Limited Liability Company Agreement

LIMITED LIABILITY COMPANY AGREEMENT


OF


BET STUDIO LLC


a Delaware Limited Liability Company


Adopted as of April 11, 1997


LIMITED LIABILITY COMPANY AGREEMENT
OF
BET STUDIO LLC
A DELAWARE LIMITED LIABILITY COMPANY


This Limited Liability Company Agreement of BET STUDIO LLC, a Delaware limited liability company (the "Company"), dated as of April 11, 1997 (this "Agreement"), is entered into, executed and agreed to, for good and valuable consideration, by and among the Members (as defined below).


WHEREAS, G-III Leather Fashions, Inc. ("G-III"), a New York corporation, and Black Entertainment Television, Inc. ("BET"), a Delaware corporation, (G-III and BET being referred to collectively as the "Parties") desire to form a joint venture in the form of a Delaware Limited Liability Company to produce BET-branded apparel and accessories that will cater to the African-American and urban consumer.


NOW, THEREFORE, in consideration of the mutual promises of the Parties, and of good and valuable consideration, the receipt of which are hereby acknowledged, it is mutually agreed by and among the Parties as follows:


ARTICLE I
CONSTRUCTION AND DEFINITIONS


1.1 CONSTRUCTION. Words used in this Agreement, regardless of the number or gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context shall require.


1.2 REFERENCES. As used in this Agreement, unless expressly stated otherwise, references to "including" mean "including, without limitation." Unless otherwise specified, all references in this Agreement to Articles, Sections, Exhibits, Schedules or paragraphs, are deemed references to the corresponding Articles, Sections, Exhibits, Schedules or paragraphs in this Agreement.


1.3 HEADINGS. The headings of the Articles, Sections, Schedules and Exhibits of this Agreement are included for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction or interpretation hereof.


1.4 DEFINITIONS. Terms used herein, but not otherwise defined herein, shall have the following meanings:


"Affiliate" means any Person that directly or indirectly controls, is controlled by, or is under common control with any other Person. For the purposes of this definition, "control" means the power to direct the management and affairs of a Person or to vote 20 percent or more of securities or other equity interests having ordinary voting power of a Person;


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"Act" means the Delaware Limited Liability Company Act, 6 Del. C. 'SS' 18-101, et seq., and any successor statute, as amended from time to time;


"Agreement" has the meaning given that term in the introductory paragraph hereof;


"Board of Managers" shall mean those representatives of the Parties selected to manage the business and affairs of the Company (also referred to as the "Board");


"Business Affairs Services" shall have the meaning given that term in Section 7.1;


"Business Day" means any day other than a Saturday, a Sunday or a holiday on which national banking associations in the State of New York generally will not send wire transfers;


"Capital Account" shall have the meaning given that term in Section 4.5;


"Capital Contribution" means, with respect to any Member, the aggregate amount of cash and the agreed fair market value or other binding obligations to contribute cash or property or perform services or any other valuable consideration, if any, transferred to the Company by such Member in accordance with Article IV hereof.;


"Certificate" shall have the meaning given that term in Section 2.1;


"Code" means the Internal Revenue Code of 1986 and any successor statute, as amended from time to time;


"Company" means BET STUDIO LLC, a Delaware limited liability company;


"Covered Person" means any Member, Manager, Affiliate of a Member, or any officers, directors, shareholders, partners, employees, representatives, advisors or agents of a Member or their respective Affiliates or any officers, employees, representatives, advisors or agents of the Company;


"Default Interest Rate" means a rate per annum equal to the lesser of (a) a varying rate per annum that is equal to the interest rate published by the WALL STREET JOURNAL in its "Money Rates" (or equivalent) section from time to time as the prime rate, with adjustments in that varying rate to be made on the same date as the publication date of any change in that rate plus 2 percent, and (b) the maximum rate permitted by applicable law;


"Dispose," "Disposing" or "Disposition" means a sale, assignment, transfer, lease, exchange, or other disposition (including dispositions by operation of law), or the acts thereof;


"Fiscal Year" means the period commencing on the date hereof and ending on January 31, 1998, and each 12-month period thereafter;


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"General Interest Rate" means a rate per annum equal to the lesser of (a) a varying rate per annum that is equal to the interest rate published by the WALL STREET JOURNAL in its "Money Rates" (or equivalent) section from time to time as the prime rate, with adjustments in that varying rate to be made on the same date as the effective date of any change in that rate, and (b) the maximum rate permitted by applicable law;


"Investment" means any share purchase, capital contribution or loan to, or advance (other than advances in the ordinary course of business) to, any Person other than a Controlled Affiliate of the Company;


"Lending Member" shall have the meaning given that term in Section 4.4;


"Licensed Marks" shall have the meaning given the term in Section 2.5;


"Manager" shall mean any member of the Board of Managers;


"Member" means any Person who has been admitted to the Company as a member in accordance with this Agreement, but does not include any Person who has ceased to be a Member in the Company, or, if other than an individual, been dissolved;


"Membership Interest" means the interest of a Member in the Company, including its Capital Account and its rights to a share of the profits and losses of the Company, to receive distributions (liquidating or otherwise), information and the right to consent to or approve actions by the Company;


"Person" means any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company, or other legal entity or organization;


"Products" shall have meaning given the term at Section 2.5;


"Securities Act" means the Securities Act of 1933, as amended;


"Sharing Ratio" with respect to any Member means the fraction (expressed as a percentage), as set forth on Exhibit A opposite such Member's name;


"Third Person" means a Person other than a Member, or any of their Affiliates;


"Treas. Reg." refers to those regulations promulgated by the U.S. Department of the Treasury pursuant to authority of the Code or any revenue law of the United States; and


"Unanimous Approval" means the unanimous approval or consent of all Members or Managers.


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ARTICLE II
ORGANIZATION


2.1 FORMATION. If not already accomplished before the date hereof, the Members shall promptly file the Certificate of Formation (the "Certificate") in accordance with the Act. The Members hereby agree to continue the Company as a limited liability company under and pursuant to the Act and agree that the rights, duties and liabilities of the Members shall be as provided in the Act, except as otherwise provided herein.


2.2 QUALIFICATION IN OTHER JURISDICTIONS. The Board of Managers shall cause the Company to be qualified, formed or registered under assumed or fictitious name statutes or similar laws in any jurisdiction in which the Company transacts business in which such qualification, formation or registration is required or desirable. The Board of Managers shall execute, deliver and file, or cause the execution, delivery or filing of, any certificates (and any amendments or restatements thereof) necessary for the Company to qualify to do business in a jurisdiction in which the Company may wish to conduct business.


2.3 NAME. The name of the Company is "BET STUDIO LLC," and all Company business may be conducted in that name or any other name that complies with applicable law as the Board of Managers may select from time to time.


2.4 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE IN THE UNITED STATES; OTHER OFFICES. The registered office of the Company and the name and address of the registered agent of the Company in the State of Delaware required by the Act shall be at c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801 or any other office (which need not be a place of business of the Company) as the Board of Managers may designate from time to time in the manner provided by law. The principal office of the Company in the United States shall be at 345 West 37th Street, New York, New York, or any such other place as the Board of Managers may designate from time to time, which need not be in the State of Delaware, and the Company shall maintain records there as required by the Act. The Company may have such other offices as the Board of Managers may designate from time to time.


2.5 PURPOSES. The purposes for which the Company is organized are to, including without limitation, manufacture, distribute and sell men's, women's and children's apparel and accessories (the "Products") bearing the marks "Black Entertainment Television," "BET" and other marks utilized by BET or its affiliates (the "Licensed Marks"), or other marks developed by the Company, and to transact any or all lawful business for which limited liability companies may be organized under the Act.


2.6 TERM. The initial term of the Company commenced on April 10, 1997, the date the Certificate was filed with the Secretary of State of the State of Delaware and shall continue until April 11, 2007, unless (i) such term shall be extended by mutual agreement of the Parties or (ii) the Company shall be dissolved before such date in accordance with the provisions of this Agreement.


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ARTICLE III
MEMBERS; MEMBERSHIP INTERESTS;
DISPOSITIONS OF MEMBERSHIP INTERESTS


3.1 MEMBERS. The Members of the Company are the entities set forth on Exhibit A, each of which has, as of the date hereof, the Sharing Ratio and Capital Account balance stated thereon.


3.2 RESTRICTIONS ON THE DISPOSITION OF A MEMBERSHIP INTEREST. No Membership Interest may be disposed or transferred, in whole or part, unless the terms and conditions of this Section 3.2 have been satisfied. Any disposition or transfer or reported disposition or transfer not made in accordance with this Section 3.2 will be null and void. Anything in this Agreement to the contrary notwithstanding, no Person who is an assignee or transferee of a Membership Interest shall be admitted to the Company as a substitute Member absent the Unanimous Approval of the Board of Managers. Anything in this Agreement to the contrary notwithstanding, no Member may dispose of one or more Membership Interests or interests in his Sharing Ratio without the unanimous prior written consent of the Board of Managers, which consent will be given in its sole and absolute discretion.


ARTICLE IV
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS


4.1 INITIAL CONTRIBUTIONS OF MEMBERS. Contemporaneously with the execution of this Agreement, the Members shall make an initial Capital Contribution as set forth on Exhibit A, and the Sharing Ratios and initial Capital Contribution of the Members shall be as provided in Exhibit A.


4.2 ADDITIONAL CONTEMPLATED CONTRIBUTIONS. The Members agree to provide additional Capital Contributions in an amount up to $1,000,000 each, at such time or times on a pari passu basis as shall be determined by G-III, in consultation with BET, in connection with G-III's provision of Business Affairs Services (as hereinafter defined). Exhibit A shall be amended from time to time to reflect any additional Capital Contributions made by the Members. Except as set forth in this Section 4.2, no Member shall be required or permitted to make any additional Capital Contributions unless approved by the Board.


4.3 RETURN OF CONTRIBUTIONS. A Member is not entitled to the return of any part of its Capital Contributions or to be paid interest in respect of either its Capital Account or its Capital Contributions.


4.4 OTHER OBLIGATIONS OF MEMBERS. Each Member agrees that it will cause to be issued one or more letters of credit in an aggregate amount equal to 50% of the amount determined by the Board to be necessary to support the business of the Company. If the Company does not have sufficient cash to pay its obligations, a Member ("Lending Member") that may agree to do so, with the Unanimous Approval


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of the Board of Managers, may advance all or part of the needed funds to or on behalf of the Company. An advance described in this Section 4.4 constitutes a loan from the Member to the Company, which shall bear interest at the General Interest Rate from the date of the advance until the date of payment, shall contain such other terms and conditions as approved by the Board and shall not be deemed a Capital Contribution.


4.5 CAPITAL ACCOUNTS. A separate "Capital Account" (herein so called) shall be maintained for each Member for the full term of the Agreement in accordance with the capital accounting rules of Treas. Reg. 'SS' 1.704-1(b)(2)(iv). Each Member shall have only one Capital Account, regardless of the number or classes of Membership Interests in the Company owned by such Member and regardless of the time or manner in which such interests were acquired by such Member. Pursuant to the basic rules of Treas. Reg. 'SS' 1.704-1(b)(2)(iv), the balance of each Member's Capital Account shall be:


(a) Increased by the amount of money contributed by such Member
(or such Member's predecessor-in-interest) to the capital of the Company
and decreased by the amount of money distributed to such Member (or such
Member's predecessor-in-interest);


(b) Increased by the fair market value (determined without regard
to Section 7701(g) of the Code) of each property contributed by such
Member (or such Member's predecessor-in-interest) to the capital of the
Company (net of liabilities secured by such property that the Company is
considered to assume or take subject to under Section 752 of the Code)
and decreased by the fair market value (determined without regard to
Section 7701(g) of the Code) of each property distributed to such Member
(or such Member's predecessor-in-interest) by the Company (net of
liabilities secured by such property that such Member is considered to
assume or take subject to under Section 752 of the Code);


(c) Increased by the amount of each item of Company profit
allocated to such Member (or such Member's predecessor-in-interest);


(d) Decreased by the amount of each item of Company loss
allocated to such Member (or such Member's predecessor-in-interest); and


(e) Otherwise adjusted in accordance with the other capital
account maintenance rules of Treas. Reg. 'SS' 1.704-1(b)(2)(iv).


ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS


5.1 ALLOCATIONS. (a) Except as otherwise provided herein or unless another allocation is required by Section 704(b) of the Code and Treas. Reg. ss. 1.704-1(b) (including, but not limited to, minimum gain chargebacks, qualified income offsets, and nonrecourse deductions), for purposes of determining the Members' Capital Accounts, all items of income, gain, loss, deduction and credit shall be allocated among the


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Members pro rata in accordance with their Sharing Ratios in effect for the period during which such items accrue. For purposes of computing the amount of each item of income, gain, deduction or loss, the determination, recognition and classification of such item shall be the same as its determination, recognition and classification for federal income tax purposes, unless otherwise required by Section 704(b) of the Code.


(b) Except to the extent such item is subject to allocation under Section 704(c) of the Code or Section 704(c) principles as contemplated under Section 704(b) of the Code, each item of income, gain, loss, deduction and credit, as determined for federal and other income tax purposes, shall be allocated in the same manner as such item was allocated under Section 5.1(a), above.


(c) All items of income, gain, loss, deduction and credit allocable to any Membership Interest that may have been transferred shall be allocated between the transferor and the transferee based on the portion of the calendar year during which each was recognized as owning that Membership Interest, without regard to the results of Company operations during any particular portion of that calendar year and without regard to whether cash distributions were made to the transferor or the transferee during that calendar year; provided, however, that this allocation must be made in accordance with a method permissible under Section 706 of the Code and the regulations thereunder.


5.2 DISTRIBUTIONS. From time to time (but at least once each Fiscal Year) the Board of Managers shall determine in its reasonable judgment to what extent (if any) the Company's cash on hand exceeds its current and anticipated needs, including for operating expenses, debt service, acquisitions and a reasonable contingency reserve. If the Board of Managers determines that an excess exists, the Board of Managers shall direct the Company to make a distribution to the Members, in accordance with their Sharing Ratios, in an amount in cash equal to that excess.


ARTICLE VI
MANAGEMENT


6.1. BOARD OF MANAGERS. (a) Except as provided in Article VII hereof, the business and affairs of the Company shall be managed under the direction of the Board of Managers (the "Board"), and the Board shall have all power and authority to manage, and direct the management and the business and affairs of, the Company. Any power not delegated pursuant ...