EXECUTION COPY

SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT OF
WILLIAM RAST LICENSING, LLC
 
Effective As of October 1, 2011

 
 

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TABLE OF CONTENTS
 
ARTICLE I - DEFINITIONS OF TERMS
1
       
ARTICLE II - INTRODUCTORY MATTERS
4
       
2.1
 
Business of LLC
4
2.2
 
Laws Governing the Agreement
4
2.3
 
Term
4
2.4
 
Principal Place of Business
4
2.5
 
Agent for Service of Process
5
2.6
 
Required Maintenance of Records in California
5
2.7
 
Records Subject to Inspection
5
2.8
 
Foreign Qualification
5
2.9
 
Commencement of Operations
6
       
ARTICLE III - MEMBERS, CAPITAL CONTRIBUTIONS, ALLOCATIONS
6
       
3.1
 
Membership Interests, Capital Accounts and Percentage Interests
6
3.2
 
Interests
6
3.3
 
Status of Capital Contributions
6
3.4
 
Capital Accounts
6
3.5
 
Return of Capital Contributions
7
3.6
 
No Management
7
       
ARTICLE IV – ADDITIONAL CAPTIAL CONTRIBUTIONS; NEW MEMBERS
7
       
4.1
 
Additional Capital Contributions
7
4.2
 
Admission of Additional Members
7
       
ARTICLE V —  ALLOCATIONS AND DISTRIBUTIONS
8
       
5.1
 
Allocations of Profits and Losses
8
5.2
 
Time of Allocation
8
5.3
 
Distributions of Cash
8
5.4
 
Limitations on Distributions
8
5.5
 
Amounts Withheld
9
5.6
 
Tax Allocations; Section 704(c) of the Code; Special Allocations
9
5.7
 
Allocation of Net Income and Net Loss for Financial Reporting Purposes
9
       
ARTICLE VI - MANAGEMENT OF THE LLC, CONTROL OF THE BUSINESS, OFFICERS
10
       
6.1
 
Governance of the LLC and Election of the Manager
10
6.2
 
Powers of the Manager
10
6.3
 
Contractual Authority
10
6.4
 
Officers
11
6.5
 
Limitations on Liability of the Managers and Officers
11

 
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6.6
 
Other Activities of the Members and Manager Permitted
11
6.7
 
Devotion of Time
11
6.8
 
Class B Member Consent Rights
11
       
ARTICLE VII – MEETINGS OF MEMBERS & INFORMATION RIGHTS
12
       
7.1
 
Meeting of Members
12
7.2
 
Reports
12
       
ARTICLE VIII - TRANSFER AND ASSIGNMENT OF MEMBERSHIP INTERESTS, ECONOMIC
INTERESTS AND RIGHTS
12
       
8.1
 
Transfers
12
8.2
 
Substitution of Members
12
8.3
 
Permitted Transfers
13
8.4
 
Additional Transfer Restrictions
13
8.5
 
Enforcement of Transfer Restrictions
13
8.6
 
Mandatory Co-Sale
13
8.7
 
Redemption of Class B Membership Interests; Liquidating Payment
14
       
ARTICLE IX - DISSOLUTION AND WINDING UP
16
       
9.1
 
Conditions of Dissolution
16
9.2
 
Order of Payment of Liabilities Upon Dissolution
16
9.3
 
Limitations on Payments Made on Dissolution
16
9.4
 
Liquidation
16
9.5
 
Termination of Covenants
17
       
ARTICLE X - BOOKS AND RECORDS, FISCAL YEAR
17
       
ARTICLE XI - TAX MATTERS
17
       
ARTICLE XII - INDEMNIFICATION
17
       
12.1
 
Liability of Members
17
12.2
 
Liability of Manager and Officers
17
12.3
 
Exculpation
17
12.4
 
Fiduciary Duty; Waiver
18
12.5
 
Indemnification by the LLC
18
12.6
 
Indemnification Procedure
18
12.7
 
Expenses
19
       
ARTICLE XIII - REQUIRED ARBITRATION OF DISPUTES
19
       
13.1
 
Reference; Rules and Procedures
19
13.2
 
Confidentiality
19

 
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ARTICLE XIV - MISCELLANEOUS
20
       
14.1
 
Law Governing
20
14.2
 
Complete Agreement
20
14.3
 
Binding Effect
20
14.4
 
No Third Party Beneficiary
20
14.5
 
Gender and Number in Nouns and Pronouns
20
14.6
 
Headings
21
14.7
 
References in This Agreement
21
14.8
 
Exhibits
21
14.9
 
Severability
21
14.10
 
Additional Documents and Acts
21
14.11
 
Notices
21
14.12
 
Amendments
21
14.13
 
Multiple Counterparts
22

 
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SECOND AMENDED AND RESTATED
OPERATING AGREEMENT OF
WILLIAM RAST LICENSING, LLC
 
This Second Amended and Restated Operating Agreement, made and entered into
effective as of October 1, 2011 (the “Effective Date”), governs the relationship
between the undersigned Members of William Rast Licensing, LLC, a California
limited liability company (the “LLC”), and between the LLC and the undersigned
Members, pursuant to the Beverly-Killea Limited Liability Act as amended from
time to time (the “Act”), and the Articles of Organization for the LLC.  In
consideration of their mutual promises, covenants, and agreements, the parties
hereto do hereby promise, covenant, and agree as set forth herein.
 
RECITALS
 
A.          The Members of the LLC were previously party to that certain Amended
and Restated Operating Agreement effective January 1, 2007, as amended effective
October 2, 2007 (the “Prior Agreement”).
 
B.           The LLC’s Members desire to amend and restate the Prior Agreement
to (i) to recapitalize and reclassify the membership interests previously issued
to the Members, such that Bella Rose, LLC, a Delaware limited liability company
(“BR”) shall become the holder of “Class A Membership Interests” and Tennman
WR-T, Inc., a Delaware corporation (“TWR”) shall become the holder of “Class B
Membership Interests” (in each case in the amounts and as noted on Exhibit A),
(ii) recognize the redemption of certain membership interests previously issued
to TWR, (iii) to establish the characteristics of the Class A Membership
Interests and Class B Membership Interests and (iv) in connection with the LLC’s
recapitalization, to memorialize the agreement among the Members as to the
restated ownership of the LLC.
 
C.           In connection with the above described recapitalization, TWR, the
LLC and the other persons and entities party thereto are also entering into that
certain Royalty Agreement of even date herewith which provides for the payment
of certain consideration in relation to the recapitalization (the “Royalty
Agreement”).
 
D.          This Agreement has been approved by the requisite Members as
provided by the Prior Agreement.
 
E.           The Members of the LLC desire to enter into this Agreement such
that this Agreement shall hereafter govern the rights, preferences, privileges
and restrictions of the Members of the LLC.
 
ARTICLE I - DEFINITIONS OF TERMS
 
When used in this Agreement, the following terms shall have the meanings set
forth below:
 
1.1         “Affiliate” means, with respect to any Member, any Person, directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with such Member.  The term “control,” as used in the
immediately preceding sentence, means, with respect to a corporation the right
to exercise directly or indirectly, 50% or more of the voting rights
attributable to the controlled corporation, and, with respect to any
partnership, trust, other entity or association, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled entity.

 
 

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1.2         “Agreement” means this Operating Agreement among the Members
regulating the affairs of the LLC and the conduct of its business, as originally
executed and as amended from time to time, and shall refer to this Agreement as
a whole, unless the context otherwise requires.
 
1.3         “Aggregate Sales Proceeds” shall have the meaning set forth in
Section 8.7.4 hereof.
 
1.4         “Articles” means the Articles of Organization for the LLC which were
filed with the Secretary of State of California on August 30, 2006, as File
No. 200624310013, together with all amendments thereto or restatements thereof
and shall mean the Articles as a whole unless the context otherwise requires.
 
1.5         “BR” means Bella Rose, LLC, a California limited liability company.
 
1.6         “Capital Account” means, with respect to any Member, the account
maintained for such Member in accordance with the provisions of Section 3.4
hereof.
 
1.7         “Capital Contribution” means, with respect to any Member, the
aggregate amount of money and the fair market value (as determined in good faith
by the Manager) of any property, tangible or intangible (other than money)
contributed to the LLC pursuant to Article III hereof with respect to the
Membership Interest of such Member.
 
1.8         “Class A Member” refers to the Members holding Class A Membership
Interests as set forth on Exhibit A or to any other person or entity who
succeeds them in that capacity as permitted by this Agreement.  The Class A
Members in the aggregate shall be entitled to all of the Distributable Cash from
Operations and all Distributable Cash from a Sale Transaction that is not paid
or required to be paid to the Class B Members in accordance with Section 8.7 of
this Agreement.
 
1.9         “Class B Member” refers to the Members holding Class B Membership
Interests as set forth on Exhibit A or to any other person or entity who
succeeds them in that capacity as permitted by this Agreement.  The Class B
Members in the aggregate shall not be entitled to any of the Distributable Cash
from Operations and shall only be entitled to receive that portion of the
Distributable Cash from a Sale Transaction and such other amounts or property
specifically described in Section 8.7 of this Agreement.
 
1.10       “Code” means the Internal Revenue Code of 1986, as amended from time
to time, the Treasury Regulations promulgated thereunder, or any corresponding
provisions of any succeeding federal statute.
 
1.11       “Covered Person” means any Member, any Manager, any partners,
employees, representatives or agents of any Member or Manager, and any officer,
employee, partner, representative or agent of the LLC.
 
1.12       “Distributable Cash” the gross amount of cash from LLC operations
(including, but not limited to, licensing revenues, royalties, sales,
dispositions and refinancings of LLC property, and all principal and interest
payments with respect to any note or other obligation received by the LLC in
connection with sales or other dispositions of LLC property), less the portion
thereof used to pay or establish reserves for all LLC expenses, debt payments,
research and development (to the extent approved by the Manager), capital
improvements, replacements and contingencies, all as determined by the Manager
in good faith.  “Distributable Cash” shall not be reduced by depreciation,
amortization, cost recovery deductions or similar allowances (except to the
extent cash is set aside to pay or establish a reserve for such items), but
shall be increased by any reductions of reserves previously established under
this Section 1.12.

 
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1.13       “Economic Interest” means a Person’s right to share in the Profits,
Losses, and similar items of, and to receive distributions from, the LLC, but
does not include any other rights of a Member including, without limitation, the
right to vote or to participate in the management of the LLC, or, except as
specifically provided in this Agreement or required under the Act, any right to
information concerning the business and affairs of the LLC.
 
1.14       “Existing PPLB Debt” means any and all obligations of the LLC and/or
any of its controlled subsidiaries to PPLB, Versatile Entertainment, Inc. and/or
BR to repay all amounts advanced, loaned or allocated to the LLC or its
controlled subsidiaries, and any other indebtedness of the LLC or its controlled
subsidiaries owing to PPLB, Versatile Entertainment, Inc. and/or BR, in each
case existing as of the date hereof, and all rights of PPLB and/or BR with
respect thereto. As of August 31, 2011, the Members acknowledge and agree that
the outstanding amount of the Existing PPLB Debt equals $0.
 
1.15       “LLC” means William Rast Licensing, LLC.
 
1.16       “LLC Property” means property of the LLC, including, without
limitation, all real, personal, tangible or intangible property or any interests
in such property.
 
1.17       “Manager” means Colin Dyne, or such other Person elected Manager of
the LLC elected pursuant to Article VI.
 
1.18       “Member” means each Person who has been admitted to the LLC as a
Member in accordance with the Articles and this Agreement (other than any Person
who has transferred its entire Membership Interest in accordance with this
Agreement).
 
1.19       “Membership Interest” means the entire ownership interest of a Member
in the LLC at any particular time, including, collectively, his Economic
Interest, any and all rights to vote and otherwise participate in the LLC’s
affairs, and the rights to any and all benefits to which a Member may be
entitled as provided in this Agreement, together with the obligations of such
Member to comply with all of the terms and provisions of this Agreement.  A
Membership Interest constitutes personal property.  Membership Interests may be
divided into such classes and such number of series as the Manager may determine
from time to time in accordance with the terms hereof. As of the date of this
Agreement, the LLC has authorized two classes of Membership Interests,
designated respectively as “Class A Membership Interests” and “Class B
Membership Interests.”  Each class of Membership Interests has such rights,
preferences, privileges and restrictions as set forth in this Agreement.  The
Class B Membership Interests shall be non-voting and shall have no rights to
vote or participate in the management of the LLC except as may be required under
the Act or otherwise expressly set forth herein.  The term “Membership
Interests” shall refer to the Class A Membership Interests and Class B
Membership Interests, collectively.
 
1.20       “Operations” means the business of the LLC other than a Sale
Transaction.
 
1.21       “Percentage Interest” means, with respect to a Member, the percentage
amount set forth beside such Member’s name in the right-hand column of the table
set forth in Exhibit A hereto.
 
1.22       “Person” means an individual, general partnership, limited
partnership, other limited liability company, corporation, trust, estate, real
estate investment trust and any other entity.
 
1.23       “PPLB” means Peoples Liberation, Inc., a Delaware corporation.

 
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1.24       “PPLB Indebtedness” means (i) the Existing PPLB Debt, and (ii) any
indebtedness of the LLC or any of its controlled Affiliates incurred or issued
in exchange for, or the net proceeds of which are used to renew, refund,
refinance, replace or discharge, the Existing PPLB Debt.
 
1.25       “Profits and Losses” means the profits and losses of the LLC,
determined in accordance with the accounting method followed by the LLC for
federal income tax purposes, including, without limitation, each item of LLC
income, gain, loss, deduction, tax preference and credit, all as such terms or
words are used in the Code.
 
1.26       “Sale Transaction” shall have the meaning set forth in Section 8.7.3
hereof.
 
1.27       “Transfer” shall mean, with respect to any interest in the LLC, (i) a
sale, conveyance, exchange, assignment, pledge, encumbrance, gift, bequest,
hypothecation or other transfer or disposition by any other means, whether for
value or no value, direct or indirect, and whether voluntary or involuntary
(including, without limitation, by operation of law), or an agreement to do any
of the foregoing, or (ii) any sale or other voluntary transfer, including by
means of a merger or consolidation, or a series of related sales or voluntary
transfers, aggregating more than 50% of the voting or equity interests of a
Member.
 
1.28       “TWR” means Tennman WR-T, Inc., a Delaware corporation.
 
1.29       “WRS License Agreement” means that certain Trademark License
Agreement, effective as of October 1, 2006, by and between the LLC and William
Rast Sourcing, LLC, as amended to date and as the same may be further amended or
supplemented from time to time.
 
ARTICLE II - INTRODUCTORY MATTERS
 
2.1         Business of LLC.
 
The LLC shall be authorized to engage in any lawful act or activity for which a
limited liability company may be organized under the Act.  Initially, the
purpose of the LLC shall be to own, and license, others (including a Member or
any of its Affiliates) right to, the trademark “William Rast” in all
classifications.
 
2.2         Laws Governing the Agreement.
 
This Agreement is subject to, and governed by, the mandatory provisions of the
Act and the Articles.  In the event of a direct conflict between the provisions
of this Agreement and the mandatory provisions of the Act or the provisions of
the Articles, such provisions of the Act or the Articles, as the case may be,
shall be controlling.
 
2.3         Term.
 
The term of the LLC began upon the due filing of the Articles and shall continue
until such date as the LLC is terminated as provided herein.
 
2.4         Principal Place of Business.
 
The principal place of business of the LLC shall be at 1212 S. Flower St., 5th
Floor, Los Angeles, CA 90015, or at such other place as the Manager shall from
time to time determine.

 
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2.5         Agent for Service of Process.
 
The agent for service of process for the LLC in California shall be National
Registered Agents, Inc., or such other service firm or person as the Manager
shall from time to time determine.
 
2.6         Required Maintenance of Records in California.
 
The LLC shall continuously maintain an office in the State of California which
may, but need not be, its principal executive office, and at which it shall
keep:
 
(a)           A current list in alphabetical order of the full name and last
known business address of each Member, and each holder of an Economic Interest,
together with their respective Capital Contribution and Percentage Interest;
 
(b)           A copy of the filed Articles, together with any powers of attorney
pursuant to which the Articles or any amendments thereto were executed;
 
(c)           Copies of the LLC’s federal, state and local income tax returns or
information returns and reports, if any, for the six most recent taxable years
or such short period as the LLC has been in existence;
 
(d)           A copy of this Agreement, together with any powers of attorney
pursuant to which this Agreement or any amendments thereto were executed;
 
(e)           Copies of financial statements of the LLC for the six most recent
taxable years or such short period as the LLC has been in existence; and
 
(f)           The books and records of the LLC as they relate to its internal
affairs as more particularly described in Section 10.1 herein for at least the
current and past four taxable years or such short period as the LLC has been in
existence.
 
2.7         Records Subject to Inspection.
 
Records kept pursuant to Section 2.6 are subject to inspection at the reasonable
request of any Member (but not any assignee thereof who does not become a
substitute Member, except such an assignee that has been approved by the
Members) and its duly authorized representative during normal business
hours.  Copies of the records referenced in Section 2.6 shall also be provided
at the reasonable request and expense of any Member (but not any assignee
thereof who does not become a substitute Member, except such an assignee that
has been approved by the Members).
 
2.8         Foreign Qualification.
 
The officers shall cause the LLC to be qualified or registered under assumed or
fictitious name statutes or similar laws in any other jurisdiction in which such
qualification or registration is necessary or required to conduct the LLC’s
business, except where the failure to do so would not have a material adverse
effect on the LLC.  The officers or other authorized representative shall
execute, deliver and file any certificates (and any amendments and/or
restatements thereof) necessary for the LLC to qualify to do business in a
jurisdiction in which the LLC may wish to conduct business, except where the
failure to do so would not have a material adverse effect on the LLC.

 
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2.9         Commencement of Operations.
 
The operations of the LLC commenced as of October 1, 2006.
 
ARTICLE III - MEMBERS, CAPITAL CONTRIBUTIONS, ALLOCATIONS
 
3.1         Membership Interests, Capital Accounts and Percentage Interests.
 
Immediately following the execution and delivery of this Agreement and
recapitalization of the Membership Interests as described in the recitals to
this Agreement, the Membership Interests, Capital Accounts (determined as of
December 31, 2010) and Percentage Interests of each Member are as set forth on
Exhibit A.
 
3.2         Interests.
 
In the event of dissolution of the LLC, no Member shall have an interest in
specific LLC Property.
 
3.3         Status of Capital Contributions.
 
3.3.1   Except as otherwise provided in this Agreement, a Member’s Capital
Contributions may be returned, in whole or in part, at any time upon the request
of such Member, only with the approval of the Manager.  In no way limiting any
other provision of this Agreement, this Section 3.3.1 shall not prohibit
distributions otherwise authorized by this Agreement notwithstanding that such
distributions may result in returns of Capital Contributions.
 
3.3.2   Notwithstanding the foregoing, no return of a Member’s Capital
Contribution shall be made hereunder if such distribution would violate
applicable law.
 
3.3.3   No Member shall receive any interest, salary or drawing with respect to
its Capital Contribution or its Capital Account or for services rendered to or
on behalf of the LLC or otherwise in its capacity as a Member or otherwise,
except as otherwise specifically provided in this Agreement.
 
3.3.4   Following the execution and delivery of this Agreement, no Member shall
be required to make any additional capital contributions at any time to the LLC.
 
3.4         Capital Accounts.
 
3.4.1   An individual Capital Account shall be established and maintained for
each Member.  The original Capital Account established for any Member who
acquires a Membership Interest by virtue of an assignment or transfer in
accordance with the terms of this Agreement shall be a pro-rata part of the
Capital Account of the assignor represented by such percentage of the Membership
Interest as is assigned to such assignee, and, for purposes of this Agreement,
such Member shall be deemed to have made a proportionate amount of the Capital
Contributions made by the assignor of such Membership Interest (or made by any
of such assignor’s predecessors in interest).
 
3.4.2   The Capital Account of each Member shall be maintained in accordance
with the following provisions:

 
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(a)           to such Member’s Capital Account, there shall be credited the
amount of any cash, and the fair market value (as determined in good faith by
the Manager) of any other property contributed by such Member to the capital of
the LLC, such Member’s allocated share of Profits and the amount of any LLC
liabilities that are expressly assumed by such Member or that are secured by any
LLC Property distributed to such Member;
 
(b)           to such Member’s Capital Account, there shall be debited the
amount of cash and the fair market value (as determined in good faith by the
Manager) of any LLC Property distributed to such Member pursuant to any
provision of this Agreement, such Member’s allocated share of Losses and the
amount of any liabilities of such Member that are assumed by the LLC or that are
secured by any property contributed by such Member to the LLC;
 
(c)           from time to time as they deem appropriate, the Manager may make
such modification to the manner in which the Capital Accounts are computed to
comply with Treasury Regulation Section 1.704-1(b) provided that such
modification is not likely to have a material effect on the amounts
distributable to any Member pursuant to this Agreement; and
 
(d)           the foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Treasury Regulation Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulation.
 
3.5         Return of Capital Contributions.
 
The Manager and Members shall not be personally liable for the return of the
Capital Contributions of any Member, or any portion thereof, it being expressly
understood that any such return shall be made solely from LLC Property, nor
shall the Manager or Members be required to pay to the LLC or any Member any
deficit in any Member’s Capital Account upon dissolution or otherwise.
 
3.6         No Management.
 
A Member shall not be an agent of the LLC, nor can a Member bind, nor execute
any instrument on behalf of, the LLC.  A Member shall not participate in the
management of the business or affairs of the LLC and, except as provided in this
Agreement, shall not have any voting, consent or approval rights.
 
ARTICLE IV – ADDITIONAL CAPTIAL CONTRIBUTIONS;
NEW MEMBERS
 
4.1         Additional Capital Contributions.
 
No Member shall be required to make additional Capital Contributions to the
LLC.  The Members may make additional Capital Contributions to the LLC only with
the approval of the Manager.
 
4.2         Admission of Additional Members.
 
Additional Members may be admitted to the LLC from time to time only with the
approval of the Manager, such additional Members to be issued Membership
Interests in one or more classes or series, and upon such terms and conditions,
and for such consideration, as shall be determined by the Manager.  Except as
otherwise provided hereunder, upon any such admission of any additional Members
to the LLC, the Manager shall have the authority to adopt such amendments to
this Agreement, and to execute and deliver such additional instruments and
documents, as shall be necessary or appropriate in order to evidence or reflect
the issuance of the same.

 
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ARTICLE V —  ALLOCATIONS AND DISTRIBUTIONS
 
5.1         Allocations of Profits and Losses.
 
The Profits and Losses of the LLC shall be allocated for each fiscal year (or
any proportion thereof) as follows:
 
5.1.1   Profits from Operations (and all items thereof) for each Fiscal Year
shall be allocated to the Class A Members.
 
5.1.2   Losses (and all items thereof) for each Fiscal Year (including Losses
from a Sale Transaction) shall be allocated (i) first, among the Members having
a positive Capital Account balance in accordance with their relative Percentage
Interests until each Member’s Capital Account balance is reduced to zero, (ii)
to the Members who bear the economic risk of loss for the expenses or deductions
giving rise to the Losses or items thereof and (iii) any remaining Losses or
items thereof among the Members in accordance with their relative Percentage
Interests.
 
5.1.3   Profits (or items thereof) from a Sale Transaction shall be allocated
among the Members pro rata in accordance with their respective Membership
Interests as set forth on Exhibit A.
 
5.2         Time of Allocation.
 
All allocations of Profits and Losses made pursuant to Section 5.1 shall be made
as of the last day of each fiscal year of the LLC; provided, however, that if
during any fiscal year of the LLC or any portion thereof there is for any reason
a change in any Member’s Percentage Interest attributable to their Membership
Interests in the LLC, the Profits and Losses for such year shall be allocated
among the Members based upon the number of days during such period that such
Member was the owner of such interest or in such other manner as the Manager
deems appropriate in accordance with the requirements of the Code and of
Treasury Regulations issued pursuant thereto.
 
5.3         Distributions of Cash.
 
5.3.1   From time to time, at the sole discretion of the Manager, the LLC shall
distribute all Distributable Cash from Operations, or any portion thereof,
solely to the Class A Members pro rata in accordance with their Percentage
Interests in the LLC vis-à-vis each other.  Class B Members shall not be
entitled to receive any distributions of Distributable Cash from Operations.
 
5.3.2   The LLC shall distribute to the Class B Members that portion of the
Distributable Cash from a Sale Transaction specifically described in Section 8.7
of this Agreement to be distributed to the Class B Members, pro rata in
accordance with their Percentage Interests in the LLC vis-à-vis each other, and
the LLC shall distribute to the Class A Members that portion of the
Distributable Cash from a Sale Transaction not distributed or required to be
distributed to the Class B Members pursuant to Section 8.7 of this Agreement,
pro rata in accordance with their Percentage Interests in the LLC vis-à-vis each
other.
 
5.4         Limitations on Distributions.
 
Anything contained herein to the contrary notwithstanding, the LLC shall not
make a distribution to any Member on account of its Membership Interest if such
distribution would violate the Act or other applicable law or any restrictions
in any of the LLC’s loan agreements.  In addition, notwithstanding anything
contained herein to the contrary, the LLC shall not consummate a Sale
Transaction unless the Class B Members will receive a Liquidating Payment in
accordance with Section 8.7 hereof.

 
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5.5         Amounts Withheld.
 
All amounts of federal, state and local income taxes, personal property taxes,
unincorporated business taxes or other taxes withheld from, or required to be
paid with respect to, any distribution or amount distributable to a Member,
because of that Member’s status or otherwise, shall be treated as amounts
distributed to such Member for all purposes under this Agreement.
 
5.6         Tax Allocations; Section 704(c) of the Code; Special Allocations.
 
5.6.1   The income, gains, losses, deductions and expenses of the LLC shall be
allocated, for federal, state and local income tax purposes, among the Members
in accordance with the allocation of such income, gains, losses, deductions and
expenses among the Members for computing their Capital Accounts, except that if
any such allocation is not permitted by the Code or other applicable law, the
LLC’s subsequent income, gains, losses, deductions and expenses shall be
allocated among the Members so as to reflect as nearly as possible the
allocation set forth herein in computing their Capital Accounts.
 
5.6.2   The Members acknowledge that the Code may require allocations of
Profits, Losses, or items thereof in a manner which varies from the general
provisions of Section 5.1, including allocations in respect of such matters
known as “minimum gain chargeback,” “qualified income offset,” “gross income
allocation,” “nonrecourse deductions,” “Section 754 adjustments,” “Section
704(c)” provisions relating to any property which may be contributed to the LLC,
and items relating to the issuance of Membership Interests.  The Manager is
authorized and directed to make such allocations as may be required by the Code
(which are incorporated by this reference as if fully set forth herein), and
also to make any offsetting allocations otherwise permissible under the Code so
that the foregoing required allocations do not adversely affect the intended
pattern of distributions under Section 5.3, in each case upon advice or
consultation with the LLC’s regularly retained accountant.
 
5.6.3   Any elections or other decisions relating to such allocations shall be
made by the Manager in any manner that reasonably reflects the purpose and
intent of this Agreement.
 
5.6.4   The Manager may elect to adjust the basis of LLC Property for federal
income tax purposes in accordance with Section 754 of the Code, in the event of
a distribution of LLC Property as described in Section 734 of the Code or a
transfer of a Membership Interest described in Section 743 of the Code.  In the
event that any Member requests to make any such election, the Manager may
require the Member so benefited thereby to pay the additional annual accounting
costs incurred as a result of making such election.
 
5.7         Allocation of Net Income and Net Loss for Financial Reporting
Purposes.
 
The Members acknowledge and agree that, for purposes of the preparation of the
financial statements of PPLB under generally accepted accounting principles
(“GAAP”), it is their intention that PPLB will be entitled to consolidate the
Company’s financial results with the financial results of PPLB and its other
consolidated subsidiaries, and that BR and, through consolidation, PPLB shall be
entitled to report 100% of the Company’s net income or net loss (as determined
under GAAP) from Operations for all periods on PPLB’s financial statements
without including thereon any allocation of net income or net loss to the Class
B Members in respect of their Class B Membership Interests, on the basis that
BR, as the sole Class A Member, is entitled to 100% of Profits from Operations
and 100% of Distributable Cash from Operations, and that TWR, as the sole Class
B Member, is only entitled to a portion of Profits from a Sale Transaction and a
portion of Distributable Cash from a Sale Transaction.

 
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ARTICLE VI - MANAGEMENT OF THE LLC,
CONTROL OF THE BUSINESS, OFFICERS
 
6.1         Governance of the LLC and Election of the Manager.
 
6.1.1   Governance of the LLC by the Manager.  All powers of the LLC shall be
exercised under the authority of, and the business and affairs of the LLC shall
be under the direction of, the Manager, unless otherwise provided in the Act,
the Articles, or this Agreement.  A Member shall not participate in the
day-to-day operation of the business affairs of the LLC.  A Manager need not be
a Member.
 
6.1.2   Election of the Managers by the Members; Term.  The Manager of the LLC
shall be Colin Dyne.  The Manager shall serve until the earliest of (i) the
appointment of a different Manager by BR, or (ii) the date upon which such
Manager resigns, dies or becomes disabled and unable to serve, whereupon BR
shall be entitled to elect a successor.  A Manager may resign at any time upon
written notice to the LLC.
 
6.1.3   Acknowledgement.  TWR acknowledges and agrees that, notwithstanding the
parties’ relative Percentage Interests in the LLC, and subject to the explicit
terms of this Agreement, including Section 6.2 hereof, BR shall have the
exclusive right to appoint the Manager of the LLC and thus, indirectly through
the appointment of such Manager, to manage and control the LLC and its
operations.  Any amendment to this ARTICLE VI shall, in addition to the other
approvals set forth herein, require the approval BR.
 
6.2         Powers of the Manager.
 
The Manager shall have all necessary powers of direction and control to carry
out, through the officers, the purposes, business, and objectives of the LLC,
including, but not limited to, the right to direct the officers of the LLC to
enter into and carry out contracts of all kinds; to employ employees, agents,
consultants and advisors on behalf of the LLC; to lend or borrow money and to
issue evidences of indebtedness; to bring and defend actions in law or at
equity; and to buy, own, manage, sell, lease, mortgage, pledge or otherwise
acquire or dispose of the LLC property. The Manager may, on behalf of the LLC,
enter into contracts with Affiliates; provided, however, such contracts are on
the same terms and conditions that would be available from an independent
responsible third party that is willing to perform the requested service.
 
6.3         Contractual Authority.
 
Only the Manager or those officers of the LLC and/or any other individuals
associated with the LLC who have been given authority by the Manager to do so
may execute on behalf of the LLC any note, mortgage, evidence of indebtedness,
contract, certificate, statement, conveyance, or other instrument in writing, or
any assignment or endorsement thereof.  Any person dealing with the LLC or the
Manager may rely upon a certificate signed by the Manager as to (a) the identity
of the Manager or any other Member of the LLC, (b) the persons who are
authorized to execute and deliver any instrument or document for or on behalf of
the LLC or (c) any act or failure to act by the LLC or as to any other matter
whatsoever involving the LLC or any Member.

 
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6.4         Officers.
 
The Manager may appoint a chief executive officer, a president, a secretary, a
chief financial officer, and such other officers of the LLC as appropriate, each
of whom shall hold office for such period, have such authority and perform such
duties as the Manager determines.
 
6.5         Limitations on Liability of the Managers and Officers.
 
The Manager and officers shall not be liable to the LLC or Members for any loss
or damage resulting from any mistake of fact or judgment or any act or failure
to act unless the mistake, act or failure to act results directly from fraud,
willful misconduct or gross negligence.  The Manager and officers shall be
indemnified pursuant to Article XII hereof.
 
6.6         Other Activities of the Members and Manager Permitted.
 
The Members and the Manager and their respective Affiliates may engage or
invest, independently or with others, in any business activity of any type or
description, including without limitation those that might be the same as or
similar to the LLC’s business and that might be in direct or indirect
competition with the LLC.  Neither the Members nor the Manager shall be
obligated to present any investment opportunity or prospective economic
advantage to the LLC, even if the opportunity is of a character that, if
presented to the LLC, could be taken by the LLC.  The Members and the Manager
shall have the right to hold any investment opportunity or prospective economic
advantage for their own account or to recommend such opportunity to Persons
other than the LLC.  Neither the LLC nor any other Member or Manager, as the
case may be, shall have any right in or to such other venture or activities or
opportunities or to the income or proceeds derived therefrom.  Each Member and
Manager acknowledges that the other Members and Manger and their respective
Affiliates own and/or manage other businesses, including businesses that may
compete with the LLC and for the Members’ and/or the Manager’s time.  Each
Member and each Manager hereby waives any and all rights and claims which he may
otherwise have against the other Members and/or Manager, as the case may be, and
their respective Affiliates as a result of any of such activities.
 
6.7         Devotion of Time.
 
The Manager is not obligated to devote all of his time or business efforts to
the affairs of the LLC.  The Manager shall devote whatever time, effort, and
skill as he deems appropriate for the operation of the LLC.
 
6.8         Class B Member Consent Rights.
 
Until such time as the Class B Members have received all of the Aggregate Sales
Proceeds to which they are entitled in accordance with Section 8.7 of this
Agreement, the Company shall not, without obtaining the prior written approval
of the holders of a majority-in-interest of the Percentage Interests held by the
Class B Members:
 
6.8.1   engage in any business or activity other than that for which the LLC was
formed and has historically conducted;
 
6.8.2   take any action to amend, alter, or repeal Section 6.8 or Section 8.7 of
this Agreement;
 
6.8.3   admit any additional Class B Members;

 
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6.8.4   create any new Membership Interests or modify the terms of any existing
Membership Interests in a manner that reasonably could be expected to adversely
affect the rights of the Class B Members; or
 
6.8.5   enter into any transaction for the sale of assets of the LLC not in the
ordinary course of its business which does not constitute a Sale Transaction.
 
ARTICLE VII – MEETINGS OF MEMBERS & INFORMATION RIGHTS
 
7.1         Meeting of Members.
 
The Members are not required to hold meetings.  Decisions may be reached by a
written consent signed by the requisite Members.  In the event that the Members
desire to hold a meeting, formal notice of the meeting shall not be required.
The Members may participate in the meeting through the use of a conference
telephone or similar communications equipment, provided that all Members
participating in the meeting can hear one another.  The Members shall keep or
cause to be kept with the books and records of the LLC full and accurate minutes
of all meetings, notices of meetings, when given, and all written consent in
lieu of meetings.
 
7.2         Reports.
 
The Manager will prepare and provide the Class B Members with (i) within
forty-five (45) days after the end of each fiscal quarter, unaudited financial
statements of the LLC, including a balance sheet, income statement, a statement
of cash flow, and a statement of profit or loss for the fiscal quarter then
ended; and (ii) within ninety (90) days after the end of each fiscal year,
unaudited financial statements of the LLC, including a balance sheet, statement
of operations, and a statement of cash flow for the fiscal year then-ended.
 
ARTICLE VIII - TRANSFER AND ASSIGNMENT OF MEMBERSHIP INTERESTS,
ECONOMIC INTERESTS AND RIGHTS
 
8.1         Transfers.
 
Except for Permitted Transfers (as defined below), no Member may Transfer
(directly or indirectly) all or any portion of such Member’s Membership
Interests (or any beneficial interests therein) to any other Person except with
the approval of the Manager, which approval may be given or withheld as the
Manager may determine in his sole discretion.  Any purported Transfer which is
not in accordance with this Agreement shall be null and void and of no
effect.  After the consummation of any Transfer of any part of a Member’s
Membership Interests, the Membership Interests so Transferred shall continue to
be subject to the terms and conditions of this Agreement and any further
Transfers shall be required to comply with all of the terms and provisions of
this Agreement.
 
8.2         Substitution of Members.
 
A transferee of any Membership Interests properly Transferred hereunder shall
have the right to become a substitute Member only if such transferee executes an
instrument satisfactory to the Manager accepting and adopting the terms and
provisions of this Agreement, and such transferee pays any reasonable expenses
in connection with his, her or its admission as a substitute Member (as
requested by the Manager).  The admission of a substitute Member shall not
result in the release of the Member who assigned the membership interest in the
LLC from any liability that such Member may have to the LLC unless the
substitute Member expressly agrees in writing to assume such liability.

 
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8.3         Permitted Transfers.
 
For purposes of this Agreement, the term “Permitted Transfer” shall mean a
transfer by a Member of all or any portion of such Member’s Membership Interests
in the LLC (i) (A) to a trust for the benefit of the transferor and/or his or
her family members, provided that such trust is, during the transferor’s
lifetime, controlled by the transferor, or (B) as an estate planning transfer to
an entity over which the transferor retains voting control, (ii) to an Affiliate
of such Member, or (iii) in the case of any transfer by a permitted transferee
described in (i) or (ii), above, back to the original transferor Member
thereof,.  Notwithstanding the foregoing, in no event shall a putative Transfer
constitute a “Permitted Transfer” unless and to the extent that (i) the other
Members are notified of the material terms concerning such transfer prior
thereto (including, but not limited to, the would-be transferee and the
consideration to be received therefor) and (ii) the would-be transferee agrees
in writing to be bound by the provisions of all agreements applicable to the
Membership Interests to be transferred (including, without limitation, a joinder
to this Agreement).
 
8.4         Additional Transfer Restrictions.
 
Notwithstanding anything herein to the contrary, no Member may, without the
prior written consent of the Manager, Transfer all or any portion of its
Membership Interests to the extent such Transfer (a) would violate any
applicable securities laws, or (b) would cause a termination of the LLC for
federal income tax purposes.
 
8.5         Enforcement of Transfer Restrictions.
 
The restrictions on Transfer contained in this Agreement are an essential
element in the ownership of Membership Interests.  Upon application to any court
of competent jurisdiction, the LLC and/or a Member, as the case may be, shall be
entitled to a decree against any Person violating or about to violate such
restrictions, requiring their specific performance, including those prohibiting
a Transfer of all or a portion of such Membership Interests.
 
8.6         Mandatory Co-Sale.
 
8.6.1   Right of Mandatory Co-Sale.  One or more Members holding Membership
Interests representing a majority of the Percentage Interests in the LLC who
propose to sell all of their respective Membership Interests to any Person which
is not an Affiliate of  the LLC or BR in a bona fide, arms-length transaction
(the “Selling Members”), upon delivery of a written notice of the proposed sale
(the “Drag Along Notice”) to the other Members, shall have the right (the
“Mandatory Co-Sale Right”) to require all, but not less than all, of the other
Members to sell, or to cause to be sold, all, but not less than all, of the
Membership Interests owned by such other Members upon the Offered Terms and
Conditions (as defined below).  The Drag Along Notice shall contain a
description of the proposed transaction and the terms thereof, the name of the
proposed transferee, the price at which the Membership Interests are to be sold
and the terms of payment and the other terms and conditions to the proposed sale
(the “Offered Terms and Conditions”), which such Offered Terms and Conditions
shall provide for the aggregate payment to the Class B Members at the closing of
an amount at least equal to the amount of the Liquidating Payment that would
have been required to be paid pursuant to Sections 8.7.2 and 8.7.4(c) in the
event the sale pursuant to this Section 8.6.1 constituted a “Sale Transaction”
as defined by clause (iii) of Section 8.7.3.

 
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8.6.2   Participation in Mandatory Co-Sale.  At the closing of the transfer, the
other Members who have received notice of the exercise of the Mandatory Co-Sale
Right must provide for sale to the transferee, free and clear of all liens and
rights of third parties, the Interests which the other Member has been notified
are subject to the Mandatory Co-Sale Right.  The other Members agree to make
such representations and warranties regarding the LLC and its subsidiaries and
their respective ownership of Membership Interests as the Selling Members may be
required to make to the transferee, provided, such representations and
warranties shall be reasonably acceptable to the other Members and provided,
further, that each of the other Members’ respective liabilities for breach of
such representations and warranties shall be limited to such other Members’
proceeds of the sale of their respective Membership Interests pursuant to the
Mandatory Co-Sale Right, and provided, further, that if any such other Member is
not involved in the business of the LLC and its Percentage Interest is less than
20%, the Selling Members shall use commercially reasonable efforts to ensure
that any representations or warranties that such other Member is required to
make to the transferee shall be limited to such Member’s title to the its
Membership Interest and its authority to enter into the relevant sales agreement
and perform its obligations thereunder.  Notwithstanding the foregoing, in the
event that the LLC is in breach of any of its representations and warranties
regarding itself and its subsidiaries that it may be required to make in
connection with such transfer, each of the Members’ respective liability for
breach of such representations and warranties shall be shared on a pro-rata
basis based on their respective Percentage Interests or shall be satisfied by a
reduction in the price at which the Membership Interests are sold to the
transferee.
 
8.7         Redemption of Class B Membership Interests; Liquidating Payment.
 
8.7.1   Redemption.  Upon a Sale Transaction, the LLC shall redeem and purchase
from the Class B Members, and the Class B Members hereby agree to sell to the
LLC, 100% of the Membership Interest of the LLC owned by the Class B Members
(the “Redeemed Securities”), for the consideration provided herein.  Without any
further action by the LLC or the Members, effective as of the date of any Sale
Transaction, the LLC shall cancel the Redeemed Securities which shall cease to
be outstanding.  The Class B Members and the LLC shall execute and deliver any
documents and other papers and perform any further acts as may be reasonably
required or desirable to carry out the provisions of this Section 8.7 and the
transactions contemplated hereby, including, without limitation, the execution
and delivery of such endorsements, assignments and other good and sufficient
instruments of conveyance, transfer and assignment as shall be necessary to vest
in the LLC good title in and to the Redeemed Securities.
 
8.7.2   Amount of Payment.  In connection with a Sale Transaction, the LLC shall
redeem the Membership Interest of the LLC owned by the Class B Members and shall
pay or otherwise cause to be paid to the Class B Members an amount (the
“Liquidating Payment”) equal to, in the aggregate, eighteen percent (18%) (which
percentage shall not be subject to dilution or reduction without the consent of
the Class B Members) of the Aggregate Sales Proceeds (defined below) for such
Sale Transaction.
 
8.7.3   Sale Transaction.  For purposes hereof, a “Sale Transaction” shall mean
the earliest to occur of (i) the voluntary or involuntary liquidation,
dissolution or winding up of the LLC followed by the LLC’s distribution to
holders of its Membership Interests of amounts to which such holders are
entitled in respect of such interests as a result of the liquidation,
dissolution or winding up of the LLC; (ii) the sale of all or substantially all
of the assets of the LLC in one transaction or a series of related transactions
to any Person which is not an Affiliate of  the LLC or BR in a bona fide,
arms-length transaction; and (iii) the acquisition of the LLC by any person or
entity which is not an Affiliate of  the LLC or BR in a bona fide, arms-length
transaction by means of merger, consolidation, share exchange, reorganization,
equity purchase or otherwise pursuant to which equity interests of the LLC are
converted into or exchanged for cash, securities or other property of the
acquiring entity or any of its affiliates and which results in the holders of
the voting securities (excluding shares of the surviving entity held by holders
of equity interests of the LLC acquired by means other than the exchange or
conversion of the capital stock of the LLC for shares of the surviving entity)
of the LLC immediately prior to such merger, consolidation, share exchange,
reorganization or other transaction beneficially owning, directly or indirectly,
less than a majority of the combined voting power of the surviving entity
resulting from such merger, consolidation, share exchange, reorganization or
other transaction.

 
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8.7.4   Aggregate Sales Proceeds.  For purposes hereof, “Aggregate Sales
Proceeds” shall be determined as follows:
 
(a)           Dissolution.  In connection with a Sale Transaction described in
clause (i) of the definition thereof, the “Aggregate Sales Proceeds” shall be an
amount equal to the total amount of cash and other property to be distributed by
the LLC, as applicable, to holders of Membership Interests as a result of the
liquidation, dissolution or winding up of the LLC.  It is understood and agreed
that for purposes of calculating Aggregate Sales Proceeds hereunder, in the
event of a Sale Transaction described in clause (i) of the definition thereof,
no PPLB Indebtedness shall be considered in such calculation.  For clarity, and
without limiting the foregoing, it is the intent of the parties that the amount
of the Liquidating Payment in a Sale Transaction described in clause (i) of the
definition thereof be made to the Class B Members shall be determined as if the
PPLB Indebtedness does not exist at the time of such sale to reduce the
Aggregate Sales Proceeds thereof.
 
(b)           Asset Sale.  In connection with a Sale Transaction described in
clause (ii) of the definition thereof, the “Aggregate Sales Proceeds” shall be
an amount equal to the sum of (A) the total amount of cash and other property
actually received by the LLC in consideration of the assets sold in such Sale
Transaction and (B) the amount of PPLB Indebtedness assumed by the buyer in such
transaction.
 
(c)           LLC Acquisition.  In connection with a Sale Transaction described
in clause (iii) of the definition thereof, the “Aggregate Sales Proceeds” shall
be an amount equal to the sum of (A) the total amount of cash and other property
actually received by holders of equity interests of the LLC in consideration for
their equity interests in the LLC and (B) the amount of PPLB Indebtedness that
remains outstanding and payable by the LLC or is otherwise assumed by the buyer
in such transaction.
 
8.7.5   Intentionally Omitted.
 
8.7.6   Timing and Form of Payment.  In the event of a Sale Transaction, the LLC
shall pay or cause to be paid to the Class B Members a Liquidating Payment no
later than five (5) business days following the date the Aggregate Sales
Proceeds are paid to the LLC or distributed by the LLC to its equity holders
other than the Class B Members.  The Liquidating Payment shall be paid to the
Class B Members in the same form of consideration (e.g., cash, securities and/or
other property) received by the LLC in such Sale Transaction.
 
8.7.7   Conforming Agreements from the Class B Members.  The Class B Members
shall cooperate with the LLC, the Members and buyer in any Sale Transaction in
all reasonable respects, and shall execute and deliver any documents and other
papers and perform any further acts as may be reasonably required or desirable
to (i) evidence the redemption of the Redeemed Securities upon the payment of a
Liquidating Payment by each of the LLC or an agreement by each of the LLC to
make a Liquidating Payment, and (ii) facilitate the payment to the Class B
Members of a Liquidating Payment, including, without limitation, making such
investment representations and warranties of the Class B Members as may be
necessary for buyer’s delivery of securities to the Class B Members in a
transaction which is exempt from registration under Section 5 of the Securities
Act of 1933, as amended.  Notwithstanding the foregoing, the Class B Members
shall not be required to make or provide any representations, warranties,
covenants or indemnities about or with respect to the business of the LLC, as
applicable, with respect to any competitive restrictions, provide any licenses
to any intellectual property or provide any covenants with respect to any
performance obligations.  The Class B Members shall be subject to post-closing
purchase price adjustments, escrow terms, offset rights and holdback terms
applicable to equity holders of the LLC as applicable.

 
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ARTICLE IX - DISSOLUTION AND WINDING UP
 
9.1         Conditions of Dissolution.
 
Subject to the rights of the Class B Members to receive the Liquidating Payment
under Section 8.7 of this Agreement, the LLC shall be dissolved, its assets
shall be disposed of, and its affairs wound up on the first to occur of the
following:
 
(a)           a determination by Members having an aggregate Percentage Interest
greater than fifty-percent (50%) that the LLC shall be dissolved and wound up;
 
(b)           the sale of all or substantially all of the assets of the LLC;
 
(c)           the entry of a decree of judicial dissolution by a court of
competent jurisdiction providing for the dissolution of the LLC; or
 
(d)           the occurrence of any other event which causes the dissolution of
the LLC by operation of law.
 
9.2         Order of Payment of Liabilities Upon Dissolution.
 
Upon dissolution, the LLC’s liabilities shall be settled in the following order,
as required by the Act:
 
(a)           to creditors other than Members, in the order of priority as
provided by law;
 
(b)           to the Class B Members, any Liquidating Payment as provided by
Section 8.7, pro rata in accordance with their Percentage Interests in the LLC
vis-à-vis each other;
 
(c)           to creditors who are Members; and
 
(d)           solely to the Class A Members pro rata in accordance with their
Percentage Interests in the LLC vis-à-vis each other.
 
9.3         Limitations on Payments Made on Dissolution.
 
Except as otherwise specifically provided in this Agreement, each Member shall
be entitled to look solely at the assets of the LLC for the return of his
positive adjusted Capital Account balance.
 
9.4         Liquidation.
 
Upon the dissolution of the LLC, the assets of the LLC shall be liquidated as
promptly as shall be practicable.  Upon any such liquidation, the LLC shall
comply with the terms of Section 8.7 of this Agreement to the extent applicable.

 
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9.5         Termination of Covenants.
 
Upon dissolution and winding up of the LLC, this Agreement, including, without
limitation, all covenants of the parties hereto contained herein, shall
terminate.
 
ARTICLE X - BOOKS AND RECORDS, FISCAL YEAR
 
There shall be maintained and kept at all times during the continuation of the
LLC, proper and usual books of account in accordance with generally accepted
principles of accounting consistently applied and which shall accurately reflect
the condition of the LLC and shall account for all matters concerning the
management thereof; which books shall be maintained and kept at the principal
office of the LLC or at such other place or places as the Manager may from time
to time determine.  The LLC’s books and records shall be maintained on the basis
selected by the Manager.  The fiscal year of the LLC shall commence January 1
and terminate on December 31 of the same calendar year.
 
ARTICLE XI - TAX MATTERS
 
BR is hereby designated as the “Tax Matters Partner” (as such term is defined in
the Code and the Treasury Regulations promulgated thereunder) for purposes of
federal and state income tax matters.  The Tax Matters Partner shall cause the
preparation and timely filing of all tax returns required to be filed by the LLC
pursuant to the Code and all other tax returns deemed by it to be necessary and
required in each jurisdiction in which the LLC does business.
 
ARTICLE XII - INDEMNIFICATION
 
12.1       Liability of Members.
 
Except as otherwise provided by the Act, the debts, obligations and liabilities
of the LLC, whether arising in contract, tort or otherwise, shall be the debts,
obligations and liabilities solely of the LLC, and no Covered Person shall be
obligated personally for any such debt, obligation, or liability of the LLC
solely by reason of being a Covered Person.
 
12.2       Liability of Manager and Officers.
 
The Manager and the officers shall not be liable, in damages or otherwise, to
the LLC or any Member for any act or failure to act by the Managers or the
officers which act was within the scope of the authority conferred on the
Manager or the officers by this Agreement, as applicable, unless such act or
omission constituted fraud, willful misconduct or gross negligence. The Manager
and the officers shall be indemnified by the LLC against liability for any
claim, demand, tax penalty, loss, damage, liability or expense (including,
without limitation, amounts paid in settlement, reasonable costs of
investigation and reasonable legal fees and expenses) resulting from any
threatened, pending or completed action, suit or proceeding naming as a
defendant the Manager or any officer by reason of acts or omissions by him
within the scope of his authority as set forth in this Agreement, provided his
actions did not constitute fraud, willful misconduct or gross negligence.
 
12.3       Exculpation.
 
12.3.1   No Covered Person shall be liable to the LLC for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Covered Person on behalf of the LLC, in good faith and in a manner reasonably
within the scope of authority conferred on such Covered Person by this Agreement
or otherwise, except that a Covered Person shall be liable for any such loss,
damage or claim incurred by reason of such Covered Person’s fraud, willful
misconduct, breach of this Agreement or gross negligence.

 
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12.3.2   A Covered Person shall be fully protected in reasonably relying in good
faith upon the records maintained by the LLC and upon such information,
opinions, reports or statements presented to the LLC by any Person as to matters
reasonably within such other Person’s professional or expert competence,
including information, opinions, reports or statements as to the value and
amount of the assets, liabilities, Profits, Losses or distributions or any other
facts pertinent to the existence and amount of assets from which distributions
to Members might properly be paid.
 
12.4       Fiduciary Duty; Waiver.
 
12.4.1   To the extent that, at law or in equity, a Covered Person has duties
(including fiduciary duties) and liabilities relating thereto to the LLC or to
any other Covered Person, a Covered Person acting under this Agreement shall not
be liable to the LLC or to any other covered Person for its good faith reliance
on the provisions of this Agreement.
 
12.4.2   In accordance with Section 17005(d) of the Act, the Members hereby
waive any and all fiduciary duties of the Manager to the LLC and to the Members
of the LLC as may otherwise be provided by Section 17153 of the Act.
 
12.4.3   Unless otherwise expressly provided herein, whenever a conflict of
interest exists or arises between Covered Persons, the Covered Person shall
resolve such conflict of interest in good faith, considering in each case
(a) the relative interests of each party (including its own interests) in such
conflict, agreement, transaction or situation, (b) the benefits and burdens
relating to such interests, (c) any customary or accepted industry practices,
(d) any applicable generally accepted accounting practices or principles, and
(e) in the case of any transaction, the terms of similar transactions among
unrelated third parties.  In the absence of bad faith or a breach of this
Agreement by the Covered Person, the resolution, action or terms so made, taken
or provided by the Covered Person shall not constitute a breach of any duty or
obligation of the Covered Person at law or in equity or otherwise.
 
12.5       Indemnification by the LLC.
 
To the fullest extent permitted by applicable law, a Covered Person shall be
entitled to indemnification from the LLC for any loss, damage or claim
(including reasonable legal fees) incurred by such Covered Person by reason of
any act or omission performed or omitted by such Covered Person in good faith on
behalf of the LLC and in a manner reasonably within the scope of authority
conferred on such Covered Person by this Agreement, except that no Covered
Person shall be entitled to be indemnified in respect of any loss, damage or
claim incurred by such Covered Person (a) by reason of fraud, willful misconduct
or gross negligence with respect to such acts or omissions or (b) in breach of
the Agreement; provided, however, that any indemnity under this Section 12.5
hereof shall be provided out of and to the extent of LLC assets only, and no
Covered Person shall have any personal liability on account thereof.
 
12.6       Indemnification Procedure.
 
Any person asserting a right to indemnification under Section 12.5 hereof shall
so notify the Manager, in writing pursuant to the notice requirements of
Section 14.11 hereof.  With respect to those claims governed by Section 12.5
hereof, the Manager shall be entitled to control the defense or prosecution of
such claim or demand in the name of the indemnified person.  The parties hereto
shall cooperate in the prosecution or defense against any claims and shall
furnish such records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may reasonably be
requested in connection therewith.

 
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12.7       Expenses.
 
To the fullest extent permitted by applicable law, expenses (including legal
fees) incurred by a Covered Person in defending any claim, demand, action, suit
or proceeding shall, from time to time, be advanced by the LLC prior to the
final disposition of such claim, demand, action, suit or proceeding upon receipt
by the LLC of an undertaking by or on behalf of the Covered Person to repay such
amount if it shall be determined that the Covered Person is not entitled to be
indemnified as authorized in Section 12.5 hereof.
 
ARTICLE XIII - REQUIRED ARBITRATION OF DISPUTES
 
Any dispute, claim, controversy or action (collectively “Dispute”) arising
directly or indirectly out of or in any way relating to this Agreement shall be
administered and fully and finally resolved before JAMS in Los Angeles,
California, pursuant to its Comprehensive Arbitration Rules and Procedures in
accordance with the provisions set forth below:
 
13.1       Reference; Rules and Procedures.
 
Such dispute shall be resolved by a single arbitrator appointed in accordance
with said Rules and Procedures.  The Members consent that any process or notice
of motion or other application to any court, and any paper in connection with
arbitration, may be served by certified mail, return receipt requested or by
personal service or in such other manner as may be permissible under the rules
of the applicable court or arbitration tribunal, provided a reasonable time for
appearance is allowed.  Pending the arbitration award, the Members shall have
all rights to provisional remedies which they would have at law or equity,
notwithstanding the existence of this agreement to arbitrate.  The arbitrators
shall have no power to alter or modify any express provision of this Agreement
(all of which provisions are hereby incorporated by reference into this
arbitration provision) or to render an award which has the effect of altering or
modifying any express provision hereof, provided, however, that any application
for reformation of the contract shall be made to the arbitrators and not to any
court and the arbitrators shall be empowered to determine whether valid grounds
for reformation exist.
 
13.2       Confidentiality.
 
The Members shall maintain the confidential nature of the arbitration proceeding
and any award, including the hearing, except as may be necessary to prepare for
or conduct the arbitration hearing on the merits, or except as may be necessary
in connection with a court application for a preliminary remedy, a judicial
challenge to an award or its enforcement, or unless otherwise required by law or
judicial decision.  To the extent that any Member seeks injunctive or other
preliminary relief, a stay or provisional remedy, confirmation of an award or
any other judicial intervention, that Member shall use its best effort to have
any such submission filed under seal, and to ensure that any related documents
shall be designated and treated as a “Sealed Document.”  To the extent the court
permits such sealing, all papers and documents filed under seal shall be filed
in sealed envelopes and shall remain under seal until such time as the court, or
any court of competent jurisdiction, orders otherwise.  Such Sealed Documents
shall be identified with the caption of this action and a general description of
the sealed contents, and shall bear the following statement which should also
appear on the sealed envelope:

 
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“CONFIDENTIAL - SUBJECT TO PROTECTIVE ORDER
 
Contents are confidential and are subject to a court ordered protective
order governing the use and dissemination of such contents.”
 
The clerk of the court shall maintain such Sealed Documents separate from the
public records, intact and unopened except as otherwise directed by the
court.  Such Sealed Documents shall be released by the clerk of the court only
upon further order of the court.
 
ARTICLE XIV - MISCELLANEOUS
 
14.1       Law Governing.
 
This Agreement shall be governed by and construed in accordance with the laws of
the State of California applicable to contracts made and to be performed
entirely therein.
 
14.2       Complete Agreement.
 
This Agreement and the Articles constitute the complete and exclusive statement
of agreement among Members relating to the LLC.  This Agreement and the Articles
supersede all prior written and oral statements and agreements by and among
Members and no representation, statement, or condition or warranty not contained
in this Agreement or the Articles will be binding on the Members or have any
force or effect whatsoever.
 
14.3       Binding Effect.
 
Subject to the provisions of this Agreement and the Act relating to
transferability, this Agreement shall be binding and inure to the benefit of
Members, and their respective executors, administrators, heirs, successors and
permitted assigns.
 
14.4       No Third Party Beneficiary.
 
This Agreement is made solely and specifically among and for the benefit for the
LLC and the parties hereto, and their respective successors and permitted
assigns subject to the express provisions hereof relating to successors and
permitted assigns, and no other Person will have any rights, interest, or claims
hereunder or be entitled to any benefits under or on account of this Agreement
as a third party beneficiary or otherwise.  This Agreement is not intended for
the benefit of a creditor who is not a Member and does not grant any rights to
or confer any benefits on any Person who is not a Member, Manager, officer, or
agent of the LLC.
 
14.5       Gender and Number in Nouns and Pronouns.
 
Common nouns and pronouns will be deemed to refer to the masculine, feminine,
neuter, singular and plural, as the identity of the person or persons, firm or
corporation may in the context require.  The singular shall include the plural
and the masculine gender shall include the feminine and neuter, and vice versa,
as the context requires.  Any reference to the Code, the Act, or statutes or
laws will include all amendments, modifications, or replacements of the specific
sections and provisions concerned.

 
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14.6       Headings.
 
All headings herein are inserted only for convenience and ease of reference and
are not to be considered in the construction or interpretation of any provision
of this Agreement.
 
14.7       References in This Agreement.
 
Numbered or lettered articles, sections and subsections herein contained refer
to articles, sections and subsections of this Agreement unless otherwise
expressly stated.
 
14.8       Exhibits.
 
All Exhibits attached to this Agreement are incorporated and shall be treated as
if set forth herein.
 
14.9       Severability.
 
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under the present or future laws effective during the term of this
Agreement, such provision will be fully severable.  This Agreement will be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part of this Agreement; and the remaining provisions of
this Agreement will remain in full force and effect and will not be affected by
the illegal, invalid, or unenforceable provision or by its severance from this
Agreement.  Furthermore, in lieu of such illegal, invalid, or unenforceable
provision, there will be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and enforceable.
 
14.10     Additional Documents and Acts.
 
Each Member agrees to execute and deliver such additional documents and
instruments and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions,
and conditions of this Agreement and the transactions contemplated hereby.
 
14.11     Notices.
 
In order to be effective all notices, consents, approvals, disapprovals and
other communications (“Notices”) required or permitted by this Agreement must be
in writing and either (a) sent by telegram or telecopy (or similar facsimile),
or (b) placed in the United States mail, certified with return receipt
requested, properly addressed and with the full postage prepaid, or
(c) personally delivered, and in all cases other than telegram or telecopy (or
similar facsimile), signed.  Notice shall be deemed received and effective on
the earliest of (x) the date actually received, or (y) two business days after
being mailed as aforesaid, or (z) 24 hours after being sent by telegram or
telecopy (or similar facsimile).  Each Member’s address, telephone number and
facsimile number for the purpose of receiving Notice is set forth on Exhibit A
hereto.  Any Member may change its address, telephone number or facsimile number
for Notice purposes by giving Notice in the manner described in this
Section 14.11, provided that such change of address shall not be effective until
10 days after notice of the change.
 
14.12     Amendments.
 
14.12.1   In addition to amendments specifically authorized herein, but subject
to Section 6.8 hereof, any and all amendments to this Agreement may be made from
time to time only by agreement of the Class A Members having an aggregate
Percentage Interest greater than fifty percent (50%) of the aggregate Percentage
Interests held by the Class A Members.

 
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14.12.2   In addition to other amendments authorized herein, amendments may be
made to this Agreement from time to time by the Manager, without the consent of
any Member: (a) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Agreement that are not inconsistent with the provisions of this Agreement; (b)
to delete or add any provision of this Agreement required to be so deleted or
added by any federal or state official, which addition or deletion is deemed by
such official to be for the benefit or protection of all of the Members; and (c)
to take such actions as may be necessary (if any) to insure that the LLC will be
treated as a partnership for federal income tax purposes.
 
14.12.3   In making any amendments, there shall be prepared and filed by, or
for, all of the Members or the Managers, as the case may be, such documents and
certificates as may be required under the Act and under the laws of any other
jurisdiction applicable to the LLC.
 
14.13     Multiple Counterparts.
 
This Agreement may be executed in several counterparts, each of which will be
deemed an original but all of which will constitute one and the same instrument.

 
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IN WITNESS WHEREOF, the undersigned have executed this Second Amended and
Restated Operating Agreement to be effective as of October 1, 2011.
 

 
BELLA ROSE, LLC, a
 
California limited liability company
     
By:
PEOPLE’S LIBERATION, INC.
 
Its:
Sole Member

 

 
By:
/s/ Colin Dyne    
Colin Dyne,
 
Its:
Chief Executive Officer

 

 
TENNMAN WR-T, INC., a
 
Delaware corporation
     
By:
/s/ Justin Timberlake    
Name:
 
Its:
 

 
S-1

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EXHIBIT A
 
WILLIAM RAST LICENSING, LLC
Members’ Names, Addresses and Interests
 
Member’s Name
 
Member’s Address
 
Member’s
Capital
Account*
 
Class of
Membership
Interest
 
Member’s
Percentage
Interest
                     
Bella Rose, LLC
 
c/o People’s Liberation, Inc.
150 West Jefferson Blvd.
Los Angeles, CA 90007
Attn: Colin Dyne
  $ (156,645 )
Class A
    82 %                        
Tennman WR-T, Inc.
 
c/o Al Gossett
1900 Covington Pike
Memphis, TN 38128
  $ 0  
Class B
    18 %                        
TOTAL
      $ (156,645 )       100.0 %

 
*  Determined as of December 31, 2010.
 
Exhibit A
 
 
 

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