Document:

Exhibit 10.5

EXECUTED VERSION

SECOND
AMENDED AND RESTATED STOCK PLEDGE AGREEMENT

THIS SECOND AMENDED AND
RESTATED 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 banking
association, in its capacity as agent (in such capacity, “Pledgee”) for the
Lenders (as hereinafter defined) and Bank Product Providers (as defined in the
Loan Agreement).

RECITALS

WHEREAS, Pledgor and Pledgee
entered into the Amended and Restated Stock Pledge Agreement, dated as of March
16, 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 as
heretofore amended (the “Existing Financing Agreements”).

WHEREAS, Pledgor owns one
hundred percent (100%) of the issued and outstanding Capital Stock (as defined
in the Loan Agreement) of each of Associated Lerner Shops of America, Inc., a
New York corporation (“Associated Lerner”), Lerner New York GC, LLC, an
Ohio limited liability company (“Lerner GC”), and Jasmine Company, Inc.,
a Massachusetts corporation (“Jasmine”, and together with Lerner GC, Associated
Lerner, each a “Company” and collectively, the “Companies”), and
may from time to time in the future, subject to the terms and conditions set
forth 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, each
individually a “Borrower” and collectively “Borrowers”), Pledgee and the
persons from time to time party to the Loan Agreement (as hereinafter defined)
as lenders (collectively, “Lenders”), have amended and restated or are
about to amend and restate the existing financing arrangements of Pledgee,
Lenders, Borrowers and Guarantors pursuant to which Lenders (or Pledgee on
behalf of Lenders) may make loans and advances and provide other financial
accommodations to Borrowers as set forth in the Second Amended and Restated
Loan 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 be
amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan
Agreement”) and other agreements, documents and instruments referred to
therein or at any time executed and/or delivered in connection therewith or
related thereto, including, but not limited to, this Agreement (all of the
foregoing, together with the Loan Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, being collectively referred to herein as the “Financing Agreements”).

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

organized
under the laws of any jurisdiction outside of the United States of America (“Foreign
Future Subsidiaries”), in each case as collateral security for the
Obligations (as defined below).

WHEREAS, in order to induce
Pledgee and the Lenders to enter into the Loan Agreement, Pledgor and Pledgee
desire to amend and restate the Existing Pledge Agreement in its entirety as
set forth herein.

AGREEMENT

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

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

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

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

4.             Covenants. 
Pledgor will not permit Lerner GC to (i) authorize the amendment of or
amend its articles of organization, operating agreement or other organizational
documents to provide that its Capital Stock is governed by Article 8 of the
Code, or (ii) authorize the issuance of or issue certificates evidencing its
Capital 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 its
attorney-in-fact to arrange, upon the occurrence and during the continuance of
an Event of Default, for a transfer of the Collateral on the books of any
Company or Future Subsidiary, as applicable, to the name of Pledgee or to the
name of Pledgee’s nominee.

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

7.             Stock Adjustments And Dividends.  If during the term of this Agreement, any
stock dividend, reclassification, readjustment or other change is declared or
made in the capital structure of any Company or Future Subsidiary or any option
included within the Collateral is exercised, or both, all new, substituted and
additional shares, or other securities, issued to Pledgor by reason of any such
change or exercise shall be delivered to and held by Pledgee under the terms of
this Agreement in the same manner as the Collateral originally pledged
hereunder.  During the term of this
Agreement 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 the
Collateral; provided, however, that upon the occurrence of an
Event of Default, unless otherwise permitted under the terms of the Loan Agreement
or the Intercompany Subordination Agreement (as defined in the Loan Agreement)
Pledgor shall immediately deliver all such dividends or other distributions to
Pledgee in the same form received (except that dividends received in cash shall
be remitted to the Blocked Account) and in the same manner as the Collateral
pledged hereunder.

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

9.             Remedies Upon Default.  In addition to the other remedies provided
for 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 the
Collateral, any one or more of the rights and remedies available under the New
York Uniform Commercial Code and other applicable law; and

(ii)           sell or otherwise assign, give an
option or options to purchase or dispose of and deliver the Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private 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 and
conditions as it may deem advisable and at such prices as it may deem best, for
cash, 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 of
redemption) of Pledgor, which claim, right and equity are hereby expressly
waived and released.  Pledgee or any
Lender shall have the right to the extent permitted by applicable law, upon any
such sale or sales, public or private, to purchase the whole or any part of the
Collateral so sold; provided, however, Pledgor shall not receive
any net proceeds, if any, of any such credit sale or future delivery until cash
proceeds are actually received by Pledgee (which cash proceeds shall be applied
by Pledgee to the Obligations) and after all Obligations have been paid in
full.  In case of any sale of all or any
part of the Collateral on credit or for future delivery, the Collateral so sold
may be retained by Pledgee until the selling price is paid by the purchaser
thereof, but Pledgee shall incur no liability in case of the failure of such
purchaser to pay for the Collateral so sold and, in case of such failure, the
Collateral may again be sold as herein provided.

(b)           Any notice required to be
given by Pledgee of a sale of the Collateral, or any part thereof, or of any
other intended action by Pledgee, which occurs not less than five (5) days
prior to such proposed action, shall constitute commercially reasonable and
fair notice to Pledgor thereof.  If,
after the occurrence of an Event of Default, a statement renouncing or
modifying any right to notification of sale or other intended disposition has
been signed by Pledgor, during the continuance of such Event of Default, no
such notification need be given to Pledgor.

(c)           Pledgee shall not be obligated
to make any sale or other disposition of the Collateral, or any part thereof
unless the terms thereof shall, in its sole discretion, be satisfactory to
it.  Pledgee may, if it deems it
reasonable, postpone or adjourn the sale of any of the Collateral, or any part
thereof, from time to time by an announcement at the time and place of such
sale or by announcement at the time and place of such postponed or adjourned
sale, without being required to give a new notice of sale.  Pledgor agrees that Pledgee has no
obligations to preserve rights against prior parties to the Collateral.

(d)           Pledgor acknowledges and
agrees that Pledgee may comply with limitations or restrictions in connection
with any sale of the Collateral in order to avoid any violation of applicable
law or in order to obtain any required approval of the sale or of the purchase
thereof by any governmental regulatory authority or official and, without
limiting the generality of the foregoing, Pledgor acknowledges and agrees that
Pledgee may be unable to effect a public sale of any or all the Collateral by
reason of certain prohibitions contained in the federal securities laws and
applicable state securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof.  Pledgor acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale.

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Notwithstanding any such circumstances, Pledgor
acknowledges and agrees that such compliance shall not result in any such
private sale for such reason alone being deemed to have been made in a
commercially unreasonable manner. 
Pledgee shall not be liable or accountable to Pledgor for any discount
allowed by reason of the fact that the Collateral is sold in compliance with
any such limitation or restriction. 
Pledgee shall not be under any obligation to delay a sale of any of the
Collateral for the period of time necessary to permit the issuer of such
securities to register such securities for public sale under the federal
securities laws, or under applicable state securities laws, even if the issuer
desires, requests or would agree to do so.

(e)           Any
cash held by Pledgee as Collateral and all cash proceeds received by Pledgee in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of Pledgee, be held by Pledgee as
Collateral for the Obligations and/or then or at any time thereafter applied,
without any marshalling of rights, remedies or assets, and after payment of any
amounts payable to Pledgee or any Lender hereunder and, after deducting all
reasonable costs and expenses of every kind in connection with the care,
safekeeping, collection, sale, delivery or otherwise of any or all of the
Collateral or in any way relating to the rights of Pledgee hereunder (including
attorneys’ fees and disbursements), to the payment of reduction of the Obligations.  Any surplus of such cash or cash proceeds
held by Pledgee and remaining after payment in full of all the Obligations
shall be paid over to Pledgor or to whomsoever may be lawfully entitled to
receive such surplus.

10.           Successors And
Assigns.  This Agreement shall be
binding upon and inure to the benefit of Pledgor, Pledgee, and their respective
successors and assigns.  This Agreement
may be sold, assigned and transferred by Pledgee, whether in accordance with
the Loan Agreement or otherwise, to another person, firm, association or
corporation, including, without limitation, any lender for whom Pledgee is
acting as agent.

11.           Applicable Law.  This Agreement shall be governed by and
construed under the internal laws of the State of New York but excluding any
principles of conflicts of law or other rule of law that would cause the
application of the law of any jurisdiction other than the laws of the State of
New York.  Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but, if any provision of this
Agreement shall be held to be prohibited or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

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

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provisions and
purposes hereof; (c) the Collateral will remain free and clear of all security
interests and liens throughout the term hereof, and (d) it will forward to
Pledgee, immediately upon receipt, copies of any information or documents
received by Pledgor in connection with the Collateral.  For purposes of defining security interest
perfection, Pledgor further agrees that any Collateral which is in transit to
Pledgee shall be deemed to be in Pledgee’s possession.  Pledgor warrants and represents that none of
the 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 loans
made by Pledgee or the Lenders to Pledgor will be used to purchase or carry any
margin stock.

13.           Integrated
Agreement.  Except as otherwise
provided in the Loan Agreement, this Agreement sets forth the entire
understanding of the parties with respect to the within matters, and may not be
modified except by a writing signed by all parties.

14.           Incorporation By
Reference.  All of the terms and
conditions, including, without limitation, the warranties, representations,
covenants, agreements and default provisions, of the Loan Agreement are
incorporated herein by this reference.

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

16.           Section Headings.  The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.

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

18.           Acknowledgment
and Restatement.

(a)           Pledgor hereby
acknowledges, confirms and agrees that Pledgor is indebted to Pledgee
and Lenders in respect of any obligations, liabilities or indebtedness for
loans, advances and letter of credit accommodations to Pledgee under the
Existing Loan Agreement, the Existing Security Agreement or the other Existing
Financing Agreements, together with all interest accrued and accruing thereon,
and all fees, costs, expenses and other charges relating thereto, all of which
are unconditionally owing by Pledgor to Pledgee without offset, defense, or
counterclaim of any kind, nature or description whatsoever. Pledgor hereby
ratifies, assents, adopts and agrees to pay all of the Obligations arising
before, on or after the date hereof.

(b)           Pledgor
hereby acknowledges, confirms and agrees that Pledgee has and shall continue to
have, for itself and the benefit of Lenders, valid, enforceable and perfected
first priority security interests in and liens upon all of the Collateral

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

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

(d)           Except
as otherwise stated in Section 18(b) hereof and in this Section 18(d), as of
the date hereof, the terms, conditions, agreements, covenants, representations
and warranties set forth in the Existing Security Agreement are hereby amended
and restated in their entirety, and as so amended and restated, are replaced
and superseded by the terms, conditions agreements, covenants, representations
and warranties set forth in this Agreement, except that nothing herein shall
impair or adversely affect the continuation of the liability of Pledgor for the
obligations or the security interests and liens heretofore granted, pledged or
assigned to Pledgee for itself and the benefit of Lenders.  The amendment and restatement contained
herein shall not, in any manner, be construed to constitute payment of, or
impair, limit, cancel or extinguish, or constitute a novation in respect of,
the indebtedness and other obligations and liabilities of Pledgor evidenced by
or arising under the Existing Security Agreement and any of the other Existing
Financing Agreements to which Pledgor is a party, and the liens and security
interests securing such indebtedness and other obligations and liabilities
shall 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 first
written 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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 8Exhibit
10.6

EXECUTED VERSION

SECOND
AMENDED AND RESTATED STOCK PLEDGE AGREEMENT

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

RECITALS

WHEREAS, Pledgor and Pledgee
entered into the Amended and Restated Stock Pledge Agreement, dated as of March
16, 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 as
heretofore amended (the “Existing Financing Agreements”).

WHEREAS, Pledgor owns one
hundred percent (100%) of the issued and outstanding Capital Stock (as defined
in the Loan Agreement) of Lerner New York, Inc., Lerner, Inc. and Nevada
Receivable Factoring, Inc. (each a “Company” and collectively, the “Companies”),
and may from time to time in the future, subject to the terms and conditions
set forth in the Financing Agreements, acquire one or more additional Subsidiaries
(as defined in the Loan Agreement) (“Future Subsidiaries”).

WHEREAS, the
Company, Jasmine Company, Inc., and Lernco, Inc. (each individually a “Borrower”
and collectively “Borrowers”), Pledgee and the persons from time to time party
to the Loan Agreement (as hereinafter defined) as lenders (collectively, “Lenders”),
have amended and restated or are about to amend and restate the existing
financing arrangements of Pledgee, Lenders, Borrowers and Guarantors pursuant
to which Lenders (or Pledgee on behalf of Lenders) may make loans and advances
and provide other financial accommodations to Borrowers as set forth in the
Second Amended and Restated Loan 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 be amended, modified, supplemented, extended,
renewed, restated or replaced, the “Loan Agreement”) and other
agreements, documents and instruments referred to therein or at any time
executed and/or delivered in connection therewith or related thereto,
including, but not limited to, this Agreement (all of the foregoing, together
with the Loan Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the “Financing Agreements”).

WHEREAS, Pledgor desires to
pledge to Pledgee, for its benefit and the ratable benefit of the Lenders and
Bank Product Providers (as defined in the Loan Agreement), a continuing
security interest in all of the Capital Stock of the Companies, any and all of
the Future Subsidiaries organized under the laws of any jurisdiction within the
United States of America (“Domestic Future Subsidiaries”) and 65% of the
Capital Stock of all Future Subsidiaries organized under the laws of any
jurisdiction outside of the United States of America (“Foreign Future
Subsidiaries”), in each case as collateral security for the Obligations (as
defined below).

WHEREAS, in order to induce
Pledgee and the Lenders to enter into the Loan Agreement, Pledgor and Pledgee
desire to amend and restate the Existing Pledge Agreement in its entirety as
set forth herein.

AGREEMENT

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

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

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

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

4.             Covenants.  Pledgor will not permit any Company to (i)
authorize the amendment of or amend its articles of organization, operating
agreement or other organizational documents to provide that its Capital Stock
is governed by Article 8 of the Code, or (ii) authorize the issuance of or
issue certificates evidencing its Capital Stock.

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 

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its
attorney-in-fact to arrange, upon the occurrence and during the continuance of
an Event of Default, for a transfer of the Collateral on the books of any
Company or Future Subsidiary, as applicable, to the name of Pledgee or to the
name of Pledgee’s nominee.

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

7.             Stock
Adjustments And Dividends.  If during
the term of this Agreement, any stock dividend, reclassification, readjustment
or other change is declared or made in the capital structure of any Company or
Future Subsidiary or any option included within the Collateral is exercised, or
both, all new, substituted and additional shares, or other securities, issued
to Pledgor by reason of any such change or exercise shall be delivered to and
held by Pledgee under the terms of this Agreement in the same manner as the
Collateral originally pledged hereunder. 
During the term of this Agreement 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 the Collateral; provided, however, that upon
the occurrence of an Event of Default, unless otherwise permitted under the
terms of the Loan Agreement or the Intercompany Subordination Agreement (as
defined in the Loan Agreement) Pledgor shall immediately deliver all such
dividends or other distributions to Pledgee in the same form received (except
that dividends received in cash shall be remitted to the Blocked Account) and
in the same manner as the Collateral pledged hereunder.

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

9.             Remedies Upon
Default.  In addition to the other
remedies provided for 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 the Collateral, any one or more of the rights and remedies
available under the New York Uniform Commercial Code and other applicable law;
and

(ii)           sell
or otherwise assign, give an option or options to purchase or dispose of and
deliver the Collateral (or contract to do so), or any part thereof, in one or
more parcels at public or private sale or sales, at any exchange, broker’s
board or at any of Pledgee’s offices or elsewhere upon such terms and
conditions as it may deem advisable and at such 

 3
 

prices as it may deem best, for cash, 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 of redemption) of Pledgor, which claim,
right and equity are hereby expressly waived and released.  Pledgee or any Lender shall have the right to
the extent permitted by applicable law, upon any such sale or sales, public or
private, to purchase the whole or any part of the Collateral so sold; provided,
however, Pledgor shall not receive any net proceeds, if any, of any such
credit sale or future delivery until cash proceeds are actually received by
Pledgee (which cash proceeds shall be applied by Pledgee to the Obligations)
and after all Obligations have been paid in full.  In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by Pledgee until the selling price is paid by the purchaser thereof,
but Pledgee shall incur no liability in case of the failure of such purchaser
to pay for the Collateral so sold and, in case of such failure, the Collateral
may again be sold as herein provided.

(b)           Any
notice required to be given by Pledgee of a sale of the Collateral, or any part
thereof, or of any other intended action by Pledgee, which occurs not less than
five (5) days prior to such proposed action, shall constitute commercially
reasonable and fair notice to Pledgor thereof. 
If, after the occurrence of an Event of Default, a statement renouncing
or modifying any right to notification of sale or other intended disposition
has been signed by Pledgor, during the continuance of such Event of Default, no
such notification need be given to Pledgor.

(c)           Pledgee
shall not be obligated to make any sale or other disposition of the Collateral,
or any part thereof unless the terms thereof shall, in its sole discretion, be
satisfactory to it.  Pledgee may, if it
deems it reasonable, postpone or adjourn the sale of any of the Collateral, or
any part thereof, from time to time by an announcement at the time and place of
such sale or by announcement at the time and place of such postponed or
adjourned sale, without being required to give a new notice of sale.  Pledgor agrees that Pledgee has no
obligations to preserve rights against prior parties to the Collateral.

(d)           Pledgor
acknowledges and agrees that Pledgee may comply with limitations or
restrictions in connection with any sale of the Collateral in order to avoid
any violation of applicable law or in order to obtain any required approval of
the sale or of the purchase thereof by any governmental regulatory authority or
official and, without limiting the generality of the foregoing, Pledgor
acknowledges and agrees that Pledgee may be unable to effect a public sale of
any or all the Collateral by reason of certain prohibitions contained in the
federal securities laws and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view to the
distribution or resale thereof.  Pledgor
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a public
sale.  Notwithstanding any such
circumstances, Pledgor acknowledges and agrees that such compliance shall not
result in any such private sale for such reason alone being deemed 

 4
 

to have been made in a commercially
unreasonable manner.  Pledgee shall not
be liable or accountable to Pledgor for any discount allowed by reason of the
fact that the Collateral is sold in compliance with any such limitation or
restriction.  Pledgee shall not be under
any obligation to delay a sale of any of the Collateral for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the federal securities laws, or under applicable state
securities laws, even if the issuer desires, requests or would agree to do so.

(e)           Any
cash held by Pledgee as Collateral and all cash proceeds received by Pledgee in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of Pledgee, be held by Pledgee as
Collateral for the Obligations and/or then or at any time thereafter applied,
without any marshalling of rights, remedies or assets, and after payment of any
amounts payable to Pledgee or any Lender hereunder and, after deducting all
reasonable costs and expenses of every kind in connection with the care,
safekeeping, collection, sale, delivery or otherwise of any or all of the
Collateral or in any way relating to the rights of Pledgee hereunder (including
attorneys’ fees and disbursements), to the payment of reduction of the
Obligations.  Any surplus of such cash or
cash proceeds held by Pledgee and remaining after payment in full of all the
Obligations shall be paid over to Pledgor or to whomsoever may be lawfully
entitled to receive such surplus.

10.           Successors And
Assigns.  This Agreement shall be
binding upon and inure to the benefit of Pledgor, Pledgee, and their respective
successors and assigns.  This Agreement
may be sold, assigned and transferred by Pledgee, whether in accordance with
the Loan Agreement or otherwise, to another person, firm, association or
corporation, including, without limitation, any lender for whom Pledgee is
acting as agent.

11.           Applicable Law.  This Agreement shall be governed by and
construed under the internal laws of the State of New York but excluding any
principles of conflicts of law or other rule of law that would cause the
application of the law of any jurisdiction other than the laws of the State of
New York.  Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but, if any provision of this
Agreement shall be held to be prohibited or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

12.           Further
Assurances.  Pledgor covenants and
agrees that:  (a) it will execute and
deliver, or cause to be executed and delivered, all such other stock powers,
proxies, instruments and documents as Pledgee may reasonably request from time
to time in order to perfect and protect the security interests granted or
purported to be granted hereunder (including without limitation the
security interest granted in any Capital Stock of any Future Subsidiary) or
otherwise to carry out the provisions and purposes hereof, (b) it will take all
such other action, as Pledgee may reasonably request from time to time in order
to perfect and protect the security interests granted or purported to be
granted hereunder (including without limitation the security interest granted
in any Capital Stock of any Future Subsidiary) or otherwise to carry out the
provisions and purposes hereof; (c) the Collateral will remain free and clear
of all security interests and liens throughout the term hereof, and (d) it will
forward to Pledgee, immediately 

 5
 

upon receipt,
copies of any information or documents received by Pledgor in connection with
the Collateral.  For purposes of defining
security interest perfection, Pledgor further agrees that any Collateral which
is in transit to Pledgee shall be deemed to be in Pledgee’s possession.  Pledgor warrants and represents that none of
the 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 loans
made by Pledgee or the Lenders to Pledgor will be used to purchase or carry any
margin stock.

13.           Integrated
Agreement.  Except as otherwise
provided in the Loan Agreement, this Agreement sets forth the entire
understanding of the parties with respect to the within matters, and may not be
modified except by a writing signed by all parties.

14.           Incorporation By
Reference.  All of the terms and
conditions, including, without limitation, the warranties, representations,
covenants, agreements and default provisions, of the Loan Agreement are
incorporated herein by this reference.

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

16.           Section Headings.  The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.

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

18.           Acknowledgment
and Restatement.

(a)           Pledgor hereby
acknowledges, confirms and agrees that Pledgor is indebted to Pledgee
and Lenders in respect of any obligations, liabilities or indebtedness for
loans, advances and letter of credit accommodations to Pledgee under the
Existing Loan Agreement, the Existing Security Agreement or the other Existing
Financing Agreements, together with all interest accrued and accruing thereon,
and all fees, costs, expenses and other charges relating thereto, all of which
are unconditionally owing by Pledgor to Pledgee without offset, defense, or
counterclaim of any kind, nature or description whatsoever. Pledgor hereby
ratifies, assents, adopts and agrees to pay all of the Obligations arising before,
on or after the date hereof.

(b)           Pledgor
hereby acknowledges, confirms and agrees that Pledgee has and shall continue to
have, for itself and the benefit of Lenders, valid, enforceable and perfected
first priority security interests in and liens upon all of the Collateral
heretofore granted to Pledgee pursuant to the Existing Security Agreement to
secure all 

 6
 

of the Obligations subject only to liens
permitted under the Loan Agreement and the other Financing Agreements.

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

(d)           Except
as otherwise stated in Section 18(b) hereof and in this Section 18(d), as of
the date hereof, the terms, conditions, agreements, covenants, representations
and warranties set forth in the Existing Security Agreement are hereby amended
and restated in their entirety, and as so amended and restated, are replaced
and superseded by the terms, conditions agreements, covenants, representations
and warranties set forth in this Agreement, except that nothing herein shall
impair or adversely affect the continuation of the liability of Pledgor for the
obligations or the security interests and liens heretofore granted, pledged or
assigned to Pledgee for itself and the benefit of Lenders.  The amendment and restatement contained
herein shall not, in any manner, be construed to constitute payment of, or
impair, limit, cancel or extinguish, or constitute a novation in respect of,
the indebtedness and other obligations and liabilities of Pledgor evidenced by
or arising under the Existing Security Agreement and any of the other Existing
Financing Agreements to which Pledgor is a party, and the liens and security
interests securing such indebtedness and other obligations and liabilities
shall 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 first
written above.

	
   

  	
   

  	
  “Pledgor”

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lerner New York Holding,
  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

  	
   

  
						

 

 8

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