EXECUTION COPY

ROYALTY AGREEMENT
 
THIS ROYALTY AGREEMENT (this “Agreement”) is made and entered into as of October
1, 2011, by and among TENNMAN WR-T, INC., a Delaware corporation (“TWR”),
WILLIAM RAST SOURCING, LLC, a California limited liability company (“WRS”)
and  WILLIAM RAST LICENSING, LLC, a California limited liability company
(“WRL”)(TWR, WRS and WRL are herein collectively referred to as the “Parties”).
 
RECITALS
 
A.          TWR and Bella Rose, LLC, a California limited liability company
(“BR”), are parties to that certain Second Amended and Restated Limited
Liability Company Operating Agreement of WRS, dated of even date herewith,
pursuant to which the parties recapitalized and recharacterized BR’s and TWR’s
membership interest in WRS on the terms set forth therein and, in part, for the
consideration to be provided by WRS as set forth in this Agreement.
 
B.           TWR and BR are parties to that certain Second Amended and Restated
Limited Liability Company Operating Agreement of WRL, dated of even date
herewith, pursuant to which the parties recapitalized and recharacterized BR’s
and TWR’s membership interest in WRL on the terms set forth therein and, in
part, for the consideration to be provided by WRL as set forth in this
Agreement.
 
C.           In connection with the foregoing agreements, the Parties desire to
enter into this Agreement.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and on the terms and subject to the conditions
hereinafter set forth, the parties hereto agree as follows:
 
1.           Definitions.  When used in this Agreement, the following terms
shall have the meanings set forth below:
 
“Affiliate” means, with respect to any Person, any Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Person.  The term “control,” as used in the
immediately preceding sentence, means, with respect to a corporation the right
to exercise directly or indirectly, 50% or more of the voting rights
attributable to the controlled corporation, and, with respect to any
partnership, trust, other entity or association, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled entity.
 
“Excluded Royalties” shall have the meaning given such term in Section 2.2(c)
below.

 
 

--------------------------------------------------------------------------------

 

“Mobility Indebtedness” means the indebtedness evidenced by that certain
promissory note, dated August 13, 2010, made by WRL in favor of Mobility Special
Situations I, LLC, in the original principal amount of $750,000 (the “Mobility
Note”), provided, however, Mobility Indebtedness shall be include only the
original principal amount of the Mobility Note and accrued interest thereon and
shall exclude any and all other obligation or liability of WRL or its Affiliates
arising thereunder or in connection therewith, and provided, further, Mobility
Indebtedness will not include any additional principal amount of indebtedness
borrowed after the date hereof
 
“New License Agreements” means all agreements providing for the license by WRL
of rights to the William Rast® mark, including the Viva Optique Agreement, but
excluding that certain Trademark License Agreement, effective as of October 1,
2006, by and between WRL and WRS, as amended to date and as the same may be
further amended or supplemented from time to time (the “WRS License Agreement”).
 
“New License Net Cash” means for any period, all gross receipts of WRL in
respect of royalties or other compensation of any kind for such period, earned
and/or accrued during such period, from all New License Agreements other than
Excluded Royalties, minus (A) all reasonable legal and other costs paid to third
parties in connection with (i) negotiation of licensing agreements, including
broker commissions payable to non-Affiliated third parties, and (ii) enforcement
of the New License Agreements (including collection of the receipts, including
costs of litigation and audit incurred to enforce the rights of WRL under any
New License Agreement) and (B) up to an additional $250,000 per year incurred by
WRL for its actual, out of pocket costs in connection with its direct operations
(excluding any allocations of overhead from other entities or the like)
including, without limitation, for WRL’s employees, WRL’s facilities and other
of WRL’s administrative functions and overhead.
 
“Person” means an individual, general partnership, limited partnership, other
limited liability company, corporation, trust, estate, real estate investment
trust and any other entity.
 
“PPLB” means Peoples Liberation, Inc., a Delaware corporation.
 
“Restricted Party” means (i) any Person other than BR or PPLB, with whom Justin
Timberlake has an active bona fide legal or business dispute determined in TWR’s
reasonable discretion, (ii) any Person that has been convicted of a crime
involving moral turpitude, or (iii) any Affiliate of any of the foregoing.
 
“Restricted Purpose” means the license of the William Rast® mark for any of the
following categories of products: firearms; drug paraphernalia; and any products
primarily associated with the adult entertainment industry (other than
lingerie).
 
“Retail Net Sales” means the gross sales price for all WR Products sold by or on
behalf of WRS or any of its Affiliates direct to end-users at William Rast®
branded retail stores or Internet websites owned and operated by WRS or its
Affiliates, less actual deductions taken and incurred, including, but not
limited to, (i) actual returns and (ii) actual discounts and allowances,
including, but not limited to, season ending allowances, vendor retagging and/or
mark-downs.  In computing Retail Net Sales, no costs incurred in manufacturing,
selling, advertising or distributing the WR Products and no indirect expenses
shall be deducted.

 
2

--------------------------------------------------------------------------------

 

“Royalty Term” means the period commencing on July 1, 2011 and continuing (i)
with respect to WRS until the earlier, if either, of (a) the date that WRS pays
the Liquidating Payment (as defined in the Second Amended and Restated Operating
Agreement of WRS) or (b) the date that TWR and any Affiliate thereof no longer
owns any Class B Membership Interests in WRS, and (ii) with respect to WRL until
the earlier, if either, of (a) the date that WRL pays the Liquidating Payment
(as defined in the Second Amended and Restated Operating Agreement of WRL) or
(b) the date that TWR and any Affiliate thereof no longer owns any Class B
Membership Interests in WRL.
 
“Sublicense Gross Consideration” means for any period, all gross receipts of WRS
or any Affiliate of WRS in respect of royalties or other compensation of any
kind for such period, earned and/or accrued during such period, from all
sublicenses by WRS of any of its rights granted to it under the WRS License
Agreement, less any applicable broker commissions payable to non-Affiliated
third parties.
 
“Viva Optique Agreement” means that certain Binding Term Sheet, effective as of
December 9, 2009, by and between the WRL and Viva Optique, Inc., as the same may
be amended or supplemented from time to time.
 
“Wholesale Net Sales” means the gross sales price for all WR Products sold by or
on behalf of WRS to purchasers for resale (including sales made to third-party
operators of Internet websites), less actual deductions taken and incurred,
including, but not limited to, (i) actual returns and (ii) actual discounts and
allowances, including, but not limited to, season ending allowances, vendor
retagging and/or mark-downs, and freight separately charged.  In computing Net
Sales, no costs incurred in manufacturing, selling, advertising or distributing
the WR Products and no indirect expenses shall be deducted.  If WR Products are
sold by or on behalf of WRS to any Affiliate of WRS at an invoice price that is
less than the price at which such WR Products are sold to non-Affiliates, then
the invoice price to the Affiliate of WRS, for purposes of calculating Net
Sales, shall be deemed to be the current invoice price charged to non-Affiliates
of WRS.  Notwithstanding the foregoing, “Wholesale Net Sales” shall not include
sales of WR Products by or on behalf of WRS to any Affiliate of WRS purchasing
or otherwise acquiring such WR Products for resale to end-users in William Rast®
branded retail stores, provided that the sale of such WR Products are included
in the calculation of Retail Net Sales pursuant to this Agreement.
 
“William Rast® mark” means the William Rast® mark, in all its current and future
forms and variations, all derivatives thereto, and all related logos, graphics
and artwork containing the word “William Rast”, any related marks and/or any
extensions or derivatives of any of them.
 
“WR Products” means all apparel, apparel accessories and other merchandise which
display, embody or make use of the William Rast® mark.
 
“WRL Royalty” means an amount equal to 50.0% of New License Net Cash.
 
“WRS Royalty” means an amount equal (i) to 5.0% of Wholesale Net Sales, plus
(ii) 2.50% of Retail Net Sales, and (iii) 25.0% of Sublicense Gross
Consideration.
 
“WRL Royalty Statement” shall have the meaning set forth in Section 2.4 hereof.
 
“WRS Royalty Statement” shall have the meaning set forth in Section 2.3 hereof.

 
3

--------------------------------------------------------------------------------

 

2.           Royalty Payments.
 
2.1          WRS Royalty.  WRS shall pay to TWR the WRS Royalty on all Wholesale
Net Sales, Retail Net Sales and Sublicense Gross Consideration made, accrued
and/or earned during the Royalty Term; provided that the WRS Royalty shall be
due only on amounts actually collected by WRS.  Taxes such as value added taxes
or its equivalent shall be deducted and separately listed from gross sales.  WRS
shall use good faith, commercially reasonable efforts to collect all amounts due
to it arising from sales of WR Products and/or any other activity otherwise
giving rise to WRS Royalties.
 
2.2          WRL Royalty.  WRL shall pay to TWR the WRL Royalty with respect to
New License Agreements entered into prior to or during the Royalty Term, subject
to the following:
 
(a)           WRL shall pay to TWR the WRL Royalty on all New License Net Cash
accrued and/or earned during the Royalty Term; provided that the WRL Royalty
shall be due only on amounts actually collected by WRL;
 
(b)           with respect to New License Net Cash generated from the Viva
Optique Agreement, the WRL Royalty shall be payable as follows: (i) WRL shall
have no obligation to pay TWR a WRL Royalty on New License Net Cash generated
from the Viva Optique Agreement until New License Net Cash generated from the
Viva Optique Agreement is equal to the Mobility Indebtedness; (ii) after New
License Net Cash generated from the Viva Optique Agreement is equal to the
Mobility Indebtedness, WRL shall be obligated to pay to TWR a WRL Royalty equal
to twenty five percent (25%) of New License Net Cash generated from the Viva
Optique Agreement until the amount of such New License Net Cash actually
received by WRL, after New License Net Cash generated from the Viva Optique
Agreement is equal to the Mobility Indebtedness, equals $750,000 (i.e., until
the WRL Royalty in respect thereof equals $187,500); and (iii) thereafter, WRL
shall pay to TWR a WRL Royalty equal to fifty percent (50%) of New License Net
Cash generated from the Viva Optique Agreement; and
 
(c)           there shall be excluded from New License Net Cash, and WRL shall
have no obligation to pay the WRL Royalty with respect to, any gross receipts of
WRL in respect of royalties or other compensation of any kind (collectively, the
“Excluded Royalties”) for any product in a product category (e.g., eyewear,
watches, fragrances) that is the subject of a New License Agreement if, at any
time after WRL enters into such New License Agreement (but not before), Justin
Timberlake begins to sponsor, promote, endorse and/or derive any economic
benefit from a non-William Rast® branded product in the same product category,
whether such product is owned by a third-party or owned in whole or in part by
Justin Timberlake or any of his Affiliates.  For clarity, if WRL enters into a
New License Agreement for a product in a product category that, at the time such
agreement is signed, Justin Timberlake already sponsors, promotes, endorses
and/or derives economic benefit from, then WRL shall pay the WRL Royalty on New
License Net Cash generated from such New License Agreement.

 
4

--------------------------------------------------------------------------------

 

WRL shall use good faith, commercially reasonable efforts to collect all amounts
due to it arising from New License Agreements and/or any other activity
otherwise giving rise to WRL Royalties.
 
2.3          WRS Payment.  WRS shall, within twenty-five (25) days of the end of
each calendar quarter, commencing with the calendar quarter ending September 30,
2011 and continuing until all payments required to be made by WRS hereunder are
made, furnish TWR a royalty statement setting forth a calculation of the
aggregate amount of Wholesale Net Sales, Retail Net Sales and Sublicense Gross
Consideration for such calendar quarter (which calculation shall include the
amount of gross receipts and all permitted deductions) and the amount of WRS
Royalty due TWR for such calendar quarter, and any other information reasonably
requested by TWR (each a “WRS Royalty Statement”).  On the date that each WRS
Royalty Statement is delivered to TWR, WRS shall pay to TWR, by wire transfer of
immediately available funds to an account designated by TWR in writing, an
amount equal to the WRS Royalty for such calendar quarter.
 
2.4          WRL Payment.  WRL shall, within twenty-five (25) days of the end of
each calendar quarter, commencing with the calendar quarter ending September 30,
2011 and continuing until all payments required to be made by WRL hereunder are
made, furnish TWR a royalty statement describing the aggregate amount of New
License Net Cash for such calendar quarter and the amount of WRL Royalty due TWR
for such calendar quarter, and any other information reasonably requested by TWR
(each a “WRL Royalty Statement”).  On the date that each WRL Royalty Statement
is delivered to TWR, WRL shall pay to TWR, by wire transfer of immediately
available funds to an account designated by TWR in writing, an amount equal to
the WRL Royalty for such calendar quarter.
 
2.5          Guaranteed WRS Royalty.
 
(a)          During each calendar year of the Royalty Term, WRS shall be
obligated to pay to TWR a guaranteed minimum WRS Royalty of (i) Two Hundred
Thousand Dollars ($200,000) for the calendar year ending December 31, 2011, and
(ii) Four Hundred Thousand Dollars ($400,000) for each calendar year thereafter
(the “Guaranteed WRS Royalty”).
 
(b)          For calendar year 2011, payment of the Guaranteed WRS Royalty for
such calendar year shall be made quarterly as follows (all payments of the
Guaranteed WRS Royalty for a calendar quarter shall be made with the payment of
the WRS Royalty due TWR for the applicable calendar quarter):
 
(i)           if the amount of the WRS Royalty for the calendar quarter ending
September 30 is less than $100,000, WRS shall pay TWR a portion of the
Guaranteed WRS Royalty so that the amount of such payment plus the amount of the
WRS Royalty for such calendar quarter is $100,000;

 
5

--------------------------------------------------------------------------------

 

(ii)          if the amount of the WRS Royalty for the calendar quarter ending
December 31, plus the amount of the WRS Royalty and the Guaranteed WRS Royalty
previously paid by WRS for the calendar quarter ending September 30 of such
calendar year is less than $200,000, then WRS shall pay TWR a portion of the
Guaranteed WRS Royalty so that the amount of such payment plus the amount of the
WRS Royalty and the Guaranteed WRS Royalty for the calendar quarters ending
September 30 and December 31 of such calendar year is $200,000;
 
(c)          For calendar year 2012 and beyond, payment of the Guaranteed WRS
Royalty for such calendar year shall be made quarterly as follows (all payments
of the Guaranteed WRS Royalty for a calendar quarter shall be made with the
payment of the WRS Royalty due TWR for the applicable calendar quarter):
 
(i)           if the amount of the WRS Royalty for the calendar quarter ending
March 31 is less than $100,000, WRS shall pay TWR a portion of the Guaranteed
WRS Royalty so that the amount of such payment plus the amount of the WRS
Royalty for such calendar quarter is $100,000;
 
(ii)          if the amount of the WRS Royalty for the calendar quarter ending
June 30, plus the amount of the WRS Royalty and the Guaranteed WRS Royalty
previously paid by WRS for the calendar quarter ending March 31 of such calendar
year is less than $200,000, then WRS shall pay TWR a portion of the Guaranteed
WRS Royalty so that the amount of such payment plus the amount of the WRS
Royalty and the Guaranteed WRS Royalty for the calendar quarters ending June 30
and March 31 of such calendar year is $200,000;
 
(iii)         if the amount of the WRS Royalty for the calendar quarter ending
September 30, plus the amount of the WRS Royalty and the Guaranteed WRS Royalty
previously paid by WRS for the calendar quarters ending March 31 and June 30 of
such calendar year is less than $300,000, then WRS shall pay TWR a portion of
the Guaranteed WRS Royalty so that the amount of such payment plus the amount of
the WRS Royalty and the Guaranteed WRS Royalty for the calendar quarters ending
September 30, June 30 and March 31 of such calendar year is $300,000; and
 
(iv)        if the amount of the WRS Royalty for the calendar quarter ending
December 31, plus the amount of the WRS Royalty and the Guaranteed WRS Royalty
previously paid by WRS for the calendar quarters ending March 31, June 30 and
September 30 of such calendar year is less than $400,000, then WRS shall pay TWR
a portion of the Guaranteed WRS Royalty so that the amount of such payment plus
the amount of the WRS Royalty and the Guaranteed WRS Royalty for the calendar
quarters ending December 31, September 30, June 30 and March 31 of such calendar
year is $400,000.

 
6

--------------------------------------------------------------------------------

 

2.6          Records and Audit:  WRS and WRL shall each maintain and keep (at
their respective principal places of business and at their sole expense), during
the Royalty Term applicable to such party and for at least two (2) years after
expiration of the Royalty Term applicable to such party, accurate books of
account and records covering all matters and transactions relating to the
calculation of the WRS Royalty and the WRL Royalty, as applicable.  TWR and its
duly authorized representative(s) shall have the right, upon reasonable notice
and during normal business hours, on no more than one occasion during any twelve
(12) month period with respect to each of WRS and WRL, to examine and otherwise
audit said books of account, records and all other documents and materials in
the possession or under the control of WRS and WRL, as applicable, which are
relevant to the calculation of the WRS Royalty and WRL Royalty.  If any audit
discloses deficiencies, said amount shall be immediately paid to TWR by WRS or
WRL, as applicable, and if any audit performed at TWR’s expense discloses
deficiencies of five percent (5%) or more of the total amount of WRS Royalty or
WRL Royalty due TWR, WRS or WRL, as applicable, shall reimburse TWR for the
reasonable costs of such audit.
 
3.           Representations and Warranties of TWR.  TWR hereby represents and
warrants to each of WRS and WRL as follows:
 
3.1          Organization. TWR is corporation duly organized and validly
existing under the laws of the State of Delaware, with all requisite corporate
power and authority to own, lease and operate its properties and to conduct its
business as presently conducted.
 
3.2          Authorization; Binding Effect.  TWR has the full legal right,
authorization, and capacity to execute and deliver, and to perform its
obligations under, this Agreement.  TWR has taken all action necessary to
execute, deliver and perform its obligations under this Agreement.  This
Agreement constitutes the valid obligation of TWR and is legally binding on and
enforceable against TWR in accordance with its respective terms except as such
enforceability may be limited by (i) bankruptcy, insolvency, moratorium or other
similar laws affecting creditors’ rights, and (ii) general principles of equity
relating to the availability of equitable remedies (regardless of whether any
applicable agreements are sought to be enforced in a proceeding at law or in
equity).
 
3.3          No Conflict.  The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not, (i)
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under any provision of any mortgage, indenture, lease or other agreement
or instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to TWR or its properties
or assets, or (ii) violate any provision of law, or any order, judgment or
decree of any court or other governmental authority applicable to the TWR.  No
consent, waiver, approval or authorization of any third party is required to be
obtained on the part of the TWR in connection with the transactions contemplated
by this Agreement other than those that have been or will be obtained.
 
3.4          Disclaimer of Other Representations and Warranties. EXCEPT AS
EXPRESSLY SET FORTH IN THIS SECTION 3, TWR MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY OF TWR’s ASSETS,
LIABILITIES OR OPERATIONS, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE
HEREBY EXPRESSLY DISCLAIMED.

 
7

--------------------------------------------------------------------------------

 

4.           Representations and Warranties of WRS and WRL.  Each of WRS and
WRL, severally, and not jointly, hereby represent and warrant to TWR as follows:
 
4.1          Organization. Such company is a limited liability company duly
organized and validly existing under the laws of the State of California, with
all requisite power and authority to own, lease and operate its properties and
to conduct its business as presently conducted.
 
4.2          Authorization; Binding Effect.  Such company has the full legal
right, authorization, and capacity to execute and deliver, and to perform its
obligations under, this Agreement.  Such company has taken all action necessary
to execute, deliver and perform its obligations under this Agreement.  This
Agreement constitutes the valid obligation of such company and is legally
binding on and enforceable against such company in accordance with its
respective terms except as such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium or other similar laws affecting creditors’ rights, and
(ii) general principles of equity relating to the availability of equitable
remedies (regardless of whether any applicable agreements are sought to be
enforced in a proceeding at law or in equity).
 
4.3          No Conflict.  The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not, (i)
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under any provision of any mortgage, indenture, lease or other agreement
or instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to such company or its
properties or assets, or (ii) violate any provision of law, or any order,
judgment or decree of any court or other governmental authority applicable to
such company.  No consent, waiver, approval or authorization of any third party
is required to be obtained on the part of such company in connection with the
transactions contemplated by this Agreement other than those that have been or
will be obtained.
 
4.4          Disclaimer of Other Representations and Warranties. EXCEPT AS
EXPRESSLY SET FORTH IN THIS SECTION 4, EACH OF WRS AND WRL MAKE NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT
OF ANY OF WRS’ OR WRL’s ASSETS, LIABILITIES OR OPERATIONS, AND ANY SUCH OTHER
REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
 
5.           Additional Covenants of the Parties.
 
5.1          Business of WRL and WRS.  Each of WRS and WRL shall not have the
authority to, and shall not, take or fail to take any of the following actions
or transactions by or involving WR and/or WRSL, including entering into of any
contract or agreement to do any of the following actions, or causing any
material modification, amendment, enforcement, waiver, extension or renewal
thereof, without first obtaining the approval of TWR, which approval shall not
be unreasonably withheld:

 
8

--------------------------------------------------------------------------------

 

(a)           enter into any license, sublicense or similar grant of rights with
respect to the William Rast® mark with any party identified to WRL or WRS in
writing by TWR as a Restricted Party, or for any Restricted Purpose;
 
(b)           with respect to WRL only, engage in any business other than
owning, and licensing others (including any Affiliate of WRL) rights to, the
William Rast® mark in all classifications;
 
(c)           enter into any license agreement, sublicense or other arrangement
granting any rights to the William Rast® mark to any party who is not an
Affiliate of WRS or WRL which is substantially more favorable to such third
party than the form, terms and conditions of what would be expected in an arms
length transaction with a third party for fair market value; or
 
(d)           with respect to WRL, grant WRS any rights to use the William Rast®
mark in addition to those existing as of the date hereof.  A true and correct
copy of the WRS License Agreement in effect as of the date hereof is attached
hereto as Exhibit A.
 
In order to obtain the prior approval of TWR with respect to any of the above
actions, WRL and/or WRS, as the case may be, shall provide TWR with all relevant
information reasonably necessary for TWR to conduct its due diligence and make
its determination, including but not limited to the identity of the relevant
parties and the principals thereof, the form, terms and conditions of any
proposed agreements and/or copies of such proposed agreements if in final form,
and any other information reasonably requested by TWR.
 
In addition, WRL and/or WRS, as the case may be, shall provide TWR with all of
the above referenced information with respect to all licenses, sublicenses or
similar grant of rights it enters into or grants which do not otherwise require
the approval of TWR hereunder.
 
5.2           Timberlake Support.  TWR will ensure that Justin Timberlake (i)
uses his commercially reasonable efforts to support, endorse and promote the
William Rast® brand, including by, among other things, associating himself as an
owner of the William Rast® brand and one of its original creators, and otherwise
taking actions that are intended by him to reflect favorably on the William
Rast® brand, and (ii) performs his obligations under the Services Agreement (as
defined in the Settlement Agreement). The covenants of TWR in this Section 5.2
are a material inducement to WRS and WRL to enter into this Agreement and
perform each of their obligations hereunder.
 
6.           Term and Termination.  This Agreement shall commence the date
hereof and shall continue until expiration of the Royalty Term (as it applies to
both WRS and WRL), unless terminated earlier as follows:
 
6.1           Termination by TWR.  TWR shall have the right to terminate this
Agreement upon thirty (30) days prior written notice to WRS and WRL.

 
9

--------------------------------------------------------------------------------

 

6.2           Termination by WRS.  WRS shall have the right to terminate this
Agreement (including with respect to WRL’s obligations hereunder), as its sole
and exclusive remedy under this Agreement, if Justin Timberlake begins to
sponsor, promote, endorse and/or derive any economic benefit from a non-William
Rast® branded product in any product category that is covered by the WRS License
Agreement and such activities by Justin Timberlake continue for a period of
thirty (30) days after written notice of termination is provided by WRS to TWR.
 
On the termination date, (i) the obligations of each of WRS and WRL under
Section 2 (other than with respect to Section 2.6, Records and Audit) and
Section 5.1 shall immediately terminate and (ii) the obligations of TWR under
Section 5.2 shall immediately terminate.  Each representation and warranty of a
party to this Agreement shall survive consummation of the transactions
hereunder.
 
7.           Miscellaneous.
 
7.1           Notices.  All notices, requests and other communications to any
party hereunder shall be in writing, by reliable overnight delivery service
(with proof of service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), or by facsimile, and shall
be given:
 
(a)          if to WRS or WRL, to:
 
People’s Liberation, Inc.
1212 S. Flower St., 5th Floor
Los Angeles, CA 90015
Attention:  Chief Executive Officer
Facsimile:  (213) 745-2032

with copies to:

John J. McIlvery, Esq.
Stubbs Alderton & Markiles, LLP
15260 Ventura Boulevard, 20th Floor
Sherman Oaks, CA 91403
Facsimile: (818) 444-6302

(b)          if to TWR:
 
c/o Al Gossett
1900 Covington Pike
Memphis, TN 38128
Facsimile: (901) 373-2047

 
10

--------------------------------------------------------------------------------

 

with copies to:

Brad D. Rose, Esq.
Pryor Cashman LLP
7 Times Square
New York, NY  10036-6569
Facsimile: (212) 798-6369

or such other address or facsimile number as such party may hereafter specify by
notice to the other Parties hereto.  Each such notice, request or other
communication shall be effective (a) if given by facsimile, when such facsimile
is transmitted to the facsimile number specified above and electronic
confirmation of transmission is received or (b) if given by any other means,
when delivered at the address specified in this Section 7.1.
 
7.2           Entire Agreement.  This Agreement contains the sole and entire
agreement and understanding of the parties with respect to the entire subject
matter of this Agreement, and any and all prior discussions, negotiations,
commitments and understandings, whether oral or otherwise, related to the
subject matter of this Agreement are hereby merged herein.
 
7.3           Assignment.  No party may assign this Agreement, and any attempted
or purported assignment or any delegation of any party’s duties or obligations
arising under this Agreement to any third party or entity shall be deemed to be
null and void, and shall constitute a material breach by such party of its
duties and obligations under this Agreement.  Notwithstanding the foregoing or
anything to the contrary herein, TWR may assign this Agreement to an Affiliate
of TWR.
 
7.4           Waiver and Amendment.  No provision of this Agreement may be
waived unless in writing signed by all the parties to this Agreement, and waiver
of any one provision of this Agreement shall not be deemed to be a waiver of any
other provision.  This Agreement may be amended only by a written agreement
executed by all of the parties to this Agreement.

 
11

--------------------------------------------------------------------------------

 

7.5           Governing Law; Dispute Resolution.  This Agreement is governed by
and will be interpreted according to California law, except for any choice of
law rules.  Any controversy arising out of or relating to this Agreement, or any
modification or extension thereof, shall be administered and fully and finally
resolved before JAMS in Los Angeles, California, pursuant to its Comprehensive
Arbitration Rules and Procedures.  Such dispute shall be resolved by a single
arbitrator appointed in accordance with said Rules and Procedures.  The Parties
consent that any process or notice of motion or other application to any court,
and any paper in connection with arbitration, may be served by certified mail,
return receipt requested or by personal service or in such other manner as may
be permissible under the rules of the applicable court or arbitration tribunal,
provided a reasonable time for appearance is allowed.  Pending the arbitration
award, the Parties shall have all rights to provisional remedies which they
would have at law or equity, notwithstanding the existence of this agreement to
arbitrate.  The arbitrators shall have no power to alter or modify any express
provision of this Agreement (all of which provisions are hereby incorporated by
reference into this arbitration provision) or to render an award which has the
effect of altering or modifying any express provision hereof, provided, however,
that any application for reformation of the contract shall be made to the
arbitrators and not to any court and the arbitrators shall be empowered to
determine whether valid grounds for reformation exist.  The Parties shall
maintain the confidential nature of the arbitration proceeding and any award,
including the hearing, except as may be necessary to prepare for or conduct the
arbitration hearing on the merits, or except as may be necessary in connection
with a court application for a preliminary remedy, a judicial challenge to an
award or its enforcement, or unless otherwise required by law or judicial
decision.  To the extent that any Party seeks injunctive or other preliminary
relief, a stay or provisional remedy, confirmation of an award or any other
judicial intervention, that Party shall use its best effort to have any such
submission filed under seal, and to ensure that any related documents shall be
designated and treated as a “Sealed Document.”  To the extent the court permits
such sealing, all papers and documents filed under seal shall be filed in sealed
envelopes and shall remain under seal until such time as the court, or any court
of competent jurisdiction, orders otherwise.  Such Sealed Documents shall be
identified with the caption of this action and a general description of the
sealed contents, and shall bear the following statement which should also appear
on the sealed envelope:
 
“CONFIDENTIAL - SUBJECT TO PROTECTIVE ORDER
 
Contents are confidential and are subject to a court ordered protective
order governing the use and dissemination of such contents.”
 
The clerk of the court shall maintain such Sealed Documents separate from the
public records, intact and unopened except as otherwise directed by the
court.  Such Sealed Documents shall be released by the clerk of the court only
upon further order of the court.
 
7.6           Severability.  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 or become
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
 
7.7           Captions.  The various captions of this Agreement are for
reference only and shall not be considered or referred to in resolving questions
of interpretation of this Agreement.
 
7.8           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
 
7.9           Costs and Attorneys’ Fees.  If any action, suit, arbitration or
other proceeding is instituted to remedy, prevent or obtain relief from a
default in the performance by any party to this Agreement of its obligations
under this Agreement, the prevailing party shall recover all of such party’s
attorneys’ fees incurred in each and every such action, suit, arbitration or
other proceeding, including any and all appeals or petitions therefrom.  As used
in this Section, attorneys’ fees shall be deemed to mean the full and actual
costs of any legal services actually performed in connection with the matters
involved calculated on the basis of the usual fee charged by the attorney
performing such services and shall not be limited to “reasonable attorneys’
fees” as defined in any statute or rule of court.

 
12

--------------------------------------------------------------------------------

 

7.10           Judicial Interpretation.  Should any provision of this Agreement
require judicial interpretation, it is agreed that a court interpreting or
construing the same shall not apply a presumption that the terms hereof shall be
more strictly construed against any person by reason of the rule of construction
that a document is to be construed more strictly against the person who itself
or through its agent prepared the same, it being agreed that all parties have
participated in the preparation of this Agreement.

 
13

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
 

 
WILLIAM RAST SOURCING, LLC,
 
a California limited liability company
       
By:
/s/ Colin Dyne
   
Colin Dyne
 
Its:
Manager
       
WILLIAM RAST LICENSING, LLC,
 
a California limited liability company
       
By:
/s/ Colin Dyne
   
Colin Dyne
 
Its:
Manager
       
TENNMAN WR-T, INC.,
 
a Delaware limited liability company
       
By:
/s/ Justin Timberlake
 
Name:
  
 
Its:
  

 
 
S-1

--------------------------------------------------------------------------------