**Exhibit 10.5**

EXECUTED VERSION

**SECONDAMENDED AND RESTATED STOCK PLEDGE AGREEMENT**

THIS SECOND AMENDED ANDRESTATED STOCK PLEDGE AGREEMENT (this “Agreement”), dated as of August 22,2007, is entered into by and between LERNER NEW YORK, INC., a Delaware corporation(“Pledgor”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national bankingassociation, in its capacity as agent (in such capacity, “Pledgee”) for theLenders (as hereinafter defined) and Bank Product Providers (as defined in theLoan Agreement).

RECITALS

WHEREAS, Pledgor and Pledgeeentered into the Amended and Restated Stock Pledge Agreement, dated as of March16, 2004, as in effect on the date hereof (the “Existing Pledge Agreement”) and the other agreements,documents and instruments executed or delivered in connection therewith asheretofore amended (the “Existing Financing Agreements”).

WHEREAS, Pledgor owns onehundred percent (100%) of the issued and outstanding Capital Stock (as definedin the Loan Agreement) of each of Associated Lerner Shops of America, Inc., aNew York corporation (“Associated Lerner”), Lerner New York GC, LLC, anOhio limited liability company (“Lerner GC”), and Jasmine Company, Inc.,a Massachusetts corporation (“Jasmine”, and together with Lerner GC, AssociatedLerner, each a “Company” and collectively, the “Companies”), andmay from time to time in the future, subject to the terms and conditions setforth in the Financing Agreements, acquire one or more additional Subsidiaries(as defined in the Loan Agreement) (“Future Subsidiaries”).

WHEREAS, Pledgor,Jasmine, and Lernco, Inc. (“Lernco” and together with Pledgor and Jasmine, eachindividually a “Borrower” and collectively “Borrowers”), Pledgee and thepersons from time to time party to the Loan Agreement (as hereinafter defined)as lenders (collectively, “Lenders”), have amended and restated or areabout to amend and restate the existing financing arrangements of Pledgee,Lenders, Borrowers and Guarantors pursuant to which Lenders (or Pledgee onbehalf of Lenders) may make loans and advances and provide other financialaccommodations to Borrowers as set forth in the Second Amended and RestatedLoan and Security Agreement, dated as of the date hereof, by and among Pledgee,Lenders, Borrowers and Guarantors (as the same now exists or may hereafter beamended, modified, supplemented, extended, renewed, restated or replaced, the “LoanAgreement”) and other agreements, documents and instruments referred totherein or at any time executed and/or delivered in connection therewith orrelated thereto, including, but not limited to, this Agreement (all of theforegoing, together with the Loan Agreement, as the same now exist or mayhereafter be amended, modified, supplemented, extended, renewed, restated orreplaced, being collectively referred to herein as the “Financing Agreements”).

WHEREAS, Pledgor desires topledge to Pledgee, for its benefit and the ratable benefit of the Lenders andBank Product Providers (as defined in the Loan Agreement), a continuingsecurity interest in all of the Capital Stock of the Companies, any and all ofthe Future Subsidiaries organized under the laws of any jurisdiction within theUnited States of America (“Domestic Future Subsidiaries”) and 65% of theCapital Stock of all Future Subsidiaries

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organizedunder the laws of any jurisdiction outside of the United States of America (“ForeignFuture Subsidiaries”), in each case as collateral security for theObligations (as defined below).

WHEREAS, in order to inducePledgee and the Lenders to enter into the Loan Agreement, Pledgor and Pledgeedesire to amend and restate the Existing Pledge Agreement in its entirety asset forth herein.

AGREEMENT

NOW, THEREFORE, inconsideration of the foregoing facts the parties hereto agree as follows:

# 1.             Pledge. Pledgor hereby delivers, pledges and grants a continuing securityinterest to Pledgee, for Pledgor’s benefit and the ratable benefit of theLenders and the Bank Product Providers, in all of the Capital Stock of eachCompany, all of the Capital Stock of each Domestic Future Subsidiary and 65% ofthe Capital Stock of each Foreign Future Subsidiary, whether now or hereafterowned or beneficially owned by Pledgor, together with all proceeds,replacements, substitutions, newly issued stock, stock received by reason of astock split, bonus or any other form of issue, dividend or distribution withrespect to or arising from such stock (collectively, the “Collateral”).  Pledgor shall forthwith deliver to Pledgeethe Collateral together with stock powers in form and substance satisfactory toPledgee duly executed in blank, with signatures guaranteed, regarding theCollateral.  Pledgor hereby authorizesPledgee and its agents and attorneys to file any and all UCC financingstatements and amendments thereto deemed desirable by Pledgee to perfect orevidence the security interest in the Collateral granted hereunder.

# 2.             Obligations Secured.  The pledge and security interest effectuatedhereby shall secure all of Pledgor’s obligations to Pledgee and/or the Lenders,which obligations shall consist of all debts, obligations and liabilities ofPledgor to Pledgee and/or the Lenders under any Financing Agreement by whichPledgor is bound, including, without limitation, all obligations that areincluded in the definition of “Obligations” under the Loan Agreement(collectively, the “Obligations”).

# 3.             Representations And Warranties Regarding TheCollateral.  Pledgor represents andwarrants that:  (a) all of the shares ofstock described in Paragraph 1 hereof are fully paid, non-assessable andvalidly issued; (b) the Collateral was not issued in violation of any person’sor entity’s preemptive rights; (c) the Collateral is owned free and clear ofany and all security interests, pledges, options to purchase or sell,redemptions or liens, other than the liens in favor of Pledgee; (d) Pledgor hasfull power to convey the Collateral; (e) no financing statements covering theCollateral are recorded with any cognizant state official or recording office(other than in favor of Pledgee, for itself and the ratable benefit of theLenders and Bank Product Providers); and (f) the Collateral is free and clearof any claims, security interests or liens other than those in favor ofPledgee.

# 4.             Covenants. Pledgor will not permit Lerner GC to (i) authorize the amendment of oramend its articles of organization, operating agreement or other organizationaldocuments to provide that its Capital Stock is governed by Article 8 of theCode, or (ii) authorize the issuance of or issue certificates evidencing itsCapital Stock.

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# 5.             Events Of Default.  For purposes herein, “Event of Default”shall mean any “Event of Default” as defined under the Loan Agreement.  Pledgor hereby appoints Pledgee as itsattorney-in-fact to arrange, upon the occurrence and during the continuance ofan Event of Default, for a transfer of the Collateral on the books of anyCompany or Future Subsidiary, as applicable, to the name of Pledgee or to thename of Pledgee’s nominee.

# 6.             Voting Rights. During the term of this Agreement, so long as there shall not occur anyEvent of Default, Pledgor shall have the right to vote the Collateral on allcorporate questions for all purposes not inconsistent with the terms of thisAgreement.  Upon the occurrence and duringthe continuance of an Event of Default, Pledgee shall thereafter have, at itsdiscretion, the option to exercise all voting powers and other corporate rightspertaining to the Collateral.  Pledgeemay, upon or at any time after the occurrence of an Event of Default, at itsoption, transfer or register the Collateral or any part thereof into its own orits nominee’s name.

# 7.             Stock Adjustments And Dividends.  If during the term of this Agreement, anystock dividend, reclassification, readjustment or other change is declared ormade in the capital structure of any Company or Future Subsidiary or any optionincluded within the Collateral is exercised, or both, all new, substituted andadditional shares, or other securities, issued to Pledgor by reason of any suchchange or exercise shall be delivered to and held by Pledgee under the terms ofthis Agreement in the same manner as the Collateral originally pledgedhereunder.  During the term of thisAgreement and so long as there shall not have occurred an Event of Default,Pledgor shall have the right to receive any dividend or other distribution(other than dividends or distributions of stock) made on account of theCollateral; provided, however, that upon the occurrence of anEvent of Default, unless otherwise permitted under the terms of the Loan Agreementor the Intercompany Subordination Agreement (as defined in the Loan Agreement)Pledgor shall immediately deliver all such dividends or other distributions toPledgee in the same form received (except that dividends received in cash shallbe remitted to the Blocked Account) and in the same manner as the Collateralpledged hereunder.

# 8.             Warrants And Rights.  If during the term of this Agreement,subscription warrants or any other rights or options shall be issued inconnection with the Collateral, such warrants, rights and options shall beimmediately assigned by Pledgor to Pledgee to be held under the terms of thisAgreement in the same manner as the Collateral originally pledged hereunder.

# 9.             Remedies Upon Default.  In addition to the other remedies providedfor herein, in the Loan Agreement or otherwise available under applicable law,upon the occurrence and during the continuance of an Event of Default:

## (a)           Pledgee may:

### (i)            exercise in respect to theCollateral, any one or more of the rights and remedies available under the NewYork Uniform Commercial Code and other applicable law; and

### (ii)           sell or otherwise assign, give anoption or options to purchase or dispose of and deliver the Collateral (orcontract to do so), or any part thereof, in one or more parcels at public orprivate sale or sales, at

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### any exchange,broker’s board or at any of Pledgee’s offices or elsewhere upon such terms andconditions as it may deem advisable and at such prices as it may deem best, forcash, on credit or for future delivery without assumption of any credit risk,free of any claim or right of whatsoever kind (including any right or equity ofredemption) of Pledgor, which claim, right and equity are hereby expresslywaived and released.  Pledgee or anyLender shall have the right to the extent permitted by applicable law, upon anysuch sale or sales, public or private, to purchase the whole or any part of theCollateral so sold; provided, however, Pledgor shall not receiveany net proceeds, if any, of any such credit sale or future delivery until cashproceeds are actually received by Pledgee (which cash proceeds shall be appliedby Pledgee to the Obligations) and after all Obligations have been paid infull.  In case of any sale of all or anypart of the Collateral on credit or for future delivery, the Collateral so soldmay be retained by Pledgee until the selling price is paid by the purchaserthereof, but Pledgee shall incur no liability in case of the failure of suchpurchaser to pay for the Collateral so sold and, in case of such failure, theCollateral may again be sold as herein provided.

## (b)           Any notice required to begiven by Pledgee of a sale of the Collateral, or any part thereof, or of anyother intended action by Pledgee, which occurs not less than five (5) daysprior to such proposed action, shall constitute commercially reasonable andfair notice to Pledgor thereof.  If,after the occurrence of an Event of Default, a statement renouncing ormodifying any right to notification of sale or other intended disposition hasbeen signed by Pledgor, during the continuance of such Event of Default, nosuch notification need be given to Pledgor.

## (c)           Pledgee shall not be obligatedto make any sale or other disposition of the Collateral, or any part thereofunless the terms thereof shall, in its sole discretion, be satisfactory toit.  Pledgee may, if it deems itreasonable, postpone or adjourn the sale of any of the Collateral, or any partthereof, from time to time by an announcement at the time and place of suchsale or by announcement at the time and place of such postponed or adjournedsale, without being required to give a new notice of sale.  Pledgor agrees that Pledgee has noobligations to preserve rights against prior parties to the Collateral.

## (d)           Pledgor acknowledges andagrees that Pledgee may comply with limitations or restrictions in connectionwith any sale of the Collateral in order to avoid any violation of applicablelaw or in order to obtain any required approval of the sale or of the purchasethereof by any governmental regulatory authority or official and, withoutlimiting the generality of the foregoing, Pledgor acknowledges and agrees thatPledgee may be unable to effect a public sale of any or all the Collateral byreason of certain prohibitions contained in the federal securities laws andapplicable state securities laws, but may be compelled to resort to one or moreprivate sales thereof to a restricted group of purchasers who will be obligedto agree, among other things, to acquire such securities for their own accountfor investment and not with a view to the distribution or resale thereof.  Pledgor acknowledges and agrees that any suchprivate sale may result in prices and other terms less favorable to the sellerthan if such sale were a public sale.

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Notwithstanding any such circumstances, Pledgoracknowledges and agrees that such compliance shall not result in any suchprivate sale for such reason alone being deemed to have been made in acommercially unreasonable manner. Pledgee shall not be liable or accountable to Pledgor for any discountallowed by reason of the fact that the Collateral is sold in compliance withany such limitation or restriction. Pledgee shall not be under any obligation to delay a sale of any of theCollateral for the period of time necessary to permit the issuer of suchsecurities to register such securities for public sale under the federalsecurities laws, or under applicable state securities laws, even if the issuerdesires, requests or would agree to do so.

## (e)           Anycash held by Pledgee as Collateral and all cash proceeds received by Pledgee inrespect of any sale of, collection from, or other realization upon all or anypart of the Collateral may, in the discretion of Pledgee, be held by Pledgee asCollateral for the Obligations and/or then or at any time thereafter applied,without any marshalling of rights, remedies or assets, and after payment of anyamounts payable to Pledgee or any Lender hereunder and, after deducting allreasonable costs and expenses of every kind in connection with the care,safekeeping, collection, sale, delivery or otherwise of any or all of theCollateral or in any way relating to the rights of Pledgee hereunder (includingattorneys’ fees and disbursements), to the payment of reduction of the Obligations.  Any surplus of such cash or cash proceedsheld by Pledgee and remaining after payment in full of all the Obligationsshall be paid over to Pledgor or to whomsoever may be lawfully entitled toreceive such surplus.

# 10.           Successors AndAssigns.  This Agreement shall bebinding upon and inure to the benefit of Pledgor, Pledgee, and their respectivesuccessors and assigns.  This Agreementmay be sold, assigned and transferred by Pledgee, whether in accordance withthe Loan Agreement or otherwise, to another person, firm, association orcorporation, including, without limitation, any lender for whom Pledgee isacting as agent.

# 11.           Applicable Law.  This Agreement shall be governed by andconstrued under the internal laws of the State of New York but excluding anyprinciples of conflicts of law or other rule of law that would cause theapplication of the law of any jurisdiction other than the laws of the State ofNew York.  Whenever possible, eachprovision of this Agreement shall be interpreted in such manner as to beeffective and valid under applicable law, but, if any provision of thisAgreement shall be held to be prohibited or invalid under applicable law, suchprovision shall be ineffective only to the extent of such prohibition orinvalidity, without invalidating the remainder of such provision or theremaining provisions of this Agreement.

# 12.           FurtherAssurances.  Pledgor covenants andagrees that:  (a) it will execute anddeliver, or cause to be executed and delivered, all such other stock powers,proxies, instruments and documents as Pledgee may reasonably request from timeto time in order to perfect and protect the security interests granted orpurported to be granted hereunder (including without limitation thesecurity interest granted in any Capital Stock of any Future Subsidiary) orotherwise to carry out the provisions and purposes hereof, (b) it will take allsuch other action, as Pledgee may reasonably request from time to time in orderto perfect and protect the security interests granted or purported to begranted hereunder (including without limitation the security interest grantedin any Capital Stock of any Future Subsidiary) or otherwise to carry out the

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# provisions andpurposes hereof; (c) the Collateral will remain free and clear of all securityinterests and liens throughout the term hereof, and (d) it will forward toPledgee, immediately upon receipt, copies of any information or documentsreceived by Pledgor in connection with the Collateral.  For purposes of defining security interestperfection, Pledgor further agrees that any Collateral which is in transit toPledgee shall be deemed to be in Pledgee’s possession.  Pledgor warrants and represents that none ofthe Collateral constitutes margin securities for the purposes of Regulations T,U or X, and also warrants and represents that none of the proceeds of any loansmade by Pledgee or the Lenders to Pledgor will be used to purchase or carry anymargin stock.

# 13.           IntegratedAgreement.  Except as otherwiseprovided in the Loan Agreement, this Agreement sets forth the entireunderstanding of the parties with respect to the within matters, and may not bemodified except by a writing signed by all parties.

# 14.           Incorporation ByReference.  All of the terms andconditions, including, without limitation, the warranties, representations,covenants, agreements and default provisions, of the Loan Agreement areincorporated herein by this reference.

# 15.           Counterparts.  This Agreement may be executed in one or morecounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument and agreement.

# 16.           Section Headings.  The section headings herein are forconvenience of reference only, and shall not affect in any way theinterpretation of any of the provisions hereof.

# 17.           Release.  At such time as Pledgor shall completelysatisfy all of the non-contingent Obligations, and the Financing Agreementshave been terminated, other than upon enforcement of Pledgee’s remedies underthe Financing Agreements after an Event of Default, (i) Pledgee will executeand deliver to Pledgor a release or other instrument as may be necessary orproper to release Pledgor’s lien in the Collateral and return to Pledgor allstock certificates and stock powers relating to this Agreement which are in itspossession, subject to any dispositions thereof which may have been made byPledgee pursuant hereto and (ii) this Agreement will terminate along with suchother Financing Agreements as provided for in the Loan Agreement.

# 18.           Acknowledgmentand Restatement.

## (a)           Pledgor herebyacknowledges, confirms and agrees that Pledgor is indebted to Pledgeeand Lenders in respect of any obligations, liabilities or indebtedness forloans, advances and letter of credit accommodations to Pledgee under theExisting Loan Agreement, the Existing Security Agreement or the other ExistingFinancing Agreements, together with all interest accrued and accruing thereon,and all fees, costs, expenses and other charges relating thereto, all of whichare unconditionally owing by Pledgor to Pledgee without offset, defense, orcounterclaim of any kind, nature or description whatsoever. Pledgor herebyratifies, assents, adopts and agrees to pay all of the Obligations arisingbefore, on or after the date hereof.

## (b)           Pledgorhereby acknowledges, confirms and agrees that Pledgee has and shall continue tohave, for itself and the benefit of Lenders, valid, enforceable and perfectedfirst priority security interests in and liens upon all of the Collateral

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## heretofore granted to Pledgee pursuant to theExisting Security Agreement to secure all of the Obligations subject only toliens permitted under the Loan Agreement and the other Financing Agreements.

## (c)           Pledgorhereby acknowledges, confirms and agrees that: (i) the Existing SecurityAgreement has been duly executed and delivered by Pledgor and is in full forceand effect as of the date hereof; (ii) the agreements and obligations ofPledgor contained in the Existing Security Agreement constitute legal, valid andbinding obligations of Pledgor enforceable against it in accordance with theterms thereof, and Pledgor has no valid defense, offset or counterclaim to theenforcement of such obligations; and (iii) Pledgee and Lenders are entitled toall of the rights, remedies and benefits provided for in the Existing SecurityAgreement.

## (d)           Exceptas otherwise stated in Section 18(b) hereof and in this Section 18(d), as ofthe date hereof, the terms, conditions, agreements, covenants, representationsand warranties set forth in the Existing Security Agreement are hereby amendedand restated in their entirety, and as so amended and restated, are replacedand superseded by the terms, conditions agreements, covenants, representationsand warranties set forth in this Agreement, except that nothing herein shallimpair or adversely affect the continuation of the liability of Pledgor for theobligations or the security interests and liens heretofore granted, pledged orassigned to Pledgee for itself and the benefit of Lenders.  The amendment and restatement containedherein shall not, in any manner, be construed to constitute payment of, orimpair, limit, cancel or extinguish, or constitute a novation in respect of,the indebtedness and other obligations and liabilities of Pledgor evidenced byor arising under the Existing Security Agreement and any of the other ExistingFinancing Agreements to which Pledgor is 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, this Agreement is executed as of the date firstwritten above.
|   |   | “Pledgor”     |                                             |
|--------|--------|-------------------------|--------------------------------------------------|
|   |   |                    |                                             |
|   |   | LERNER NEW YORK, INC.,  |                                             |
|   |   | a Delaware corporation  |                                             |
|   |   |                    |                                             |
|   |   |                    |                                             |
|   |   | By:                     | /s/ Ronald W. Ristau                             |   |
|   |   | Name:                   | Ronald W. Ristau                                 |   |
|   |   | Title:                  | President, Chief Financial Officer and Secretary |   |
|   |   |                    |                                             |   |
|   |   |                    |                                             |   |
|   |   | “Pledgee”     |                                             |
|   |   |                    |                                             |
|   |   | WACHOVIA BANK, NATIONAL |                                             |
|   |   | ASSOCIATION,as Agent    |                                             |
|   |   |                    |                                             |
|   |   |                    |                                             |
|   |   | By:                     | /s/ Laurence Forte                               |   |
|   |   | Name:                   | Laurence Forte                                   |   |
|   |   | Title:                  | Managing Director                                |   |
|   |   |                    |                                             |   |

 

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