished only to you and
is solely for your benefit and is not to be used, quoted,
relied upon or otherwise referred to by any other Person
or for any other purpose without our prior written con-
sent.

                              Very truly yours,





                        SCHEDULE I

             Clipper Receivables Corporation
                      P.O. Box 4024
               Boston, Massachusetts  02201

         State Street Boston Capital Corporation
                   225 Franklin Street
               Boston, Massachusetts  02110

              PNC Bank, National Association
               Fifth Avenue and Wood Street
             Pittsburgh, Pennsylvania  15265

             Standard & Poor's Ratings Group
                       25 Broadway
                New York, New York  10004

             Moody's Investors Service, Inc.
                     99 Church Street
                New York, New York  10007








                 Exhibit A to Opinion of
        Special Counsel to AnnTaylor Funding, Inc.
        ------------------------------------------

                  Officer's Certificate
                  ---------------------



          I, Jocelyn F.L. Barandiaran, am Corporate
Secretary of AnnTaylor Funding, Inc., a Delaware corpora-
tion ("Funding").  I understand that pursuant to Section
5.01(h)(i) of that certain Receivables Financing Agree-
ment, dated as of January 27, 1994 (the "Receivables Fi-
nancing Agreement"), among Funding, AnnTaylor, Inc.
("AnnTaylor") as servicer, Clipper Receivables Corpora-
tion, State Street Boston Capital Corporation and PNC
Bank, National Association, Skadden, Arps, Slate, Meagher
& Flom is rendering an opinion (the "Opinion").  Defined
terms used herein but not otherwise defined shall have
the meaning set forth in Appendix A to the Receivables
Financing Agreement.  I further understand that Skadden,
Arps, Slate, Meagher & Flom is relying on this certifi-
cate and the statements made herein in rendering the
Opinion.

          With regard to the foregoing, on behalf of
Funding, I certify that:

          1.   The chief executive office of Funding is
located at either 142 West 57th Street, New York, New
York 10019 or 414 Chapel Street, New Haven, Connecticut
06511.

          2.   Set forth on Schedule I hereto are all of
the agreements and instruments (other than the Transac-
tion Documents) to which Funding is a party which are
material to the business or financial condition of Fund-
ing.

          3.   Set forth on Schedule II hereto are all of
the orders, judgments and decrees of any governmental
authority which are material to the business or property
of Funding.

          4.   Funding holds no stock in any company.

          5.   Funding is engaged in the business set
forth in the Transaction Documents.  The value of all





securities owned by Funding does not exceed 10% of the
value of Funding's total assets.

          6.   Funding does not directly or indirectly
own or operate facilities used for the generation, trans-
mission or distribution of electric energy for sale or
facilities used for the distribution at retail of natural
or manufactured gas for heat, light or power and Funding
does not own any interest in any company which owns or
operates such facilities.

          7.  Neither Funding nor any of its subsidiaries
is a person providing railroad transportation for compen-
sation (a "rail carrier") or a person controlled by or
affiliated with a rail carrier or a person providing
sleeping car transportation for compensation (a "sleeping
car carrier") or a corporation organzied to provide
transportation by rail carrier or sleeping car carrier.

          IN WITNESS WHEREOF, I have executed this cer-
tificate this      day of January 1994.
              ----



                    By:
                        --------------------------------------
                        Name: Jocelyn F.L. Barandiaran
                        Title: Corporate Secretary





















                               2






                          Schedule I

                     Applicable Contracts
                     --------------------

                             None










































                               3





                          Schedule II

                       Applicable Orders
                       -----------------

                             None











































                               4





                 Exhibit B to Opinion of
            Special Counsel to AnnTaylor, Inc.
            ----------------------------------

                  Officer's Certificate
                  ---------------------



          I, Jocelyn F.L. Barandiaran, am Vice President,
General Counsel and Corporate Secretary of AnnTaylor,
Inc., a Delaware corporation ("AnnTaylor").  I understand
that pursuant to (i) Section 5.01(h)(i) of that certain
Receivables Financing Agreement, dated as of January 27,
1994 (the "Receivables Financing Agreement"), among
AnnTaylor Funding, Inc. ("Funding"), AnnTaylor, as ser-
vicer, Clipper Receivables Corporation, State Street
Boston Capital Corporation and PNC Bank, National Associ-
ation and (ii) Section 4.1(h) of that certain Purchase
and Sale Agreement, dated as of January 27, 1994 between
Funding and AnnTaylor, Skadden, Arps, Slate, Meagher & Flom is rendering an opinion (the "Opinion").  Defined
terms used herein but not otherwise defined shall have
the meaning set forth in Appendix A to the Receivables
Financing Agreement.  I further understand that Skadden,
Arps, Slate, Meagher & Flom is relying on this certifi-
cate and the statements made herein in rendering the
Opinion.

          With regard to the foregoing, on behalf of
AnnTaylor, I certify that:

          1.   The chief executive office of AnnTaylor is
located at 142 West 57th Street, New York, New York
10019.

          2.   Set forth on Schedule I hereto are all of
the agreements and instruments (other than the Transac-
tion Documents) to which AnnTaylor is a party which are
material to the business or financial condition of
AnnTaylor.

          3.   Set forth on Schedule II hereto are all of
the orders, judgments and decrees of any governmental
authority which are material to the business or property
of AnnTaylor.

          4.   AnnTaylor holds no stock in any company
other than the stock represented by the certificates set





forth on Schedule III hereto; none of such stock is trad-
ed on a national securities exchange.

          5.   AnnTaylor is primarily engaged in the
business described in Schedule IV.  The value of all
securities owned by AnnTaylor (excluding those referred
to in paragraph 4 above) does not exceed 10% of the value
of AnnTaylor's total assets.

          6.   AnnTaylor does not directly or indirectly
own or operate facilities used for the generation, trans-
mission or distribution of electric energy for sale or
facilities used for the distribution at retail of natural
or manufactured gas for heat, light or power and
AnnTaylor does not own any interest in any company which
owns or operates such facilities.

          7.  Neither AnnTaylor nor any of its subsid-
iaries is a person providing railroad transportation for
compensation (a "rail carrier") or a person controlled by
or affiliated with a rail carrier or a person providing
sleeping car transportation for compensation (a "sleeping
car carrier") or a corporation organzied to provide
transportation by rail carrier or sleeping car carrier.
























                            2






          IN WITNESS WHEREOF, I have executed this cer-
tificate this      day of January 1994.
              ----



                    By:
                        --------------------------------------
                        Name: Jocelyn F.L. Barandiaran
                        Title: Vice President, General Counsel
                                 and Corporate Secretary






































                               3





                          Schedule I

                     Applicable Contracts
                     --------------------

1.   Indenture, dated as of July 15, 1989, between AnnTaylor
     and United States Trust Company of New York, as Trustee,
     together with the Certificate of Satisfaction and Dis-
     charge in favor of AnnTaylor as of July 29, 1993 by such
     Trustee.

2.   Indenture, dated as of July 15, 1989, between AnnTaylor
     and State Street Bank and Trust Company of Connecticut,
     as successor trustee to The Connecticut Bank and Trust
     Company, National Association, as Trustee, together with
     the Certificate of Satisfaction and Discharge in favor of
     AnnTaylor as of July 29, 1993 by such Trustee.

3.   Credit Agreement, dated as of June 28, 1993, among
     AnnTaylor, Bank of America, Bank of Montreal and the
     other financial institutions party thereto, as amended by
     Amendment No. 1 to Credit Agreement dated as August 10,
     1993, Amendment No. 2 to Credit Agreement dated as Sep-
     tember 30, 1993, Amendment No. 3 to Credit Agreement
     dated as December 23, 1993, and Amendment No. 4 and
     Consent to Credit Agreement dated as January 24, 1994.

4.   Security and Pledge Agreement, dated as of June 28, 1993,
     made by AnnTaylor in favor of Bank of America, as Agent,
     as modified by Amendment No. 4 and Consent to Credit
     Agreement dated as January 24, 1994.

5.   Trademark Assignment, dated as of June 28, 1993, made by
     AnnTaylor with Bank of America, as Agent.

6.   Tax Sharing Agreement, dated as of July 12, 1989, between
     the Company and AnnTaylor Stores Corporation ("ATSC").

7.   Agreement, dated as of July 13, 1993, among Cygne De-
     signs, Inc., Cygne Design F.E. Limited, CAT US Inc.,
     C.A.T. (Far East) Limited and AnnTaylor.

8.   Stock Purchase Agreement, dated as of July 13, 1993,
     between Cleveland Investment Limited and AnnTaylor.

9.   Agreement, dated as of June 14, 1989, and the Trademark
     License Agreement, effective as of January 1, 1990, among
     Allied Stores Corporation, AnnTaylor and ATSC.

                               4





10.  Indenture, dated as of June 15, 1993, between AnnTaylor
     and Fleet Bank, N.A., as Trustee.

11.  Employment Agreement, effective as of February 3, 1992,
     between AnnTaylor, AnnTaylor Stores Corporation and Sally
     Frame Kasaks.

12.  Lease, dated as of March 17, 1989, between Carven Associ-
     ates and AnnTaylor concerning the West 57th Street head-
     quarters, as amended by the First Amendment thereto dated
     as of November 14, 1990, the Second Amendment thereto
     dated as of February 28, 1993, the Third Amendment there-
     to dated as of June  24, 1993, and the letter agreement
     dated as of October 1, 1993.

13.  Lease, dated December 1, 1985, between Hamilton Realty
     Co. and AnnTaylor (as successor in interest to ASC Stores
     III, Inc.) concerning the New Haven distribution center,
     as amended by the letter agreement dated March 22, 1993,
     and the letter agreement dated July 26, 1993.

14.  Lease, dated June 12, 1986, between SMR 85-1 Limited
     Partnership and AnnTaylor (as successor in interest to
     ASC Stores III, Inc.) concerning the New Haven offices,
     as amended by the Amendment to Lease dated December 7,
     1987 and the Second Amendment to Lease dated December 10,
     1992.





















                               5





                          Schedule II

                       Applicable Orders
                       -----------------

                             None











































                               6





                           Schedule III

                        Stock Certificates
                        ------------------


Company                    Certificate Nos.           No. of Shares
- -------                    ----------------           -------------

AnnTaylor Travel, Inc.1          1                            1

CAT U.S. Inc.1                   1 and 11                  4,000

C.A.T. (Far East) Limited1       5 and 8                  60,000

AnnTaylor Funding, Inc.1         1                           100






























- --------------------
1    Pledged to Bank of America pursuant to the Security
     and Pledge Agreement, dated as of June 28, 1993.

                                7





                           Schedule IV

                     Description of Business
                     -----------------------


      AnnTaylor is primarily engaged in the business of the
retail sale of women's apparel, shoes and accessories.









































                                8




                                              EXHIBIT D
                                                  to
                                      Purchase and Sale Agreement


                   STOCK SUBSCRIPTION AGREEMENT
                   ----------------------------


     This  Stock Subscription Agreement  (as amended  or modified
from  time to  time,  this  "Agreement") is  entered  into as  of
                             ---------
January  24, 1994  among  ANNTAYLOR  FUNDING,  INC.,  a  Delaware
corporation  ("Issuer")   and   ANNTAYLOR,   INC.,   a   Delaware
               ------
corporation ("AnnTaylor").
              ---------

                         R E C I T A L S

     A.   Issuer is  organized under  the  laws of  the State  of
Delaware for the  purpose of purchasing accounts  receivable (and
certain related rights) of AnnTaylor.

     B.   (i) Issuer and AnnTaylor will enter into a Purchase and
Sale  Agreement (the "Purchase  and Sale Agreement")  pursuant to
                      ----------------------------
which AnnTaylor  will sell  all of  the Receivables (and  certain
related rights)  generated by  it (other  than Receivables  being
used to purchase Shares (as defined below)  hereunder) to Issuer,
and  (ii) Issuer,  AnnTaylor,  Clipper  Receivables  Corporation,
State  Street Boston Capital  Corporation and PNC  Bank, National
Association  will  enter into  a Receivables  Financing Agreement
("Receivables Financing  Agreement"), in  connection with  which,
  --------------------------------
Issuer   will  grant  to  Lender  a   security  interest  in  the
Receivables referred to  in clause (i) and the  Receivables being
                            ----------
contributed to Issuer  hereunder.  The term "Receivables" and the
other capitalized terms  used (but not otherwise  defined) herein
shall  have the meanings  set forth in  the Receivables Financing
Agreement (when executed).

     C.   Issuer desires  to sell all  the shares of  its capital
stock  to AnnTaylor,  and  AnnTaylor  desires  to  purchase  such
shares, on the terms set forth in this Agreement.

     NOW, THEREFORE, Issuer and AnnTaylor agree as follows:

          1.   Purchase and Sale of Capital Stock.
               ----------------------------------

               (a)  On  the Closing  Date, Issuer  shall sell  to
AnnTaylor, and AnnTaylor  shall purchase from Issuer,  100 shares
of  common  stock, $1.00  par  value, of  Issuer  (such aggregate
number of shares and common  stock herein called the "Shares" and
                                                      ------
"Common Stock," respectively).
 ------------



               (b)  The  purchase  price   for  the  Shares  will
consist of an aggregate of $100.

          2.   Closing.
               -------

          The  closing of  the purchase  and sale  of the  Shares
hereunder  (the  "Closing")  shall  be  held  at the  offices  of
                  -------
AnnTaylor in New York, New York on January 24, 1994 (the "Closing
                                                          -------
Date").  On the Closing Date, Issuer shall deliver to AnnTaylor a
- ----
certificate  registered  in  AnnTaylor's  name  representing  the
number of Shares to be purchased by AnnTaylor against delivery to
Issuer by  AnnTaylor of the  purchase price set forth  in Section
                                                          -------
1(b).
- ----

          3.   Representations and Warranties of Issuer.   Issuer
               ----------------------------------------
represents and warrants to AnnTaylor as follows:

               (a)  Issuer  is a  corporation duly  incorporated,
validly existing and in good standing under the laws of the State
of Delaware, and has all requisite  corporate power and authority
to carry on its business as proposed to be conducted.

               (b)  Issuer has all requisite  legal and corporate
power to enter into  this Agreement, to issue  the Shares and  to
perform its other obligations under the terms of this Agreement.

               (c)  The  authorized capital stock of Issuer as of
the date hereof and as  of the Closing Date  is 100 shares.   The
Shares  have  been duly  authorized  and, when  issued,  and upon
receipt of  the purchase price  thereof, will be  validly issued,
fully paid and nonassessable.

               (d)  Issuer   has  taken   all  corporate   action
necessary  for its authorization, execution, and delivery of, and
its performance under, this Agreement.

               (e)  This Agreement constitutes a legal, valid and
binding  obligation  of  Issuer, enforceable  against  Issuer  in
accordance  with its  terms, except  that  enforceability may  be
limited by (i) bankruptcy, insolvency or other laws affecting the
enforcement of  creditors'  rights  generally  and  (ii)  general
principles of equity regardless of whether such enforceability is
considered in a proceeding in equity or at law.

          4.   Representations and Warranties of AnnTaylor.
               -------------------------------------------

               AnnTaylor  represents  and warrants  to  Issuer as
follows:

               (a)  AnnTaylor is a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware,



                              - 2 -



and has all  requisite corporate power and authority  to carry on
its business as conducted on the date hereof.

               (b)  AnnTaylor has taken  all actions required for
its   authorization,  execution,   and  delivery   of,  and   its
performance under, this Agreement.

               (c)  This  Agreement   constitutes  a   valid  and
binding obligation of AnnTaylor, enforceable against AnnTaylor in
accordance  with its  terms, except  that  enforceability may  be
limited by (i) bankruptcy, insolvency or other laws affecting the
enforcement  of  creditors'  rights generally  and  (ii)  general
principles of equity regardless of whether such enforceability is
considered in a proceeding in equity or at law.

               (d)  AnnTaylor  is   purchasing  the   Shares  for
investment  for its own account,  not as a  nominee or agent, and
not with a  view to the sale or distribution of any part thereof;
and AnnTaylor  has no  current intention  of selling,  granting a
participation in, or otherwise distributing, the same.

               (e)  AnnTaylor  understands that  the Shares  have
not been registered under the Securities Act of 1933, as amended,
or under any other Federal or state law, and that Issuer does not
contemplate such a registration.

               (f)  AnnTaylor has such  knowledge, sophistication
and  experience in  financial  and business  matters  that it  is
capable of evaluating  the merits and  risks of the  transactions
contemplated  by this Agreement, and has made such investigations
in connection herewith as have been deemed necessary or desirable
to make such evaluation.

          5.   Conditions  to  AnnTaylor's   Obligations  at  the
               --------------------------------------------------
Closing.
- -------

               AnnTaylor's obligation  to purchase the  Shares at
the  Closing is  subject to the  fulfillment on  or prior  to the
Closing Date of the following conditions:

               (a)  The  representations and  warranties made  by
Issuer herein shall be  true and correct when made, and  shall be
true and  correct on the  Closing Date  with the  same force  and
effect as  if they had been made  on and as of  the Closing Date;
and  Issuer shall have  performed all obligations  and conditions
herein required to be performed or observed by it on or  prior to
the  Closing  Date and  all documents  incident thereto  shall be
satisfactory in form and content to AnnTaylor and its counsel.

               (b)  Issuer shall  have filed  the Certificate  of
Incorporation, in the form attached  hereto as Exhibit A with the
                                               ---------



                              - 3 -



Delaware Secretary of  State and adopted the By-laws  in the form
attached hereto as Exhibit B.
                   ---------

               (c)  The  purchase  of  the  Shares  by  AnnTaylor
hereunder shall be  legally permitted by all laws and regulations
to which AnnTaylor or Issuer are subject.

          6.   Conditions to Issuer's Obligations at the Closing.
               -------------------------------------------------

               Issuer's obligation  to sell and issue  the Shares
at  the  Closing  is  subject  to  the  fulfillment  to  Issuer's
satisfaction on  or prior  to the Closing  Date of  the following
conditions:

               (a)  The  representations and  warranties made  by
AnnTaylor herein shall  be true and correct when  made, and shall
be true and correct  on the Closing Date with the  same force and
effect as if they had been made  on and as of the same date;  and
AnnTaylor  shall have  performed all  obligations and  conditions
herein required to be performed or observed  by it on or prior to
the  Closing Date  and  all documents  incident thereto  shall be
satisfactory in form and content to Issuer and its counsel.

               (b)  The  purchase  of  the  Shares  by  AnnTaylor
hereunder shall be legally permitted by all  laws and regulations
to which AnnTaylor or Issuer are subject.

               (c)  AnnTaylor shall  have delivered  the purchase
price  for  the  Shares  to  be purchased  by  it  hereunder,  by
conveyance to Issuer  of the amount of the  Receivables set forth
in   Section  1(b)  (which   conveyance  shall  be   pursuant  to
     -------------
instruments reasonably satisfactory to Issuer).

          7.   Restrictions on Transfer; Legend.
               --------------------------------

          7.1  Legend.  Each certificate representing the  Shares
               ------
shall be endorsed with the following legend:

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
     "ACT"),  AND MAY  NOT  BE  SOLD,  TRANSFERRED,  ASSIGNED  OR
     HYPOTHECATED  UNLESS  THERE  IS  AN  EFFECTIVE  REGISTRATION
     STATEMENT UNDER THE  ACT COVERING SUCH SECURITIES,  THE SALE
     IS MADE IN ACCORDANCE WITH RULE 144 OR ANY SUCCESSOR RULE OR
     OTHER  EXEMPTION FROM  REGISTRATION  UNDER  THE  ACT.    THE
     SECURITIES  REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
     STOCK SUBSCRIPTION AGREEMENT  DATED AS OF JANUARY  24, 1994,
     BETWEEN ANNTAYLOR,  INC. AND  ANNTAYLOR  FUNDING, INC.  (THE
     "COMPANY"), A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
     THE  COMPANY,  AND  THE   SECURITIES  REPRESENTED  BY   THIS
     CERTIFICATE  MAY NOT BE  VOTED, TRANSFERRED, SOLD, ASSIGNED,



                              - 4 -



     PLEDGED, HYPOTHECATED OR OTHERWISE  DISPOSED OF UNLESS  SUCH
     VOTING, TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
     OTHER  DISPOSITION  COMPLIES  WITH THE  PROVISIONS  OF  SUCH
     AGREEMENT.  THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF
     THIS  CERTIFICATE,  AGREES   TO  BE  BOUND  BY  ALL  OF  THE
     PROVISIONS OF SUCH AGREEMENT.

          7.2  Registration  of  Transfers.     Issuer  need  not
               ---------------------------
register a transfer of any Shares unless the conditions specified
in  the  foregoing  legend  are satisfied.    Issuer  shall  also
instruct its transfer agent, if any, not to register the transfer
of any  Shares unless the  conditions specified in  the foregoing
legend are satisfied.

          8.   Agreement to Vote.
               -----------------

               (a)  AnnTaylor hereby agrees and covenants to vote
all of the shares of Common Stock now or hereafter owned by it at
a meeting  of stockholders  of Issuer, or  by written  consent in
lieu  of  any  such meeting,  to  cause  to  be  elected to,  and
maintained  on, Issuer's  board  of directors  at  all times  one
individual  who  meets  the   requirements  of  an   "Independent
Director" as defined in the Issuer's certificate of incorporation
as in effect on the date hereof.  AnnTaylor hereby further agrees
and covenants that in the event the  Independent Director resigns
or otherwise  ceases to be  a director of Issuer,  AnnTaylor will
vote all of  the shares of Common Stock then owned by it, whether
beneficially  or  otherwise, as  is  necessary  at a  meeting  of
stockholders of Issuer, or by written consent in lieu of any such
meeting,  to  select  and  cause  to  be  elected  a  replacement
Independent  Director who meets  all of the  qualifications of an
Independent Director as  set forth in the Issuer's certificate of
incorporation.

               (b)  AnnTaylor (for itself and  its successors and
assigns)  hereby acknowledges  and agrees  that  any decision  to
approve or otherwise  cause the commencement of  a voluntary case
or  other  proceeding  with  respect  to  the  Issuer  under  any
applicable   bankruptcy,    insolvency,   reorganization,    debt
arrangement, dissolution or other similar law, or the appointment
of or  taking possession  by, a  receiver, liquidator,  assignee,
trustee,  custodian, or  other similar  official  for the  Issuer
shall be approved in writing by the Independent Director prior to
the making  thereof, and  the  Independent Director  shall owe  a
fiduciary duty to the Issuer  (and its creditors) and not  to the
stockholders of Issuer in respect of any such decision.

               (c)  AnnTaylor  hereby  agrees  and  covenants  to
maintain  a  separate   corporate  existence   from  the   Issuer
including, without limitation,  doing all things with  respect to
itself of the type set  forth in Section 7.02 of  the Receivables
Financing Agreement.




                              - 5 -



          9.   General Restrictions on Transfer and Issuance.
               ---------------------------------------------

               No Shares or any interest therein shall be validly
sold,  assigned,  pledged,  encumbered,  awarded,  confirmed,  or
otherwise transferred,  for consideration  or otherwise,  whether
voluntarily,  involuntarily, or  by  operation  of  law,  and  no
purported  transferee shall  be recognized  as  a shareholder  of
Issuer for any purpose whatsoever unless and until the holders of
all of  the other Shares,  the Lender, the Administrator  and the
Relationship Bank have  filed with the secretary of  Issuer their
written  consents to such transfer;  provided that the Shares may
                                     --------
be  pledged  to  Bank  of  America  National  Trust  and  Savings
Association  as Agent  pursuant  to  documents  relating  to  the
AnnTaylor Credit Agreement.   A transfer  or attempt to  transfer
subject to  the provisions of  this Agreement shall be  deemed to
occur whenever any interest in  Common Stock is transferred or is
attempted  to be  transferred, voluntarily, involuntarily,  or by
operation  of law,  irrespective  of whether  any  change in  the
record ownership of any shares of Common Stock occurs.

          10.  Successors and Assigns.
               ----------------------

               Each party agrees  that it will not  assign, sell,
transfer,  delegate, or otherwise dispose of, whether voluntarily
or involuntarily, or by operation of law, any right or obligation
under  this  Agreement except  in connection  with a  transfer of
Shares  in compliance  with  the terms  and conditions  hereof or
otherwise in  accordance with  the terms hereof.   Any  purported
assignment,  transfer, or delegation in violation of this Section
shall  be null  and void  ab  initio.   Subject to  the foregoing
                          --  ------
limits  on  assignment  and delegation  and  except  as otherwise
provided herein,  this Agreement shall be binding  upon and inure
to  the benefit  of the  parties hereto, their  respective heirs,
legatees,   executors,   administrators,  assignees   and   legal
successors.  Any transferee of any shares of Common Stock  or any
interest  hereunder shall take its interest  subject to the terms
and  conditions  hereof and  shall,  upon  request  of any  party
hereto, execute  a counterpart  of this  Agreement.  The  parties
intend  that  each  of  the Lender,  the  Administrator  and  the
Relationship Bank be third party beneficiaries to this Agreement.

          11.  Amendments and Waivers.
               ----------------------

               Any  term hereof may be amended and the observance
of any  term  hereof may  be  waived (either  generally or  in  a
particular  instance and  either retroactively  or prospectively)
only  with the written consent  of Issuer, the Lender, AnnTaylor,
the Administrator  and the Relationship  Bank.  Any  amendment or



                              - 6 -



waiver so  effected shall be  binding upon Issuer  and AnnTaylor.
Sections 7, 8, 9 and 10 of  this Agreement and any requirement in
- ----------  -  -     --
this Section 11 for the  consent of the Lender, the Administrator
     ----------
or the Relationship Bank shall be null and void and of no further
effect unless the  Issuer and AnnTaylor  shall have entered  into
both   the  Purchase  and  Sale  Agreement  and  the  Receivables
Financing Agreement on or prior to February 15, 1994.

          12.  Further Acts.
               ------------

               Each  party agrees to perform any further acts and
execute   and  deliver  any  document  which  may  be  reasonably
necessary to carry out the provisions of this Agreement.

          13.  Counterparts.
               ------------

               This  Agreement may be  executed in any  number of
counterparts, all  of such counterparts together to be deemed one
instrument.

          14.  Notices.
               -------

               Any and all  notices, acceptances, statements  and
other communications  provided for  herein shall  be in  writing,
delivered personally, by telefacsimile or certified mail,  return
receipt requested.

          15.  Governing Law.
               -------------

               This Agreement  shall be  construed in  accordance
with  and  be governed  by  the  internal laws  of  the  State of
Delaware.

          16.  Severability of this Agreement.
               ------------------------------

               In case any  provision of this Agreement  shall be
invalid, illegal  or  unenforceable, the  validity, legality  and
enforceability of the remaining  provisions shall not in  any way
be affected or impaired thereby.















                              - 7 -



     IN  WITNESS WHEREOF,  the parties  hereto  have caused  this
Agreement to be executed as of the date first written above.


          THE ISSUER:

                    ANNTAYLOR FUNDING, INC.,
                    a Delaware corporation

                    By:    ___________________________________
                           Name:  Bert A. Tieben
                           Title:  Vice President

          THE PURCHASER:

                    ANNTAYLOR, INC.,
                    a Delaware corporation

                    By:    ______________________________________
                           Name:  Bert A. Tieben
                           Title:  Senior Vice President



                            EXHIBIT A


                   CERTIFICATE OF INCORPORATION



                            EXHIBIT B


                             BY-LAWS







                                                          Exhibit E

                  List of Offices Where
                     Records Are Kept
                  ---------------------


AnnTaylor, Inc.
- ---------------

Chief place of business and chief executive office:

     142 West 57th Street
     New York, New York 10019

location of books and records, etc:

     142 West 57th Street
     New York, New York 10019

     414 Chapel Street
     New Haven, Connecticut 06511









                              9





                                                         Exhibit F



                              January 27, 1994


The Persons Listed
  on Schedule I Hereto


Dear Sirs and Madams:

          I am Vice President, General Counsel and Corpo-
rate Secretary of AnnTaylor, Inc., a Delaware corporation
("AnnTaylor").  I am delivering this opinion in connec-
tion with the preparation, execution and delivery of
(i) the Purchase and Sale Agreement dated as of
January 27, 1994 (the "Purchase Agreement") between
AnnTaylor Funding, Inc., a Delaware corporation (the
"Company"), as purchaser and AnnTaylor, as seller,
(ii) the Receivables Financing Agreement, dated as of
January 27, 1994 (the "Receivables Financing Agreement"),
among the Company, Clipper Receivables Corporation (the
"Lender"), AnnTaylor, as Servicer, State Street Boston
Capital Corporation (the "Administrator"), and PNC Bank,
National Association (the "Relationship Bank"), and
(iii) certain other agreements, instruments and documents
related to the Purchase Agreement and the Receivables Fi-
nancing Agreement.  This opinion is being delivered
pursuant to  Section 4.1(h) of the Purchase Agreement and
Section 5.01(h)(i) of the Receivables Financing Agree-
ment.  Capitalized terms used herein and not otherwise
defined herein shall have the same meanings herein as set
forth in Appendix A to the Receivables Financing Agree-
ment.

          In this connection, I have examined and am
familiar with originals or copies, certified or otherwise
identified to my satisfaction, of (i) the Receivables
Financing Agreement; (ii) the Purchase Agreement;
(iii) the Certificate of Incorporation and Bylaws of
AnnTaylor, as presently in effect; and (iv) resolutions
of the Board of Directors of AnnTaylor relating to the
Receivables Financing Agreement and the Purchase Agree-
ment.  I have also examined and am familiar with origi-
nals or copies, certified or otherwise identified to my





January 27, 1994
Page 2

satisfaction, of such records of AnnTaylor and such
agreements, certificates of public officials, certifi-
cates of officers or representatives of AnnTaylor and
others, and such other documents, certificates and corpo-
rate or other records as I have deemed necessary or
appropriate as a basis for the opinions set forth below.

          In my examination, I have assumed the genuiness
of all signatures, the legal capacity of all natural
persons, the authenticity of all documents submitted to
me as originals, the conformity to original documents of
all documents submitted to me as certified or photostatic
copies and the authenticity of the originals of such
copies.  As to any facts material to this opinion which I
did not independently establish or verify, I have relied
upon certificates, statements and representations of
officers and other representatives of AnnTaylor and
others.

          I am admitted to the Bar of the State of New
York and express no opinion as to the laws of any juris-
diction except the General Corporation Law of the State
of Delaware and the laws of the United States of America
to the extent specifically referred to herein.

          Based upon and subject to the limitations,
qualifications, exceptions and assumptions set forth
herein, I am of the opinion that:

             (i)  AnnTaylor is a corporation duly incor-
     porated, validly existing and in good standing under
     the laws of the State of Delaware.

            (ii)  AnnTaylor is duly qualified to transact
     business as a foreign corporation and is in good
     standing in each other jurisdiction in which it owns
     or leases property of a nature, or transacts busi-
     ness of a type, that would make such qualification
     necessary, except to the extent that the failure to
     so qualify or be in good standing would not have a
     material adverse effect on AnnTaylor.





January 27, 1994
Page 3


          This opinion is being furnished by me as Vice
President, General Counsel and Corporate Secretary of
AnnTaylor to you solely for your benefit, and is not to
be used or relied upon by any other person without my
express prior written consent.

                              Very truly yours,







                        SCHEDULE I


Clipper Receivables Corporation
P.O. Box 4024
Boston, Massachusetts  02101

State Street Boston Capital Corporation
225 Franklin Street
Boston, Massachusetts  02110

PNC Bank, National Association
Fifth Avenue and Wood Street
Pittsburgh, Pennsylvania  15265

Moody's Investors Service
99 Church Street
New York, New York 10007

Standard & Poors Corporation
26 Broadway, 15th Floor
New York, New York 10004







                  SCHEDULE 5.14 to the Purchase Agreement
                  ---------------------------------------


                       Trade Names
                       -----------

AnnTaylor, Inc.
- ---------------

     CAC XIII, Inc.
     ASC Stores III, Inc.
     AnnTaylor Factory Stores


On February 8, 1989, AnnTaylor Acquisition Corp., a Dela-
ware corporation merged with and into AnnTaylor, Inc.
with AnnTaylor, Inc. being the surviving corporation.

































                             10






                                                             Schedule 2



                   SUBORDINATED PROMISSORY NOTE
                         (NON-NEGOTIABLE
                          COMPANY NOTE)

                                        New York, New York
                                          January 27, 1994


     FOR VALUE RECEIVED, the undersigned, ANNTAYLOR FUNDING,
INC.,  a Delaware corporation (the "Company"), promises to pay to
                                    -------
ANNTAYLOR, INC., a Delaware corporation ("AnnTaylor"), on the
                                          ---------
terms and subject to the conditions set forth herein and in the
Purchase and Sale Agreement referred to below, the sum of (i) the
aggregate unpaid Purchase Price of all Receivables purchased by
the Company from AnnTaylor pursuant to such Purchase and Sale
Agreement, as such unpaid Purchase Price is shown in the records
of Servicer plus (ii) any capitalized interest pursuant to
            ----
Section 4 hereof as shown on the records of AnnTaylor.
- ---------

     1.     Purchase and Sale Agreement.  This promissory note
            ---------------------------
(this "Company Note") is the Company Note described in, and is
       ------------
subject to the terms and conditions set forth in, that certain
Purchase and Sale Agreement of even date herewith (as the same
may be amended or otherwise modified from time to time, the
"Purchase and Sale Agreement"), between AnnTaylor and the
 ---------------------------
Company.  Reference is hereby made to the Purchase and Sale
Agreement for a statement of certain other rights and obligations
of AnnTaylor and the Company.

     2.   Definitions.  Capitalized terms used (but not defined)
          -----------
herein have the meanings assigned thereto in Appendix A to the
                                             ----------
Receivables Financing Agreement dated as of even date herewith
among AnnTaylor, as Servicer, the Company, Clipper Receivables
Corporation, as Lender, State Street Boston Capital Corporation,
as Administrator, and PNC Bank, National Association, as
Relationship Bank (as may be amended or otherwise modified from
time to time, the "Receivables Financing Agreement").  In
                   -------------------------------
addition, as used herein, the following terms have the following
meanings:

          "Bankruptcy Proceedings" has the meaning set forth in
           ----------------------
     clause (b) of paragraph 9 hereof.
     ----------    -----------

          "Final Maturity Date" means the second Business Day
           -------------------
     after a demand for payment has been made by AnnTaylor, but
     in no event earlier than the Settlement Date immediately
     following the date on which one hundred twenty-one (121)
     days have elapsed since the date the Senior Interests have
     been paid in full.



          "Interest Period" means the period from and including a
           ---------------
     Report Date (or, in the case of the first Interest Period,
     the date hereof) to but excluding the next Report Date.

          "Senior Interests" means, collectively, (i) the
           ----------------
     aggregate unpaid principal amount of the Loans, (ii) accrued
     interest on the aggregate unpaid principal amount of the
     Loans, (iii) all fees payable pursuant to the Receivables
     Financing Agreement, (iv) any Indemnified Amounts, (v) unpaid
     Servicer's Fees, provided that AnnTaylor is not the
                      --------
     Servicer, and (vi) all other obligations of the Company that
     are due and payable to any Affected Party, together with all
     interest accruing on any such amounts after the commencement
     of any Bankruptcy Proceedings, notwithstanding any provision
     or rule of law that might restrict the rights of any Senior
     Interest Holder, as against the Company or anyone else, to
     collect such interest.

          "Senior Interest Holders" means, collectively, the
           -----------------------
     Lender, the Administrator, the Relationship Bank, the other
     Affected Parties and the Indemnified Parties.

          "Subordination Provisions" means, collectively, clauses
           ------------------------                       -------
     (a) through (l) of paragraph 9 hereof.
     ---         ---    -----------

     3.   Interest.  Subject to the Subordination Provisions set
          --------
forth below, the Company promises to pay interest on this Company
Note as follows:

          (a)  Prior to the Final Maturity Date, the aggregate
     unpaid Purchase Price from time to time outstanding during
     any Interest Period shall bear interest at a rate per annum
                                                       ---------
     equal to the Alternate Base Rate plus 3% as in effect from
     time to time as determined by Servicer; and

          (b)  From (and including) the Final Maturity Date to
     (but excluding) the date on which the entire aggregate
     unpaid Purchase Price is fully paid, the aggregate unpaid
     Purchase Price from time to time outstanding shall bear
     interest at a rate per annum equal to the Alternate Base
                        ---------
     Rate as in effect from time to time, plus 5%, as determined
     by Servicer.

     4.   Interest Payment Dates.  Subject to the Subordination
          ----------------------
Provisions set forth below, the Company shall pay accrued
interest on this Company Note on each Settlement Date, and shall
pay accrued interest on the amount of each principal payment made
in cash on a date other than a Settlement Date at the time of
such principal payment; provided, however, that unless AnnTaylor
                        --------  -------



instructs the Company otherwise, such interest may be paid by
means of an increase in the amount of the unpaid principal amount
hereof by an amount equal to the interest being so paid.

     5.   Basis of Computation.  Interest accrued hereunder shall
          --------------------
be computed for the actual number of days elapsed on the basis of
a 365- or 366-day year.

     6.   Principal Payment Dates.  Subject to the Subordination
          -----------------------
Provisions set forth below, payments of the principal amount of
this Company Note shall be made as follows:

          (a)  The principal amount of this Company Note shall be
     reduced from time to time pursuant to Sections 3.2, 3.3,
                                           ------------- ---
     3.4, and 7.2 of the Purchase and Sale Agreement; and
     ---      ---

          (b)  The entire remaining unpaid Purchase Price of all
     Receivables purchased by the Company from AnnTaylor pursuant
     to the Purchase and Sale Agreement shall be paid on the
     Final Maturity Date.

Subject to the Subordination Provisions set forth below, the
principal amount of and accrued interest on this Company Note may
be prepaid on any Business Day without premium or penalty.

     7.   Payments. All payments of principal and interest
          --------
hereunder are to be made in lawful money of the United States of
America.

     8.   Enforcement Expenses.  In addition to and not in
          --------------------
limitation of the foregoing, but subject to the Subordination
Provisions set forth below and to any limitation imposed by
applicable law, the Company agrees to pay all expenses, including
reasonable attorneys' fees and legal expenses, incurred by
AnnTaylor in seeking to collect any amounts payable hereunder
which are not paid when due.

     9.   Subordination Provisions.  The Company covenants and
          ------------------------
agrees, and AnnTaylor, by its acceptance of this Company Note,
likewise covenants and agrees on behalf of itself and any holder
of this Company Note, that the payment of the principal amount of
and interest on this Company Note is hereby expressly
subordinated in right of payment to the payment and performance
of the Senior Interests to the extent and in the manner set forth
in the following clauses of this paragraph 9:
                                 -----------

          (a)  No payment or other distribution of the Company's
     assets of any kind or character, whether in cash,
     securities, or other rights or property, shall be made on



     account of this Company Note except to the extent such
     payment or other distribution is permitted under the
     Purchase and Sale Agreement and Section 3.01 of the
                                     ------------
     Receivables Financing Agreement;

          (b)  In the event of any dissolution, winding up,
     liquidation, readjustment, reorganization or other similar
     event relating to the Company, whether voluntary or
     involuntary, partial or complete, and whether in bankruptcy,
     insolvency or receivership proceedings, or upon an
     assignment for the benefit of creditors, or any other
     marshalling of the assets and liabilities of the Company or
     any sale of all or substantially all of the assets of the
     Company (such proceedings being herein collectively called
     "Bankruptcy Proceedings"), the Senior Interests shall first
      ----------------------
     be paid and performed in full and in cash before AnnTaylor
     shall be entitled to receive and to retain any payment or
     distribution in respect of this Company Note.  In order to
     implement the foregoing:  (i) all payments and distributions
     of any kind or character in respect of this Company Note to
     which AnnTaylor would be entitled except for this clause (b)
                                                       ----------
     shall be made directly to the Administrator (for the benefit
     of the Senior Interest Holders);  (ii) AnnTaylor shall
     promptly file a claim or claims, in the form required in any
     Bankruptcy Proceedings, for the full outstanding amount of
     this Company Note, and shall use commercially reasonable
     efforts to cause said claim or claims to be approved and all
     payments and other distributions in respect thereof to be
     made directly to the Administrator (for the benefit of the
     Senior Interest Holders) until the Senior Interests shall
     have been paid and performed in full and in cash; and (iii)
     AnnTaylor hereby irrevocably agrees that the Administrator,
     in the name of AnnTaylor or otherwise, may demand, sue for,
     collect, receive and receipt for any and all such payments
     or distributions, and file, prove and vote or consent in any
     such Bankruptcy Proceedings with respect to any and all
     claims of AnnTaylor relating to this Company Note, in each
     case until the Senior Interests shall have been paid and
     performed in full and in cash;

          (c)  In the event that AnnTaylor receives any payment
     or other distribution of any kind or character from the
     Company or from any other source whatsoever, in respect of
     this Company Note, other than as expressly permitted by the
     terms of this Company Note, such payment or other
     distribution shall be received for the sole benefit of the
     Senior Interest Holders and shall be turned over by
     AnnTaylor to the Administrator (for the benefit of the
     Senior Interest Holders) forthwith.  AnnTaylor will mark its



     books and records so as clearly to indicate that this
     Company Note is subordinated in accordance with the terms
     hereof.  All payments and distributions received by the
     Administrator in respect of this Company Note, to the extent
     received in or converted into cash, may be applied by the
     Administrator (for the benefit of the Senior Interest
     Holders) first to the payment of any and all expenses
     (including reasonable attorneys' fees and legal expenses)
     paid or incurred by the Senior Interest Holders in enforcing
     these Subordination Provisions, or in endeavoring to collect
     or realize upon this Company Note, and any balance thereof
     shall, solely as between AnnTaylor and the Senior Interest
     Holders, be applied by the Administrator toward the payment
     of the Senior Interests; but as between the Company and its
     creditors, no such payments or distributions of any kind or
     character shall be deemed to be payments or distributions
     in respect of the Senior Interests;

          (d)  Notwithstanding any payments or distributions
     received by the Senior Interest Holders in respect of this
     Company Note, while any Bankruptcy Proceedings are pending
     AnnTaylor shall not be subrogated to the then existing
     rights of the Senior Interest Holders in respect of the
     Senior Interests until the Senior Interests have been paid
     and performed in full and in cash;

          (e)  These Subordination Provisions are intended solely
     for the purpose of defining the relative rights of
     AnnTaylor, on the one hand, and the Senior Interest Holders,
     on the other hand.  Nothing contained in these Subordination
     Provisions or elsewhere in this Company Note is intended to
     or shall impair, as between the Company, its creditors
     (other than the Senior Interest Holders) and AnnTaylor, the
     Company's obligation, which is unconditional and absolute,
     to pay AnnTaylor the principal of and interest on this
     Company Note as and when the same shall become due and
     payable in accordance with the terms hereof or to affect the
     relative rights of AnnTaylor and creditors of the Company
     (other than the Senior Interest Holders);

          (f)  AnnTaylor shall not, until the Senior Interests
     have been paid and performed in full and in cash, (i)
     cancel, waive, forgive, transfer or assign, or commence
     legal proceedings to enforce or collect, or subordinate to
     any obligation of the Company, howsoever created, arising or
     evidenced, whether direct or indirect, absolute or
     contingent, or now or hereafter existing, or due or to
     become due, other than the Senior Interests, this Company
     Note or any rights in respect hereof (except as set forth in



     Section 12 hereof) or (ii) convert this Company Note into an
     ----------
     equity interest in the Company, unless AnnTaylor shall have
     received the prior written consent of the Administrator and
     the Relationship Bank in each case;

          (g)  AnnTaylor shall not, without the advance written
     consent of the Administrator and the Relationship Bank,
     commence, or join with any other Person in commencing, any
     Bankruptcy Proceedings with respect to the Company until at
     least one year and one day shall have passed since the
     Senior Interests shall have been paid and performed in full
     and in cash;

          (h)  If, at any time, any payment (in whole or in part)
     of any Senior Interest is rescinded or must be restored or
     returned by a Senior Interest Holder (whether in connection
     with Bankruptcy Proceedings or otherwise), these
     Subordination Provisions shall continue to be effective or
     shall be reinstated, as the case may be, as though such
     payment had not been made;

          (i)  Without affecting the rights and restrictions set
     forth in the Transaction Documents, each of the Senior
     Interest Holders may, from time to time, at its sole
     discretion, without notice to AnnTaylor, and without waiving
     any of its rights under these Subordination Provisions, take
     any or all of the following actions:  (i) retain or obtain
     an interest in any property to secure any of the Senior
     Interests;  (ii) retain or obtain the primary or secondary
     obligations of any other obligor or obligors with respect to
     any of the Senior Interests;  (iii) extend or renew for one
     or more periods (whether or not longer than the original
     period), alter or exchange any of the Senior Interests, or
     release or compromise any obligation of any nature with
     respect to any of the Senior Interests;  (iv) amend,
     supplement, amend and restate, or otherwise modify any
     Transaction Document; and (v) release its security interest
     in, or surrender, release or permit any substitution or
     exchange for all or any part of any rights or property
     securing any of the Senior Interests, or extend or renew for
     one or more periods (whether or not longer than the original
     period), or release, compromise, alter or exchange any
     obligations of any nature of any obligor with respect to any
     such rights or property;

          (j)  AnnTaylor hereby waives:  (i) notice of acceptance
     of these Subordination Provisions by any of the Senior
     Interest Holders;  (ii) notice of the existence, creation,
     non-payment or non-performance of all or any of the Senior



     Interests; and  (iii) all diligence in enforcement,
     collection or protection of, or realization upon, the Senior
     Interests, or any thereof, or any security therefor;

          (k)  Each of the Senior Interest Holders may, from time
     to time, on the terms and subject to the conditions set
     forth in the Transaction Documents to which such Persons are
     party, but without notice to AnnTaylor, assign or transfer
     any or all of the Senior Interests, or any interest therein;
     and, notwithstanding any such assignment or transfer or any
     subsequent assignment or transfer thereof, such Senior
     Interests shall be and remain Senior Interests for the
     purposes of these Subordination Provisions, and every
     immediate and successive assignee or transferee of any of
     the Senior Interests or of any interest of such assignee or
     transferee in the Senior Interests shall be entitled to the
     benefits of these Subordination Provisions to the same
     extent as if such assignee or transferee were the assignor
     or transferor; and

          (l)  These Subordination Provisions constitute a
     continuing offer from the holder of this Company Note to all
     Persons who become the holders of, or who continue to hold,
     Senior Interests; and these Subordination Provisions are
     made for the benefit of the Senior Interest Holders, and the
     Administrator or the Lender may proceed to enforce such
     provisions on behalf of each of such Persons.

     10.  General.  No failure or delay on the part of AnnTaylor
          -------
in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
such power or right preclude any other or further exercise
thereof or the exercise of any other power or right.  No
amendment, modification or waiver of, or consent with respect to,
any provision of this Company Note shall in any event be
effective unless (i) the same shall be in writing and signed and
delivered by the Company and AnnTaylor and (ii) all consents
required for such actions under the Transaction Documents shall
have been received by the appropriate Persons.

     11.  No Negotiation.  This Company Note is not negotiable;
          --------------
provided, AnnTaylor may pledge this Company Note to the agent for
- --------
the benefit of the lenders under the AnnTaylor Credit Agreement.

     12.  Governing Law.  THIS PROMISSORY NOTE SHALL BE DEEMED TO
          -------------
BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.



     13.  Captions.  Paragraph captions used in this Company Note
          --------
are for convenience only and shall not affect the meaning or
interpretation of any provision of this Company Note.

                                   ANNTAYLOR FUNDING, INC.



                                   By:_______________________
                                   Title:   Vice President

                                   Pay to the order of Bank of
                                   America National Trust and
                                   Savings Association, as Agent

                                   ANNTAYLOR, INC.



                                   By:_________________________
                                   Title:  Senior Vice President





                                                           Schedule 3
                          ANNTAYLOR, INC. 
                            CERTIFICATE

     I, Bert A. Tieben, Senior Vice President of ANNTAYLOR, INC.,
a Delaware corporation, DO HEREBY CERTIFY that:

     Pursuant to Section 4.1(k) of the Purchase and Sale
     Agreement, dated as of January 27, 1994 (as amended or
     otherwise modified from time to time, the "Agreement") among
     AnnTaylor, Inc. and AnnTaylor Funding, Inc., AnnTaylor, Inc.
     has marked its summary master control processing records
     evidencing the Pool Receivables (as defined in the
     Receivables Financing Agreement referred to in the
     Agreement) and the related Contracts (as defined in the
     Receivables Financing Agreement referred to in the
     Agreement) with the following legend:

     "THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO
     ANNTAYLOR FUNDING, INC. PURSUANT TO A PURCHASE AND SALE
     AGREEMENT, DATED AS OF JANUARY 27, 1994, AS AMENDED, BETWEEN
     ANNTAYLOR FUNDING, INC. AND ANNTAYLOR, INC. AND A SECURITY
     INTEREST IN THE RECEIVABLES DESCRIBED HEREIN HAS BEEN
     GRANTED TO CLIPPER RECEIVABLES CORPORATION, PURSUANT TO A
     RECEIVABLES FINANCING AGREEMENT, DATED AS OF JANUARY 27,
     1994, AMONG ANNTAYLOR FUNDING, INC., ANNTAYLOR, INC.,
     CLIPPER RECEIVABLES CORPORATION, STATE STREET BOSTON CAPITAL
     CORPORATION, AS THE ADMINISTRATOR, AND PNC BANK, NATIONAL
     ASSOCIATION, AS THE RELATIONSHIP BANK."

     WITNESS my hand this 27th day of January, 1994.

                                   ANNTAYLOR, INC.

                                   By:  /s/ Bert A. Tieben
                                        ------------------
                                   Name: Bert A. Tieben
                                   Title: Senior Vice President