Complaint Phigogam v. JWOWW (w/ all 21 Exhibits)

8/6/2019 Complaint Phigogam v. JWOWW (w/ all 21 Exhibits)

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IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

(1) ERIC BRAMLETT,

(2) WESLEY COX, and

(3) PAUL RUDNICKI,

Individually and d/b/a PHIGOGAM,

LLC, an unincorporated common

law partnership,

Plaintiffs,

vs.

(1) JENNI FARLEY a/k/a JWOWW;

(2) JENNY FARLEY, LLC, a New

York limited liability company;

(3) JWOWW BEAUTY, LLC, a New

York limited liability company;

(4) AUSTRALIAN GOLD, LLC, an

I n d i a n a l i m i t e d l i a b i l i t y

company; and

(5) NEW SUNSHINE, LLC, an Indiana

limited liability company,

Defendants.

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VERIFIED COMPLAINT

CIV-11-898-C

Case 5:11-cv-00898-C Document 1 Filed 08/10/11 Page 1 of 23


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1. The Plaintiffs, Eric Bramlett, Wesley Cox, and Paul Rudnicki, were college

friends, having attended the University of Oklahoma together. Collectively, Cox, Rudnicki

and Bramlett will be referred to as Plaintiffs. Plaintiffs each contributed to the ideas and

business plans at issue in this litigation. Each of them brought a particular bit of business

savvy and/or experience with the tanning industry to the table that resulted in a synergistic

partnership. The resulting concepts, business plans, and product designs were so well

conceived that they were appropriated whole cloth by Defendants and have been wildly

successful. In fact, Defendant Jenni Farley claimed that the tanning lotion, marketed in a

bottle designed by Plaintiff Cox and promoted by her, set a record as the fastest tanning

lotion to sell 115,000 bottles in only five months. See Exhibit 1, March 18, 2011 tweets

posted by Farley on her Twitter account. In the days before this Complaint was filed,

Farleys Facebook page featured her holding two bottles of tanning lotion featuring designs

created by Plaintiffs. See Figure 1, below.

2. Plaintiff Wesley Cox is a graphic designer who does business as Winston

Media, LLC. Cox currently resides in Norman, Oklahoma, but during earlier times relevant

to this litigation, he resided in Tulsa, Oklahoma. Cox conceived, among other aspects of the

Plaintiffs intellectual property, the design of the bottle in which tanning lotions bearing the

name JWOWW are currently sold by Australian Gold.

3. Plaintiff Paul Rudnicki owns tanning salons in the Oklahoma City, Oklahoma

metropolitan area. Rudnicki purchased the first tanning salon in 2003, shortly after



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graduating from college. He purchased a second tanning salon in 2007, and a third in 2009.

Currently, Rudnicki is working on the purchase of a fourth salon. Rudnicki has, through

hands-on management and day-to-day operation of these three tanning salons become

intimately familiar with the tanning industry and tanning lotions. Rudnicki resides in

Norman, Oklahoma.

Figure 1: Farleys Facebook Page as of July 27, 2011



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4. Plaintiff Eric Bramlett is an entrepreneur and internet marketing expert. In

2006, he launched an internet based real estate brokerage that he currently operates. In 2009,

he launched a real estate web applications and development firm, Displet.com, that has

expanded to 21 markets in 24 months. Bramlett resides in Austin, Texas.

5. Together, Plaintiffs started a website to sell tanning lotions direct to the public.

Plaintiffs direct-to-the-public website, Tantans.com, sold its first tanning lotion on October

22, 2007. In operating Tantans.com, Plaintiffs realized that, to increase their margins, they

needed to have their own line of tanning lotions, rather than simply carrying brands produced

by others. The profit margins selling lotions produced by others were simply not large

enough to make the Tantans.com venture very profitable, but with their own line, they could

put a larger portion of the sale price of each tanning lotion bottle in their own pockets.

Plaintiffs wanted to avoid a position as a mere re-seller of tan lotions and to circumvent

entrenched industry positions.

6. Thus, in 2009, Plaintiffs began discussing the particulars regarding their own

line of tanning products. Fairly early in the discussions, they decided that having a celebrity

tie-in would be desirable. In considering possible celebrity associations, they made a

connection between the reality show JERSEY SHORE on MTV (Jersey Shore) and

tanning products. Jersey Shore premiered in December 2009, and three seasons have aired

since that time. The fourth season premiered on August 4, 2011. The life of Jersey Shore

cast members revolves around a daily routine involving working out at the gym, tanning, and



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doing their laundry. This routine has given rise to the acronym GTL, which stands for

gym, tan, laundry, and this acronym is well known to Jersey Shore fans. See e.g., Farleys

August 4, 2011 Facebook post and Tweet in which JWOWW advises her fans to Ask for

some Jwoww Black Bronzer at your local tanning salon to get the T down in GTL.... Since

tanning was an integral part of the fame of Jersey Shore and its cast members, Plaintiffs

decided to approach cast members about endorsing their independent line of tanning lotions.

7. Plaintiffs agreed that they would each have an equal share in the proceeds from

their own line of tanning products. Each Plaintiff is a 1/3 owner of the business concept, the

intellectual property, and all other valuable facets of the business enterprise or any resulting

endeavor. In dealing with this matter, Plaintiffs did business as Phigogam, LLC, though that

entity was never formally organized as a limited liability company. See, e.g., Exhibit 2, at

1.10 (naming Phigogam, LLC a member of JWOWW Beauty, LLC, and an owner of 49%

of that entity) and p.43 (Plaintiff Cox signing as managing member of Phigogam, LLC).

Therefore, Plaintiffs are de facto members of a common law partnership doing business

under the name Phigogam, LLC.

8. Initially, since Mike The Situation Sorrentino and Paul Pauly D

Delvecchio were two of the best known Jersey Shore regulars, Plaintiffs first approached

them with the idea. However, Plaintiffs did not receive any initial response from Sorrentino

and Delvecchio. Instead of making additional efforts to interest Sorrentino or Delvechhio,

Plaintiffs re-examined their approach and decided that a female spokesperson would actually



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be preferable. They considered approaching Nicole Snooki Polizzi, but they felt that her

look was not what they needed. Instead, they decided on approaching Defendant Jenni

Farley, also known as JWOWW. Her look and image was what Plaintiffs had in mind for

promotion of their line of tanning lotions.

9. Defendant Jenni Farley is also a regular cast member of Jersey Shore. When

not filming Jersey Shore in New Jersey, Farley resides in New York City, New York. She

is the owner of a U.S. Trademark application Ser. No. 77/938,448 for JWOWW in which she

is represented by Rudolph (Rudy) Fusco. Farley owns or controls two limited liability

companies named as Defendants herein, to wit: JENNY FARLEY, LLC, a New York limited

liability company; and JWOWW BEAUTY, LLC, a New York limited liability company.

Plaintiffs will reference Farley along with the two limited liability companies she owns or

controls in this Complaint as Defendant Farley Defendants unless one of them is more

specifically referenced. When Farley alone is mentioned, Plaintiffs are referencing

individual Defendant Jenni Farley.

10. Defendant Australian Gold, LLC (Australian Gold) is an Indiana limited

liability company with its principal place of business ironically located at 6270 Corporate

Drive, Indianapolis, IN 46278-2900. Australian Gold manufactures and distributes a variety

of well-known tanning products. New Sunshine Enterprises, LLC, (New Sunshine) which

is a holding company set up to operate multiple smaller tanning companies purchased and

aggregated under common ownership. Australian Gold is a subsidiary of New Sunshine.



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Many of Plaintiffs emails were with individuals who work for New Sunshine, but that entity

is synonymous with the businesses publicly known as Australian Gold. When referencing

both Australian Gold and New Sunshine herein, they will be called Corporate Defendants.

11. Plaintiffs first contacted Farley through her then-agent and boyfriend, Tom

Lippolis. The initial approach to Lippolis was via email on February 3, 2010. See Exhibit 3,

email from Plaintiff Cox to Lippolis. That same day, Plaintiff Cox talked with Lippolis on

the phone, then forwarded a proposal to Lippolis outlining the business proposition.

See Exhibit 4, February 3, 2010 business proposal on Phigogam letterhead. The initial

proposal from Plaintiffs was for Farley to receive 20% of gross royalties. Lippolis responded

positively to the concept presented by Plaintiffs, but he indicated the percentage proposed

by Plaintiffs was not agreeable. See Exhibit 5, at p. 1, a February 6, 2010 email from Lippolis

to Plaintiff Cox, in which Lippolis asserted that 20% royalties, no ownership etc is not going

to fly.

12. Shortly after these initial communications, Rudolph (Rudy) Fusco, the Farley

Defendants attorney, became involved in discussions. See, Exhibit 5 at p.2, a February 25,

2010 email from Fusco to Plaintiff Cox following on a teleconference between them.

On March 15, 2010 Fusco sent a proposed operating agreement for JWOWW Beauty, LLC

to Plaintiff Cox. Id. at p.4, a March 15, 2010 email from Fusco to Plaintiff Cox with the

operating agreement attached. As noted above, Plaintiff Cox, on behalf of Phigogam, LLC,

signed and sent the agreement back to Fusco. Id. at p.5, a March 29, 2010 email from



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Plaintiff Cox to Fusco with a copy sent to Lippolis; and Exhibit 2, the operating agreement

signed by Plaintiff Cox on behalf of Phigogam, LLC. In addition to returning an executed

copy of the JWOWW Beauty, LLC operating agreement, Plaintiffs sent a $225 check to

Fusco Law Group to pay the filing fee for JWOWW Beauty, LLC. See Exhibit 6, check

number 1031 dated April 15, 2010 drawn on the account of Tan Tans. Fusco used the funds

from this check to pay the filing fee for JWOWW Beauty, LLC. JWOWW Beauty, LLC

which was established about a month later on May 17, 2010 as a New York limited liability

company naming Fusco Law Group, PC as the recipient of process for the LLC.

13. Regarding the design of the bottle for the initial tanning lotion, Plaintiff Cox

sent four original proposed designs for a tanning lotion bottle to Farley care of Lippolis.

See Exhibit 7, July 11, 2010 email from Plaintiff Cox to Lippolis. Exhibit 7 includes color

versions of the four alternate designs prepared by Plaintiff Cox. Each of the four designs is

the subject of an issued United States copyright registration. See Exhibit 8, copyright

registration for Option One Black Gold; Exhibit 9, copyright registration for Option Two

Icy Black; Exhibit 10, copyright registration for Option Three Baller Gold; and

Exhibit 11, copyright registration for Option Four Royal Gold. The four design options

are reproduced side-by-side in Fig. 2, and they will be referenced collectively herein as

Original Copyrighted Works.



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Figure 2: Original Copyrighted Works



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14. Upon information and belief, Plaintiffs assert that Farley, or someone on her

behalf, made revisions to Plaintiffs designs, and they were transmitted back to Plaintiff Cox.

See Exhibit 12, July 15, 2010 email from Lippolis to Plaintiff Cox along with a color version

of the revised design. The revised design combines elements of, inter alia, Option Three

(banner shape and flat black background, for example) and Option Four (banner color and

contrasting text color on the banner, for example), creating a derivative work from at least

two of the Original Copyrighted

Works. The derivative work

created by Farley, or someone

on her behalf, is reproduced

in Fig. 3.

15. Plaintiff Cox took

the revisions by or on behalf of

JWOWW and polished them to

come up with the final design.

A copy of the final design was

transmitted to Defendant New

Sunshine, LLC with a copy to

Lippolis. See Exhibit 13, July

26, 2010 email from Cox toFigure 3: JWOWWs Derivative Work



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Figure 4: Final Bottle Design

Paula Ryan at New Sunshine, LLC along with a color version of the final design. The final

design is reproduced in Fig. 4. The final design represented in Fig. 4 will hereinafter be

referenced as Final Bottle Design.

16. Plaintiffs had identified and communicated with a couple of companies that

were capable of producing tanning lotions, and Plaintiffs had worked up plans to purchase

an initial allotment of the tanning lotion of around 20,000 bottles. See Exhibit 14, emails

r e l a t e d t o p o t e n t i a l

manufacturers of the tanning

lotion and regarding purchase of

an initial allotment.

17. In late July 2010

Lippolis, or someone else on

behalf of Farley Defendants

suggested to Plaintiffs the idea

of taking the concept to

A u s t r a l i a n G o l d .

See Exhibit 15, emails related to

a p p r o a c h t o C o r p o r a t e

Defendants. Plaintiffs were

receptive to this, and they



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worked with Lippolis to pitch the concept to Australian Gold, providing them with the

product designs as well as other input into the proposed marketing campaign and product

placement associated with their business plan. Plaintiffs sent their Final Bottle Design to

Corporate Defendants for their consideration. Exhibit 15 at p.3, a July 26, 2010 email from

Plaintiff Cox to Paula Ryan at New Sunshine with a copy to Lippolis. During a

teleconference on or about July 26, the Corporate Defendants personnel made it clear that

they were very interested in the business developed by Plaintiffs. Subsequently, Wes Broyles

from Australian Gold asked Plaintiff Cox for a hi resolution version of the Final Bottle

Design, which Plaintiff Cox did. Exhibit 16, August 2, 2010 emails among Plaintiff Cox and

Wesley Broyles at Australian Gold.

18. Lippolis and Farley were dating when Jersey Shore began filming in 2009, but

they broke up after Farley had a relationship with Paul DelVecchio, also known as Pauly D

(Pauly D), a fellow Jersey Shore cast member, during the filming of the shows third

season. The Farley-Lippolis breakup occurred during final negotiations with Australian

Gold, and it was acknowledged by Plaintiff Cox in an email to Farleys attorney, Rudy Fusco,

in which Cox asks if Lippolis will still be involved. See Exhibit 17, August 20, 2010 at 10:21

a.m. email from Plaintiff Cox to Fusco (Plaintiff Cox asking: Have you heard from Tom

recently? I have been unable to get in touch with him since the news broke about the big

breakup. I am assuming that he is no longer involved with the venture?).



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T h e a r t i c l e i s c u r r e n t l y a v a i l a b l e o n l i n e a t1

http://entertainment.blogs.foxnews.com/2011/01/21/jwowws-lawyer-blocked-nude-pix-a-l

ot-more-graphic-than-her-ex-admits/

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19. Lippolis is currently suing Farley claiming, among other things, that he

negotiated a tanning lotion contract on her behalf. See Exhibit 18, verified complaint filed

against Farley by Lippolis in New York State court.

20. Rudy Fusco is a New York attorney who represents Farley. Mr. Fusco

represented Farley both before and after she split with Lippolis. On information and belief,

Plaintifs assert that Fusco is currently representing Farley in her various litigation and/or

arbitration matters with Lippolis. See, for example, Exhibit 19, an article from a Fox News

related to a dispute between Farley and Lippolis about publication of nude pictures Lippolis

took of Farley while they were still a couple. The Fox article quotes Fusco speaking on1

Farleys behalf as her attorney.

21. Thereafter, both Fusco, on behalf of Farley, and Australian Gold ceased

meaningful communication with Plaintiffs regarding their agreement. Plaintiffs inquired

about the status of the deal, but no meaningful responses were received. See Exhibit 17.

Defendants have since refused to meaningfully communicate with Plaintiffs about the

agreement, and Defendants, instead, appropriated the entire deal to themselves and cut

Plaintiffs out of the picture. Plaintiffs were left with no option to vindicate their rights but

to file this suit.



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JURISDICTION AND VENUE

22. Jurisdiction and venue of this Court are properly invoked under 28 U.S.C.

1331, 1332, 1337, 1338, 1367, 1391(b) and (c) and 1400 for Plaintiffs claims arising

under 17 U.S.C. 101 et seq and related causes of action as more fully set forth below.

FIRST CAUSE OF ACTION

Copyright Infringement

23. Plaintiffs restate and incorporates herein by reference the preceding and

subsequent allegations of this Complaint.

24. Plaintiffs Original Copyrighted Works comprise original works of authorship

fixed in a tangible medium of expression.

25. Plaintiffs Original Copyrighted Works are registered with the United States

Copyright Office, and, as an owner and holder of copyright protection, has the exclusive

rights of reproduction, preparation of derivative works, distribution, and display of same.

17 U.S.C. 106.

26. Defendants copied, distributed and sold, without Plaintiffs consent or

permission, Plaintiffs works for Defendants commercial use and benefit, including without

limitation, for the purpose of financial gain and obtaining a competitive edge over Plaintiffs

and competing tanning lotion retailers.

27. By way of illustration, and not of limitation, Farley prepared a derivative work

from Plaintiffs Original Copyrighted Works, to wit, a modification that was transmitted by



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The Final Bottle Design is also properly the subject of a copyright registration2

naming Plaintiff Cox as an author. However, since the Final Bottle Design also incorporates

contributions from Farley, Plaintiffs did not seek copyright protection on this work, but they

are seeking an order of the Court requiring Farley to reasonably cooperate in the registration

of the final Bottle Design with the U.S. Copyright Office.

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Farley or on her behalf back to Plaintiffs. See Fig. 3. Thereafter, Plaintiff Cox prepared the

Final Bottle Design. See Fig. 4. The Final Bottle Design incorporated creative elements2

from the Original Copyrighted Works and from the modifications transmitted by, or on behalf

of, Farley back to Plaintiffs. Defendants then took and appropriated the Final Bottle Design

and used it commercially on a product known as JWOWW Black Bronzer, which Farley

is holding in the picture included in this Complaint as Fig. 1. Plaintiffs have valuable rights

in both the Original Copyrighted Works and in the Final Bottle Design, and these rights are

referenced herein as Plaintiffs Copyrights.

28. A large volume of the tanning lotion has been sold by Corporate Defendants

in bottles bearing the Final Bottle Design. Farley reported that 115,000 bottles of Black

Bronzer were sold in the first five months it was marketed. See Exhibit 1 (115,000 sold as

of March 16, 2011). That is a pace of around 23,000 bottles per month. At that pace, an

additional 115,000 bottles or so would have been sold between March 16, 2011 and the time

this Complaint is being drafted in early August 2011. Thus, total sales of the Black Bronzer

product have been around 230,000 bottles by early August 2011. For each of these bottles

of Black Bronzer, damages, including, but not limited to a reasonable royalty are owed

associated with use of Plaintiffs Copyrights.



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29. In addition to the Black Bronzer product, Defendants developed and marketed

a Private Reserve ultra toning black bronzer. See Exhibit 20, March 18, 2011 tweets by

Farley related to the Private Reserve Toning Bronzer. As can be seen from the picture

provided by Farley in her tweet, the design is clearly derived from, and a modification of, the

design used on the Black Bronzer bottle. In short, the Black Bronzer bottle had a black

background with a gold shield bearing a shaded gradient whereas the Private Reserve Toning

Bronzer has a gold-flecked background

and shield. The Private Reserve Toning

Bronzer bottle design is reproduced in

Fig. 5. Damages, including but not

limited to royalties, are also owed in

connection with the Private Reserve

Toning Bronzers infringement on

Plaintiffs Copyrights.

30. Defendants are introducing

a Skincare Kit on or about September

25, 2011, and the publicity materials for

these products show bottle product

packaging designs that also infringe on

Plaintiffs Copyrights. See Exhibit 21,Figure 5: Private Reserve Toning Bronzer



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press release from Corporate Defendants. Products in the Skincare Kit include a facial

cleanser, an eye therapy cream, and a color enhancing moisturizer. The Skincare Kit will be

marketed with a suggested retail price of $49.99. This expansion of Defendants product

slate, as currently shown in the release, will continue Defendants infringement of


SECOND CAUSE OF ACTION

Vicarious and/or Contributory Copyright Infringement

31. Plaintiffs restate and incorporate herein by reference the preceding and


32. In conjunction and/or in concert Defendants copied, reproduced, sold, and

distributed Plaintiffs protected artwork for Defendants financial gain.

33. Defendants knew or should have known that their conduct would infringe

Plaintiffs rights in their copyrighted works, to wit, Defendants had actual or constructive

knowledge regarding copying, reproducing, distributing and selling the subject works, and

Defendants failed or refused to stop same, which resulted in an infringement of protected

works of expression, and that said conduct would damage Plaintiffs.

34. Farley had intimate personal knowledge of the development of the copyrighted

works and of the derivative work on the Final Bottle Design. Corporate Defendants knew

or should have known that Plaintiffs authored works that were incorporated into the Final



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Bottle Design. After all, Australian Gold specifically asked Plaintiff Cox to provide a high

resolution version of the derivative work present on the Final Bottle Design. See Exhibit 16.

THIRD CAUSE OF ACTION

Breach of Contract



36. Plaintiffs formed agreement with Farley Defendants to split revenue and other

benefits from the sale and promotion of JWOWW-branded tanning lotions and associated

products. Plaintiffs were to receive 49%, and Farley Defendants would receive the

remaining 51%. In contravention of this agreement, Farley Defendants have kept all of the

revenue associated with sale and promotion of JWOWW-branded tanning lotions and

associated products.

37. Given the above-noted sales volume of circa 230,000 bottles of lotion with

Farley Defendants receiving $2.50 per bottle, Farley Defendants have already received nearly

$600,000 in compensation from Corporate Defendants, damaging Plaintiffs by at

least $300,000.

38. Farley Defendants have received not only cash, but also trips, co-promotion

value, and other items of value from Corporate Defendants. For example, earlier this year

Corporate Defendants provided Farley Defendants with a high-end tanning bed. See Fig. 6

(described by Farley as sick, which means, upon information and belief, that she really



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liked it). Plaintiffs seek their contractual

percentage of the fair market value of all

i t e m s o f v a l u e r e c e i v e d b y

Farley Defendants.

FOURTH CAUSE OF ACTION

Unjust Enrichment

39. P la in ti ffs res ta te a nd

incorporate herein by reference the

preceding and subsequent allegations of

this Complaint.

40. The money lost by Plaintiffs

constitutes a benefit conferred upon

Defendants by Plaintiffs. Under the

circumstances, and as a matter of equity,

Defendants were unjustly enriched by

their receipt of that money and other items of value, and Defendants should return that value

to Plaintiffs.

41. Defendants received and retained money and other items of value due and

owing to Plaintiffs. The retention of these monies by Defendants resulted in an increase in

Figure 6: March 25, 2011 Tweet About

Tanning Bed from Australian Gold



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Defendants profits and a harmed Plaintiffs. Defendants retention of such profits is unjust

and unwarranted for all of the reasons set forth herein.

FIFTH CAUSE OF ACTION

Accounting



43. Plaintiffs seek a declaration of amounts relevant to contractual and royalty

calculations. To this end, Plaintiffs seek a full accounting of sales associated with JWOWW-

branded tanning lotions and associated products and also of payments by Corporate

Defendants to Farley Defendants in connection with sales of JWOWW-branded tanning

lotions and associated products.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs pray for judgment against Defendants as follows and for the

following relief:

a. That Defendants, their subsidiaries, affiliates, parents, successors, assigns,

officers, agents, servants, employees, attorneys, and all persons acting in concert or in

participation with them, or any of them, be temporarily and preliminarily enjoined during the

pendency of this action, and permanently enjoined thereafter from further infringing




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b. That Defendants be directed to fully compensate Plaintiffs for all damages

attributable to Defendants direct, indirect, or contributory copyright infringement.

c. That Defendants be ordered to deliver to Plaintiffs all products that result from

Defendants copyright infringement.

d. That Defendants be required to account for all gains, profits, advantages, and

unjust enrichment derived from their violations of copyright law.

e. That Plaintiffs be awarded punitive damages.

f. That Plaintiffs be awarded damage consistent with Farley Defendants breach

of their agreement with Plaintiffs.

g. That Plaintiffs be awarded damages to rectify Defendants unjust enrichment.

h. That Plaintiffs be awarded reasonable attorneys fees.

i. That Plaintiffs be awarded the costs of suit, and an assessment of interest.

j. That Plaintiffs have such other, further, and different relief as the court deems

proper under the circumstances.



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Respectfully submitted,

/s/ Edward L. White

Edward L. White, OBA #16549

Edward L. White, P.C.

9301 Cedar Lake Ave., Suite 200

Oklahoma City, Oklahoma 73114

Telephone: 405-810-8188

Facsimile: 405-608-0971

Email: [email protected]

-and-

S. Alex Yaffe, OBA #21063

Eric Cavett, OBA #22098

FOSHEE & YAFFE LAW

P.O. Box 890420

Oklahoma City, Oklahoma 73189

Telephone: 405-264-5777

Facsimile: 405-632-3036

Email: [email protected]

[email protected]

ATTORNEYS FOR PLAINTIFFS

ATTORNEYS LIEN CLAIMED

JURY TRIAL DEMANDED



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1

JWOWW BEAUTY, LLCOPERATING AGREEMENT

This Agreement, dated , 2010 by and between undersigned Members (theInitial Members), is hereby adopted as the written Operating Agreement ofJWOWWBEAUTY, LLC who promptly after the formation shall be added as a party to theAgreement, and

WHEREAS, the undersigned presently own all of the Membership interest in theLLC; and

WHEREAS, this agreement does not contain any provisions inconsistent with theArticles of Organization of this Company, and

WHEREAS, the Members wish to set forth provisions relating to the business of

this limited liability company, the conduct of its affairs and the rights, powers, preferences,limitations or responsibilities of its Members, Managers, employees or agents, as the casemay be; and,

WHEREAS, this agreement sets forth the agreement among the parties as to theinternal affairs of the LLC and the conduct of its business;

NOW, THEREFORE, for good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged, the undersigned agree to be legally bound,agree as follows:

ARTICLE 1FORMATION

1.1 EFFECTIVE DATE OF AGREEMENTThe effective date of this Agreement (the Effective Date) shall be the date that the last ofthe Initial Members signs and dates this Agreement.

1.2 ENFORCEABILITY OF AGREEMENTOn the Effective Date and thereafter until the parties amend or terminate this Agreement, all

rights, duties and liabilities of the LLC and its Members shall be enforceable against the LLCand its Members in accordance with the terms of this Agreement.

Complaint Exhibit 2Page 1 of 43

Case 5:11-cv-00898-C Document 1-2 Filed 08/10/11 Page 1 of 43


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2

1.3 LLC FORMATION A. The Initial Members intend to form the LLC under the Limited Liability

Company Act of the State of New York and they have authorized the formation of thislimited liability company by an organizer who prepared, executed and filed the Articles ofOrganization with the New York Secretary of State, pursuant to the New York LimitedLiability Company Law.

B. Upon its formation, the LLC shall be a separate and distinct legal entity fromits Members.

1.4 LLC NAMEThe name of this Limited Liability Company isJWOWW BEAUTY, LLC.

1.5 PRINCIPAL PLACE OF BUSINESSThe Principal office of the LLC is in the State of New York, and shall be c/o The FuscoLaw Group, P.C. located at 1267 East Main Street, Riverhead, NY 11901. The Managers, ifany, or if none then the Members may change the LLCs principal place of business fromtime to time upon reasonable notice in writing to the Members. The LLC may have suchother offices, either within or without the State of New York, as the Members may designateor as the business of the LLC may require.

1.6 LLC DURATIONThe duration of the LLC shall be indefinite unless terminated sooner by operation of law orby unanimous agreement between the Members.

1.7 LLC PURPOSE A. Business Purpose:The Company is formed for the purpose of conducting

any lawful business and shall have all the powers set forth in Sec. 202(a) 202(q) of the NewYork Limited Liability Company Law.

1.8 LLC Powers

Except as expressly otherwise provided in this Agreement, the LLC shall have all powersprovided to LLCs under the LLC Act.




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3

1.9 LLC REGISTERED AGENT AND REGISTERED OFFICEA. The name and registered office address of the Registered Agent of this

Company is: Rudolph J. Fusco Jr. Esq. located at The Fusco Law Group, P.C. 1267 Eastmain Street, Riverhead, NY 11901 or such person or persons as designated by the Membersor by the Managing Members, if any, from time to time.

B. The Secretary of State of New York is designated as agent of this LLC uponwhom process against it may be served, and the post office address to which the Secretary ofState shall mail a copy of such process against the Company served upon him is: Rudolph JFusco Jr. Esq. C/O The Fusco Law Group, P.C. 1267 East Main Street, Riverhead, NY11901

1.10 IDENTITY OF MEMBERS

On the date of formation of the LLC, the Initial Members shall be the only Members of the

LLC. Additional Members shall be admitted to the LLC in accordance withArticle 5. Theinitial members of Provost LLC are;

1. Jenni Farley, LLC -51% Interest and Managing Member2. Phigogam, LLC- 49% Interest

427 S. Boston Ave. Suite 509Tulsa, OK 74103

1.11 LIMITED LIABILITY OF MEMBERS

No Member shall be personally liable to any third party for any debts, obligations or

liabilities of the LLC or of any other Member, solely by reason of his or her being a Memberof this Company, whether such debt arose in contract, tort or otherwise. However, suchMember shall be personally liable for the payment of his or her Capital Contribution or forany other matter which may be set forth in this Operating Agreement. A Member shall havethe option to waive such limitation of liability pursuant to 609 of the New York LimitedLiability Company Law and may be legally liable pursuant to other applicable law in his orher capacity as a Member.

1.12 FIDUCIARY DUTIES AND LIABILITIES OF MEMBERS A. All of the Members may be related toone another, however they are or shallbe dealing with oneanother on an arm's length basis, each controlling his/her/itsinterest as

represented herein, and each desiring to comply with the requirements of the New YorkLimited Liability Company Law and their fiduciary responsibilities to the LLC andthe otherMembers. The Member(s) who ismanaging and operating the LLC expressly agrees to bebound by fiduciary duties to promote the purposes and bestinterests of the LLC.

B. Fiduciary responsibilities shall mean any fiduciary duties or liabilities to theLLC or to the other Members resulting from participation in the management of the LLC




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1.13 MANAGEMENTExcept as otherwise expressly provided inArticle 2.2 of this Agreement, themanagement of the business and internal affairs of the LLC shall be reserved to itsManagers.

1.14TAXATION OF LLC AND MEMBERSA. Under federal tax law and to the maximum extent possible under the tax laws

of each state and the District of Columbia, the LLC and its Members shall be taxable as apartnership and as partners.

B. The provisions of this Agreement shall be construed and applied in such amanner as to ensure full compliance with the provisions of the Internal Revenue Codeapplicable to partnerships and with the regulations thereunder.

C. Neither this Company nor any Member may make an election for theCompany to be excluded from the application of Subchapter K of Chapter 1 of Subtitle A ofthe Internal Revenue Code or similar provisions of applicable state law, and no provisions ofthis agreement shall be interpreted to authorize any such election.

1.15ANNUAL ACCOUNTING PERIOD OF LLCThe LLCs annual accounting period for financial and tax purposes shall be the calendaryear.

1.16 LLC METHOD OF ACCOUNTING The LLC shall keep books and records pursuant to Sec. 1102 of the New York LimitedLiability Company Law, either in written form or in other than written form if easilyconverted into such written form within a reasonable amount of time. Such books andrecords shall be maintained on a cash basis, and the Accounting Year of this Company shallend on December 31st.

1.17ADDITION OF LLC AS PARTY TO AGREEMENTPromptly after the formation of the LLC, a Member shall sign this Agreement on behalf ofthe LLC, and the LLC shall become a party to the Agreement.

1.18 EFFECT OF LLC ACTExcept as otherwise provided in this Agreement or by law, the business and internal affairsof the LLC shall be governed by the LLC Act as in effect on the Effective Date.




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1.19 RELATION OF AGREEMENT TO ARTICLESIf there is any conflict between the provisions of this Agreement and those of the Articles ofOrganization, then, in any dispute among the Members, the provisions of this Agreementshall prevail.

1.20AMENDMENT OF AGREEMENT AND ARTICLESNo amendment of this Agreement or of the Articles of Organization shall be valid exceptupon the affirmative vote of all Members.

1.21 QUALIFICATION OF LLC IN OTHER JURISDICTIONSBefore conducting business in any jurisdiction other than NY, the LLC shall file all forms

and shall do all other things required under the laws, including the tax laws, of thatjurisdiction in order to conduct that business.

ARTICLE 2MEMBERS, MANAGERS AND MEMBERS CONTRIBUTIONS TO LLC

2.1 CLASSES OF MEMBERSThe LLC shall have a single class of Members. Managing Members shall not be considered aseparate class. Unless specifically set forth otherwise in the Articles of Organization or byamendment thereto, management of this Company shall be vested in the Members, who

shall be subject to all of the rights, duties, privileges and liabilities of Managers, as set forthin the New York Limited Liability Company Law. Such Member names and addresses shallbe set forth in the Books and Records of this Company.

2.2 MANAGING MEMBER A. The Initial Managing Member isJenni Farley, LLC.

B. Additional Provisions regarding Managing Members (Managers) are locatedinArticle 12.

2.3 CONTRIBUTIONS TO BE MADE BYMEMBERS

A. Promptly after the LLCs formation, the Initial Members shall, in exchangefor their Memberships, make contributions to the LLC All capital contributions to the LLCshall be in the form of cash, property or services rendered, or a promissory note or otherobligation to contribute cash or property or to render services.




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B. Each Member shall own that share of the total LLC capital (i) in proportionto each Members contribution to the total LLC capital, and/or (ii) that which is gifted to aMember by another Member, or by a Member to a new Member as herein provided.

C. All of the Members agree to share in all pre and post formation capitalcontributions, profits, losses and surplus of the LLC according to the percentage of theirMembership.

D. Each Member owns an undivided interest in the business.E. All property owned by the LLC, whether real or personal, tangible or

intangible, shall be deemed to be owned by the LLC as an entity. No Member shall have anydirect ownership of any LLC property.

F. If the Members or the Managing Member at any time or from time to timedetermine that the Company required additional Capital Contributions, then notice shall begiven to each Member stating (i) the total amount of additional Capital Contributions

required; (ii) the reason the additional Capital Contribution is required; (iii) each Membersproportionate share of the total additional Capital Contribution (determined in accordance with this ); and (iv) the date each Members additional Capital Contribution is due andpayable, which date shall be not less then thirty (30) days after the notice has been given. AMembers share of the additional Capital Contributions shall be equal to the productobtained by multiplying the Members Percentage and the total additional CapitalContribution required. Each Member shall pay his or her share, in cash or by certified orbank check or by wire transfer, to the Company.

2.4 VALUATIONOFNONCASHCONTRIBUTIONSBefore any Member makes a contribution to the LLC in a form other than money, theManager shall determine the value of that contribution in dollars. In the absence of fraud,the Managers determination shall be conclusive as to that value.

2.5 PENALTIES FOR FAILURE TO CONTRIBUTE

If, any Member fails to make a contribution on the date required, the other Members by voteof Members holding a majority of Member votes (exclusive of the votes of the Memberfailing to make the contribution) may impose upon the Member any penalty that the otherMembers agree is reasonable in the circumstances, including:

A. Reduction or elimination of the Members proportionate interest in the LLC;B. Forfeiture of all or a portion of the Members Membership rights; orC. Subordination of the defaulting Members interest to that of the non-

defaulting Members; and/or

D. Forced sale of the defaulting Members interest; In determining whichpenalty to apply under this Article 2.5, the Members shall consult with the LLCs taxadviser underArticle 15.




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E. The lending by the other Members of the amount necessary to meet thedefaulting Members commitment; and/or

1. Any advances madeby one or more of the remaining Partners shallconstitute, on the part of the defaultingMember, a demand obligation owing to theadvancing Member(s),with interest thereon from the date of the advance at six (6%)per cent above the lowest Prime Rate as published in the New YorkTimes, but in noevent higher than the maximum legal interestrate permissible under the laws of theState of New York.

2. By his or her execution of thisAgreement, each defaulting Memberhereby grants in favor of theadvancing Member(s) a security interest and lien in suchdefaulting Partner's right, title and interest in and to his orher Interest and all rightsappurtenant thereto including, without limitation, the right to receive cashdistributions.

3. Each defaulting Partner, upon written request of an advancingPartner, will sign a Uniform Commercial Code financing statement to permit thesecurity interest granted hereby to be perfected and authorizes the filing of suchuniform commercial codefinancing statement without his or her signature.

F. Any other reasonable and lawful method to rectify such Members failure tomeet his or her obligation.

G. These remedies are in addition to any other remedies allowed by law or bythis Agreement.

2.6 NO INTEREST ON CONTRIBUTIONSNo Member shall be entitled to interest on his or her Capital Contribution nor is suchMember entitled as a matter of right, to a return, in part or in whole, of his or her CapitalContribution, notwithstanding anything to the contrary herein.

2.7 MEMBER LOANS TO LLC

The members or the managers may at any time or from time to time, authorize loans madeto the company or from the company.

2.8 MEMBER GUARANTEES OF LLC OBLIGATIONSThe Members, by unanimous vote, may at any time or from time to time, authorize loansmade to the Company to be guaranteed by the Members.

2.9 MEMBER TIME COMMITMENTS AND RESPONSIBILITIES

A. No Member shall be required to perform services for the Company solely byvirtue of being a Member. Unless approved by the Members, no Member shall be entitled tocompensation for services performed for the Company. However, upon substantiation of




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the amount and purpose thereof, the Members shall be entitled to reimbursement forexpenses reasonably incurred in connection with the activities of the Company. TheManaging Member, if any, must approve of all amounts in advance.

B. If the management of this Company is vested in the Members, then everyMember is an agent of this Company for the purpose of its business and the act of everyMember, including the execution in the name of this Company of any instrument, forapparently carrying on in the usual way the business of this Company, shall bind thisCompany unless it is contrary to Sec. 412 of the New York Limited Liability Law.

ARTICLE 3MEMBERS NON-ECONOMIC RIGHTS

3.1 ANNUAL MEETINGThis Company shall hold its annual meeting of Members within thirty (30) days of the filingof its Federal Income Tax return or at such other time as shall be determined by vote or

written consent of Membership interests at the office of the LLC or at such other place alsodetermined by vote or written consent of the Membership Interests, for the purpose oftransacting such business as may come before such meeting. Special Meetings may be calledfor any purpose by a Manager or any Member or group of Members holding not less thanten percent of the Membership Interest.

3.2 NOTICE OF MEETINGWhenever it is anticipated that Members will be required or permitted to take any action by vote at a meeting, written notice shall be given stating the place, date and hour of themeeting, stating the purpose of such meeting, and under whose direction such meeting has

been called. Such notice of meeting shall be given personally or by first class mail, not lessthan ten nor more than fifty days before the date of such meeting. Such notice of meetingneed not be given to any Member who submits a signed waiver of notice, in person or byproxy, whether before or after the meeting.

3.3 NUMBER OF VOTES THAT MEMBERS MAY CAST

Except as otherwise expressly provided in this Agreement, each Member shall have onevote.

3.4 NUMBER OF VOTES NECESSARY TO DECIDE MEMBER MATTERS

Except as otherwise expressly provided in this Agreement, each Member matter shall be

decided by the affirmative vote of Members holding a majority of Member votes.

3.5 QUORUMAt a meeting of Members for the transaction of any business a majority in interest of theMembers, in person or by proxy, entitled to vote shall constitute a quorum. The Memberspresent, despite not being a quorum, may adjourn the meeting. No notice of adjournedmeeting in necessary if the time and place of the adjourned meeting is announced at the




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meeting at which the adjournment is taken. At a meeting in which a quorum is initiallypresent, such quorum is not broken by the subsequent withdrawal of any Member, despitethe fact that such withdrawal results in less than a quorum being present and all votes takenare binding upon the Members of this Company. All acts at a meeting of Members at whicha quorum is present, shall be the act of all the Members and be binding upon them, exceptsuch vote requires a greater proportion or number of Membership interests pursuant to theNew York Limited Liability Company Law, or the Articles of Organization or thisAgreement.

3.6 PROXYMembers may vote on Member matters in person, by phone, by fax or by any otherreasonable means. Every proxy shall be revocable at the will of the Member. Such proxyshall automatically be revoked, if prior to its use, the death or incompetence of the Memberoccurred, and notice of such death or adjudication of incompetence is received by the ProxyHolder.

3.7 ACTION WITHOUT MEETINGWhenever the Members of this Company are required or permitted to take any action byvote, such action may be taken without a meeting, without prior notice and without a vote, ifa consent or consents in writing, setting forth the action so taken shall be signed by theMembers who hold the voting interests having not less than the minimum number of votesthat would be necessary to authorize to take such action at a meeting at which all of theMembers entitled to vote therein were present and voted and shall be delivered to the Officeof this Company, its principal place of business or a Manager, employee or agent of thisCompany. Delivery made to the office of this Company shall be by hand or by certified orregistered mail, return receipt requested.

3.8 CONSENTEvery written consent shall bear the date of signature of each Member who signs theconsent, and no written consent shall be effective to take the action referred to thereinunless, within sixty days of the earliest dated consent delivered in the manner required bythis paragraph to this Company, written consents signed by a sufficient number of Membersto take the action are delivered to the office of this Company, its principal place of businessor a Manager, employee or agent of this Company having custody of the records of thisCompany. Delivery made to such office, principal place of business or Manager, employeeor agent shall be by hand or by certified or registered mail, return receipt requested.

3.9 VOTING AGREEMENTTwo or more Members may enter into a binding agreement, in writing and executed by theMembers seeking to be bound, which provides that the Membership Interests held by themshall be voted in accordance with such Agreement or pursuant to any lawful procedureagreed upon by them.




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3.10 PROCEDURAL RULES GOVERNING MEMBER VOTING

A. In the absence of fraud or bad faith, no vote by the Members on anyMember matter shall be deemed to be invalid on any procedural or similar ground, includingany ground relating to lack of notice, lack of meeting, lack of quorum, or failure to recordvotes. The terms procedural or similar ground shall be construed broadly.

B. The invalidity or unenforceability of any particular provision of thisagreement shall not affect the other provisions hereof, and the agreement shall be construedin all respects as if such invalid or unenforceable provisions were omitted.

3.11 MEMBERS HAVE NO AGENCY RIGHT ORPOWER

No Member, except a sole Managing Member, shall have the right or power to bind the LLCin dealings with third parties, in statements about the LLC or in any other manner.

3.12 RIGHT OF MEMBERS TO OBTAIN LLC INFORMATION

During normal business hours and after reasonable notice, each Member shall be entitled forany purpose reasonably related to the Members Membership:

A. To obtain, any information in the LLCs possession or control; and

B. To inspect at the Members expense, to copy any documents and othermedia in the LLCs possession or control;

PROVIDED, that all information thus acquired by the Member shall besubject to the provisions ofArticle 9 (relating to the confidentiality of certainLLC information).

3.13 RIGHT OF MEMBERS TO BRING ACTIONS AGAINST, IN THE NAME OF OR ONBEHALF OF THE LLC OR AGAINST OTHERMEMBERS

No Member in the Members capacity as a Member may bring an action in law or equityagainst the LLC or against any other Member in the other Members capacity as a Memberin any court for any reason except to enforce an arbitration order underArticle 18.

3.14 ARBITRATION

Any Member may assert in arbitration underArticle 18 any claim that could be asserted inany suit or action against, in the right of or in the name of the LLC.

ARTICLE 4INTERIM ALLOCATIONS AND DISTRIBUTIONS TO MEMBERS;

GUARANTEED PAYMENTS, ETC.

4.1 INTERIMALLOCATIONS OF LLC PROFITS AND LOSSES

A. The LLC may make interim allocations of its profits and losses among theMembers in proportion to their respective profit and loss interest in the LLC. Such




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allocations shall be in accordance with Internal Revenue Code 704 (c) (1) (A) and theregulations thereunder.

B. Unless otherwise agreed to by the Managers or if none by all of theMembers, the profits and losses of this Company and all distributions shall be allocatedamong the Members on the basis of the ratio of the monetary value of the Member CapitalAccount of each Member to the total value of all Member Capital Account in this Company.

4.2 ALLOCATIONS OF INTERIM DISTRIBUTIONS

The LLC shall allocate to the Members Interim Distributions on the same basis on which itallocates its profits and losses.

4.3 DISTRIBUTIONS IN KIND

If this Agreement or applicable law requires the LLC to make an Interim Distribution to anyMember, the Member may not require the LLC to make this distribution except in the formof cash. The LLC may not compel a Member to accept an Interim Distribution except inthe form of cash.

4.4 NO LLC DUTY TO MAKE DISTRIBUTIONS

A. The LLC shall have no duty to make Interim or other Distributions except asexpressly provided in this Agreement or as determined from time to time by the Members orthe Managers, if any.

B. All distributions to a Member of this Company shall be offset by anyamounts owing to this Company by such Member. No distributions shall be made whichrender this Company insolvent.

C. The LLC shall set up and maintain reserves in the amount which theManager(s), if any, or if none, by the Members estimate to be necessary to cover anticipatedbusiness expenses that are coming due and payable in the subsequent year. In addition, theLLC may maintain a working capital reserve needed for normal repairs, replacements andcontingencies in such amounts as the Manager(s), if any, or if none, by the Members shallfrom time to time determine.

4.5 TAX DISTRIBUTIONS

To the extent expressly provided in this Agreement, the LLC shall make InterimDistributions to the Members to enable them to pay taxes on allocations to them of LLC

profits.

4.6 LIQUIDATING DISTRIBUTIONSThe LLC shall make distributions to Members in connection with the liquidation of theirLLC interests in accordance with Article 5. The LLC shall make distributions toMembers in connection with the liquidation of the LLC in accordance withArticle 16.




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4.7 UNLAWFUL DISTRIBUTIONS

The LLC shall make no Unlawful Distribution of its assets to any Member. A distribution isan Unlawful Distribution:

A. If, immediately after the distribution, the aggregate value of the LLCsliabilities would exceed the aggregate value of its assets; or

B. If, as a result of the distribution, the LLC would be unable to pay itsreasonably foreseeable obligations as they become due; or

C. If the distribution is unlawful under the LLC Act as in effect from time totime.

4.8 LIABILITY FOR AUTHORIZING OR RECEIVING UNLAWFUL DISTRIBUTIONS

Members who vote to authorize Unlawful Distributions or who receive these distributionsshall be liable as provided in the LLC Act.

4.9 GUARANTEED PAYMENTS AND OTHER PAYMENTS TO MEMBERS FOR SERVICES,LOANS, ETC.

A. Each Member shall receive from the LLC guaranteed payments and otherpayments for services, for loans and for other benefits provided by the Member to the LLCapproved by the Members or the Managing Members, if any. No such payment shall affectthe right of the Member to allocations of LLC profits and losses or to allocations ordistributions of LLC Interim Distributions.

4.10 DRAWS

During the fiscal year of the LLC, the Members or Managers may approve Members to drawon their shares of projected LLC profits for that year or against their capital.

4.11 REIMBURSEMENT OF EXPENSES

If any Member or Manager incurs a reasonable expense on behalf of the LLC and reasonablydocuments this expense to the LLC, the LLC shall reimburse the Member for this expenseas promptly as reasonably possible after receiving this documentation.

4.12 MISCELLANEOUS INTERIM BENEFITS TO BE PROVIDED TO MEMBERS BY THELLC

In addition to the benefits described above, the LLC may provide interim benefits to itsMembers. These benefits may include, for example, the retaining of Members as LLCconsultants and the sale, lease and license of LLC property to its Members.




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ARTICLE 5TRANSFERS AND PLEDGES OF MEMBERSHIP RIGHTS, ETC.

5.1 RESTRICTIONS ON RIGHT OF MEMBERS TO TRANSFER AND PLEDGE THEIRMEMBERSHIPRIGHTS

A.

Except as set forth in this Agreement, no Member shall have theunconditional right to give, sell, assign, pledge, hypothecate, exchange or otherwise transferto another, all or any part of his Membership Interest in this Company to another. SuchMember must secure such consent by a unanimous vote in writing of all the Membersentitled to vote thereon, not including the Member seeking such right. Nothing herein shallbe deemed to prevent a Member from granting an assignee the rights to become a Memberupon condition that Sec. 604 of the New York Limited Liability Company Law is satisfied.

B. Transfers and pledges in breach of the terms of thisArticle 5 shall be voidand of no effect.

5.2 DEFINITION OF TRANSFERFor purposes of thisArticle 5, transfer shall include:

A. Transfers by sale;B. Transfers by gift;C. Transfers (whether by will, trust or otherwise) taking effect on the death of

the transferor; and

D. Involuntary transfers, including transfers by operation of law and pursuant todivorce and bankruptcy decrees.

5.3 ADMISSIONS OF ADDITIONAL MEMBERS BY THE LLC

A. Additional Members may at any time hereafter be admitted to the LLChereby created upon the unanimous consent, in writing, of all of the Members. In suchevent, such additional Member(s) when so admitted shall have all the rights of Member(s) asherein specified for the Member and be subject to all his/her/its duties, liabilities, andresponsibilities. They shall be entitled to share in the manner herein provided in the profitsof the LLC thereafter earned in proportion to the amounts of their capital whether (i) it wascontributed by them to the LLC or (ii) it was given to them by a Member. Each suchMember shall sign this agreement or a statement to the effect that they agree to abide by thisagreement. A Member shall not become a managing Member unless such Member is

appointed a Manager pursuant toArticle 12 hereof,

B. In the event of the death of a Member, then the deceaseds heir or heirs shallbe entitled to succeed only to the economic share and interest of the deceased Member. TheLLC may upon unanimous consent of the remaining Members, as soon as practicable,provide a document by which the heir or heirs personally affirm and accept all the terms,conditions and provisions of this Operating Agreement binding themselves to the same inwriting and select a designated representative of the deceased Member.




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5.4 RIGHT OF LLC AND OTHERMEMBERS TO ACQUIRE CERTAIN MEMBERSLLCINTERESTS

The LLC may require a Member to promptly sell all or any part of the Members LLCinterest to the LLC or to the other Members for its fair value and upon other reasonablepurchase terms if:

A. The Member is dissociated from the LLC for any reason;B. The Member becomes bankrupt;C. The Member becomes a party to a divorce proceeding and the other

Members determine reasonably and in good faith that it is likely that as a result of thatproceeding, all or any of the Members Membership rights will be awarded to the Membersspouse; or

D. An arbitrator orders such a sale underArticle 18 on the ground that it isfair and reasonable in the circumstances.

E. In the event of the death of a Member, then the deceaseds heir or heirs shallbe entitled to succeed only to the economic share and interest of the deceased Member. TheLLC may upon unanimous consent of the remaining Members, as soon as practicable,provide a document by which the heir or heirs personally affirm and accept all the terms,conditions and provisions of this Operating Agreement binding themselves to the same inwriting and select a designated representative of the deceased Member.

5.5 SALEORTRANSFEROFSUBSTANTIALLYALLOFLLCSASSETS

The unanimous vote of the Members entitled to vote thereon shall be required to approve

the sale, exchange, lease, mortgage, pledge or other transfer or disposition of all orsubstantially all of the assets of this Company.

5.6 ELECTION UNDERINTERNAL REVENUE CODE754

Before any Member transfers any of the Members rights as a Member to any person, theMembers shall negotiate in good faith and shall agree whether to file an election underInternal Revenue Code 754 to adjust the basis of LLC property in connection with thattransfer.

5.8 BUY-SELLARRANGEMENTS

Except as expressly set forth in this Agreement:

A. The LLC and the Members shall have no duty to purchase all or any of aMembers Membership rights; and

B. The Member who desires to transfer his Membership Interest shall givewritten notification of proposed transfer to each of the other Members or to the Manager, as




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the case may be, of his or her intention to transfer his or her Membership Interest. Eachother Member shall have the right of first refusal to purchase all of such MembershipInterest upon such terms and conditions as were set forth in the notification of proposedtransfer. Nothing herein shall be deemed to prevent all of the remaining Members, if theyso desire, to accept the terms of the notification of proposed transfer, in writing, on behalfof all of such remaining Members. The failure to respond to the Member seeking to transferhis or her Membership Interest within 30 days shall result in the termination of such otherMembers right of first refusal. Should such Member or Members desire to exercise theirright of first refusal on the terms set forth in the written notification of transfer, then thetime, place and date of closing as designated by the Members purchasing such MembershipInterest shall be within 90 days from the date of such written consent to exercise such rightof first refusal.

ARTICLE 6MEMBER DISSOCIATIONS

6.1 DEFINITION OF MEMBER DISSOCIATION

The dissociation of a Member means the termination of the Members right to participate inthe LLCs business and internal affairs by voting on matters relating to the business andinternal affairs of the LLC, by acting as an agent for the LLC or otherwise.

6.2 EVENTS OF DISSOCIATION

A Member shall be dissociated if without the consent of all the other Members or theManaging Member one of the following events occurs:

A. The Member dies (or, if the Member is an entity, it incurs a dissolution orequivalent event);

B. The Member incurs a Total Disability (as defined in 6.6);

E. The Member becomes bankrupt;F. The Member resigns in accordance with 6.9;G. The Member transfers the Members entire LLC interest to another person;H. The Member is expelled from Membership in the LLC in accordance with

6.10.

G. Does any act in contravention of this Agreement.

H. Does any act which would make it impossible to carry on the ordinarybusiness of the LLC.

I. Confesses judgment against the LLC.




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J Possess LLC property, or assign his orher interest or rights in specific LLCproperty, forother than a Partnership purpose.

6.3 LOSS OFVOTING RIGHTS, ETC., UPON DISSOCIATION

Except as otherwise expressly provided in this Agreement, a Member upon the Membersdissociation shall immediately lose any right of the Member to participate in the business andaffairs of the LLC by voting on Member matters, by acting as an agent for the LLC, byinitiating a dispute in the Members capacity as a Member, by having access to LLCinformation in the Members capacity as a Member or by any other means.

6.4 NO DISTRIBUTIONS, ETC., TO DISSOCIATED MEMBERS

Except as otherwise provided in this Agreement, a Members dissociation shall not entitlethe Member to receive any distribution of LLC profits or other assets or to receive anypayment for the Members LLC interest.

6.5 DEFINITION OFTOTAL DISABILITY

A Member shall be deemed to have incurred a Total Disability within the meaning of 6.2B. if, by reason of any physical or mental disability, the Member is unable to participatesignificantly in the business and internal affairs of the LLC for 180 consecutive days.

6.6 DETERMINATION OFTOTAL DISABILITY

Whether a Member has incurred a Total Disability and the date on which the Member hasincurred a Total Disability shall be determined by the vote of other Members holding amajority of Member votes (except the votes of the Member about whose disability they arevoting). All such determinations shall be subject to review in arbitration under 18.

6.7 DEFINITION AND EFFECTIVE DATE OF RESIGNATION

For purposes of this 6, the resignation of a Member means the Members voluntaryrenunciation of the Members right to participate in the business and internal affairs of theLLC. A Member shall be deemed to have resigned from the LLC within the meaning of this6 on the effective date of the notice of resignation described in 6.9.

6.8 RIGHT OF MEMBERS TO RESIGN FROM LLC; NOTICE OF RESIGNATION

A Member may withdraw as a Member of this Company with the vote or written,unanimous consent of the remaining Members. If such consent is not given, a Member maywithout liability resign as a Member of the LLC by giving written notice of resignation to theother Members provided such withdrawal does not breach this Operating Agreement, the

New York Limited Liability Company Law or any other contractual obligation between suchproposed withdrawing Member and this Company or its other Members. Should suchbreach occur, then the withdrawing Member may be liable for damages as a result thereof.The resignation shall be effective 60 days after all of the other Members have received thenotice.




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6.9 MEMBER EXPULSIONS

A Member may be expelled from the LLC:

A. If the Member materially breaches this Agreement and fails to cure thebreach within a reasonable time after receiving notice of it;

B. If the Member engages in conduct that causes or is likely to cause a materialadverse impact on the reputation of the LLC or on its business; or

C. If the Member engages in fraudulent or illegal actions relating to the businessor internal affairs of the LLC.

6.10 MEMBER EXPULSIONS

A Member may be expelled from the LLC:

A. If the Member materially breaches this Agreement and fails to cure thebreach within a reasonable time after receiving notice of it;

B. If the Member engages in conduct that causes or is likely to cause a materialadverse impact on the reputation of the LLC or on its business; or

C. If the Member engages in fraudulent or illegal actions relating to the businessor internal affairs of the LLC.

6.11 VOTING REQUIREMENT FOR EXPELLING AMEMBER

A. LLCHAS AT LEAST THREE MEMBERS

If the LLC has at least three Members and one or more Members wish to expel aMember, the Member may be expelled by the affirmative vote of other Members holding atleast two thirds of Member votes (excluding the votes of the Member sought to beremoved).

B. LLC HAS TWO MEMBERS

If the LLC has only two Members, either Member may petition an arbitrator to orderthe expulsion of the other.

6.12 PURCHASE OF EXPELLED MEMBERS LLC INTEREST

A. If the LLC or the other Members exercise their right under 5 topurchase the LLC interest of an expelled Member and if the LLC and the other Memberscannot agree with the expelled Member on the purchase price or on the other terms of thispurchase, these matters shall be decided by arbitration under 18.

B. In deciding any such arbitration, the arbitrator shall consider all relevantfactors, including the conduct of the expelled Member resulting in the expulsion.




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SECTION 7IF THERE ARE MANAGERS

DUTY OF CARE; RELATED MATTERS

7.1 DUTY OF CAREGENERAL RULE

A. In participating in or handling any matter (an LLC matter) relating to thebusiness and internal affairs of the LLC, the Managers shall use their reasonable best effortsto further the interests of the LLC;

PROVIDED, that the Managers shall be liable for violations of their duty of care asManagers only as provided in 7.2.

B. The Manager shall perform his duties as a manger in good faith and with thatdegree of care which a reasonable and prudent person in a like position would use undersimilar circumstances.

1. The Manager shall not be required to manage this Company as hissole business interest but may, without liability to this Company or its Members, beinvolved in the management of other entities and activities which do not adverselyaffect his capacity to exercise his obligations to this Company; nor shall thisCompany or its Members have any right to participate in such other business interestor in income or profits therefrom.

7.2 PERSONAL LIABILITY OF MANAGERS FOR FAILURE TO USE ORDINARYPRUDENCE

The Managers shall be personally liable to the LLC for money damages and other relief if, inparticipating in or handling any LLC matter as Managers:

A. They fail to exercise the care that an ordinarily prudent person wouldexercise under similar circumstances; and

B. They are unable to rely on the defenses to liability set forth in sections 7.4and 7.5.

7.3 DUTY TO OBTAIN INFORMATIONBefore making any decision or taking any action in an LLC matter, the Managers, if any, orof none then the Members shall use their best efforts to obtain all relevant information.




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shall be threatened, arising out of or in connection with such Managing Member orwithdrawn Members activities or involvement with the LLC.

B. The LLC shall indemnify the Manager for reasonable expenses and fordamages or settlement amounts reasonable incurred by the Manager in respect of the claim ifdisinterested Members holding a majority of Member votes (exclusive of the Member votes,if any, of the Manager who is the subject of the claim) determine that in respect of thematter in question:

1. The Manager has exercised the care that an ordinarily prudent personwould exercise under similar circumstances; or

The Manager is protected from liability under sections 7.4 or 7.5.

7.9 ADVANCEMENT OF ARBITRATION AND LITIGATION EXPENSES

The LLC shall advance arbitration and litigation expenses to a Manager for the defense ofclaims against the Manager for breaches of the Members duty under this 7:

A. If disinterested Members holding a majority of Member votes (excluding theMember votes, if any, of the Manager who is the subject of the claim) determine that inrespect of the relevant matter, it is probable that the Manager has exercised the care that anordinarily prudent person would exercise under similar circumstances or that the Manager isprotected from liability under 7.4 or 7.5; and

B. If the Manager promises to return all such advances to the LLC if the court,arbitrator or other tribunal deciding the claim finds otherwise.

7.10 LIABILITY INSURANCE FORTHELLC,MANAGERSOROTHERSDuring the course of the term for which this LLC is formed, the LLC shall carry liabilityinsurance and such other insurance, in such amounts as are deemed appropriate by theManager(s), if any, or if none, by the Members.

SECTION 8DUTY OF LOYALTY; RELATED MATTERS

8.1 DUTY OF LOYALTY GENERAL RULE

In matters relating to the business and affairs of the LLC, Managers in their capacity asManagers and Members shall act solely for the benefit of the LLC and not for their personal

benefit.

8.2 DUTY NOT TO COMPETE AGAINST THE LLC

In any geographical area where the LLC is engaged in business or has definite plans (asevidenced by LLC documents) to engage in business, Managers shall not directly orindirectly compete against the LLC while the Manager is a Manager and until the secondanniversary of the date on which the Manager ceases to be a Manager;




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PROVIDED, that the Manager may compete against the LLC with the advanceconsent of disinterested Members holding a majority of Member votes (exclusive ofthe Member votes, if any, of the Manager who wishes to compete against the LLC).

8.3 DUTIES IN DOING BUSINESS WITH LLC

A. No Manager shall engage directly or indirectly in any business arrangementor transaction with the LLC on the Managers own behalf or on behalf of a disclosed orundisclosed third party except:

1. After making full disclosure to the LLC; and2. After receiving the advance consent of disinterested Members

holding a majority of Member votes (exclusive of the Member votes, if any, of theManager wishing to engage in business with the LLC).

B. The terms of any business engagement permitted under this 8.4 shall bearms-length terms.

8.5 DUTIES WITH RESPECT TO LLC BUSINESS OPPORTUNITIES

A. If a Manager learns (whether in the course of LLC business or otherwise) ofa business opportunity potentially valuable to the LLC, the Manager shall promptly disclosethe opportunity to the LLC and shall not exploit the opportunity for the Managers personalbenefit unless:

1. Within 15 business days after receiving written notice of theopportunity, the LLC rejects it; or

2. After accepting it, the LLC fails to exploit it with reasonablepromptness and diligence.

B. Whether the LLC shall accept the opportunity shall be decided in each caseby the affirmative vote of disinterested Members holding a majority of Member votes(exclusive of the Member votes, if any, of the Manager who wishes to exploit theopportunity).

8.4 DUTY TO AVOID IMPROPER PERSONAL BENEFITSIf any Manager directly or indirectly receives from any person a monetarily significantbenefit, including cash, in connection with the Managers activities as a Manager of the LLC,

the Manager shall promptly transfer this benefit to the LLC;PROVIDED, that the Manager may retain the benefit if authorized to do so:

1. By this Agreement; or2. By the advance consent of disinterested Members holding a majority

of Member votes (exclusive of the Member votes, if any, of the Manager inquestion).




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8.5 DUTIES OF GOOD FAITH AND FAIR DEALING

In all LLC matters, Managers in their capacity as Managers shall act in good faith and shalldeal fairly with the LLC and with the Members.

8.6 WHO MAY CLAIM BREACH OFTHIS;MEMBER VOTE NECESSARY TO MAKE CLAIM

Only the LLC may make a claim against a Manager for a breach of the Managers duty underthis 8. The LLC shall make no such claim except upon the affirmative vote of Membersholding a majority of Member votes (exclusive of the Member votes, if any, of the Managerpotentially subject to the claim).

8.8 STANDARD OF PROOF

Any claim of breach of this 8 shall be deemed to be proven if supported by apreponderance of the evidence.

8.9 INDEMNIFICATION OF MANAGERS FOR CLAIMS OF BREACH OF THIS

No Manager shall be entitled to indemnification for expenses or damages incurred by theMember as a result of the Managers breach of any provision of this 8.

8.10 ADVANCEMENT OF LITIGATION EXPENSESThe LLC shall advance arbitration and litigation expenses to a Manager for the defense ofclaims against the Manager for breaches of the Members duty under this 8:

A. If disinterested Members holding a majority of Member votes (excluding theMember votes, if any, of the Manager who is the subject of the claim) determine that inrespect of the relevant matter, it is probable that the Manager has complied with theprovisions of this 8; and

B. If the Manager promises to return all such advances to the LLC if the court,arbitrator or other tribunal deciding the claim directs this course of action.

SECTION 9IF THERE ARE MANAGERS

DUTY OF OBEDIENCE

The Managers shall promptly comply with all reasonable instructions approved by Membersholding a majority of Member votes or, if there are two or Managers, by a majority ofManagers.

SECTION 10

DUTY OF CANDOR

The Managers and Members shall deal honestly with the LLC and, promptly after learning ofany information (including information about their own health and personal affairs) that ismaterial to the business and affairs of the LLC, they shall disclose this information to theLLC to the other Managers (or, if there is only one Manager, to the Members).




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SECTION 11MEMBERS AND MANAGERS DUTY OF CONFIDENTIALITY

11.1 MEMBERS AND MANAGERS DUTY TO MAINTAIN CONFIDENTIALITY OF LLCINFORMATION

The Members and Managers:

A. Shall maintain the confidentiality of Confidential Information (as defined in9.2);

B. Except as required in conducting the business and internal affairs of theLLC, shall not disclose Confidential Information to any third party;

C. Shall not make copies of documents and other media containing ConfidentialInformation except for the benefit of the LLC;

D. Shall use Confidential Information only for the benefit of the LLC; andE. Promptly after ceasing to be Members and Managers (as the case may be),

shall return to the LLC all documents and other media containing Confidential Information.

11.2 DEFINITION OF CONFIDENTIAL INFORMATION

For purposes of this Agreement, Confidential Information means:

A. The terms of this Agreement;PROVIDED, that a Member may disclose these terms on a confidentialbasis to his or her professional advisers;

B. Information that the LLC maintains in confidence;C. Information that the Member or Manager knows to be proprietary to the

LLC.

D. Financial information relating to the LLC and to the Members;E. Information relating to LLC marketing and business plans and strategies;F. Information concerning the design and manufacture of LLC products and

concerning methods of providing LLC services;G. Information in LLC personnel files and similar files relating to LLCMembers and employees;

H. Information entrusted to the LLC in confidence by third parties;I. Information reasonably designated by the Managers as Confidential

Information; and




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J. Information disclosed by Managers under Sections 11 and 12.11.3 EXCEPTIONS TO DUTY OF CONFIDENTIALITY

11.1 Confidential information shall not apply to the following:

A. Which the Member or Manager in question (the Recipient) already lawfullypossess at the time of its disclosure to the Member or Manager by the LLC or which theRecipient lawfully obtains thereafter;

B. Information which is already in the public domain at the time of itsdisclosure to the Recipient or which thereafter enters the public domain through no fault ofthe Member;

C. The disclosure of which is required by final order of a court of competentjurisdiction;

D. The disclosure of which is made on a confidential basis to an arbitrator in anarbitration under 18; and

E. Which the LLC discloses without restriction to any person other than theRecipient.

11.4 BINDING EFFECT; TERMINATION

This 11 shall bind each Recipient even after the Recipient ceases to be a Member orManager. Subject to any contrary arrangement with a third party, 11 shall terminateupon the termination of the legal existence of the LLC.

SECTION 12UNLESS OTHERWISE INDICATED THIS APPLIES ONLY IF THERE ARE

MANAGERSQUALIFICATIONS, RESPONSIBILITIES, ETC.

12.1 MANAGER QUALIFICATIONS

The Managers shall be natural persons or other business entities and need not be Membersof the LLC. The Managers shall have such other qualifications as are determined from timeto time by the affirmative vote of Members holding a majority of Member votes.

12.2 MANAGER TITLES

In performing management functions for the LLC, Managers may use the title Manager orsuch other title or titles (including, without limitation, the title President or ChiefExecutive Officer) as the Members may determine from time to time by affirmative vote ofMembers holding a majority of Member votes.




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12.3 MANAGERRESPONSIBILITIES

If the management of this Company is vested in a Manager, then:

A. the Managers shall have general responsibility for managing the business andinternal affairs of the LLC. The Managers shall have any additional responsibilities that are

set forth in this Agreement or that the Members may determine from time to time byaffirmative vote of Members holding a majority of Member votes.B. the Managers shall have the power and authority on behalf of this Company

to do all things as set forth in Sec. 202(a) 202(q) of the New York Limited LiabilityCompany Law.

C. no Member, by reason of being a Member, is an agent of this Company forthe purpose of its business unless authority has been delegated to such Member by theManager or some other provision of this Operating Agreement.

12.4 MANAGER VOTING

Each Manager shall have one vote on each matter on which the Managers may vote. If thereare more then three Managers then such matter shall be decided by vote of a majority of theManagers, if there are two Managers then all matters shall be decided unanimously. TheManagers shall appoint a Manager make a written record of each such vote and to circulatethe record among the Members;

PROVIDED, that the failure of the Manager to

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Complaint Phigogam v. JWOWW (w/ all 21 Exhibits)

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