{"id":43529,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/purchase-and-sale-agreement-anntaylor-inc-and-anntaylor.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"purchase-and-sale-agreement-anntaylor-inc-and-anntaylor","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/purchase-and-sale-agreement-anntaylor-inc-and-anntaylor.html","title":{"rendered":"Purchase and Sale Agreement &#8211; AnnTaylor Inc. and AnnTaylor Funding Inc."},"content":{"rendered":"<pre>                   PURCHASE AND SALE AGREEMENT\n\n\n                   Dated as of January 27, 1994\n\n\n                             between\n\n\n                         ANNTAYLOR, INC.\n\n\n\n                               and\n\n\n                     ANNTAYLOR FUNDING, INC.\n\n\n\n                        TABLE OF CONTENTS\n                        -----------------\n\n                                                             PAGE\n                                                             ----\nARTICLE I     AGREEMENT TO PURCHASE AND SELL  . . . . . . .    3\n\n    1.1       Agreement to Purchase and Sell  . . . . . . .    4\n    1.2       Timing of Purchases . . . . . . . . . . . . .    4\n    1.3       Consideration for Purchases . . . . . . . . .    4\n    1.4       Purchase and Sale Termination Date  . . . . .    4\n\nARTICLE II    CALCULATION OF PURCHASE PRICE . . . . . . . .    4\n\n    2.1       Calculation of Purchase Price . . . . . . . .    4\n\nARTICLE III   PAYMENT OF PURCHASE PRICE . . . . . . . . . .    6\n\n    3.1       Initial Purchase Price Payment  . . . . . . .    6\n    3.2       Subsequent Purchase Price Payments  . . . . .    6\n    3.3       Settlement as to Specific Receivables . . . .    7\n    3.4       Settlement as to Dilution . . . . . . . . . .    7\n\nARTICLE IV    CONDITIONS OF PURCHASES . . . . . . . . . . .    8\n\n    4.1       Conditions Precedent to Initial Purchase  . .    8\n    4.2       Certification as to Representations\n                and Warranties  . . . . . . . . . . . . . .   10\n\nARTICLE V     REPRESENTATIONS AND WARRANTIES OF\n                 ANNTAYLOR  . . . . . . . . . . . . . . . .   10\n\n    5.1       Organization and Good Standing  . . . . . . .   10\n    5.2       Due Qualification . . . . . . . . . . . . . .   10\n    5.3       Power and Authority; Due Authorization  . . .   11\n    5.4       Valid Sale; Binding Obligations . . . . . . .   11\n    5.5       No Violation  . . . . . . . . . . . . . . . .   11\n    5.6       Proceedings . . . . . . . . . . . . . . . . .   11\n    5.7       Bulk Sales Act  . . . . . . . . . . . . . . .   12\n    5.8       Government Approvals  . . . . . . . . . . . .   12\n    5.9       Financial Condition . . . . . . . . . . . . .   12\n    5.10      Licenses, Contingent Liabilities,\n                 and Labor Controversies  . . . . . . . . .   12\n    5.11      Margin Regulations  . . . . . . . . . . . . .   12\n    5.12      Quality of Title  . . . . . . . . . . . . . .   12\n    5.13      Accuracy of Information . . . . . . . . . . .   13\n    5.14      Offices . . . . . . . . . . . . . . . . . . .   13\n    5.15      Trade Names . . . . . . . . . . . . . . . . .   13\n    5.16      Taxes . . . . . . . . . . . . . . . . . . . .   14\n    5.17      Compliance with Applicable Laws . . . . . . .   14\n    5.18      Reliance on Separate Legal Identity . . . . .   14\n    5.19      Receivables . . . . . . . . . . . . . . . . .   14\n\n\n\n\n                               -i-\n\n\n\nARTICLE VI    COVENANTS OF ANNTAYLOR  . . . . . . . . . . .   15\n\n    6.1       Affirmative Covenants . . . . . . . . . . . .   15\n    6.2       Reporting Requirements  . . . . . . . . . . .   17\n    6.3       Negative Covenants  . . . . . . . . . . . . .   18\n\nARTICLE VII   ADDITIONAL RIGHTS AND OBLIGATIONS IN\n              RESPECT OF THE RECEIVABLES  . . . . . . . . .   18\n\n    7.1       Rights of the Company . . . . . . . . . . . .   18\n    7.2       Responsibilities of AnnTaylor . . . . . . . .   19\n    7.3       Further Action Evidencing Purchases . . . . .   19\n    7.4       Application of Collections  . . . . . . . . .   20\n\nARTICLE VIII  INDEMNIFICATION . . . . . . . . . . . . . . .   20\n\n    9.1       Indemnities by AnnTaylor  . . . . . . . . . .   20\n\nARTICLE X     MISCELLANEOUS . . . . . . . . . . . . . . . .   22\n\n    10.1      Amendments, Etc . . . . . . . . . . . . . . .   22\n    10.2      Notices, Etc  . . . . . . . . . . . . . . . .   23\n    10.3      No Waiver; Cumulative Remedies  . . . . . . .   23\n    10.4      Binding Effect; Assignability . . . . . . . .   23\n    10.5      Governing Law . . . . . . . . . . . . . . . .   23\n    10.6      Costs, Expenses and Taxes . . . . . . . . . .   23\n    10.7      Submission to Jurisdiction  . . . . . . . . .   24\n    10.8      Waiver of Jury Trial  . . . . . . . . . . . .   24\n    10.9      Captions and Cross References;\n                Incorporation by Reference  . . . . . . . .   24\n    10.10     Execution in Counterparts . . . . . . . . . .   24\n    10.11     Acknowledgment and Agreement  . . . . . . . .   24\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                               -ii-\n\n\n\n\n\nEXHIBIT A - Form of Purchase Report\n\nEXHIBIT B - Form of the Company Note\n\nEXHIBIT C - Form of Opinion of AnnTaylor's Counsel\n\nEXHIBIT D - Form of Subscription Agreement\n\nEXHIBIT E - Office Locations\n\nEXHIBIT F - Form of In-House Counsel's Opinion\n\nSchedule 4.1(k)  Data Processing Reports\n\nSchedule 5.14    Trade Names\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                              -iii-\n\n\n\n                   PURCHASE AND SALE AGREEMENT\n\n\n     THIS PURCHASE  AND SALE AGREEMENT  (as amended, supplemented\nor modified  from time  to time, this  \"Agreement\"), dated  as of\n                                        ---------\nJanuary 27,  1994,  is   between  ANNTAYLOR,  INC.,   a  Delaware\ncorporation (\"AnnTaylor\"), as seller and ANNTAYLOR FUNDING, INC.,\n              ---------\na Delaware corporation (the \"Company\"), as purchaser.\n                             -------\n\n\n                           Definitions\n                           -----------\n\n     Unless   otherwise  indicated,   certain   terms  that   are\ncapitalized and  used throughout  this Agreement  are defined  in\nAppendix  A to the  Receivables Financing Agreement  of even-date\n- -----------\nherewith (as,  amended  supplemented or  otherwise modified,  the\n\"Receivables Financing Agreement\"), among the Company, AnnTaylor,\n -------------------------------\nas initial  Servicer, CLIPPER RECEIVABLES  CORPORATION, as lender\n(\"Lender\"),   STATE  STREET   BOSTON   CAPITAL  CORPORATION,   as\n  ------\nadministrator  for  Lender   under  the  Program   Administration\nAgreement  (the   \"Administrator\")   and   PNC   BANK,   NATIONAL\n                   -------------\nASSOCIATION,  as referral agent for Lender under the Relationship\nBank  Agreement (in such  capacity, together with  any successors\nthereto  in such  capacity, the  \"Relationship Bank\"  and in  its\n                                  -----------------\nindividual  capacity, \"PNC Bank\").  The following terms  have the\n                       --------\nrespective meanings indicated hereinbelow:\n\n    Adverse  Claim means  a lien,  security  interest, charge  or\n    --------------\nencumbrance, or similar right or claim of any Person.\n\n    Company Note shall have the  meaning assigned to such term in\n    ------------\nSection 3.1 hereof.\n- -----------\n\n    Deemed Collection means amounts payable by AnnTaylor pursuant\n    -----------------\nto Section 3.3 or 3.4.\n   -----------    ---\n\n    Funding  Account means  the bank  account  maintained by  the\n    ----------------\nCompany  as  specified  by  the  Company  to  AnnTaylor  and  the\nAdministrator  from time  to  time;  provided,  that  during  the\n                                     --------\ncontinuance of  an Event  of Default, such  account shall  be the\nLock-Box Account.\n\n    Ineligible Purchased Receivable  means a Receivable purchased\n    -------------------------------\nhereunder  that  does  not  comply  with  any  of  the  following\nconditions in any material respect\n\n              (a)   was generated  by AnnTaylor  in the  ordinary\n    course of its business;\n\n              (b)   may be sold hereunder without contravening or\n    conflicting any laws;\n\n\n\n              (c)   arises under  an Eligible  Contract that  has\n    been  duly  authorized  by  the  parties  thereto  and  that,\n    together with  such Receivable, is  in full force  and effect\n    and  constitutes the legal,  valid and binding  obligation of\n    the  Obligor  of  such Receivable  enforceable  against  such\n    Obligor in accordance with its terms except as enforceability\n    may be limited  by bankruptcy, insolvency, reorganization  or\n    other similar  laws affecting  the enforcement of  creditors'\n    rights  generally  and  by  general  principles   of  equity,\n    regardless  of whether such enforceability is considered in a\n    proceeding of equity or at law;\n\n              (d)    which, together  with  the Contract  related\n    thereto,  does not  contravene in  any  material respect  any\n    laws,  rules or  regulations  applicable thereto  (including,\n    without  limitation, laws, rules  and regulations relating to\n    usury, truth  in lending,  fair credit  billing, fair  credit\n    reporting,  equal credit  opportunity,  fair debt  collection\n    practices and privacy) and with  respect to which no party to\n    the Contract related thereto is in violation of any such law,\n    rule or regulation in any material respect if  such violation\n    would impair the collectability of such Receivable; and\n\n              (e)   satisfies all applicable requirements  of the\n    Credit and Collection Policy.\n\n    Initial Closing  Date shall have the meaning assigned to such\n    ---------------------\nterm in Section 1.2 hereof.\n        -----------\n\n    Initial Cut-Off Date means December 24, 1993.\n    --------------------\n\n    Initial Posting Date means January 24, 1994.\n    --------------------\n\n    Initial Reporting Period  shall have the meaning  assigned to\n    ------------------------\nsuch term in Section 2.1 hereof.\n             -----------\n\n    Lock-Box Accounts means one or more lock-box accounts held in\n    -----------------\nLock-Box Banks for receiving Collections from Pool Receivables.\n\n    Payment Day means (i) the  Initial Closing Date and (ii) each\n    -----------\nBusiness Day thereafter that AnnTaylor is open for business.\n\n    Purchase  and Sale Indemnified Amounts shall have the meaning\n    --------------------------------------\nassigned to such term in Section 8.1 hereof.\n                         -----------\n\n    Purchase  and Sale Indemnified  Party shall have  the meaning\n    -------------------------------------\nassigned to such term in Section 9.1 hereof.\n                         -----------\n\n    Purchase and  Sale Termination  Date shall  have the  meaning\n    ------------------------------------\nassigned to such term in Section 1.4 hereof.\n                         -----------\n\n\n\n\n                               -2-\n\n\n\n    Purchase Facility  shall have  the meaning  assigned to  such\n    -----------------\nterm in Section 1.1 hereof.\n        -----------\n\n    Purchase Price shall  have the meaning assigned to  such term\n    --------------\nin Section 2.1 hereof.\n   -----------\n\n    Purchase Report shall have the meaning assigned  to such term\n    ---------------\nin Section 2.1 hereof.\n   -----------\n\n    Receivables  Review shall have  the meaning assigned  to such\n    -------------------\nterm in Section 6.1(c) hereof.\n        --------------\n\n    Related Rights shall  have the meaning assigned to  such term\n    --------------\nin Section 1.1 hereof.\n   -----------\n\n    Seller Material  Adverse Effect  means, with  respect to  any\n    -------------------------------\nevent or circumstance, a material adverse effect on:\n\n              (i)   the  business,  assets, financial  condition,\n    operations or prospects of AnnTaylor, as seller;\n\n              (ii)    the  ability of  AnnTaylor  to  perform its\n    obligations under  this  Agreement or  any other  Transaction\n    Document to  which AnnTaylor, as  seller, in its  capacity as\n    such, is a party;\n\n              (iii)   the  validity or enforceability  as against\n    AnnTaylor of this Agreement or any other Transaction Document\n    to which AnnTaylor, as seller, in its capacity as such, is  a\n    party;\n\n              (iv)  the  status, existence, perfection,  priority\n    or   enforceability  of   the  Company's   interest  in   the\n    Receivables assets described in Section 1.1; or\n                                    -----------\n\n              (v)  the collectability of a significant portion of\n    the Pool Receivables.\n\n    Subscription  Agreement  means  the  Subscription  Agreement,\n    -----------------------\ndated as of January 24,  1994, between the Company and AnnTaylor,\nin the form of  Exhibit D, as it may be  amended, supplemented or\n                ---------\nmodified from time to time.\n\n\n                            Background\n                            ----------\n\n     1.    The Company is  a limited purpose corporation,  all of\nthe issued and  outstanding shares of capital stock  of which are\nwholly-owned by AnnTaylor.\n\n\n\n\n\n                               -3-\n\n\n\n     2.    AnnTaylor   is   concurrently   transferring   certain\nReceivables  and Related  Rights to  the Company  as part  of the\ncapitalization of the Company.\n\n     3.    In  order to finance its business, AnnTaylor wishes to\nsell  Receivables and  Related  Rights to  the  Company, and  the\nCompany is  willing, on the  terms and subject to  the conditions\nset forth herein, to purchase Receivables and Related Rights from\nAnnTaylor.\n\n     4.    The Company intends to borrow from Lender from time to\ntime pursuant to the Receivables Financing Agreement in  order to\nfinance, in part,  its purchases of such Receivables  and Related\nRights hereunder.\n\n     NOW, THEREFORE,  in consideration  of the  premises and  the\nmutual agreements herein  contained, the parties hereto  agree as\nfollows:\n\n\n                            ARTICLE I\n\n                  AGREEMENT TO PURCHASE AND SELL\n\n     1.1.    Agreement  to Purchase and  Sell.  On  the terms and\n             --------------------------------\nsubject to the conditions set forth in this Agreement  (including\nArticle V), and in consideration of the Purchase Price, AnnTaylor\n- ---------\nagrees to sell, assign and transfer, and does hereby sell, assign\nand transfer to the Company,  and the Company agrees to purchase,\nand  does hereby  purchase, from  AnnTaylor,  all of  AnnTaylor's\nright, title and interest in and to:\n\n     (a)   each  Receivable of  AnnTaylor  that  existed and  was\n           owing  to AnnTaylor  as of  the  close of  AnnTaylor's\n           business on the Initial Cut-Off Date;\n\n     (b)   each  Receivable created  or  originated by  AnnTaylor\n           from  the close of AnnTaylor's business on the Initial\n           Cut-Off Date, to  and including the Purchase  and Sale\n           Termination  Date and  all Finance  Charge Receivables\n           relating   to   Receivables  that   were   created  or\n           originated prior to the Purchase  and Sale Termination\n           Date;\n\n     (c)   all  rights to,  but not  the  obligations under,  the\n           Contracts and all Related Security;\n\n     (d)   all monies due or to become due with respect thereto;\n\n     (e)   all books and records related to any of the foregoing;\n           and\n\n\n\n                               -4-\n\n\n\n     (f)   all  proceeds thereof (as defined in the UCC) received\n           on  or  after  the  date  hereof   including,  without\n           limitation,  all funds  which either  are received  by\n           AnnTaylor,  the Company  or the  Servicer  from or  on\n           behalf of the  Obligors in payment of any amounts owed\n           (including,  without   limitation,  finance   charges,\n           interest  and  all   other  charges)  in  respect   of\n           Receivables,  or are applied  to such amounts  owed by\n           the Obligors (including, without limitation, insurance\n           payments, if any,  that AnnTaylor or the  Servicer (if\n           other than  AnnTaylor) applies in  the ordinary course\n           of  its business  to  amounts owed  in respect  of any\n           Receivable).\n\nAll purchases hereunder shall be made without recourse, but shall\nbe  made pursuant to  and in  reliance upon  the representations,\nwarranties and covenants of AnnTaylor, in its capacity as seller,\nset forth  in each Transaction Document.  The Company's foregoing\ncommitment  to purchase  such Receivables  and  the proceeds  and\nrights described  in subsections  (c), (d), (e)  and (f)  of this\n                     ----------------  ---  ---      ---\nSection 1.1 (collectively, the \"Related Rights\") is herein called\n- -----------                     --------------\nthe \"Purchase Facility\".\n     -----------------\n\n     1.2.  Timing of Purchases.\n           -------------------\n\n     (a)   Initial Closing Date  Purchases.  On January  __, 1994\n           -------------------------------\n(the \"Initial  Closing Date\") AnnTaylor shall sell to the Company\n      ---------------------\nin  part, and contribute to the Company, in part, and the Company\nshall  purchase and acquire, pursuant to Section 1.1, AnnTaylor's\n                                         -----------\nentire  right, title  and  interest in  (i) each  Receivable that\nexisted and was owing to AnnTaylor as of the close of AnnTaylor's\nbusiness  on the  Initial  Cut-Off  Date,  (ii)  all  Receivables\ncreated by AnnTaylor from and  including the close of AnnTaylor's\nbusiness on the Initial Cut-Off Date to and including the Initial\nClosing Date, and (iii) all Related Rights.\n\n     (b)   Regular  Purchases.  After  the Initial  Closing Date,\n           ------------------\neach  Receivable  and  Related Rights  created  or  originated by\nAnnTaylor  and described in Section 1.1(b)  hereof shall be owned\n                            --------------\nby the Company (without any  further action) upon the creation or\norigination of such Receivable.\n\n     1.3.  Consideration for Purchases.  On the terms and subject\n           ---------------------------\nto the conditions set forth in this Agreement, the Company agrees\nto make  all Purchase Price  payments to AnnTaylor  in accordance\nwith Article III.\n     -----------\n\n     1.4.  Purchase and Sale Termination Date.  The \"Purchase and\n           ----------------------------------        ------------\nSale Termination Date\"  shall be the Final Payout  Date under the\n- ---------------------\nReceivables Financing Agreement.\n\n\n\n\n                               -5-\n\n\n\n                            ARTICLE II\n\n                  CALCULATION OF PURCHASE PRICE\n\n     2.1.  Calculation of Purchase Price.  On each Reporting Date\n           -----------------------------\n(commencing February 7, 1994), the  Servicer shall deliver to the\nCompany, the Administrator, the Relationship  Bank, and AnnTaylor\n(if  the  Servicer   is  other  than   AnnTaylor)  a  report   in\nsubstantially  the form  of  Exhibit A  (each  such report  being\n                             ---------\nherein called a \"Purchase Report\")  with respect to the Company's\n                 ---------------\npurchases of Receivables from AnnTaylor\n\n     (a)   that arose on or prior to the Initial Posting Date (in\n     the case  of  the  first Purchase  Report  to  be  delivered\n     hereunder) or\n\n     (b)   that arose  during the  Settlement Period  immediately\n     preceding  such  Reporting   Date  (in  the  case   of  each\n     subsequent Purchase Report).\n\nThe \"Purchase Price\" (to be  paid to AnnTaylor in accordance with\n     --------------\nthe terms  of Article  III) for the  Receivables and  the Related\n              ------------\nRights  shall  be  determined in  accordance  with  the following\nformula:\n\n\n     PP    =  AUB X FMVD\n\n     where:\n     -----\n\n     PP    =  Purchase  Price   (to  be  paid  to   AnnTaylor  in\n              accordance  with  the  terms  of  Article  III)  as\n                                                ------------\n              calculated on the relevant Reporting Date\n\n     AUB   =  (i)   for  purposes  of  calculating  the  Purchase\n              Price on  the initial Reporting Date, the aggregate\n              Unpaid Balance of all Receivables that  existed and\n              were  owing  to  AnnTaylor as  measured  as  at the\n              Initial Cut-Off  Date  plus  the  aggregate  Unpaid\n                                     ----\n              Balance  of all  Receivables that  were created  or\n              originated by  AnnTaylor from  the Initial  Cut-Off\n              Date,  to  and including  the close  of AnnTaylor's\n              business on the Initial Posting Date (excluding, in\n              each  case, all Receivables  that had  been written\n              off the books of  AnnTaylor as uncollectible), less\n                                                             ----\n              an amount  equal to  the sum  of (A)  the aggregate\n              Unpaid Balance  of all  Receivables that  comprised\n              the capital contribution  made by AnnTaylor  to the\n              Company  on the Initial  Closing Date, and  (B) the\n              aggregate Collections  received by  AnnTaylor after\n\n\n\n\n                               -6-\n\n\n\n              the  Initial Cut-Off  Date  to  and  including  the\n              Initial Posting Date,\n\n              (ii)  for  purposes  of  calculating  the  Purchase\n              Price for Receivables on the second Reporting Date,\n              the  aggregate Unpaid  Balance  of the  Receivables\n              that  were   generated  by  AnnTaylor   during  the\n              immediately  preceding Settlement  Period less  the\n                                                        ----\n              aggregate  Collections received  by AnnTaylor  from\n              but  excluding  the  Initial Posting  Date  to  but\n              excluding the Initial Closing Date, and\n\n              (iii)   for purposes  of  calculating the  Purchase\n              Price  for  Receivables  on   each  Reporting  Date\n              thereafter,  the aggregate  Unpaid  Balance of  the\n              Receivables described in Section 1.1(b) hereof that\n              were generated by AnnTaylor  during the immediately\n              preceding Settlement Period.\n\n     FMVD  =  Fair   Market   Value   Discount   Factor  on   the\n              determination date, which  is the  quotient of  (i)\n              one divided by (ii) an amount equal to 1+ (90\/365 x\n              ABR), where ABR  is the Alternate Base Rate plus 2%\n              on such day, expressed as a fraction.\n\n\n                           ARTICLE III\n\n                    PAYMENT OF PURCHASE PRICE\n\n     3.1.    Initial Purchase  Price  Payment.    On the  Initial\n             --------------------------------\nClosing Date, AnnTaylor  shall, and hereby does contribute to the\ncapital of the  Company, Receivables and Related  Property Rights\nwith respect thereto  consisting of each Receivable  described in\nSection  1.1(a)  hereof   beginning  with  the  oldest   of  such\nReceivables and  continuing chronologically thereafter and all or\nan  undivided interest  in the  most recent  of such  contributed\nReceivables such that  the aggregate Unpaid  Balance of all  such\ncontributed Receivables  shall be equal  to $1,800,000.   On  the\nterms and subject to the  conditions set forth in this Agreement,\nthe Company  agrees to  pay to AnnTaylor  on the  Initial Closing\nDate a portion  of the Purchase Price for the purchase to be made\nfrom AnnTaylor with respect to  Receivables existing on or  prior\nto the Initial  Posting Date  (a) in  cash in the  amount of  the\nproceeds of  the Loans made to the Company on the Initial Closing\nDate under  the Receivables  Financing Agreement  and (b)  by the\nissuance of a subordinated promissory note in the form of Exhibit\n                                                          -------\nB  to AnnTaylor  (such promissory  note,  as it  may be  amended,\n- -\nsupplemented, indorsed or otherwise modified from time to time in\nsubstitution therefor or  renewal thereof in accordance  with the\nTransaction Documents, being  herein called a \"Company  Note\") in\n                                               -------------\n\n\n\n                               -7-\n\n\n\nthe initial principal amount equal to $5,412,000.  The portion of\nthe Purchase Price paid to AnnTaylor  pursuant to the immediately\npreceding sentence  shall be  adjusted on  the initial  Reporting\nDate  by the amount  of the difference,  if any,  between (x) the\nPurchase  Price calculated on the initial Reporting Date pursuant\nto  Section 2.1  hereof  and  (y) the  amount  paid to  AnnTaylor\n    -----------\npursuant  to the immediately  preceding sentence.   If the amount\ndescribed in clause  (x) is greater than the  amount described in\n             -----------\nclause (y), the Company shall  pay to AnnTaylor the difference by\n- ----------\nincreasing  the principal  amount outstanding  under the  Company\nNote,  effective as  of the  last day  of the  related Settlement\nPeriod.  If the amount described  in clause (x) is less than  the\n                                     ----------\namount  described  in clause  (y),  AnnTaylor  shall  pay to  the\n                      -----------\nCompany the difference by a  reduction in the principal amount of\nthe  Company Note, effective  as of the  last day  of the related\nSettlement  Period; provided, however,  that if  at any  time the\n                    --------  -------\nunpaid principal amount  of the Company Note has  been reduced to\nzero,  AnnTaylor shall  pay the  Company the remainder  owed with\nrespect thereto  in immediately  available funds  to the  Funding\nAccount.\n\n     3.2.   Subsequent Purchase Price Payments.  On each Business\n            ----------------------------------\nDay after the Initial Closing  Date until the termination of this\nAgreement pursuant to  Section 9.4 hereof, the  Company shall pay\n                       -----------\nto  AnnTaylor a  portion of  the Purchase  Price due  pursuant to\nSection 2.1 by  depositing into such  account as AnnTaylor  shall\n- -----------\nspecify immediately available funds  from monies then held by  or\non behalf of the Company  from Collections or Deemed Collections,\nsolely  to  the  extent  that  such   monies  do  not  constitute\nCollections that  are required to  be segregated and held  by the\nServicer pursuant to the Receivables Financing Agreement or to be\ndistributed  to the  Administrator  pursuant to  the  Receivables\nFinancing Agreement on the next Settlement Date or required to be\npaid to the Servicer as the Servicer's Fee on the next Settlement\nDate, or required to be deposited into the Spread Account or paid\nas a reimbursement to the issuer of the Letter of Credit pursuant\nto the  Receivables Financing  Agreement on  the next  Settlement\nDate,  or  otherwise necessary  to  pay current  expenses  of the\nCompany (in its discretion) and provided that AnnTaylor  has paid\nall amounts  then owing  by it  hereunder.   The  portion of  the\nPurchase Price  paid  to  AnnTaylor shall  be  adjusted  on  each\nSettlement Date (beginning on March 5, 1994) by the amount of the\ndifference,  if  any,  between  (x) the  amount  due  pursuant to\nSection 2.1 with respect to all Receivables created or originated\n- -----------\nby  AnnTaylor  that  arose during  the  corresponding  Settlement\nPeriod  and  (y)  the  amount   paid  to  AnnTaylor  during  such\nSettlement Period  pursuant to  the foregoing  sentence for  such\nReceivables.   If the amount  described in clause (x)  is greater\n                                           ----------\nthan the amount described in clause (y), the Company shall pay to\n                             ----------\nAnnTaylor  the difference  by  increasing  the  principal  amount\noutstanding under the Company Note,  effective as of the last day\n\n\n\n                               -8-\n\n\n\nof the  related Settlement  Period.  If  the amount  described in\nclause  (x) is  less than  the  amount described  in clause  (y),\n- -----------                                          -----------\nAnnTaylor shall pay to the  Company the difference by a reduction\nin the principal amount of the Company Note,  effective as of the\nlast day  of the  related Settlement  Period; provided,  however,\n                                              --------   -------\nthat  if at any time  the unpaid principal  amount of the Company\nNote has  been reduced to  zero, AnnTaylor shall pay  the Company\nthe  remainder owed with respect thereto in immediately available\nfunds to the  Funding Account.   On each  Settlement Date, if  no\nEvent  of Default under  the Receivables Financing  Agreement has\noccurred and is  continuing and payment of the  Company Note will\nnot result in an Event of Default under the Receivables Financing\nAgreement,  the Servicer will, upon the direction of the Company,\nmake a  payment on  the Company  Note to  AnnTaylor in  an amount\nequal  to  the amount  of  Collections  (not previously  paid  to\nAnnTaylor  hereunder) that  are available  to  the Company  under\nSection 3.01(b) of the Receivables Financing Agreement.\n\n     Servicer shall  make all appropriate record  keeping entries\nwith  respect to  the Company  Note  to reflect  payments by  the\nCompany thereon and Servicer's books and records shall constitute\nrebuttable  presumptive evidence of  the principal amount  of and\naccrued  interest  on   the  Company  Note.     AnnTaylor  hereby\nirrevocably authorizes Servicer to return the Company Note to the\nCompany upon the final payment  thereof after the termination  of\nthis Agreement pursuant to Section 9.4 hereof.\n                           -----------\n\n     3.3.   Settlement as  to Specific  Receivables.   Subject to\n            ---------------------------------------\nSection  7.2(a)  hereof,  if  an  officer  of  AnnTaylor  obtains\nknowledge   or  receives   notice  from   the   Company  or   the\nAdministrator that (a) on  the day that any  Receivable purchased\nhereunder  was  created or  originated  by AnnTaylor  any  of the\nrepresentations or warranties  set forth in Section  5.11 was not\n                                            -------------\ntrue with respect  to such Receivable, or such  Receivable was an\nIneligible Purchased Receivable or, (b) as a result of any action\nor inaction of  AnnTaylor, on any day any  of the representations\nor  warranties set forth  in Section 5.11 is  no longer true with\n                             ------------\nrespect  to a Receivable,  then AnnTaylor forthwith  shall reduce\nthe Purchase Price with respect to Receivables that  arose during\nthe same Settlement Period in which such knowledge is obtained or\nnotification is received by an amount equal to the Unpaid Balance\nof such Receivable; provided, however, that if there have been no\n                    --------  -------\npurchases of  Receivables (or  insufficiently large purchases  of\nReceivables to create a Purchase  Price large enough to so reduce\nby the amount  of such net reduction) from  AnnTaylor during such\nSettlement Period,  any amount owed  by which the  Purchase Price\npayable  to  AnnTaylor would  have been  reduced pursuant  to the\nimmediately preceding  clause of this  sentence shall be  paid by\neither  (at the  option of  AnnTaylor,  unless the  Company will,\nabsent such  payment in cash,  be unable to meet  its obligations\nunder the Receivables  Financing Agreement on the  next occurring\n\n\n\n                               -9-\n\n\n\nSettlement  Date,  in which  case  AnnTaylor  shall make  a  cash\npayment) a reduction in the  principal amount of the Company Note\n(but not below zero) or by payment within two Business Days after\nthe  related Report Date  in cash by AnnTaylor  to the Company by\ndeposit  in  the Funding  Account  of same  day  funds; provided,\n                                                        --------\nfurther,  that  if  the Company  thereafter  receives  payment on\n- -------\naccount of Collections due with  respect to such Receivable,  the\nCompany promptly shall deliver such funds to AnnTaylor.\n\n     3.4.  Settlement as to Dilution.  Each Purchase Report shall\n           -------------------------\ninclude,  in respect of  the Receivables previously  generated by\nAnnTaylor (including  those Receivables that were  contributed to\nthe  capital of  the  Company  on the  Initial  Closing Date),  a\ncalculation  of  the  aggregate net  reduction  in  the aggregate\nUnpaid Balance of such Receivables owed by particular Obligors on\naccount of  any defective,  rejected or  returned merchandise  or\nservices, any  cash discount,  or any  incorrect billings,  other\nadjustments,  or   setoffs  in  respect  of  any  claims  by  the\nObligor(s) thereof  against AnnTaylor  or any  of its  Affiliates\n(other than  the Company) (whether  such claims arise out  of the\nsame or  a related  or unrelated transaction),  or any  rebate or\nrefund during the  most recent month.  Subject  to Section 7.2(a)\n                                                   --------------\nhereof,  the Purchase  Price  to  be paid  to  AnnTaylor for  the\nReceivables generated during the Settlement Period for which such\nPurchase Report is delivered shall  be decreased by the amount of\nsuch net reduction; provided, however, that if there have been no\n                    --------  -------\npurchases  of Receivables  (or insufficiently large  purchases of\nReceivables to create a Purchase  Price large enough to so reduce\nby the amount  of such net reduction) from  AnnTaylor during such\nSettlement Period,  any amount owed  by which the  Purchase Price\npayable  to AnnTaylor  would have  been  reduced pursuant  to the\nimmediately preceding clause  of this sentence  shall be paid  by\neither  (at the  option of  AnnTaylor, unless  the Company  will,\nabsent such  payment in cash,  be unable to meet  its obligations\nunder the Receivables  Financing Agreement on the  next occurring\nSettlement  Date,  in  which case  AnnTaylor  shall  make  a cash\npayment) a reduction in the  principal amount of the Company Note\n(but not below zero) or by payment within two Business Days after\nthe  related Report Date in  cash by AnnTaylor  to the Company by\ndeposit in the Funding Account of same day funds.\n\n     3.5.    Reconveyance of  Receivables.    In the  event  that\n             ----------------------------\nAnnTaylor has paid to the Company the full Unpaid  Balance of any\nReceivable pursuant  to Section  3.3  or 3.4,  the Company  shall\n                        ------------     ---\nreconvey such Receivable to  AnnTaylor, without representation or\nwarranty, but free and clear of all liens created by the Company.\n\n\n\n\n\n\n\n\n                               -10-\n\n\n\n                            ARTICLE IV\n\n\n                     CONDITIONS OF PURCHASES\n\n     4.1.  Conditions Precedent to Initial Purchase.  The initial\n           ----------------------------------------\npurchase hereunder is subject to the condition precedent that the\nCompany shall  have received,  on or  before the Initial  Closing\nDate,  the following, each (unless otherwise indicated) dated the\nInitial Closing Date, and each in form, substance and date satis-\nfactory to the Company:\n\n           (a)    A copy  of  the  resolutions  of the  Board  of\n     Directors of AnnTaylor  approving the Transaction  Documents\n     to  be delivered  by it  and  the transactions  contemplated\n     hereby  and thereby, certified by the Secretary or Assistant\n     Secretary of AnnTaylor;\n\n           (b)   Good standing  certificates for AnnTaylor issued\n     as of a recent date by the Secretary of State of Delaware;\n\n           (c)    A  certificate of  the  Secretary  or Assistant\n     Secretary   of  AnnTaylor  certifying  the  names  and  true\n     signatures of the officers authorized  on Anntaylor's behalf\n     to sign the Transaction Documents  to be delivered by it (on\n     which  certificate the Company  and Servicer (if  other than\n     AnnTaylor)  may conclusively  rely until  such  time as  the\n     Company  and the  Servicer shall  receive  from AnnTaylor  a\n     revised  certificate  meeting   the  requirements  of   this\n     subsection (c));\n     --------------\n\n           (d)   The certificate  of incorporation of  AnnTaylor,\n     duly certified by the Secretary of State of Delaware as of a\n     recent  date,  together  with  a  copy  of  the  by-laws  of\n     AnnTaylor,  each duly  certified  by  the  Secretary  or  an\n     Assistant Secretary of AnnTaylor;\n\n           (e)  Copies  of the proper financing  statements (Form\n     UCC-1) that  have been duly  executed and name  AnnTaylor as\n     the assignor and the Company  as the assignee (and Lender as\n     assignee of  the Company)  of the  Receivables generated  by\n     AnnTaylor or other, similar instruments or documents, as may\n     be  necessary  or,  in Servicer's  or  the  Administrators's\n     opinion,  desirable  under   the  UCC  of   all  appropriate\n     jurisdictions  or  any  comparable  law of  all  appropriate\n     jurisdictions to perfect the Company's ownership interest in\n     all Receivables and such other rights, accounts, instruments\n     and moneys (including, without limitation, Related Security)\n     in  which  an  ownership  interest may  be  assigned  to  it\n     hereunder;\n\n           (f)     A  written   search  report   from  a   Person\n     satisfactory to Servicer and  the Administrator listing  all\n     effective financing statements that name AnnTaylor as debtor\n\n\n\n                               -11-\n\n\n\n     or assignor and that are filed in the jurisdictions in which\n     filings were made pursuant to the  foregoing subsection (e),\n                                                  --------------\n     together with copies  of such financing statements  (none of\n     which,  except   for  those  described   in  the   foregoing\n     subsection  (f), shall  cover any  Receivable  or any  right\n     ---------------\n     related to any  Receivable that is of the  type described in\n     Section 1.1) which  is to be sold to  the Company hereunder,\n     -----------\n     and  tax  and judgment  lien  search reports  from  a Person\n     satisfactory  to Servicer and  the Administrator  showing no\n     evidence of such liens filed against AnnTaylor;\n\n           (g)   A  favorable opinion  of  Skadden, Arps,  Slate,\n     Meagher &amp; Flom,  counsel  to  AnnTaylor,  in  the  form  of\n     Exhibit C   and   a  favorable   opinion  of   Jocelyn  F.L.\n     ---------\n     Barandiaran, in the form of Exhibit F;\n                                 ---------\n\n           (h)   Evidence  (i) of the  execution and  delivery by\n     each of the parties thereto of each of the other Transaction\n     Documents  to  be  executed   and  delivered  in  connection\n     herewith and (ii) that  each of the conditions  precedent to\n     the  execution,  delivery and  effectiveness  of  such other\n     Transaction Documents  has been  satisfied to the  Company's\n     satisfaction;\n\n           (i)   The  Company Note  in favor  of AnnTaylor,  duly\n     executed by the Company;\n\n           (j)  A certificate from an officer of AnnTaylor to the\n     effect that Servicer and  AnnTaylor have placed on  the most\n     recent, and  have taken  all steps  reasonably necessary  to\n     ensure that  there shall  be placed  on subsequent,  summary\n     master control data processing reports the following  legend\n     (or the  substantive equivalent thereof):   \"THE RECEIVABLES\n     DESCRIBED HEREIN HAVE  BEEN SOLD TO ANNTAYLOR  FUNDING, INC.\n     PURSUANT  TO  A PURCHASE  AND  SALE AGREEMENT,  DATED  AS OF\n     JANUARY 27,  1994, AS  AMENDED,  BETWEEN ANNTAYLOR  FUNDING,\n     INC. AND  ANNTAYLOR, INC.;  AND A  SECURITY INTEREST  IN THE\n     RECEIVABLES  DESCRIBED HEREIN  HAS BEEN  GRANTED TO  CLIPPER\n     RECEIVABLES CORPORATION, PURSUANT TO A RECEIVABLES FINANCING\n     AGREEMENT, DATED  AS OF  JANUARY 27,  1994, AMONG  ANNTAYLOR\n     FUNDING,   INC.,   ANNTAYLOR,  INC.,   CLIPPER   RECEIVABLES\n     CORPORATION, STATE STREET BOSTON CAPITAL CORPORATION, AS THE\n     ADMINISTRATOR, AND  PNC BANK,  NATIONAL ASSOCIATION, AS  THE\n     RELATIONSHIP BANK; and\n\n           (k)  A  duly executed counterpart of  the Subscription\n     Agreement from each party thereto.\n\n     4.2.  Certification  as to  Representations and  Warranties.\n           -----------------------------------------------------\nAnnTaylor,  by accepting  the  Purchase  Price  related  to  each\npurchase  of  Receivables  (and  Related  Rights)   generated  by\nAnnTaylor,  shall   be  deemed   to  have   certified  that   the\nrepresentations  and warranties contained  in Article V  are true\n                                              ---------\nand correct on and as of such day, with the same effect as though\nmade on and as of such day.\n\n\n\n\n                               -12-\n\n\n\n                            ARTICLE V\n\n           REPRESENTATIONS AND WARRANTIES OF ANNTAYLOR\n\n     In order to induce the  Company to enter into this Agreement\nand to  make purchases hereunder,  AnnTaylor, in its  capacity as\nseller under this Agreement, hereby makes the representations and\nwarranties set forth in this Article V.\n                             ---------\n\n     5.1.   Organization and  Good Standing.   AnnTaylor has been\n            -------------------------------\nduly organized and  is validly existing as a  corporation in good\nstanding under the  laws of the state of  its incorporation, with\npower  and authority  to own  its properties  and to  conduct its\nbusiness as such properties are presently owned and such business\nis presently conducted.\n\n     5.2.   Due  Qualification.   AnnTaylor is  duly  licensed or\n            ------------------\nqualified  to  do  business  as a  foreign  corporation  in  good\nstanding in all jurisdictions in which (a) the ownership or lease\nof  its property  or the  conduct of  its business  requires such\nlicensing or qualification and (b)  the failure to be so licensed\nor  qualified has  not had  and will not  have a  Seller Material\nAdverse Effect.\n\n     5.3.  Power and Authority; Due Authorization.  AnnTaylor has\n           --------------------------------------\n(a) all necessary power, authority and legal right (i) to execute\nand  deliver, and perform its obligations under, each Transaction\nDocument to which it is a party, as seller, and (ii) to generate,\nown, sell and assign  Receivables on the terms and subject to the\nconditions herein and therein  provided; and (b) duly  authorized\nsuch execution and delivery and  such sale and assignment and the\nperformance  of  such  obligations  by  all  necessary  corporate\naction.\n\n     5.4.    Valid Sale;  Binding  Obligations.    Each  sale  of\n             ---------------------------------\nReceivables and Related Rights made by AnnTaylor pursuant to this\nAgreement shall constitute a valid sale, transfer, and assignment\nthereof to  the Company,  enforceable against  creditors of,  and\npurchasers from,  AnnTaylor; and this Agreement  constitutes, and\neach other  Transaction Document  to be  signed by  AnnTaylor, as\nseller,  when duly  executed and  delivered,  will constitute,  a\nlegal, valid, and binding obligation of AnnTaylor, enforceable in\naccordance  with its  terms,  except  as  enforceability  may  be\nlimited  by  bankruptcy,  insolvency,  reorganization,  or  other\nsimilar  laws  affecting  the  enforcement  of creditors'  rights\n\n\n\n                               -13-\n\n\n\ngenerally  and by  general principles  of  equity, regardless  of\nwhether  such enforceability  is considered  in  a proceeding  in\nequity or at law.\n\n     5.5.  No  Violation.  The  consummation of the  transactions\n           -------------\ncontemplated  by  this   Agreement  and  the   other  Transaction\nDocuments  to which  AnnTaylor  is  a party  as  seller, and  the\nfulfillment of the terms hereof  or thereof will not (a) conflict\nwith, result in any breach of any of the terms and provisions of,\nor constitute (with or without notice or lapse of time or both) a\ndefault under (i) AnnTaylor's certificate of incorporation or by-\nlaws, or  (ii) any indenture,  loan agreement, mortgage,  deed of\ntrust, or other agreement or instrument to which it is a party or\nby  which it  is bound,  except  where such  conflict, breach  or\ndefault has not had and  will not have a Seller Material  Adverse\nEffect, (b) result  in the creation or imposition  of any Adverse\nClaim upon  any of its  properties pursuant to  the terms of  any\nsuch indenture, loan agreement, mortgage, deed of trust, or other\nagreement or instrument, other than the Transaction Documents, or\n(c) violate any law or  any order, rule, or regulation applicable\nto it of any court or of any federal, state or foreign regulatory\nbody,  administrative agency,  or  other governmental  instrumen-\ntality  having jurisdiction  over it  or any  of  its properties,\nexcept  where such  violation has  not had  and will  not  have a\nSeller Material Adverse Effect.\n\n     5.6.  Proceedings.  There  is no action, suit, proceeding or\n           -----------\ninvestigation   pending  before   any  court,   regulatory  body,\narbitrator,   administrative   agency,  or   other   tribunal  or\ngovernmental instrumentality (a) asserting the invalidity  of any\nTransaction Document to which AnnTaylor is a party as seller, (b)\nseeking to prevent the sale of Receivables to the  Company or the\nconsummation of any of the other transactions contemplated by any\nTransaction Document to which AnnTaylor  is a party as seller, or\n(c) seeking any determination or ruling that could reasonably  be\nexpected to have a Seller Material Adverse Effect.\n\n     5.7.  Bulk  Sales Act.   No transaction contemplated  hereby\n           ---------------\nrequires compliance with any bulk sales act or similar law.\n\n     5.8.   Government Approvals.   Except for the filing  of the\n            --------------------\nUCC financing statements referred to in Article IV, all of which,\n                                        ----------\nat the time required in Article IV, shall have been duly made and\n                        ----------\nshall be in  full force and effect, no  authorization or approval\nor other action  by, and no notice to or filing with, any govern-\nmental authority or  regulatory body is required  for AnnTaylor's\ndue  execution,  delivery  and  performance  of  any  Transaction\nDocument to which it is a party, as seller.\n\n     5.9.  Financial Condition.  On the date hereof AnnTaylor is,\n           -------------------\nand on the  date of each transfer  of a new  Receivable hereunder\n\n\n\n                               -14-\n\n\n\n(both before and after giving effect to such transfer), AnnTaylor\nshall be solvent.\n\n     5.10.  Margin Regulations.  No use of  any funds acquired by\n            ------------------\nAnnTaylor under this  Agreement will conflict with  or contravene\nany  of Regulations  G, T, U  and X  promulgated by the  Board of\nGovernors of the Federal Reserve System from time to time.\n\n     5.11.  Quality of Title.\n            ----------------\n\n           (a)    Each  Receivable  (together  with  the  Related\n     Security for  such Receivable)  which is to  be sold  to the\n     Company  hereunder is or  shall be owned  by AnnTaylor, free\n     and clear of  any Adverse Claim,  except as provided  herein\n     and  in the Receivables  Financing Agreement.   Whenever the\n     Company makes a  purchase hereunder, it shall  have acquired\n     and shall continue to have maintained a valid and  perfected\n     ownership  interest (free  and clear  of  any Adverse  Claim\n     created  by  AnnTaylor)  in  all  Receivables  generated  by\n     AnnTaylor  and  all  Collections  related  thereto,  and  in\n     AnnTaylor's  entire right, title and interest  in and to the\n     Related Security with respect thereto.\n\n           (b)    No  effective   financing  statement  or  other\n     instrument  similar   in  effect  covering   any  Receivable\n     generated by  AnnTaylor or  any  right related  to any  such\n     Receivable that is  of the type described in  Section 1.1 is\n                                                   -----------\n     on  file in any recording office except such as may be filed\n     in favor of the Company or AnnTaylor, as the case may be, in\n     accordance with this Agreement or  in favor of the Lender in\n     accordance with  the Receivables  Financing Agreement  or in\n     favor   of  Bank  of  America  National  Trust  and  Savings\n     Association  for  which  AnnTaylor  has  delivered  executed\n     partial  releases  (UCC-3  statements) on  or  prior  to the\n     Initial Closing Date.\n\n     5.12.     Accuracy  of  Information.    No  factual  written\n               -------------------------\ninformation heretofore or contemporaneously  furnished in writing\n(and  prepared) by  AnnTaylor,  as seller,  to  the Company,  the\nLender or the Administrator for purposes of or in connection with\nany Transaction Document  or any transaction  contemplated hereby\nor  thereby is,  and no  other such  factual written  information\nhereafter  furnished (and prepared)  by AnnTaylor, as  seller, to\nthe Company, the  Lender, or the Administrator pursuant  to or in\nconnection  with any Transaction  Document will be  inaccurate in\nany material respect  (in light of the  circumstances under which\nsuch information was furnished and taken as a whole together with\nall  other  information   previously  furnished  or   then  being\nfurnished)  as  of  the  date  it was  furnished  or  (except  as\notherwise disclosed to the  Company at or prior to  such time) as\nof the date as of which  such information is dated or  certified.\n\n\n\n                               -15-\n\n\n\nNo  information contained  in any  report  delivered pursuant  to\nSection 6.2 or in any  Purchase Report shall contain any material\n- -----------\nmisstatement  of  fact or  omitted  or  will  omit to  state  any\nmaterial fact necessary  to make such information  not materially\nmisleading on  the date as of which  such information is dated or\ncertified.\n\n     5.13.  Offices.  AnnTaylor's principal place of business and\n            -------\nchief executive office is located  at the address set forth under\nAnnTaylor's  signature hereto,  and the  offices where  AnnTaylor\nkeeps  all  its  books,  records  and  documents  evidencing  the\nReceivables,  the  related  Contracts and  all  other  agreements\nrelated   to  such  Receivables  are  located  at  the  addresses\nspecified in Exhibit  E (or at such other  locations, notified to\n             ----------\nServicer  (if  other  than AnnTaylor)  and  the  Administrator in\naccordance with Section 6.1(f), in jurisdictions where all action\n                --------------\nrequired by Section 7.3 has been taken and completed).\n            -----------\n\n     5.14.  Trade  Names.  Except as disclosed  on Schedule 5.15,\n            ------------                           -------------\nAnnTaylor  does not  use any  trade  name other  than its  actual\ncorporate name.  From and after the date that fell five (5) years\nbefore the date hereof, AnnTaylor has not been known by any legal\nname other than its corporate name as of the date hereof, nor has\nAnnTaylor  been the  subject  of any  merger  or other  corporate\nreorganization except as disclosed on Schedule 5.14.\n                                      -------------\n\n     5.15.   Taxes.   AnnTaylor  has  filed all  tax returns  and\n             -----\nreports required by law to have been filed by it and has paid all\ntaxes and governmental charges thereby shown  to be owing, except\nany  such  taxes  which  are  not yet  delinquent  or  are  being\ndiligently contested in good faith by appropriate proceedings and\nfor which adequate reserves in accordance with generally accepted\naccounting principles shall have been set aside on its books.\n\n     5.16.   Compliance  with Applicable Laws.   AnnTaylor  is in\n             --------------------------------\ncompliance,  in all material  respects, with the  requirements of\nall  applicable laws,  rules,  regulations,  and  orders  of  all\ngovernmental   authorities   (including,    without   limitation,\nRegulation  Z, laws,  rules and  regulations  relating to  usury,\ntruth in  lending, fair  credit billing,  fair credit  reporting,\nequal  credit  opportunity, fair  debt  collection practices  and\nprivacy and all other consumer laws applicable to the Receivables\nand related Contracts), a breach of any of which, individually or\nin the  aggregate, would  be reasonably likely  to have  a Seller\nMaterial Adverse Effect.\n\n     5.17.  Reliance  on Separate Legal  Identity.  AnnTaylor  is\n            -------------------------------------\naware  that Lender, the  Relationship Bank and  the Administrator\nare entering  into the  Transaction Documents to  which they  are\nparties in reliance upon the Company's identity as a legal entity\nseparate from AnnTaylor.\n\n\n\n                               -16-\n\n\n\n\n                            ARTICLE VI\n\n                     COVENANTS OF ANNTAYLOR\n\n     6.1.  Affirmative Covenants.  From the date hereof until the\n           ---------------------\nfirst  day  following  the Purchase  and  Sale  Termination Date,\nAnnTaylor  will, unless the  Company, the Administrator,  and the\nRelationship Bank shall otherwise consent in writing:\n\n           (a)    Compliance  with  Laws,  Etc.    Comply in  all\n                  -----------------------------\n     material   respects  with   all   applicable  laws,   rules,\n     regulations  and  orders  with  respect to  the  Receivables\n     generated  by  it  and the  Contracts  and  other agreements\n     related thereto, except where such noncompliance has not had\n     and will not have a Seller Material Adverse Effect.\n\n           (b)   Preservation of  Corporate Existence.   Preserve\n                 ------------------------------------\n     and maintain its corporate existence, rights, franchises and\n     privileges  in  the jurisdiction  of its  incorporation, and\n     qualify and remain  qualified in good standing as  a foreign\n     corporation  in  each  jurisdiction  where  the  failure  to\n     preserve and  maintain such  existence, rights,  franchises,\n     privileges and  qualification would have  a Seller  Material\n     Adverse Effect.\n\n           (c)   Receivables Review.   (i) At  any time  and from\n                 ------------------\n     time  to time during regular business hours, upon reasonable\n     notice and in a manner designed not to  unreasonably disrupt\n     the  normal business  operations  of  AnnTaylor, permit  the\n     Company,  the Collateral  Agent,  the Administrator  and the\n     Relationship   Bank   or   their   respective   agents    or\n     representatives, (A) to examine, to audit and make copies of\n     and  abstracts  from   all  books,  records  and   documents\n     (including, without limitation, computer tapes and disks) in\n     the possession or under the control of AnnTaylor relating to\n     the  Receivables   generated  by   it,  including,   without\n     limitation,  the  Contracts  and  other  agreements  related\n     thereto, and (B) to visit AnnTaylor's offices and properties\n     for the purpose of examining such materials described in the\n     foregoing  clause (A) and discussing matters relating to the\n                ----------\n     Receivables   generated   by    AnnTaylor   or   AnnTaylor's\n     performance  hereunder with any of the officers or employees\n     of  AnnTaylor   having knowledge  of such matters;  and (ii)\n     without  limiting the provisions  of clause (i)  next above,\n                                          ----------\n     from  time  to  time  on  request of  Administrator  or  the\n     Relationship Bank,  permit certified  public accountants  or\n     other  auditors acceptable to the Administrator to conduct a\n     review  of its books  and records; provided,  however, that,\n                                        --------   -------\n     unless an Event  of Default has occurred  and is continuing,\n\n\n\n                               -17-\n\n\n\n     AnnTaylor  shall  not  be  obligated to  pay  for  any  such\n     reviews,  which together with  reviews conducted pursuant to\n     Section 7.01(c) of the  Receivables Financing Agreement, are\n     done more frequently  than three times per year  by internal\n     auditors  of the Administrator or the Relationship Bank (and\n     such expenses  shall be subject  to Section 14.05(a)  of the\n     Receivables Financing Agreement).\n\n           (d)     Keeping  of  Records  and  Books  of  Account.\n                   ---------------------------------------------\n     Maintain  an  ability  to recreate  records  evidencing  the\n     Receivables generated by it in the  event of the destruction\n     of the originals thereof.\n\n           (e)  Performance  and Compliance with Receivables  and\n                -------------------------------------------------\n     Contracts.   Timely and  fully perform  and comply  with all\n     ---------\n     provisions, covenants  and  other promises  required  to  be\n     observed by it under the Contracts and all other  agreements\n     related to the Receivables.\n\n           (f)  Location of Records.  Keep its principal place of\n                -------------------\n     business and chief  executive office, and the  offices where\n     it keeps its  records concerning or related  to Receivables,\n     at  the address(es)  referred to  in Exhibit  E or,  upon 30\n                                          ----------\n     days'   prior  written  notice   to  the  Company   and  the\n     Administrator,  at  such  other locations  in  jurisdictions\n     where all  action required  by Section 7.3  shall have  been\n                                    -----------\n     taken and completed.\n\n           (g)   Credit and  Collection Policies.  Comply in  all\n                 -------------------------------\n     material respects with  its Credit and Collection  Policy in\n     connection  with the Receivables  that it generates  and all\n     Contracts related thereto.\n\n           (h)    Separate Corporate  Existence  of the  Company.\n                  ----------------------------------------------\n     Take such actions as shall be required in order that:\n\n              (i)   the Company's  operating expenses (other than\n           certain organization expenses and expenses incurred in\n           connection  with  the   preparation,  negotiation  and\n           delivery  of the  Transaction Documents)  will not  be\n           paid by AnnTaylor;\n\n              (ii)    the  Company's books  and  records  will be\n           maintained separately from those of AnnTaylor;\n\n              (iii)  All financial  statements of  AnnTaylor that\n           are consolidated to  include the Company and  are used\n           other than for  internal purposes by AnnTaylor  or any\n           Affiliate thereof will  contain detailed notes clearly\n           stating that (A) all of the Company's assets are owned\n           by  the Company,  and (B)  the Company  is a  separate\n\n\n\n                               -18-\n\n\n\n           corporate  entity  with  creditors who  have  received\n           security interests in the Company's assets;\n\n              (iv)   AnnTaylor  will  strictly observe  corporate\n           formalities in its dealing with the Company;\n\n              (v)  AnnTaylor  shall not commingle its  funds with\n           any  funds of the Company; provided that AnnTaylor and\n                                      --------\n           the Company acknowledge that some Obligors  make their\n           payments to AnnTaylor's  stores or headquarters, which\n           in-store collections are subject to the provisions  of\n           Section 7.2(a) hereof;\n           --------------\n\n              (vi)    AnnTaylor    will   maintain  arm's  length\n           relationships with  the Company, and AnnTaylor will be\n           compensated  at  market  rates  for  any  services  it\n           renders or otherwise furnishes to the Company; and\n\n              (vii)   AnnTaylor will  not be,  and will  not hold\n           itself out to  be, responsible  for the  debts of  the\n           Company or the decisions or actions in respect  of the\n           daily business and affairs of the Company.\n\n     6.2.   Reporting Requirements.   From the date  hereof until\n            ----------------------\nthe first day following the  Purchase and Sale Termination  Date,\nAnnTaylor  will, unless  the Administrator  and the  Relationship\nBank shall  otherwise consent in writing, furnish to the Company,\nthe Administrator, and the Relationship Bank:\n\n           (a)   Proceedings.   As  soon as  possible and  in any\n                 -----------\n     event  within  three  Business   Days  after  AnnTaylor  has\n     knowledge  thereof,  written  notice  to  the  Company,  the\n     Administrator and  the Relationship Bank of  (i) all pending\n     proceedings  and  investigations of  the  type described  in\n     Section 5.6 not  previously disclosed to the  Company and\/or\n     -----------\n     the Administrator and (ii) all material adverse developments\n     that  have occurred with respect to any previously disclosed\n     proceedings and investigations; and\n\n           (b)  Other.   Promptly, from time to  time, such other\n                -----\n     information, documents,  records or  reports respecting  the\n     Receivables or  AnnTaylor's performance as  seller hereunder\n     that the Company, the Administrator or the Relationship Bank\n     may from time to time reasonably request in order to protect\n     the interests of the Company, the Lender, the Administrator,\n     the Relationship Bank, or any  other Affected Party under or\n     as contemplated by the Transaction Documents.\n\n     6.3.   Negative Covenants.   From the date hereof  until the\n            ------------------\ndate  following the Purchase and Sale Termination Date, AnnTaylor\n\n\n\n\n                               -19-\n\n\n\nagrees  that, unless the Administrator, and the Relationship bank\nshall otherwise consent in writing, it shall not:\n\n           (a)   Sales, Liens, Etc.  Except as otherwise provided\n                 -----------------\n     herein  or in any  other Transaction Document,  sell, assign\n     (by operation of law or  otherwise) or otherwise dispose of,\n     or create or  suffer to exist any Adverse Claim upon or with\n     respect  to, any Receivable  or related Contract  or Related\n     Security,  or  any  interest  therein,  or  any  Collections\n     thereon, or  assign any right  to receive income  in respect\n     thereof.\n\n           (b)  Change in Credit and Collection Policy.  Make any\n                --------------------------------------\n     change in the Credit and Collection Policy that would not be\n     permitted under Section 7.04(c) of the Receivables Financing\n     Agreement.\n\n           (c)   Receivables Not  to be  Evidenced by  Promissory\n                 ------------------------------------------------\n     Notes.   Take any action  to cause or permit  any Receivable\n     -----\n     generated by it to become evidenced  by any \"instrument\" (as\n     defined  in the applicable  UCC), except as  contemplated by\n     Section 6.01(u) of the Receivables Financing Agreement.\n\n\n                           ARTICLE VII\n\n               ADDITIONAL RIGHTS AND OBLIGATIONS IN\n                    RESPECT OF THE RECEIVABLES\n\n     7.1.   Rights of the  Company.  AnnTaylor  hereby authorizes\n            ----------------------\nthe Company and  the Servicer (if other than  AnnTaylor) or their\nrespective designees  to take  any and  all steps in  AnnTaylor's\nname necessary  or desirable, in their  respective determination,\nto  collect  all  amounts  due  under  any and  all  Receivables,\nincluding,  without  limitation,  endorsing  AnnTaylor's name  on\nchecks  and   other  instruments  representing   Collections  and\nenforcing  such Receivables  and the  provisions  of the  related\nContracts  that concern payment  and\/or enforcement of  rights to\npayment.\n\n     7.2.  Responsibilities of AnnTaylor.  Anything herein to the\n           -----------------------------\ncontrary notwithstanding:\n\n           (a)    Collection  Procedures.    AnnTaylor agrees  to\n                  ----------------------\n     direct  its respective Obligors in the billing statements to\n     make  payments of Receivables directly to a Lock-Box Account\n     at a Lock-Box  Bank.  AnnTaylor  further agrees to  transfer\n     any  Collections   that  it  receives   (including,  without\n     limitation, in-store and  headquarters payments) directly to\n     Servicer (for  deposit to  the Funding  Account) within  two\n     Business Days of  receipt thereof, and agrees  that all such\n\n\n\n                               -20-\n\n\n\n     Collections shall be deemed to  be received in trust for the\n     Company;  provided that, to the extent permitted pursuant to\n               --------\n     Section  3.2, AnnTaylor  may retain  such  Collections as  a\n     ------------\n     portion of  the Purchase  Price then payable  or apply  such\n     Collections to the  reduction of the outstanding  balance of\n     the  Company  Note.   AnnTaylor  agrees  to pay  all  Deemed\n     Collections payable pursuant to Section 3.3 or 3.4; provided\n                                     -----------    ---\n     that,  notwithstanding anything  to the  contrary  set forth\n     therein,  if   requested   by  the   Administrator  or   the\n     Relationship  Bank during  the continuance  of  an Event  of\n     Default,  AnnTaylor shall pay such Deemed Collections to the\n     Servicer  for deposit to the Lock-Box  Account on the second\n     Business Day following the day on which they arise.\n\n           (b)     AnnTaylor   shall   perform  its   obligations\n     hereunder, and the exercise by  the Company or its  designee\n     of its  rights hereunder  shall not  relieve AnnTaylor  from\n     such obligations.\n\n           (c)   AnnTaylor hereby  grants to  Servicer (if  other\n     than  AnnTaylor) an irrevocable power of attorney, with full\n     power  of substitution, coupled with an interest, to take in\n     the name of  AnnTaylor all steps  necessary or advisable  to\n     indorse,  negotiate or otherwise  realize on any  writing or\n     other right of any kind  held or transmitted by AnnTaylor or\n     transmitted or received by the Company (whether or not  from\n     AnnTaylor) in connection with any Receivable.\n\n     7.3.  Further Action Evidencing Purchases.  AnnTaylor agrees\n           -----------------------------------\nthat from time to time, at  its expense, it will promptly execute\nand deliver all  further instruments and documents, and  take all\nfurther  action that the Company  may reasonably request in order\nto perfect, protect  or more fully evidence  the Receivables (and\nthe  Related Rights) purchased  by the  Company hereunder,  or to\nenable  the Company  to exercise  or  enforce any  of its  rights\nhereunder  or  under  any other  Transaction  Document.   Without\nlimiting the generality of the foregoing, upon the request of the\nCompany, AnnTaylor will:\n\n           (a)  execute  and file such financing  or continuation\n     statements, or  amendments thereto  or assignments  thereof,\n     and such other  instruments or notices, as  may be necessary\n     or appropriate; and\n\n           (b)  mark  the summary master control  data processing\n     records with the legend set forth in Section 4.1(j).\n                                          --------------\n\nAnnTaylor  hereby authorizes the Company or  its designee to file\none  or more financing or continuation statements, and amendments\nthereto and  assignments thereof, relative  to all or any  of the\nReceivables  (and the Related  Rights) now existing  or hereafter\n\n\n\n                               -21-\n\n\n\ngenerated by AnnTaylor.  If AnnTaylor fails to perform any of its\nagreements  or obligations under  this Agreement, the  Company or\nits designee may  (but shall not be required  to) itself perform,\nor  cause performance of,  such agreement or  obligation, and the\nexpenses of the  Company or its  designee incurred in  connection\ntherewith   shall  be  payable   by  AnnTaylor  as   provided  in\nSection 9.6.\n- -----------\n\n     7.4.  Application of Collections.  Any payment by an Obligor\n           --------------------------\nin respect of any indebtedness owed by it to AnnTaylor in respect\nof  any  Contract shall,  except as  otherwise specified  by such\nObligor  or otherwise  required  by contract  or law,  be applied\nfirst,  as  a Collection  of  any  Finance  Charge Receivable  or\n- -----\nReceivables of  such Obligor,  in the  order of  the age  of such\nFinance  Charge Receivables,  starting with  the  oldest of  such\nFinance  Charge Receivables,  second, to  the  collection of  any\n                              ------\nPrincipal  Receivable or  Receivables  then  outstanding of  such\nObligor in  the order of  the age of such  Principal Receivables,\nstarting  with  the  oldest of  such  Principal  Receivables, and\nthird, to any other indebtedness of such Obligor.\n- -----\n\n\n                           ARTICLE VIII\n\n                         INDEMNIFICATION\n\n     8.1.   Indemnities by AnnTaylor.  Without limiting any other\n            ------------------------\nrights which the  Company may have hereunder  or under applicable\nlaw, AnnTaylor hereby agrees to indemnify the Company and each of\nits assigns, officers,  directors, employees and agents  (each of\nthe foregoing Persons  being individually called a  \"Purchase and\n                                                     ------------\nSale Indemnified Party\"),  forthwith on demand, from  and against\n- ----------------------\nany and all  damages, losses, claims, judgments,  liabilities and\nrelated  costs and expenses, including reasonable attorneys' fees\nand disbursements (all of the foregoing being collectively called\n\"Purchase  and Sale  Indemnified  Amounts\")  awarded  against  or\n ----------------------------------------\nincurred by  any of them  arising out  of or as  a result  of the\nfollowing:\n\n           (a)  the  transfer by AnnTaylor of an  interest in any\n     Receivable or  Related Right  to any  Person other than  the\n     Company;\n\n           (b)   without duplication  of amounts  paid as  Deemed\n     Collections, the  breach of  any representation  or warranty\n     made by AnnTaylor under or in connection with this Agreement\n     or any  other Transaction  Document, or  any information  or\n     report delivered  by AnnTaylor  pursuant  hereto or  thereto\n     which shall  have been  false or incorrect  in any  material\n     respect when made or deemed made;\n\n\n\n\n                               -22-\n\n\n\n           (c)   the  failure  by AnnTaylor  to  comply with  any\n     applicable  law,  rule  or regulation  with  respect  to any\n     Receivable generated  by AnnTaylor or the  related Contract,\n     or  the   nonconformity  of  any   Receivable  generated  by\n     AnnTaylor or the  related Contract with any  such applicable\n     law, rule or regulation;\n\n           (d)   the failure to  vest and maintain vested  in the\n     Company  an ownership interest  in the Receivables generated\n     by AnnTaylor free and clear of any Adverse Claim, other than\n     an Adverse Claim arising solely as a result of an act of the\n     Company, whether  existing at the  time of  the purchase  of\n     such Receivables or at any time thereafter;\n\n           (e)  the failure of  AnnTaylor to file with respect to\n     itself,  or any  delay in  filing,  financing statements  or\n     other similar instruments or documents under the UCC of  any\n     applicable  jurisdiction  or  other  applicable  laws   with\n     respect   to  any   Receivables  or   purported  Receivables\n     generated by AnnTaylor, whether at the  time of any purchase\n     or at any subsequent time;\n\n           (f)   without duplication  of amounts  paid as  Deemed\n     Collections, any  dispute, claim,  offset or  defense (other\n     than discharge in bankruptcy) of the Obligor  to the payment\n     of  any  Receivable  or purported  Receivable  generated  by\n     AnnTaylor (including, without limitation, a defense based on\n     such Receivables or the related Contracts not being a legal,\n     valid  and binding  obligation of  such  Obligor enforceable\n     against it in accordance with its terms), or any other claim\n     resulting from the  services related to any  such Receivable\n     or the furnishing of or failure to furnish such services;\n\n           (g)  any product liability  claim arising out of or in\n     connection  with  services  that  are  the  subject  of  any\n     Receivable generated by AnnTaylor; and\n\n           (h)  any tax or governmental fee or charge (other than\n     any tax excluded pursuant to  clause (iii) in the proviso to\n                                   ------------\n     the preceding sentence), all  interest and penalties thereon\n     or with  respect thereto,  and all  out-of-pocket costs  and\n     expenses,  including  the reasonable  fees  and  expenses of\n     counsel  in defending against  the same, which  may arise by\n     reason  of  the  purchase or  ownership  of  the Receivables\n     generated by AnnTaylor  or any Related Right  connected with\n     any such Receivables;\n\nexcluding,  however, (i) Purchase and Sale Indemnified Amounts to\n- ---------   -------\nthe  extent resulting from gross negligence or willful misconduct\non the part of such Purchase and Sale Indemnified Party, (ii) any\nindemnification  which has the effect of recourse for non-payment\n\n\n\n                               -23-\n\n\n\nof the Receivables to AnnTaylor (except as otherwise specifically\nprovided under this Section  8.1) and (iii) any tax based upon or\n                    ------------\nmeasured by net income.\n\n     If for any reason the indemnification provided above in this\nSection 8.1  is unavailable  to a  Purchase and  Sale Indemnified\n- -----------\nParty  or  is  insufficient  to  hold  such   Purchase  and  Sale\nIndemnified Party  harmless, then  AnnTaylor shall contribute  to\nthe amount paid or payable  by such Purchase and Sale Indemnified\nParty to the maximum extent permitted under applicable law.\n\n\n                            ARTICLE IX\n\n                          MISCELLANEOUS\n\n     9.1.  Amendments, etc.\n           ---------------\n\n           (a)  The provisions of this Agreement may from time to\n     time  be amended,  modified or  waived,  if such  amendment,\n     modification or  waiver is in  writing and  consented to  by\n     AnnTaylor, the Company,  the Administrator, the Relationship\n     Bank and the Servicer (if other than AnnTaylor).\n\n           (b)  No  failure or delay on the part  of the Company,\n     Servicer,  AnnTaylor  or  any  third  party  beneficiary  in\n     exercising any power or  right hereunder shall operate as  a\n     waiver thereof, nor shall any  single or partial exercise of\n     any  such  power  or right  preclude  any  other or  further\n     exercise  thereof or  the  exercise of  any  other power  or\n     right.  No notice to or demand  on the Company, Servicer, or\n     AnnTaylor  in any  case shall  entitle it  to any  notice or\n     demand  in similar  or other  circumstances.   No waiver  or\n     approval by  the Company  or Servicer  under this  Agreement\n     shall, except as  may otherwise be stated in  such waiver or\n     approval,  be  applicable  to subsequent  transactions.   No\n     waiver  or approval under  this Agreement shall  require any\n     similar  or dissimilar waiver  or approval thereafter  to be\n     granted hereunder.\n\n     9.2.  Notices,  etc.  All  notices and other  communications\n           -------------\nprovided  for hereunder shall, unless otherwise stated herein, be\nin  writing (including  facsimile  communication)  and  shall  be\npersonally delivered  or sent  by express mail  or courier  or by\ncertified mail, postage-prepaid, or by facsimile, to the intended\nparty at the address  or facsimile number of such party set forth\nunder its  name on the  signature pages  hereof or at  such other\naddress or facsimile number as  shall be designated by such party\nin  a  written notice  to  the other  parties  hereto.   All such\nnotices  and communications shall be effective, (i) if personally\ndelivered  or sent  by express  mail  or courier  or  if sent  by\n\n\n\n                               -24-\n\n\n\ncertified  mail,  when  received,  and  (ii)  if  transmitted  by\nfacsimile,   when  sent,  receipt   confirmed  by   telephone  or\nelectronic means.\n\n     9.3.   No Waiver; Cumulative  Remedies.  The remedies herein\n            -------------------------------\nprovided  are  cumulative  and  not  exclusive  of  any  remedies\nprovided by law.\n\n     9.4.  Binding  Effect; Assignability.  This  Agreement shall\n           ------------------------------\nbe  binding  upon  and  inure  to the  benefit  of  the  Company,\nAnnTaylor and  its respective successors  and permitted  assigns.\nAnnTaylor may  not assign its  rights hereunder  or any  interest\nherein   without  the   prior  consent   of   the  Company,   the\nAdministrator  and the Relationship  Bank.  This  Agreement shall\ncreate and constitute  the continuing obligations of  the parties\nhereto in  accordance with  its terms, and  shall remain  in full\nforce  and effect  until the  date  after the  Purchase and  Sale\nTermination Date  on which AnnTaylor has received payment in full\nfor  all  Receivables  and Related  Rights  conveyed  pursuant to\nSection 1.1 hereof.  The rights and  remedies with respect to any\n- -----------\nbreach  of  any  representation and  warranty  made  by AnnTaylor\npursuant  to   Article V  and  the  indemnification  and  payment\n               ---------\nprovisions  of Article VIII  and Section 9.6 shall  be continuing\n               ------------      -----------\nand shall survive any termination of this Agreement.\n\n     9.5.  Governing  Law.  THIS AGREEMENT SHALL  BE GOVERNED BY,\n           --------------\nAND CONSTRUED IN  ACCORDANCE WITH, THE  LAWS OF THE STATE  OF NEW\nYORK.\n\n     9.6.    Costs, Expenses  and  Taxes.    In addition  to  the\n             ---------------------------\nobligations  of AnnTaylor under  Article VIII and  subject to any\n                                 ------------\nlimitations agreed to  in writing by any Affected  Party prior to\nthe date hereof, AnnTaylor agrees to pay on demand:\n\n           (a)  all  reasonable costs and expenses  in connection\n     with  the  enforcement  of  this  Agreement  and  the  other\n     Transaction Documents executed by AnnTaylor as seller; and\n\n           (b)   all  stamp  and  other similar  taxes  and  fees\n     payable or determined  to be payable in connection  with the\n     execution,  delivery, filing and recording of this Agreement\n     or  the other Transaction Documents, and agrees to indemnify\n     each  Purchase   and  Sale  Indemnified  Party  against  any\n     liabilities with  respect to or resulting from  any delay in\n     paying or omission to pay such taxes and fees.\n\n     9.7.  Submission to Jurisdiction.   EACH PARTY HERETO HEREBY\n           --------------------------\nIRREVOCABLY  (a) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY\nNEW  YORK STATE  OR UNITED  STATES FEDERAL  COURT SITTING  IN THE\nBOROUGH  OF MANHATTAN,  STATE OF  NEW  YORK, OVER  ANY ACTION  OR\nPROCEEDING   ARISING  OUT  OF  OR  RELATING  TO  ANY  TRANSACTION\n\n\n\n                               -25-\n\n\n\nDOCUMENT; (b) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR\nPROCEEDING MAY  BE HEARD AND  DETERMINED IN SUCH STATE  OR UNITED\nSTATES FEDERAL  COURT; (c) WAIVES,  TO THE FULLEST EXTENT  IT MAY\nEFFECTIVELY DO  SO  UNDER  APPLICABLE  LAW,  THE  DEFENSE  OF  AN\nINCONVENIENT  FORUM  TO   THE  MAINTENANCE  OF  SUCH   ACTION  OR\nPROCEEDING; (d) CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN\nANY SUCH ACTION  OR PROCEEDING BY THE  MAILING OF COPIES  OF SUCH\nPROCESS TO SUCH PERSON AT  ITS ADDRESS SPECIFIED IN SECTION 10.2;\n                                                    ------------\nAND  (e)  TO THE  EXTENT  ALLOWED  BY LAW,  AGREES  THAT  A FINAL\nJUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND\nMAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR\nIN ANY OTHER  MANNER PROVIDED BY LAW.    NOTHING IN  THIS SECTION\n                                                          -------\n10.7 SHALL AFFECT  THE COMPANY'S RIGHT TO SERVE  LEGAL PROCESS IN\n- ----\nANY  OTHER MANNER  PERMITTED BY  LAW OR  TO BRING  ANY ACTION  OR\nPROCEEDING AGAINST ANNTAYLOR OR ITS PROPERTY IN THE COURTS OF ANY\nOTHER JURISDICTIONS.\n\n     9.8.   Waiver of  Jury Trial.   EACH PARTY  HERETO EXPRESSLY\n            ---------------------\nWAIVES ANY  RIGHT TO A TRIAL BY JURY  IN ANY ACTION OR PROCEEDING\nTO ENFORCE OR  DEFEND ANY RIGHTS UNDER THIS  AGREEMENT, ANY OTHER\nTRANSACTION  DOCUMENT,  OR  UNDER  ANY AMENDMENT,  INSTRUMENT  OR\nDOCUMENT DELIVERED  OR WHICH  MAY IN THE  FUTURE BE  DELIVERED IN\nCONNECTION  HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN\nCONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT,\nAND  AGREES THAT  ANY SUCH  ACTION OR  PROCEEDING SHALL  BE TRIED\nBEFORE A COURT AND NOT BEFORE A JURY.\n\n     9.9.    Captions  and  Cross  References;  Incorporation  by\n             ----------------------------------------------------\nReference.   The various captions (including, without limitation,\n- ---------\nthe  table  of  contents)  in  this  Agreement  are included  for\nconvenience   only  and   shall  not   affect   the  meaning   or\ninterpretation of any provision of this Agreement.  References in\nthis Agreement to any underscored  Section or Exhibit are to such\nSection or Exhibit  of this Agreement, as  the case may be.   The\nExhibits hereto  are hereby  incorporated by  reference into  and\nmade a part of this Agreement.\n\n     9.10.  Execution  in Counterparts.   This  Agreement may  be\n            --------------------------\nexecuted  in any number of counterparts  and by different parties\nhereto in separate  counterparts, each of which when  so executed\nshall be deemed  to be an  original and all  of which when  taken\ntogether shall constitute one and the same Agreement.\n\n     9.11.   Acknowledgment and  Agreement.  By  execution below,\n             -----------------------------\nAnnTaylor  expressly  acknowledges  and agrees  that  all  of the\nCompany's rights,  title, and  interests in,  to, and  under this\nAgreement shall be assigned by the Company to the Lender pursuant\nto the Receivables Financing Agreement, and AnnTaylor consents to\nsuch assignment.   Each  of the parties  hereto acknowledges  and\nagrees that the  Administrator, the Lender, and  the Relationship\nBank are third  party beneficiaries of the rights  of the Company\narising  hereunder and under  the other Transaction  Documents to\nwhich AnnTaylor is a party as seller.\n\n\n                               -26-\n\n\n\n     IN WITNESS WHEREOF,  the parties have caused  this Agreement\nto  be executed  by  their  respective  officers  thereunto  duly\nauthorized, as of the date first above written.\n\n\n                         ANNTAYLOR FUNDING INC.\n\n\n                         By\n                           --------------------------------\n                           Title:  Vice President\n\n                         414 Chapel Street\n                         New Haven, CT  06511\n                         Attention: Bert A. Tieben\n                         Vice President\n                         Facsimile: (203) 865-0811\n\n\n                         ANNTAYLOR, INC.\n\n\n                         By________________________________\n                           Title:  Senior Vice President\n\n                         142 West 57th Street\n                         New York, NY  10019\n                         Attention:  Jocelyn Barandiaran, Esq.\n                         Vice President\/Secretary and General Counsel\n                         Facsimile: (212) 541-3299\n\n                         With a copy to:\n                         AnnTaylor, Inc.\n                         414 Chapel Street\n                         New Haven, CT  06511\n\n                         Facsimile:  (203) 865-2756\n                         Attention:  Walter Parks\n                         Vice President\/Financial Reporting\n\n\n\n\n\n                                                         Exhibit A\n\n                     ANNTAYLOR FUNDING, INC.\n                RECEIVABLES REPORT AS OF 12\/24\/93\n                            FOR Dec-93\n\nPortfolio Information\n\n     I.  Outstanding Principal                       $________\n\n    II.  Beginning Receivables Balance               $________\n\n   III.  New Receivables to add                      $________\n\n    IV.  Collections to deduct                       $________\n\n     V.  Defaulted Receivables to deduct             $________\n\n    VI.  +\/-Other Adjustments                        $________\n\n   VII.  Delinquent Receivables to deduct            $________\n\n  VIII.  Other Ineligible Receivables to deduct      $________\n \n         (Not including Defaulted Receivables)\n\n    IX.  Aging Schedule\n\nCurrent    Age 1 Age 2 Age 3 Age 4 Age 5  Age 6 Age 7+\n\n\n\n\n\n                                             EXHIBIT B\n                                                 to\n                                      Purchase and Sale Agreement\n\n\n\n                   SUBORDINATED PROMISSORY NOTE\n                         (NON-NEGOTIABLE\n                          COMPANY NOTE)\n\n                                               New York, New York\n                                                 January   , 1994\n                                                         --\n\n\n     FOR VALUE RECEIVED, the undersigned, ANNTAYLOR FUNDING,\nINC., a Delaware corporation ( the \"Company\"), promises to pay to\n                                    -------\nANNTAYLOR, INC., a Delaware corporation (\"AnnTaylor\"), on the\n                                          ---------\nterms and subject to the conditions set forth herein and in the\nPurchase and Sale Agreement referred to below, the sum of (i) the\naggregate unpaid Purchase Price of all Receivables purchased by\nthe Company from AnnTaylor pursuant to such Purchase and Sale\nAgreement, as such unpaid Purchase Price is shown in the records\nof Servicer plus (ii) any capitalized interest pursuant to\n            ----\nSection 4 hereof as shown on the records of AnnTaylor.\n- ---------\n\n     1.   Purchase and Sale Agreement.  This promissory note\n          ---------------------------\n(this \"Company Note\") is the Company Note described in, and is\n       ------------\nsubject to the terms and conditions set forth in, that certain\nPurchase and Sale Agreement of even date herewith (as the same\nmay be amended or otherwise modified from time to time, the\n\"Purchase and Sale Agreement\"), between AnnTaylor and the\n ---------------------------\nCompany.  Reference is hereby made to the Purchase and Sale\nAgreement for a statement of certain other rights and obligations\nof AnnTaylor and the Company.\n\n     2.   Definitions.  Capitalized terms used (but not defined)\n          -----------\nherein have the meanings assigned thereto in Appendix A to the\n                                             ----------\nReceivables Financing Agreement dated as of even date herewith\namong AnnTaylor, as Servicer, the Company, Clipper Receivables\nCorporation, as Lender, State Street Boston Capital Corporation,\nas Administrator, and PNC Bank, National Association, as\nRelationship Bank (as may be amended or otherwise modified from\ntime to time, the \"Receivables Financing Agreement\").  In\n                   -------------------------------\naddition, as used herein, the following terms have the following\nmeanings:\n\n          \"Bankruptcy Proceedings\" has the meaning set forth\n           ----------------------\n     in clause (b) of paragraph 9 hereof.\n        ----------    -----------\n\n          \"Final Maturity Date\" means the second Business Day\n           -------------------\n     after a demand for payment has been made by AnnTaylor,\n     but in no event earlier than the Settlement Date\n     immediately following the date on which one hundred\n\n\n\n     twenty one (121) days have elapsed since the date the\n     Senior Interests have been paid in full.\n\n          \"Interest Period\" means the period from and\n           ---------------\n     including a Report Date (or, in the case of the first\n     Interest Period, the date hereof) to but excluding the\n     next Report Date.\n\n          \"Senior Interests\" means, collectively, (i) the\n           ----------------\n     aggregate unpaid principal amount of the Loans, (ii)\n     accrued interest on the aggregate unpaid principal\n     amount of the Loans, (iii) all fees payable pursuant to\n     the Receivables Financing Agreement, (iv) any\n     Indemnified Amounts, (v) unpaid Servicer's Fees,\n     provided that AnnTaylor is not the Servicer, and (vi)\n     --------\n     all other obligations of the Company that are due and\n     payable to any Affected Party, together with all\n     interest accruing on any such amounts after the\n     commencement of any Bankruptcy Proceedings,\n     notwithstanding any provision or rule of law that might\n     restrict the rights of any Senior Interest Holder, as\n     against the Company or anyone else, to collect such\n     interest.\n\n          \"Senior Interest Holders\" means, collectively, the\n           -----------------------\n     Lender, the Administrator, the Relationship Bank, the\n     other Affected Parties and the Indemnified Parties.\n\n          \"Subordination Provisions\" means, collectively,\n           ------------------------\n     clauses (a) through (l) of paragraph 9 hereof.\n     -----------         ---    -----------\n\n     3.   Interest.  Subject to the Subordination Provisions set\n          --------\nforth below, the Company promises to pay interest on this Company\nNote as follows:\n\n          (a)  Prior to the Final Maturity Date, the\n     aggregate unpaid Purchase Price from time to time\n     outstanding during any Interest Period shall bear\n     interest at a rate per annum equal to the Alternate Base\n                        --- -----\n     Rate plus 3% as in effect from time to time as\n     determined by Servicer; and\n\n          (b)  From (and including) the Final Maturity Date\n     to (but excluding) the date on which the entire\n     aggregate unpaid Purchase Price is fully paid, the\n     aggregate unpaid Purchase Price from time to time\n     outstanding shall bear interest at a rate per annum\n                                               --- -----\n     equal to the Alternate Base Rate as in effect from time\n     to time, plus 5%, as determined by Servicer.\n\n     4.   Interest Payment Dates.  Subject to the\n          ----------------------\nSubordination Provisions set forth below, the Company shall\npay accrued interest on this Company Note on each Settlement\nDate, and shall pay accrued interest on the amount of each\n\n\n\n                               -2-\n\n\n\nprincipal payment made in cash on a date other than a\nSettlement Date at the time of such principal payment;\nprovided, however, that unless AnnTaylor instructs the\n- --------  -------\nCompany otherwise, such interest may be paid by means of an\nincrease in the amount of the unpaid principal amount hereof\nby an amount equal to the interest being so paid.\n\n     5.   Basis of Computation.  Interest accrued hereunder\n          --------------------\nshall be computed for the actual number of days elapsed on\nthe basis of a 365- or 366-day year.\n\n     6.   Principal Payment Dates.  Subject to the\n          -----------------------\nSubordination Provisions set forth below, payments of the\nprincipal amount of this Company Note shall be made as\nfollows:\n\n          (a)  The principal amount of this Company Note\n     shall be reduced from time to time pursuant to\n     Sections 3.2,  3.3, 3.4 and 7.2 of the Purchase and Sale\n     -------------- ---  ---     ---\n     Agreement; and\n\n          (b)  The entire remaining unpaid Purchase Price of\n     all Receivables purchased by the Company from AnnTaylor\n     pursuant to the Purchase and Sale Agreement shall be\n     paid on the Final Maturity Date.\n\nSubject to the Subordination Provisions set forth below, the\nprincipal amount of and accrued interest on this Company Note\nmay be prepaid on any Business Day without premium or\npenalty.\n\n     7.   Payments.  All payments of principal and interest\n          --------\nhereunder are to be made in lawful money of the United States\nof America.\n\n     8.   Enforcement Expenses.  In addition to and not in\n          --------------------\nlimitation of the foregoing, but subject to the Subordination\nProvisions set forth below and to any limitation imposed by\napplicable law, the Company agrees to pay all expenses,\nincluding reasonable attorneys' fees and legal expenses,\nincurred by AnnTaylor in seeking to collect any amounts\npayable hereunder which are not paid when due.\n\n     9.   Subordination Provisions.  The Company covenants\n          ------------------------\nand agrees, and AnnTaylor, by its acceptance of this Company\nNote, likewise covenants and agrees on behalf of itself and\nany holder of this Company Note, that the payment of the\nprincipal amount of and interest on this Company Note is\nhereby expressly subordinated in right of payment to the\npayment and performance of the Senior Interests to the extent\n\n\n\n\n                               - 3 -\n\n\n\nand in the manner set forth in the following clauses of this\nparagraph 9:\n- -----------\n\n          (a)  No payment or other distribution of the\n     Company's assets of any kind or character, whether in\n     cash, securities, or other rights or property, shall be\n     made on account of this Company Note except to the\n     extent such payment or other distribution is permitted\n     under the Purchase and Sale Agreement and Section 3.01\n                                               ------------\n     of the Receivables Financing Agreement;\n\n          (b)  In the event of any dissolution, winding up,\n     liquidation, readjustment, reorganization or other\n     similar event relating to the Company, whether voluntary\n     or involuntary, partial or complete, and whether in\n     bankruptcy, insolvency or receivership proceedings, or\n     upon an assignment for the benefit of creditors, or any\n     other marshalling of the assets and liabilities of the\n     Company or any sale of all or substantially all of the\n     assets of the Company (such proceedings being herein\n     collectively called \"Bankruptcy Proceedings\"), the\n                          ----------------------\n     Senior Interests shall first be paid and performed in\n     full and in cash before AnnTaylor shall be entitled to\n     receive and to retain any payment or distribution in\n     respect of this Company Note.  In order to implement the\n     foregoing:  (i) all payments and distributions of any\n     kind or character in respect of this Company Note to\n     which AnnTaylor would be entitled except for this clause\n                                                       ------\n     (b) shall be made directly to the Administrator (for the\n     ---\n     benefit of the Senior Interest Holders); (ii) AnnTaylor\n     shall promptly file a claim or claims, in the form\n     required in any Bankruptcy Proceedings, for the full\n     outstanding amount of this Company Note, and shall use\n     commercially reasonable efforts to cause said claim or\n     claims to be approved and all payments and other\n     distributions in respect thereof to be made directly to\n     the Administrator (for the benefit of the Senior\n     Interest Holders) until the Senior Interests shall have\n     been paid and performed in full and in cash; and (iii)\n     AnnTaylor hereby irrevocably agrees that the\n     Administrator, in the name of AnnTaylor or otherwise,\n     may demand, sue for, collect, receive and receipt for\n     any and all such payments or distributions, and file,\n     prove and vote or consent in any such Bankruptcy\n     Proceedings with respect to any and all claims of\n     AnnTaylor relating to this Company Note, in each case\n     until the Senior Interests shall have been paid and\n     performed in full and in cash;\n\n          (c)  In the event that AnnTaylor receives any\n     payment or other distribution of any kind or character\n\n\n\n                               - 4 -\n\n\n\n     from the Company or from any other source whatsoever, in\n     respect of this Company Note, other than as expressly\n     permitted by the terms of this Company Note, such\n     payment or other distribution shall be received for the\n     sole benefit of the Senior Interest Holders and shall be\n     turned over by AnnTaylor to the Administrator (for the\n     benefit of the Senior Interest Holders) forthwith.\n     AnnTaylor will mark its books and records so as clearly\n     to indicate that this Company Note is subordinated in\n     accordance with the terms hereof.  All payments and\n     distributions received by the Administrator in respect\n     of this Company Note, to the extent received in or\n     converted into cash, may be applied by the Administrator\n     (for the benefit of the Senior Interest Holders) first\n     to the payment of any and all expenses (including\n     reasonable attorneys' fees and legal expenses) paid or\n     incurred by the Senior Interest Holders in enforcing\n     these Subordination Provisions, or in endeavoring to\n     collect or realize upon this Company Note, and any\n     balance thereof shall, solely as between AnnTaylor and\n     the Senior Interest Holders, be applied by the\n     Administrator toward the payment of the Senior\n     Interests; but as between the Company and its creditors,\n     no such payments or distributions of any kind or\n     character shall be deemed to be payments or\n     distributions in respect of the Senior Interests;\n\n          (d)  Notwithstanding any payments or distributions\n     received by the Senior Interest Holders in respect of\n     this Company Note, while any Bankruptcy Proceedings are\n     pending AnnTaylor shall not be subrogated to the then\n     existing rights of the Senior Interest Holders in\n     respect of the Senior Interests until the Senior\n     Interests have been paid and performed in full and in\n     cash;\n\n          (e)  These Subordination Provisions are intended\n     solely for the purpose of defining the relative rights\n     of AnnTaylor, on the one hand, and the Senior Interest\n     Holders on the other hand.  Nothing contained in these\n     Subordination Provisions or elsewhere in this Company\n     Note is intended to or shall impair, as between the\n     Company, its creditors (other than the Senior Interest\n     Holders) and AnnTaylor, the Company's obligation, which\n     is unconditional and absolute, to pay AnnTaylor the\n     principal of and interest on this Company Note as and\n     when the same shall become due and payable in accordance\n     with the terms hereof or to affect the relative rights\n     of AnnTaylor and creditors of the Company (other than\n     the Senior Interest Holders);\n\n\n\n\n                               - 5 -\n\n\n\n          (f)  AnnTaylor shall not, until the Senior\n     Interests have been paid and performed in full and in\n     cash, (i) cancel, waive, forgive, transfer or assign, or\n     commence legal proceedings to enforce or collect, or\n     subordinate to any obligation of the Company, howsoever\n     created, arising or evidenced, whether direct or\n     indirect, absolute or contingent, or now or hereafter\n     existing, or due or to become due, other than the Senior\n     Interests, this Company Note or any rights in respect\n     hereof (except as set forth in Section 12 hereof) or\n                                    ----------\n     (ii) convert this Company Note into an equity interest\n     in the Company, unless AnnTaylor shall have received the\n     prior written consent of the Administrator and the\n     Relationship Bank in each case;\n\n          (g)  AnnTaylor shall not, without the advance\n     written consent of the Administrator and the\n     Relationship Bank, commence, or join with any other\n     Person in commencing, any Bankruptcy Proceedings with\n     respect to the Company until at least one year and one\n     day shall have passed since the Senior Interests shall\n     have been paid and performed in full and in cash;\n\n          (h)  If, at any time, any payment (in whole or in\n     part) of any Senior Interest is rescinded or must be\n     restored or returned by a Senior Interest Holder\n     (whether in connection with Bankruptcy Proceedings or\n     otherwise), these Subordination Provisions shall\n     continue to be effective or shall be reinstated, as the\n     case may be, as though such payment had not been made;\n\n          (i)  Without affecting the rights and restrictions\n     set forth in the Transaction Documents, each of the\n     Senior Interest Holders may, from time to time, at its\n     sole discretion, without notice to AnnTaylor, and\n     without waiving any of its rights under these\n     Subordination Provisions, take any or all of the\n     following actions:  (i) retain or obtain an interest in\n     any property to secure any of the Senior Interests; (ii)\n     retain or obtain the primary or secondary obligations of\n     any other obligor or obligors with respect to any of the\n     Senior Interests; (iii) extend or renew for one or more\n     periods (whether or not longer than the original\n     period), alter or exchange any of the Senior Interests,\n     or release or compromise any obligation of any nature\n     with respect to any of the Senior Interests; (iv) amend,\n     supplement, amend and restate, or otherwise modify any\n     Transaction Document; and (v) release its security\n     interest in, or surrender, release or permit any\n     substitution or exchange for all or any part of any\n     rights or property securing any of the Senior Interests,\n\n\n\n                               - 6 -\n\n\n\n     or extend or renew for one or more periods (whether or\n     not longer than the original period), or release,\n     compromise, alter or exchange any obligations of any\n     nature of any obligor with respect to any such rights or\n     property;\n\n          (j)  AnnTaylor hereby waives:  (i) notice of\n     acceptance of these Subordination Provisions by any of\n     the Senior Interest Holders; (ii) notice of the\n     existence, creation, non-payment or non-performance of\n     all or any of the Senior Interests; and (iii) all\n     diligence in enforcement, collection or protection of,\n     or realization upon, the Senior Interests, or any\n     thereof, or any security therefor;\n\n          (k)  Each of the Senior Interest Holders may, from\n     time to time, on the terms and subject to the conditions\n     set forth in the Transaction Documents to which such\n     Persons are party, but without notice to AnnTaylor,\n     assign or transfer any or all of the Senior Interests,\n     or any interest therein; and, notwithstanding any such\n     assignment or transfer or any subsequent assignment or\n     transfer thereof, such Senior Interests shall be and\n     remain Senior Interests for the purposes of these\n     Subordination Provisions, and every immediate and\n     successive assignee or transferee of any of the Senior\n     Interests or of any interest of such assignee or\n     transferee in the Senior Interests shall be entitled to\n     the benefits of these Subordination Provisions to the\n     same extent as if such assignee or transferee were the\n     assignor or transferor; and\n\n          (l)  These Subordination Provisions constitute a\n     continuing offer from the holder of this Company Note to\n     all Persons who become the holders of, or who continue\n     to hold, Senior Interests; and these Subordination\n     Provisions are made for the benefit of the Senior\n     Interest Holders, and the Administrator or the Lender\n     may proceed to enforce such provisions on behalf of each\n     of such Persons.\n\n     10.  General.  No failure or delay on the part of\n          -------\nAnnTaylor in exercising any power or right hereunder shall\noperate as a waiver thereof, nor shall any single or partial\nexercise of any such power or right preclude any other or\nfurther exercise thereof or the exercise of any other power\nor right.  No amendment, modification or waiver of, or\nconsent with respect to, any provision of this Company Note\nshall in any event be effective unless (i) the same shall be\nin writing and signed and delivered by the Company and\nAnnTaylor and (ii) all consents required for such actions\n\n\n\n                               - 7 -\n\n\n\nunder the Transaction Documents shall have been received by\nthe appropriate Persons.\n\n     12.  No Negotiation.  This Company Note is not\n          --------------\nnegotiable; provided, AnnTaylor may pledge this Company Note\n            --------\nto the agent for the benefit of the lenders under the\nAnnTaylor Credit Agreement.\n\n     13.  Governing Law.  THIS PROMISSORY NOTE SHALL BE\n          -------------\nDEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS\nOF THE STATE OF NEW YORK.\n\n     14.  Captions.  Paragraph captions used in this Company\n          --------\nNote are for convenience only and shall not affect the\nmeaning or interpretation of any provision of this Company\nNote.\n\n\n                              ANNTAYLOR FUNDING, INC.\n\n\n\n                              By:___________________________\n\n                              Title:________________________\n\n                              Pay to the order of Bank of\n                              America National Trust and\n                              Savings Association, as Agent\n\n\n                              ANNTAYLOR, INC.\n\n\n\n                              By:___________________________\n                              Title:  Senior Vice President\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                               - 8 -\n\n\n\n\n\n\n\n                                                         Exhibit C\n\n\n\n                              January 27, 1994\n\n\n\nThe Persons Listed on\nSchedule I Hereto\n\n          Re:  Receivables Facility of\n               AnnTaylor, Inc. and\n               AnnTaylor Funding, Inc.\n               -----------------------\n\nLadies and Gentlemen:\n\n          We have acted as special counsel to AnnTaylor\nFunding, Inc., a Delaware corporation (the \"Company\"),\nand AnnTaylor, Inc., a Delaware corporation (\"AnnTaylor\",\nand together with the Company, the \"Credit Parties\") in\nconnection with the preparation, execution and delivery\nof (i) the Purchase and Sale Agreement dated as of\nJanuary 27, 1994 (the \"Purchase Agreement\") between the\nCompany, as purchaser and AnnTaylor, as seller, (ii) the\nReceivables Financing Agreement, dated as of January 27,\n1994 (the \"Receivables Financing Agreement\"), among the\nCompany, Clipper Receivables Corporation (the \"Lender\"),\nAnnTaylor, as Servicer, State Street Boston Capital\nCorporation (the \"Administrator\"), and PNC Bank, National\nAssociation (the \"Relationship Bank\"), and (iii) certain\nother agreements, instruments and documents related to\nthe Purchase Agreement and the Receivables Financing\nAgreement.  This opinion is being delivered pursuant to\nSection 4.1(h) of the Purchase Agreement and Section\n5.01(h)(i) of the Receivables Financing Agreement.  Capi-\ntalized terms used herein and not otherwise defined\nherein shall have the same meanings herein as set forth\nin Appendix A to the Receivables Financing Agreement.\n\n          In our examination we have assumed the genuine-\nness of all signatures including endorsements, the legal\ncapacity of natural persons, the authenticity of all\ndocuments submitted to us as originals, the conformity to\noriginal documents of all documents submitted to us as\nfacsimile, certified or photostatic copies, and the au-\nthenticity of the originals of such copies.  As to any\nfacts material to this opinion which we did not indepen-\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 2\n\ndently establish or verify, we have relied upon state-\nments and representations of the Credit Parties and their\nrespective officers and other representatives and of\npublic officials, including the facts set forth in the\nCompany's Certificate and AnnTaylor's Certificate, each\nas described below.\n\n          In rendering opinions set forth herein, we have\nexamined and relied on originals or copies of the follow-\ning:\n               (a)  the Receivables Financing Agreement;\n\n               (b)  the Purchase Agreement;\n\n               (c)  the Spread Account Agreement;\n\n               (d)  the Note;\n\n               (e)  the Company Note (as defined in the\nPurchase Agreement);\n\n               (f)  the Fee Letter;\n\n               (g)  the certificate of the Company exe-\ncuted by an officer of the Company dated the date hereof,\na copy of which is attached as Exhibit A hereto (the\n\"Company's Certificate\");\n\n               (h)  the certificate of AnnTaylor executed\nby an officer of AnnTaylor, dated the date hereof, a copy\nof which is attached as Exhibit B hereto (\"AnnTaylor's\nCertificate\");\n\n               (i)  the Certificate of Incorporation and\nBy-laws of each of the Credit Parties;\n\n               (j)  certain resolutions of the Board of\nDirectors of the Company adopted by unanimous written\nconsent on January 24, 1994;\n\n               (k)  certain resolutions of the Board of\nDirectors of AnnTaylor adopted on January 19, 1994;\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 3\n\n               (l)  signed, unfiled copies of financing\nstatements under the Uniform Commercial Code as in effect\nin the State of New York, naming (i) AnnTaylor as the\ndebtor, the Company as secured party and the Lender as\nthe assignee and (ii) the Company as debtor and the\nLender as the secured party, which we understand and have\nassumed in each case will be filed within ten days of the\nassignment of Pool Receivables from AnnTaylor to the\nCompany and the transfer of the security interest therein\nfrom the Company to the Lender in the offices of the\nSecretary of State of the State of New York and the City\nRegister of New York County, New York (the \"Filing Offic-\nes\") (such financing statements, the \"Financing State-\nments\");\n\n               (m)  search reports provided by Lexis\nDocument Services, (i) dated January 25, 1994 and cover-\ning the period through December 17, 1993 listing financ-\ning statements that name AnnTaylor as debtor and that are\nfiled in the Secretary of State of the State of New York\nand (ii) dated January 24, 1994, and covering the period\nthrough December 17, 1993, listing financing statements\nthat name the Company as debtor and that are filed in the\nSecretary of State of the State of New York, together\nwith copies of such financing statements, a summary of\nwhich search reports are attached as Exhibit C hereto\n(the \"Search Reports\");\n\n               (n)  a certificate from the Secretary of\nState of the State of Delaware as to the good standing of\nthe Company in such jurisdiction; and\n\n               (o)  such other documents as we have\ndeemed necessary or appropriate as a basis for the opin-\nions set forth below.\n\n          Unless otherwise indicated, references in this\nopinion to the \"New York UCC\" shall mean the Uniform Com-\nmercial Code as in effect on the date hereof in the State\nof New York.  The documents listed in paragraphs (a)\nthrough (f) above shall hereinafter be referred to col-\nlectively as the \"Documents.\"\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 4\n\n          Members of our firm are admitted to the bar of\nthe State of New York.  We express no opinion as to the\nlaws of any jurisdiction other than (i) the laws of the\nState of New York, (ii) the General Corporation Law of\nthe State of Delaware (the \"DGCL\"), and (iii) the federal\nlaws of the United States of America to the extent spe-\ncifically referred to herein.\n\n          The opinions set forth below are subject to the\nfollowing qualifications:\n\n                    (i)  enforcement of each of the\n     Documents and of any interests created thereby may\n     be limited by applicable bankruptcy, insolvency,\n     reorganization, moratorium or other similar laws\n     affecting creditors' rights generally and by general\n     principles of equity (regardless of whether enforce-\n     ment is sought in equity or at law);\n\n                    (ii)  certain of the remedial provi-\n     sions with respect to the security including waivers\n     with respect to the exercise of remedies against the\n     collateral contained in each of the Documents may be\n     unenforceable in whole or in part, but the inclusion\n     of such provisions does not affect the validity of\n     the Documents, each taken as a whole, and, subject\n     to the other qualifications and exceptions contained\n     in this opinion, each of the Documents, each taken\n     as a whole, together with applicable law, contains\n     adequate provisions for the practical realization of\n     the benefits of the security created thereby;\n\n                    (iii)  we express no opinion as to\n     any provision with respect to governing law to the\n     extent that it purports to affect the choice of law\n     governing perfection and the effect of perfection\n     and non-perfection of the security interests.\n\n                    (iv)  enforcement of the Documents\n     may be subject to the terms of instruments, leases,\n     contracts or other agreements between the Credit\n     Parties and the other parties to such agreements,\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 5\n\n     the rights of such other parties and any claims or\n     defenses of such other parties against the Credit\n     Parties arising under or outside such instruments,\n     leases or contracts or other agreements; and\n\n                    (v)  we express no opinion as to the\n     enforceability of any rights to contribution or\n     indemnification provided for in the Documents which\n     are violative of the public policy underlying any\n     law, rule or regulation (including any federal or\n     state securities law, rule or regulation).\n\n          We have assumed for the purpose of the opinions\nset forth herein that the assignment from AnnTaylor to\nthe Company pursuant to the Purchase Agreement consti-\ntutes the sale of (and not a lien upon) the assets pur-\nported to be conveyed thereby.  We call to your attention\nthat we have delivered an opinion to you on even date\nherewith with respect to the characterization of such\nassignment in the event that AnnTaylor were to become a\ndebtor under the United States Bankruptcy Code, 11 U.S.C.\nSec. 101 et. seq. (the \"Bankruptcy Code\").\n\n          Based upon the foregoing and subject to the\nlimitations, qualifications, exceptions and assumptions\nset forth herein, we are of the opinion that:\n\n          1.   The Company has been incorporated and is\nvalidly existing and is in good standing under the laws\nof the State of Delaware.\n\n          2.   Each of the Credit Parties has the corpo-\nrate power and corporate authority to execute, deliver\nand perform all of its obligations under each of the\nDocuments to which it is a party.  The execution and\ndelivery by each of the Credit Parties of each of the\nDocuments to which it is a party and the consummation of\nthe transactions contemplated thereby have been duly\nauthorized by all requisite corporate action on the part\nof each such Credit Party.  Each of the Documents has\nbeen duly executed and delivered by each Credit Party\nwhich is a party thereto.\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 6\n\n          3.   Each of the Documents constitutes the\nvalid and binding obligation of each Credit Party that is\na party thereto enforceable against such Credit Party in\naccordance with its terms.\n\n          4.   The execution and delivery by each of the\nCredit Parties of each of the Documents to which it is a\nparty and the performance by each such Credit Party of\nits obligations under each such Document, each in accor-\ndance with its terms, do not (i) conflict with the Cer-\ntificate of Incorporation or By-laws of such Credit\nParty, (ii) constitute a violation of or a default under\nany Applicable Contract (as hereinafter defined) or (iii)\ncause the creation of any security interest or lien\n(other than the liens granted under, created by or per-\nmitted by the Documents) upon any of the property of such\nCredit Party pursuant to any Applicable Contracts.  We do\nnot express any opinion, however, as to whether the\nexecution, delivery or performance by any Credit Party of\nany Document to which it is a party will constitute a\nviolation of or a default under any covenant, restriction\nor provision with respect to financial ratios or tests or\nany aspect of the financial condition or results of\noperations of such Credit Party or the effect of any such\nviolation or default on the opinions expressed herein.\nFor purposes of this paragraph 4, \"Applicable Contracts\"\nmeans those agreements or instruments set forth on Sched-\nule I to the Company's Certificate with respect to the\nCompany and on Schedule I to AnnTaylor's Certificate with\nrespect to AnnTaylor and which have been identified to us\nas all the agreements and instruments (other than the\nDocuments) which are material to the business or finan-\ncial condition of the Company and AnnTaylor respectively.\n\n          5.   Neither the execution, delivery or perfor-\nmance by any Credit Party of any of the Documents to\nwhich it is a party nor the compliance by such Credit\nParty with the terms and provisions thereof will contra-\nvene any provision of any Applicable Law (as hereinafter\ndefined).  For purposes of this paragraph 5 and para-\ngraph 6, \"Applicable Laws\" means the DGCL and those laws,\nrules and regulations of the State of New York and of the\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 7\n\nUnited States of America (including, without limitation,\nRegulations G, U and X of the Federal Reserve Board)\nwhich, in our experience, are normally applicable to\ntransactions of the type contemplated by the Documents\nand are not the subject of a specific opinion herein\nreferring expressly to a particular law or laws.\n\n          6.   No Governmental Approval (as hereinafter\ndefined) which has not been obtained or taken and is not\nin full force and effect is required to authorize or is\nrequired in connection with the execution, delivery or\nperformance of any of the Documents by any Credit Party\nexcept the filing of the Financing Statements in the\nFiling Offices, the filing of financing statements in the\nState of Connecticut and the filing of partial releases\n(UCC-3 statements) with respect to security interests of\nthe Bank of America National Trust and Savings Associa-\ntion, as agent (the \"Bank of America Release State-\nments\").  For the purposes of this paragraph 6, the term\n\"Governmental Approval\" means any consent, approval,\nlicense, authorization or validation of, or filing,\nrecording or registration with, any Governmental Authori-\nty pursuant to Applicable Laws, and for the purposes of\nthis paragraph 6 and paragraph 7, the term \"Governmental\nAuthority\" means any federal, New York or, to the extent\nrelating to the DGCL, Delaware executive, legislative,\njudicial, administrative or regulatory body.\n\n          7.   Neither the execution, delivery or perfor-\nmance by any Credit Party of its obligations under the\nDocuments to which it is a party nor compliance by such\nCredit Party with the terms thereof will contravene any\nApplicable Order (as hereinafter defined) against such\nCredit Party.  For purposes of this paragraph 7, the term\n\"Applicable Orders\" means those orders or decrees of\nGovernmental Authorities identified on Schedule II to the\nCompany's Certificate with respect to the Company and on\nSchedule II to AnnTaylor's Certificate with respect to\nAnnTaylor.\n\n          8.   The provisions of the Purchase Agreement\nare effective to create, in favor of the Company, a valid\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 8\n\nsecurity interest (as such term is defined in Section 1-\n201 of the New York UCC) in that portion of the Pool\nReceivables of AnnTaylor constituting accounts (as such\nterm is defined in Section 9-106 of the New York UCC)\n(the \"Accounts Property\"), and the proceeds thereof.  We\ncall to your attention that the term security interest as\ndefined in Section 1-201 of the New York UCC includes the\nsale of accounts.  We express no opinion with respect to\nthe nature or extent of the obligations being secured by\nthe security interest granted to the Company.\n\n          9.   While there is no case law precisely on\npoint and the issue is not free from doubt, based upon\nour review of relevant case law authority in New York,\nincluding Stathos v. Murphy, 26 App. Div. 2d 500, 276\n          -----------------\nN.Y. Supp. 2d 727, aff'd 19 N.Y.2d 883, 281 N.Y. Supp. 2d\n81 (1967), and the principles set forth in Restatement of\n                                           --------------\nContracts 2d (1981), the provisions of the Purchase\n- ------------\nAgreement are effective to create, in favor of the Compa-\nny, a valid interest under the common law of the State of\nNew York in that portion (if any) of the Pool Receivables\nof AnnTaylor constituting general intangibles (as such\nterm is defined in Section 9-106 of the New York UCC)\n(the \"General Intangibles Property,\" and together with\nthe Accounts Property, the \"Receivables Property\") that\nis enforceable against subsequent creditors of or pur-\nchasers from AnnTaylor.  We note, however, that unless\nthe Obligor in respect of a Pool Receivable has received\nnotice of such sale, bona fide payments made by such\nObligor to AnnTaylor or to a subsequent assignee of such\nPool Receivable as to which the Obligor has received\nnotice of such assignment will discharge such Obligor's\nobligations to the extent of such payment, and such\npayment will be recoverable only from AnnTaylor or such\nassignee.\n\n          The opinions expressed in paragraphs 8 and 9\nare subject to the following qualifications:\n\n               (a)  we have assumed that the Receivables\nProperty exists and that AnnTaylor has sufficient rights\nin the Receivables Property for the interest of the\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 9\n\nCompany to attach, and we express no opinion as to the\nnature or extent of any of AnnTaylor's rights in or title\nto any Receivables Property;\n\n               (b)  we call to your attention that Sec-\ntion 552 of the Bankruptcy Code limits the extent to\nwhich property acquired by a debtor after the commence-\nment of a case under the Bankruptcy Code may be subject\nto a security interest arising from a security agreement\nentered into by such debtor before the commencement of\nsuch case;\n\n               (c)  we call to your attention that the\nsecurity interest of the Company in proceeds of the\nAccounts Property is limited to the extent set forth in\nSection 9-306 of the New York UCC and to property of a\ntype subject to the New York UCC;\n\n               (d)  we have assumed that there are no\nagreements between AnnTaylor and any account debtor\nprohibiting, restricting or conditioning the assignment\nof any portion of the Receivables Property;\n\n               (e)  we call to your attention that the\ninterest of the Company in the Receivables Property may\nbe subject to the rights of account debtors, claims and\ndefenses of account debtors and the terms of agreements\nwith account debtors;\n\n               (f)  we express no opinion regarding the\ninterest of the Company in any of the Receivables Proper-\nty consisting of claims against any government or gov-\nernmental agency (including, without limitation, the\nUnited States of America or any state thereof or any\nagency or department of the United States of America or\nany state thereof); and\n\n               (g)  in the case of any account or general\nintangible which is itself secured by other property, we\nexpress no opinion with respect to the rights of the\nCompany in and to such underlying property.\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 10\n\n          10.  The provisions of the Receivables Financ-\ning Agreement are effective to create, in favor of the\nLender, as security for the obligations of the Company\ndescribed in Section 9.01 thereof, a valid security\ninterest in that portion of the Pool Receivables consti-\ntuting accounts or general intangibles (as each such term\nis defined in Section 9-106 of the New York UCC) (the\n\"Receivables Collateral\"), and the proceeds thereof.\n\n          The opinions expressed in paragraph 10 are sub-\nject to the qualifications to opinion paragraphs 8 and 9\nset forth above and to the following qualifications:\n\n               (a)  we have assumed that the Receivables\nCollateral exists and the Company has sufficient rights\nin the Receivables Collateral for the security interest\nof the Lender to attach, and, except to the extent set\nforth in opinion paragraphs 8 and 9 above, we express no\nopinion as to the nature or extent of the Company's\nrights in or title to any Receivables Collateral;\n\n               (b)  we call to your attention that Sec-\ntion 552 of the Bankruptcy Code limits the extent to\nwhich property acquired by a debtor after the commence-\nment of a case under the Bankruptcy Code may be subject\nto a security interest arising from a security agreement\nentered into by such debtor before the commencement of\nsuch case;\n\n               (c)  we call to your attention that the\nsecurity interest of the Lender in proceeds is limited to\nthe extent set forth in Section 9-306 of the New York UCC\nand to property of a type subject to the New York UCC;\n\n               (d)  we call to your attention that the\nsecurity interest of the Lender may be subject to the\nrights of account debtors, claims and defenses of account\ndebtors and the terms of agreements with account debtors;\n\n               (e)  we express no opinion regarding the\nsecurity interest of the Lender in any of the Receivables\nCollateral consisting of claims against any government or\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 11\n\ngovernmental agency (including, without limitation, the\nUnited States of America or any state thereof or any\nagency or department of the United States of America or\nany state thereof); and\n\n               (f)  in the case of any account or general\nintangible which is itself secured by other property, we\nexpress no opinion with respect to the rights of the\nLender in and to such underlying property.\n\n          11.  The Financing Statements are in appropri-\nate form for filing in each of the Filing Offices under\nthe New York UCC.\n\n          12.  The security interest in favor of the\nCompany in the Accounts Property described in the Financ-\ning Statements naming AnnTaylor as debtor (the \"Article 9\nFiling Property\") will be perfected upon the filing of\nsuch Financing Statements in the respective Filing Offic-\nes, and no other security interest of any other transfer-\nee of AnnTaylor is equal or prior to the security inter-\nest of the Company in such Article 9 Filing Property.\n\n          13.  If the chief executive office of the\nCompany is located in the State of New York for the\npurposes of the New York UCC, the security interest in\nfavor of the Lender in the Receivables Collateral de-\nscribed in the Financing Statements naming the Company as\ndebtor (the \"Article 9 Filing Collateral\") will be per-\nfected upon the filing of such Financing Statements in\nthe respective Filing Offices, and no other security\ninterest of any other transferee from the Company is\nequal or prior to the security interest of the Lender in\nsuch Article 9 Filing Collateral.\n\n          The opinions expressed in paragraphs 11, 12 and\n13 are subject to the qualifications to opinion para-\ngraphs 8, 9 and 10 set forth above and to the following\nqualifications:\n\n          (a)  we have assumed based upon AnnTaylor's\nCertificate that, for the purposes of the New York UCC,\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 12\n\nthe chief executive office of AnnTaylor as of the date of\nfiling of the Financing Statements is located in New York\nCounty in the State of New York;\n\n          (b)  we have assumed based upon the Company's\nCertificate that, for the purposes of the New York UCC,\nthe chief executive office of the Company as of the date\nof filing of the Financing Statements is located either\nin New York County in the State of New York or in the\nState of Connecticut, and we express no opinion with\nrespect to the perfection or priority of the security\ninterest of the Lender in the Receivables Collateral to\nthe extent that the chief executive office of the Company\nis located in the State of Connecticut;\n\n          (c)  we call to your attention that the perfec-\ntion and the effect of perfection and nonperfection of\nthe security interest of the Company in the Article 9\nFiling Property and the security interest of the Lender\nin the Article 9 Filing Collateral may be governed by\nlaws other than those of the New York UCC to the extent\nthat the chief executive office of either AnnTaylor or\nthe Company respectively is or becomes located in a\njurisdiction other than New York;\n\n          (d)  we call to your attention that (i) the\nperfection of the security interest of the Company as to\nthe Article 9 Filing Property and the Lender as to the\nArticle 9 Filing Collateral will be terminated as to any\nsuch property acquired by AnnTaylor or the Company re-\nspectively more than four months after AnnTaylor or the\nCompany respectively changes its name, identity, or\ncorporate structure so as to make the applicable Financ-\ning Statements seriously misleading unless new appropri-\nate financing statements indicating the new name, identi-\nty or corporate structure of AnnTaylor or the Company, as\nthe case may be, are properly filed before the expiration\nof such four months, and (ii) the New York UCC requires\nthe filing of continuation statements within the period\nof six months prior to the expiration of five years from\nthe date of the filing of the original Financing State-\nments or the filing of any continuation statements in\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 13\n\norder to maintain the effectiveness of the original\nFinancing Statements;\n\n          (e)  we express no opinion with respect to any\nof the Accounts Property consisting of accounts or gener-\nal intangibles arising from or relating to the sale of\nfarm products by a farmer, consumer goods in the hands of\nAnnTaylor, crops growing or to be gown, timber to be cut\nor minerals or the like (including oil and gas) or ac-\ncounts subject to subsection 5 of Section 9-103 of the\nNew York UCC;\n\n          (f)  we express no opinion with respect to any\nof the Receivables Collateral consisting of accounts or\ngeneral intangibles arising from or relating to the sale\nof farm products by a farmer, consumer goods in the hands\nof the Company, crops growing or to be grown, timber to\nbe cut or minerals or the like (including oil and gas) or\naccounts subject to subsection 5 of Section 9-103 of the\nNew York UCC;\n\n          (g)  we express no opinion as to the priority\nof the security interest of the Company in the Article 9\nFiling Property or the Lender in the Article 9 Filing\nCollateral against:  (i) any liens, claims or other\ninterests that arise by operation of law and do not\nrequire any filing or possession in order to take priori-\nty over security interests perfected through the filing\nof a financing statement; (ii) any lien, claim or encum-\nbrance in favor of the United States of America or any\nstate, or any agency or instrumentality of any of them or\nany other governmental entity (including, without limita-\ntion, federal tax liens, liens arising under the Employee\nRetirement Income Security Act of 1974, as amended, or\nclaims given priority pursuant to 31 U.S.C. Sec. 3713);\n(iii) a lien creditor who attached or levied prior to the\nperfection of the security interest of the Company or the\nLender, as the case may be; (iv) a lien creditor with\nrespect to future advances to the extent set forth in\nSection 9-301(4) of the New York UCC; (v) another secured\ncreditor with respect to any future advances to the\nextent set forth in Section 9-312(7) of the New York UCC;\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 14\n\n(vi) a security interest perfected under the laws of\nanother jurisdiction to the extent that either AnnTaylor\nor the Company had its chief executive office in such\njurisdiction within four months prior to the date of the\nperfection of the security interest of the Company or the\nLender, as the case may be; (vii) a security interest\nperfected without filing any financing statement pursuant\nto Section 9-302(1) of the New York UCC; (viii) a secu-\nrity interest perfected by filing a financing statement\nnaming AnnTaylor or the Company as debtor using a trade\nname, fictitious name or previous name; (ix) the holder\nof a perfected \"purchase money security interest\" as such\nterm is defined in Section 9-107 of the New York UCC;\n(x) another secured party with a perfected security\ninterest in other property of AnnTaylor or the Company to\nthe extent the Pool Receivables are proceeds of such\nother creditor's collateral; (xi) any person who has en-\ntered into a subordination or intercreditor agreement\nwith the Company with respect to the Accounts Property or\nwith the Lender with respect to the Receivables Collat-\neral; (xii) any claim for wages, salary or other compen-\nsation; (xiii) a purchaser of accounts purchased as part\nof the sale of the business out of which they arose;\n(xiv) an assignment of accounts for purposes of collec-\ntion only or a transfer of a single account; (xv) any\nclaim arising out of tort or any surety who is subrogated\nto the rights of AnnTaylor or the Company, as the case\nmay be; or (xvi) the security interest of a creditor who\nfiled a financing statement based on a prior or incorrect\nlocation of the chief executive office of AnnTaylor or\nthe Company to the extent such other financing statement\nwould be effective under Section 9-401(2) or (3) of the\nNew York UCC;\n\n          (h)  we have assumed that (i) all financing\nstatements presented for filing prior to the effective\ndate of the applicable search report in which each of\nAnnTaylor and the Company is named as debtor have been\nproperly filed, indexed and recorded with the Secretary\nof State of the State of New York and are identified in\nthe appropriate Search Report and (ii) no financing\nstatements naming AnnTaylor or the Company as debtor were\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 15\n\nfiled with Secretary of State of the State of New York\nbetween the effective date of the Search Reports and the\ndate of the filing of the applicable Financing Statements\nin such Filing Office; and we call to your attention that\nwe did not review any search report with respect to any\nfinancing statements naming AnnTaylor or the Company as\ndebtor filed with the City Register of New York County,\nNew York; and\n\n          (i)  we have assumed that the Bank of America\nRelease Statements will be filed on or prior to the date\nof the filing of the Financing Statements.\n\n          14.  No registration of AnnTaylor or the Compa-\nny under the Investment Company Act of 1940, as amended,\nis required in connection with the initial assignment\nunder the Purchase Agreement or the initial borrowing\nunder the Receivables Financing Agreement, respectively.\n\n          In rendering the foregoing opinions, we have\nassumed, with your consent, that:\n\n               (a)  AnnTaylor has been incorporated in\n     the State of Delaware and is validly existing and in\n     good standing under the laws of all jurisdictions in\n     which it owns or leases property of a nature, or\n     transacts business of a type, that would make such\n     qualification necessary;\n\n               (b)  the execution, delivery and perfor-\n     mance of each Credit Party's obligations under the\n     Documents to which it is a party does not and will\n     not conflict with, contravene, violate or constitute\n     a default under (i) any lease, indenture, instrument\n     or other agreement to which such Credit Party or its\n     property is subject (other than the Applicable\n     Contracts, as to which we make no such assumption),\n     (ii) any rule, law or regulation to which such\n     Credit Party is subject (other than Applicable Laws,\n     as to which we make no such assumption), or (iii)\n     any judicial or administrative order or decree of\n\n\n\n\n\nThe Persons listed on\nSchedule I hereto\nJanuary 27, 1994\nPage 16\n\n     any governmental authority (other than Applicable\n     Orders, as to which we make no such assumption); and\n\n                    (c)  no authorization, consent or\n     other approval of, notice to or filing with any\n     court, governmental authority or regulatory body\n     (other than Governmental Approvals, as to which we\n     make no such assumption) is required to authorize or\n     is required in connection with the execution, deliv-\n     ery or performance by any Credit Party of any Docu-\n     ment to which it is a party or the transactions\n     contemplated thereby.\n\n          Our opinions are also subject to the following\nassumptions and qualifications:\n\n               (a)  we have assumed each of the Documents\n     constitutes the legal, valid and binding obligation\n     of each party to such Document (other than the\n     Credit Parties) enforceable against such party in\n     accordance with its terms; and\n\n                    (b)  we express no opinion as to the\n     effect on the opinions expressed herein of (i) the\n     compliance or noncompliance of the Administrator,\n     the Relationship Bank, the Collateral Agent, the\n     Credit Bank, the Liquidity Bank, the Lock-Box Bank,\n     the Lender or any other party (other than the Credit\n     Parties) to the Documents with any state, federal or\n     other laws or regulations applicable to them or (ii)\n     the legal or regulatory status or the nature of the\n     business of any such Person.\n\n          This opinion is being furnished only to you and\nis solely for your benefit and is not to be used, quoted,\nrelied upon or otherwise referred to by any other Person\nor for any other purpose without our prior written con-\nsent.\n\n                              Very truly yours,\n\n\n\n\n\n                        SCHEDULE I\n\n             Clipper Receivables Corporation\n                      P.O. Box 4024\n               Boston, Massachusetts  02201\n\n         State Street Boston Capital Corporation\n                   225 Franklin Street\n               Boston, Massachusetts  02110\n\n              PNC Bank, National Association\n               Fifth Avenue and Wood Street\n             Pittsburgh, Pennsylvania  15265\n\n             Standard &amp; Poor's Ratings Group\n                       25 Broadway\n                New York, New York  10004\n\n             Moody's Investors Service, Inc.\n                     99 Church Street\n                New York, New York  10007\n\n\n\n\n\n\n\n\n                 Exhibit A to Opinion of\n        Special Counsel to AnnTaylor Funding, Inc.\n        ------------------------------------------\n\n                  Officer's Certificate\n                  ---------------------\n\n\n\n          I, Jocelyn F.L. Barandiaran, am Corporate\nSecretary of AnnTaylor Funding, Inc., a Delaware corpora-\ntion (\"Funding\").  I understand that pursuant to Section\n5.01(h)(i) of that certain Receivables Financing Agree-\nment, dated as of January 27, 1994 (the \"Receivables Fi-\nnancing Agreement\"), among Funding, AnnTaylor, Inc.\n(\"AnnTaylor\") as servicer, Clipper Receivables Corpora-\ntion, State Street Boston Capital Corporation and PNC\nBank, National Association, Skadden, Arps, Slate, Meagher\n&amp; Flom is rendering an opinion (the \"Opinion\").  Defined\nterms used herein but not otherwise defined shall have\nthe meaning set forth in Appendix A to the Receivables\nFinancing Agreement.  I further understand that Skadden,\nArps, Slate, Meagher &amp; Flom is relying on this certifi-\ncate and the statements made herein in rendering the\nOpinion.\n\n          With regard to the foregoing, on behalf of\nFunding, I certify that:\n\n          1.   The chief executive office of Funding is\nlocated at either 142 West 57th Street, New York, New\nYork 10019 or 414 Chapel Street, New Haven, Connecticut\n06511.\n\n          2.   Set forth on Schedule I hereto are all of\nthe agreements and instruments (other than the Transac-\ntion Documents) to which Funding is a party which are\nmaterial to the business or financial condition of Fund-\ning.\n\n          3.   Set forth on Schedule II hereto are all of\nthe orders, judgments and decrees of any governmental\nauthority which are material to the business or property\nof Funding.\n\n          4.   Funding holds no stock in any company.\n\n          5.   Funding is engaged in the business set\nforth in the Transaction Documents.  The value of all\n\n\n\n\n\nsecurities owned by Funding does not exceed 10% of the\nvalue of Funding's total assets.\n\n          6.   Funding does not directly or indirectly\nown or operate facilities used for the generation, trans-\nmission or distribution of electric energy for sale or\nfacilities used for the distribution at retail of natural\nor manufactured gas for heat, light or power and Funding\ndoes not own any interest in any company which owns or\noperates such facilities.\n\n          7.  Neither Funding nor any of its subsidiaries\nis a person providing railroad transportation for compen-\nsation (a \"rail carrier\") or a person controlled by or\naffiliated with a rail carrier or a person providing\nsleeping car transportation for compensation (a \"sleeping\ncar carrier\") or a corporation organzied to provide\ntransportation by rail carrier or sleeping car carrier.\n\n          IN WITNESS WHEREOF, I have executed this cer-\ntificate this      day of January 1994.\n              ----\n\n\n\n                    By:\n                        --------------------------------------\n                        Name: Jocelyn F.L. Barandiaran\n                        Title: Corporate Secretary\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                               2\n\n\n\n\n\n\n                          Schedule I\n\n                     Applicable Contracts\n                     --------------------\n\n                             None\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                               3\n\n\n\n\n\n                          Schedule II\n\n                       Applicable Orders\n                       -----------------\n\n                             None\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                               4\n\n\n\n\n\n                 Exhibit B to Opinion of\n            Special Counsel to AnnTaylor, Inc.\n            ----------------------------------\n\n                  Officer's Certificate\n                  ---------------------\n\n\n\n          I, Jocelyn F.L. Barandiaran, am Vice President,\nGeneral Counsel and Corporate Secretary of AnnTaylor,\nInc., a Delaware corporation (\"AnnTaylor\").  I understand\nthat pursuant to (i) Section 5.01(h)(i) of that certain\nReceivables Financing Agreement, dated as of January 27,\n1994 (the \"Receivables Financing Agreement\"), among\nAnnTaylor Funding, Inc. (\"Funding\"), AnnTaylor, as ser-\nvicer, Clipper Receivables Corporation, State Street\nBoston Capital Corporation and PNC Bank, National Associ-\nation and (ii) Section 4.1(h) of that certain Purchase\nand Sale Agreement, dated as of January 27, 1994 between\nFunding and AnnTaylor, Skadden, Arps, Slate, Meagher &amp; Flom is rendering an opinion (the \"Opinion\").  Defined\nterms used herein but not otherwise defined shall have\nthe meaning set forth in Appendix A to the Receivables\nFinancing Agreement.  I further understand that Skadden,\nArps, Slate, Meagher &amp; Flom is relying on this certifi-\ncate and the statements made herein in rendering the\nOpinion.\n\n          With regard to the foregoing, on behalf of\nAnnTaylor, I certify that:\n\n          1.   The chief executive office of AnnTaylor is\nlocated at 142 West 57th Street, New York, New York\n10019.\n\n          2.   Set forth on Schedule I hereto are all of\nthe agreements and instruments (other than the Transac-\ntion Documents) to which AnnTaylor is a party which are\nmaterial to the business or financial condition of\nAnnTaylor.\n\n          3.   Set forth on Schedule II hereto are all of\nthe orders, judgments and decrees of any governmental\nauthority which are material to the business or property\nof AnnTaylor.\n\n          4.   AnnTaylor holds no stock in any company\nother than the stock represented by the certificates set\n\n\n\n\n\nforth on Schedule III hereto; none of such stock is trad-\ned on a national securities exchange.\n\n          5.   AnnTaylor is primarily engaged in the\nbusiness described in Schedule IV.  The value of all\nsecurities owned by AnnTaylor (excluding those referred\nto in paragraph 4 above) does not exceed 10% of the value\nof AnnTaylor's total assets.\n\n          6.   AnnTaylor does not directly or indirectly\nown or operate facilities used for the generation, trans-\nmission or distribution of electric energy for sale or\nfacilities used for the distribution at retail of natural\nor manufactured gas for heat, light or power and\nAnnTaylor does not own any interest in any company which\nowns or operates such facilities.\n\n          7.  Neither AnnTaylor nor any of its subsid-\niaries is a person providing railroad transportation for\ncompensation (a \"rail carrier\") or a person controlled by\nor affiliated with a rail carrier or a person providing\nsleeping car transportation for compensation (a \"sleeping\ncar carrier\") or a corporation organzied to provide\ntransportation by rail carrier or sleeping car carrier.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                            2\n\n\n\n\n\n\n          IN WITNESS WHEREOF, I have executed this cer-\ntificate this      day of January 1994.\n              ----\n\n\n\n                    By:\n                        --------------------------------------\n                        Name: Jocelyn F.L. Barandiaran\n                        Title: Vice President, General Counsel\n                                 and Corporate Secretary\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                               3\n\n\n\n\n\n                          Schedule I\n\n                     Applicable Contracts\n                     --------------------\n\n1.   Indenture, dated as of July 15, 1989, between AnnTaylor\n     and United States Trust Company of New York, as Trustee,\n     together with the Certificate of Satisfaction and Dis-\n     charge in favor of AnnTaylor as of July 29, 1993 by such\n     Trustee.\n\n2.   Indenture, dated as of July 15, 1989, between AnnTaylor\n     and State Street Bank and Trust Company of Connecticut,\n     as successor trustee to The Connecticut Bank and Trust\n     Company, National Association, as Trustee, together with\n     the Certificate of Satisfaction and Discharge in favor of\n     AnnTaylor as of July 29, 1993 by such Trustee.\n\n3.   Credit Agreement, dated as of June 28, 1993, among\n     AnnTaylor, Bank of America, Bank of Montreal and the\n     other financial institutions party thereto, as amended by\n     Amendment No. 1 to Credit Agreement dated as August 10,\n     1993, Amendment No. 2 to Credit Agreement dated as Sep-\n     tember 30, 1993, Amendment No. 3 to Credit Agreement\n     dated as December 23, 1993, and Amendment No. 4 and\n     Consent to Credit Agreement dated as January 24, 1994.\n\n4.   Security and Pledge Agreement, dated as of June 28, 1993,\n     made by AnnTaylor in favor of Bank of America, as Agent,\n     as modified by Amendment No. 4 and Consent to Credit\n     Agreement dated as January 24, 1994.\n\n5.   Trademark Assignment, dated as of June 28, 1993, made by\n     AnnTaylor with Bank of America, as Agent.\n\n6.   Tax Sharing Agreement, dated as of July 12, 1989, between\n     the Company and AnnTaylor Stores Corporation (\"ATSC\").\n\n7.   Agreement, dated as of July 13, 1993, among Cygne De-\n     signs, Inc., Cygne Design F.E. Limited, CAT US Inc.,\n     C.A.T. (Far East) Limited and AnnTaylor.\n\n8.   Stock Purchase Agreement, dated as of July 13, 1993,\n     between Cleveland Investment Limited and AnnTaylor.\n\n9.   Agreement, dated as of June 14, 1989, and the Trademark\n     License Agreement, effective as of January 1, 1990, among\n     Allied Stores Corporation, AnnTaylor and ATSC.\n\n                               4\n\n\n\n\n\n10.  Indenture, dated as of June 15, 1993, between AnnTaylor\n     and Fleet Bank, N.A., as Trustee.\n\n11.  Employment Agreement, effective as of February 3, 1992,\n     between AnnTaylor, AnnTaylor Stores Corporation and Sally\n     Frame Kasaks.\n\n12.  Lease, dated as of March 17, 1989, between Carven Associ-\n     ates and AnnTaylor concerning the West 57th Street head-\n     quarters, as amended by the First Amendment thereto dated\n     as of November 14, 1990, the Second Amendment thereto\n     dated as of February 28, 1993, the Third Amendment there-\n     to dated as of June  24, 1993, and the letter agreement\n     dated as of October 1, 1993.\n\n13.  Lease, dated December 1, 1985, between Hamilton Realty\n     Co. and AnnTaylor (as successor in interest to ASC Stores\n     III, Inc.) concerning the New Haven distribution center,\n     as amended by the letter agreement dated March 22, 1993,\n     and the letter agreement dated July 26, 1993.\n\n14.  Lease, dated June 12, 1986, between SMR 85-1 Limited\n     Partnership and AnnTaylor (as successor in interest to\n     ASC Stores III, Inc.) concerning the New Haven offices,\n     as amended by the Amendment to Lease dated December 7,\n     1987 and the Second Amendment to Lease dated December 10,\n     1992.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                               5\n\n\n\n\n\n                          Schedule II\n\n                       Applicable Orders\n                       -----------------\n\n                             None\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                               6\n\n\n\n\n\n                           Schedule III\n\n                        Stock Certificates\n                        ------------------\n\n\nCompany                    Certificate Nos.           No. of Shares\n- -------                    ----------------           -------------\n\nAnnTaylor Travel, Inc.1          1                            1\n\nCAT U.S. Inc.1                   1 and 11                  4,000\n\nC.A.T. (Far East) Limited1       5 and 8                  60,000\n\nAnnTaylor Funding, Inc.1         1                           100\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n- --------------------\n1    Pledged to Bank of America pursuant to the Security\n     and Pledge Agreement, dated as of June 28, 1993.\n\n                                7\n\n\n\n\n\n                           Schedule IV\n\n                     Description of Business\n                     -----------------------\n\n\n      AnnTaylor is primarily engaged in the business of the\nretail sale of women's apparel, shoes and accessories.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                                8\n\n\n\n\n                                              EXHIBIT D\n                                                  to\n                                      Purchase and Sale Agreement\n\n\n                   STOCK SUBSCRIPTION AGREEMENT\n                   ----------------------------\n\n\n     This  Stock Subscription Agreement  (as amended  or modified\nfrom  time to  time,  this  \"Agreement\") is  entered  into as  of\n                             ---------\nJanuary  24, 1994  among  ANNTAYLOR  FUNDING,  INC.,  a  Delaware\ncorporation  (\"Issuer\")   and   ANNTAYLOR,   INC.,   a   Delaware\n               ------\ncorporation (\"AnnTaylor\").\n              ---------\n\n                         R E C I T A L S\n\n     A.   Issuer is  organized under  the  laws of  the State  of\nDelaware for the  purpose of purchasing accounts  receivable (and\ncertain related rights) of AnnTaylor.\n\n     B.   (i) Issuer and AnnTaylor will enter into a Purchase and\nSale  Agreement (the \"Purchase  and Sale Agreement\")  pursuant to\n                      ----------------------------\nwhich AnnTaylor  will sell  all of  the Receivables (and  certain\nrelated rights)  generated by  it (other  than Receivables  being\nused to purchase Shares (as defined below)  hereunder) to Issuer,\nand  (ii) Issuer,  AnnTaylor,  Clipper  Receivables  Corporation,\nState  Street Boston Capital  Corporation and PNC  Bank, National\nAssociation  will  enter into  a Receivables  Financing Agreement\n(\"Receivables Financing  Agreement\"), in  connection with  which,\n  --------------------------------\nIssuer   will  grant  to  Lender  a   security  interest  in  the\nReceivables referred to  in clause (i) and the  Receivables being\n                            ----------\ncontributed to Issuer  hereunder.  The term \"Receivables\" and the\nother capitalized terms  used (but not otherwise  defined) herein\nshall  have the meanings  set forth in  the Receivables Financing\nAgreement (when executed).\n\n     C.   Issuer desires  to sell all  the shares of  its capital\nstock  to AnnTaylor,  and  AnnTaylor  desires  to  purchase  such\nshares, on the terms set forth in this Agreement.\n\n     NOW, THEREFORE, Issuer and AnnTaylor agree as follows:\n\n          1.   Purchase and Sale of Capital Stock.\n               ----------------------------------\n\n               (a)  On  the Closing  Date, Issuer  shall sell  to\nAnnTaylor, and AnnTaylor  shall purchase from Issuer,  100 shares\nof  common  stock, $1.00  par  value, of  Issuer  (such aggregate\nnumber of shares and common  stock herein called the \"Shares\" and\n                                                      ------\n\"Common Stock,\" respectively).\n ------------\n\n\n\n               (b)  The  purchase  price   for  the  Shares  will\nconsist of an aggregate of $100.\n\n          2.   Closing.\n               -------\n\n          The  closing of  the purchase  and sale  of the  Shares\nhereunder  (the  \"Closing\")  shall  be  held  at the  offices  of\n                  -------\nAnnTaylor in New York, New York on January 24, 1994 (the \"Closing\n                                                          -------\nDate\").  On the Closing Date, Issuer shall deliver to AnnTaylor a\n- ----\ncertificate  registered  in  AnnTaylor's  name  representing  the\nnumber of Shares to be purchased by AnnTaylor against delivery to\nIssuer by  AnnTaylor of the  purchase price set forth  in Section\n                                                          -------\n1(b).\n- ----\n\n          3.   Representations and Warranties of Issuer.   Issuer\n               ----------------------------------------\nrepresents and warrants to AnnTaylor as follows:\n\n               (a)  Issuer  is a  corporation duly  incorporated,\nvalidly existing and in good standing under the laws of the State\nof Delaware, and has all requisite  corporate power and authority\nto carry on its business as proposed to be conducted.\n\n               (b)  Issuer has all requisite  legal and corporate\npower to enter into  this Agreement, to issue  the Shares and  to\nperform its other obligations under the terms of this Agreement.\n\n               (c)  The  authorized capital stock of Issuer as of\nthe date hereof and as  of the Closing Date  is 100 shares.   The\nShares  have  been duly  authorized  and, when  issued,  and upon\nreceipt of  the purchase price  thereof, will be  validly issued,\nfully paid and nonassessable.\n\n               (d)  Issuer   has  taken   all  corporate   action\nnecessary  for its authorization, execution, and delivery of, and\nits performance under, this Agreement.\n\n               (e)  This Agreement constitutes a legal, valid and\nbinding  obligation  of  Issuer, enforceable  against  Issuer  in\naccordance  with its  terms, except  that  enforceability may  be\nlimited by (i) bankruptcy, insolvency or other laws affecting the\nenforcement of  creditors'  rights  generally  and  (ii)  general\nprinciples of equity regardless of whether such enforceability is\nconsidered in a proceeding in equity or at law.\n\n          4.   Representations and Warranties of AnnTaylor.\n               -------------------------------------------\n\n               AnnTaylor  represents  and warrants  to  Issuer as\nfollows:\n\n               (a)  AnnTaylor is a corporation duly incorporated,\nvalidly existing and in good standing under the laws of Delaware,\n\n\n\n                              - 2 -\n\n\n\nand has all  requisite corporate power and authority  to carry on\nits business as conducted on the date hereof.\n\n               (b)  AnnTaylor has taken  all actions required for\nits   authorization,  execution,   and  delivery   of,  and   its\nperformance under, this Agreement.\n\n               (c)  This  Agreement   constitutes  a   valid  and\nbinding obligation of AnnTaylor, enforceable against AnnTaylor in\naccordance  with its  terms, except  that  enforceability may  be\nlimited by (i) bankruptcy, insolvency or other laws affecting the\nenforcement  of  creditors'  rights generally  and  (ii)  general\nprinciples of equity regardless of whether such enforceability is\nconsidered in a proceeding in equity or at law.\n\n               (d)  AnnTaylor  is   purchasing  the   Shares  for\ninvestment  for its own account,  not as a  nominee or agent, and\nnot with a  view to the sale or distribution of any part thereof;\nand AnnTaylor  has no  current intention  of selling,  granting a\nparticipation in, or otherwise distributing, the same.\n\n               (e)  AnnTaylor  understands that  the Shares  have\nnot been registered under the Securities Act of 1933, as amended,\nor under any other Federal or state law, and that Issuer does not\ncontemplate such a registration.\n\n               (f)  AnnTaylor has such  knowledge, sophistication\nand  experience in  financial  and business  matters  that it  is\ncapable of evaluating  the merits and  risks of the  transactions\ncontemplated  by this Agreement, and has made such investigations\nin connection herewith as have been deemed necessary or desirable\nto make such evaluation.\n\n          5.   Conditions  to  AnnTaylor's   Obligations  at  the\n               --------------------------------------------------\nClosing.\n- -------\n\n               AnnTaylor's obligation  to purchase the  Shares at\nthe  Closing is  subject to the  fulfillment on  or prior  to the\nClosing Date of the following conditions:\n\n               (a)  The  representations and  warranties made  by\nIssuer herein shall be  true and correct when made, and  shall be\ntrue and  correct on the  Closing Date  with the  same force  and\neffect as  if they had been made  on and as of  the Closing Date;\nand  Issuer shall have  performed all obligations  and conditions\nherein required to be performed or observed by it on or  prior to\nthe  Closing  Date and  all documents  incident thereto  shall be\nsatisfactory in form and content to AnnTaylor and its counsel.\n\n               (b)  Issuer shall  have filed  the Certificate  of\nIncorporation, in the form attached  hereto as Exhibit A with the\n                                               ---------\n\n\n\n                              - 3 -\n\n\n\nDelaware Secretary of  State and adopted the By-laws  in the form\nattached hereto as Exhibit B.\n                   ---------\n\n               (c)  The  purchase  of  the  Shares  by  AnnTaylor\nhereunder shall be  legally permitted by all laws and regulations\nto which AnnTaylor or Issuer are subject.\n\n          6.   Conditions to Issuer's Obligations at the Closing.\n               -------------------------------------------------\n\n               Issuer's obligation  to sell and issue  the Shares\nat  the  Closing  is  subject  to  the  fulfillment  to  Issuer's\nsatisfaction on  or prior  to the Closing  Date of  the following\nconditions:\n\n               (a)  The  representations and  warranties made  by\nAnnTaylor herein shall  be true and correct when  made, and shall\nbe true and correct  on the Closing Date with the  same force and\neffect as if they had been made  on and as of the same date;  and\nAnnTaylor  shall have  performed all  obligations and  conditions\nherein required to be performed or observed  by it on or prior to\nthe  Closing Date  and  all documents  incident thereto  shall be\nsatisfactory in form and content to Issuer and its counsel.\n\n               (b)  The  purchase  of  the  Shares  by  AnnTaylor\nhereunder shall be legally permitted by all  laws and regulations\nto which AnnTaylor or Issuer are subject.\n\n               (c)  AnnTaylor shall  have delivered  the purchase\nprice  for  the  Shares  to  be purchased  by  it  hereunder,  by\nconveyance to Issuer  of the amount of the  Receivables set forth\nin   Section  1(b)  (which   conveyance  shall  be   pursuant  to\n     -------------\ninstruments reasonably satisfactory to Issuer).\n\n          7.   Restrictions on Transfer; Legend.\n               --------------------------------\n\n          7.1  Legend.  Each certificate representing the  Shares\n               ------\nshall be endorsed with the following legend:\n\n     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN\n     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE\n     \"ACT\"),  AND MAY  NOT  BE  SOLD,  TRANSFERRED,  ASSIGNED  OR\n     HYPOTHECATED  UNLESS  THERE  IS  AN  EFFECTIVE  REGISTRATION\n     STATEMENT UNDER THE  ACT COVERING SUCH SECURITIES,  THE SALE\n     IS MADE IN ACCORDANCE WITH RULE 144 OR ANY SUCCESSOR RULE OR\n     OTHER  EXEMPTION FROM  REGISTRATION  UNDER  THE  ACT.    THE\n     SECURITIES  REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A\n     STOCK SUBSCRIPTION AGREEMENT  DATED AS OF JANUARY  24, 1994,\n     BETWEEN ANNTAYLOR,  INC. AND  ANNTAYLOR  FUNDING, INC.  (THE\n     \"COMPANY\"), A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF\n     THE  COMPANY,  AND  THE   SECURITIES  REPRESENTED  BY   THIS\n     CERTIFICATE  MAY NOT BE  VOTED, TRANSFERRED, SOLD, ASSIGNED,\n\n\n\n                              - 4 -\n\n\n\n     PLEDGED, HYPOTHECATED OR OTHERWISE  DISPOSED OF UNLESS  SUCH\n     VOTING, TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR\n     OTHER  DISPOSITION  COMPLIES  WITH THE  PROVISIONS  OF  SUCH\n     AGREEMENT.  THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF\n     THIS  CERTIFICATE,  AGREES   TO  BE  BOUND  BY  ALL  OF  THE\n     PROVISIONS OF SUCH AGREEMENT.\n\n          7.2  Registration  of  Transfers.     Issuer  need  not\n               ---------------------------\nregister a transfer of any Shares unless the conditions specified\nin  the  foregoing  legend  are satisfied.    Issuer  shall  also\ninstruct its transfer agent, if any, not to register the transfer\nof any  Shares unless the  conditions specified in  the foregoing\nlegend are satisfied.\n\n          8.   Agreement to Vote.\n               -----------------\n\n               (a)  AnnTaylor hereby agrees and covenants to vote\nall of the shares of Common Stock now or hereafter owned by it at\na meeting  of stockholders  of Issuer, or  by written  consent in\nlieu  of  any  such meeting,  to  cause  to  be  elected to,  and\nmaintained  on, Issuer's  board  of directors  at  all times  one\nindividual  who  meets  the   requirements  of  an   \"Independent\nDirector\" as defined in the Issuer's certificate of incorporation\nas in effect on the date hereof.  AnnTaylor hereby further agrees\nand covenants that in the event the  Independent Director resigns\nor otherwise  ceases to be  a director of Issuer,  AnnTaylor will\nvote all of  the shares of Common Stock then owned by it, whether\nbeneficially  or  otherwise, as  is  necessary  at a  meeting  of\nstockholders of Issuer, or by written consent in lieu of any such\nmeeting,  to  select  and  cause  to  be  elected  a  replacement\nIndependent  Director who meets  all of the  qualifications of an\nIndependent Director as  set forth in the Issuer's certificate of\nincorporation.\n\n               (b)  AnnTaylor (for itself and  its successors and\nassigns)  hereby acknowledges  and agrees  that  any decision  to\napprove or otherwise  cause the commencement of  a voluntary case\nor  other  proceeding  with  respect  to  the  Issuer  under  any\napplicable   bankruptcy,    insolvency,   reorganization,    debt\narrangement, dissolution or other similar law, or the appointment\nof or  taking possession  by, a  receiver, liquidator,  assignee,\ntrustee,  custodian, or  other similar  official  for the  Issuer\nshall be approved in writing by the Independent Director prior to\nthe making  thereof, and  the  Independent Director  shall owe  a\nfiduciary duty to the Issuer  (and its creditors) and not  to the\nstockholders of Issuer in respect of any such decision.\n\n               (c)  AnnTaylor  hereby  agrees  and  covenants  to\nmaintain  a  separate   corporate  existence   from  the   Issuer\nincluding, without limitation,  doing all things with  respect to\nitself of the type set  forth in Section 7.02 of  the Receivables\nFinancing Agreement.\n\n\n\n\n                              - 5 -\n\n\n\n          9.   General Restrictions on Transfer and Issuance.\n               ---------------------------------------------\n\n               No Shares or any interest therein shall be validly\nsold,  assigned,  pledged,  encumbered,  awarded,  confirmed,  or\notherwise transferred,  for consideration  or otherwise,  whether\nvoluntarily,  involuntarily, or  by  operation  of  law,  and  no\npurported  transferee shall  be recognized  as  a shareholder  of\nIssuer for any purpose whatsoever unless and until the holders of\nall of  the other Shares,  the Lender, the Administrator  and the\nRelationship Bank have  filed with the secretary of  Issuer their\nwritten  consents to such transfer;  provided that the Shares may\n                                     --------\nbe  pledged  to  Bank  of  America  National  Trust  and  Savings\nAssociation  as Agent  pursuant  to  documents  relating  to  the\nAnnTaylor Credit Agreement.   A transfer  or attempt to  transfer\nsubject to  the provisions of  this Agreement shall be  deemed to\noccur whenever any interest in  Common Stock is transferred or is\nattempted  to be  transferred, voluntarily, involuntarily,  or by\noperation  of law,  irrespective  of whether  any  change in  the\nrecord ownership of any shares of Common Stock occurs.\n\n          10.  Successors and Assigns.\n               ----------------------\n\n               Each party agrees  that it will not  assign, sell,\ntransfer,  delegate, or otherwise dispose of, whether voluntarily\nor involuntarily, or by operation of law, any right or obligation\nunder  this  Agreement except  in connection  with a  transfer of\nShares  in compliance  with  the terms  and conditions  hereof or\notherwise in  accordance with  the terms hereof.   Any  purported\nassignment,  transfer, or delegation in violation of this Section\nshall  be null  and void  ab  initio.   Subject to  the foregoing\n                          --  ------\nlimits  on  assignment  and delegation  and  except  as otherwise\nprovided herein,  this Agreement shall be binding  upon and inure\nto  the benefit  of the  parties hereto, their  respective heirs,\nlegatees,   executors,   administrators,  assignees   and   legal\nsuccessors.  Any transferee of any shares of Common Stock  or any\ninterest  hereunder shall take its interest  subject to the terms\nand  conditions  hereof and  shall,  upon  request  of any  party\nhereto, execute  a counterpart  of this  Agreement.  The  parties\nintend  that  each  of  the Lender,  the  Administrator  and  the\nRelationship Bank be third party beneficiaries to this Agreement.\n\n          11.  Amendments and Waivers.\n               ----------------------\n\n               Any  term hereof may be amended and the observance\nof any  term  hereof may  be  waived (either  generally or  in  a\nparticular  instance and  either retroactively  or prospectively)\nonly  with the written consent  of Issuer, the Lender, AnnTaylor,\nthe Administrator  and the Relationship  Bank.  Any  amendment or\n\n\n\n                              - 6 -\n\n\n\nwaiver so  effected shall be  binding upon Issuer  and AnnTaylor.\nSections 7, 8, 9 and 10 of  this Agreement and any requirement in\n- ----------  -  -     --\nthis Section 11 for the  consent of the Lender, the Administrator\n     ----------\nor the Relationship Bank shall be null and void and of no further\neffect unless the  Issuer and AnnTaylor  shall have entered  into\nboth   the  Purchase  and  Sale  Agreement  and  the  Receivables\nFinancing Agreement on or prior to February 15, 1994.\n\n          12.  Further Acts.\n               ------------\n\n               Each  party agrees to perform any further acts and\nexecute   and  deliver  any  document  which  may  be  reasonably\nnecessary to carry out the provisions of this Agreement.\n\n          13.  Counterparts.\n               ------------\n\n               This  Agreement may be  executed in any  number of\ncounterparts, all  of such counterparts together to be deemed one\ninstrument.\n\n          14.  Notices.\n               -------\n\n               Any and all  notices, acceptances, statements  and\nother communications  provided for  herein shall  be in  writing,\ndelivered personally, by telefacsimile or certified mail,  return\nreceipt requested.\n\n          15.  Governing Law.\n               -------------\n\n               This Agreement  shall be  construed in  accordance\nwith  and  be governed  by  the  internal laws  of  the  State of\nDelaware.\n\n          16.  Severability of this Agreement.\n               ------------------------------\n\n               In case any  provision of this Agreement  shall be\ninvalid, illegal  or  unenforceable, the  validity, legality  and\nenforceability of the remaining  provisions shall not in  any way\nbe affected or impaired thereby.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                              - 7 -\n\n\n\n     IN  WITNESS WHEREOF,  the parties  hereto  have caused  this\nAgreement to be executed as of the date first written above.\n\n\n          THE ISSUER:\n\n                    ANNTAYLOR FUNDING, INC.,\n                    a Delaware corporation\n\n                    By:    ___________________________________\n                           Name:  Bert A. Tieben\n                           Title:  Vice President\n\n          THE PURCHASER:\n\n                    ANNTAYLOR, INC.,\n                    a Delaware corporation\n\n                    By:    ______________________________________\n                           Name:  Bert A. Tieben\n                           Title:  Senior Vice President\n\n\n\n                            EXHIBIT A\n\n\n                   CERTIFICATE OF INCORPORATION\n\n\n\n                            EXHIBIT B\n\n\n                             BY-LAWS\n\n\n\n\n\n\n\n                                                          Exhibit E\n\n                  List of Offices Where\n                     Records Are Kept\n                  ---------------------\n\n\nAnnTaylor, Inc.\n- ---------------\n\nChief place of business and chief executive office:\n\n     142 West 57th Street\n     New York, New York 10019\n\nlocation of books and records, etc:\n\n     142 West 57th Street\n     New York, New York 10019\n\n     414 Chapel Street\n     New Haven, Connecticut 06511\n\n\n\n\n\n\n\n\n\n                              9\n\n\n\n\n\n                                                         Exhibit F\n\n\n\n                              January 27, 1994\n\n\nThe Persons Listed\n  on Schedule I Hereto\n\n\nDear Sirs and Madams:\n\n          I am Vice President, General Counsel and Corpo-\nrate Secretary of AnnTaylor, Inc., a Delaware corporation\n(\"AnnTaylor\").  I am delivering this opinion in connec-\ntion with the preparation, execution and delivery of\n(i) the Purchase and Sale Agreement dated as of\nJanuary 27, 1994 (the \"Purchase Agreement\") between\nAnnTaylor Funding, Inc., a Delaware corporation (the\n\"Company\"), as purchaser and AnnTaylor, as seller,\n(ii) the Receivables Financing Agreement, dated as of\nJanuary 27, 1994 (the \"Receivables Financing Agreement\"),\namong the Company, Clipper Receivables Corporation (the\n\"Lender\"), AnnTaylor, as Servicer, State Street Boston\nCapital Corporation (the \"Administrator\"), and PNC Bank,\nNational Association (the \"Relationship Bank\"), and\n(iii) certain other agreements, instruments and documents\nrelated to the Purchase Agreement and the Receivables Fi-\nnancing Agreement.  This opinion is being delivered\npursuant to  Section 4.1(h) of the Purchase Agreement and\nSection 5.01(h)(i) of the Receivables Financing Agree-\nment.  Capitalized terms used herein and not otherwise\ndefined herein shall have the same meanings herein as set\nforth in Appendix A to the Receivables Financing Agree-\nment.\n\n          In this connection, I have examined and am\nfamiliar with originals or copies, certified or otherwise\nidentified to my satisfaction, of (i) the Receivables\nFinancing Agreement; (ii) the Purchase Agreement;\n(iii) the Certificate of Incorporation and Bylaws of\nAnnTaylor, as presently in effect; and (iv) resolutions\nof the Board of Directors of AnnTaylor relating to the\nReceivables Financing Agreement and the Purchase Agree-\nment.  I have also examined and am familiar with origi-\nnals or copies, certified or otherwise identified to my\n\n\n\n\n\nJanuary 27, 1994\nPage 2\n\nsatisfaction, of such records of AnnTaylor and such\nagreements, certificates of public officials, certifi-\ncates of officers or representatives of AnnTaylor and\nothers, and such other documents, certificates and corpo-\nrate or other records as I have deemed necessary or\nappropriate as a basis for the opinions set forth below.\n\n          In my examination, I have assumed the genuiness\nof all signatures, the legal capacity of all natural\npersons, the authenticity of all documents submitted to\nme as originals, the conformity to original documents of\nall documents submitted to me as certified or photostatic\ncopies and the authenticity of the originals of such\ncopies.  As to any facts material to this opinion which I\ndid not independently establish or verify, I have relied\nupon certificates, statements and representations of\nofficers and other representatives of AnnTaylor and\nothers.\n\n          I am admitted to the Bar of the State of New\nYork and express no opinion as to the laws of any juris-\ndiction except the General Corporation Law of the State\nof Delaware and the laws of the United States of America\nto the extent specifically referred to herein.\n\n          Based upon and subject to the limitations,\nqualifications, exceptions and assumptions set forth\nherein, I am of the opinion that:\n\n             (i)  AnnTaylor is a corporation duly incor-\n     porated, validly existing and in good standing under\n     the laws of the State of Delaware.\n\n            (ii)  AnnTaylor is duly qualified to transact\n     business as a foreign corporation and is in good\n     standing in each other jurisdiction in which it owns\n     or leases property of a nature, or transacts busi-\n     ness of a type, that would make such qualification\n     necessary, except to the extent that the failure to\n     so qualify or be in good standing would not have a\n     material adverse effect on AnnTaylor.\n\n\n\n\n\nJanuary 27, 1994\nPage 3\n\n\n          This opinion is being furnished by me as Vice\nPresident, General Counsel and Corporate Secretary of\nAnnTaylor to you solely for your benefit, and is not to\nbe used or relied upon by any other person without my\nexpress prior written consent.\n\n                              Very truly yours,\n\n\n\n\n\n\n\n                        SCHEDULE I\n\n\nClipper Receivables Corporation\nP.O. Box 4024\nBoston, Massachusetts  02101\n\nState Street Boston Capital Corporation\n225 Franklin Street\nBoston, Massachusetts  02110\n\nPNC Bank, National Association\nFifth Avenue and Wood Street\nPittsburgh, Pennsylvania  15265\n\nMoody's Investors Service\n99 Church Street\nNew York, New York 10007\n\nStandard &amp; Poors Corporation\n26 Broadway, 15th Floor\nNew York, New York 10004\n\n\n\n\n\n\n\n                  SCHEDULE 5.14 to the Purchase Agreement\n                  ---------------------------------------\n\n\n                       Trade Names\n                       -----------\n\nAnnTaylor, Inc.\n- ---------------\n\n     CAC XIII, Inc.\n     ASC Stores III, Inc.\n     AnnTaylor Factory Stores\n\n\nOn February 8, 1989, AnnTaylor Acquisition Corp., a Dela-\nware corporation merged with and into AnnTaylor, Inc.\nwith AnnTaylor, Inc. being the surviving corporation.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n                             10\n\n\n\n\n\n\n                                                             Schedule 2\n\n\n\n                   SUBORDINATED PROMISSORY NOTE\n                         (NON-NEGOTIABLE\n                          COMPANY NOTE)\n\n                                        New York, New York\n                                          January 27, 1994\n\n\n     FOR VALUE RECEIVED, the undersigned, ANNTAYLOR FUNDING,\nINC.,  a Delaware corporation (the \"Company\"), promises to pay to\n                                    -------\nANNTAYLOR, INC., a Delaware corporation (\"AnnTaylor\"), on the\n                                          ---------\nterms and subject to the conditions set forth herein and in the\nPurchase and Sale Agreement referred to below, the sum of (i) the\naggregate unpaid Purchase Price of all Receivables purchased by\nthe Company from AnnTaylor pursuant to such Purchase and Sale\nAgreement, as such unpaid Purchase Price is shown in the records\nof Servicer plus (ii) any capitalized interest pursuant to\n            ----\nSection 4 hereof as shown on the records of AnnTaylor.\n- ---------\n\n     1.     Purchase and Sale Agreement.  This promissory note\n            ---------------------------\n(this \"Company Note\") is the Company Note described in, and is\n       ------------\nsubject to the terms and conditions set forth in, that certain\nPurchase and Sale Agreement of even date herewith (as the same\nmay be amended or otherwise modified from time to time, the\n\"Purchase and Sale Agreement\"), between AnnTaylor and the\n ---------------------------\nCompany.  Reference is hereby made to the Purchase and Sale\nAgreement for a statement of certain other rights and obligations\nof AnnTaylor and the Company.\n\n     2.   Definitions.  Capitalized terms used (but not defined)\n          -----------\nherein have the meanings assigned thereto in Appendix A to the\n                                             ----------\nReceivables Financing Agreement dated as of even date herewith\namong AnnTaylor, as Servicer, the Company, Clipper Receivables\nCorporation, as Lender, State Street Boston Capital Corporation,\nas Administrator, and PNC Bank, National Association, as\nRelationship Bank (as may be amended or otherwise modified from\ntime to time, the \"Receivables Financing Agreement\").  In\n                   -------------------------------\naddition, as used herein, the following terms have the following\nmeanings:\n\n          \"Bankruptcy Proceedings\" has the meaning set forth in\n           ----------------------\n     clause (b) of paragraph 9 hereof.\n     ----------    -----------\n\n          \"Final Maturity Date\" means the second Business Day\n           -------------------\n     after a demand for payment has been made by AnnTaylor, but\n     in no event earlier than the Settlement Date immediately\n     following the date on which one hundred twenty-one (121)\n     days have elapsed since the date the Senior Interests have\n     been paid in full.\n\n\n\n          \"Interest Period\" means the period from and including a\n           ---------------\n     Report Date (or, in the case of the first Interest Period,\n     the date hereof) to but excluding the next Report Date.\n\n          \"Senior Interests\" means, collectively, (i) the\n           ----------------\n     aggregate unpaid principal amount of the Loans, (ii) accrued\n     interest on the aggregate unpaid principal amount of the\n     Loans, (iii) all fees payable pursuant to the Receivables\n     Financing Agreement, (iv) any Indemnified Amounts, (v) unpaid\n     Servicer's Fees, provided that AnnTaylor is not the\n                      --------\n     Servicer, and (vi) all other obligations of the Company that\n     are due and payable to any Affected Party, together with all\n     interest accruing on any such amounts after the commencement\n     of any Bankruptcy Proceedings, notwithstanding any provision\n     or rule of law that might restrict the rights of any Senior\n     Interest Holder, as against the Company or anyone else, to\n     collect such interest.\n\n          \"Senior Interest Holders\" means, collectively, the\n           -----------------------\n     Lender, the Administrator, the Relationship Bank, the other\n     Affected Parties and the Indemnified Parties.\n\n          \"Subordination Provisions\" means, collectively, clauses\n           ------------------------                       -------\n     (a) through (l) of paragraph 9 hereof.\n     ---         ---    -----------\n\n     3.   Interest.  Subject to the Subordination Provisions set\n          --------\nforth below, the Company promises to pay interest on this Company\nNote as follows:\n\n          (a)  Prior to the Final Maturity Date, the aggregate\n     unpaid Purchase Price from time to time outstanding during\n     any Interest Period shall bear interest at a rate per annum\n                                                       ---------\n     equal to the Alternate Base Rate plus 3% as in effect from\n     time to time as determined by Servicer; and\n\n          (b)  From (and including) the Final Maturity Date to\n     (but excluding) the date on which the entire aggregate\n     unpaid Purchase Price is fully paid, the aggregate unpaid\n     Purchase Price from time to time outstanding shall bear\n     interest at a rate per annum equal to the Alternate Base\n                        ---------\n     Rate as in effect from time to time, plus 5%, as determined\n     by Servicer.\n\n     4.   Interest Payment Dates.  Subject to the Subordination\n          ----------------------\nProvisions set forth below, the Company shall pay accrued\ninterest on this Company Note on each Settlement Date, and shall\npay accrued interest on the amount of each principal payment made\nin cash on a date other than a Settlement Date at the time of\nsuch principal payment; provided, however, that unless AnnTaylor\n                        --------  -------\n\n\n\ninstructs the Company otherwise, such interest may be paid by\nmeans of an increase in the amount of the unpaid principal amount\nhereof by an amount equal to the interest being so paid.\n\n     5.   Basis of Computation.  Interest accrued hereunder shall\n          --------------------\nbe computed for the actual number of days elapsed on the basis of\na 365- or 366-day year.\n\n     6.   Principal Payment Dates.  Subject to the Subordination\n          -----------------------\nProvisions set forth below, payments of the principal amount of\nthis Company Note shall be made as follows:\n\n          (a)  The principal amount of this Company Note shall be\n     reduced from time to time pursuant to Sections 3.2, 3.3,\n                                           ------------- ---\n     3.4, and 7.2 of the Purchase and Sale Agreement; and\n     ---      ---\n\n          (b)  The entire remaining unpaid Purchase Price of all\n     Receivables purchased by the Company from AnnTaylor pursuant\n     to the Purchase and Sale Agreement shall be paid on the\n     Final Maturity Date.\n\nSubject to the Subordination Provisions set forth below, the\nprincipal amount of and accrued interest on this Company Note may\nbe prepaid on any Business Day without premium or penalty.\n\n     7.   Payments. All payments of principal and interest\n          --------\nhereunder are to be made in lawful money of the United States of\nAmerica.\n\n     8.   Enforcement Expenses.  In addition to and not in\n          --------------------\nlimitation of the foregoing, but subject to the Subordination\nProvisions set forth below and to any limitation imposed by\napplicable law, the Company agrees to pay all expenses, including\nreasonable attorneys' fees and legal expenses, incurred by\nAnnTaylor in seeking to collect any amounts payable hereunder\nwhich are not paid when due.\n\n     9.   Subordination Provisions.  The Company covenants and\n          ------------------------\nagrees, and AnnTaylor, by its acceptance of this Company Note,\nlikewise covenants and agrees on behalf of itself and any holder\nof this Company Note, that the payment of the principal amount of\nand interest on this Company Note is hereby expressly\nsubordinated in right of payment to the payment and performance\nof the Senior Interests to the extent and in the manner set forth\nin the following clauses of this paragraph 9:\n                                 -----------\n\n          (a)  No payment or other distribution of the Company's\n     assets of any kind or character, whether in cash,\n     securities, or other rights or property, shall be made on\n\n\n\n     account of this Company Note except to the extent such\n     payment or other distribution is permitted under the\n     Purchase and Sale Agreement and Section 3.01 of the\n                                     ------------\n     Receivables Financing Agreement;\n\n          (b)  In the event of any dissolution, winding up,\n     liquidation, readjustment, reorganization or other similar\n     event relating to the Company, whether voluntary or\n     involuntary, partial or complete, and whether in bankruptcy,\n     insolvency or receivership proceedings, or upon an\n     assignment for the benefit of creditors, or any other\n     marshalling of the assets and liabilities of the Company or\n     any sale of all or substantially all of the assets of the\n     Company (such proceedings being herein collectively called\n     \"Bankruptcy Proceedings\"), the Senior Interests shall first\n      ----------------------\n     be paid and performed in full and in cash before AnnTaylor\n     shall be entitled to receive and to retain any payment or\n     distribution in respect of this Company Note.  In order to\n     implement the foregoing:  (i) all payments and distributions\n     of any kind or character in respect of this Company Note to\n     which AnnTaylor would be entitled except for this clause (b)\n                                                       ----------\n     shall be made directly to the Administrator (for the benefit\n     of the Senior Interest Holders);  (ii) AnnTaylor shall\n     promptly file a claim or claims, in the form required in any\n     Bankruptcy Proceedings, for the full outstanding amount of\n     this Company Note, and shall use commercially reasonable\n     efforts to cause said claim or claims to be approved and all\n     payments and other distributions in respect thereof to be\n     made directly to the Administrator (for the benefit of the\n     Senior Interest Holders) until the Senior Interests shall\n     have been paid and performed in full and in cash; and (iii)\n     AnnTaylor hereby irrevocably agrees that the Administrator,\n     in the name of AnnTaylor or otherwise, may demand, sue for,\n     collect, receive and receipt for any and all such payments\n     or distributions, and file, prove and vote or consent in any\n     such Bankruptcy Proceedings with respect to any and all\n     claims of AnnTaylor relating to this Company Note, in each\n     case until the Senior Interests shall have been paid and\n     performed in full and in cash;\n\n          (c)  In the event that AnnTaylor receives any payment\n     or other distribution of any kind or character from the\n     Company or from any other source whatsoever, in respect of\n     this Company Note, other than as expressly permitted by the\n     terms of this Company Note, such payment or other\n     distribution shall be received for the sole benefit of the\n     Senior Interest Holders and shall be turned over by\n     AnnTaylor to the Administrator (for the benefit of the\n     Senior Interest Holders) forthwith.  AnnTaylor will mark its\n\n\n\n     books and records so as clearly to indicate that this\n     Company Note is subordinated in accordance with the terms\n     hereof.  All payments and distributions received by the\n     Administrator in respect of this Company Note, to the extent\n     received in or converted into cash, may be applied by the\n     Administrator (for the benefit of the Senior Interest\n     Holders) first to the payment of any and all expenses\n     (including reasonable attorneys' fees and legal expenses)\n     paid or incurred by the Senior Interest Holders in enforcing\n     these Subordination Provisions, or in endeavoring to collect\n     or realize upon this Company Note, and any balance thereof\n     shall, solely as between AnnTaylor and the Senior Interest\n     Holders, be applied by the Administrator toward the payment\n     of the Senior Interests; but as between the Company and its\n     creditors, no such payments or distributions of any kind or\n     character shall be deemed to be payments or distributions\n     in respect of the Senior Interests;\n\n          (d)  Notwithstanding any payments or distributions\n     received by the Senior Interest Holders in respect of this\n     Company Note, while any Bankruptcy Proceedings are pending\n     AnnTaylor shall not be subrogated to the then existing\n     rights of the Senior Interest Holders in respect of the\n     Senior Interests until the Senior Interests have been paid\n     and performed in full and in cash;\n\n          (e)  These Subordination Provisions are intended solely\n     for the purpose of defining the relative rights of\n     AnnTaylor, on the one hand, and the Senior Interest Holders,\n     on the other hand.  Nothing contained in these Subordination\n     Provisions or elsewhere in this Company Note is intended to\n     or shall impair, as between the Company, its creditors\n     (other than the Senior Interest Holders) and AnnTaylor, the\n     Company's obligation, which is unconditional and absolute,\n     to pay AnnTaylor the principal of and interest on this\n     Company Note as and when the same shall become due and\n     payable in accordance with the terms hereof or to affect the\n     relative rights of AnnTaylor and creditors of the Company\n     (other than the Senior Interest Holders);\n\n          (f)  AnnTaylor shall not, until the Senior Interests\n     have been paid and performed in full and in cash, (i)\n     cancel, waive, forgive, transfer or assign, or commence\n     legal proceedings to enforce or collect, or subordinate to\n     any obligation of the Company, howsoever created, arising or\n     evidenced, whether direct or indirect, absolute or\n     contingent, or now or hereafter existing, or due or to\n     become due, other than the Senior Interests, this Company\n     Note or any rights in respect hereof (except as set forth in\n\n\n\n     Section 12 hereof) or (ii) convert this Company Note into an\n     ----------\n     equity interest in the Company, unless AnnTaylor shall have\n     received the prior written consent of the Administrator and\n     the Relationship Bank in each case;\n\n          (g)  AnnTaylor shall not, without the advance written\n     consent of the Administrator and the Relationship Bank,\n     commence, or join with any other Person in commencing, any\n     Bankruptcy Proceedings with respect to the Company until at\n     least one year and one day shall have passed since the\n     Senior Interests shall have been paid and performed in full\n     and in cash;\n\n          (h)  If, at any time, any payment (in whole or in part)\n     of any Senior Interest is rescinded or must be restored or\n     returned by a Senior Interest Holder (whether in connection\n     with Bankruptcy Proceedings or otherwise), these\n     Subordination Provisions shall continue to be effective or\n     shall be reinstated, as the case may be, as though such\n     payment had not been made;\n\n          (i)  Without affecting the rights and restrictions set\n     forth in the Transaction Documents, each of the Senior\n     Interest Holders may, from time to time, at its sole\n     discretion, without notice to AnnTaylor, and without waiving\n     any of its rights under these Subordination Provisions, take\n     any or all of the following actions:  (i) retain or obtain\n     an interest in any property to secure any of the Senior\n     Interests;  (ii) retain or obtain the primary or secondary\n     obligations of any other obligor or obligors with respect to\n     any of the Senior Interests;  (iii) extend or renew for one\n     or more periods (whether or not longer than the original\n     period), alter or exchange any of the Senior Interests, or\n     release or compromise any obligation of any nature with\n     respect to any of the Senior Interests;  (iv) amend,\n     supplement, amend and restate, or otherwise modify any\n     Transaction Document; and (v) release its security interest\n     in, or surrender, release or permit any substitution or\n     exchange for all or any part of any rights or property\n     securing any of the Senior Interests, or extend or renew for\n     one or more periods (whether or not longer than the original\n     period), or release, compromise, alter or exchange any\n     obligations of any nature of any obligor with respect to any\n     such rights or property;\n\n          (j)  AnnTaylor hereby waives:  (i) notice of acceptance\n     of these Subordination Provisions by any of the Senior\n     Interest Holders;  (ii) notice of the existence, creation,\n     non-payment or non-performance of all or any of the Senior\n\n\n\n     Interests; and  (iii) all diligence in enforcement,\n     collection or protection of, or realization upon, the Senior\n     Interests, or any thereof, or any security therefor;\n\n          (k)  Each of the Senior Interest Holders may, from time\n     to time, on the terms and subject to the conditions set\n     forth in the Transaction Documents to which such Persons are\n     party, but without notice to AnnTaylor, assign or transfer\n     any or all of the Senior Interests, or any interest therein;\n     and, notwithstanding any such assignment or transfer or any\n     subsequent assignment or transfer thereof, such Senior\n     Interests shall be and remain Senior Interests for the\n     purposes of these Subordination Provisions, and every\n     immediate and successive assignee or transferee of any of\n     the Senior Interests or of any interest of such assignee or\n     transferee in the Senior Interests shall be entitled to the\n     benefits of these Subordination Provisions to the same\n     extent as if such assignee or transferee were the assignor\n     or transferor; and\n\n          (l)  These Subordination Provisions constitute a\n     continuing offer from the holder of this Company Note to all\n     Persons who become the holders of, or who continue to hold,\n     Senior Interests; and these Subordination Provisions are\n     made for the benefit of the Senior Interest Holders, and the\n     Administrator or the Lender may proceed to enforce such\n     provisions on behalf of each of such Persons.\n\n     10.  General.  No failure or delay on the part of AnnTaylor\n          -------\nin exercising any power or right hereunder shall operate as a\nwaiver thereof, nor shall any single or partial exercise of any\nsuch power or right preclude any other or further exercise\nthereof or the exercise of any other power or right.  No\namendment, modification or waiver of, or consent with respect to,\nany provision of this Company Note shall in any event be\neffective unless (i) the same shall be in writing and signed and\ndelivered by the Company and AnnTaylor and (ii) all consents\nrequired for such actions under the Transaction Documents shall\nhave been received by the appropriate Persons.\n\n     11.  No Negotiation.  This Company Note is not negotiable;\n          --------------\nprovided, AnnTaylor may pledge this Company Note to the agent for\n- --------\nthe benefit of the lenders under the AnnTaylor Credit Agreement.\n\n     12.  Governing Law.  THIS PROMISSORY NOTE SHALL BE DEEMED TO\n          -------------\nBE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF\nNEW YORK.\n\n\n\n     13.  Captions.  Paragraph captions used in this Company Note\n          --------\nare for convenience only and shall not affect the meaning or\ninterpretation of any provision of this Company Note.\n\n                                   ANNTAYLOR FUNDING, INC.\n\n\n\n                                   By:_______________________\n                                   Title:   Vice President\n\n                                   Pay to the order of Bank of\n                                   America National Trust and\n                                   Savings Association, as Agent\n\n                                   ANNTAYLOR, INC.\n\n\n\n                                   By:_________________________\n                                   Title:  Senior Vice President\n\n\n\n\n\n                                                           Schedule 3\n                          ANNTAYLOR, INC. \n                            CERTIFICATE\n\n     I, Bert A. Tieben, Senior Vice President of ANNTAYLOR, INC.,\na Delaware corporation, DO HEREBY CERTIFY that:\n\n     Pursuant to Section 4.1(k) of the Purchase and Sale\n     Agreement, dated as of January 27, 1994 (as amended or\n     otherwise modified from time to time, the \"Agreement\") among\n     AnnTaylor, Inc. and AnnTaylor Funding, Inc., AnnTaylor, Inc.\n     has marked its summary master control processing records\n     evidencing the Pool Receivables (as defined in the\n     Receivables Financing Agreement referred to in the\n     Agreement) and the related Contracts (as defined in the\n     Receivables Financing Agreement referred to in the\n     Agreement) with the following legend:\n\n     \"THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO\n     ANNTAYLOR FUNDING, INC. PURSUANT TO A PURCHASE AND SALE\n     AGREEMENT, DATED AS OF JANUARY 27, 1994, AS AMENDED, BETWEEN\n     ANNTAYLOR FUNDING, INC. AND ANNTAYLOR, INC. AND A SECURITY\n     INTEREST IN THE RECEIVABLES DESCRIBED HEREIN HAS BEEN\n     GRANTED TO CLIPPER RECEIVABLES CORPORATION, PURSUANT TO A\n     RECEIVABLES FINANCING AGREEMENT, DATED AS OF JANUARY 27,\n     1994, AMONG ANNTAYLOR FUNDING, INC., ANNTAYLOR, INC.,\n     CLIPPER RECEIVABLES CORPORATION, STATE STREET BOSTON CAPITAL\n     CORPORATION, AS THE ADMINISTRATOR, AND PNC BANK, NATIONAL\n     ASSOCIATION, AS THE RELATIONSHIP BANK.\"\n\n     WITNESS my hand this 27th day of January, 1994.\n\n                                   ANNTAYLOR, INC.\n\n                                   By:  \/s\/ Bert A. Tieben\n                                        ------------------\n                                   Name: Bert A. Tieben\n                                   Title: Senior Vice President\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6710],"corporate_contracts_industries":[9494],"corporate_contracts_types":[9623,9622],"class_list":["post-43529","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-anntaylor-stores-corp","corporate_contracts_industries-retail__clothing","corporate_contracts_types-planning__asset","corporate_contracts_types-planning"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43529","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43529"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43529"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43529"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43529"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}