**Exhibit10.2**

EXECUTION

SECOND AMENDED ANDRESTATED GUARANTEE

THIS SECOND AMENDED AND RESTATED GUARANTEE (“Guarantee”),dated August 22, 2007, is made by New York & Company, Inc., a Delawarecorporation (“NY&Co”), Lerner New York Holding, Inc., a Delawarecorporation (“Parent”), Nevada Receivable Factoring, Inc., a Nevada corporation(“Nevada Factoring”) Associated Lerner Shops of America, Inc., a New Yorkcorporation (“Associated Lerner”), and Lerner New York GC, LLC, an Ohio limitedliability company (“Lerner GC” and together with NY&Co, Parent, NevadaFactoring and Associated Lerner, collectively, “Guarantors” and each a “Guarantor”)each having an address at 450 West 33rd Street, New York, New York 10001, in favor ofWachovia Bank, National Association, a national banking association, in itscapacity as agent for the Lenders and the Bank Product Providers (in suchcapacity, “Agent”), having an office at 1133 Avenue of the Americas, New York,New York 10036.

WITNESSETH :

WHEREAS, NY&Co previously guaranteed theobligations of Lerner New York, Inc. (“Lerner” and together with Lernco, Inc. (“Lernco”)pursuant to the Amended and Restated Guaranty and Security Agreement, dated asof March 16, 2004, by and between NY&Co and Agent (as in effect on the datehereof, the “Existing Guaranty”).

WHEREAS, Lerner, Lernco and Jasmine Company, Inc. (“Jasmine”and together with Lerner and Lernco, each individually a “Borrower” andcollectively, “Borrowers”), Agent and the persons from time to time party tothe Loan Agreement (as hereinafter defined) as lenders (collectively, “Lenders”),have amended and restated or are about to amend and restate the existingfinancing arrangements of Agent and Lenders. Borrowers and Guarantors pursuantto which Lenders (or Agent on behalf of Lenders) may make loans and advancesand provide other financial accommodations to Borrowers as set forth in theSecond Amended and Restated Loan and Security Agreement, dated as of the datehereof, by and among Agent, Lenders, Borrowers and Guarantors (as the same nowexists or may hereafter be amended, modified, supplemented, extended, renewed,restated or replaced, the “Loan Agreement”) and other agreements, documents andinstruments referred to therein or at any time executed and/or delivered inconnection therewith or related thereto, including, but not limited to, thisGuarantee (all of the foregoing, together with the Loan Agreement, as the samenow exist or may hereafter be amended, modified, supplemented, extended,renewed, restated or replaced, being collectively referred to herein as the “FinancingAgreements”).

WHEREAS, in order to induce Agent and the Lenders to enter into theLoan Agreement and to continue to make loans and other credit accommodationsunder the Loan Agreement, Guarantors desire to amend and restate the ExistingGuaranty in its entirety as set forth herein.

WHEREAS, due to the close business and financialrelationships between Borrowers and each Guarantor, in consideration of thebenefits which will accrue to each Guarantor and as an inducement for and inconsideration of Lenders (or Agent on behalf of Lenders) making loans andadvances and providing other financial accommodations to Borrowers pursuant tothe Loan Agreement and the other Financing Agreements each Guarantor has agreedto guarantee the payment and performance of the Guaranteed Obligations (ashereinafter defined) on the terms set

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forth herein;

NOW, THEREFORE, in consideration of the premises andfor other good and valuable consideration, the receipt and sufficiency of whichare hereby acknowledged, each Guarantor hereby jointly and severally agrees infavor of Agent and Lenders as follows:

# 1.             Guarantee.

## (a)           EachGuarantor absolutely and unconditionally, jointly and severally, guarantees andagrees to be liable for the full and indefeasible payment and performance whendue of the following (all of which are collectively referred to herein as the “GuaranteedObligations”):  (i) all obligations,liabilities and indebtedness of any kind, nature and description of Borrowersto Agent or any Lender or any of their Affiliates (including all Obligationsarising under or in connection with any Bank Products), including principal,interest, charges, fees, costs and expenses, however evidenced, whether asprincipal, surety, endorser, guarantor or otherwise, arising under the LoanAgreement or any of the other Financing Agreements, whether now existing orhereafter arising, whether arising before, during or after the initial or anyrenewal term of the Loan Agreement or after the commencement of any case withrespect to any Borrower under the United States Bankruptcy Code or any similarstatute (including, without limitation, the payment of interest and otheramounts, which would accrue and become due but for the commencement of suchcase, whether or not such amounts are allowed or allowable in whole or in partin any such case and including loans, interest, fees, charges and expensesrelated thereto and all other obligations of such Borrower or its successors toAgent and any Lender arising after the commencement of such case), whetherdirect or indirect, absolute or contingent, joint or several, due or not due,primary or secondary, liquidated or unliquidated, secured or unsecured, andhowever acquired by Agent or any Lender and (ii) all expenses (including,without limitation, attorneys’ fees and legal expenses) incurred by Agent orany Lender in connection with the preparation, execution, delivery, recording,administration, collection, liquidation, enforcement and defense of anyBorrower’s obligations, liabilities and indebtedness as aforesaid to Agent orany Lender, the rights of Agent or any Lender in any collateral or under thisGuarantee and all other Financing Agreements or in any way involving claims byor against Agent or any Lender directly or indirectly arising out of or relatedto the relationships between any Borrower, any Guarantor or any other Obligor(as hereinafter defined) and Agent or any Lender, whether such expenses areincurred before, during or after the initial or any renewal term of the LoanAgreement and the other Financing Agreements or after the commencement of anycase with respect to any Borrower or any Guarantor under the United StatesBankruptcy Code or any similar statute.

## (b)           ThisGuarantee is a guaranty of payment and not of collection.  Each Guarantor agrees that Agent or Lendersneed not attempt to collect any Guaranteed Obligations from any Borrower, anyGuarantor or any other Obligor (as hereinafter defined) or to realize upon anyCollateral (as defined in the Loan Agreement), but may require any Guarantor tomake immediate payment of all of the Guaranteed Obligations to Agent, for thebenefit of Lenders and the Bank Product Providers, when due, whether bymaturity, acceleration or otherwise, or at any time thereafter may apply anyamounts received in respect of the Guaranteed Obligations to any of theGuaranteed Obligations, in whole or in part (including reasonable attorneys’fees and legal expenses incurred by Agent or any Lender with respect thereto orotherwise chargeable to Borrowers or Guarantors) and in such order as Agent mayelect.

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## (c)           Paymentby Guarantors shall be made to Agent at the office of Agent from time to timeon demand as Guaranteed Obligations become due. Guarantors shall make all payments to Agent on the GuaranteedObligations free and clear of, and without deduction or withholding for or onaccount of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,fees, deductions, withholding restrictions or conditions of any kind.  One or more successive or concurrent actionsmay be brought hereon against any Guarantor either in the same action in whichany Borrower or any other Guarantor or any other Obligor is sued or in separateactions.  In the event any claim oraction, or action on any judgment, based on this Guarantee is brought againstany Guarantor, each Guarantor agrees not to deduct, set-off, or seek anycounterclaim for or recoup any amounts which are or may be owed by Agent or anyLender to such Guarantor.

## (d)           Notwithstandinganything to the contrary contained herein, the amount of the GuaranteedObligations payable by any Guarantor under this Guarantee shall be theaggregate amount of the Obligations unless a court of competent jurisdictionadjudicates each Guarantor’s obligations to be invalid, avoidable orunenforceable for any reason (including, without limitation, because of anyapplicable state,  federal or other lawrelating to fraudulent conveyances or transfers), in which case the amount ofthe Guaranteed Obligations payable by Guarantors hereunder shall be limited tothe maximum amount that could be guaranteed by Guarantors without renderingsuch Guarantors’ Obligations under this Guarantee invalid, avoidable orunenforceable under such applicable law.

# 2.             Waivers and Consents.

## (a)           Noticeof acceptance of this Guarantee, the making of loans and advances and providingother financial accommodations to Borrowers and presentment, demand, protest,notice of protest, notice of nonpayment or default and all other notices towhich any Borrower or any Guarantor is entitled are hereby waived by eachGuarantor.  Each Guarantor also waivesnotice of and hereby consents to, (i) any amendment, modification, waiver,supplement, extension, renewal, or restatement of the Loan Agreement and any ofthe other Financing Agreements, including, without limitation, extensions oftime of payment of or increase or decrease in the amount of any of theGuaranteed Obligations, the interest rate, fees, other charges, or any Collateral,and the guarantee made herein shall apply to the Loan Agreement and the otherFinancing Agreements and the Guaranteed Obligations as so amended, modified,supplemented, renewed, restated or extended, increased or decreased, (ii) thetaking, exchange, surrender and releasing of Collateral or guarantees now or atany time held by or available to Agent for itself and the benefit of Lendersfor the obligations of any Borrower, Guarantor or any other party at any timeliable on or in respect of the Guaranteed Obligations or who is the owner ofany property which is security for the Guaranteed Obligations (individually, an“Obligor” and collectively, the “Obligors”), including, without limitation, thesurrender or release by Agent of any one Guarantor hereunder, (iii) theexercise of, or refraining from the exercise of any rights against anyBorrower, any Guarantor or any other Obligor or any Collateral, (iv) thesettlement, compromise or release of, or the waiver of any default with respectto, any of the Guaranteed Obligations and (v) any financing by Agent and/or anyLender of any Borrower under Section 364 of the United States Bankruptcy Codeor consent to the use of cash collateral by Agent and/or Lenders under Section363 of the United States Bankruptcy Code. Each Guarantor agrees that the amount of the Guaranteed Obligationsshall not be diminished and the liability of Guarantors hereunder shall not beotherwise impaired or affected by any of the foregoing.

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## (b)           Noinvalidity, irregularity or unenforceability of all or any part of theGuaranteed Obligations shall affect, impair or be a defense to this Guarantee,nor shall any other circumstance which might otherwise constitute a defenseavailable to or legal or equitable discharge of any Borrower in respect of anyof the Guaranteed Obligations, or any one Guarantor in respect of thisGuarantee, affect, impair or be a defense to this Guarantee.  Without limitation of the foregoing, theliability of Guarantors hereunder shall not be discharged or impaired in anyrespect by reason of any failure by Agent or any Lender to perfect or continueperfection of any lien or security interest in any collateral or any delay byAgent or any Lender in perfecting any such lien or security interest.  As to interest, fees and expenses, whetherarising before or after the commencement of any case with respect to anyBorrower under the United States Bankruptcy Code or any similar statute, eachGuarantor shall be liable therefor, even if such Borrower’s liability for suchamounts does not, or ceases to, exist by operation of law.  Each Guarantor acknowledges that Agent andLenders have not made any representations to any Guarantor with respect to anyBorrower, any other Obligor or otherwise in connection with the execution anddelivery by Guarantors of this Guarantee and such Guarantors are not in anyrespect relying upon Agent or any Lender or any statements by Agent or anyLender in connection with this Guarantee.

## (c)           Unlessand until the indefeasible payment and satisfaction in full of all of theGuaranteed Obligations in immediately available funds and the termination ofthe financing arrangements of Agent and Lenders with Borrowers, to the fullestextent permitted by law, each Guarantor hereby irrevocably and unconditionallywaives and relinquishes (i) all statutory, contractual, common law, equitableand all other claims against any Borrower, any Collateral for the GuaranteedObligations or other assets of any Borrower or any other Obligor, forsubrogation, reimbursement, exoneration, contribution, indemnification, setoffor other recourse in respect to sums paid or payable to Agent or any Lender byeach Guarantor hereunder and (ii) any and all other benefits which anyGuarantor might otherwise directly or indirectly receive or be entitled toreceive by reason of any amounts paid by or collected or due from Guarantors,Borrowers or any other Obligor upon the Guaranteed Obligations or realized fromtheir property.  The foregoing waiver ofrights is made in favor of Agent, the Lenders, and their respective successorsand assigns only and shall not be deemed a waiver of such rights for thebenefit of any other creditor of Borrower or any other Obligor.

# 3.             Subordination.  Payment of all amounts now or hereafter owedto any Guarantor by any Borrower or any other Obligor is hereby subordinated inright of payment to the indefeasible payment in full of the GuaranteedObligations and all such amounts and any security and guarantees therefor arehereby assigned to Agent as security for the Guaranteed Obligations.

# 4.             Acceleration.  Notwithstanding anything to the contrarycontained herein or any of the terms of any of the other Financing Agreements,the liability of Guarantors for the entire Guaranteed Obligations shall matureand become immediately due and payable, even if the liability of any Borroweror any other Obligor therefor does not, upon the occurrence of any act,condition or event which constitutes an Event of Default as such term isdefined in the Loan Agreement.

# 5.             Account Stated. The booksand records of Agent showing the account between Agent and Borrower shall beadmissible in evidence in any action or proceeding against or involvingGuarantors as prima facie proof of the items therein set forth, and the monthly

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# statements of Agentrendered to Borrower, to the extent to which no written objection is madewithin thirty (30) days from the date of sending thereof to Borrower, shall bedeemed conclusively correct and constitute an account stated between Agent andBorrower and be binding on Guarantors.

# 6.             Termination.  This Guarantee is continuing, unlimited,absolute and unconditional.  AllGuaranteed Obligations shall be conclusively presumed to have been created inreliance on this Guarantee.  EachGuarantor shall continue to be liable hereunder until one of Agent’s officersactually receives a written termination notice from a Guarantor sent to Agentat its address set forth above by certified mail, return receipt requested andthereafter as set forth below.  Suchnotice received by Agent from any one Guarantor shall not constitute arevocation or termination of this Guarantee as to any other Guarantor.  Revocation or termination hereof by anyGuarantor shall not affect, in any manner, the rights of Agent or anyobligations or duties of any Guarantor (including any Guarantor which may havesent such notice) under this Guarantee with respect to (a) GuaranteedObligations which have been created, contracted, assumed or incurred prior tothe receipt by Agent of such written notice of revocation or termination asprovided herein, including, without limitation, (i) all amendments, extensions,renewals and modifications of such Guaranteed Obligations (whether or notevidenced by new or additional agreements, documents or instruments executed onor after such notice of revocation or termination), (ii) all interest, fees andsimilar charges accruing or due on and after revocation or termination, and(iii) all attorneys’ fees and legal expenses, costs and other expenses paid orincurred on or after such notice of revocation or termination in attempting tocollect or enforce any of the Guaranteed Obligations against Borrowers,Guarantors or any other Obligor (whether or not suit be brought), or (b)Guaranteed Obligations which have been created, contracted, assumed or incurredafter the receipt by Agent of such written notice of revocation or terminationas provided herein pursuant to any contract entered into by Agent or any Lenderprior to receipt of such notice.  Thesole effect of such revocation or termination by any Guarantor shall be toexclude from this Guarantee the liability of such Guarantor for thoseGuaranteed Obligations arising after the date of receipt by Agent of suchwritten notice which are unrelated to Guaranteed Obligations arising ortransactions entered into prior to such date. Without limiting the foregoing, this Guarantee may not be terminated andshall continue so long as the Loan Agreement shall be in effect (whether duringits original term or any renewal, substitution or extension thereof).

# 7.             Reinstatement.  If after receipt of any payment of, orproceeds of Collateral applied to the payment of, any of the GuaranteedObligations, Agent or any Lender or Bank Product Provider is required tosurrender or return such payment or proceeds to any Person for any reason, thenthe Guaranteed Obligations intended to be satisfied by such payment or proceedsshall be reinstated and continue and this Guarantee shall continue in fullforce and effect as if such payment or proceeds had not been received by Agentor such Lender or Bank Product Provider. Each Guarantor shall be liable to pay to Agent and each Lender, and doesindemnify and hold Agent and such Lender or Bank Product Provider harmless forthe amount of any payments or proceeds surrendered or returned.  This Section 7 shall remain effectivenotwithstanding any contrary action which may be taken by Agent or any Lenderor Bank Product Provider in reliance upon such payment or proceeds.  This Section 7 shall survive the terminationor revocation of this Guarantee.

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# 8.             Amendments and Waivers.  Neither this Guarantee nor any provisionhereof shall be amended, modified, waived or discharged orally or by course ofconduct, but only by a written agreement signed by an authorized officer ofAgent and by the Guarantors.  Agent shallnot by any act, delay, omission or otherwise be deemed to have expressly orimpliedly waived any of its rights, powers and/or remedies unless such waivershall be in writing and signed by an authorized officer of Agent.  Any such waiver shall be enforceable only tothe extent specifically set forth therein. A waiver by Agent of any right, power and/or remedy on any one occasionshall not be construed as a bar to or waiver of any such right, power and/orremedy which Agent would otherwise have on any future occasion, whether similarin kind or otherwise.

# 9.             Corporate Existence, Power andAuthority.  Each Guarantor is acorporation duly organized and in good standing under the laws of its state orother jurisdiction of incorporation and is duly qualified as a foreigncorporation and in good standing in all states or other jurisdictions where thenature and extent of the business transacted by it or the ownership of assetsmakes such qualification necessary, except for those jurisdictions in which thefailure to so qualify would not have a material adverse effect on the financialcondition, results of operation or businesses of any Guarantor or the rights ofAgent hereunder or under any of the other Financing Agreements.  The execution, delivery and performance ofthis Guarantee is within the corporate powers of each Guarantor, have been dulyauthorized and are not in contravention of law or the terms of the certificatesof incorporation, by laws, or other organizational documentation of anyGuarantor, or any indenture, agreement or undertaking to which any Guarantor isa party or by which any Guarantor or its property are bound.  This Guarantee constitutes the legal, validand binding obligation of each Guarantor enforceable in accordance with itsterms.  Any one Guarantor signing thisGuarantee shall be bound hereby whether or not any other Guarantor or any otherperson signs this Guarantee at any time.

# 10.           Governing Law; Choice of Forum;Service of Process; Jury Trial Waiver.

## (a)           Thevalidity, interpretation and enforcement of this Guarantee and any disputearising out of the relationship between any Guarantor and Agent or any Lender,whether in contract, tort, equity or otherwise, shall be governed by the internallaws of the State of New York, but excluding any principles of conflicts of lawor other rule of law that would cause the application of the law of anyjurisdiction other than the laws of the State of New York.

## (b)           EachGuarantor hereby irrevocably consents and submits to the non-exclusivejurisdiction of the Supreme Court of the State of New York for New York Countyand the United States District Court for the Southern District of New York,whichever Agent may elect, and waives any objection based on venue or forum nonconveniens with respect to any action instituted therein arising under thisGuarantee or any of the other Financing Agreements or in any way connected withor related or incidental to the dealings of any Guarantor and Agent or any Lenderin respect of this Guarantee or any of the other Financing Agreements or thetransactions related hereto or thereto, in each case whether now existing orhereafter arising and whether in contract, tort, equity or otherwise, andagrees that any dispute arising out of the relationship between any Guarantoror any Borrower and Agent or any Lender or the conduct of any such persons inconnection with this Guarantee, the other Financing Agreements or otherwiseshall be heard only in the courts described above (except that Agent andLenders shall have the right to bring any action or proceeding against anyGuarantor or its property in the courts of any other jurisdiction which Agentdeems necessary or appropriate in order to realize

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## on any collateral at any time granted by any Borrower or any Guarantorto Agent or any Lender or to otherwise enforce its rights against any Guarantoror its property).

## (c)           EachGuarantor hereby waives personal service of any and all process upon it andconsents that all such service of process may be made by certified mail (returnreceipt requested) directed to its address set forth in Section 11 hereof andservice so made shall be deemed to be completed five (5) days after the sameshall have been so deposited in the U.S. mails, or, at Agent’s option, byservice upon any Guarantor in any other manner provided under the rules of anysuch courts.  Within thirty (30) daysafter such service, any Guarantor so served shall appear in answer of suchprocess, failing which such Guarantor shall be deemed in default and judgmentmay be entered by Agent against such Guarantor for the amount of the claim andother relief requested.

## (d)           EACHGUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTIONOR CAUSE OF ACTION (i) ARISING UNDER THIS GUARANTEE OR ANY OF THE OTHERFINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTALTO THE DEALINGS OF ANY OF GUARANTORS AND AGENT OR ANY LENDER IN RESPECT OF THISGUARANTEE OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATEDHERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, ANDWHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY ANDTHAT ANY GUARANTOR, ANY LENDER OR AGENT MAY FILE AN ORIGINAL COUNTERPART OF ACOPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OFGUARANTORS, LENDERS AND AGENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

## (e)           Agentand Lenders shall not have any liability to Guarantors (whether in tort,contract, equity or otherwise) for losses suffered by Guarantors in connectionwith, arising out of, or in any way related to the transactions or relationshipscontemplated by this Guarantee, or any act, omission or event occurring inconnection herewith, unless it is determined by a final and non-appealablejudgment or court order binding on Agent or such Lender that the losses werethe result of acts or omissions constituting gross negligence or willfulmisconduct.  In any such litigation,Agent and Lenders shall be entitled to the benefit of the rebuttablepresumption that it acted in good faith and with the exercise of ordinary carein the performance by it of the terms of the Loan Agreement and the otherFinancing Agreements.

# 11.           Notices.  All notices, requests and demands hereundershall be in writing and deemed to have been given or made: if delivered inperson, immediately upon delivery; if by telex, telegram or facsimiletransmission, immediately upon sending and upon confirmation of receipt; if bynationally recognized overnight courier service with instructions to deliverthe next business day, one (1) business day after sending; and if by certifiedmail, return receipt requested, five (5) days after mailing.  All notices, requests and demands upon theparties are to be given to the following addresses (or to such other address asany party may designate by notice in accordance with this Section):

| If to a Guarantor: |   | Lerner New York Holding, Inc. |
|--------------------|--------|-------------------------------|

 

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|                          |   | 450 West 33rd Street                     |
|--------------------------|--------|-----------------------------------------------|
|                     |   | New York, New  York 10001                     |
|                     |   | Attention: Chief  Financial Officer           |
|                     |   | Telephone No.:  (212) 884-2110                |
|                     |   | Telecopy No.:  (212) 884-2103                 |
|                     |   |                                          |
| If to Agent and  Lender: |   | Wachovia Bank, National Association, as Agent |
|                     |   | 1133 Avenue of  the Americas                  |
|                     |   | New York, New  York 10036                     |
|                     |   | Attention:  Portfolio Manager                 |
|                     |   | Telephone No.:  (212) 545-4280                |
|                     |   |                                          |

# 12.           Partial Invalidity.  If any provision of this Guarantee is held tobe invalid or unenforceable, such invalidity or unenforceability shall notinvalidate this Guarantee as a whole, but this Guarantee shall be construed asthough it did not contain the particular provision held to be invalid or unenforceableand the rights and obligations of the parties shall be construed and enforcedonly to such extent as shall be permitted by applicable law.

# 13.           Entire Agreement.  This Guarantee represents the entireagreement and understanding of this parties concerning the subject matterhereof, and supersedes all other prior agreements, understandings, negotiationsand discussions, representations, warranties, commitments, proposals, offersand contracts concerning the subject matter hereof, whether oral or written.

# 14.           Successors and Assigns.  This Guarantee, the other FinancingAgreements and any other document referred to herein or therein shall bebinding upon each Guarantor and their respective successors and assigns andshall inure to the benefit of Agent and each Lender and their respectivesuccessors, endorsees, transferees and assigns. The liquidation, dissolution or termination of any Guarantor shall notterminate this Guarantee as to such entity or as to any of the otherGuarantors.

# 15.           Construction.

## (a)           Allreferences to the term “Guarantors” wherever used herein shall mean each andall of Guarantors and their respective successors and assigns, individually andcollectively, jointly and severally (including, without limitation, anyreceiver, trustee or custodian for any of Guarantors or any of their respectiveassets or any of Guarantors in its capacity as debtor or debtor-in-possessionunder the United States Bankruptcy Code). All references to the term “Lender” wherever used herein shall meanLender and its successors and assigns and all references to the term “Borrower”wherever used herein shall mean Borrower and its successors and assigns(including, without limitation, any receiver, trustee or custodian for Borroweror any of its assets or Borrower in its capacity as debtor ordebtor-in-possession under the United States Bankruptcy Code).  All references to the term “Person” or “person”wherever used herein shall mean any individual, sole proprietorship,partnership, corporation (including, without limitation, any corporation whichelects subchapter S status under the Internal Revenue Code of 1986, asamended), limited liability company, limited liability partnership, businesstrust, unincorporated association, joint stock corporation, trust, joint ventureor other entity or

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## any government or any agency or instrumentality of politicalsubdivision thereof.  All references tothe plural shall also mean the singular and to the singular shall also mean theplural.

## (b)           Capitalizedterms not otherwise defined herein shall have the respective meanings ascribedthereto in the Loan Agreement.

# 16.           Acknowledgment and Restatement.

## (a)           EachGuarantor hereby acknowledges, confirms and agrees that Guarantors are indebtedto Agent and Lenders in respect of any obligations, liabilities or indebtednessfor loans, advances and letter of credit accommodations to Borrowers under theExisting  Loan Agreement, theExisting  Guaranty or the other Existing  Financing Agreements, together with allinterest accrued and accruing thereon, and all fees, costs, expenses and othercharges relating thereto, all of which are unconditionally owing by Guarantorsto Agent without offset, defense, or counterclaim of any kind, nature ordescription whatsoever. Each Guarantor hereby ratifies, assents, adopts andagrees to pay all of the Obligations arising before, on or after the datehereof.

## (b)           EachGuarantor hereby acknowledges, confirms and agrees that Agent has and shallcontinue to have, for itself and the benefit of Lenders, valid, enforceable andperfected first priority security interests in and liens upon all of theCollateral heretofore granted to Agent pursuant to the Existing  Guarantyto secure all of the Obligations as amended and restated pursuant to the LoanAgreement subject only to liens permitted under the Loan Agreement and theother Financing Agreements.

## (c)           EachGuarantor hereby acknowledges, confirms and agrees that: (i) the Existing  Guaranty has been duly executed and deliveredby Guarantors and is in full force and effect as of the date hereof; (ii) theagreements and obligations of Guarantors contained in the Existing  Guaranty constitute legal, valid and bindingobligations of Guarantors enforceable against it in accordance with the termsthereof, and Guarantors have no valid defense, offset or counterclaim to theenforcement of such obligations; and (iii) Agent and Lenders are entitled toall of the rights, remedies and benefits provided for in the Existing Guaranty.

## (d)           Exceptas otherwise stated in Section 16(b) hereof and in this Section 16(d), as ofthe date hereof, the terms, conditions, agreements, covenants, representationsand warranties set forth in the Existing Guaranty are hereby amended and restated in their entirety, and as soamended and restated, are replaced and superseded by the terms, conditionsagreements, covenants, representations and warranties set forth in thisAgreement, except that nothing herein shall impair or adversely affect thecontinuation of the liability of Guarantors for the Obligations or the securityinterests and liens heretofore granted, pledged or assigned to Agent for itselfand the benefit of Lenders.  Theamendment and restatement contained herein shall not, in any manner, beconstrued to constitute payment of, or impair, limit, cancel or extinguish, orconstitute a novation in respect of, the indebtedness and other obligations andliabilities of Guarantors evidenced by or arising under the Existing Guarantyand any of the other Existing  FinancingAgreements to which Guarantors are a party, and the liens and securityinterests securing such indebtedness and other obligations and liabilitiesshall not in any manner be impaired, limited, terminated, waived or released.

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IN WITNESS WHEREOF, each Guarantor has executed anddelivered this Guarantee as of the day and year first above written.

 
|   |   | NEW YORK & COMPANY, INC.              |
|--------|--------|-------------------------------------------|
|   |   |                                      |   |   |
|   |   | By:                                       |   | /s/ Ronald  Ristau |
|   |   |                                      |   |   |
|   |   | Title:                                    |   | President, Chief  Financial Officer and Secretary |
|   |   |                                      |   |   |
|   |   |                                      |   |   |
|   |   | NEVADA  RECEIVABLE FACTORING, INC.        |
|   |   |                                      |   |   |
|   |   | By:                                       |   | /s/ Ronald  Ristau |
|   |   |                                      |   |   |
|   |   | Title:                                    |   | Secretary |
|   |   |                                      |   |   |
|   |   |                                      |   |   |
|   |   | LERNER NEW YORK  HOLDING, INC.            |
|   |   |                                      |   |   |
|   |   | By:                                       |   | /s/ Ronald  Ristau |
|   |   |                                      |   |   |
|   |   | Title:                                    |   | President, Chief  Financial Officer and Secretary |
|   |   |                                      |   |   |
|   |   |                                      |   |   |
|   |   | LERNER NEW YORK  GC, LLC                  |
|   |   |                                      |   |   |
|   |   | By:                                       |   | /s/ Ronald  Ristau |
|   |   |                                      |   |   |
|   |   | Title:                                    |   | President |
|   |   |                                      |   |   |
|   |   |                                      |   |   |
|   |   | ASSOCIATED  LERNER SHOPS OF AMERICA, INC. |
|   |   |                                      |   |   |
|   |   | By:                                       |   | /s/ Ronald Ristau |
|   |   |                                      |   |   |
|   |   | Title:                                    |   | Secretary |

 

 

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ACKNOWLEDGED AND AGREED:

WACHOVIA BANK, NATIONAL ASSOCIATION,as Agent

 
| By:    |   | /s/ Laurence Forte |   |   |
|--------|--------|--------------------|--------|--------|
| Name:  |   | Laurence Forte     |   |   |
| Title: |   | Managing  Director |   |   |

 

 

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