ANNTAYLOR STORES CORPORATION NON-QUALIFIED DEFERRED COMPENSATION PLAN

Exhibit 10.42

ANNTAYLOR STORES CORPORATION

NON-QUALIFIED DEFERRED COMPENSATION PLAN

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Table of Contents

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ANNTAYLOR STORES CORPORATION

NON-QUALIFIED DEFERRED COMPENSATION PLAN

Article 1

Establishment and Purpose of the Plan

Article 2

Definitions

Whenever used in the Plan, the following terms will have the meanings as set forth in this Article, unless a different meaning is clearly required by the context in which the term is used.

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Article 3

Participation in the Plan

Article 4

Credits

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Article 5

Distribution of Benefits

(a) Amounts Credited Under 4.1(a), (b) and (c). Amounts credited under 4.1 (a), (b) and (c) will be distributed as a lump sum payment six months after a Separation from Service or according to a fixed schedule elected by the Participant prior to the beginning of each calendar year in which the Participant defers compensation under the Plan.

(b) Amounts Credited Under 4.1(d).

Vested amounts credited under 4.1(d) will be distributed only upon Separation from Service, and in the following manner:

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(a) Death or Disability: For amounts credited under 4.1 (a), (b), and (c) that the Participant has elected to receive according to a fixed schedule, distribution will accelerate upon the Participant’s Death or Disability.

(b) Change in Control: For amounts credited under 4.1 (a), (b), (c), and (d), distributions will accelerate upon a Change in Control. (See 4.3 above for vesting rules upon a Change in Control.)

(c) Unforeseeable Emergency: If a Participant has an Unforeseeable Emergency, the Participant may elect to receive a lump sum distribution equal to the amount requested or, if less, the maximum amount determined by the Administrator to be permitted to be distributed under this sub-section (c), 409A of the Code, and the regulations promulgated thereunder. A distribution due to an Unforeseeable Emergency (a) may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets (to the extent that any such liquidation would not itself cause severe financial hardship), or by cessation of deferrals under the Plan; and (b) may not exceed the amount reasonably necessary to satisfy the emergency need (which may include any amounts necessary to pay any federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution).

(d) No Acceleration. Except as provided for in subsection (a), (b), and (c) above, in no event will the time or schedule of any payment be accelerated except in the instance of (a) payments to someone other than the Participant that are needed to fulfill a domestic relations order as defined in Code §414(q); (b) payments necessary to comply with federal rules against conflicts of interest; and (c) the minimum amount necessary to pay FICA taxes required by Code §3121(v)(2) (and the related income tax withholding triggered by the distribution). In addition, the Plan may be amended at any time to add a provision permitting an automatic lump sum payment of not more than $10,000 upon termination of a Participant’s entire interest in the Plan, provided the distribution is made not later than the later of (a) 2  ¹/2 months after a Participant’s Separation from Service; or (b) the end of the calendar year which contains the date of the Participant’s Separation from Service.

Article 6

Plan Administration

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Article 7

Investment of Rabbi Trust Assets

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(a) Directed Investment Accounts. The Administrator will designate which accounts can be directed and whether the Participant or other payee can direct all or only a portion of each such account. Any such designation can be changed by the Administrator from time to time by communicating new procedures to the Participants.

(b) Investment Funds. Any amount a Participant or other payee directs will be put into a segregated investment selected by him or her; or among alternative investment funds offered under the Plan. With respect to any Plan assets which are invested in the Trust Fund, such alternative investment funds will be under the full control and management of the Trustees. Alternatively, if investments outside the Trustee’s control are allowed, Participants and payees may not direct that investments be made in collectibles, other than U.S. Government gold and silver coins. If a Participant or payee fails to make a timely investment election, at the Administrator’s discretion either no election will be deemed to have been made or the Participant or other payee will be considered to have made an election to invest 100% of his or her account in an investment option, the primary objective of which is the preservation of principal, until such time as an investment decision by the Participant or other payee becomes effective.

(c) Investment Form. A Participant’s investment direction will be made in a form acceptable to, and in accordance with procedures established by, the Administrator. Unless changed by procedures established by the Administrator and communicated to Participants and other payees, (1) a Participant or other payee may change his or her investment election by filing a new investment designation form with the Administrator or the Administrator’s designee; (2) any such change will be effective no later than the first day of the next investment election period; and (3) investment election periods will be established at the discretion of the Administrator.

(d) Transfers of Assets Between Funds. Unless changed by procedures established by the Administrator and communicated to Participants and other payees, if multiple investment fund options are made available, a Participant or other payee may elect to transfer all or part of his or her account from one investment fund to another investment fund by filing an investment designation form with the Administrator or with the Administrator’s designee within a reasonable administrative period prior to the next period for which investment options may be elected to be transferred. The funds will be transferred as soon as practicable prior to, or by the start of, the new election period. If made available, telephone or other electronic or computer transfers will be permitted under uniform procedures approved adopted by the Administrator.

(e) Administrator Responsibility. Either the Administrator or the Administrator’s designee will be responsible when transmitting Employer and Employee credits or other Plan assets to indicate the dollar amount which is to be credited to each investment fund on behalf of each Participant or other payee.

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(f) No Administrator Liability. Except as may otherwise be provided under the terms of the Plan, neither the Administrator nor the Employer will be liable to the Participant or other payee (or to his or her Beneficiaries) for any loss resulting from action taken under this Section at the direction of the Participant or other payee.

(g) Charges and Fees. Any charge or fee, including legal fees, incurred in connection with a Participant’s direction under this Section of the Plan may be charged to and paid from the assets of the Participant’s account.

(h) Adoption of Procedures. All investment designations by Participants or other payees will be made subject to and in accordance with any rules or procedures the Administrator may adopt. Such rules or procedures, when properly executed in a written document, will be deemed incorporated in this Plan.

Article 8

Amendment or Termination of Plan

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Article 9

Miscellaneous Provisions

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This Agreement is executed as of the 22^nd day of January, 2008.

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SAMPLE CORPORATION

NON-QUALIFIED DEFERRED COMPENSATION PLAN

Administrative Policy Regarding Claims Procedures

In accordance with Section 9.12 of ANNTAYLOR STORES CORPORATION NON-QUALIFIED DEFERRED COMPENSATION PLAN (the “Plan”), ANNTAYLOR STORES CORPORATION and its subsidiaries (the “Sponsoring Employer”) hereby implements the rules and procedures set forth below to govern claims for benefit under the Plan. The procedures set forth in the policy here are the sole and exclusive remedy for an Employee, Participant or Beneficiary (“Claimant”) to make a claim for benefits, and these procedures will be administered and interpreted in a manner consistent with the requirements of ERISA §503 and the regulations thereunder. All claims determinations that are made by the Administrator, the Appropriate Named Fiduciary, and/or the Committee (if one has been appointed under Section 8.3 of the Plan) will be made in accordance with this procedure and will be applied consistently to similarly situated Claimants. The terms used in this procedure will have the same meaning ascribed to those terms in the Plan.

Definitions

In applying the terms of this Policy, any terms used herein which are also used in the Plan will have the same meaning ascribed to them under this Policy as ascribed to them under the terms of the Plan except as may otherwise be provided in this Policy. In addition, the following terms specific to this Policy will have the following meanings:

Appropriate Named Fiduciary. For purposes of this Policy, the term “Appropriate Named Fiduciary” means either (1) if a Committee has been appointed by the Sponsoring Employer under Section 8.3 of the Plan, the Committee; (2) if a Committee has not been appointed pursuant to Section 8.3 of the Plan, the Administrator; or (3) if an appeal of the initial denial is made for Disability Benefits, then an individual who is neither the individual who made the initial adverse benefit determination that is the subject of the appeal, nor the subordinate of such individual. Furthermore, for purposes of this Policy, if a Committee has not been appointed by the Sponsoring Employer pursuant to Section 8.3 of the Plan, any reference to Committee will be considered a reference to the Administrator.

Disability Benefit. For purposes of this Policy, the term “Disability Benefit” means a benefit that, if available and provided by the Plan, becomes payable upon a determination of a Participant’s Disability, other than any disability that, pursuant to the terms of this Plan, is determined either by the Social Security Administration or under the Sponsoring Employer’s long term disability plan.

Initial Determination of a Claim

Written Claim. A Claimant (or the Claimant’s authorized representative) may file a claim for a benefit to which the Claimant believes he or she is entitled under the Plan. Claims must be filed in writing with the Administrator.

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Denial of a Claim. The Administrator, in its sole and complete discretion, will make all initial determinations as to the right of any person to benefits. If the claim is denied in whole or in part, the Administrator will send the Claimant a written or electronic notice (which electronic notice must comply with the standards imposed by Department of Labor Regulation §2520.104b-l(c)(l)(I), (iii), and (iv)) informing the Claimant of the denial. The notice must be written in a manner calculated to be understood by the Claimant and must contain the following information: (1) the specific reason or reasons for the denial; (2) reference to the specific plan provisions on which the denial is based; (3) a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; (4) a description of the Plan’s review (i.e., appeal) procedures and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under ERISA §502(a) following an adverse benefit determination on review; and (5) in the case of the Plan’s denial to provide Disability Benefits to a Claimant (a) if an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion; or a statement that such a rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol, or other criterion will be provided free of charge to the Claimant upon request; or (b) if the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the Claimant’s medical circumstances, or a statement that such explanation will be provided free of charge upon request.

Notice of a Claim Denial

Claims for Non-Disability Benefits. With respect to a claim for benefits that are not Disability Benefits, written or electronic notice of the denial will be given within a reasonable period of time (but no later than 90 days) from the date the Administrator receives the written claim, unless special circumstances require an extension of time for processing the claim. In no event may the extension exceed 90 days from the end of the initial 90-day period. If an extension is necessary, the Administrator will send the Claimant a written notice prior to the expiration of the initial 90-day period in which the Administrator indicates the special circumstances requiring an extension and the date by which the Administrator expects to render a decision.

Claims for Disability Benefits. With respect to a claim for Disability Benefits, written or electronic notice of the denial will be given within a reasonable period of time (but no later than 45 days) from the date the Administrator receives the written claim. The 45-day period can be extended by the Administrator for up to 30 days if the Administrator both determines that an extension is necessary due to matters beyond the control of the Administrator and notifies the Claimant, prior to the expiration of the initial 45-day period, of the circumstances requiring the extension and the date by which the Administrator expects to render a decision. If, prior to the end of the first 30-day extension period, the Administrator determines that, due to matters beyond the control of the Administrator, a decision cannot be rendered within that extension period, then the period for making the determination may be extended for up to an additional 30 days, provided the Administrator notifies the Claimant, prior to the expiration of the first 30-day extension period, of the circumstances requiring the extension and the date as of which the Administrator expects to render a decision. In the case of any extension under this paragraph, the

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notice of extension will specifically explain the standards on which entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and the Claimant will be afforded at least 45 days within which to provide the specified information.

Appeals Process

Request for Appeal. If the Administrator denies a claim in whole or in part, the Claimant may elect to appeal the denial. If the Claimant does not appeal the denial pursuant to the procedures set forth in this Policy, the denial will be final, binding and unappeasable. If a request for an appeal is timely filed, the Claimant will be afforded a full and fair review of the claim and the denial. As part of this review, the Claimant may submit written comments, documents, records, and other information relating to the claim, and the review will take into account all such comments, documents, records, or other information submitted by the Claimant, without regard to whether such information was submitted or considered in the Administrator’s initial benefit determination. The Claimant also may obtain, free of charge and upon request, records and other information relevant to the claim, without regard to whether such information was relied upon by the Administrator in making the initial benefit determination. The timing for an appeal of the initial denial of benefits (and other applicable provisions) is as follows:

Review of Appeal. The Appropriate Named Fiduciary will, in its sole and complete discretion, determine whether to uphold all or part of the initial claim denial. If on appeal the Appropriate

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Named Fiduciary determines that all or part of the initial denial should be upheld, the Administrator will send the Claimant a written or electronic notice informing the Claimant of its decision to uphold all or part of the initial denial, written in a manner calculated to be understood by the Claimant and containing the specific reason or reasons for the denial; a specific reference to pertinent Plan provisions on which the denial is based; a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents and other information relevant to the claim; and an explanation of the Claimant’s right to request arbitration and the applicable time limits for doing so. Any written or electronic notice informing the Claimant of its decision to uphold all or a portion of the initial denial will be given according to the following provisions:

Alternative Time for an Appeal to Be Decided. Notwithstanding the preceding section, if (1) a Committee is serving as the Appropriate Named Fiduciary, (2) the Committee holds regularly scheduled meetings on a quarterly or more frequent basis, and (3) the appeal of the initial denial is for benefits that are not Disability Benefits (however, if this Plan is a multi-Employer Plan, then this paragraph will also apply to Disability Benefits), then the Committee may make its determination of the claim on appeal at its next regularly scheduled meeting if the Committee receives the written request for appeal more than 30 days prior to its next regularly scheduled meeting or at the regularly scheduled meeting immediately following the next regularly scheduled meeting if the Committee receives the written request for appeal within 30 days of the next regularly scheduled meeting. If special circumstances require an extension, the decision may be postponed to the third regularly scheduled meeting following the Committee’s receipt of the written request for appeal if, prior to the expiration of the initial time period for review, the Claimant is provided with written notice, indicating the special circumstances requiring an extension and the date by which the Committee expects to render a decision. If the extension is required because the Claimant has not provided information that is necessary to decide the claim, the Committee may suspend the review period from the date on which notice of the extension is

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sent to the Claimant until the date on which the Claimant responds to the request for additional information. The Committee shall notify the Claimant of the benefit determination as soon as possible, but not later than 5 days after the benefit determination is made.

Voluntary Arbitration

If (1) a Claimant wishes to contest a final decision of the Appropriate Named Fiduciary and (2) the Claimant voluntarily chooses not to bring a civil action under ERISA §502(a) following an adverse benefit determination on appeal, then the Claimant and the Appropriate Named Fiduciary may agree to arbitration. If a Claimant agrees to arbitration, then a written request for arbitration must be filed by the Claimant (or the Claimant’s authorized representative) with the Administrator within 60 days (or such additional time as the Administrator may deem appropriate) after the date the Claimant receives the written decision of the Appropriate Named Fiduciary. The Claimant and the Administrator will each name an arbitrator within 20 days after the Administrator receives the Claimant’s written request for arbitration. The two arbitrators will jointly name a third arbitrator within 15 days after their appointment. If either party fails to select an arbitrator within the 20 day period, or if the two arbitrators fail to select a third arbitrator within 15 days after their appointment, then the Administrator will determine that either (1) the arbitration will cease, or (2) the presiding judge of the county court (or its equivalent) in the county in which the principal office of the Sponsoring Employer is located will appoint the other arbitrator or arbitrators. The arbitrators will render a decision within 60 days after the appointment of the third arbitrator and will conduct all proceedings pursuant to the laws of the state in which the Sponsoring Employer’s principal place of business is located and the then current Rules of the American Arbitration Association governing commercial transactions, to the extent such rules are not inconsistent with applicable state law. The cost of arbitration will be borne by the losing party or, if the decision is not clearly in favor of one party or the other, in the manner determined by the arbitrators. Pursuant to the Claimant’s voluntary choice to pursue arbitration, the arbitrators’ decision will be final, binding and unappeasable.

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