Exhibit 10.1
OPERATING AGREEMENT

OF

EYEFLY LLC

This Operating Agreement is executed as of January 4, 2011 (the “Effective
Date”), by and among Eyefly LLC (the “Company”), Bluefly, Inc., a Delaware
corporation (“Bluefly”), A+D Labs LLC, a Delaware limited liability Company
(“A+D”) and an Affiliate of MODO and any other party that hereinafter becomes a
Member.

WITNESSETH:

WHEREAS, the Certificate of Formation of the Company has been filed with the
Secretary of State of the State of Delaware on the Effective Date; and

WHEREAS, the Company and the Founding Members desire to enter into this
Agreement in order to establish their respective economic and other rights as
members of the Company and to provide regulations and procedures for the
governance of the Company.

NOW, THEREFORE in consideration of the premises, the mutual promises and
obligations contained herein, and with the intent of being legally bound, the
parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.1  Definitions.  For purposes of this Agreement, capitalized terms
used but not defined herein shall have the following meanings:

“A+D” shall have the meaning set forth in the recitals hereto.

“A+D Designee” shall have the meaning set forth in Section 8.3.

“Adjusted Capital Account” shall mean, with respect to any Member, the balance
in such Member's Capital Account as of the end of the relevant Fiscal Year,
after giving effect to the following adjustments:

(i)           such Capital Account shall be deemed to be increased by any
amounts that such Member is obligated to restore to the Company (pursuant to
this Agreement or otherwise) or is deemed to be obligated to restore pursuant to
(A) the penultimate sentence of
 
 
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section 1.704-2(g)(1) of the Regulations, or (B) the penultimate sentence of
section 1.704-2(i)(5) of the Regulations (which includes amounts loaned by
Members); and
 
(ii)  such Capital Account shall be deemed to be decreased by the items
described in sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.

The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be
interpreted and applied consistently therewith.

“Adjusted EBITDA” means, for any period of determination,  EBITDA adjusted to
eliminate the following: (i) gain (or loss) on sale of assets, (ii) gain (or
loss) on disposal of assets, (iii) gain (or loss) on early extinguishment or
restructuring of debt, (v) foreign currency transaction gain (or loss), and (vi)
extraordinary items, in each case as determined in accordance with generally
accepted accounting principles.

“Affiliate” of a party shall mean any entity that, directly or indirectly,
controls, is controlled by, or is under the common control with, such party. 
The term “control” means the power to direct the affairs of such entity by
reason of ownership of equity securities, by contract, or otherwise.

“Agreement” shall mean this Operating Agreement, as amended from time to time.

“Approved Transaction” shall have the meaning set forth in Section 19.3(a).

“Assignee” shall have the meaning set forth in Section 19.5.

“Available Cash” means net cash flow of the Company for the relevant period, if
any, less such reasonable reserves as the Board of Managers shall determine to
be necessary for present operations, planned expenditures and/or future
contingencies.

“Award” shall have the meaning set forth in the Plan.

“Bluefly” shall have the meaning set forth in the recitals hereto.

“Bluefly Common Stock” shall mean the Common Stock of Bluefly.

“Bluefly Management Services Agreement” means the Management Services Agreement
entered into on or about the date hereof by and between the Company and Bluefly,
as the same may be amended from time to time.
 

 
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“Bluefly Price Per Share” shall mean the average closing price of Bluefly Common
Stock for the twenty (20) trading days prior to the date on which the Call
Option is exercised, provided that the Bluefly Price Per Share shall, in no
event, be less than the closing bid price as of the last close of a trading day
prior to the time at which the Bluefly Price Per Share is calculated.

“Board” or “Board of Managers” shall mean a committee of Managers comprised in
accordance with this Agreement and having the powers set forth herein.

“Book Value” means, with respect to any asset of the Company, the adjusted basis
of such asset as of the relevant date for federal income tax purposes, except as
follows:

(i)  the initial Book Value of any asset contributed by a Member to the Company
shall be the Fair Market Value of such asset;

(ii)  the Book Values of all Company assets (including intangible assets such as
goodwill) shall be adjusted to equal their respective Fair Market Values as of
the following times:

(A)          the acquisition of an additional interest in the Company by any new
or existing Member (1) in exchange for more than a de minimis Capital
Contribution or (2) as consideration for the provision of services to or for the
benefit of the Company;

(B)          the distribution by the Company to a Member of more than a de
minimis amount of money or Company property as consideration for its interest in
the Company; and

(C)          the liquidation of the Company within the meaning of section
1.704-1(b)(2)(iv)(f)(5)(ii) of the Regulations; and

(iii)  if the Book Value of an asset has been determined or adjusted pursuant to
subsection (i) or (ii) above, such Book Value shall thereafter be adjusted by
the Depreciation taken into account with respect to such asset for purposes of
computing Net Profits and Net Losses and other items allocated pursuant to
Section 13.2.

The foregoing definition of Book Value is intended to comply with the provisions
of section 1.704-1(b)(2)(iv) of the Regulations and shall be interpreted and
applied consistently therewith.

“Built-In Gain” shall have the meaning set forth in Section 5.1(c).

“Business” shall have the meaning set forth in Section 4.1.
 

 
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“Business Day” shall mean any day other than Saturday, Sunday and any other day
on which banks in New York City are not open for business.

“Call Option” shall have the meaning set forth in Section 19.10(a).

“Call Option Exercise Notice” shall have the meaning set forth in Section
19.10(a).

“Call Option Valuation” shall mean, as of any date that the Call Option is
exercised in whole or in part, seven (7) times the Company’s Adjusted EBITDA for
the twelve month period ending as of the last day of the last completed full
fiscal quarter prior to the date of such exercise.  For example, if the Call
Option were to be exercised on November 5, 2017, the Call Option would be seven
(7) times the Company’s Adjusted EBITDA for the twelve month period ending
September 30, 2017.

“Capital Account” shall have the meaning set forth in Section 12.1.

“Capital Contribution” shall mean the amount of cash and the Fair Market Value
of property (net of liabilities secured by such property that the Company is
considered to assume, or take subject to, under section 752 of the Code)
contributed by a Member to the capital of the Company and any Company
liabilities assumed by the Member within the meaning of section
1.704-1(b)(2)(iv)(c) of the Regulations.  No Capital Contribution shall be made
with respect to any Class B Common Unit.

“Certificate of Formation” shall mean the Certificate of Formation of the
Company, as amended from time to time.

“Change of Control” shall mean, with respect to a Member that is an entity, the
existence of any circumstances by which “control” (as used in the definition of
“Affiliate”) of such Member is acquired by a Person (or group of Persons acting
in concert) other than the Person(s) who “control” the Member as of the date on
which the Member executes this Agreement.

“Class A Common Units” shall mean an interest in the Company that arises out of
a Capital Contribution pursuant to which the holder of such interest shall be
entitled to be allocated Net Profits and Net Losses and receive Distributions,
and to vote, in accordance with the terms hereof.

“Class B Common Units” shall mean an interest in the Company that does not arise
out of a Capital Contribution pursuant to which  the holder of such interest
shall be entitled to be allocated Net Profits and Net Losses and receive
Distributions in accordance with the terms hereof.  Except as otherwise required
by law, the Class B Common Units shall have no right to vote with respect to any
matter.  The issuances of Class B Common Units from time to time are
 
 
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intended to be “Profits Interests” pursuant to Internal Revenue Service Revenue
Procedures 2001-43, 2001-2 C.B. 191 and 93-27, 1993-2 C. B. 343.
 
“Class B Member” shall mean a Member who owns Class B Common Units.

“Co-Sale Notice” shall have the meaning set forth in Section 19.2(e).

“Co-Sale Right” shall have the meaning set forth in Section 19.2(f).

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time (including corresponding provisions of subsequent or successor revenue
laws).

“Combined Marginal Rate” shall mean, for any Fiscal Year, the sum of (i) the
highest marginal federal income tax rate assessable for such year on the income
of corporate taxpayers and (ii) the highest combined marginal state and local
income tax rate assessable for such year on the income of corporate taxpayers
among the various states and localities in which holders of Units shall be
required to file income tax returns after giving effect to the federal income
tax benefit derived from such state and local taxes based on the rate determined
in the preceding clause (i).

“Common Units” shall mean the Class A Common Units and the Class B Common Units.

“Company” shall have the meaning set forth in the preamble to this Agreement.

“Company Minimum Gain” means the aggregate amount of gain (of whatever
character), determined for each Nonrecourse Liability of the Company, that would
be realized by the Company if it disposed of the Company property subject to
such liability in a taxable transaction in full satisfaction thereof (and for no
other consideration) and by aggregating the amounts so computed, determined in
accordance with sections 1.704-2(d) and (k) of the Regulations.

“Company Notice” shall have the meaning set forth in Section 19.2(b).

“Company Right” shall have the meaning set forth in Section 19.2(b).

“Competitive Business” means any Person engaged in the Business.

“Competitor” means any Person to the extent that Person, if it became a Member,
would be in violation of the prohibitions on competition (as those prohibitions
are limited by the exclusions thereto) set forth in Section 20.2.

“Confidential Information” shall have the meaning set forth in Section 20.1.

 
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“Convertible Securities” shall have the meaning set forth in Section 5.1(d).

“Depreciation” means, for each Fiscal Year or part thereof, an amount equal to
the depreciation, amortization or other cost recovery deduction allowable for
federal income tax purposes with respect to an asset for such Fiscal Year or
part thereof, except that if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such Fiscal
Year, the depreciation, amortization or other cost recovery deduction for such
Fiscal Year or part thereof shall be an amount that bears the same ratio to such
Book Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such Fiscal Year or part thereof bears to such adjusted
tax basis.

“Designated Units” shall have the meaning set forth in Section 19.3(a).

“Dissolution” shall mean the happening of any of the events set forth in Section
17.1.

“Distribution” shall mean any money and the Fair Market Value of any property
(net of liabilities secured by such property that the Member is deemed to
assume, or take subject to, under Section 752 of the Code) distributed by the
Company to the Members in accordance with Articles XIV or XVIII.

“EBITDA” means, for any period of determination, net income for the applicable
period plus, without duplication and only to the extent deducted in determining
net income, (i) depreciation and amortization expense for such period, (ii)
interest expense, whether paid or accrued, for such period, (iii) all income
taxes for such period, in each case as determined in accordance with generally
accepted accounting principles.

“Effective Date” shall have the meaning set forth in the recitals hereto.

“Election Notice” shall have the meaning set forth in Section 19.10(b).

“Fair Market Value” shall mean, with respect to any property or assets
(including the Units), the value (as determined by the Board of Managers in good
faith) that would be obtained in an arm's length transaction for ownership of
such property for cash between an informed and willing seller and an informed
and willing purchaser, each with an adequate understanding of the facts and
under no compulsion to buy or sell.

“Fiscal Year” shall mean the period specified in Section 16.2.

“Founding Members” shall mean Bluefly and A+D.

 
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“Initial Contribution” shall mean the initial Capital Contribution made by a
Member to the Company in return for such Member’s purchase of Units, other than
Class B Common Units.

“Initiating Members” shall have the meaning set forth in Section 19.3(a).

“Liquidation” shall mean the process of winding up and terminating the Company
after its Dissolution.

“LLCA” shall mean the Delaware Limited Liability Company Act, as amended from
time to time.

“Management Services Agreements” means, collectively, the Bluefly Management
Services Agreement and the MODO Management Services Agreement.

“Managers” shall have the meaning set forth in Section 8.1(b).  For all purposes
hereunder, the term “Manager” shall have the same meaning as is provided for
that term in the LLCA.

“Member” shall mean a Person who acquires Units and who is admitted to the
Company as a Member in accordance with the terms of this Agreement.

“Member Minimum Gain” means the aggregate amount of gain (of whatever
character), determined for each Member Nonrecourse Debt, that would be realized
by the Company if it disposed of the Company property subject to such Member
Nonrecourse Debt in a taxable transaction in full satisfaction thereof (and for
no other consideration), determined in accordance with the provisions of
sections 1.704-2(i)(3) and (k) of the Regulations for determining a Member’s
share of minimum gain attributable to a Member Nonrecourse Debt.

“Member Nonrecourse Debt” has the same meaning as “partner nonrecourse debt” as
specified in section 1.704-2(b)(4) of the Regulations.

“MODO” shall mean Tworoger Associates, Ltd., a New York corporation, doing
business as MODO Eyewear.

“MODO Management Services Agreement” means the Management Services Agreement
entered into on or about the date hereof by and between the Company and MODO, as
the same may be amended from time to time.

“Negative Balance” shall have the meaning set forth in Section 13.2(a)(i).

“Net Losses” shall mean, with respect to any Fiscal Year (or part thereof) of
the Company, the net losses of the Company for such period computed using Book
Values and
 
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applying the methods and principles of accounting used for federal income tax
purposes specified by section 704(b) of the Code and the Regulations promulgated
thereunder, including, as appropriate, each item of income, gain, loss,
deduction or credit entering into such determination, as determined by the
accountants of the Company.

“Net Profits” shall mean, with respect to any Fiscal Year (or part thereof) of
the Company, the net profits of the Company for such period computed using Book
Values and applying the methods and principles of accounting used for federal
income tax purposes specified by section 704(b) of the Code and the Regulations
promulgated thereunder, including, as appropriate, each item of income, gain,
loss, deduction or credit entering into such determination, as determined by the
accountants of the Company.

“New Member” shall mean any Member that is not a Founding Member.

“Nonrecourse Liability” shall mean any Company liability (or portion thereof)
for which no Member bears the economic risk of loss for such liability under
section 1.752-2 of the Regulations.

“Offer” shall have the meaning set forth in Section 19.2(a).

“Offering Member” shall have the meaning set forth in Section 19.2(a).

“Option Notice” shall have the meaning set forth in Section 19.2(a).

“Other Members” shall have the meaning set forth in Section 19.3(a).

“Outside Party” shall have the meaning set forth in Section 19.2(a).

“Percentage Interest” means, for each Member, a fraction, the numerator of which
shall be all Common Units held by such Member (including any Common Units
issuable upon the conversion of Preferred Units held by such Member) and the
denominator of which shall be all Units then issued and outstanding (including
any Common Units issuable upon the conversion of Preferred Units then issued and
outstanding).

“Permitted Transfer” shall have the meaning set forth in Section 19.1(a).

“Permitted Transfer to an Affiliate” shall mean a Permitted Transfer of the type
described in clauses (ii) or (iii) of Section 19.1(b).

“Person” shall mean an individual, corporation, limited liability company,
partnership, trust, unincorporated organization or other entity, or a government
or any agency or political subdivision thereof.

 
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“Phantom Units” shall have the meaning set forth in the Plan.

“Plan” shall have the meaning set forth in Section 5.5.

“Preferred Unit Designation” shall mean the exercise by the Board of its
authority to designate the rights of a series of Preferred Units pursuant to
Section 5.1(b).

“Preferred Units” shall mean an interest in the Company that arises out of a
capital contribution pursuant to which the holder of such interest shall be
entitled to be allocated Net Profits and Net Losses and receive Distributions,
and to vote, in accordance with the terms hereof.

“Regulations” shall mean the Treasury Regulations (including temporary
regulations) promulgated under the Code, as amended from time to time (including
corresponding provisions of succeeding regulations).

“Regulatory Allocations” shall have the meaning set forth in Section
13.5(a)(vi).

“Sale of the Company Transaction” shall mean a transaction, or series of
transactions, pursuant to which: (a) the Company would sell all or substantially
all of its assets, (b) the Members would sell Units that entitle the holders
thereof to cast a majority of the votes entitled to be cast by the holders of
all Units or (c) the Company would merge or consolidate with another entity and,
as a result thereof, the Members immediately prior to such transaction or series
of transactions would hold less than fifty percent (50%) of the combined voting
power of the outstanding equity securities of the surviving entity immediately
following such transaction or series of transactions.

“Securities Act” shall mean the Securities Act of 1933, as the same may be
amended from time to time.

“Section 704(b) Regulations” shall have the meaning set forth in Section 12.1.

“Selling Members” shall have the meaning set forth in Section 19.10(a).

“Service” shall mean a Class B Member’s performance of services on behalf of the
Company, where as an employee, consultant, officer or Manager.

“Share Cap” shall have the meaning set forth in Section 19.10(c).

“Tax Matters Partner” shall have the meaning set forth in Section 11.4(a).

“Total Consideration” shall have the meaning set forth in Section 19.3(b).

 
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“Transfer” shall mean a sale, exchange, assignment, transfer, pledge,
hypothecation or other disposition of Units (whether voluntary or involuntary),
including (without limitation) the creation of any lien, security interest or
other encumbrance, other than by operation of law.  A “Transfer” shall include a
Change of Control of any Member that is an entity, the primary assets of which
consist of Units, provided that a transfer of equity interests in Bluefly shall,
in no event, constitute a Transfer of Units held by Bluefly.

“Transferring Member” shall mean a Member that is Transferring Units.

“Undesignated Preferred Units” shall mean any Preferred Units that, as of the
date hereof, have not been designated by the Board pursuant to Section 5.1(b).

“Units” shall mean the interests in the Company having the characteristics
ascribed to them herein.  For all purposes hereunder, the term “Unit” shall have
the same meaning as the term “membership interest” as that term is used in the
LLCA.

“Unvested Class B Common Units” shall mean, with respect to a Class B Member,
any Class B Common Units granted to such Member that have not yet vested in
accordance with the terms of the written award agreement pursuant to which such
Class B Common Units were granted.

All other capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned thereto in the LLCA.  To the extent that a term
specifically defined in this Section 1.1 conflicts with a definition provided in
the LLCA, the specific definition set forth herein shall govern.

ARTICLE II

Formation

SECTION 2.1  Formation.  The Company was formed effective as of January 4, 2011,
by the filing of the Certificate of Formation with the Secretary of State of the
State of Delaware pursuant to the LLCA and on behalf of the Members of the
Company.

SECTION 2.2  Name.  The name of the Company is “Eyefly LLC.”  The business of
the Company will be conducted under such name or such other trade names or
fictitious names as may be adopted in accordance with Section 2.3.

SECTION 2.3  Trade Name Affidavits.  The Company will file such trade name or
fictitious name affidavits and other certificates as may be necessary or
desirable in connection with the formation, existence and operation of the
Company (including those filings required in any jurisdiction where the Company
owns property).
 
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SECTION 2.4  Foreign Qualification.  The Company will apply for authority to
transact business in those jurisdictions where it is required to do so.  The
Company will file such other certificates and instruments as may be necessary or
desirable in connection with its formation, existence and operation.

ARTICLE III

Offices

SECTION 3.1  Principal Office.  The principal office, place of business and
address of the Company shall be 42 West 39th Street, 9th Floor, New York, New
York 10018, and may be changed by the Board of Managers from time to time.

SECTION 3.2  Other Offices.  The Company may also have offices at other places,
either within or without the State of Delaware, as the Board of Managers may
from time to time determine or as the business of the Company may require.

ARTICLE IV

Business and Powers

SECTION 4.1  Business.  The business of the Company shall be (a) to develop and
operate an e-commerce Web site and related online and mobile applications
focused on selling fashionable prescription eyewear directly to consumers (the
“Business”) and (b) to conduct such other lawful activities as the Board of
Managers shall agree from time to time.

SECTION 4.2  Powers.  The Company shall have all the powers permitted to a
limited liability company under the LLCA and which are necessary, convenient or
advisable in order for it to conduct its business.

 
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ARTICLE V

General Provisions

SECTION 5.1  Issuance of Interests.  (a)  The membership interests in the
Company are referred to in this Agreement as “Units.”  The Company shall be
authorized to issue two classes of Units:  “Common Units” and “Preferred
Units.”  The Common Units may be issued in two series:  “Class A Common Units”
and “Class B Common Units.”  The Preferred Units may be issued in multiple
series as set forth below.  The Company is hereby authorized to issue up to
16,000,000 Class A Common Units, 1,500,000 Class B Common Units, and 10,000,000
Preferred Units, all of which are Undesignated Preferred Units and may be
designated in the future in accordance with subsection (b) below.

(b)  The Board is vested with authority to establish and designate additional
series of Preferred Units and to fix the number of Units to be included in such
series and the voting powers, the relative rights, preferences and special
rights, and the qualifications, limitations or restrictions, of such series,
subject to the provisions of this Section 5.1(b).  The Board shall also have the
authority to issue additional Common Units in lieu of designating and issuing
all or any portion of the authorized Preferred Units that have not otherwise
been designated as of the time of such issuance.  The authority of the Board
with respect to each series of Preferred Units shall include, but not be limited
to, determination of the following:

(i)            the number of Preferred Units constituting that series and the
distinctive designation of that series;

(ii)           whether that series shall be entitled to any distributions, and,
if so, the distribution rate on the Units of that series, whether distributions
shall be cumulative, and, if so, from which date or dates;

(iii)          whether that series shall have voting rights, in addition to the
voting rights required by law, and, if so, the terms of such voting rights;

(iv)          whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate to such events as the Board shall determine;

(iv)          whether the Units of that series shall be redeemable, and, if so,
the terms and conditions of such redemption, including the date or dates upon or
after which they shall be redeemable, and the amount per Unit payable in case of
redemption, which amount may vary under different conditions at different
redemption dates;

(v)           the amounts payable on the Units of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the Company;
and

 
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(vi)          any other voting powers, relative rights, preferences and special
rights and qualifications, limitations or restrictions of that series.

(c)  At the time that any Class B Common Unit is issued pursuant to this
Agreement, the Board shall determine the extent, if any, by which any asset of
the Company has a Fair Market Value in excess of the Book Value of such asset (a
“Built-In Gain”).  Notwithstanding anything to the contrary in this Agreement,
(i) a Person who receives a Class B Common Unit shall not be allocated any
portion of the Built-In Gains that are ultimately realized by the Company from
the sale or exchange of assets that were owned by the Company (or by a
subsidiary partnership or limited liability company in which the Company has an
interest) on the date such Person received such Class B Common Unit and (ii) the
amount of distributions made by the Company to a Person with respect to such
Class B Common Unit (exclusive of amounts paid or distributed to such Person as
guaranteed payments or compensation for services) shall be limited to the sum of
(A) such Person’s interest in Net Profits arising from the ordinary operations
of the Company after the date such Class B Common Unit was issued and (B) such
Person’s interest in Net Profits from a sale of Company assets that is in excess
of the amount of Built-In Gain of the Company as of the date such Class B Common
Unit was issued.

(d)  The Company shall be authorized to issue securities (“Convertible
Securities”) that are convertible into, or exchangeable or exercisable for,
Units authorized pursuant to this Section 5.1, provided that such Units shall
not be deemed issued until such time as such securities are converted, exchanged
or exercised (as the case may be) in accordance with the terms thereof.

SECTION 5.2  Unit Certificates .  Every holder of record of a Unit shall be
entitled to have a certificate certifying the class, series and number of Units
owned by such Person in the Company.  Each certificate evidencing ownership of
Units shall bear and be subject to the following legend:

“THE UNITS EVIDENCED HEREBY ARE SUBJECT TO AN OPERATING AGREEMENT EFFECTIVE AS
OF JANUARY 4, 2011 AS THE SAME MAY BE AMENDED FROM TIME TO TIME (A COPY OF WHICH
MAY BE OBTAINED FROM THE SECRETARY OF THE ISSUER).  SUCH OPERATING AGREEMENT
RESTRICTS THE SALE, PLEDGE, HYPOTHECATION AND TRANSFER OF THE UNITS AND THE
INTEREST REPRESENTED HEREBY AND CONTAINS PROVISIONS GOVERNING THE VOTING OF THE
UNITS. BY ACCEPTING ANY INTEREST IN SUCH UNITS, THE PERSON ACCEPTING SUCH UNITS
SHALL BE DEEMED TO AGREE TO, AND SHALL BECOME BOUND BY, ALL THE PROVISIONS OF
SUCH OPERATING AGREEMENT.

 
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NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
UNITS EVIDENCED BY THIS CERTIFICATE MAY BE MADE EXCEPT AS OTHERWISE PROVIDED IN
SUCH OPERATING AGREEMENT AND (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), ANY APPLICABLE STATE
SECURITIES AND “BLUE SKY” LAWS OR (B) IF NOT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, THEN ONLY WHEN SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
THE ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER AND SUCH STATE
SECURITIES AND “BLUE SKY” LAWS.”

Each such certificate shall be signed by, or in the name of the Company by, the
Chairman, the Chief Executive Officer, the President or a Vice President and by
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Company.  In case any officer who has signed or whose facsimile
signature has been placed upon a certificate while such officer was an officer
of the Company but such officer shall have ceased to be an officer before such
certificate is issued, it may nevertheless be issued by the Company with the
same effect as if such Person were an officer at the date of issue.

SECTION 5.3  General Rights.  (a) Units shall not have a stated value or any
rights to Distributions unless the Board of Managers, pursuant to the terms
hereof, shall have declared such a Distribution out of funds legally available
therefor.

(b)           Except as expressly provided herein or in a Preferred Unit
Designation, no Member shall have priority over any other Member whether for the
return of a Capital Contribution or Capital Account or for Net Profits, Net
Losses or a Distribution; provided, however, that the foregoing shall not apply
to loans, advances or other indebtedness (as distinguished from a Capital
Contribution) made by a Member to the Company.

SECTION 5.4  General Protective Provisions.  Notwithstanding anything in this
Agreement to the contrary, no Manager, Member, or officer shall, without first
obtaining the written approval of those Members representing at least a majority
of all of the votes of Members permitted hereunder:

(a) cause the Dissolution of the Company;
 
 
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(b) cause or permit the sale of all or substantially all of the Company's
assets;

 
(c) cause or permit the merger or consolidation of the Company into or with
another Person; or

(d) cause or permit the conversion of the Company into another form of business
entity.

SECTION 5.5  Phantom Units. In addition to the Units, the Company may issue
Phantom Units in accordance with the Eyefly LLC 2011 Long-Term Incentive Plan
(the “Plan”) attached hereto as Exhibit B.  Participants holding Awards under
the Plan shall have no rights as Members pursuant to such Awards, such Awards
shall not constitute any series or class of Units issued pursuant to this
Agreement and such participants shall not be treated as members of the Company. 
The initial number of Phantom Units available for issuance under the Plan shall
be 1,500,000.  The Plan may be amended with the approval of the Board of
Managers, including (without limitation) to increase the number of Phantom Units
available for issuance thereunder, and no such amendment shall require a vote of
the Members.

ARTICLE VI

Capital Contributions; Members

SECTION 6.1  Initial Contributions.  (a)  The name of each Founding Member,
their Initial Contribution, and the number and type of Units representing their
membership interest under this Agreement are set forth on Exhibit A hereto. Each
Founding Members shall only be required to pay the portion of its Initial
Contribution set forth on Exhibit A immediately, but shall be required to pay
the remaining amounts, or any portion thereof, within ten (10) Business Days of
request by the Company.  To the extent that any Founding Member does not pay any
requested portion of the Initial Contribution within such ten (10) Business Day
period then, in addition to all other remedies that the Company may have at law
or equity (including, without limitation, for breach of contract), upon five (5)
Business Days’ written notice from the Company, all of such Founding Member’s
Units shall automatically be deemed to have been terminated, redeemed and
forfeited without any consideration or further action on anyone’s part,
resulting in the surrender, termination and forfeiture of all of such Founding
Member’s rights, privileges and preferences attendant to its ownership of a
Capital Interest with respect to such Units.

(b)  The Initial Contribution of each New Member shall be the purchase price for
such Member’s Units, and such Member shall not be deemed admitted as a Member of
the Company (and such Units shall not be deemed issued) until such time as such
Initial Contribution has been paid in full; provided that no New Member shall be
required to make a Capital Contribution with respect to any Class B Common Units
issued to such Member.

 
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SECTION 6.2  Additional Contributions.  Except as provided in the LLCA or as
specifically provided in this Agreement, no Member will be required to make any
additional Capital Contributions or restore any deficit to its Capital Account.

SECTION 6.3  Withdrawal of Capital.  Except as specifically provided in this
Agreement, no Member will be entitled to withdraw all or any part of such
Person's Capital Contribution or Capital Account from the Company prior to the
Company's Dissolution and Liquidation or, when such withdrawal is permitted, to
demand a Distribution of property other than money.

SECTION 6.4  No Interest on Capital.  No Member will be entitled to receive
interest on such Person’s Capital Account or any Capital Contribution.

SECTION 6.5  Admission of Members.  Upon the Company’s issuance of Units to any
Person who is not a Member or the Transfer (other than any pledge or
hypothecation) of any Units to any Person who is not a Member, and the approval
of the Board of Managers, and provided that, in the case of a Transfer, there
has been compliance with the terms contained in Article XIX hereof, such Person
shall be admitted to the Company as a Member.  No transferee of Units shall be
admitted as a Member except upon the approval of the Board of Managers.

SECTION 6.6  Power of Attorney .  (a) Each Member hereby appoints the Board of
Managers, and any officer duly appointed thereby, including the Secretary and
each Assistant Secretary, acting individually, with power of substitution, as
its true and lawful representative and attorney-in-fact, in its name, place and
stead to make, execute, sign, acknowledge, swear to and file: (i) any and all
instruments, certificates, and other documents that may be deemed necessary or
desirable to effect the Dissolution or Liquidation of the Company, provided that
such action has been approved in accordance with Section 5.4 hereof; (ii) any
business certificate, fictitious name certificate, amendment thereto, or other
instrument or document of a similar nature necessary or desirable to accomplish
the business, purpose and objectives of the Company, or required by any
applicable federal, state or local law; and (iii) all amendments or
modifications to this Agreement, provided that such amendment or modification
has been approved in accordance with Section 21.1.

(b)           The power of attorney hereby granted by each Member is coupled
with an interest, is irrevocable, and shall survive, and shall not be affected
by, the subsequent death, disability, incapacity, incompetency, termination,
bankruptcy or insolvency of such Member.

SECTION 6.7  Representations and Warranties.  Each Member hereby represents and
warrants to the Company and each other Member that: (a) if that Member is an
organization, that it is duly organized, validly existing, and in good standing
under the law of its State of organization and that it has full organizational
power to execute and agree to this Agreement and to perform its obligations
hereunder; (b) the Member is acquiring its interest in the Company for
 
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the Member’s own account as an investment and without an intent to distribute
the interest; (c) except as specifically permitted in this Agreement, the Member
has not and will not enter into any agreements or understandings relating to
his, her or its interest in the Company that could give rise to any other Person
having any direct or indirect interest in the Company; (d) the Member has good
and marketable title to any property contributed to the Company as a capital
contribution, free and clear of any liens, claims, liabilities, restrictions or
encumbrances of any kind; (e) neither the execution and delivery of this
Agreement, nor the performance by the Member of any of the duties or obligations
under this Agreement, shall violate any term, covenant or agreement to which the
Member or any of the Member’s property is bound; (f) the Member has sufficient
knowledge and experience in investing in similar companies in terms of the
Company’s stage of development so as to be able to evaluate the risks and merits
of its investment in the Company and it is able financially to bear the risks
thereof; and (g) the Member acknowledges that the interests have not been
registered under the Securities Act or any state securities laws, and may not be
resold or transferred by the Member without appropriate registration or the
availability of an exemption from such requirements.

ARTICLE VII

Meetings of Members

SECTION 7.1  Meetings.  Meetings of the Members for any purpose or purposes may
be called by a Member or Members holding of record Units entitling such
Member(s) at least a majority of the votes of Members permitted hereunder, or by
the Board of Managers, the Chairman, the Chief Executive Officer, or the
President and held at such place, date and hour as shall be designated in the
notice thereof.

SECTION 7.2  Notice of Meetings.  (a) Notice of each meeting of the Members
shall be given not less than ten (10), nor more than sixty (60), calendar days
before the date of the meeting to each Member entitled to vote thereat by
mailing such notice, postage prepaid, to each such Member at the address of such
Member as it appears on the records of the Company.  Every such notice shall
state the place, date, and hour of the meeting and the purpose or purposes for
which the meeting is called.  Except as provided in the immediately succeeding
sentence, notice of any adjourned meeting of the Members need not be given if
the time and place thereof is announced at the meeting at which adjournment is
taken.  If the adjournment is for more than thirty (30) calendar days or if,
after the adjournment, a new record date is fixed for the adjourned meeting,
notice of the adjourned meeting shall be given to each Member entitled to vote
at such adjourned meeting in the manner and containing the information set forth
in the first and second sentences of this Section 7.2, respectively.

(b)           A written waiver of notice, signed by a Member entitled thereto,
whether before or after the time stated therein, shall be deemed equivalent to
notice of the meeting relating thereto.  Attendance of a Member in person or by
proxy at a Members' meeting shall constitute a waiver of notice to such Member
of such meeting, except when such Member 
 
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attends the meeting for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not duly
called or convened.

SECTION 7.3  Record Date.  For the purpose of determining the Members entitled
to notice of or to vote at any meeting of the Members or any adjournment of such
meeting, the date one (1) Business Day prior to the date on which notice of the
meeting is mailed (or such other date as the Board of Managers may determine)
shall be the record date for making such a determination.  When a determination
of Members entitled to vote at any meeting of the Members has been made pursuant
to this Section 7.3, such determination of Members shall also apply to any
adjournment of the meeting.  For the purpose of determining the Members for any
other purpose (excluding entitlement to Distributions which shall be governed by
Section 14.1), the date established by the Board of Managers as the record date
for making such determination shall be deemed to be the record date for making
such a determination.

SECTION 7.4  Quorum.  At each meeting of the Members, except as otherwise
required by law, Members holding more than fifty percent (50%) of all of the
votes of Members permitted hereunder shall be present in person or by proxy to
constitute a quorum for the transaction of business.  In the absence of a quorum
at any such meeting or any adjournment or adjournments thereof, a majority in
voting interest of those Members present in person or represented by proxy and
entitled to vote thereat, or, in the absence therefrom of all the Members, any
officer entitled to preside at, or to act as secretary of, such meeting may
adjourn such meeting from time to time until Members holding Units representing
the number votes entitled to be cast by Members requisite for a quorum shall be
present in person or by proxy.  At any such adjourned meeting at which a quorum
may be present, any business may be transacted that might have been transacted
at the meeting as originally called.

SECTION 7.5  Organization.  At each meeting of the Members, one of the following
shall act as chairman of the meeting and preside thereat, in the following order
of precedence:

 
(a)
the Chairman;

(b)           the Secretary;

(c)           if the Chairman and the Secretary shall be absent from such
meeting, any other officer of the Company designated by the Board of Managers to
act as chairman of such meeting and to preside thereat; or

(d)           in the absence of any of the above, a Member who shall be chosen
chairman of such meeting by a majority in voting interest of the Members present
in person or by proxy and entitled to vote thereat.
 
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The Secretary or, if the Secretary shall be presiding over the meeting in
accordance with the provisions of this Section 7.5 or if he shall be absent from
such meeting, the person whom the chairman of such meeting shall appoint, shall
act as secretary of such meeting and keep the minutes thereof.

SECTION 7.6  Order of Business.  The order of business at each meeting of the
Members shall be determined by the chairman of such meeting.

SECTION 7.7  Voting.  (a) Each Member shall, with respect to all matters
requiring its vote, be entitled to cast, in person or by proxy, one vote for
each Class A Common Unit registered in such Member’s name on the transfer books
of the Company on the date fixed pursuant to the provisions of Section 7.3 as
the record date for the determination of Members who shall be entitled to
receive notice of and to vote at such meeting; provided that the number of votes
that each Member shall be entitled to cast for each Undesignated Preferred Unit
that may hereafter be registered in such Member’s name as of such date shall be
determined by the Board pursuant to the applicable Preferred Unit Designation. 
Except as otherwise required by law, a Member shall not be entitled to cast any
votes for any Class B Common Unit held by such Member.

(b)           Any vote of Units held by Members may be given at any meeting of
the Members by the Members entitled to vote thereat either in person or by proxy
appointed by an instrument in writing fulfilling the requirements of the LLCA
and delivered to the Secretary or an Assistant Secretary of the Company or the
secretary of the meeting.  The attendance at any meeting of a Member who may
theretofore have given a proxy shall not have the effect of revoking such proxy
unless the Member shall in writing so notify the secretary of the meeting prior
to the voting of the proxy.  At all meetings of the Members, all matters, except
as otherwise provided by law or in this Agreement, shall be decided by the vote
of a majority of the votes cast by Members present in person or by proxy and
entitled to vote thereat, a quorum being present. To the maximum extent
permitted by law, all Units will vote together, as one class, on all matters,
except as expressly set forth herein, provided that, except as otherwise
required by law, a Member shall not be entitled to cast any votes for any Class
B Common Unit held by such Member. Except as otherwise expressly required by
law, the vote at any meeting of the Members on any question need not be by
ballot, unless so directed by the chairman of the meeting.  On a vote by ballot,
each ballot shall be signed by the Member voting, or by such Member's proxy, if
there be such a proxy, and shall state the number of votes cast.

SECTION 7.8  Action by Written Consent.  Any action required or permitted to be
taken at any annual or special meeting of the Members may be taken without a
meeting, without prior notice and without a vote if a consent or consents in
writing, setting forth the action so taken, shall be signed by the Members who
hold of record the minimum number of votes that would be necessary to authorize
or to take such action at a meeting at which all the Members entitled to vote
thereon were present and voted and shall be delivered to the Secretary
 
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or other officer of the Company who shall have charge of its records.  Every
consent must be signed by the Member or its attorney-in-fact.

SECTION 7.9  Action by Communication Equipment.  The Members may participate in
a meeting of Members by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear or
otherwise interactively communicate with each other, and such participation
shall constitute presence in person at such meeting.

ARTICLE VIII

Board of Managers; Managers

SECTION 8.1  General Powers.  (a) Subject to the rights expressly granted to the
Members under the provisions of this Agreement, the Board of Managers and the
authorized officers of the Company appointed by the Board of Managers shall have
the exclusive authority and responsibility to manage the business of the
Company.  The Managers shall be entitled to receive from the Company such
information regarding the Company’s operations as they may reasonably request,
including (without limitation) monthly, quarterly and annual financial
statements, budgets and lists of expenditures.

(b)           The members of the Board of Managers (the “Managers”) shall be
“managers” within the meaning of the LLCA.  Except as expressly set forth in
this Agreement to the contrary, the Board of Managers shall have power and
authority, on behalf of the Company, to take any and all lawful acts that the
Board of Managers considers necessary, advisable, or in the best interests of
the Company in connection with any business of the Company, including, without
limitation: (i) to authorize the purchase, lease or other acquisition, or the
sale, lease or other disposition, of any property or assets; (ii) to authorize
the opening, maintenance or closing of bank accounts, the drawing of checks or
other orders for the payment of moneys and the investing of funds of the
Company; (iii) to authorize the purchase of insurance on the business and assets
of the Company; (iv) to authorize the commencement of lawsuits and other
proceedings; (v) to authorize the Company to enter into any agreement,
instrument or other writing; (vi) to retain accountants, attorneys, consultants,
appraisers or other agents or advisors; (vii) to appoint and remove officers of
the Company; (viii) to issue Units and admit Members; and (viii) to approve the
incurrence of indebtedness by the Company, whether or not in the ordinary course
of business.  Notwithstanding the foregoing, the power and authority of the
Managers shall be subject to the limitations set forth in Sections 5.4 and 5.5

SECTION 8.2  Binding Authority.  Unless specifically authorized to do so by this
Agreement, no Member or other Person shall have any power or authority to bind
the Company, unless such Member or other Person has been authorized by the Board
of Managers to act on behalf of the Company.
 
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SECTION 8.3  Number and Term of Office.  The number of Managers constituting the
Board of Managers shall be three (3) and shall consist of the following: (a) two
Managers appointed by Bluefly, who shall initially be Melissa Payner and
Bradford Matson; and (b) one Manager appointed by A+D (the “A+D Designee”), who
shall initially be Alessandro Lanaro.  Notwithstanding the foregoing, a Founding
Member shall no longer be entitled to appoint a Manager at such time as it
(together with its Affiliates) no longer owns at least fifty percent (50%) of
the number of Units owned by it as of the date hereof, and any Manager
previously appointed by it may be removed, and/or any vacancy created by the
removal or resignation of such Manager may be filled by, a vote of Members
holding of record Units representing a majority of the votes entitled to be cast
at a meeting of Members.

SECTION 8.4  Resignation, Removal and Vacancies.

(a)           Any Manager may resign at any time by giving written notice of his
or her resignation to the Company.  Any such resignation shall take effect at
the time specified therein, or, if the time when it shall become effective shall
not be specified therein, when accepted by action of the Board of Managers. 
Except as aforesaid, the acceptance of such resignation shall not be necessary
to make it effective.

(b)           Except as otherwise set forth in Section 8.3, a Manager may be
removed only by the Member(s) who appointed such Manager pursuant to Section
8.3; provided that a Manager who has been found by a court of competent
jurisdiction to have committed a fraud or felony may be removed by the other
Managers; provider further that the vacancy created by any such removal shall,
except as otherwise set forth in Section 8.3, be filled by the Member(s) who
appointed such Manager.

(c)           Except as otherwise set forth in Section 8.3, any Manager that
resigns or dies shall be replaced by any individual designated by the Member(s)
who appointed the resigning or deceased Manager.

SECTION 8.5  Meetings.

(a)           Regular Meetings.  Regular meetings of the Board of Managers shall
be held at such times as the Board of Managers shall from time to time
determine.

(b)           Special Meetings.  Special meetings of the Board of Managers shall
be held whenever called by the Chairman, Chief Executive Officer, the President
or any Manager at the time in office.  Any and all business may be transacted at
a special meeting that may be transacted at a regular meeting of the Board of
Managers.

(c)           Place of Meeting.  The Board of Managers may hold its meetings at
such place or places as the Board of Managers may from time to time by
resolution determine or as shall be designated in the respective notices or
waivers of notice thereof.
 
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(d)           Notice of Meetings.  Notice of any special meeting of the Board of
Managers shall be mailed or sent by facsimile, email, registered or certified
mail, overnight delivery or other form of recorded communication or delivered
via messenger by the Company to each Manager, addressed to such Person at such
Person’s residence or usual place of business, so as to be received at least two
(2) Business Days before the day on which such meeting is to be held.  Such
notice shall include the time and place of such meeting.  However, notice of any
such meeting need not be given to any Manager if waived in writing or by
facsimile, email or other form of recorded communication, whether before or
after such meeting shall be held or if such Person shall be present at such
meeting.

(e)           Quorum and Manner of Acting.  Except as otherwise provided by law
or this Agreement, at least a majority of the total number of Managers shall be
present at any meeting of the Board of Managers in order to constitute a quorum
for the transaction of business at such meeting.  In the absence of a quorum for
any such meeting, a majority of the Managers present thereat may adjourn such
meeting from time to time until a quorum shall be present thereat.  Except as
otherwise required by law, all actions taken and decisions made by the Board of
Managers shall require the approval of a majority of the Managers.

(f)           Action by Communication Equipment.  The Managers may participate
in a meeting of the Board of Managers and members of a committee of the Board of
Managers may participate in a meeting of such committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation shall
constitute presence in person at such meeting.

(g)           Action by Consent.  Any action required or permitted to be taken
by the Managers or members of a committee of the Board of Managers, as the case
may be, may be taken without a meeting if all of the Managers or members of such
committee, as the case may be, consent thereto in writing and such writing is
filed with the minutes of the proceedings of the Board of Managers or of the
committee, as the case may be.

(h)           Organization.  At each meeting of the Board of Managers, in the
absence of the Chairman, one of the following shall act as chairman of the
meeting and preside thereat, in the following order of precedence:  (i) the
Chief Executive Officer; (ii) President, and (iii) any Manager chosen by a
majority of the Managers present.  The Secretary or, in case of the Secretary’s
absence, any person whom the Chairman shall appoint, shall act as secretary of
such meeting and keep the minutes thereof.

SECTION 8.6  Compensation; Expenses.  (a) Managers, as such, shall not receive
any stated salary for their services, but by resolution of the Board of Managers
may receive a fixed sum for expenses incurred in performing the functions of
Manager, and such additional, reasonable compensation as the Board of Managers
may award from time to time.  Nothing
 
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herein contained shall be construed so as to preclude any Manager from serving
the Company in any other capacity and receiving compensation therefor.

(b)           The Company shall (subject to the receipt of appropriate
supporting documentation) be responsible for paying directly out of Company
funds, all ordinary and necessary costs and expenses incurred in connection with
the business of the Company, including, without limitation, any such reasonable
and customary expenses incurred by the Managers in the performance of their
duties, liability and other insurance premiums, expenses in the preparation of
reports to the Members and legal, accounting and other professional fees and
expenses.

SECTION 8.7  Duties of Managers.  (a) Each Manager shall perform his or her
duties as a Manager in good faith and with that degree of care that an
ordinarily prudent person in a like position would use under similar
circumstances.  In performing his or her duties, each Manager shall be entitled
to rely on information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or presented by: (i)
one or more agents or employees of the Company; (ii) counsel, public accountants
or other persons as to matters that such Manager reasonably believes to be
within such person’s professional or expert competence; or (iii) any other
Manager duly designated in accordance with this Agreement, as to matters within
his or her designated authority, which the Manager believes to merit confidence,
so long as in so relying he or she shall be acting in good faith and with such
degree of care that an ordinarily prudent person in a like position would use
under similar circumstances.  The provisions of this Agreement, to the extent
they restrict the duties and liabilities of a Manager otherwise existing at law
or in equity, are agreed by the parties hereto to replace such other duties and
liabilities of such Manager.

(b) To the fullest extent permitted by applicable law, expenses (including
reasonable legal fees) incurred by a Manager in defending any claim, demand,
action, suit or proceeding relating to his or her duties as a Manager shall,
from time to time, be advanced by the Company prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Company of an
undertaking by or on behalf of the Manager to repay such amount if it shall be
determined by a court of competent jurisdiction having final or unappealed
dispositive authority over such matter that the Manager is not entitled to be
indemnified as authorized in Article XV.

SECTION 8.8  Committees.  (a) The Board of Managers may in its discretion
establish one or more committees to consist of one or more Managers.  Each duly
established committee shall have the powers and perform such duties as may from
time to time be assigned to it by the Board of Managers and shall be subject to
the limitations of this Agreement and applicable law.

(b)           Any member of such a committee may be removed at any time with or
without cause, by the Board of Managers.
 
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SECTION 8.9  Protective Provisions.  Notwithstanding anything in this Agreement,
for so long as A+D is entitled to appoint the A+D Designee, the Company shall
not take any of the following actions without the unanimous approval of the
Board of Managers:

(a)           Any change to the Company’s primary line of business to something
other than the Business;

(b)           (i)  Issue Units (other than Class B Units) or Convertible
Securities in one transaction or any number of transactions to the extent that
the number of Units so issued (including Units issuable upon conversion,
exchange or exercise of Convertible Securities so issued) exceeds 900,000 Units
unless Bluefly and A+D each is offered an opportunity to purchase a pro rata
portion (based on its Percentage Interest) of such excess Units or Convertible
Securities on the same terms or (ii) issue in excess of a total of 1,500,000
Class B Common Units or Phantom Units, or any combination of Class B Common
Units and Phantom Units, provided that the foregoing shall not apply to (x) the
issuance of up to a total of 1,500,000 Class B Common Units or Phantom Units ,
or any combination of Class B Common Units and Phantom Units, to employees,
consultants, directors and advisors of the Company and (y) any Units or
Convertible Securities issued in connection with an additional investment in the
Company by Bluefly or any third party, provided that A+D is offered an
opportunity to purchase a pro rata portion (based on its Percentage Interest) of
such Units or Convertible Securities on the same terms;

(c)           Any Sale of the Company Transaction, other than any Sale of the
Company Transaction that occurs after the four (4) year anniversary of the
Effective Date in which the total consideration received by the Company in
connection therewith is valued at an amount equal to or greater than the Call
Option Valuation (valued for such purpose as of the end of the last full fiscal
year prior to the proposed date of the consummation of the Sale of the Company
Transaction);

(d)           Any transaction between the Company and one of the Founding
Members or any Affiliates thereof, provided that the foregoing shall not apply
to any services provided pursuant to the Management Services Agreement or any
additional debt or equity investment in the Company by Bluefly, provided that
A+D is offered an opportunity to purchase a pro rata portion (based on their
relative Percentage Interests) of such investment on the same terms; or

(d)           The approval of any annual marketing budget pursuant to which the
Company would be projected to incur annual advertising expenses in excess of
twenty percent (20%) of its projected annual gross sales.

ARTICLE IX
 
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Chairman and Officers

SECTION 9.1  Chairman.  The Chairman shall be the Chairman of the Board of
Managers and the Chairman shall preside at all meetings of the Members and at
all meetings of the Board of Managers and shall perform such other duties and
exercise such other powers as may from time to time be prescribed by the Board
of Managers.  At each annual meeting of the Board of Managers at which a quorum
is present, the individual receiving the greatest number of votes shall be
Chairman until his or her successor is elected at the next annual Board of
Managers meeting or until his resignation or removal in accordance with Section
8.4 in which event his or her replacement shall become Chairman for the
remainder of his term.  The initial Chairman shall be Melissa Payner.

SECTION 9.2  Election, Appointment and Term of Office.  The Board of Managers
may appoint such officers as it deems necessary, including, without limitation,
a Chief Executive Officer, President, Chief Financial Officer, Treasurer,
Secretary and one or more Vice Presidents, Assistant Vice Presidents, Assistant
Treasurers or Assistant Secretaries.  Each such officer shall have such
authority and shall perform such duties as may be provided herein or as the
Board of Managers may prescribe.  Any two (2) or more offices may be held by the
same person.  Each officer shall hold office until the next annual meeting of
the Board of Managers and until his successor is appointed or until his earlier
death, or his earlier resignation or removal in the manner hereinafter
provided.  Melissa Payner shall be the initial Chief Executive Officer and
President of the Company. Kara Jenny will be the initial Secretary and Treasurer
of the Company.

SECTION 9.3  Resignation, Removal and Vacancies.

(a)           Any officer may resign at any time by giving written notice to the
Board of Managers, and such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be specified
therein, when accepted by action of the Board of Managers.  Except as aforesaid,
the acceptance of such resignation shall not be necessary to make it effective.

(b)           All officers and agents elected or appointed by the Board of
Managers shall be subject to removal at any time by the Board of Managers, with
or without cause.

(c)           A vacancy in any office may be filled for the unexpired portion of
the term in the same manner as provided for election or appointment to such
office.

ARTICLE X

Documents; Bank Accounts

SECTION 10.1  Execution of Documents.  To the extent not inconsistent with any
 
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other provision contained herein, the Chief Executive Officer, President and any
other officer of the Company designated by the Board of Managers, or designated
in accordance with Company policy as approved by the Board of Managers, shall
have the power to execute and deliver deeds, leases, contracts, mortgages and
other grants of security interests, bonds, debentures, notes and other evidences
of indebtedness, checks, drafts and other orders for the payment of money and
other documents for and in the name of the Company, and such power may be
delegated (including power to redelegate) by written instrument to other
officers, employees or agents of the Company.

SECTION 10.2  Deposits.  All funds of the Company not otherwise employed shall
be deposited from time to time to the credit of the Company or otherwise in
accordance with Company policy as determined by the proper officers of the
Company and the Board of Managers.

SECTION 10.3  Proxies in Respect of Stock or Other Securities of Other
Companies.  The Chief Executive Officer, President and any other officer of the
Company designated by the Board of Managers shall have the authority (a) to
appoint from time to time an agent or agents of the Company to exercise in the
name and on behalf of the Company the powers and rights that the Company may
have as the holder of stock or other securities in any other company, (b) to
vote or consent in respect of such stock or securities and (c) to execute or
cause to be executed in the name and on behalf of the Company such written
proxies, consents, powers of attorney or other instruments as he or she may deem
necessary or appropriate in order that the Company may exercise such powers and
rights.  The Chief Executive Officer, President or any such designated officer
may instruct any Person or Persons appointed as aforesaid as to the manner of
exercising such power and rights.

ARTICLE XI

Books and Records; Right of Inspection; Tax Matters

SECTION 11.1  Books and Records.  The Company will keep accurate books and
records relating to transactions with respect to the assets of the Company based
on Book Values using federal income tax accounting principles.  The Company will
also keep the following books and records at the Company’s principal
office:  (i) a current list of the full name and last known business, residence
or mailing address of each Member, (ii) a copy of the Certificate of Formation
and of this Agreement, (as well as any signed powers of attorney pursuant to
which any such document was executed); (iii) a copy of the Company’s federal,
state and local income tax returns and reports for all Fiscal Years; and (iv)
minutes, or minutes of action (or written consent without a meeting), of every
meeting of the Members or the Board of Managers or any committee thereof.

SECTION 11.2  Tax Returns.  The Company, at its expense, will cause the
preparation and timely filing (including extensions) of all tax returns required
to be filed by the
 
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Company pursuant to the Code as well as all other required state, local or
foreign tax returns in each jurisdiction in which the Company owns property or
does business.  Within sixty (60) days following the end of each Fiscal Year,
the Company will provide each Member with all necessary tax reporting
information, a copy of the Company's informational federal income tax return for
such Fiscal Year and such other information as is reasonably necessary to enable
the Members to comply with their tax reporting requirements.

SECTION 11.3  Tax Elections.  The Company shall make and revoke such tax
elections as the Board of Managers may from time to time determine.

SECTION 11.4  Tax Matters Partner.  (a) The Members by a majority vote of all
votes of Members permitted hereunder shall designate one Member to be the tax
matters partner (the “Tax Matters Partner”) under Section 6231(a)(7) of the
Code.  Until further action by the Members, Bluefly is hereby designated as the
Tax Matters Partner.

(b)           The Tax Matters Partner will be responsible for notifying all
Members of ongoing proceedings, both administrative and judicial, and will
represent the Company throughout any such proceeding; provided that each Member
shall be required to notify the Tax Matters Partner promptly, in writing, of any
such proceeding that it becomes aware of.  Each Member agrees, and each holder
of Units who is not a Member shall be deemed by virtue of its ownership of Units
to agree, that it will furnish the Tax Matters Partner with such information as
the Tax Matters Partner may reasonably request in order to allow the Tax Matters
Partner to provide the Internal Revenue Service with sufficient information to
allow proper notice to the Members with respect to any such proceedings.

(c)           If an administrative proceeding with respect to a partnership item
under the Code has begun, and the Tax Matters Partner so requests, each Member
agrees, and each holder of Units who is not a Member shall be deemed by virtue
of its ownership of Units to agree, that it will notify the Tax Matters Partner
of its treatment of any partnership item on its federal income tax return, if
any, that is inconsistent with the treatment of that item on the partnership
return for the Company.  Any settlement agreement with the Internal Revenue
Service will be binding upon the holder of Units only as provided in the Code. 
The Tax Matters Partner will not bind any other holder of Units to any extension
of the statute of limitations or to a settlement agreement without such holder's
written consent.  Any holder of Units who enters into a settlement agreement
with respect to any partnership item will notify the other holders of Units of
such settlement agreement and its terms within thirty (30) days from the date of
settlement.

(d)           If the Tax Matters Partner does not file a petition for
readjustment of partnership items in the Tax Court, federal District Court or
Claims Court within the ninety (90) day period following a notice of a final
partnership administrative adjustment, any notice partner and 5-percent group
(as such terms are defined in the Code) may institute such action within the
following sixty (60) days.  The Tax Matters Partner will timely notify the other
Members in
 
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writing of its decision.  Any notice partner and 5-percent group will notify any
other Member of its filing of any petition for readjustment.

(e)           The Tax Matters Partner shall be indemnified for all actions taken
in such capacity in accordance with the terms of Article XV.

SECTION 11.5  No Partnership.  The classification of the Company as a
partnership will apply only for federal (and, as appropriate, state and local)
income tax purposes.  This characterization, solely for income tax purposes,
does not create or imply a general partnership among the Members for state law
or any other purpose.  Instead, the Members acknowledge the status of the
Company as a limited liability company formed under the LLCA.

SECTION 11.6  Title to Company Assets.  Title to, and all right and interest in,
the Company's assets shall be acquired in the name of and held by the Company,
or, if acquired in any other name, be held for the benefit of the Company.

ARTICLE XII

Capital Accounts

SECTION 12.1  Maintenance.  Each Member agrees that a single capital account
(each a “Capital Account”) will be established and maintained for each Member
and will be credited, charged and otherwise adjusted as provided in this Article
XII and as required by the Regulations promulgated under Section 704(b) of the
Code (the “Section 704(b) Regulations”).  The Capital Account of each Member
will be:

(a)           credited with (i) each Capital Contribution made by such Member,
(ii) such Member’s allocable share of Net Profits and other items of income and
gain of the Company, including items of income and gain exempt from tax and
(iii) all other items properly charged to the Capital Account of such Member as
required by the Section 704(b) Regulations; and

(b)           charged with (i) each Distribution made to such Member by the
Company, (ii) such Member’s allocable share of Net Losses and other items of
loss and deduction of the Company and (iii) all other items properly charged to
the Capital Account of such Member as required by the Section 704(b)
Regulations.

SECTION 12.2  Adjustments.  The Members intend to comply with the Section 704(b)
Regulations in all respects, and to adjust their Capital Accounts to the full
extent that the Section 704(b) Regulations may apply (including, without
limitation, applying the concepts of the minimum gain chargebacks and qualified
income offsets).  To this end, each Member agrees to make any Capital Account
adjustment that is necessary or appropriate to maintain equality
 
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between the aggregate Capital Accounts of the Members and the amount of capital
of the Company reflected on its balance sheet (as computed for book purposes),
as long as such adjustments are consistent with the underlying economic
arrangement of the Members and are based, wherever practicable, on and
consistent with federal tax accounting principles.

SECTION 12.3  Market Value Adjustments.  Each Member agrees to make appropriate
adjustments to the Capital Account of such Member upon any Transfer of Units,
including those that apply upon the constructive liquidation of the Company
under Section 708(b)(1) of the Code or the liquidation of a Member’s Units, all
in accordance with the Section 704(b) Regulations.

SECTION 12.4  Transfer.  Each Member agrees that, if all or any part of its
Units are transferred in accordance with this Agreement, except to the extent
otherwise provided in the Section 704(b) Regulations, upon admission of the
transferee as a Member, the Capital Account of the transferor that is
attributable to the transferred Units will carry over to the transferee.

ARTICLE XIII

Allocation of Income, Gain, Loss and Deduction

SECTION 13.1  Determination.  Each Member agrees that for each Fiscal Year, Net
Profits and Net Losses, including items of income, gain, loss and deduction of
the Company, will be determined based upon Book Values in accordance with
federal income tax accounting principles consistently applied (including the
Section 704(b) Regulations).

SECTION 13.2  Allocation of Net Profits and Net Losses.

(a) Subject to Section 5.1(c), the Net Profits of the Company for each Fiscal
Year shall, unless otherwise determined by the Board pursuant to any Preferred
Unit Designation, be allocated:

(i) first, to the Members who have negative balances in their Adjusted Capital
Accounts (a “Negative Balance”), in proportion to such Negative Balances, until
such balances equal zero;

(ii) next, pro rata among the Members in accordance with any Net Losses
allocated to such Members pursuant to Section 13.2(b), until the aggregate
amount of Net Profits allocated to each such Member pursuant to this Section
13.2(a)(ii) equals the aggregate amount of Net Losses allocated to each such
Member for all prior Fiscal Years pursuant to Section 13.2(b); and

(iii) thereafter, to all Members, pro rata, in proportion to the Members’
holdings of Units for such Fiscal Year.
 
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(b) The Net Losses of the Company for each Fiscal Year shall, unless otherwise
determined by the Board pursuant to any Preferred Unit Designation, be
allocated:

(i)  first, to the Members, if any, having positive balances in their Adjusted
Capital Accounts, in proportion to such positive balances, until such balances
have been reduced to zero; and

(ii)  thereafter to all Members, pro rata, in proportion to the Members’
holdings of Units for such Fiscal Year.

SECTION 13.3  Allocations Upon Liquidation.  Notwithstanding Section 13.2
but subject to Section 5.1(c), the Company’s items of income, gain, loss and
deduction realized on or after a Liquidation shall, unless otherwise determined
by the Board pursuant to any Preferred Unit Designation, be allocated as
follows:

(a)           If gain is realized upon Liquidation, the gain shall be allocated
among the Members in the following manner (and the Capital Accounts of the
Member shall be increased by the amount so allocated in each of the following
subclauses, in the order listed, before an allocation is made pursuant to the
next succeeding subclause):

(i)           first, to the Members who have a Negative Balance, in proportion
to such Negative Balances, until such balances equal zero;

(ii)          next, pro rata among the Members in accordance with any Net Losses
allocated pursuant to Section 13.2(b), until the aggregate amount of Net Profits
allocated to each such Member pursuant to Section 13.2(a)(ii), plus the
aggregate amount of gain allocated to each such Member pursuant to this Section
13.3(a)(ii), equals the aggregate amount of Net Losses allocated to each such
Member for all prior Fiscal Years pursuant to Section 13.2(b); and

(iii)  thereafter, to all Members, pro rata, in proportion to the Members'
holdings of Units for such Fiscal Year.

(b)           If a loss is realized upon Liquidation, the loss shall, unless
otherwise determined by the Board pursuant to any Preferred Unit Designation, be
allocated among the Members, pro rata, in proportion to the Members’ holdings of
Units for such Fiscal Year.

SECTION 13.4  Allocation in the Event of Property Distribution.  In the event
that property other than cash is distributed to any Member, such property shall
be deemed sold at its Fair Market Value immediately prior to its Distribution,
and any gain or loss resulting from such deemed sale shall be allocated among
the Members in accordance with Section 13.2.

 
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SECTION 13.5  Special Rules.  Notwithstanding the general allocation rules set
forth in Sections 13.2 and 13.3 or the allocation rules set forth in Section
13.4, the following special allocation rules shall apply under the circumstances
described.

(a) Deficit Capital Account and Nonrecourse Debt Rules.

(i)           Limitation on Loss Allocations.  The Net Losses allocated to any
Member pursuant to Section 13.2 with respect to any Fiscal Year shall not exceed
the maximum amount of Net Losses that can be so allocated without causing such
Member to have a deficit in its Adjusted Capital Account at the end of such
Fiscal Year.  All Net Losses in excess of the limitation set forth in the
preceding sentence of this Section 13.5(a)(i) shall be allocated (1) first, to
the maximum extent permitted by the Code and the Regulations, pro rata among the
Members having positive balances in their Adjusted Capital Accounts (after
giving effect to the allocations required by Section 13.2) in the ratio obtained
by dividing (x) each such Member’s Capital Account balance by (y) the sum of all
such Members’ Capital Account balances and (2) second, any remaining amount to
the Members in the manner required by the Code and the Regulations.

(ii)          Qualified Income Offset.  If in any Fiscal Year a Member
unexpectedly receives an adjustment, allocation or distribution described in
sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, and such
adjustment, allocation or distribution causes or increases a deficit in the
Adjusted Capital Account for such Member, then, before any other allocations are
made under this Agreement or otherwise, such Member shall be allocated items of
income and gain (consisting of a pro rata portion of each item of income,
including gross income and gain) in an amount and manner sufficient to eliminate
such deficit in the Adjusted Capital Account as quickly as possible.

(iii) Company Minimum Gain Chargeback.  If there is a net decrease in Company
Minimum Gain during any Fiscal Year, each Member shall be allocated items of
income and gain for such Fiscal Year (and, if necessary, for subsequent Fiscal
Years) in proportion to, and to the extent of, an amount equal to the portion of
such Member’s share of the net decrease in Company Minimum Gain during such
Fiscal Year, subject to the exceptions set forth in sections 1.704-2(f)(2), (3)
and (5) of the Regulations; provided that, if the Company has any discretion as
to an exception set forth in section 1.704-2(f)(5), the Tax Matters Partner
(with the consent of the other Members) shall exercise such discretion on behalf
of the Company.  The Tax Matters Partner shall, if the application of this
Section 13.5(a)(iii) would cause a distortion in the economic arrangement among
the Members, ask the Commissioner of the Internal Revenue Service to waive the
Company Minimum Gain chargeback requirements pursuant to section 1.704-2(f)(4)
of the Regulations.  To the extent that this Section is inconsistent with
section 1.704-2(f) or 1.704-2(k) of the Regulations or incomplete with respect
to such sections of the Regulations, the Company Minimum Gain chargeback
provided for herein shall be applied and interpreted in accordance with such
sections of the Regulations.
 
(iv)         Member Minimum Gain Chargeback.  If there is a net decrease in
 
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Member Minimum Gain during any Fiscal Year, each Member shall be allocated items
of income and gain for such Fiscal Year (and, if necessary, for subsequent
Fiscal Years) in proportion to, and to the extent of, an amount equal to such
Member's share of the net decrease in Member Minimum Gain during such Fiscal
Year, subject to the exceptions set forth in sections 1.704-2(f)(2), (3), and
(5) of the Regulations as referenced by section 1.704-2(i)(4) of the
Regulations.  The Tax Matters Partner shall, if the application of this Section
13.5(a)(iv) would cause a distortion in the economic arrangement among the
Members, ask the Commissioner of the Internal Revenue Service to waive the
Member Minimum Gain chargeback requirement pursuant to section 1.704-2(i)(4) of
the Regulations.  To the extent that this Section 13.5(a)(iv) is inconsistent
with sections 1.704-2(i)(4) or 1.704-2(k) of the Regulations or incomplete with
respect to such sections of the Regulations, the Member Minimum Gain chargeback
provided for herein shall be applied and interpreted in accordance with such
sections of the Regulations.

(v)  Member Nonrecourse Deductions.  Member Nonrecourse Deductions shall be
allocated among the Members in accordance with the ratios in which the Members
share the economic risk of loss for the Member Nonrecourse Debt that gave rise
to those deductions as determined under section 1.752-2 of the
Regulations.  This allocation is intended to comply with the requirements of
section 1.704-2(i) of the Regulations and shall be interpreted and applied
consistent therewith.

(vi)         Limited Effect and Interpretation.  The special rules set forth in
Sections 13.5(a)(i), (ii), (iii), (iv) and (v) (the “Regulatory Allocations”)
shall be applied only to the extent required by applicable Regulations for the
resulting allocations provided for in this Section 13.5, taking into account
such Regulatory Allocations, to be respected for federal income tax
purposes.  The Regulatory Allocations are intended to comply with the
requirements of sections 1.704-1(b), 1.704-2 and 1.752-1 through 1.752-5 of the
Regulations and shall be interpreted and applied consistently therewith.

(vii) Curative Allocations.  The Regulatory Allocations may not be consistent
with the manner in which the Members intend to divide the Net Profits, Net
Losses and similar items.  Accordingly, Net Profits, Net Losses and other items
will be reallocated among the Members in a manner consistent with section
1.704-1(b) and 1.704-2 of the Regulations so as to negate as rapidly as possible
any deviation from the manner in which Net Profits, Net Losses and other items
are intended to be allocated among the Members pursuant to Section 13.2 that is
caused by the Regulatory Allocations to the extent not inconsistent therewith.

(viii) Change in Regulations.  If the Regulations incorporating the Regulatory
Allocations are hereafter changed or if new Regulations are hereafter adopted,
and such changed or new Regulations make it necessary to revise the Regulatory
Allocations or provide further special allocation rules in order to avoid a
significant risk that a material portion of any allocation set forth in this
Article XIII would not be respected for federal income tax
 
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purposes, the Members shall make such reasonable amendments to this Agreement as
are necessary or desirable, taking into account the interests of the Members as
a whole and all other relevant factors, to avoid or reduce significantly such
risk to the extent possible without materially changing the amounts allocable
and distributable to any Member pursuant to this Agreement.
 
(b)  Change in Member's Interests.  If there is a change in any Member’s share
of the Net Profits, Net Losses or other items of the Company during any Fiscal
Year, allocations among the Members shall be made in accordance with their
interests in the Company from time to time during such Fiscal Year in accordance
with section 706 of the Code, using the closing-of-the-books method, except that
Depreciation, amortization and similar items shall be deemed to accrue ratably
on a daily basis over the entire Fiscal Year during which the corresponding
asset is owned by the Company if such asset is placed in service prior to or
during the Fiscal Year.

SECTION 13.6  Tax Allocations.

(a)          In General.  Except as set forth in Section 13.5, allocations for
tax purposes of items of income, gain, loss and deduction, and credits and basis
therefor, shall be made in the same manner as allocations for book purposes as
set forth in Section 13.2.  Allocations pursuant to this Section 13.6 are solely
for purposes of federal, state and local income taxes and shall not affect, or
in any way be taken into account in computing, any Member’s Capital Account or
share of Net Profits, Net Losses, other items or distributions pursuant to any
provision of this Agreement.

(b)          Special Rules.

(i)           Elimination of Book/Tax Disparities.  In determining a Member’s
allocable share of the Company’s taxable income, the Member’s allocable share of
each item of Net Profits and Net Losses shall be properly adjusted to reflect
the difference between such Member’s share of the adjusted tax basis and the
Book Value of the Company’s assets used in determining such item.  With respect
to depreciation, in determining the taxable income allocable to such Member, Net
Profits and Net Losses allocable to such Member shall be adjusted by eliminating
Depreciation allocable to such Member and substituting therefor tax depreciation
allocable to such Member determined by reference to such Member’s share of the
tax basis of the Company’s assets. This provision is intended to comply with the
requirements of section 704(c) of the Code and section 1.704-1(b)(2)(iv)(f) of
the Regulations and shall be interpreted and applied consistently therewith.

(ii)  Allocation of Items Among Members.  Except as otherwise provided in
Section 13.5(a), each item of income, gain, loss and deduction and all other
items governed by section 702(a) of the Code shall be allocated among the
Members in proportion to the allocation of Net Profits and Net Losses set forth
in Section 13.2, provided that any gain recognized from
 
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any disposition of a Company asset that is treated as ordinary income because it
is attributable to the recapture of any depreciation or amortization shall be
allocated among the Members in the same ratio as the prior allocations of Net
Profits, Net Losses or other items that included such depreciation or
amortization, but not in excess of the gain otherwise allocable to each Member.
 
(iii)  Tax Credits.  All foreign tax credits of the Company for a fiscal year
(or portion thereof, if appropriate) shall be allocated among the Members in the
same proportion as the net income and gains of the Company that were subject to
the foreign taxes that gave rise to such credits. All other items of federal
income tax credit and items of tax credit recapture shall be allocated among the
Members in accordance with the Members' Interests in the Company as of the time
the tax credit or credit recapture arises, as provided in Section
1.704-1(b)(4)(ii) of the Regulations.

(c)          Conformity of Reporting.  The Members are aware of the income tax
consequences of the allocations made by this Section 13.6 and hereby agree to be
bound by the provisions of this Section 13.6 in reporting their share of the
Company’s profits, gains, income, losses, deductions, credits and other items
for income tax purposes.

ARTICLE XIV

Distributions

SECTION 14.1  Distributions.  (a)  Except as otherwise provided in this
Agreement, the Board of Managers may distribute Available Cash to the
Members.  Any such Available Cash shall, subject to Section 5.1(c) and unless
otherwise determined by the Board pursuant to any Preferred Unit Designation, be
distributed in the following order and priority:

(i)  first, to all Members holding Class A Common Units, pro rata, in accordance
with the number of Units registered in each such Member’s name on the Company's
books on the date chosen by the Board of Managers, until each such Member has
received a cumulative amount under this Section 14.1(a)(i) equal to its Capital
Contribution; and

(ii)  thereafter, to all Members, pro rata, in accordance with the number of
Units registered in each Member’s name on the Company's books on the date chosen
by the Board of Managers.

(b)  For the purpose of determining the Members entitled to receive payment of
any Distribution, the resolution declaring a Distribution as adopted by the
Board of Managers shall declare a record date for purposes of the Distribution,
which date shall be no earlier than the effective date of such resolution.

 
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SECTION 14.2  Withholding.

(a) If required by the Code or by State or local law, the Company will withhold
any required amount from Distributions to a Member for payment to the
appropriate taxing authority.  Any amount so withheld from a Member will be
treated as a Distribution by the Company to such Member.  Each Member agrees to
timely file any document that is required by any taxing authority in order to
avoid or reduce any withholding obligation that would otherwise be imposed on
the Company.

(b) To the extent any amount is required to be withheld with respect to a Member
and paid over to an appropriate taxing authority which amount is in excess of
the amounts distributed to such Member in respect of such withholding, the
amounts paid to the taxing authority in respect of such withholding shall be
treated as a Distribution to such Member and a corresponding Distribution shall
be made to each other Member in proportion to the number of Units registered on
the Company’s books in such Member's name.  To the extent that cash is not
available to make any of the Distributions required under this Section 14.2(b),
such Distribution shall be delayed and paid out of the next Available Cash.

SECTION 14.3  Offset.  The Company may offset all amounts owing to the Company
by a holder of Units against any Distribution to be made to such holder.

SECTION 14.4  Tax Distributions.  Notwithstanding Section 14.1, within five (5)
Business Days before the due date of each corporate quarterly federal estimated
tax payment for any Fiscal Year and on March 1 of the following Fiscal Year (or
the next Business Day thereafter), the Company shall distribute to each Member
an amount in cash of Available Cash, if any, equal to the excess of (x) such
Member’s share of Net Profits (which (A) for any distribution with respect to
the first three quarterly federal estimated tax payments shall be calculated
through the end of the month immediately preceding the month of such estimated
tax payment due date and (B) for any distribution with respect to the fourth
quarterly estimated tax payment shall include an estimate of Net Profits to be
earned through the end of such Fiscal Year) for such (or in the case of any
distribution scheduled to be made on March 1 (or the next Business Day
thereafter), with respect to the preceding) Fiscal Year multiplied by the
Combined Marginal Rate over (y) the sum of the Distributions to such Member for
such (or in the case of any distribution scheduled to be made on March 1 (or the
next Business Day thereafter), the preceding) Fiscal Year.  Any Distribution to
a Member pursuant to this Section 14.4 shall be taken into account in
determining Distributions to Members pursuant to Section 14.1 such that, if
possible, the economic consequences to the Members of Distributions pursuant to
this Article XIV would be unaffected by the application of this Section 14.4.
 
ARTICLE XV
 
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Indemnification

SECTION 15.1  Indemnification.  Each Manager and officer (each, an “Indemnified
Party”) shall, in accordance with this Article XV, be indemnified and held
harmless by the Company to the fullest extent permitted by then-current law from
and against any and all losses, claims, damages, liabilities, expenses
(including legal and other professional fees and disbursements), judgments,
fines, settlements, and other amounts (collectively, the “Indemnification
Obligations”) arising from any and all claims, demands, actions, suits or
proceedings (civil, criminal, administrative or investigative), actual or
threatened, in which such Indemnified Party may be involved, as a party or
otherwise, by reason of such Indemnified Party’s service to, or on behalf of, or
management of the affairs of, the Company, or rendering of advice or
consultation with respect thereto, or which relate to the Company, its
properties, business or affairs, whether or not the Indemnified Party continues
to be a Manager or officer at the time any such Indemnification Obligation is
paid or incurred.  The Company shall also indemnify and hold harmless any
Indemnified Party from and against any Indemnification Obligation suffered or
sustained by such Indemnified Party by reason of any action or inaction of any
employee, broker or other agent of such Indemnified Party, provided, that such
employee, broker or agent was selected, engaged or retained by such Indemnified
Party with reasonable care.  The termination of a proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that such Indemnification Obligation
resulted from the gross negligence, willful misconduct or bad faith of such
Indemnified Party.  Expenses (including legal and other professional fees and
disbursements) incurred in any proceeding will be paid by the Company, as
incurred, in advance of the final disposition of such proceeding upon receipt of
an undertaking by or on behalf of such Indemnified Party to repay such amount if
it shall ultimately be determined that such Indemnified Party is not entitled to
be indemnified by the Company as authorized hereunder.

SECTION 15.2  Indemnification Not Exclusive.  The indemnification provided by
this Article XV shall not be deemed to be exclusive of any other rights to which
each Indemnified Party may be entitled under any agreement, or as a matter of
law, or otherwise, both as to action in such Indemnified Party’s official
capacity and to action in another capacity, and shall continue as to such
Indemnified Party who has ceased to have an official capacity for acts or
omissions during such official capacity or otherwise when acting at the request
of the Board of Managers, or any Person granted authority thereby, and shall
inure to the benefit of the heirs, successors and administrators of such
Indemnified Party.

SECTION 15.3  Insurance on Behalf of Indemnified Party. The Board of Managers
shall have the power but not the obligation to purchase and maintain insurance
on behalf of each Indemnified Party, at the expense of the Company, against any
liability that may be asserted against or incurred by him or her in any such
capacity, whether or not the Company would have the power to indemnify the
Indemnified Parties against such liability under the provisions of this
Agreement.
 
 
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SECTION 15.4  Indemnification Limited by Law.  Notwithstanding any of the
foregoing to the contrary, the provisions of this Article XV shall not be
construed so as to provide for the indemnification of an Indemnified Party for
any liability to the extent (but only to the extent) that such indemnification
would be in violation of applicable law or that such liability may not be
waived, modified or limited under applicable law, but shall be construed as to
effectuate the provisions of this Article XV to the fullest extent permitted by
law.

SECTION 15.5  Repeal or Modification; Indemnified Parties as Third Party
Beneficiaries.  No repeal or modification of this Article XV shall adversely
affect any right of an Indemnified Party existing hereunder at the time of such
repeal or modification.  Notwithstanding Section 21.19, each Indemnified Party
shall be deemed a third party beneficiary of the provisions of this Article XV.

ARTICLE XVI

Accounting Provisions

SECTION 16.1  Fiscal Year.  For income tax and financial accounting purposes,
the Fiscal Year of the Company will end on December 31 of each year (unless
otherwise required by the Code).

SECTION 16.2  Accounting Method.  For income tax and financial accounting
purposes, the Company will use the accrual method of accounting.
 
ARTICLE XVII

Dissolution

SECTION 17.1  Dissolution.  Dissolution of the Company will occur upon the
happening of any of the following events: (i) the affirmative vote of (A) a
Member or Members holding of record at least a majority of the votes of Members
permitted hereunder and (B) for so long as any Founding Member, along with its
Affiliates, continues to hold at least fifty percent (50%) of the Units held by
it as of the date hereof, the affirmative vote of such Founding Member; (ii)
upon the sale of all or substantially all of the Company’s assets; or (iii) the
conversion of the Company into a corporation or other Person.

 
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ARTICLE XVIII

Liquidation

SECTION 18.1  Liquidation.  Upon Dissolution of the Company, the Company will
immediately proceed to wind up its affairs and liquidate.  The Liquidation of
the Company will be accomplished in a businesslike manner by such Person or
Persons designated by the Board of Managers, which Person(s) shall be entitled
to reasonable compensation therefore as determined by the Board of Managers.  A
reasonable time will be allowed for the orderly Liquidation of the Company and
the discharge of liabilities to creditors so as to enable the Company to
minimize any losses attendant upon Liquidation.  Any gain or loss on disposition
of any Company assets in Liquidation will be allocated among the Members and
credited or charged to Capital Accounts in accordance with the provisions of
this Agreement.  Until the filing of the Certificate of Cancellation under
Section 18.6 and without affecting the liability of Members and without imposing
liability on the liquidating trustee, the Person or Persons conducting the
liquidation may settle and close the Company's business, prosecute and defend
suits, dispose of its property, discharge or make provision for its liabilities,
and make Distributions in accordance with the priorities set forth in Section
18.3.

SECTION 18.2  Tax Termination.  In addition to termination of the Company
following its Dissolution, a termination of the Company will occur for federal
income tax purposes on the date the Company is terminated under Section
708(b)(1) of the Code.  Under current law, events causing such a termination
include the sale or exchange of fifty percent (50%) or more of the total
interest in the capital and profits of the Company within a 12-month
period.  Upon the occurrence of a termination under Section 708(b)(1) of the
Code, a constructive liquidation and constructive reformation of the Company as
a tax partnership will be deemed to occur for federal income tax purposes.  All
adjustments and computations will be made under this Agreement as if the
constructive transactions had actually occurred, and the Capital Accounts of the
Members in such new tax partnership will be determined and maintained in
accordance with the Section 704(b) Regulations.

SECTION 18.3  Priority of Payment.  Except as otherwise set forth in a Preferred
Unit Designation, the assets of the Company will be distributed in Liquidation
in the following order:

(a)           To creditors, including Members who are creditors, by the payment
or provision for payment of the debts and liabilities of the Company and the
expenses of Liquidation;

(b)           To the setting up of any reserves that are reasonably necessary
for any contingent or unforeseen liabilities or obligations of the Company; and

 
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(c)           To the Members, as a Distribution, in proportion to their Capital
Accounts (after adjustment in accordance with Section 13.3 hereof).

SECTION 18.4  Timing.  Final Distributions in Liquidation (except in the case of
a constructive Liquidation under Section 18.2) will be made by the end of the
Company's Fiscal Year in which such actual Liquidation occurs (or, if later,
within ninety (90) days after such event) in the manner required to comply with
the Section 704(b) Regulations.  Payments of Distributions in Liquidation may be
made to a liquidating trust established by the Company for the benefit of those
entitled to payments under Section 18.3 in any manner consistent with this
Agreement and the Section 704(b) Regulations.

SECTION 18.5  Liquidating Reports.  A report will be submitted with each
liquidating Distribution to the Members, showing the collections, disbursements
and Distributions during the period which is subsequent to any previous
report.  A final report, showing cumulative collections, disbursements and
Distributions, will be submitted upon completion of the liquidation process.

SECTION 18.6  Certificate of Cancellation.  Within ninety (90) days following
the Dissolution of the Company and the commencement of winding up of its
business, or at any other time there are no Members, the Company will file a
Certificate of Cancellation (to cancel the Certificate of Formation) with the
Secretary of State of the State of Delaware pursuant to the LLCA. At such time,
the Company will also file an application for withdrawal of its certificate of
authority in any jurisdiction where it is then qualified to do business.

ARTICLE XIX

Transfer Restrictions

SECTION 19.1  Restrictions on Transfer of Units.  No Person shall directly or
indirectly Transfer any Unit or any interest therein except as may be expressly
permitted by this Agreement.

(a)          Subject to the limitations set forth in Section 19.1(b), any Member
may Transfer any unit or any interest therein: (i) by any Member that is a
natural person: (A) to any member of his/her immediate family, (B) to a trust
for the benefit of such Member’s immediate family, (C) to an entity that is
wholly-owned by such Founding Member and/or members of his/her family, (D) in
connection with a will or the laws of descent or (E) pursuant to a Transfer
approved by the Board of Managers;  (ii) by any Member that is a corporation,
limited liability company, limited partnership or similar entity:  (A) to any
Affiliate or (B) pursuant to a Transfer approved by the Board of Managers; and
(iii) by any Member that is a trust, to one or more beneficiaries of such trust
(a transfer of the type referred to in clauses (i) through (iii) above
hereinafter referred to as a “Permitted Transfer”).

 
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(b)         Notwithstanding anything else to the contrary contained in this
Agreement, no Unit or any interest therein may be Transferred: (i) to a
Competitor of the Company without the prior approval of the Board of Managers;
or (ii) to a transferee who is not already a Member unless the transferee
executes and delivers to the Board of Managers an instrument pursuant to which
it agrees to be bound by the terms of this Agreement.  In addition, no Unvested
Class B Common Unit may be Transferred without the approval of the Board of
Managers.  No Transfer of a Unit, or Transfer of an indirect interest in the
Company, or any portion of either thereof, shall be made if such Transfer, or
the transferee’s, as the case may be, ownership of such Unit or indirect
interest in the Company, would:

(i)                 result by itself, or in combination with any other previous
Transfers, in the termination of the Company as a partnership for federal income
tax purposes;

(ii)                result in the violation of the Securities Act or any other
applicable federal or state laws;

(iii)              be a violation of or a default (or an event that, with notice
or the lapse of time or both, would constitute a default) under, or result in an
acceleration of any indebtedness under, any note, mortgage, loan agreement or
similar instrument or document to which the Company is a party;

(iv)              result in or create a “prohibited transaction” or cause the
Company or a Member to be or become a “party in interest,” as such terms are
defined in section 3(3) of ERISA, or a “disqualified person,” as defined in
section 4975 of the Code, with respect to any “plan,” as defined in section
3(14) of ERISA and/or section 4975 of the Code; or result in or cause the
Company or any Member to be liable for tax under Chapter 42 of the Code;

(v)               be a Transfer to an individual who is not legally competent or
who has not achieved his or her majority under the law of the state (excluding
trusts for the benefit of minors);
(vi)              cause the Company or any Member (other than the transferee) to
be subject to any excise tax pursuant to Chapter 42A of Subtitle D of the Code;
or

(vii)             be a Transfer to a "tax-exempt entity" or a "tax-exempt
controlled entity" within the meaning of sections 168(h)(2) and
168(h)(6)(F)(ii), respectively, of the Code.

The Company shall not transfer on its books any Unit or issue any certificate or
other document representing a Unit or any interest in the Company unless there
has been compliance with all of the material conditions hereof affecting the
Units and any such attempted Transfer in violation of this Agreement shall be
void and of no effect.
 
 
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SECTION 19.2  First Refusal Rights; Right of Co-Sale.  (a) Except for a
Permitted Transfer, if any holder of Units shall receive a bona fide offer that
such Member intends to pursue (the “Offer”) for the sale of one or more of the
Units held of record by such holder to another party (the “Outside Party”), such
holder (the “Offering Member”) shall have the Offer reduced to writing and shall
give notice (the “Option Notice”) to the Company, containing the name and
address of the Outside Party and accompanied by a copy of the Offer.  The Units
subject to the Offer are referred to herein as the “Offered Units.”

(b)          Upon the giving of the Option Notice, the Company, to the extent
permitted by law, shall have the right, but not the obligation (the “Company
Right”), to purchase, at the pro rata price, on the terms and subject to the
conditions specified in the Offer, all (but not less than all) of the Offered
Units covered by the Option Notice.  Within thirty (30) days after the date of
the Option Notice, the Company shall notify the Offering Member (the “Company
Notice”) whether it intends to exercise the Company Right.  Failure to deliver
the Company Notice within such period shall constitute a waiver of the Company
Right.  The Company may assign the Company Right, in whole or in part, to one or
more third parties or Members.

(c)           The Offering Member shall have the obligation to sell to the
Company or its assignee the Offered Units in the event that the Company Right is
exercised.  If the Company Rights is not exercised, the Offering Member may sell
the Offered Units to the Outside Party on terms not more favorable to such
Outside Party than those contained in the Offer.  In the event that such terms
are more favorable or if such sale to the Outside Party is not consummated
within the time period specified herein, the Offered Units shall again be
subject to the restrictions contained in this Agreement.

(d)           The closing for any purchase of Offered Units by the Company
pursuant to this Section 19.2 shall be held at 10:00 a.m. (local time) at the
offices of the Company on the fortieth (40th) day after the date of the Option
Notice or at such other time and place as the parties shall agree.  At the
closing, the Company and/or its assignee, as the case may be, shall pay for the
Offered Units in accordance with the terms of the Offer.  The Offering Member
shall deliver certificates representing the Units being Transferred, free and
clear of all liens, charges and encumbrances and properly endorsed for
Transfer.  Upon the closing of any purchase of any Units by the Company, such
Units purchased by the Company shall be retired and all voting and other rights
attached thereto shall be cancelled.

(e)           In the event that the Company does not exercise the Company Right,
the Offering Member shall deliver, promptly upon expiration of the Company
Notice, a written notice to each other Member (the “Co-Sale Notice”) reiterating
the information included in the Company Notice.
 
(f)           Each other Member shall have the right (the “Co-Sale Right”),
exercisable upon written notice to the Offering Member and the Company within
twenty (20) days after
 
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receipt of the Co-Sale Notice, to participate in the sale of the Offered Units
on the same terms and conditions as those set forth in the Co-Sale Notice.  Each
Member may sell all or any part of a number of Units equal to the product
obtained by multiplying (A) the aggregate number of Units covered by the Co-Sale
Notice by (B) such Member’s Percentage Interest.  To the extent one or more of
the Members exercises such right of participation, the number of Units that the
Offering Member may sell in the transaction shall be correspondingly reduced.

(g)           The closing of any purchase of Offered Units (including any Units
sold pursuant to the Co-Sale Right) to an Outside Party shall occur within sixty
(60) days after the giving of the Option Notice with respect to such proposed
transaction.  At the closing, the Outside Party shall pay for the Offered Units
(including any Units sold pursuant to the Co-Sale Right) in accordance with the
terms of the Offer.  The Offering Member and any Members who have exercised the
Co-Sale Right shall deliver certificates representing the Units being
Transferred, free and clear of all liens, charges and encumbrances and properly
endorsed for Transfer.

(h)           In the event that neither the Company Right nor the Co-Sale Right
are exercised, the Offering Member may sell the Offered Units to the Outside
Party on terms not more favorable to such Outside Party than those contained in
the Offer within sixty (60) days after the giving of the Option Notice.  In the
event that such terms are more favorable or if such sale to the Outside Party is
not consummated within such time period, the Offered Units shall again be
subject to the restrictions contained in this Agreement.

SECTION 19.3  Right to Compel Sale.  (a) If Members owning Units representing
more than fifty percent (50%) of the votes entitled to be cast by all
outstanding Units (the “Initiating Members”) propose to enter into a Sale of the
Company Transaction, then such Members may require all other Members (the “Other
Members”) to (i) vote all Units then owned by such Member at any regular or
special meeting of the Members (or written consent in lieu of a meeting) in
favor of such Sale of the Company Transaction, (ii) waive any and all
dissenters’, appraisal or similar rights with respect to such Sale of the
Company Transaction and (iii) if the Sale of the Company Transaction is
structured as a sale of all of the outstanding Units of the Company by the
Members, sell all of their Units owned by them (the “Designated Units”) to the
third party in accordance with the terms and conditions of such Sale of the
Company Transaction.  Any Sale of the Company Transaction approved pursuant to
this Section 19.3(a) may hereinafter be referred to as an “Approved
Transaction.”  Notwithstanding the foregoing, for so long as A+D is entitled to
appoint the A+D Designee, no Sale of the Company Transaction shall be deemed an
Approved Transaction unless it has been approved by a unanimous vote of the
Board of Managers, other than any Sale of the Company Transaction that occurs on
or after January 1, 2015 in which the total consideration received by the
Company in connection therewith is valued at an amount equal to or greater than
the Call Option Valuation (valued for such purpose for the twelve month period
ending as of the end of the last completed full fiscal quarter prior to the
proposed date of the consummation of the Sale of the Company Transaction).
 
(b)         In the event of an Approved Transaction that is structured as a sale
 
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of all or substantially all of the Company’s assets, such transaction shall be
treated as a Dissolution pursuant to Article XVII, and the proceeds from such
sale shall be distributed in accordance with Article XVIII.  In the event of an
Approved Transaction that is structured as a merger, consolidation or sale of
all of the Units of the Company, the total consideration to be paid by the
acquirer (the “Total Consideration”) shall be distributed among the Members in
the same manner as the proceeds from a sale of assets would have been
distributed pursuant to the immediately preceding sentence.

(c)  The Initiating Members shall send written notice of the exercise of such
rights pursuant to this Section 19.3 to the Other Members, setting forth the
Total Consideration to be paid by the third party and the other terms and
conditions of such transaction. In the event that the Approved Transaction is
structured as a sale of all of the outstanding Units of the Company, within
fourteen (14) days following the date of the delivery of the notice, the Other
Members shall deliver to the Initiating Members certificates representing the
Designated Units held by them duly endorsed, together with all other transfer
documents reasonably required to be executed in connection with such
transaction.  In the event that any Other Member should fail to deliver such
certificates to the Initiating Members, the Company shall cause the books and
records of the Company to show that such Units are bound by the provisions of
this Section 19.3 and that such Units shall be transferred only to the third
party upon surrender for transfer by the holder thereof.  If, within ninety (90)
days after the Initiating Members gives such notice, the sale of all of the
Other Member’s Units in accordance herewith has not been completed, the
Initiating Members shall return to the Other Members all certificates
representing the Designated Units delivered for sale, and all the restrictions
on sale or other disposition contained in the Agreement with respect to Units
owned by the Initiating Members shall again be in effect.  Simultaneously with
the consummation of the sale of Units of the Initiating Members pursuant to this
Section 19.3, the Initiating Members shall notify the Other Members of the
consummation of the sale, shall cause the purchaser to remit directly to the
Other Members the total sales price of the Other Members’ Units sold or
otherwise disposed of pursuant thereto and shall furnish such other evidence of
the completion and time of completion of such sale or other disposition and the
terms thereof as may be reasonably requested by the Other Members.

(d)  As security for each Member’s obligations hereunder, each Member
hereby:  (i) grants to the Chief Executive Officer of the Company at the time of
any Approved Transaction, with full power of substitution and resubstitution, an
irrevocable proxy, coupled with an interest, to vote all Units at all meetings
of the Members held or taken after the date of this Agreement with respect to
any matter relating to an Approved Transaction; and (ii) irrevocably appoints
such Chief Executive Officer as such Member’s attorney-in-fact with authority to
execute and deliver any agreements, instruments or other documents to be
executed and delivered in connection with the consummation of such Approved
Transaction.
 
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SECTION 19.4  No Member Rights.  No Member or holder of Units that is not a
Member has the right or power to confer upon any transferee the attributes of a
Member in the Company and no transferee of Units shall be admitted as a Member
except as agreed to by the Board of Managers on behalf of the Company.
 
SECTION 19.5  Transferee Rights.  Any transferee of Units who is not admitted as
a Member in accordance with this Agreement (an “Assignee”) has no right (a) to
participate or interfere in the management or administration of the Company's
business or affairs or (b) to vote or agree on any matter affecting the Company
or any Member.  The only rights of an Assignee are to receive the Distributions
to which the transferor would otherwise be entitled (to the extent of the Units
transferred).  However, each Assignee will be subject to all of the obligations,
restrictions and other terms contained in this Agreement as if such transferee
were a Member.  To the extent of any Units Transferred, the Transferring Member
shall not possess any right or power as a Member or under the terms of this
Agreement and may not exercise any such right or power directly or indirectly on
behalf of the transferee.

SECTION 19.6  Effect of Transfer.  Any Member that makes a Transfer of all of
the Units held of record by such Member will be treated as resigning from any
and all positions with the Company and shall immediately cause any and all of
its designees and representatives to resign immediately from any and all
positions held with the Company on the effective date of such Transfer.  Any
Member that makes a Transfer of part (but not all) of its Units will continue as
a Member (with respect to the interest retained), and such partial Transfer will
not constitute a withdrawal of such Member.  The admission of a transferee shall
not release the Transferring Member from any liability with respect to the
Transferred Units (or otherwise) that may have existed prior to the Transfer,
unless a written release to such effect is executed by the Company (or such
other party who might have a claim against the Transferring Member with
respected to the Transferred Units.

SECTION 19.7  Secured Party.  The pledge or hypothecation of, or the granting of
any security interest in, or other lien or encumbrance against, the Units by any
Person shall be made only in accordance with this Agreement and will not cause a
withdrawal of such Member from the Company.  In no event will the Company have
any liability or obligation to any Person by reason of the Company’s payment of
a Distribution to any secured party as long as the Company makes such payment in
reliance upon written instructions from the holder of record on whose behalf
such Distributions are payable. Any secured party will be entitled, with respect
to the security interest granted, only to the Distributions to which the holder
of record granting the security interest is entitled under this Agreement, and
only if, as and when such Distribution is made by the Company.  Upon any
foreclosure or other Transfer in lieu of foreclosure of the Units to any secured
party, the Transfer will be subject to the other provisions of this Agreement.

SECTION 19.8  Conversion to “C” Corporation.  If Members owning Units
representing more than fifty percent (50%) of the votes entitled to be cast by
all outstanding Units propose to enter into a transaction pursuant to which the
Company would be converted
 
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into, or otherwise be taxable as, a “C” corporation, then such Members may
require all other Members to (i) vote all Units then owned by such Member at any
regular or special meeting of the Members (or written consent in lieu of a
meeting) in favor of such transaction, (ii) waive any and all dissenters’,
appraisal or similar rights with respect to such transaction and (iii) if such
transaction is structured as an exchange of all of the outstanding Units of the
Company by the Members for Units of capital stock in the “C” corporation,
exchange all of their Units owned by them in accordance with the terms and
conditions of such transaction.  In connection with any such transaction, (a)
the capital structure of the “C” corporation shall be implemented so as to
provide each Member with capital stock having rights and privileges
substantially the same as such Member’s Units in the Company and (b) each Member
shall be required to enter into a stockholders agreement containing rights and
obligations substantially the same as those contained in this Article XIX.
 
SECTION 19.9  Automatic Termination of Unvested Class B Common Units.  Upon the
termination of a Class B Member’s Service, all of such Member’s Unvested Class B
Common Units shall automatically and immediately be terminated, redeemed and
forfeited without any consideration or further action on anyone’s part,
resulting in the surrender, termination and forfeiture of all of such Member’s
rights, privileges and preferences attendant to its ownership of such Unvested
Class B common Units.  Any Class B Common Units that are terminated, redeemed
and forfeited pursuant to this Section 19.9 shall once again be deemed to be
authorized and unissued Class B Common Units and be available for future
issuance pursuant to the terms of this Agreement.

SECTION 19.10  Call Option.  (a)  At any time, and from time to time, from and
after January 1, 2015, Bluefly shall have the option (the “Call Option”) to
purchase any or all of the Units held by any other Member for a purchase price
per Unit equal to (i) the Call Option Valuation divided by (ii) the sum of (A)
the number of Common Units outstanding as of the date that the Call Option is so
exercised and (B) the number of Common Units issuable upon the exercise of any
Preferred Units outstanding as of such date; provided that the purchase price
for a Unit shall, in no event, be less than the Initial Capital Contribution
made with respect to such Unit, plus interest accruing on an annual basis from
the date or dates that such Initial Capital Contribution was funded at the rate
of five percent (5%) per annum.  Bluefly may exercise the Call Option by
providing written notice thereof (a “Call Option Exercise Notice”) to the Member
or Members who hold Units with respect to which the Call Option is being
exercised (the “Selling Members”), which notice shall include the number of
Units to be purchased from each Selling Member, the price per Unit as calculated
pursuant to this Section 19.10 and the Bluefly Price Per Share as of the date of
such exercise.

(b)  Upon any exercise of the Call Option, the Selling Member(s) shall have the
right, subject to the limitations set forth in Section 19.10(c), to determine
whether all or part of the purchase price for its Units will be paid in cash or
Bluefly Common Stock by providing Bluefly with written notice of such
determination (an “Election Notice”) within twenty (20) days of receipt of the
Call Option Exercise Notice, provided that, in the event that no notice is
 
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provided within such twenty (20) day period, all of the purchase price to be
paid to such Selling Member shall be paid in cash.  To the extent that a Selling
Member elects to have all or a portion of the purchase price paid in Bluefly
Common Stock it will receive with respect thereto a number of shares of Bluefly
Common Stock equal to the purchase price to be so paid divided by the Bluefly
Price Per Share as of the date that the Call Option was exercised.
 
(c)  Notwithstanding Section 19.10(b): (i) no Selling Member will have the right
to have any purchase price for shares to be repurchased pursuant to the exercise
of a Call Option to be paid in shares of Bluefly Common Stock if the Bluefly
Common Stock is not then registered pursuant to the Securities Exchange Act of
1934, as amended; and (ii) the total number of shares of Bluefly Common Stock
issued in connection with any and all exercises of the Call Option pursuant to
this Section 19.10(b) shall not exceed 4,918,856 (the “Share Cap”).  To the
extent that multiple Selling Members elect to have their purchase price paid in
shares of Bluefly Common Stock such that the Share Cap would be exceeded, shares
will be allocated to Selling Members based upon the date upon which their
Election Notices were delivered, with shares being allocated to those Election
Notices first delivered.   To the extent that the purchase price with respect to
multiple Election Notices delivered on the same day cannot be fully paid in
Bluefly Common Stock, shares shall be allocated amongst such Election Notices on
a pro rata basis, based on the amount of purchase price requested to be paid in
Bluefly Common Stock in each such Election Notice.  Any amounts that cannot be
paid in Bluefly Common Stock as a result of the limitations set forth herein
shall be paid in cash.

(d)  The closing of the sale of any Units pursuant to an exercise of the Call
Option shall take place on the sixtieth (60th) day following the exercise of the
Call Option.  In connection with any issuance of Bluefly Common Stock at any
such closing, the Selling Member receiving such Bluefly Common Stock shall be
required to execute an agreement containing such representations, warranties and
covenants as Bluefly may reasonably determine to be necessary in order to comply
with applicable law.

SECTION 19.11  Forfeiture of Units Upon Default.  In the event that any Member
breaches any of the terms of this Agreement  or any Management Services
Agreement to which it is a party and does not cure such breach within thirty
(30) days after receiving written notice thereof from the Company (or, with
respect to any obligation to fund any portion of the Initial Capital
Contribution not funded on the Effective Date, thirty (30) days after receiving
written notice thereof from the Company), all of such Member’s Units shall
automatically be deemed to have been terminated, redeemed and forfeited without
any consideration or further action on anyone’s part, resulting in the
surrender, termination and forfeiture of all of such Member’s rights, privileges
and preferences attendant to its ownership of a Capital Interest with respect to
such Units.
 
ARTICLE XX

Confidentiality; Non-Competition; Non-Solicitation
 
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SECTION 20.1  Confidentiality.  Each Member covenants and agrees that he, she or
it will not, during the term of this Agreement or any time thereafter for so
long as the Company remains in existence (a) communicate, divulge, discuss,
furnish, disclose or make accessible, except in the ordinary course of the
Company’s business, to anyone other than (i) the Company and its Managers,
Officers or employees, (ii) as required by law (including, with respect to
Bluefly, as required under applicable securities laws), and (iii) the Company’s
and such Member’s attorneys and accountants, without the written consent of the
Company, information with respect to factual matters, designs, plans or
projections, which are of a confidential or proprietary nature, or financial
information relating to the business and activities of the Company or its
Members (“Confidential Information”); or (b) use any Confidential Information
for any purpose other than for purposes of analyzing its investment in, or
performing services for, the Company. This provision shall not apply to any
information that is now or which subsequently becomes available in the public
domain, provided that such Member has not disclosed or caused to be disclosed
such information so as to make it publicly available. All records, memoranda,
calculations, letters, papers, lists, drawings designs and copies thereof or any
other materials and documents concerning, affecting or relating to the business
and activities of the Company and of the Members, obtained by each Member from
whatever source, are confidential and shall be plainly marked to show the
confidential and proprietary nature thereof and to prevent the unauthorized use,
reproduction, disclosure or other dissemination of the same. The provisions of
this Section 20.1 shall survive any termination of this Agreement indefinitely
and shall apply regardless of whether or not a party hereto remains a Member of
the Company. Notwithstanding the foregoing, either Bluefly or A+D shall be
permitted to disclose Confidential Information to a potential purchaser of its
Units that is not a competitor of the Company, provided that such potential
purchaser executes a written confidentiality agreement approved by the Company
in its reasonable discretion.

SECTION 20.2  Non-Competition; Non-Solicitation.  For so long as any Member
holds any Units, and for a period of three (3) years thereafter, such Member
shall not, without the prior written consent of the Company, anywhere in the
world, directly or indirectly, (i) enter into the employ of or render any
services to any Competitive Business; (ii) engage in the Business for its own
account; (iii) become associated with or interested in any Competitive Business
as an individual, partner, shareholder, creditor, director, officer, principal,
agent, employee, trustee, consultant, advisor or in any other relationship or
capacity (other than passive ownership of less than 5% of any publicly-traded
company that is a Competitive Business); or (iv) solicit, interfere with, or
endeavor to entice away from the Company any of its employees, customers,
suppliers or other Persons with whom the Company does business.  The provisions
of this Section 20.2 shall survive any termination of this Agreement
indefinitely and shall apply regardless of whether or not a party hereto remains
a Member of the Company.  Notwithstanding the foregoing, nothing in this Section
20.2 shall be construed as prohibiting:  (a) A+D and its Affiliates from selling
eyewear products on a wholesale basis to Competitive Businesses or to retailers
that may engage in e-commerce, provided that A+D does not provide any services
to, or
 
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otherwise own any interest in, any such Competitive Business or retailer; or (b)
either A+D, Bluefly or their respective Affiliates from (i) selling rimless
prescription glasses online, (ii) selling prescription glasses with
sports-related licensing online or (iii) designer brand prescription glasses
online (it being understood and agreed that designer brands shall not include
any brand owned or controlled by A+D, Bluefly or their respective
Affiliates). For the avoidance of doubt, the use of the term “services” in
clause (a) of the preceding sentence is not intended to prohibit A+D or any of
its Affiliates from performing services relating to the sale, at wholesale, of
eyewear products to e-commerce retailers which are similar to, or are of a type
of, services performed by A+D or any of its Affiliates in the usual course of
its business in connection with the sale, at wholesale, of eyewear products to
retailers who are not e-commerce retailers (examples of such services performed
for retailers who are not e-commerce retailers include product development of
private label products and warehousing of eyewear products until called-out by
retailers).  In addition, notwithstanding anything in this Section 20.2 to the
contrary, A+D and its Affiliates shall not be prohibited from continuing to sell
the MODO and ECO brands of prescription glasses (both of which are owned by
MODO) online, including making off-price sales online of closeouts of such
brands of prescription glasses, provided that such brands of prescription
glasses continue to be targeted at the same consumer market segment at which
they are currently targeted.
 
SECTION 20.3  Equitable Relief. Each Member agrees that any breach by it of
Sections 20.1 or 20.2 will cause irreparable damage to the Company and that in
the event of such breach the Company shall have, in addition to any and all
remedies of law, the right to an injunction, specific performance or other
equitable relief to prevent the violation of my obligations hereunder.

SECTION 20.4  No Corporate Opportunity Doctrine.  Subject to Section 20.2, each
Member may directly or indirectly engage in or possess any interest in other
business ventures of any kind, independently or with others.   Each Member may
encounter opportunities to purchase, otherwise acquire, lease, sell or otherwise
dispose of other business ventures from time to time, and, subject to Section
20.2, may take advantage of such opportunities itself or introduce such
opportunities to entities in which they may have an interest, and no such
failure to bring an opportunity to the Company shall subject the Member or any
Manager appointed by such Member to liability to the Company or any of the
Members on account of any lost opportunity.  Subject to Section 20.2, neither
the Company nor any Member shall have any right by virtue of this Agreement or
the Company relationship created hereby in or to such ventures or to the income
or profits derived therefrom, and the pursuit of such ventures, shall not be
deemed wrongful or improper.
 
ARTICLE XXI

General Provisions
 
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SECTION 21.1  Amendment.  The terms and provisions of this Agreement may be
modified or amended at any time and from time to time with the vote or written
consent of (i) the Member or Members holding Units representing more than fifty
percent (50%) of all the votes permitted hereunder and (ii) for so long as A+D
is entitled to appoint the A+D Designee, the unanimous approval of the Board of
Managers; provided, however, that the Board of Managers may amend this Agreement
without the vote or written consent of the Members to (a) reflect changes
validly made in the membership of the Company and the Capital Contributions of
the Members; (b) make a change that is necessary or, in the opinion of the Board
of Managers, advisable to qualify the Company as a limited liability company
under the laws of any state or foreign jurisdiction, or to ensure that the
Company will not be treated as an association taxable as a corporation for
federal, state or local income tax purposes; (c) make a change that is necessary
or desirable to cure any ambiguity, to correct or supplement any provision in
this Agreement that would be inconsistent with any other provision in this
Agreement, or to make a change to any other provision with respect to matters or
questions arising under this Agreement that will not be inconsistent with the
provisions of this Agreement, in each case so long as such change does not
increase the financial obligations of the Members and does not otherwise
adversely affect the Members in any material respect; (d) satisfy any
requirements, conditions or guidelines contained in any opinion, directive,
order, statute, ruling or regulation of any federal, state, local or foreign
governmental entity, so long as such change is made in a manner that minimizes
any adverse effect on the Members; (e) add to the duties or obligations of the
Board of Managers or officers or surrender, for the benefit of the Members, any
right or power granted to the Board of Managers; or (f) to effect a Preferred
Unit Designation and reflect the rights, terms and preferences of the Preferred
Units designated pursuant thereto (as determined by the Board pursuant to the
terms of this Agreement); provided, however, that each of the following
amendments shall not be made with respect to such Member without such Member’s
consent:  (i) any amendment to this Agreement that requires such Member to make
a Capital Contribution or loan to the Company; (ii) any amendment to Sections
5.4 or 6.2; (iii) any amendment to Sections 13.2, 13.3 14.1, 14.4, 18.3 and
19.3(b) (other than an amendment in connection with a Preferred Unit
Designation), Section 21.10 and this Section 21.1 that, in each case, would
cause such provisions to be modified as they affect such Member; and (vi) any
amendment to this Agreement to change the allocation of Net Profits and Net
Losses previously made to such Member’s Capital Account.

SECTION 21.2  Waiver of Dissolution Rights.  The Members agree that irreparable
damage would occur if any Member should bring an action for judicial dissolution
of the Company.  Accordingly, each Member accepts the provisions under this
Agreement as such Member’s sole entitlement on Dissolution of the Company and
waives and renounces such Member’s right to seek a court decree of dissolution
or to seek the appointment by a court of a liquidator for the Company.  Each
Member further waives and renounces any alternative rights that might otherwise
be provided by law upon the withdrawal or resignation of such Member and accepts
the provisions under this Agreement as such Member's sole entitlement upon the
happening of such event.
 
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SECTION 21.3  Waiver of Partition Right.  Each Member waives and renounces any
right that it may have prior to Dissolution and Liquidation to institute or
maintain any action for partition with respect to any property of the Company.
 
SECTION 21.4  Waivers Generally.  No course of performance or other conduct
subsequently pursued or acquiesced in, and no oral agreement or representation
subsequently made, by the Members, whether or not relied or acted upon, and no
usage of trade, whether or not relied or acted upon, shall amend this Agreement
or impair or otherwise affect any Member's obligations pursuant to this
Agreement or any rights and remedies of a Member pursuant to this Agreement.  No
delay in the exercise of any right will operate as a waiver of such right.  No
single or partial exercise of any right will preclude its further exercise.  A
waiver of any right on any one occasion will not be construed as a bar to, or
waiver of, any such right on any other occasion.

SECTION 21.5  Equitable Relief.  If any Member proposes to Transfer all or any
part of its Units in violation of the terms of this Agreement, the Company or
any Member may apply to any court of competent jurisdiction for an injunctive
order prohibiting such proposed Transfer except upon compliance with the terms
of this Agreement, and the Company or any Member may institute and maintain any
action or proceeding against the Person proposing to make such Transfer to
compel the specific performance of this Agreement.  Any attempted Transfer in
violation of this Agreement is null and void, and of no force and effect.  The
Person against whom such action or proceeding is brought waives the claim or
defense that an adequate remedy at law exists, and such Person will not urge in
any such action or proceeding the claim or defense that such remedy at law
exists.

SECTION 21.6  Remedies for Breach.  The rights and remedies of the Members set
forth in this Agreement are neither mutually exclusive nor exclusive of any
right or remedy provided by law, in equity or otherwise.  The Members agree that
all legal remedies (such as monetary damages) as well as all equitable remedies
(such as specific performance) will be available for any breach or threatened
breach of any provision of this Agreement.

SECTION 21.7  Counterparts.  This Agreement may be signed in multiple
counterparts.  Each counterpart will be considered an original, but all of them
in the aggregate will constitute one instrument.

SECTION 21.8  Notice.  All notices under this Agreement will be in writing and
will be delivered or sent to a Member at the address or fax number listed in the
Company’s records.  Any notices given to any Member in accordance with this
Agreement will be deemed to have been duly given:  (a) on the date of receipt if
personally delivered, (b) five (5) days after being sent by mail, postage
prepaid, (c) the date of receipt, if sent by registered or certified mail,
postage prepaid, (d) when sent by confirmed facsimile or telecopier
transmission, or (e) on the date of delivery if sent by a recognized overnight
courier service.
 
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SECTION 21.9  Date of Performance. Whenever this Agreement provides for any
action to be taken on a day which is not a Business Day, such action shall be
taken on the next following Business Day.
 
SECTION 21.10  Limited Liability.  (a) The liability of each Member, holder of
Units who is not a Member, Manager, committee member, officer or agent of the
Company shall be limited as set forth in this Agreement, the LLCA and other
applicable law.  No Member, holder of Units who is not a Member, Manager,
committee member, officer or agent of the Company is liable for any debts,
obligations or liabilities of the Company or each other, whether arising in
tort, contract or otherwise, solely by reason of being a Member, holder of
Units, Manager, officer or agent of the Company, or acting (or omitting to act)
in such capacities or participating (as an employee, consultant, contractor or
otherwise) in the conduct of the business of the Company, except that a holder
of Units shall remain personally liable for the payment of such holder's Capital
Contribution and as otherwise set forth in this Agreement, the LLCA and other
applicable law.

(b)           Notwithstanding the foregoing, each Manager shall perform such
Manager’s duties in accordance with the provisions of Section 8.7(a).  A Manager
who so performs such duties shall not have any liability by reason of being or
having been a Manager.  No Manager shall be liable to the Company or any holder
of Units for any loss or damage sustained by the Company or any holder of Units,
unless a judgment or other final adjudication adverse to such Manager
establishes that such Manager’s acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law or that such Manager
personally gained in fact a financial profit or other advantage to which such
Manager was not legally entitled.  Without limiting the generality of the
preceding sentence, a Manager does not in any way guaranty the return of any
Capital Contribution to a holder of Units or a profit for the holders of Units
from the operations of the Company.

SECTION 21.11  Partial Invalidity.  Wherever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law.  However, if for any reason any one or more of the
provisions of this Agreement are held to be invalid, illegal or unenforceable in
any respect, such action will not affect any other provision of this
Agreement.  In such event this Agreement will be construed as if such invalid,
illegal or unenforceable provision had never been contained in it.

SECTION 21.12  Entire Agreement.  This Agreement contains the entire agreement
among the Members with respect to the subject matter of this Agreement, and
supersedes each course of conduct previously pursued or acquiesced in, and each
oral agreement and representation previously made, by the Members with respect
thereto, whether or not relied or acted upon.
 
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SECTION 21.13  Benefit.  The contribution obligations of each Member will inure
solely to the benefit of the other Members and the Company, without conferring
on any other Person any rights of enforcement or other rights.

SECTION 21.14  Binding Effect.  This Agreement is binding upon, and inures to
the benefit of, the Members and their transferees, successor and assigns,
provided that, any transferee will have only the rights specified in Section
19.5 unless admitted as an additional Member in accordance with this Agreement.
 
SECTION 21.15  Further Assurances.  Each Member agrees, without further
consideration, to sign and deliver such other documents of further assurance as
may reasonably be necessary to effectuate the provisions of this Agreement.

SECTION 21.16  Headings.  Article and section titles have been inserted for
convenience of reference only.  They are not intended to affect the meaning or
interpretation of this Agreement.

SECTION 21.17  Terms.  Terms used with initial capital letters will have the
meanings specified, applicable to both singular and plural forms, for all
purposes of this Agreement.  All pronouns (and any variation) will be deemed to
refer to the masculine, feminine or neuter, as the identity of the Person may
require.  The singular or plural includes the other, as the context requires or
permits.  The word include (and any variation) is used in an illustrative sense
rather than in a limiting sense.  The word day means a calendar day, unless
otherwise specified.

SECTION 21.18  Governing Law; Consent to Jurisdiction. This Agreement will be
governed by, and construed in accordance with, the internal laws of the State of
Delaware, without regard to conflicts of law principles.  Any conflict or
apparent conflict between this Agreement and the LLCA will be resolved in favor
of this Agreement except as otherwise required by the LLCA. Any disputes arising
hereunder shall be subject to the exclusive jurisdiction of the federal and
State courts located in New York County, New York.

SECTION 21.19  Third Party Beneficiaries.  Except as set forth in Section 15.5,
nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.

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

 
EYEFLY LLC
         
By:
  / s / Melissa Payner
   
  Name: Melissa Payner
   
  Title: Manager
         
BLUEFLY, INC.
         
By:
  / s / Melissa Payner
   
  Name: Melissa Payner
   
  Title: Chief Executive Officer
         
A+D LABS LLC
         
By:
  / s / Alessandro Lanaro
   
  Name: Alessandro Lanaro
   
  Title: Manager
 

 
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Exhibit A

Founding Members

Name
 
Initial Capital
Contribution
   
Portion of Initial
Capital
Contribution to be
Immediately
Funded
 
Units Issued
                   
Bluefly
  $ 676,000.00     $ 364,000.00  
4,420,000 Class A Common Units
                   
A+D Labs LLC
  $ 624,000.00     $ 336,000.00  
4,080,000 Class A Common Units

 
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EXHIBIT B

EYEFLY LLC
2011 LONG-TERM INCENTIVE PLAN

SECTION 1    Purpose of the Plan.  The Eyefly LLC 2011 Long-Term Incentive Plan
(the “Plan”) is intended to promote the interests of Eyefly LLC, a Delaware
limited liability company (together with any successor entity, the “Company”),
by providing to officers, Managers, key employees, consultants and advisors of
the Company and its subsidiaries incentive compensation awards in the form of
Awards.  The Plan is also intended to enhance the ability of the Company and its
subsidiaries to attract and retain the services of individuals who are essential
for the growth and profitability of the Company and to encourage them to devote
their best efforts to the business of the Company, thereby advancing the
interests of the Company and its members.
 
SECTION 2    Definitions.  As used in the Plan, the following terms shall have
the meanings set forth below (capitalized terms used and not defined below shall
have the meaning set forth for such terms in the LLC Agreement (as hereinafter
defined)):
 
“Award” means a grant of Phantom Units made under the Plan.
 
“Board” means the Board of Managers of the Company.
 
 “Committee” means the Board or such other committee of the Board, if any, that
is, appointed by the Board to administer the Plan.
 
“Distribution Right” means, with respect to a Phantom Unit, the right to receive
an amount in cash equal to, and at the same time as, the cash distributions made
by the Company from time to time with respect to a Class A Common Unit pursuant
to Sections 14.1 of the LLC Agreement during the period such Phantom Unit is
held by the Participant, other than any distribution with respect to the return
of Capital Contributions made with respect to Class A Common
Units.  Accordingly, any cash distributions made to a holder of Class A Common
Units pursuant to Section 14.4 of the LLC shall not entitle a holder of a
Phantom Unit to receive a similar distribution.
 
“IPO” means the initial public offering of the Company’s common equity interests
pursuant to a registration statement under the Securities Act.
 
“LLC Agreement” means the Operating Agreement of the Company, dated as of
January 4, 2011, as the same may be amended from time to time.
 
“Participant” means a Person holding a Phantom Unit granted under the Plan.
 
“Phantom Unit” means a phantom or notional Class A Common Unit granted under the
Plan, which shall include a Distribution Right.
 
“Replacement Awards” means, with respect to any Award to be cancelled in
connection with the consummation of a transaction pursuant to which the Company
is converted into a “C”
 
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corporation or an IPO, a number of shares of Common Stock (or other common
equity interests) of the Company equal to the number of Phantom Units so
cancelled.
 
“Restricted Period” means the period established by the Committee with respect
to a Phantom Unit during which period the Phantom Unit remains subject to
forfeiture by the Participant.
 
“Sale of the Company Consideration Per Unit” means with respect to each Phantom
Unit cancelled in connection with a Sale of the Company Transaction, the same
amount of consideration, paid in substantially the same form, as the
consideration received by a holder of a Class A Common Unit upon the
consummation of the Sale of the Company Transaction.
 
SECTION 3    Administration.  The Plan shall be administered by the
Committee.  A majority of the Committee shall constitute a quorum, and the acts
of the members of the Committee who are present at any meeting thereof at which
a quorum is present, or acts unanimously approved by the members of the
Committee in writing, shall be the acts of the Committee.  Subject to the terms
of the Plan and applicable law, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have
full power and authority to: (i) designate the Persons who are Participants;
(ii)  determine the number of Phantom Units to be covered by each Award; (iii)
determine the terms and conditions of any Award; (iv) determine whether, to what
extent, and under what circumstances Awards may become settled, vested,
cancelled, forfeited, exchanged or subject to a right of repurchase; (v)
interpret and administer the Plan and any instrument or agreement relating to an
Award made under the Plan; (vi) establish, amend, suspend, or waive such rules
and regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (vii) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan.  Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other decisions under or
with respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive, and binding
upon all parties, including the Company, any Affiliate, any Participant, and any
beneficiary of any Award.
 
SECTION 4    Phantom Units Available for Awards.
 
(a)           Phantom Units Available.  Subject to adjustment as provided in
Section 4(b), the number of Phantom Units with respect to which Awards may be
granted under the Plan is 1,500,000 Phantom Units; provided, however, to the
extent any Phantom Units are forfeited, such forfeited Phantom Units shall again
be available for future Awards.
 
(b)           Adjustments.  In the event the Committee determines that any
distribution (whether in the form of cash, Units, Convertible Securities, other
securities, or other property), recapitalization, contributions to capital,
split, reverse split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Units or other securities of the
Company, issuance of warrants or other rights to purchase Units or other
securities of the Company, or other similar transaction or event affects the
number or value of Class A Common Units such that an adjustment is determined by
the Committee to be appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits
 
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intended to be made available by grants of Awards under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of Phantom Units (or other securities or property) with
respect to which Awards may be granted, (ii) the number and type of Phantom
Units (or other securities or property) subject to outstanding Awards and (iii) 
if deemed appropriate, make provision for a cash payment to the holder of
outstanding Phantom Units.
 
SECTION 5    Eligibility.  Any Manager, officer, employee, consultant or advisor
shall be eligible to be designated a Participant by the Committee.
 
SECTION 6    Awards.
 
(a)           Phantom Units.  The Committee shall determine the Persons to whom
Phantom Units shall be granted, the number of Phantom Units to be granted to
each such Participant, the duration of the Restricted Period (if any), the terms
or conditions under which the Phantom Units may become vested, forfeited or
subject to a right of repurchase, and such other terms and conditions as the
Committee may establish with respect to such Awards.
 
(b)           Transferability of Awards.  No Award and no right under any such
Award may be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant, other than by will or by the laws of
descent and distribution, and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate.
 
(c)           Conversion of Company to “C” Corporation; IPO.  Upon the
consummation of a transaction pursuant to which the Company is converted into a
“C” corporation or an IPO, all vested Awards then outstanding shall
automatically be cancelled in exchange for either: (i) Replacement Awards, (ii)
cash in an amount equal to the aggregate Fair Market Value of the Awards
cancelled, or (iii) any combination of the foregoing, whichever payment form is
elected by the Committee in its sole discretion.  Any Awards that become vested
after the consummation of such transaction shall, upon such vesting, be
similarly cancelled, provided that, the Committee may choose to issue shares of
restricted Common Stock (or other common equity interests) in exchange for such
unvested Awards, with restrictions and other terms equivalent to the terms of
such Awards.  To the extent that a Participant receives shares of Common Stock
(or other common equity interests) of the Company in exchange for Awards
pursuant to the terms hereto, such securities shall be issued subject to the
restrictions set forth in Article XIX of the LLC Agreement and the shareholders
agreement described in Section 19.8 of the LLC Agreement.
 
(d)           Sale of the Company. Upon the consummation of a Sale of the
Company Transaction, all outstanding Awards shall be automatically cancelled and
each Participant shall be entitled to receive with respect to each such
cancelled Phantom Unit that was vested on such date, the Sale of the Company
Consideration Per Unit.  Notwithstanding anything in this Plan to the contrary,
any unvested Awards issued on the date of the consummation of the Sale of the
Company Transaction shall be cancelled without consideration unless, and to the
extent, the Committee, in its sole discretion, provides otherwise in an Award
agreement.  For purposes of clarification of this Section 6(d), “consideration”
shall not include any direct or indirect benefits to holders of Class A Common
Units from income tax allocations.
 
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SECTION 7    Amendment and Termination.  Except to the extent prohibited by
applicable law and unless otherwise expressly provided in an Award agreement or
in the Plan:
 
(a)           Amendments to the Plan.  Subject to paragraph (b) below, the Board
or the Committee may amend, alter, suspend, discontinue, or terminate the Plan
in any manner without the consent of any member, Participant, other holder or
beneficiary of an Award, or other Person.
 
(b)           Amendments to Awards. The Committee may waive any conditions or
rights under, amend any terms of, or alter any Award theretofore granted,
provided no change, other than pursuant to paragraph (c) below, in any Award
shall materially reduce the benefit to a Participant without the consent of such
Participant.
 
(c)           Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events.  The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(b) of the Plan) affecting the Company or the financial
statements of the Company, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such adjustments
are appropriate to prevent the dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
 
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SECTION 8    General Provisions.
 
(a)           No Rights to Awards.  No Person shall have any claim to be granted
any Award, and there is no obligation for uniformity of treatment of
Participants.  The terms and conditions of Awards need not be the same with
respect to each recipient.
 
(b)           Withholding.  The Company or any Affiliate is authorized to
withhold from any Award, from any payment due with respect to or upon the
vesting of any Award or from any compensation or other amount owing to a
Participant the amount of any applicable taxes payable in respect of the grant
of an Award, its exercise, the lapse of restrictions thereon, or any payment or
transfer under an Award and to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of such
taxes.  Notwithstanding the foregoing, the Participant shall be solely
responsible for the payment of all U.S., State, local or foreign taxes related
to an Award, and the Company shall have no liability to a Participant for any
failure to withhold, or apprise the Participant of, any such tax.
 
(c)           No Right to Employment.  The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate.  Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
agreement.
 
(d)           Governing Law.  The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the internal laws of the State of New York and applicable
federal law.  Any dispute in connection with the Plan or any Award issued
hereunder shall be subject to the exclusive jurisdiction of the federal and
State courts located in New York, New York, and by accepting an Award, each
Participant hereby submits to such exclusive jurisdiction.
 
(e)           Severability.  If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.
 
(f)           No Trust or Fund Created.  Neither the Plan nor the Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person.  To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any general unsecured creditor of the
Company or any Affiliate.
 
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(g)           Headings.  Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference.  Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
 
SECTION 9    Term of the Plan.  The Plan shall be effective as of the Effective
Date and shall continue until the date terminated by the Board or Phantom Units
are no longer available for grants of Awards under the Plan, whichever occurs
first.  However, unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted prior to such termination, and the
authority of the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights
under such Award, shall extend beyond such termination date.
 
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