Javascript is disabled. Please enable Javascript to log in.
Published: 2008-03-26

Limited Liability Company Agreement - Ralph Lauren Media LLC



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

                       SECOND AMENDED AND RESTATED LIMITED
                           LIABILITY COMPANY AGREEMENT

                                       of

                             RALPH LAUREN MEDIA, LLC

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



                            Dated as of May 18, 2000







              Second Amended and Restated Limited Liability Company
                                  Agreement of
                             Ralph Lauren Media, LLC

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                    ARTICLE I

DEFINITIONS .................................................................  2

                                   ARTICLE II

FORMATION AND CONDUCT ....................................................... 19
     2.1  Formation and Purpose ............................................. 19
     2.2  Name .............................................................. 20
     2.3  Principal Office and Place of Business ............................ 20
     2.4  Term .............................................................. 20
     2.5  Registered Office and Agent ....................................... 20
     2.6  Qualification in Other Jurisdictions .............................. 20
     2.7  No Liability to Third Parties ..................................... 20
     2.8  Business Purpose .................................................. 21
     2.9  Business Launch ................................................... 21
     2.10 Initial Activities ................................................ 21
     2.11 Membership Interests .............................................. 22
     2.12 Admission of Additional Members ................................... 23
     2.13 Relinquishment of Class B Membership Interests and Class C
          Membership Interests .............................................. 23
     2.14 Redemption of Class B Membership Interests and Class C Membership
          Interests ......................................................... 25
     2.15 [Reserved] ........................................................ 25
     2.16 Employment by the Company ......................................... 25
     2.17 "Drag-Along" Rights Against Class B Members and Class C Members ... 25
     2.18 "Tag-Along" Rights of Class B Members and Class C Members ......... 26
     2.19 Authorization of Actions Taken by the Company ..................... 28
            (a)  Ancillary Agreements ....................................... 28
            (b)  Formation .................................................. 28
            (c)  Bank Accounts .............................................. 28

                                   ARTICLE III

OPERATIONS .................................................................. 29
     3.1  Books and Records ................................................. 29
            (a) Books and Accounts .......................................... 29
            (b) Other Records ............................................... 29
     3.2  Financial Statements; Information; Bank Accounts .................. 29
            (a) Preparation in Accordance with GAAP ......................... 30
            (b) Monthly Reports ............................................. 30



                                                                            Page
                                                                            ----

            (c) Quarterly Report ............................................ 30
            (d) Annual Reports .............................................. 30
            (e) Other Reports ............................................... 30
            (f) Bank Accounts ............................................... 31
     3.3  Auditors .......................................................... 31
     3.4  Fiscal Year ....................................................... 31
     3.5  Demand Registration ............................................... 31
     3.6  Piggyback Registrations ........................................... 34
     3.7  Lock-Up Provision ................................................. 36
     3.8  Exchange of Membership Interests for Common Stock ................. 37
     3.9  Employees and Benefit Matters ..................................... 37
            (a) Generally ................................................... 37
            (b) Member Responsibility ....................................... 37
            (c) Non-Solicitation ............................................ 37
     3.10 Expense Reimbursement ............................................. 38
     3.11 The Members as Third Party Beneficiaries .......................... 38
     3.12 Deadlocks ......................................................... 38
            (a) Deadlocks of Managers ....................................... 38
            (b) Deadlocks of Class A Members ................................ 38
            (c) Continuation of Business .................................... 39
            (d) Polo Deadlock Call .......................................... 39
            (e) Media Members Sale Right .................................... 39
     3.13 Change of Control ................................................. 42
            (a) Change of Control of a Member ............................... 42
            (b) Continuation of Business .................................... 42
            (c) NBC Change of Control Call .................................. 42
            (d) Polo Change of Control Sale ................................. 43
     3.14 Polo Buyout Right ................................................. 43
     3.15 Material Deadlock, Change of Control and Polo Buyout Right,
          Pricing, Deferred Compensation and Closing ........................ 44
            (a) Price of the Media Members Membership Interests ............. 44
            (b) [Reserved] .................................................. 44
            (c) Closing ..................................................... 44
            (d) Services Agreement .......................................... 45
     3.16 Media Members IPO Right ........................................... 45
     3.17 Certain Restrictions .............................................. 46

                                   ARTICLE IV

RIGHTS AND REPRESENTATIONS AND WARRANTIES OF MEMBERS ........................ 46
     4.1  Members' Rights ................................................... 46
     4.2  Representations and Warranties .................................... 46



                                                                            Page
                                                                            ----

            (a) Due Organization ............................................ 47
            (b) Authorization and Validity of Agreement ..................... 47
            (c) No Breach or Government Approvals ........................... 47
            (d) Certain Fees ................................................ 47
            (e) Legal Proceedings ........................................... 48
            (f) Employee Benefits Programs .................................. 48
            (g) SEC Filings ................................................. 48
            (h) Acknowledgment .............................................. 49
     4.3  Representations and Warranties of JM .............................. 49
     4.4  Title to Company Assets ........................................... 50

                                    ARTICLE V

MANAGEMENT .................................................................. 51
     5.1  Management by Managers ............................................ 51
     5.2  Management Committee .............................................. 51
            (a) Number; Composition ......................................... 51
            (b) Appointment of Managers ..................................... 51
            (c) Voting ...................................................... 51
            (d) Quorum ...................................................... 51
            (e) Required Vote for Action .................................... 51
            (f) Term ........................................................ 51
            (g) Vacancy ..................................................... 52
            (h) Removal ..................................................... 52
            (i) Resignation ................................................. 52
     5.3  Action Requiring Unanimous Vote of Polo Managers and the Media
          Managers; Unanimous Vote of the Class A Members ................... 52
            (a) Unanimous Vote of the Managers .............................. 52
            (b) Unanimous Vote of the Class A Members ....................... 54
     5.4  Business Plan ..................................................... 55
     5.5  Limitation on Management Committee Authority ...................... 55
     5.6  Meetings of the Management Committee .............................. 55
     5.7  Methods of Voting; Proxies ........................................ 56
     5.8  Order of Business ................................................. 56
     5.9  Actions Without a Meeting ......................................... 56
     5.10 Telephone and Similar Meetings .................................... 57
     5.11 Compensation of Managers .......................................... 57
     5.12 Media Representative .............................................. 57
     5.13 Waiver of Certain Claims .......................................... 57

                                   ARTICLE VI

OFFICERS .................................................................... 57
     6.1  Designation Term; Qualifications .................................. 57
     6.2  Chief Executive Officer ........................................... 58



                                                                            Page
                                                                            ----

     6.3  Chief Financial Officer ........................................... 58
     6.4  Vice President .................................................... 59
     6.5  Secretary ......................................................... 59
     6.6  Treasurer ......................................................... 59
     6.7  Other Officers .................................................... 59
     6.8  Removal and Resignation ........................................... 59
     6.9  Vacancies ......................................................... 59
     6.10 Duties ............................................................ 60

                                   ARTICLE VII

MEETINGS OF CLASS A MEMBERS ................................................. 60
     7.1  Meetings of Class A Members ....................................... 60
     7.2  Place of Meetings of Class A Members .............................. 60
     7.3  Notice of Meetings of Class A Members ............................. 60
     7.4  Fixing of Record Date ............................................. 60
     7.5  Quorum ............................................................ 60
     7.6  Methods of Voting; Proxies ........................................ 61
     7.7  Conduct of Meetings ............................................... 61
     7.8  Voting on Matters ................................................. 61
     7.9  Registered Members ................................................ 61
     7.10 Actions Without a Meeting ......................................... 62
     7.11 Telephone and Similar Meetings .................................... 62

                                  ARTICLE VIII

CONTRIBUTIONS; CAPITAL ACCOUNTS ............................................. 62
     8.1  Initial Contributions ............................................. 62
     8.2  Additional Contributions .......................................... 63
     8.3  Enforcement of Commitments ........................................ 63
     8.4  Maintenance of Capital Accounts ................................... 64
     8.5  No Obligation to Restore Deficit Balance .......................... 65
     8.6  Withdrawal; Successors ............................................ 65
     8.7  Interest .......................................................... 65
     8.8  Investment of Capital Contributions ............................... 65
     8.9  Advances to the Company ........................................... 65
     8.10 Initial Public Offering ........................................... 65

                                   ARTICLE IX

ALLOCATIONS AND DISTRIBUTIONS ............................................... 66
     9.1  Profits and Losses ................................................ 66
     9.2  Profits ........................................................... 66
     9.3  Losses ............................................................ 67
     9.4  Special Allocations ............................................... 67
            (a) Qualified Income Offset ..................................... 67
            (b) Gross Income Allocation ..................................... 67
            (c) Curative Allocations ........................................ 67



                                                                            Page
                                                                            ----

            (d) Elective Gross Allocations .................................. 68
            (e) Subsequent Adjustments to Income ............................ 68
     9.5  Other Allocation Rules ............................................ 68
     9.6  Tax Allocations ................................................... 69
            (a) General Rules ............................................... 69
            (b) Mandatory Allocations Under Code Section 704(c) ............. 69
            (c) Tax Allocations Binding ..................................... 70
            (d) Contributions ............................................... 70
     9.7  Distributions to Members .......................................... 70
            (a) Amounts and Timing .......................................... 70
            (b) Amounts Withheld ............................................ 71
            (c) Draws for Payment of Estimated Taxes ........................ 71

                                    ARTICLE X

TAXES ....................................................................... 72
     10.1 Tax Characterization .............................................. 72
     10.2 Tax Matters Partner, Etc. ......................................... 72
     10.3 Tax Returns ....................................................... 73
     10.4 Section 83(b) Elections ........................................... 73

                                   ARTICLE XI

TRANSFER OF MEMBERSHIP INTEREST ............................................. 73
     11.1 Compliance with Securities Laws ................................... 73
     11.2 Transfer of Membership Interest ................................... 74
     11.3 Obligations of a Withdrawing Member ............................... 75
            (a) Generally ................................................... 75
            (b) Non-Disclosure by a Withdrawing Member ...................... 75
            (c) Survival .................................................... 75
     11.4 Encumbrances ...................................................... 75
     11.5 Effect of Unauthorized Transfer ................................... 75
     11.6 Standstill Agreement .............................................. 76

                                   ARTICLE XII

DISSOLUTION ................................................................. 77
     12.1 Events of Dissolution ............................................. 77
     12.2 Liquidation and Distribution Following Dissolution ................ 78
     12.3 Final Accounting .................................................. 79
     12.4 Winding Up and Certificate of Dissolution ......................... 79
     12.5 Use of the Company Name, Etc. Upon Dissolution, Winding Up and
          Termination ....................................................... 79
     12.6 Payments Upon Certain Dissolutions ................................ 80

                                  ARTICLE XIII



                                                                            Page
                                                                            ----

[RESERVED] .................................................................. 81

                                   ARTICLE XIV

INDEMNIFICATION OF MEMBERS, MANAGERS AND OFFICERS ........................... 81
     14.1 Indemnification by a Class A Member ............................... 81
     14.2 Indemnification by the Company .................................... 81
     14.3 Survival; Limitations; Procedures ................................. 82
     14.4 Third-Party Dealings With Members ................................. 83
     14.5 Insurance ......................................................... 83
            (a) Generally ................................................... 83
            (b) Liability Insurance ......................................... 84
     14.6 Report to Members ................................................. 84

                                   ARTICLE XV

CLOSING DELIVERIES .......................................................... 84
     15.1 Closing Deliveries of Polo ........................................ 84
     15.2 Closing Deliveries of the Original Media Members .................. 85

                                   ARTICLE XVI

MISCELLANEOUS ............................................................... 85
     16.1 Notices ........................................................... 85
     16.2 Public Announcements and Other Disclosure ......................... 86
     16.3 Headings and Interpretation ....................................... 86
     16.4 Entire Agreement .................................................. 86
     16.5 Binding Agreement ................................................. 86
     16.6 Saving Clause ..................................................... 86
     16.7 Counterparts ...................................................... 87
     16.8 Governing Law ..................................................... 87
     16.9 No Membership Intended for Nontax Purposes ........................ 87
     16.10  No Rights of Creditors and Third Parties under Agreement ........ 87
     16.11  Amendment or Modification of Agreement .......................... 87
     16.12  Specific Performance ............................................ 87
     16.13  General Interpretive Principles ................................. 88
     16.14  Consent to Jurisdiction ......................................... 88
     16.15  Certain Obligations ............................................. 88



                       SECOND AMENDED AND RESTATED LIMITED
                           LIABILITY COMPANY AGREEMENT

                                       of

                             RALPH LAUREN MEDIA, LLC


         THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
(this "Agreement") of Ralph Lauren Media, LLC, a Delaware limited liability
company (the "Company"), dated as of May 18, 2000, by and among Polo Ralph
Lauren Corporation, a Delaware corporation ("Polo"), National Broadcasting
Company, Inc., a Delaware corporation ("NBC"), ValueVision International, Inc.
("ValueVision"), a Minnesota corporation, CNBC.com LLC, a Delaware limited
liability company ("CNBC.com"), NBC Internet, Inc., a Delaware corporation
("NBCi" and together with NBC, CNBC.com and ValueVision, the "Original Media
Members"), and Jeffrey D. Morgan ("JM"). Certain capitalized terms used herein
are defined in Article I of this Agreement and, if not otherwise defined herein,
shall have the meanings ascribed to such terms in the Operating Agreement, dated
as of February 7, 2000, by and among Polo, the Original Media Members and the
Company (the "Operating Agreement").

         WHEREAS, Polo filed a Certificate of Formation on February 2, 2000 for
the Company on behalf of itself and the Original Media Members pursuant to the
provisions of the Act;

         WHEREAS, a Limited Liability Agreement for the Company was duly adopted
by Polo pursuant to and in accordance with the Act on February 2, 2000 (the
"Original Agreement");

         WHEREAS, the Original Agreement was amended and restated as of February
7, 2000 by the Amended and Restated Limited Liability Company Agreement (the
"Existing Agreement") of the Company to permit the admission of the Original
Media Members as Members;

         WHEREAS, Polo and the Original Media Members wish to enter into this
Second Amended and Restated Limited Liability Company Agreement of the Company
to permit the admission of JM as a Member and the issuance of Membership
Interests to employees from time to time and to provide for certain rights and
obligations of JM hereunder; and

         WHEREAS, Polo, the Original Media Members and JM desire to set forth
their respective rights and obligations as members of the Company and to provide
for the operation



and governance of the Company.

         NOW, THEREFORE, in consideration of the mutual promises and agreements
herein made and intending to be legally bound hereby, the parties hereby agree
to amend and restate the Existing Agreement in its entirety to read as follows:


                                    ARTICLE I

                                   DEFINITIONS

         For purposes of this Agreement, unless the context clearly indicates
otherwise, the following terms shall have the following meanings:

         "Accessories": Eyewear, jewelry, watches, leather goods, handbags,
     luggage, golf bags, fragrances, skin care, cosmetics and other beauty
     products and any other similar products, in each case that bear or are
     otherwise marketed, advertised or promoted under any of the Polo and Ralph
     Lauren Brands.

         "Act": The Delaware Limited Liability Company Act, Title 6, Chapter 18,
     Section 101 et seq. of the Delaware Code, and all amendments to the Act.

         "Additional Contribution": An additional Capital Contribution (other
     than a ValueVision Additional Contribution) payable by the Class A Members
     to the Company pursuant to Article VIII.

         "Additional Contribution Share": A Class A Member's proportionate share
     of an Additional Contribution equal to the product of (i) such Class A
     Member's Sharing Ratio and (ii) such Additional Contribution, or as
     otherwise agreed by the Class A Members under Section 8.2.

         "Adjusted Capital Account Deficit": With respect to any Member, the
     deficit balance, if any, in such Member's Capital Account as of the end of
     the relevant Fiscal Year, after giving effect to the following adjustments:

                  (i credit to such Capital Account the minimum gain chargeback
         that such Member is deemed to be obligated to restore pursuant to the
         penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of
         the Regulations; and

                  (ii debit to such Capital Account the items described in
         Sections 1.704-l(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5), and
         1.704-l(b)(2)(ii)(d)(6) of the Regulations.



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

         "Advertising Agreement": Advertising Agreement, dated as of February 7,
     2000, by and between the Company and NBC.

         "Affiliate": A Person that directly, or indirectly through one or more
     intermediaries, controls, or is controlled by or under common control with,
     the Person specified, for so long as such Person remains so associated to
     the specified Person. Control means, with respect to a specified Person,
     the possession, directly or indirectly, of the power to direct or cause the
     direction of the affairs or management of a Person, whether through the
     ownership of voting securities, by contract or otherwise.

         "Aggregate Contributions": As defined in Section 12.6.

         "Agreement": This Second Amended and Restated Limited Liability Company
     Agreement, as the same may be amended, modified or otherwise supplemented
     from time to time, all in accordance with this Agreement and the Act.

         "Ancillary Agreements": License Agreement, Supply Agreement, Services
     Agreement, Advertising Agreement, Promotion Agreement and Operating
     Agreement.

         "Annual Advertising Obligation": As defined in the Operating Agreement.

          "Apparel": Clothing products, including, men's, women's, children's
     apparel, swimwear, loungewear, intimate apparel, underwear, socks, hosiery,
     sports specialty apparel, outerwear, footwear and all other items included
     in International Trademark Class 25, in each case that bear or are
     otherwise marketed, advertised or promoted under any of the Polo and Ralph
     Lauren Brands.

         "Auditors": As defined in Section 3.3.

          "Budget": The capital and operating budgets of the Company for any
     quarterly period or Fiscal Year, prepared by the management of the Company
     and approved by the Management Committee in accordance with Section 5.4,
     including all amendments, modifications and revisions thereto, as approved
     in accordance with Section 5.4.

         "Business": Any business that the Company operates in accordance with
the Business Purpose set forth in Section 2.8.



         "Business Day": Any day other than Saturday, Sunday or any legal
     holiday observed in the State of Delaware or New York.

         "Business Plan": As defined in Section 5.4(a), including the Initial
     Business Plan.

         "Business Purpose": As defined in Section 2.8.

         "Capital Account": The account maintained for a Member determined in
     accordance with Article VIII.

         "Capital Contribution": Any contribution of Property or services made
     by or on behalf of a Class A Member in accordance with the terms of this
     Agreement.

         "Catalog": One or more direct marketing publications developed and
     produced, or subcontracted to a third party, by the Company for the
     promotion and sale of Polo Products under the Licensed Brands.

         "Cause": As defined in the JM Employment Agreement.

         "CEO": As defined in Section 6.1.

         "Certificate of Formation": The Certificate of Formation of the
     Company, as amended from time to time, and filed with the Secretary of
     State of Delaware.

         "CFO": As defined in Section 6.1.

         "Change of Control": Either a Polo Change of Control or an NBC Change
     of Control.

         "Class": The classes into which the Membership Interests may be
     classified or divided from time to time pursuant to the provisions of this
     Agreement.

         "Class A Member": Any Member holding Class A Membership Interests.

         "Class A Membership Interest": Any Membership Interest classified as
     such pursuant to the provisions of this Agreement.

         "Class B Member": Any Member holding Class B Membership Interests.

         "Class B Membership Interest": Any Membership Interest classified as
     such pursuant to the provisions of this Agreement.



         "Class B Change of Control": (1) The Initial Class A Members (and/or
     their Affiliates), individually and/or in the aggregate, hold less than a
     majority of the voting power of the Company's outstanding equity securities
     and (2) any "person" or "group" (within the meaning of Section 13(d) or
     14(d) of the Exchange Act or any successor thereto) (other than the Initial
     Class A Members and/or their Affiliates) holds equity securities of the
     Company representing a greater percentage of the voting power of the
     Company's outstanding equity securities than is held by the Initial Class A
     Members and/or their Affiliates, in the aggregate.

         "Class C Member": Any Member holding Class C Membership Interests.

         "Class C Membership Interest": Any Membership Interest classified as
     such pursuant to the provisions of this Agreement.

         "Closing": The initial transfer of the ValueVision Initial Capital
     Contribution to the Company and the consummation of the other transactions
     contemplated by the Existing Agreement and the Operating Agreement on the
     Closing Date and the delivery of all certificates and other documents
     necessary in connection therewith.

         "Closing Date": The date on which the Existing Agreement and the
     Ancillary Agreements were executed and delivered.

         "CNBC.com": CNBC.com LLC, a Delaware limited liability company, and any
     successor thereof.

         "Code": The Internal Revenue Code of 1986, as amended from time to
     time.

         "Collection Brands": Purple Label, Black Label and Collection and other
     similarly positioned premier, high-end, limited distribution Polo and Ralph
     Lauren Brands that may be developed or acquired in the future.

         "Commitment": The Capital Contributions that a Class A Member is
     obligated to make, including the ValueVision Additional Contributions and
     any Additional Contribution Share of a Class A Member.

         "Company": Ralph Lauren Media, LLC, a limited liability company formed
     under the laws of the State of Delaware, and any successor limited
     liability company.

         "Company Assets": Any rights or assets, whether tangible or intangible,
     acquired by the Company pursuant to this Agreement or any Ancillary
     Agreement, contributed by the Members in accordance with the terms of this
     Agreement or any Ancillary Agreement



     or otherwise acquired by the Company.

         "Company Customer Data": As defined in Section 3.1(b).

         "Company Securities": As defined in Section 3.5(d).

         "Continuing Member": As defined in Section 11.2.

         "Cumulative Losses": As defined in Section 12.6.

         "Damages": As defined in Section 14.1.

         "Default Interest Rate": The prime rate published by the Wall Street
     Journal for the last Business Day on which a Commitment is payable.

         "Delinquent Member": A Member who has failed to meet the Commitment of
     that Member.

         "Demand Registrable Securities": Any common stock held by a holder or
     issuable to a holder upon the exchange of Class A Membership Interests
     pursuant to Section 3.8, and any other securities which may be issued or
     distributed in respect of such common stock by way of distribution,
     recapitalization, reclassification or similar transaction.

         "Demand Registration": As defined in Section 3.5.

         "Disability": As defined in the JM Employment Agreement.

         "Disposition or Dispose": Any sale, assignment, exchange, mortgage,
     pledge, grant, hypothecation, lease or other transfer, absolute or as
     security or encumbrance (including dispositions by operation of law).

         "Distribution": A transfer of Property of the Company to a Member on
     account of a Membership Interest as described in Article IX.

         "Distribution Interest": As defined in Section 9.7(a)(iv).

         "Employee Member": Any employee or former employee of the Company to
     whom Class B Membership Interests or Class C Membership Interests are
     allocated.

         "Exchange Act": the Securities Exchange Act of 1934, as amended.



         "Existing Agreement": As defined in the recitals.

         "Fair Market Value":

                  (i) Fair Market Value of a Membership Interest means, as of
         any date (the "Computation Date"), the value of a Membership Interest
         as mutually determined by the Media Representative and Polo, or if the
         Media Representative and Polo cannot agree, then the Fair Market Value
         of any Membership Interest shall be (A) determined by (x) calculating
         the aggregate realizable value of all Membership Interests as of the
         Computation Date (the "Total Value"), assuming a sale of the Company in
         its entirety in a transaction or a series of related transactions to a
         third party on an arm's length basis in a controlled auction process
         designed to maximize membership value by attracting all possible
         bidders and (y) dividing the Total Value by the Membership Interest
         (the "Auction Value FMV") or (B) that which would be negotiated in an
         arm's length transaction (effected as of the Computation Date) between
         two willing parties after giving effect to any increased cost of
         ValueVision's services as provided in Section 3.15(d) (the "Private
         Value FMV"), as applicable. For all determinations of Fair Market
         Value, the License Agreement and the Supply Agreement shall be deemed
         to run for the remaining balance of their respective terms.

                  (ii) If Polo and the Media Representative cannot agree on a
         Fair Market Value of a Membership Interest as set forth in paragraph
         (i) above within 30 days after the date of notice of the event giving
         rise to such Fair Market Value determination, the Media Representative
         and Polo shall each appoint a nationally recognized investment bank as
         promptly as practicable and in any event within seven days following
         the expiration of such 30-day period to determine the Fair Market Value
         of such Membership Interest as of the Computation Date as promptly as
         possible thereafter and in any event within 30 days of such
         appointment. In the event that the higher of the two values determined
         by the investment banks is equal to or less than 110% of the lower
         value, then the Fair Market Value of such Membership Interest shall be
         the average of the two. In the event that the higher value is greater
         than 110% of the lower value, then the two investment banks shall
         promptly appoint a third investment bank of nationally recognized
         standing to determine the Fair Market Value of such Membership
         Interest. The third investment bank shall have 30 days to render its
         determination of the Fair Market Value and the average of the two
         closest such determinations (of the three investment banks) shall be
         the Fair Market Value of such Membership Interest. The third investment
         bank will not be permitted to see or otherwise have access to, or be
         informed of, the results of the determinations made by the first two
         investment banks. Each investment bank engaged pursuant



         to this clause (ii) shall promptly deliver to each of Polo and the
         Media Representative a written notice in reasonable detail of its
         determination of the Fair Market Value made pursuant to the foregoing.
         In the event that the determination made by the third investment bank
         is higher than the higher of the two previous determinations, the costs
         of the third investment bank shall be borne by the Member whose
         investment bank submitted the lower of the two previous determinations.
         In the event that the determination made by the third investment bank
         is lower than the lower of the two previous determinations, the costs
         of the third investment bank shall be borne by the Member whose
         investment bank submitted the higher of the two previous
         determinations. Except as set forth in the two immediately preceding
         sentences, each Member shall be responsible for the percentage
         represented by such Member's Membership Interest of all costs incurred
         in connection with the determination of the Fair Market Value set forth
         herein.

         "Fair Value": The amount that would be distributed to the Class B
     Members or the Class C Members with respect to their Class B Membership
     Interests or Class C Membership Interests, respectively, in accordance with
     Article IX, in the event of a liquidation of the Company at the date of
     determination based upon the value of the Company at such time. Such
     valuation of the Company shall be determined by the Management Committee in
     good faith using the following assumptions: (i) either (x) a sale of the
     Company in its entirety in a transaction or series of transactions to a
     third party on an arm's length basis in a controlled auction process
     designed to maximize membership value by attracting all possible bidders or
     (y) a negotiated arm's length transaction between two willing parties, in
     either case after giving effect to any increased cost of ValueVision's
     services as provided in Section 3.15(d), and (ii) the License Agreement and
     the Supply Agreement shall be deemed to run for the remaining balance of
     their respective terms; provided that if Fair Value is being determined for
     purposes of JM's Class B Membership Interests, if JM disagrees with the
     Management Committee's determination, he may require the Company to retain
     an independent investment banker to determine the Fair Value. The Company
     will bear the cost of such appraisal, unless the appraised value is 110% or
     less than the Management Committee's determination of Fair Value, in which
     case JM will bear the cost of such appraisal.

         "Family Controlled Entity": (i) Any not-for-profit corporation if at
     least a majority of its board of directors is composed of Ralph Lauren
     Family Members; (ii) any other corporation if at least a majority of its
     outstanding voting power is held by Ralph Lauren Family Members; (iii) any
     partnership if at least a majority of the outstanding voting interest of
     its partnership interests are owned by Ralph Lauren Family Members; and
     (iv) any limited liability or similar company if at least a majority of the
     outstanding voting interest of the company is owned by Ralph Lauren Family
     Members.



         "Fiscal Quarter": As defined in Section 3.2(c).

         "Fiscal Year": As defined in Section 3.4.

         "GAAP": As defined in Section 3.1(a).

         "Good Reason": As defined in the JM Employment Agreement.

         "Governmental Authority": Any nation or government, any state or other
     political subdivision thereof, and any entity exercising executive,
     legislative, judicial, regulatory or administrative functions of or
     pertaining to government.

         "Holder Request": As defined in Section 3.5(a).

         "Home Products": Products to furnish and/or decorate the home,
     including bedding and bath products, interior decor/furniture and tabletop
     items, paints, wallpaper, fabrics, curtains, home fragrance products and
     other decorative accessories, in each case bearing or otherwise marketed,
     advertised or promoted under any of the Polo and Ralph Lauren Brands.

         "Indemnified Party": As defined in Section 14.3(d).

         "Indemnifying Member": As defined in Section 14.1.

         "Indemnitee": As defined in Section 14.2.

         "Initial Business Plan": The Business Plan to be agreed among the
     parties hereto.

         "Initial Class A Members": Polo and the Original Media Members.

         "Initial Membership Interest": With respect to any Member, the Initial
     Membership Interest of such Member set forth in Exhibit A.

         "Initial Public Offering": The initial offer for sale of capital stock
     of the Company pursuant to an effective registration statement filed under
     the "Securities Act," which results in an active trading market in such
     shares of capital stock (it being understood that such an active trading
     market shall be deemed to exist if, among other things, such shares are
     listed on the New York Stock Exchange or the Nasdaq Stock Market, Inc.
     National Market System or another national securities exchange). In
     connection with an Initial Public Offering, the Members agree to take all
     actions necessary and appropriate to convert the form of the Company to an
     appropriate form



     required for such purpose and make such other adjustments as are necessary
     in connection therewith. "JM": As defined in the Preamble.

         "JM Employment Agreement": Employment agreement, dated as of February
     7, 2000, by and between JM and Polo, and assigned to, and assumed by the
     Company.

         "JM Interests": As defined in Section 4.3(a).

         "Lauren Family Trust": includes trusts the primary beneficiaries of
     which are Ralph Lauren, the spouse of Ralph Lauren, Lauren Descendants,
     Ralph Lauren's siblings, spouses of Lauren Descendants and their respective
     estates, guardians, conservators or committees and/or charitable
     organizations, provided that if the trust is a wholly charitable trust, at
     least a majority of the trustees of such trust consists of Ralph Lauren,
     the spouse of Ralph Lauren and/or Ralph Lauren Family Member.

         "License Agreement": License Agreement, dated as of February 7, 2000,
     by and between Licensor and the Company.

         "Licensed Brands": "Polo by Ralph Lauren," "Ralph (Polo Player Design)
     Lauren," "Polo," "Ralph," "Polo (Polo Player Design) Ralph Lauren," "Ralph
     Lauren," "RLX," "Polo Sport," "Polo Jeans Co," "Ralph Lauren Home
     Collection," the Polo Player Design and such other trademarks which
     Licensor licenses to the Company pursuant to the License Agreement. The
     term "Licensed Brands" shall specifically exclude the mark "Club Monaco."

         "Licensed Materials": Any text, artwork, photographs, transfers,
     transparencies, designs, graphic or pictorial or other similar material (i)
     furnished to the Company by or on behalf of Licensor for use by the Company
     in connection with any Catalog or the Site pursuant to the terms of this
     Agreement, the Operating Agreement or the License Agreement or (ii) created
     by or on behalf of the Company during the term of the License Agreement
     specifically for use in connection with any Catalog or the Site in the
     exercise of the Company's rights under the License Agreement, all of which
     shall be owned exclusively by Licensor, except to the extent it contains
     marks or materials owned or licensed by NBC or its Affiliates.

         "Licensor": PRL USA Holdings, Inc.

         "Lien": As defined in Section 11.4.



         "Liquidation Payment": As defined in Section 12.6.

         "Litigation": As defined in Section 5.3(xx).

         "Majority-Owned Affiliates": With respect to any Person, means any
     Affiliate of such Person with respect to which such Person owns at least a
     majority of the total voting power. For the avoidance of doubt, NBCi shall
     not be considered a Majority-Owned Affiliate of NBC except, for purposes of
     Section 11.6 hereof only, in the event that NBC shall actually own a
     majority of the outstanding voting stock of NBCi.

         "Management Committee": As defined in Section 5.1.

         "Manager": Any person appointed as a Manager of the Company by any
     Class A Member as provided in Section 5.2(b), but does not include any
     person who has ceased to be a Manager of the Company.

         "Marks": As defined in the License Agreement.

         "Material Adverse Effect": Any material adverse effect on (A) the
     assets, business, results of operations or condition (financial or
     otherwise) of the Company or (B) when used with respect to any Member or
     the Company, the ability of such Member or the Company to perform its
     obligations hereunder or under the Ancillary Agreements to which it is a
     party.

         "Material Deadlock": Failure by the Class A Members or the Management
     Committee to reach agreement on any matter (i) that is of such magnitude
     and is so fundamental to the Business and the Business Purpose that failure
     to resolve such issue could reasonably be expected to have a Material
     Adverse Effect, (ii) that is so fundamental to the business of Polo or any
     Original Media Member that failure to resolve such issue could reasonably
     be expected to have a material adverse effect on the assets, business,
     results of operations or condition (financial or otherwise) of Polo or any
     Original Media Member or (iii) which disagreement is of such a nature that
     continuance of operation of the Company as a jointly owned entity by the
     Class A Members would be unworkable as a result of the breakdown in the
     communications and business relationship of the Class A Members. For the
     avoidance of doubt, the Class A Members agree that a failure by the
     Managers appointed by either Polo or the Media Members to approve an
     Initial Public Offering, in accordance with Section 5.3(x), recommended in
     good faith by either Polo or the Media Members, as the case may be, at any
     time following the fifth anniversary of the Closing Date shall constitute a
     Material Deadlock.

         "Material Deadlock Event": As defined in Section 3.12(d).



         "Media Competitor": Any media, telecommunications or Internet company
     or similar company, or any Majority-Owned Affiliate thereof, a significant
     business of which is any of the three primary businesses of NBC and its
     Affiliates at the time of determination; provided, however, that Media
     Competitor shall not include any Person identified by Polo in writing to
     the Media Representative (a "Request Notice") that the Media Representative
     does not identify as a Media Competitor in writing to Polo within thirty
     (30) days of such Request Notice.

         "Media Manager": Any Manager appointed by the Media Members in
     accordance with Section 5.2(b).

         "Media Member IPO Right": As defined in Section 3.16.

         "Media Members": The Original Media Members and their transferees.

         "Media Members' Membership Interests": As defined in Section 3.12(d).

         "Media Members Sale Notice": As defined in Section 3.12(e)(i).

         "Media Members Sale Right": As defined in Section 3.12(e).

         "Media Representative": Initially NBC, or such other party as is
     designated as representative by all of NBC, ValueVision, CNBC.com and NBCi
     or their permitted transferees by written notice to Polo.

         "Member": A Person executing this Agreement when acting in its capacity
     as a member of the Company and any Person admitted as an additional or
     substitute member of the Company pursuant to this Agreement.

         "Member Plans": As defined in Section 4.2(f)(iii).

         "Membership Interest": The interest of a Member in the Company,
     including a Member's (i) right to receive allocations of Profit and Loss,
     Distributions, returns of capital and distribution of assets upon a
     dissolution of the Company, (ii) right, if any, to vote on, or to consent
     to, or approve or disapprove, certain actions or decisions regarding the
     Company as provided in this Agreement and the Operating Agreement or under
     the Act and (iii) Initial Membership Interest.

         "NBC": National Broadcasting Company, Inc., a Delaware corporation, and
     any successor thereof.



         "NBC Change of Control": The occurrence of any of the following: (a)
     (i) the acquisition of ownership, directly or indirectly, beneficially or
     of record, by any Person, of 25% or more of the voting equity or equity
     value of NBC, and General Electric Company and its Affiliates own 25% or
     less of the voting equity or equity value of NBC, as applicable, followed
     within 180 days by (ii) an event or a series of events which results in
     those officers of NBC which are actively involved in making decisions
     regarding the Company and this Agreement (and the Operating Agreement),
     including as of the date of this Agreement the Chief Executive Officer of
     NBC, the President of NBC West Coast and the President of NBC Interactive
     Business Development, who are Bob Wright, Scott Sassa and Martin Yudkovitz
     (collectively the "NBC Executives"), respectively, as of the date of this
     Agreement, or comparable positions at the relevant time, shall no longer be
     employees of NBC and such persons shall be replaced by persons who were not
     employees of NBC at least two months prior to the earlier of the entry into
     an agreement with respect to, or consummation of, the transaction described
     in clause (i) or (b) any sale, lease, exchange or transfer (in one
     transaction or a series of related transactions) of control of, whether by
     transfer of all or substantially all of the assets comprising, or
     otherwise, the NBC Television Network other than in a Permitted NBC
     Transfer.

         "NBC Change of Control Call": As defined in Section 3.13(c).

         "NBCi": NBC Internet, Inc., a Delaware corporation, and any successor
     thereof.

         "NBC Properties": The NBC Television Network, CNBC and NBC-owned and
     operated television stations, and other NBC-owned properties as they emerge
     in the future.

         "Nonrecourse Liability": As defined in Section 1.704-2(b)(3) of the
     Regulations.

         "Notice of Material Deadlock": As defined in Section 3.12(d).

         "Officer": As defined in Section 6.1.

         "Online": Any electronic interactive service, system, network or medium
     that is available via (a) public or private computer networks such as the
     Internet (including the World Wide Web), (b) proprietary online services
     such as America Online and Compuserve, (c) hybrid Internet services such as
     WebTV and @Home, (d) interactive cable, satellite or broadcast television
     and (e) any successor technology to any of the foregoing. "Online" does not
     mean traditional person-to-person voice only telephone communications.

         "Online Identifier": Any URL, keyword, logo or other identifier
     selected by the Company, subject to the License Agreement, for identifying
     Online the Company, the



     Business or any of its services.

         "Operating Agreement": As defined in the Preamble.

         "Operations Manual": As defined in Section 5.4(c).

         "Organization": A Person other than a natural person. The term
     Organization includes corporations (both non-profit and other
     corporations), partnerships (both limited and general), joint ventures,
     limited liability companies, and unincorporated associations, but the term
     does not include joint tenancies and tenancies by the entirety.

         "Original Agreement": As defined in the recitals.

         "Original Media Members": As defined in the Preamble.

         "Other Indemnified Persons": As defined in Section 14.1.

         "Permitted NBC Transfer": Any sale, lease, exchange or transfer (in one
     transaction or a series of related transactions) of the NBC Television
     Network in which (x) NBC's Membership Interest and all of NBC's rights and
     obligations hereunder are transferred to the transferee in such transaction
     and (y) any NBC Executive or other executive officer of NBC who was an
     officer of NBC for at least two months prior to the public announcement or
     execution of a definitive agreement regarding the transaction is employed
     by the transferee following such transaction as Chief Executive Officer of
     NBC, President of the NBC Television Network or in a similar (or higher)
     capacity for a period of at least six months after the consummation of such
     transaction.

         "Person": Any natural person, corporation, partnership, joint venture,
     trust, incorporated organization, limited liability company, other form of
     business or legal entity or Governmental Authority.

         "Piggyback Registrable Securities": Any common stock held by a holder
     or issuable to a holder upon the exchange of Class A Membership Interests
     or Class B Membership Interests (in the case of Class B Membership
     Interests, only the portion that is not relinquished to the Company in
     accordance with Section 2.13) pursuant to Section 3.8, and any other
     securities which may be issued or distributed in respect of such common
     stock by way of distribution, recapitalization, reorganization,
     reclassification, share exchange or similar transaction; provided, however,
     that with respect to Employee Members, only Vested Securities shall be
     Piggyback Registrable Securities.

         "Polo": Polo Ralph Lauren Corporation, a Delaware corporation, and any
     successor thereof.



         "Polo and Ralph Lauren Brands": (i) The Licensed Brands and Tradenames,
     (ii) any brands that are owned or licensed by Polo or an Affiliate of Polo
     or any other Person bound by the License Agreement on or after the date of
     this Agreement that are (A) marketed, advertised or promoted under the Polo
     or Ralph Lauren name or any part thereof or (B) related for purposes of
     Polo's marketing, advertising or promotional strategies to the Polo or
     Ralph Lauren names or any part thereof (including initials or any other
     derivatives) or, as a result of Polo's marketing, advertising or
     promotional strategies, are reasonably likely to be associated by customers
     with the Polo and Ralph Lauren Brands and (iii) any other brands that may
     from time to time be licensed to the Company pursuant to the License
     Agreement. The term Polo and Ralph Lauren Brands shall specifically exclude
     the trademark "Club Monaco" and shall include the trademarks "Chaps,"
     "Lauren" and "American Living."

         "Polo Buyout Right": As defined in Section 3.14(a).

         "Polo Change of Control": The occurrence of any of the following: (a)
     there shall be consummated (i) any consolidation, merger, recapitalization
     or other similar transaction involving Polo in which Polo is not the
     continuing or surviving corporation, or pursuant to which the shares of
     common stock or other equity securities of Polo (the "Polo Equity") would
     be converted in whole or in part into cash, other securities or other
     property, other than any such transaction in which (1) Ralph Lauren and his
     estate, guardian, conservator or committee , (2) the spouse of Ralph Lauren
     and her estate, guardian, conservator or committee, (3) each descendant of
     Ralph Lauren and their respective estates, guardians, conservators or
     committees (a "Lauren Descendant"), (4) each Family Controlled Entity and
     (5) the trustees, in their respective capacities as such, of each Lauren
     Family Trust (the "Ralph Lauren Family Members") beneficially hold at least
     a majority of the voting equity of the continuing or surviving company
     immediately after such transaction, (ii) any consolidation, merger,
     recapitalization or other similar transaction in which Polo is the
     continuing or surviving company, other than any such transaction in which
     Ralph Lauren and/or any Ralph Lauren Family Member beneficially holds at
     least a majority of the voting equity of the continuing or surviving
     company immediately after such transaction, or (iii) any sale, lease,
     exchange or transfer (in one transaction or a series of related
     transactions) of all or substantially all of the Licensed Brands or assets
     of Polo; (b) any person, other than a Ralph Lauren Family Member, shall
     become the beneficial owner (within the meaning of Rule 13d-3 under the
     Exchange Act) of the Polo Equity representing 50% or more of the combined
     voting equity of Polo as a result of a tender offer or exchange offer, open
     market purchases, privately negotiated purchases or otherwise; (c) the
     acquisition of ownership, directly or indirectly, beneficially or of
     record, by any Media Competitor, of 25% or more of the voting equity of
     Polo, and Ralph Lauren and/or Ralph Lauren Family Members collectively own
     25% or less of the voting equity of Polo; or (d) the acquisition of
     ownership, directly or indirectly, beneficially or of record, by any Media
     Competitor from Polo, of 10% or more of the total equity of Polo in a
     negotiated transaction in which Polo has not offered NBC a right to acquire
     such equity not less than 30 or more than 180 days prior to the acquisition
     of



     ownership on the same terms and conditions; provided, however, that any
     transfer of Polo Equity that occurs by reason of the laws of inheritance or
     through any bona fide testamentary or inter vivos device to a Ralph Lauren
     Family Member shall not constitute a Polo Change of Control.

         "Polo Change of Control Sale": As defined in Section 3.13(d).

         "Polo Deadlock Call": As defined in Section 3.12(d).

         "Polo Manager": The Manager appointed by Polo in accordance with
     Section 5.2(b).

         "Polo Members": Polo and its permitted transferees.

         "Polo Offer Notice": As defined in Section 3.12(e)(ii).

         "Polo Products": Apparel, Accessories and Home Products which are
     manufactured by or under license from Polo, any Affiliate of Polo or any
     other Person bound by the License Agreement or any combination of the
     foregoing. The definition of Polo Products will be automatically amended to
     include any additional products and services as may be determined in
     accordance with Section 2.6(c) of the Operating Agreement.

         "Preservation Notice": As defined in Section 3.14(b).

         "Principal Office": The principal office of the Company as set forth in
     Section 2.3.

         "Proceeding": Any administrative, judicial, or other adversary
     proceeding, including litigation, arbitration, administrative adjudication,
     mediation, and appeal or review of any of the foregoing.

         "Profits or Losses": For each Fiscal Year, an amount equal to the
     Company's taxable income or loss for such Fiscal Year, determined in
     accordance with Section 703(a) of the Code (for this purpose, all items of
     income, gain, loss, or deduction required to be stated separately pursuant
     to Section 703(a)(1) of the Code will be included in taxable income or
     loss), with the following adjustments:



                  (i Any income of the Company that is exempt from federal
         income tax and not otherwise taken into account in computing Profits or
         Losses pursuant to this definition will be added to such taxable income
         or loss;

                  (ii Any expenditures of the Company described in Section
         705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code
         expenditures pursuant to Section 1.704-l(b)(2)(iv)(i) of the
         Regulations, and not otherwise taken into account in computing Profits
         or Losses pursuant to this definition, will be subtracted from such
         taxable income or loss;

                  (iii Notwithstanding any other provisions of this definition,
         any items which are specially allocated pursuant to paragraph 9.4 shall
         not be taken into account in computing Profits or Losses.

         "Promotion Agreement": Promotion Agreement, dated as of February 7,
     2000, by and between the Company and NBCi.

         "Property": Any property, real or personal, tangible or intangible,
     including cash, and any legal or equitable interest in such property, but
     excluding services and promises to perform services in the future.

         "Purchase Price Notice": As defined in Section 3.14(b).

         "Qualified Buyer": Any Person that satisfies as of the date of
     determination each of the following requirements: (a) the stockholders'
     equity or the market capitalization of such Person is or was, as of the end
     of the most recently completed Fiscal Quarter of such Person prior to the
     date of entering into any agreement for the transfer to such Person of any
     interest in the Company in excess of U.S. $100 million or U.S. $1 billion,
     respectively; (b) neither such Person nor any Affiliate of such Person has
     been convicted within the prior five years of any criminal violation of law
     in any country; (c) neither such Person nor any Subsidiary of such Person
     directly or indirectly manages, operates, owns any equity interest in
     excess of 10% in or has agreed to purchase a Person listed on Schedule 1;
     (d) the admission of such Person as a Member or such Person being, acting
     or otherwise exercising the rights of a Member will not have a Material
     Adverse Effect on Polo or the Company, or make it illegal or impossible for
     the Company or Polo to do business in any country where the Company or Polo
     at that time does business; (e) there is not pending any material
     litigation against such Person which would be reasonably expected to have a
     material adverse effect on the assets, business, results of operations or
     condition (financial or otherwise) of such Person; and (f) such Person is
     not bankrupt, insolvent or in similar financial condition.

         "Quiet Period": The period commencing on the date the Change of Control
     notice



     required by Section 3.13(a) is received and ending on the date that is 180
     days thereafter.

         "Regulations": The federal income tax regulations promulgated by the
     United States Treasury Department under the Code as such Regulations may be
     amended from time to time. All references herein to a specific section of
     the Regulations will be deemed to also refer to any corresponding provision
     of succeeding Regulations.

         "Regulatory Allocations": As defined in Section 9.4(c).

         "Requesting Holder": As defined in Section 3.5(a)(i).

         "ROFR Notice": As defined in Section 3.12(e)(iii).

         "SEC": The Securities and Exchange Commission.

         "SEC Reports": As defined in Section 4.2(g).

         "Secretary": As defined in Section 6.5.

         "Securities": As defined in Section 11.6(a).

         "Securities Act": Securities Act of 1933, as amended.

         "Services Agreement": Services Agreement, dated as of February 7, 2000,
     by and between the Company and ValueVision.

         "Sharing Ratio": With respect to any Member, the Sharing Ratio of each
     Member expressed as a pro rata portion of 100%, as set forth opposite each
     Member's name on Exhibit A. Exhibit A will be amended from time to time in
     accordance with this Agreement. In the event that a Membership Interest is
     transferred in accordance with the terms of this Agreement, the transferee
     will succeed to the Membership Interest and Sharing Ratio of the
     Withdrawing Member.

         "Site": With respect to the World Wide Web, the website and pages
     developed, produced and maintained by, or at the direction of, the Company
     located at or operated under the domain name Polo.com, ralphlauren.com or
     any subdomains of either thereof, or any other domain names agreed by the
     Class A Members, and successors or extensions thereof, or any comparable
     area, site or pages designed to promote the Business in other Online media
     or services.

         "Subsidiary": Any corporation, partnership, limited liability company,
     joint venture or other legal entity of which a Person (either alone,
     through or together with any other Subsidiary) that owns or has the right
     to acquire, directly or indirectly, more than



     50% of the stock or other equity interests the holder of which is generally
     entitled to vote for the election of the board of directors or other
     governing body of such corporation or other legal entity.

         "Supply Agreement": Supply Agreement, dated as of February 7, 2000, by
     and between the Company and Polo.

         "Tax Matters Partner": As defined in Section 10.2.

         "Territory": As defined in the License Agreement.

         "Third Party Claim": As defined in Section 14.3(d).

         "Tradename": As defined in the License Agreement.

         "Transfer": As defined in Section 11.2.

         "Treasurer": As defined in Section 6.6.

         "United States": The United States of America (including the District
     of Columbia), its possessions and territories and other areas subject to
     its jurisdiction (including the Commonwealth of Puerto Rico, the U.S.
     Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
     Islands).

         "ValueVision": ValueVision International, Inc., a Minnesota corporation
     and any successor thereof.

         "ValueVision Additional Contributions": As defined in Section 8.2(a).

         "ValueVision Commitment": $50,000,000.

         "ValueVision Initial Capital Contribution": As defined in Section
     8.1(a).

         "Vested Securities": (i) With respect to JM, at any given time, (A) if
     JM is employed by the Company, 25% of JM's initial Class B Membership
     Interests (or securities into which such initial Class B Membership
     Interests were converted) for each anniversary of the Closing Date that has
     passed, commencing on the first anniversary of the Closing Date and (B) if
     JM is no longer employed by the Company, that portion of JM's outstanding
     Class B Membership Interests (or securities into which such Class B
     Membership Interests were converted) no longer subject to relinquishment
     pursuant to Section 2.13 and (ii) with respect to other Employee Members,
     as set forth in the subscription or other agreements pursuant to which such
     Employee Members'



     Membership Interests were issued.

         "Vice President": As defined in Section 6.4.

         "Withdrawing Member": As defined in Section 11.2.


                                   ARTICLE II

                              FORMATION AND CONDUCT

         2.1 Formation and Purpose. The Members hereby authorize and ratify the
formation of the Company as a Delaware limited liability company pursuant to the
provisions of the Act. The original Certificate of Formation was filed with the
Secretary of State of the State of Delaware on February 2, 2000. On the Closing
Date, the Original Media Members and Polo were admitted as Members. The purposes
of the Company are to engage in the following activities:

         (i) to conduct the Business;

         (ii) to acquire, hold, own, operate, manage, finance, encumber, sell,
     or otherwise Dispose of or otherwise use the Company Assets;

         (iii) to enter into any lawful transaction and engage in any lawful
     activities as may be necessary, incidental or convenient to carry out the
     business of the Company as contemplated by this Agreement, the Ancillary
     Agreements and the Business Purpose.

         The Company may do any and all acts and things necessary, appropriate,
proper, advisable, or convenient for the furtherance and accomplishment of the
purposes of the Company, including to engage in any kind of activity and to
enter into and perform obligations of any kind necessary to or in connection
with, or incidental to, the accomplishment of the purposes of the Company, so
long as such activities and obligations may be lawfully engaged in or performed
by a limited liability company under the Act. In furtherance of its purposes,
the Company shall have and may exercise all of the powers now or hereafter
conferred by Delaware law on limited liability companies formed under the Act.

         2.2 Name. The name of the Company is "Ralph Lauren Media, LLC". All
business of the Company will be conducted under the name of the Company and
title to all property, real, personal or mixed, owned by or leased to the
Company will be held in such name.

         2.3 Principal Office and Place of Business. The principal office and
place of



business of the Company will be located at such place or places as Polo and the
Media Representative may from time to time designate by mutual agreement.

         2.4 Term. The term of the Company commenced on the date the Certificate
of Formation was filed with the Secretary of State of the State of Delaware in
accordance with the Act and will continue until the Company is dissolved as
provided in Article XII.

         2.5 Registered Office and Agent. The registered agent for the service
of process and the registered office will be that Person and location reflected
in the Certificate of Formation as filed in the office of the Secretary of State
of the State of Delaware. At any time and from time to time the Company may
designate another registered office or agent.

         2.6 Qualification in Other Jurisdictions. The Company will be qualified
or registered under foreign qualification or assumed or fictitious name statutes
or similar laws in any jurisdiction in which the Company transacts business and
in which such qualification or registration is determined by the Company to be
necessary or advisable.

         2.7 No Liability to Third Parties. No Member, Manager or Officer,
solely by reason of being a Member or acting as a Manager or Officer, will be
subject to any liability in connection with the Company Assets, debts,
obligations, liabilities, acts or affairs of the Company, including under any
Proceeding. The debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, will be solely the debts, obligations
and liabilities of the Company.

         2.8 Business Purpose. The Members hereby agree that the following
statement sets forth the purpose of the Company (the "Business Purpose"): (i)
the development of the Company into a world class direct marketer of Polo and
Ralph Lauren Brands; (ii) the establishment, articulation and definition of Polo
and Ralph Lauren Brands' identity Online and, to the extent applicable, in the
Catalog and the creation of an appropriate level of awareness for both; (iii)
the positioning of Online activities and the Catalog as integral components of
new and existing customers' shopping channels; (iv) providing consumer value
through product sales, content and service to the same level that Polo delivers
in free-standing retail stores, but with elimination or reduction of negative
aspects of shopping in a store; (v) providing format and content that promotes
(1) the Business, (2) Polo's business generally with respect to the Licensed
Brands, (3) Collection Brands and (4) in accordance with Section 2.3(a) of the
Operating Agreement, any other Polo and Ralph Lauren Brands provided that such
promotions are not materially competitive with the Business Online; (vi)
focusing on the customer and developing lasting one-to-one relationships; (vii)
providing an interactive shopping experience, comprised of different shopping
modes and customer rapport; (viii) the creation of a direct-to-customer upscale
shopping environment Online, offering products and services at traditional
retail prices, as distinguished from an outlet store or other price-driven
shopping facility; (ix) providing entertaining and engaging experiences Online
itself through means of experience-rich



promotional events that are interwoven into the merchandising and product
presentations; and (x) the development and promotion, as applicable, of new
products and services under the Polo and Ralph Lauren Brands in accordance with
Section 2.6 of the Operating Agreement.

         2.9 Business Launch. The Members recognize the competitive imperative
of launching the Business as promptly as practicable. Pursuant to a phased
market entry outlined in the Initial Business Plan, the Members shall use all
commercially reasonable efforts to launch the Site no later than October 15,
2000. With respect to a Catalog, if the Company does not launch, or sub-contract
with a third party to launch, a Catalog by January 1, 2003, Polo shall have the
right to enter into arrangements with a third party to develop and promote a
Catalog; provided, to the extent such failure to launch was not due to an action
on the part of the Media Members or the failure on the part of any Media Members
to act and the terms of any such arrangement with a third party are materially
more favorable than those offered to the Company, Polo shall offer the Company
the opportunity to agree to launch the Catalog in a reasonable period of time on
such terms and the Company shall have 60 days to advise Polo in writing that it
agrees to all such terms.

         2.10 Initial Activities. On the Closing Date, (i) Polo, the Original
Media Members and the Company entered into the Operating Agreement, (ii)
Licensor and the Company entered into the License Agreement, (iii) ValueVision
and the Company entered into the Services Agreement, (iv) Polo and the Company
entered into the Supply Agreement, (v) NBC and the Company entered into the
Advertising Agreement and (vi) NBCi and the Company entered into the Promotion
Agreement.

         2.11 Membership Interests. (a) The Membership Interests shall initially
be divided into three Classes, "Class A Membership Interests", "Class B
Membership Interests" and "Class C Membership Interests". Except as expressly
provided in this Agreement to the contrary, (i) any reference to "Membership
Interests" shall include the Class A Membership Interests, Class B Membership
Interests and Class C Membership Interests and (ii) any reference to "Members"
shall include the Class A Members, the Class B Members and the Class C Members.

         (b) Class A Membership Interests. As of the date of this Agreement,
Class A Membership Interests are owned by the Class A Members as set forth on
Exhibit A.

         (c) Class B Membership Interests and Class C Membership Interests. The
Class B Membership Interests and the Class C Membership Interests shall be
special Classes of Membership Interests in the Company representing only (i) the
right to participate in allocations of Profits and Losses of the Company and to
receive Distributions from the Company in accordance with the terms of this
Agreement and (ii) such other rights expressly provided to the Class B
Membership Interests and the Class C Membership Interests under this Agreement.
Each Class B Member and each Class C Member, by his execution of this Agreement
or



acceptance of the benefits of the Class B Membership Interests or Class C
Membership Interests, as the case may be, hereby acknowledges and agrees that:

         (x) Except as may be expressly provided in this Agreement, no Class B
     Member and no Class C Member in their capacity as such shall have any right
     to participate in the management of the business and affairs of the Company
     or to vote on or approve of any matters requiring the consent or approval
     of the Members, including any matter requiring the unanimous or other
     consent of the Members or any class of Members under the Act;

         (y) No Class B Member and no Class C Member shall have any right or any
     obligation to make Capital Contributions to the Company:

                  (i) At the date of this Agreement, JM will be issued Class B
         Membership Interests with a Sharing Ratio as set forth on Exhibit A;

                  (ii) After the date of this Agreement, Class C Membership
         Interests may be issued by the Managers to key employees in accordance
         with this Section 2.11; provided that upon any issuance of Class C
         Membership Interests, (i) the Sharing Ratio of the Class B Members will
         remain the same as the Class B Members prior to such issuance, (ii) the
         Sharing Ratio of each Class C Member after the issuance will remain the
         same as the Sharing Ratio of such Class C Member prior to such issuance
         and (iii) the Sharing Ratio of the Class A Members shall be adjusted
         accordingly. The Class C Membership Interests will be issued to key
         employees pursuant to the terms and conditions of subscription
         agreements and other agreements that are approved by the Management
         Committee and such other terms and conditions as are established by the
         Management Committee in consultation with the CEO;

                  (iii) For the avoidance of doubt, under no circumstances will
         the Managers issue any Class C Membership Interests that would result
         in an aggregate Sharing Ratio of the Class B Members and the Class C
         Members exceeding 10%; and

         (z) No Class B Member and no Class C Member shall have any rights under
     the Operating Agreement.

         2.12 Admission of Additional Members. The Class A Members are
authorized to cause the Company to issue new Classes of Membership Interests at
any time or from time to time to existing Members or to other Persons and to
admit such other Persons to the Company as additional Members subject to the
terms and conditions of this Agreement. The Class A Members shall have complete
discretion to determine, with respect to such new Classes, the designations,
preferences and relative rights, powers and duties of such new Class including,



without limitation: (i) the allocation of items of Company income, gain, loss,
deduction and credit to each such Class, (ii) the rights of each such Class upon
dissolution and liquidation, (iii) the Distribution Interest of such class, (iv)
the terms and conditions upon which each such Class will be issued, subject to
repurchase, and assigned or transferred; and (v) the right of each such Class to
vote on Company matters, including matters relating to the relative rights,
preferences and privileges of each such Class. Upon or prior to the issuance of
any Class, the Class A Members may amend any provision of this Agreement as the
Class A Members determine to be necessary or appropriate in connection therewith
in order to reflect the authorization and issuance of each such Class and the
relative rights and preferences as to the matters set forth herein, provided
that such amendment does not disproportionately reduce the rights of the Class B
Members or Class C Members hereunder in any material respect without consent
from a majority of the holders of Membership Interests of each affected Class
(it being understood that the creation of a new Class of Membership Interests in
connection with the funding by the Class A Members of Additional Contributions
in accordance with Section 8.2(a) and the corresponding adjustment of the
Sharing Ratio or Distribution Interest of any Member shall not in and of itself
constitute an amendment giving rise to the rights of the Class B Members and
Class C Members pursuant to this sentence).

         2.13 Relinquishment of Class B Membership Interests and Class C
Membership Interests. (a) The outstanding Class B Membership Interests will be
relinquished to the Company (i.e., automatically deemed to have been canceled
and delivered to the Company without consideration) as follows: (i) if JM's
employment with the Company is terminated by the Company for Cause or if JM's
employment with the Company is terminated by JM without Good Reason prior to the
fourth year anniversary of the Closing Date, then the following percentage of
the outstanding Class B Membership Interests will be relinquished to the Company
effective as of such termination: (1) if termination occurs prior to the
one-year anniversary of the Closing Date, 100%; (2) if termination occurs on or
after the one-year anniversary of the Closing Date but prior to the two-year
anniversary of the Closing Date, 75%; (3) if termination occurs on or after the
two-year anniversary of the Closing Date but prior to the three-year anniversary
of the Closing Date, 50%; and (4) if termination occurs on or after the
three-year anniversary of the Closing Date but prior to the four-year
anniversary of the Closing Date, 25%, (ii) if JM's employment is terminated by
the Company without Cause for reasons related to JM's performance prior to the
date the Site is established and operative in all material respects for public
use, the Class B Membership Interests shall be relinquished to the Company in
accordance with the formula contained in clause (i) above effective as of the
date of termination of JM's employment, provided, that the amount of the Class B
Membership Interests to be relinquished to the Company pursuant to this clause
(ii) will be calculated as if JM's date of termination of employment with the
Company is the one (1) year anniversary of JM's termination of employment with
the Company, and (iii) in the event of JM's death or Disability prior to the
fourth anniversary of the Closing Date, the Class B Membership Interests shall
be relinquished to the Company in accordance with the formula contained in
clause (i) above effective as of the



date of termination of JM's employment due to death or Disability, provided,
that the amount of the Class B Membership Interests to be relinquished to the
Company pursuant to this clause (iii) will be calculated as if JM's date of
termination of employment with the Company is the one (1) year anniversary of
JM's termination of employment with the Company due to such death or Disability
(e.g., if such termination due to death or Disability occurs eighteen (18)
months after the Closing Date, the termination will be deemed to occur thirty
(30) months after the Closing Date and fifty percent (50%) of the aggregate
amount of Class B Membership Interests would be relinquished to the Company).

         (b) The Class C Membership Interests will be subject to relinquishment
as set forth in the subscription or other agreements pursuant to which such
Class C Membership Interests will be issued.

         (c) Effective upon the occurrence of any event resulting in the
relinquishment to the Company or upon the repurchase by the Company pursuant to
Section 2.14 of any of the Class B Membership Interests or Class C Membership
Interests, (i) such relinquished or repurchased Membership Interests shall, for
all purposes of this Agreement, be canceled and no longer be considered
outstanding and shall no longer be entitled to receive any distributions
pursuant to Section 9.7 and 12.2 hereof or have any rights hereunder and (ii)
the Sharing Ratio of such Class B Member or Class C Member as set forth on
Exhibit A or otherwise in the applicable subscription or other agreements,
respectively, shall be reduced by the percentage amount of such Class B
Membership Interests relinquished or repurchased or Class C Membership Interests
relinquished or repurchased, as the case may be, and the Sharing Ratio of the
Class A Members shall increase proportionately to the extent such relinquished
or repurchased Class B Membership Interests or Class C Membership Interests, as
the case may be, are not granted to another Person.

         2.14 Redemption of Class B Membership Interests and Class C Membership
Interests. (a) If an Employee Member's employment with the Company is
voluntarily or involuntarily terminated for any reason whatsoever, then the
Company shall have an option to purchase all of the Class B Membership Interests
or Class C Membership Interests, as the case may be, that are not relinquished
to the Company. In addition, in the event of a Class B Change of Control, all of
the Class B Membership Interests that have not been previously relinquished to
the Company shall be redeemed by the Company. The purchase price for such Class
B Membership Interests or Class C Membership Interests, as the case may be,
whether upon a Class B Change of Control or a termination of employment, will be
their Fair Value. The Company may make payment of the purchase price in cash or
publicly traded securities of the Company or its Affiliates, if any, or, at the
option of any Class A Members, in publicly traded securities of such Class A
Members of the Company or any combination thereof. The option of the Company
under this Section (and in the case of a Class B Change of Control, the
obligation of the Company) may be assigned by it to any Person or Persons as
long as such Person or



Persons make payment of the purchase price solely in cash and/or publicly traded
securities of the Initial Class A Members or their Affiliates.

         (b) The completion of the purchases pursuant to the foregoing paragraph
(a) shall take place at the principal office of the Company on the sixtieth
(60th) day after the giving of the notice of Class B Change of Control or the
notice of the Company's election to repurchase the Class B Interests or Class C
Interests, as the case may be.

         (c) Notwithstanding any of the foregoing, the provisions of this
Section 2.14 shall terminate upon the consummation of an Initial Public
Offering.

         2.15 [Reserved]

         2.16 Employment by the Company. Nothing contained in this Agreement (i)
obligates the Company to employ JM or any other Member in any capacity
whatsoever or (ii) prohibits or restricts the Company from terminating the
employment of JM or any other Member at any time or for any reason whatsoever.

         2.17 "Drag-Along" Rights Against Class B Members and Class C Members.
In the event that any or all of the Initial Class A Members propose to transfer,
in any single or series of related transactions, twenty percent (20%) or more of
the aggregate Class A Membership Interests then owned by all the Initial Class A
Members other than to one or more of their respective Affiliates or to other
Members and their Affiliates, the Initial Class A Member(s) will have the right,
exercisable upon not less than fifteen (15) days' prior written notice from such
Initial Class A Member(s), to require that the Class B Members and Class C
Members transfer their Class B Membership Interests and Class C Membership
Interests, respectively, owned by such Class B Members and Class C Members on
the same terms and conditions as the transfer of Class A Membership Interests
proposed to be made by the Initial Class A Members. Such terms and conditions
shall include, without limitation: the sales price paid; the payment of fees,
commissions and expenses; the provision of representations, warranties and
indemnifications; provided that any indemnification provided by the Class B
Members or the Class C Members, as the case may be, shall (except with respect
to legal title to the relevant securities) be pro rata in proportion with the
total consideration to be received by the Class B Members or the Class C
Members, as the case may be, relative to the total consideration to be received
by the Initial Class A Members. The number of Class B Membership Interests and
Class C Membership Interests to be sold by each Class B Member and Class C
Member, respectively, shall be a percentage of the aggregate Class B Membership
Interests and Class C Membership Interests owned by such Class B Member and
Class C Member, respectively, that is equal to the percentage of the aggregate
Class A Membership Interests owned by the Initial Class A Members that are being
transferred, and such Class B Membership Interests and Class C Membership
Interests shall be converted into Class A Membership Interests based upon the
Fair Value of Class B Membership Interests and Class C Membership Interests at
such time, as determined in good faith by the Management



Committee; provided that such Class B Members and Class C Members will be
obligated to sell their Vested Securities on a first priority basis prior to
selling any remaining Class B Membership Interests or Class C Membership
Interests. Each of the Class B Members and the Class C Members will, if
requested by the transferring Initial Class A Member, execute and deliver a
power of attorney in form and substance reasonably satisfactory to such Initial
Class A Member and a custody agreement in form and substance reasonably
satisfactory to and signed by the Initial Class A Member with respect to the
Class B Membership Interests and Class C Membership Interests which are to be
sold by such Class B Members and Class C Members, respectively. Notwithstanding
any of the foregoing, the provisions of this Section 2.17 shall terminate upon
the consummation of an Initial Public Offering.

         2.18 "Tag-Along" Rights of Class B Members and Class C Members. (a) In
the event that any or all of the Initial Class A Members propose to transfer, in
any single or series of related transactions, twenty percent (20%) or more of
the aggregate Class A Membership Interests then owned by all the Initial Class A
Members other than to one or more of their respective Affiliates or to other
Members and their Affiliates, and other than in an Initial Public Offering, the
Initial Class A Member(s) will notify the Class B Members and the Class C
Members in writing (a "Transfer Notice") of such proposed sale (a "Proposed
Sale") and the material terms of the Proposed Sale as of the date of the
Transfer Notice (the "Material Terms"). The Transfer Notice will be delivered to
the Class B Members and the Class C Members not less than fifteen (15) days
prior to the consummation of the Proposed Sale and not more than five (5) days
after the execution of the definitive agreement relating to the Proposed Sale,
if any (the "Sale Agreement"). If within ten (10) days of receipt by the Class B
Members and the Class C Members of such Notice, the Initial Class A Members
receive from any Class B Members or the Class C Members a written request (a
"Request") to include in the Proposed Sale any Class B Membership Interests or
the Class C Membership Interests, as the case may be, which are Vested
Securities owned by such Class B Members or the Class C Members, respectively
(which Request shall be irrevocable unless (a) there shall be a material adverse
change in the Material Terms or (b) if otherwise mutually agreed to in writing
by the Initial Class A Members and the Class B Members or the Class C Members,
as the case may be), the Class B Membership Interests or the Class C Membership
Interests, as the case may be, so requested will be so included as provided
herein. In the event that the Initial Class A Members sell their Class A
Membership Interests in related transactions with materially different terms,
such transactions shall each be deemed a separate Proposed Sale.

         (b) Except as may otherwise be provided herein, the Class B Members'
Class B Membership Interests or the Class C Members' Class C Membership
Interests, as the case may be, which are Vested Securities, subject to a Request
will be included in a Proposed Sale pursuant hereto and in any agreements with
purchasers relating thereto on the same terms and subject to the same conditions
applicable to the Class A Membership Interests which the Initial Class A Members
propose to sell in the Proposed Sale. Such terms and conditions shall include,



without limitation: the sales price; the payment of fees, commissions and
expenses; the provision of representations, warranties and indemnifications;
provided that any indemnification provided by the Class B Members or the Class C
Members, as the case may be, shall (except with respect to legal title to the
relevant securities) be pro rata in proportion with the total consideration to
be received by the Class B Members or the Class C Members, as the case may be,
relative to the total consideration to be received by the Initial Class A
Members.

         (c) The percentage of Class B Membership Interests or Class C
Membership Interests, as the case may be, which are Vested Securities, which
each Class B Member or Class C Member, respectively, will be permitted to
include in a Proposed Sale pursuant to a Request will be any amount of Class B
Membership Interests or Class C Membership Interests, as the case may be, which
are Vested Securities, owned by such Class B Member or Class C Member,
respectively (allocated as provided below), not to exceed a percentage of the
aggregate Class B Membership Interests or Class C Membership Interests, as the
case may be, which are Vested Securities, owned by such Class B Member or Class
C Member, respectively, that is equal to the percentage of the aggregate Class A
Membership Interests owned by the Initial Class A Members that are being
transferred in the transaction subject to such Transfer Notice; provided that if
a proposed transferee in a Proposed Sale advises the Initial Class A Members
that it wants to limit the number of Membership Interests that it purchases to
an amount less than all of the Class A Membership Interests, Class B Membership
Interests or Class C Membership Interests, as the case may be, that would be
available for purchase under this Section 2.18, the Initial Class A Members will
so advise each Class B Member or Class C Member, as the case may be, and the
amount of Class A Membership Interests, Class B Membership Interests or Class C
Membership Interests, as the case may be, to be included in such Proposed Sale,
shall be determined pro rata in proportion to the total number of Class A
Membership Interests, Class B Membership Interests or Class C Membership
Interests, as the case may be, held by each Class A Member, Class B Member and
Class C Member and sought to be included in such sale, in order to meet such
limitation. Such Class B Membership Interests or Class C Membership Interests,
as the case may be, shall be converted into Class A Membership Interests based
upon the Fair Value of Class B Membership Interests or Class C Membership
Interests, as the case may be, at such time, as determined in good faith by the
Management Committee.

         (d) Upon delivering a Request, each Class B Member or Class C Member,
as the case may be, will, if requested by any Initial Class A Member, execute
and deliver a custody agreement and power of attorney in form and substance
satisfactory to the Initial Class A Member with respect to such Class B Member's
or Class C Member's Class B Membership Interests or Class C Membership
Interests, respectively, which are to be sold by such Class B Member or Class C
Member, as the case may be, pursuant hereto. Such custody agreement and power of
attorney will provide, among other things, that such Class B Member or Class C
Member, as the case may be, will deliver to and deposit in custody with the
custodian and attorney-in-fact named therein a certificate or certificates
representing such Class B Membership Interests or Class C Membership Interests,
respectively (duly endorsed in blank by the registered



owner or owners thereof), and irrevocably appoint such custodian and
attorney-in-fact as his agent and attorney-in-fact with full power and authority
to act under such custody agreement and Power of Attorney on his behalf with
respect to the matters specified therein.

         (e) The Class B Members' or the Class C Members' rights, as the case
may be, pursuant hereto to participate in a Proposed Sale shall be contingent on
their strict compliance with each of the provisions hereof and their willingness
to execute such documents in connection therewith as may be reasonably requested
by the Initial Class A Members.

         (f) Notwithstanding any of the foregoing, the provisions of this
Section 2.18 shall terminate upon the consummation of an Initial Public
Offering.

         2.19 Authorization of Actions Taken by the Company.

         (a) Ancillary Agreements. The Members hereby ratify, confirm, authorize
and approve the execution and delivery by any officer or other Person duly
authorized by the Company, including Polo, on behalf of the Company of the
Ancillary Agreements and the execution and delivery of such other instruments,
agreements, assignments, certificates or other documents as any such officer or
other Person deems necessary or appropriate in connection therewith.

         (b) Formation. The Members hereby ratify, confirm, authorize and
approve the formation of the Company and the contemporaneous filing of the
Certificate of Formation of the Company with the Delaware Secretary of State.
The Members hereby ratify the designation of Polo as an authorized person,
within the meaning of the Act, to execute, deliver and file the Certificate of
Formation and any amendments and/or restatements of the Certificate of Formation
and any other certificates necessary for the Company to qualify to do business
in a jurisdiction in which the Company may wish to conduct business. The
execution by Polo alone of any of the foregoing certificates (and any amendments
and/or restatements thereof) shall be sufficient.

         (c) Bank Accounts. The Members hereby ratify, confirm, authorize and
approve the opening of whatever bank accounts shall be deemed necessary by Polo
for the expeditious conduct of the Company's affairs by Polo or any officer on
behalf of the Company in the name of the Company with such financial
institutions selected by Polo or any such officers from time to time, and the
adoption of any and all resolutions required to be adopted by any such financial
institution as a condition to the opening of such accounts are hereby ratified,
confirmed, authorized and approved. Any and all actions described in this
Section 2.19 heretofore taken by Polo on behalf of the Company or by the
Company's officers and agents on behalf of the Company are approved, ratified
and confirmed as the acts of the Company without the necessity of further
evidence.



                                   ARTICLE III

                                   OPERATIONS

         3.1 Books and Records.

         (a) Books and Accounts. The Company will keep, or cause to be kept,
accurate, full and complete books and accounts showing assets, liabilities,
income, operations, transactions and the financial condition of the Company. The
books, accounts and records of the Company at all times will be maintained at
the Company's principal office. Such books and accounts will be prepared in
accordance with generally accepted accounting principles in effect in the United
States at the time of preparation of such books and accounts, consistently
applied ("GAAP"). Any Class A Member or its designee and any Manager will have
access to the physical premises, the operations, the books, accounts and records
of the Company at any time during regular business hours and will have the right
to copy any records at its expense. No charges will be made to such Class A
Member, its designee or Manager by the Company for such inspection and audit
other than for out-of-pocket costs of the Company occasioned thereby. The
Company will maintain all such records for a period of three years from the date
of the making or receipt thereof, except for those records, if any, required to
be kept for a longer period under applicable law or which a Class A Member
reasonably requests be maintained for a longer period.

         (b) Other Records. The Company will provide, or will cause to be
provided, to the Class A Members real time access to all sales, inventory and
operational data relating to the Business, any and all information relating to
customers and potential customers of the Business or otherwise relating to
Online or Catalog marketing and sales activities of the Company, including data
relating to the volume of traffic generated by the Site, the persons visiting
the Site, the length of time spent at the Site, inventory control, sales
records, history of inventory as well as individual categories of inventory and
such other related information that is or may become available (collectively,
the "Company Customer Data"), provided that the use and disclosure of such
Company Customer Data shall be subject to the confidentiality and use
restrictions set forth in the Operating Agreement.

         3.2 Financial Statements; Information; Bank Accounts.

         (a) Preparation in Accordance with GAAP. All financial statements
prepared pursuant to this Section 3.2 will present fairly the financial position
and operating results of the Company and will be prepared in accordance with
GAAP.

         (b) Monthly Reports. Within 15 Business Days after the end of each
calendar month during the term of this Agreement, commencing with the first
calendar month after the date of this Agreement, the Company shall prepare and
submit or cause to be prepared and



submitted to the Class A Members and the Management Committee an unaudited
statement of profit and loss of the Company for such month, an unaudited balance
sheet of the Company dated as of the end of such calendar month and an unaudited
statement of cash flows for the Company for such calendar month, in each case,
certified by the CFO as true and correct and prepared in accordance with GAAP
consistently applied.

         (c) Quarterly Report. Within 15 days after the end of each quarterly
period (the "Fiscal Quarter") of each Fiscal Year, commencing with the first
Fiscal Quarter after the date of this Agreement, the Company shall prepare and
submit or cause to be prepared and submitted to the Class A Members and the
Management Committee an unaudited statement of profit and loss for the Company
for such Fiscal Quarter, an unaudited balance sheet of the Company dated as of
the end of such Fiscal Quarter, and an unaudited statement of cash flows for the
Company for such Fiscal Quarter, in each case, certified by the CFO as true and
correct and prepared in accordance with GAAP consistently applied.

         (d) Annual Reports. Within 30 days after the end of each Fiscal Year
during the term of this Agreement, the Company shall prepare and submit or cause
to be prepared and submitted to the Class A Members and the Management Committee
(i) the following audited statements: a balance sheet, together with a statement
of profit and loss, a statement of cash flows for the Company during such Fiscal
Year, a statement of any amounts contributed and/or distributed to the Class A
Members during such Fiscal Year and a statement of Class A Members' equity, in
each case, prepared in accordance with GAAP consistently applied and (ii) a
report of the activities of the Company during the Fiscal Year.

         (e) Other Reports. Subject to the confidentiality and use restrictions
set forth in the Operating Agreement and elsewhere herein, the Company shall
provide to each Class A Member and the Management Committee such other reports
and information concerning the business and affairs of the Company as may be
required by the Act or by any other law or regulation of any regulatory body
applicable to the Company and such other information as may be reasonably
requested by any Class A Member, it being understood that any information
provided to any Class A Member in accordance with this Section 3.2(e) shall be
simultaneously provided to the other Class A Members. Any Class A Member
requesting additional reports or information in accordance with this Section
3.2(e) not otherwise contemplated by this Agreement or the Operating Agreement
shall be required to reimburse the Company for any out-of-pocket costs
associated with producing such additional reports or providing such additional
information. Any such information may be used only by such Class A Member and
its Majority-Owned Affiliates in the ordinary course of its own business and in
connection with its investment in the Company.

         (f) Bank Accounts. All funds of the Company will be deposited in the
Company's name in such checking and savings accounts, time deposits,
certificates of deposit or other accounts at the banks designated by the CEO
from time to time, and the CEO will arrange



for the appropriate conduct of such account or accounts.

         3.3 Auditors. The Company's independent public accountants and auditors
will be Deloitte & Touche LLP or such other nationally recognized accounting
firm as Polo and the Media Representative may approve from time to time (the
"Auditors"). The Auditors will initially be appointed pursuant to an engagement
letter between the Company and the Auditors approved by both Polo and the Media
Representative, which letter will provide that (i) a copy of any Management or
Accounting Control Letters of Recommendation or Comment from the Auditors to the
Company will be delivered to the Class A Members approximately contemporaneously
with delivery thereof to the Company, and (ii) the Auditors and their work
papers will be available to any Class A Member at reasonable times and upon
reasonable advance notice to the Auditors and the Company.

         3.4 Fiscal Year. The fiscal year of the Company for financial,
accounting and Federal, state and local income tax purposes initially will be
the calendar year (the "Fiscal Year"). Upon the consent of Polo and the Media
Representative as provided in Section 5.3, the beginning and ending dates of the
Fiscal Year may be changed.

         3.5 Demand Registration.

         (a) Subject to the conditions and limitations hereinafter set forth in
this Section 3.5, at any time and from time to time after the effectuation of an
Initial Public Offering by the Company or in accordance with and as required by
Section 3.16, either the Media Representative or Polo may request in writing
that the Company effect the registration under the Securities Act of all or part
of Polo's or the Media Members', as the case may be, Demand Registrable
Securities specifying in the request the number and type of Demand Registrable
Securities to be registered by each such requesting holder and the intended
method of disposition thereof (such notice is hereinafter referred to as a
"Holder Request"). Registrations requested pursuant to this Section 3.5 are
collectively referred to herein as "Demand Registrations." Upon receipt of such
Holder Request, the Company will, within 10 days, give written notice of such
requested Demand Registration to all other holders of Demand Registrable
Securities, including Polo or the Media Representative, which other holders
shall have the right (subject to the limitations set forth in subsection (f) of
this Section 3.5) to include the Demand Registrable Securities held by them in
such registration and thereupon the Company will, as expeditiously as possible
and subject to the terms of this Agreement, use its best efforts to effect the
registration under the Securities Act of the following:

         (i) the Demand Registrable Securities that the Company has been so
     requested to register by the holder that submitted the Holder Request (the
     "Requesting Holder"); and

         (ii) all other Demand Registrable Securities that the Company has been



     requested to register by any other holder thereof by written request given
     to the Company within 30 calendar days after the giving of such written
     notice by the Company (which request shall specify the intended method of
     disposition of such Demand Registrable Securities), all to the extent
     necessary to permit the disposition (in accordance with the intended
     methods thereof as aforesaid) of the Demand Registrable Securities so to be
     registered.

         (b) Subject to the provision set forth in subsection (f) of this
Section 3.5, (i) the Company shall not be obligated to effect more than (A) four
(4) Demand Registrations (of which no more than two may be shelf registrations)
pursuant to this Section 3.5 at the request of the Media Representative and (B)
four (4) Demand Registrations (of which no more than two may be shelf
registrations) pursuant to this Section 3.5 at the request of Polo, and (ii) the
Company shall not be obligated to file a registration statement under Section
3.5(a) unless the Company shall have received requests for such registration
with respect to at least 5% of the fully diluted equity of the Company at such
time or shares having a market value of at least $50 million.

         (c) The Company shall not be obligated to file a registration statement
relating to any Holder Request under Section 3.5(a) within a period of one year
after the effective date of any registration statement relating to any previous
Demand Registration or an Initial Public Offering.

         (d) In connection with any offering pursuant to this Section 3.5, the
only shares that may be included in such offering are (i) Demand Registrable
Securities, (ii) shares of authorized but unissued equity that the Company
elects to include in such offering ("Company Securities"), and (iii) Piggyback
Registrable Securities eligible to be included in such offering.

         (e) If the Company or Polo reasonably determines that (i) the filing of
a registration statement or the compliance by the Company with its disclosure
obligations in connection with a registration statement would require the
disclosure of material information regarding the Company or Polo, as the case
may be, that the Company or Polo, as the case may be, has a bona fide business
purpose for preserving as confidential or (ii) such registration would be likely
to have an adverse effect on any proposal or plan by the Company or Polo, as the
case may be, to engage in any financing transaction, acquisition of assets
(other than in the ordinary course of business) or any merger, consolidation,
tender offer or similar transaction, the Company may delay (or Polo may instruct
the Company to delay, as applicable) the filing of a registration statement and
shall not be required to maintain the effectiveness thereof or amend or
supplement a registration statement for a period expiring upon the earlier to
occur of (A) the date on which such material information is disclosed to the
public or ceases to be material, in the case of clause (i), (B) the date on
which such transaction is completed or abandoned, in the case of clause (ii), or
(C) 120 days after the Company or Polo makes such good faith determination, in



the case of either clauses (i) or (ii); provided that in such event, the holders
of Demand Registrable Securities initiating the request for such registration
will be entitled to withdraw such request, and if such request is withdrawn such
registration will not count as one of the permitted registrations under this
Section 3.5. In any event, the Company will pay all registration expenses in
connection with any registration initiated under this Section 3.5, except as
provided in Section 3.5(i) below.

         (f) If, in connection with any underwritten offering, the managing
underwriter shall advise the Company and any holder of Demand Registrable
Securities that has requested registration that, in its judgment, the number of
securities proposed to be included in such offering should be limited due to
market conditions, the Company will so advise each holder of Demand Registrable
Securities that has requested registration, and shares shall be excluded from
such offering in the following order until such limitation has been met: first,
any Piggyback Registrable Securities requested to be included in such offering
pursuant to Section 3.6 shall be excluded pro rata based on the respective
number of Piggyback Registrable Securities as to which registration has been so
requested by all such holders until all such Piggyback Registrable Securities
have been so excluded; second, the Demand Registrable Securities requested to be
included by the Company shall be excluded until all such Demand Registrable
Securities shall have been so excluded; third, the Demand Registrable Securities
requested to be included in such offering pursuant to Section 3.5(a)(ii) shall
be excluded pro rata, based on the respective number of Demand Registrable
Securities as to which registration has been so requested by all such holders
until all such Demand Registrable Securities have been so excluded; and
thereafter, the Demand Registrable Securities requested to be included in such
offering pursuant to Section 3.5(a)(i) by the Requesting Holder shall be
excluded; provided, however, that if, in any case where registration has been
requested pursuant to Section 3.5(a)(i) by Polo or the Media Representative, by
reason of the application of this subsection (f) more than 25% of the Demand
Registrable Securities requested by the Requesting Holder to be included in such
registration shall be excluded therefrom, then such registration will not count
as a Demand Registration requested by the Requesting Holder pursuant to Section
3.5(a).

         (g) A Demand Registration will not be deemed to have been effected
unless the registration statement relating thereto has become effective;
provided that if after it has become effective, the offering of Demand
Registrable Securities pursuant to such registration is interfered with by any
stop order, injunction or other order or requirement of the SEC or other
governmental agency or court, such registration will be deemed not to have been
effected. Additionally, a Demand Registration shall not be deemed to have been
effected if:

         (i) the registration statement relating thereto does not remain
     effective, current and usable by the Requesting Holder until the earlier of
     (A) three (3) months following the date on which such registration
     statement became effective, subject to the last sentence of Section 3.5(a)
     herein and (B) the date on which all of the Demand Registrable Securities
     requesting in the Demand Registration to be sold pursuant to such



     registration statement are sold;

         (ii) after the registration statement relating thereto has become
     effective, such registration statement is interfered with by any stop
     order, injunction or other order or requirement of the Commission or other
     governmental agency or court for any reason prior to the earlier of (A) the
     four (4) months following the date on which such registration statement
     became effective, subject to the last sentence of Section 3.5(a) herein and
     (B) the date on which all of the Demand Registrable Securities requested in
     the Demand Registration to be sold pursuant to such registration statement
     are sold; and

         (iii) the conditions to closing specified in any purchase agreement or
     underwriting agreement entered into in connection with such Demand
     Registration are not satisfied, unless the failure to satisfy such
     conditions to closing is due to some act or failure to act of the
     Requesting Holder.

         (h) If the Requesting Holder specifies in the Holder Request an
underwritten offering, such party or parties shall have the right, with the
approval of the Company, which approval shall not be unreasonably withheld, to
select the managing underwriter; provided, however, in the event that the
Company has elected to include Company Securities in such offering, the Company
shall have the right, with the approval of a majority of the holders of Demand
Registrable Securities that have requested to be included in such offering,
which approval shall not be unreasonably withheld, to select the managing
underwriter.

         (i) The Company will pay all registration expenses incurred in
connection with each Demand Registration effected by it pursuant to this Section
3.5. The Requesting Holder will be responsible for underwriters discounts,
selling commissions and fees and disbursements of counsel for the Requesting
Holder with respect to the Demand Registrable Securities being sold by it.

         (j) The Requesting Holder, upon the approval of the Company, which
shall not unreasonably be withheld, shall have the sole right to determine the
offering price per share and underwriting discounts, if applicable, in
connection with a Demand Registration pursuant to this Section 3.5.

         3.6 Piggyback Registrations.

         (a) In connection with or after an Initial Public Offering, if the
Company at any time proposes to register any of its equity securities under the
Securities Act (other than a registration on Form S-4 or S-8 or any successor or
similar forms thereto), whether or not for sale for its own account, on a form
and in a manner that would permit registration of Piggyback Registrable
Securities for sale to the public under the Securities Act, it will, within ten
days, give written notice to all the holders of Piggyback Registrable Securities
of its intention to do so,



describing such securities and specifying the form and manner and the other
relevant facts involved in such proposed registration, including, without
limitation, (x) the intended method to dispose of the securities offered,
including whether or not such registration will be effected through an
underwriter in an underwritten offering or on a "best efforts" basis, and, in
any case, the identity of the managing underwriter, if any, and (y) the price at
which the Piggyback Registrable Securities are reasonably expected to be sold.
Upon the written request of any holder of Piggyback Registrable Securities
delivered to the Company within 20 calendar days after the receipt of any such
notice (which request shall specify the Piggyback Registrable Securities
intended to be disposed of by such holder), the Company will use its
commercially reasonable efforts to effect the registration under the Securities
Act of all the Piggyback Registrable Securities that the Company has been so
requested to register; provided, however, that:

         (i) with respect to Piggyback Registrable Securities acquired, directly
     or indirectly, in respect of Class B Membership Interests, they shall not
     participate in an Initial Public Offering;

         (ii) if, at any time after giving such written notice of its intention
     to register any securities and prior to the effective date of the
     registration statement filed in connection with such registration, the
     Company shall determine for any reason not to register such securities, the
     Company may, at its election, give written notice of such determination to
     each holder of Piggyback Registrable Securities who shall have made a
     request for registration as hereinabove provided and thereupon the Company
     shall be relieved of its obligation to register any Piggyback Registrable
     Securities in connection with such registration (but not from its
     obligation to pay the registration expenses in connection therewith);

         (iii) if the Company has determined in good faith (A) that the Company
     then is unable to comply with its disclosure obligations (because it would
     otherwise need to disclose material information which the Company has a
     bona fide business purpose for preserving as confidential) or the SEC
     requirements in connection with a registration statement or (B) that the
     registration and distribution of Piggyback Registrable Securities (or the
     use of the registration statement or related prospectus) would interfere
     with any pending material financing, acquisition, corporate reorganization
     or any other material corporate development involving the Company, the
     Company may, at its election, give written notice of such determination to
     each holder of Piggyback Registrable Securities included in such
     registration and thereupon the Company shall be relieved of any obligation
     to maintain the effectiveness thereof or amend or supplement such
     registration statement; and

         (iv) if such registration involves an underwritten offering, all
     holders of Piggyback Registrable Securities requesting to be included in
     the Company's registration



     must sell their Piggyback Registrable Securities to the underwriters
selected by the Company on the same terms and conditions as apply to the Company
and the Requesting Holders shall enter into the underwriting agreement agreed to
between the Company and such managing underwriter.

         (b) The Company shall not be obligated to effect any registration of
Piggyback Registrable Securities under this Section 3.6 incidental to the
registration of any of its securities in connection with mergers, acquisitions,
exchange offers, dividend reinvestment plans or stock option or other employee
benefit plans.

         (c) If a registration pursuant to this Section 3.6 involves an
underwritten offering and the managing underwriter advises the issuer that, in
its opinion, the number of securities proposed to be included in such
registration should be limited due to market conditions, the Company will so
advise each holder of Piggyback Registrable Securities that has requested
registration pursuant to Section 3.6(a), and shares shall be excluded from such
offering in the following order until such limitation has been met: first, the
Piggyback Registrable Securities requested to be included in such offering by
Polo, the Media Representative and any other holder of Piggyback Registrable
Securities requesting to participate therein shall be excluded pro rata, based
on the respective number of Piggyback Registrable Securities as to which
registration has been so requested by such parties, until all such Piggyback
Registrable Securities shall have been so excluded; and thereafter, the
securities requested to be registered by the Company shall be excluded.

          (d) In connection with any underwritten offering with respect to which
holders of Piggyback Registrable Securities shall have requested registration
pursuant to this Section 3.6, the Company shall have the right to select the
managing underwriter with respect to the offering; provided that such managing
underwriter shall be a nationally recognized investment bank and the Company
shall have the right to choose a co-managing underwriter.

          (e) The Company will pay all registration expenses incurred in
connection with each of the registrations of Piggyback Registrable Securities
effected by it pursuant to this Section 3.6. In addition, the Company shall have
the sole right to determine the offering price per share and underwriting
discounts in connection with any resale of Piggyback Registrable Shares pursuant
to an underwritten offering in connection with a registration pursuant to this
Section 3.6, after consultation with the selling stockholders and due regard for
their view relating thereto.

         3.7 Lock-Up Provision. The Members agree that in connection with an
Initial Public Offering or any subsequent offering of the Company's equity
(other than a demand registration) they will each agree not to sell any shares
of the Company's capital stock for a 180- day period following the consummation
of such offering. In addition, in connection with any demand registrations
effected pursuant to Sections 3.5 and 3.6, respectively, the Members



shall each agree to customary restrictions on the sale of shares of the
Company's capital stock as are determined by the lead underwriters of any such
offering to be necessary in connection therewith.

         3.8 Exchange of Membership Interests for Common Stock. In the event
that the Company is converted to a corporation, including, without limitation,
upon an Initial Public Offering, (i) first, all outstanding Class B Membership
Interests and Class C Membership Interests shall be converted into Class A
Membership Interests at Fair Value of such outstanding Class B Membership
Interests and Class C Membership Interests, and (ii) after such conversion, all
Class A Membership Interests owned by a holder shall be exchanged by the Company
for shares of common stock. Any such shares of common stock received by holders
of Class B Membership Interests and Class C Membership Interests shall continue
to be subject to the requirements of Section 2.13 and to any applicable
restrictions on vesting and forfeiture set forth in any agreements to which the
Class B Members or the Class C Members are party. For the avoidance of doubt,
any Class B Membership Interests which are vested and not subject to forfeiture
will be transferrable following the consummation of an Initial Public Offering,
subject to compliance with any and all applicable securities laws.

         3.9 Employees and Benefit Matters.

         (a) Generally. The Class A Members will use all commercially reasonable
efforts to examine and determine the needs of the Company in respect of
employees and employee benefit matters and to reach a written agreement on such
matters at the earliest practicable date. The Company shall provide for its
management an equity incentive pool of up to 10% of the fully diluted equity of
the Company for the grant of options, restricted units or interests or any other
similar incentive plan (inclusive of any Class B Membership Interests granted as
of the date hereof).

         (b) Member Responsibility. Each Class A Member will be responsible for
any rights of its (or its respective Affiliates') respective employees who
become employees of the Company which rights accrued prior to employment by the
Company and by virtue of employment with the Class A Member (or its respective
Affiliates), as the case may be, including any rights accrued under any pension
or other benefit plan.

         (c) Non-Solicitation. No Class A Member may, directly or indirectly,
solicit the employment of, or hire, any employee of the Company or of any other
Class A Member with whom it has had contact or who became known to it in
connection with the Business, this Agreement or the Operating Agreement without
the prior consent of Polo, in the case of the Media Members, or the applicable
Media Member, in the case of Polo; provided, however, that the foregoing
provisions will not prevent any Class A Member from employing any such Person
(i) who contacts such Class A Member on his or her own initiative without any
direct or indirect solicitation by or encouragement from such Class A Member and
who has not been employed by such Class A Member or the Company during the
preceding six months, (ii) who is referred to



such Class A Member by a bona fide employee search firm not specifically
directed to contact such employee or other employees of such Class A Member or
the Company or (iii) as a result of general solicitation, including solicitation
in trade magazines.

         3.10 Expense Reimbursement. Except as otherwise provided herein or in
the Operating Agreement, the Company will be responsible for the payment of all
its own expenses. The Company will not be obligated to reimburse the Members for
any expenses paid by them on behalf of the Company, whether out-of-pocket or
direct overhead, except for such items as are agreed to by the Management
Committee to be provided by one of the Members. This provision shall not apply
to any products supplied under the Supply Agreement or services provided under
the Services Agreement.

         3.11 The Members as Third Party Beneficiaries. The Company shall ensure
to the extent commercially practicable that each contract, agreement or other
arrangement the Company enters into with any third party for the purposes of
providing services to the Company shall provide each Class A Member with rights
as a third party beneficiary to enforce such third party contract to the extent
that any party to such third party contract shall act in a manner inconsistent
with the terms of this Agreement or any Ancillary Agreement.

         3.12 Deadlocks.

         (a) Deadlocks of Managers. In the event that the Management Committee
fails to agree on any matter as to which unanimous agreement of the Managers is
required under this Agreement, the Operating Agreement or by law, and such
deadlock is not resolved within 30 days of the date the Management Committee
reaches such deadlock, Polo and the Media Representative shall use their
commercially reasonable best efforts to resolve such deadlock. In the event that
Polo and the Media Representative fail to agree on any issue, and such deadlock
is not resolved within 30 days following the giving of written notice of the
existence of such deadlock (including a Material Deadlock) from the Management
Committee to the Class A Members or by Polo to the Media Representative, or vice
versa, either Polo or the Media Representative may request that the Chief
Executive Officer of Polo and the Chief Executive Officer of NBC, or their
respective designees, seek to resolve such deadlock. Within 30 days of the
initial request, such persons or their designees shall meet and use their
reasonable best efforts to resolve the deadlock.

         (b) Deadlocks of Class A Members. In the event that the unanimous
consent of Polo and the Media Representative is not received on any matter as to
which such consent is so required in accordance with the terms of this
Agreement, the Operating Agreement or by law, including Section 5.3, either Polo
or the Media Representative may provide the other party with notice that a
deadlock (including, if applicable, a Material Deadlock) has occurred. Following
the delivery of such notice, Polo and the Media Representative shall negotiate
in good faith, and



shall use their commercially reasonable best efforts, to resolve such deadlock,
and shall include their senior management in such negotiation process. In the
event that Polo and the Media Representative fail to reach agreement after a
period of 30 days following the giving of written notice of the existence of
such deadlock by Polo to the Media Representative, or vice versa, either Polo or
the Media Representative may request that the Chief Executive Officer of Polo
and the Chief Executive Officer of NBC, or their respective designees, seek to
resolve such deadlock. Within 30 days of the initial request, such persons or
their designees shall meet and use their reasonable best efforts to negotiate in
good faith to resolve the deadlock (including Material Deadlock).

         (c) Continuation of Business. While any deadlock (including a Material
Deadlock) referred to in Section 3.12(a) or 3.12(b) is pending, the Business
shall continue to be operated without interruption consistent with prudent
management practices and in a manner most likely to continue its operations in
the ordinary course of business consistent with the Business Plan and Budget
most recently in effect.

         (d) Polo Deadlock Call. It is understood and agreed that the rights
provided to Polo and the Media Members in Sections 3.12(d) and 3.12(e) shall not
be exercisable unless the respective Chief Executive Officers of NBC and Polo
(or designees of each) shall have attempted in good faith to resolve matters
that are the subject of a Material Deadlock. In the event that (i) on or prior
to the fifth anniversary of the date of this Agreement, a Material Deadlock has
occurred and has been continuing uninterrupted for a period of 365 days and (ii)
after the fifth anniversary of the date of this Agreement, in the event that a
Material Deadlock has occurred and has been continuing uninterrupted for a
period of 180 days, in each case, from the date notice (a "Notice of Material
Deadlock") is first provided pursuant to Section 3.12(b) by either Polo or the
Media Representative, as the case may be, to the other Members that a deadlock
has occurred (the expiration of either such period a "Material Deadlock Event"),
Polo shall have the right (the "Polo Deadlock Call") to purchase from the Media
Members all, but not less than all, of the Media Members' aggregate Membership
Interests in the Company (the "Media Members' Membership Interests"). If Polo
wishes to exercise the Polo Deadlock Call, then Polo (no later than 60 days
following a Material Deadlock Event) shall provide written notice to the Media
Representative, which notice shall (A) state that Polo proposes to exercise the
Polo Deadlock Call and (B) set forth in reasonable detail the purchase price as
calculated in accordance with Section 3.15(a) and all the material terms and
conditions of the proposed purchase. For purposes of the foregoing, a Material
Deadlock shall be deemed to have occurred if the party receiving the Notice of
Material Deadlock does not dispute such Material Deadlock by seeking a
determination of an arbitrator on or prior to the 15th day following receipt of
such Notice of Material Deadlock. The closing of such sale will take place as
set forth in Section 3.15(c). If Polo fails to give notice within 60 days
following a Material Deadlock Event, then Polo shall be deemed to have waived
the Polo Deadlock Call and shall have no further right to exercise the Polo
Deadlock Call with respect to such Material Deadlock Event.



         (e) Media Members Sale Right. In the event of a Material Deadlock
Event, the Media Members shall have the right (the "Media Members Sale Right"),
at the election of the Media Representative, to sell or cause to be sold all,
but not less than all, of the Media Members' Membership Interests in accordance
with the following procedures:

         (i) The Media Representative shall give written notice to Polo no later
     than 90 days following a Material Deadlock Event which notice shall state
     that Media Members propose to effect a sale of all, but not less than all,
     their Membership Interest (the "Media Members Sale Notice"). If the Media
     Representative fails to give the Media Members Sale Notice within 90 days
     following a Material Deadlock Event, the Media Members shall be deemed to
     have waived the Media Members Sale Right and have no further right to
     exercise the Media Members Sale Right with respect to such Material
     Deadlock Event. The Media Members Sale Notice shall state which of the
     following rights the Media Members have determined to give Polo: (x) a
     right to purchase the Media Members' Membership Interests at the Fair
     Market Value as determined in accordance with clause (B) of the definition
     of such term or (y) a right of first refusal in connection with such sale
     (the "Election Notice").

         (ii) In the event that the Media Representative elects to provide Polo
     a right to purchase the Media Members' Membership Interests at the Fair
     Market Value as determined in accordance with clause (B) of the definition
     of such term, Polo shall, within 30 days after receiving its Election
     Notice, deliver to the Media Representative a written notice stating that
     Polo would be willing to buy all, but not less than all, of the Media
     Members' Membership Interests at the Fair Market Value as determined in
     accordance with clause (B) of the definition of such term (the "Polo Offer
     Notice"). If Polo delivers such Polo Offer Notice, the closing of such sale
     will take place as set forth in Section 3.15(c). If Polo determines not to
     acquire the Media Members' Membership Interests at the Fair Market Value as
     determined in accordance with clause (B) of the definition of such term or
     does not respond to the Election Notice within the 30-day period mentioned
     above, the Media Representative may then sell to one or more Qualified
     Buyers (but not more than four) so long as one of such Qualified Buyers (x)
     acquires at least 26% of the Company's voting equity, (y) has an unfettered
     right to vote on behalf of all the other Qualified Buyers and (z) the terms
     of agreement among such Qualified Buyers are reasonably satisfactory to
     Polo, subject to the provisions in this Section 3.12(e)(ii), all but not
     less than all, of the Media Members' Membership Interest for any price and
     for any type of consideration; provided, however, that such sale is bona
     fide and that a bona fide written, binding agreement with respect to such
     sale has been reached with one or more Qualified Buyers and delivered to
     Polo prior to 180 days from the date of the earlier of the date on which
     Polo notifies the Media Representative that it does not wish to purchase
     the Media Members' Membership Interests in accordance with this Section
     3.12(e)(ii) or the expiration of the 30-day period described above. If an



     agreement of sale is not reached within the period provided for in this
     clause (ii), or if an agreement is reached but the sale is not consummated,
     then the Media Members shall be deemed to have waived the Media Members
     Sale Right with respect to such Material Deadlock Event. The closing of any
     sale made in accordance with the foregoing will take place as set forth in
     Section 3.15(c).

         (iii) In the event that the Media Representative elects to provide Polo
     a right of first refusal, the Media Representative shall, within 180 days
     after giving its Election Notice, deliver to Polo an additional written
     notice stating the purchase price in cash at which the Media Members would
     be willing to sell all, but not less than all, of their Membership
     Interests to a Qualified Buyer or Buyers (as described below) and all the
     material terms and conditions of the proposed sale (the "ROFR Notice"). If
     the Media Representative does not deliver to Polo the ROFR Notice within
     such 180-day period, the Media Members shall be deemed to have waived the
     Media Members Sale Right and have no further right to exercise the Media
     Members Sale Right with respect to such Material Deadlock Event. If the
     Media Representative does deliver such notice, Polo shall have 30 days from
     the date of receipt of the ROFR Notice to elect to acquire all, but not
     less than all, of the Media Members' Membership Interests at the price set
     forth in the ROFR Notice. If Polo makes such election, the closing of such
     sale will take place as set forth in Section 3.15(c). If Polo fails to
     notify Media Representative that it wishes to acquire the Media Members'
     Membership Interests within the 30-day period mentioned above, the Media
     Members, at the election of the Media Representative, may sell to one or
     more Qualified Buyers (but not more than four) so long as one of such
     Qualified Buyers (x) acquires at least 26% of the Company's voting equity,
     (y) has an unfettered right to vote on behalf of all the other Qualified
     Buyers and (z) the terms of agreement among such Qualified Buyers are
     reasonably satisfactory to Polo, subject to the provisions in this Section
     3.12(e)(iii), all but not less than all, of their Membership Interests (1)
     for a purchase price in cash or marketable securities that is no less than
     the aggregate purchase price payable in cash set forth in the ROFR Notice
     and (2) upon terms and conditions no more favorable to any Qualified Buyer
     than those stated in the ROFR Notice; provided, however, that such sale is
     bona fide and that a bona fide written agreement with respect to such sale
     has been reached with one or more Qualified Buyers and delivered to Polo
     within 30 days from the earlier of the date on which Polo notifies the
     Media Representative that it does not wish to exercise its rights in
     accordance with this Section 3.12(e)(iii) or the expiration of the 30-day
     period described above. If an agreement of sale is not reached within the
     period provided for in this clause (iii), or if an agreement is reached but
     the sale is not consummated, then the Media Members shall be deemed to have
     waived the Media Members Sale Right with respect to such Material Deadlock
     Event.

         (iv) So long as a Qualified Buyer complies with the last sentence of



     Section 3.15(c), any Qualified Buyer's purchase of the Media Members'
     Membership Interests under Sections 3.12(e)(ii) and 3.12(e)(iii) shall be
     deemed to have been authorized by Polo for purposes of Article XI, in which
     case such Qualified Buyer shall automatically succeed to the Media Members'
     rights as a Member or otherwise under this Agreement and the Operating
     Agreement notwithstanding anything to the contrary that may be contained in
     Article XI and the Media Members shall be released from all obligations
     under this Agreement and the Operating Agreement other than Section 2.4 of
     the Operating Agreement (Non-Disclosure) and NBC's obligations to provide
     $100 million aggregate credits for advertising time and the obligations of
     NBCi and CNBC.com in respect of $40 million and $10 million, respectively,
     of credits in Online Advertising. The closing of any sale made in
     accordance with the foregoing will take place as set forth in Section
     3.15(c).

         (v) In the event that the Media Members shall exercise the Media
     Members Sale Right, the Company and Polo shall cooperate with all
     reasonable requests of the Media Representative to facilitate such sale.

         (f) Notwithstanding the provisions in this Section 3.12 providing for
the waiver of the Polo Deadlock Call or the Media Members Sale Right if notice
is not provided on a timely basis, if the parties continue to be deadlocked with
respect to a particular issue following the occurrence of a Material Deadlock
Event, after taking into account a significant change in the facts and
circumstances surrounding such Material Deadlock Event, such continuing deadlock
can result in a subsequent Material Deadlock Event if the standards set forth in
this Section 3.12 are satisfied and, as a result of such Material Deadlock, the
Polo Deadlock Call and the Media Members Sale Right would otherwise be
exercisable.

         3.13 Change of Control.

         (a) Change of Control of a Member. Polo or the Media Representative, as
the case may be, shall give written notice to the other Member no later than ten
days after the earlier to occur of (i) the event constituting a Change of
Control and (ii) the execution of a definitive agreement to effect a Change of
Control. Such notice shall set forth in reasonable detail the circumstances and
terms of the Change of Control, including the identity of the Person acquiring
control of Polo or NBC, as the case may be.

         (b) Continuation of Business. Notwithstanding that a Change of Control
has occurred or an agreement to effect a Change of Control has been executed,
the Business shall continue to be operated without interruption consistent with
prudent management practices and in a manner most likely to continue its
operations in the ordinary course of business consistent with the Business Plan
and Budget most recently in effect.

         (c) NBC Change of Control Call. It is understood and agreed that the
rights



provided to Polo and the Media Members in Section 3.13(c) and (d) shall not be
exercisable during the Quiet Period. In the event of a NBC Change of Control,
Polo shall have the right (the "NBC Change of Control Call"), exercisable upon
expiration of the Quiet Period and for 365 days thereafter, to purchase all, but
not less than all, of the Media Members' Membership Interests at a purchase
price determined in accordance with Section 3.15(a). If Polo wishes to exercise
the NBC Change of Control Call, then Polo (no later than 365 days following
expiration of the Quiet Period) shall provide written notice to the Media
Representative, which notice shall (A) state that Polo proposes to exercise the
NBC Change of Control Call and (B) set forth in reasonable detail the purchase
price as calculated in accordance with Section 3.15(a) and all the material
terms and conditions of such purchase. The closing of such sale will take place
as set forth in Section 3.15(c). If Polo fails to give notice within 365 days
following expiration of the Quiet Period, then Polo shall be deemed to have
waived the NBC Change of Control Call.

         (d) Polo Change of Control Sale. In the event of a Polo Change of
Control, the Media Members shall have the right (the "Polo Change of Control
Sale"), at the election of the Media Representative, to sell all, but not less
than all, of their Membership Interest in accordance with the following
procedures:

         (i) The Media Representative shall give written notice to Polo no later
     than 365 days following expiration of the Quiet Period, which notice shall
     state that the Media Members propose to effect a sale of their Membership
     Interest and that Polo shall have the right to purchase all, but not less
     than all, the Media Members' Membership Interests at the Fair Market Value
     as determined in accordance with clause (B) of the definition of such term
     (the "Change of Control Notice"). If the Media Representative fails to give
     the Change of Control Notice within 365 days following expiration of the
     Quiet Period, then the Media Members shall be deemed to have waived the
     Polo Change of Control Sale.

         (ii) Polo shall, within 60 days after receiving the Change of Control
     Notice, deliver to the Media Representative a written notice stating that
     Polo would be willing to buy all, but not less than all, of the Media
     Members' Membership Interests at the Fair Market Value as determined in
     accordance with clause (B) of the definition of such term. If Polo delivers
     such notice, the closing of such sale will take place as set forth in
     Section 3.15(c). If Polo notifies the Media Representative that it has
     determined not to acquire the Media Members' Membership Interests at the
     Fair Market Value as determined in accordance with clause (B) of the
     definition of such term or does not respond to the Change of Control Notice
     within the 60-day period mentioned above, the Media Representative may then
     sell all but not less than all of the Media Members' Membership Interests
     for any price and for any type of consideration to one or more Qualified
     Buyers (but not more than four) so long as one of such Qualified Buyers (x)
     acquires at least 26% of the Company's voting equity, (y) has an unfettered
     right to vote on behalf of all the other Qualified Buyers and (z) the terms
     of agreement among



     such Qualified Buyers are reasonably satisfactory to Polo.

         3.14 Polo Buyout Right.

         (a) For a 90-day period commencing upon the date of delivery of the
first set of audited financial statements after the twelfth anniversary of this
Agreement, and thereafter every three years for a 90-day period commencing upon
the date of delivery of the audited financial statements in respect of the
fifteenth and every third Fiscal Year of the Company thereafter, Polo shall have
the right (the "Polo Buyout Right") to purchase all, but not less than all, of
the Media Members' Membership Interests at a purchase price in cash determined
in accordance with Section 3.15(a).

         (b) If Polo wishes to exercise the Polo Buyout Right, then Polo shall
provide (i) a written notice to the Media Representative within the 90-day
period prior to the tenth anniversary of the date of this Agreement and on each
successive three year anniversary of such date (the "Preservation Notice"),
which notice shall state that Polo wishes to preserve the Polo Buyout Right and
(ii) a written exercise notice to the Media Representative within the period
referred to in Section 3.14(a) (the "Purchase Price Notice"), which notice shall
set forth in reasonable detail the purchase price as calculated in accordance
with Section 3.15(a) and all the material terms and conditions of such purchase.
If Polo fails to give either the Preservation Notice or the Purchase Price
Notice to the Media Representative within the applicable time period, then Polo
shall be deemed to have waived the Polo Buyout Right until the commencement of
the next applicable period. The closing of such sale will take place as set
forth in Section 3.15(c). In the event that Polo gives the Media Representative
the Preservation Notice, the Media Members shall have no further obligations
under Section 3.2 of the Operating Agreement, provided, however, that if Polo
does not give the Purchase Price Notice, or advises the Media Representative
that it has waived its right to give the Purchase Price Notice, then Section 3.2
of the Operating Agreement shall be reinstated except that any bona fide
arrangements entered into by any Media Member prior to the earlier of the date
on which the Polo Buyout Right Notice may be exercised or 90 days from the date
of such advice by Polo shall not be deemed to be a violation of Section 3.2 of
the Operating Agreement.

         3.15 Material Deadlock, Change of Control and Polo Buyout Right,
Pricing, Deferred Compensation and Closing.

         (a) Price of the Media Members Membership Interests. (i) In the event
of the exercise of a Polo Deadlock Call, an NBC Change of Control Call or a Polo
Buyout Right where the purchase price is determined by reference to Fair Market
Value, the purchase price for the Media Members' Membership Interests, which
shall be payable as set forth in Section 3.15(c), shall be equal to the Fair
Market Value of the Media Members' Membership Interests, as determined in
accordance with clause (A) of the definition of such term, as of the date of
Polo's notice of exercise of such Polo Deadlock Call, the NBC Change of Control
Call or the Polo



Buyout Right; and (ii) in the event of the exercise of the Media Members Sale
Right or Polo Change of Control Sale, the purchase price for the Media Members'
Membership Interests, which shall be payable as set forth in Section 3.15(c),
shall be equal to the Fair Market Value of the Media Members' Membership
Interests as determined in accordance with clause (B) of the definition of such
term, as of the date of the Media Representative's notice of the exercise of the
Media Members Sale Right or the Polo Change of Control Sale.

         (b) [Reserved]

         (c) Closing. The closing with respect to any exercise of the Polo
Deadlock Call, the Media Members Sale Right, the NBC Change of Control Call, the
Polo Change of Control Sale or the Polo Buyout Right shall take place at the
principal office of the Company on the later to occur of (i) the tenth Business
Day after final determination of Fair Market Value or the entering into by the
Media Representative and a Qualified Buyer of a definitive purchase agreement,
whichever is later, or (ii) the date that all orders, consents and approvals of
Governmental Authorities legally required for the closing of such sale have been
obtained and are in effect, it being understood that the Class A Members shall
use their commercially reasonable best efforts to obtain all such orders,
consent and approvals as promptly as practicable. At such closing, to the extent
that Polo is purchasing the Media Members' Membership Interests, Polo shall
deliver cash or a certified check or checks in the appropriate amount against
the delivery of a duly executed assignment of the Membership Interest so
purchased. Such Membership Interest shall be delivered to Polo free and clear of
all Liens of any nature whatsoever. In the case of a Qualified Buyer, the
Qualified Buyer shall agree to be bound by, and become a party to, all the terms
of this Agreement and the Operating Agreement.

         (d) Services Agreement. The Services Agreement shall remain in full
force and effect in accordance with its terms following the consummation of any
sale pursuant to the exercise of the Polo Deadlock Call, the Media Members Sale
Right, the NBC Change of Control Call, the Polo Change of Control Sale or the
Polo Buyout Right, except that (i) at ValueVision's option, the cost of the
services provided by ValueVision thereunder shall be modified to provide
ValueVision with payment for such services at the fair market value thereof, as
would be negotiated in an arm's length transaction between two willing parties,
(ii) the term of such continuation shall not exceed two years and (iii) the
renewal of the Services Agreement thereafter shall be subject to the mutual
consent of the Company and ValueVision.

         3.16 Media Members IPO Right. In the event that (i) the Media
Representative provides Polo with a Notice of Material Deadlock on account of
the failure of Polo and the Media Representative to agree to an Initial Public
Offering after the fifth anniversary, the tenth anniversary, the 12th
anniversary and every third anniversary thereafter, in each case of the Closing
Date, (ii) after the requisite time period has elapsed, the Media Representative
exercises the Media Members Sale Right, and (iii) neither Polo nor a Qualified
Buyer purchases the Media



Members' Membership Interests at Fair Market Value (as defined in clause (A) of
the definition of such term) or greater for a one-year period commencing on the
date of the Media Representative's notice of the exercise of the Media Members
Sale Right, the Media Representative, after such a one-year period, shall have
the right (the "Media Member IPO Right") to require the Company to consummate an
Initial Public Offering in accordance with the Demand Registration provisions of
Section 3.5 and in a manner consistent with the prestige of the Members' brands,
which the Company shall use its reasonable best efforts to consummate within 180
days of such request on the part of the Media Representative. The lead
underwriter for any such Initial Public Offering shall be a nationally
recognized (i.e. "bulge bracket") investment bank. Any Initial Public Offering
in connection with this Section 3.16 or otherwise shall be subject to (b)
conversion of a portion of the royalty under the License Agreement in accordance
with Section 8.10 and (c) conversion of the Company into corporate form and the
adoption of mutually acceptable governance provisions to Polo and the Class A
Members, the approval of such governance provisions by each Class A Member not
to be unreasonably withheld. In connection with the conversion of the Company to
a corporation for purposes of effecting an Initial Public Offering, after
effecting the transactions contemplated by Section 3.8, the Members shall
receive equity in the Company in proportion to their respective Sharing Ratios
at the time of such conversion.

         3.17 Certain Restrictions. In the event that (a) (i) one or more Class
A Members reasonably and in good faith believes that Additional Capital
Contributions are required in order to fund the Company's reasonably anticipated
capital and operating needs for the twelve months following the request of such
Class A Member therefor (after having exhausted the ValueVision Commitment,
giving effect to any ValueVision Additional Contributions to be made
concurrently with such proposed Additional Capital Contributions) or (ii) the
Company is in default under the License Agreement as a result of a failure to
pay the royalties due thereunder and Additional Capital Contributions would be
required in order to provide the Company with sufficient cash to cure such
default and avoid the termination by the Licensor of the License Agreement in
accordance with its terms, (b) the Company is unable to raise the required
capital plus sufficient capital to fund its capital and operating needs for an
additional twelve months on a prudent basis and on commercially reasonable terms
through bank borrowings or otherwise in the capital markets and (c) Polo is
unwilling or unable to commit to fund its share of any such Additional Capital
Contributions but one or more of the Original Media Members is willing and able
to fund the aggregate amount of all such Additional Capital Contributions
required of the Original Media Members, as evidenced by appropriate supporting
documentation, including all necessary corporate and shareholder action of the
Original Media Members and their shareholders to authorize such funding and, as
a result of the foregoing, in the case of clause (a) (i), a liquidation,
dissolution, winding up, voluntary bankruptcy or insolvency of the Company
occurs, or the Company shall have ceased to have any substantial ongoing
operations, and in the case of clause (a) (ii), Licensor shall terminate the
License Agreement in accordance with its terms, neither Polo nor its Affiliates
will be permitted to engage in the Business, directly or indirectly, or license
or otherwise authorize any third party to engage in the



Business, for a period of three years following such termination without the
prior written consent of the Media Representative, and Polo shall be relieved of
its obligations under Section 2.6 of the Operating Agreement.

                                   ARTICLE IV

              RIGHTS AND REPRESENTATIONS AND WARRANTIES OF MEMBERS

         4.1 Members' Rights. No Member will have any actual, implied or
apparent authority to enter into contracts on behalf of, or to otherwise bind,
the Company, nor take any action in the name of, or on behalf of, the Company or
conduct any business of the Company other than by action of both Polo and the
Media Representative.

         4.2 Representations and Warranties. Each Class A Member represents and
warrants to the Company and the other Members as follows:

         (a) Due Organization. Such Member is a corporation duly organized,
     validly existing and in good standing under the laws of the state of its
     incorporation. Such Member is duly qualified to transact business and is in
     good standing as a foreign corporation in each jurisdiction where its
     ownership or leasing of property or the conduct of its business requires
     such qualification, except where the failure to be so qualified would not
     have, individually or in the aggregate, a Material Adverse Effect. Such
     Member has the requisite power and authority to own, lease and operate its
     properties and to conduct its business as presently conducted;

         (b) Authorization and Validity of Agreement. Such Member has all
     requisite power and authority to enter into this Agreement and the
     Ancillary Agreements to which it is a party and to perform its obligations
     hereunder and thereunder. The execution, delivery and performance by such
     Member of this Agreement and the Ancillary Agreements to which it is a
     party and the consummation by such Member of the transactions contemplated
     hereby and thereby have been duly authorized by all necessary corporate
     action on the part of such Member. This Agreement and the Ancillary
     Agreements to which such Member is a party have been duly executed and
     delivered by such Member and constitute valid and legally binding
     obligations of such Member, enforceable against such Member in accordance
     with their respective terms;

         (c) No Breach or Government Approvals. The execution, delivery and
     performance by such Member of this Agreement and the Ancillary Agreements
     to which such Member is a party and the consummation by such Member of the
     transactions contemplated hereby and thereby will not (i) conflict with or
     result in a breach of any provision of the charter or bylaws of such
     Member, (ii) require any consent, approval,



     authorization or permit of, or filing with or notification to, any
     Governmental Authority, (iii) require the consent or approval of any Person
     (other than a Governmental Authority) or violate or conflict with, or
     result in a breach of any provision of, constitute a default (or an event
     which with notice or lapse of time or both would become a default) or give
     to any third party any right of termination, cancellation, amendment or
     acceleration under, or result in the creation of a lien under, any of the
     terms, conditions or provisions of any contract or license to which such
     Member is a party or by which it or its assets or properties are bound, or
     (iv) violate or conflict with any law, order, writ, injunction, decree,
     statute, rule or regulation applicable to such Member, except, in the case
     of items (ii), (iii) and (iv) above only, for those which, individually or
     in the aggregate, would not have a Material Adverse Effect;

         (d) Certain Fees. Neither such Member nor its officers, directors or
     employees, on behalf of such Member, has employed any broker or finder or
     incurred any other liability for any brokerage fees, commissions or
     finders' fees in connection with the transactions contemplated hereby or by
     the Ancillary Agreements, except in the case of Polo, for Credit Suisse
     First Boston Corporation, all of whose fees shall be borne by Polo;

         (e) Legal Proceedings. There is no litigation, proceeding or
     governmental investigation to which such Member or any of its Affiliates is
     a party pending or, to the knowledge of such Member and its Affiliates,
     threatened against any of them that relates to the Business or to the
     Capital Contribution of such party or the transactions contemplated by this
     Agreement or by the Ancillary Agreements which could, either individually
     or in the aggregate, result in a Material Adverse Effect or which seeks to
     restrain or enjoin the consummation of any of the transactions contemplated
     hereby or by the Ancillary Agreements. Neither such Member nor any of its
     Affiliates is in violation of any term of any judgment, writ, decree,
     injunction or order entered by any court or Governmental Authority
     (domestic or foreign) and outstanding against such Member or its Affiliates
     or with respect to the Business or to the Capital Contribution of such
     Member, except for such violations which could not, individually or in the
     aggregate, have a Material Adverse Effect;

         (f) Employee Benefits Programs.

                  (i) The Member Plans (as defined below) are in compliance in
         all material respects with all applicable requirements of Section 3(3)
         of the Employee Retirement Income Security Act of 1974, as amended
         ("ERISA"), the Code, and other applicable laws and have been
         administered in all material respects in accordance with their terms
         and such laws. Each Member Plan which is intended to be qualified
         within the meaning of Section 401 of the Code has received a favorable
         determination letter as to its qualification, and nothing has occurred
         that could reasonably be expected to cause the loss of such
         qualification;



                  (ii) There are no pending or, to the knowledge of each of the
         Members, threatened claims and no pending or, to the knowledge of each
         of the Members, threatened litigation with respect to any Member Plans,
         other than ordinary and usual claims for benefits by participants and
         beneficiaries; and

                  (iii) No event has occurred and no condition exists that could
         reasonably be expected to result in material liability to the Company
         under Title IV of ERISA. "Member Plans" shall mean each material
         "employee benefit plan" (within the meaning of ERISA), severance,
         change in control or employment plan, program or agreement, and
         vacation, incentive, bonus, stock option, stock purchase, and
         restricted stock plan, program or policy sponsored or maintained by
         each Member or its Subsidiaries, in which any present or former
         employee of such Member has any present or future right to benefits or
         under which each Member or its Subsidiaries has any present or future
         liability.

         (g) SEC Filings. Polo has filed all forms, reports, statements,
     schedules, registration statements and other documents required to be filed
     with the SEC since April 3, 1999 (the "SEC Reports"). Except to the extent
     revised or superseded by a subsequent filing with the SEC, none of the SEC
     Reports filed prior to February 7, 2000 contains any untrue statement of a
     material fact or omits to state a material fact required to be stated or
     incorporated by reference therein or necessary in order to make the
     statements therein, in the light of the circumstances under which they were
     made, not misleading. Each of the Media Members and Polo confirms that as
     of February 7, 2000, the Ancillary Agreements did not constitute material
     agreements required to be publicly filed by any Member with the SEC as
     exhibits pursuant to Item 601 of Regulation S-K.

         (h) Acknowledgment. Such Member acknowledges that it is acquiring its
     Membership Interest for its own account as an investment and without an
     intent to distribute such Membership Interest and that its Membership
     Interest has not been registered under the Securities Act, as amended, or
     any state securities laws, and may not be resold or transferred without
     appropriate registration or the availability of an exemption from such
     requirements.

         4.3 Representations and Warranties of JM. JM hereby represents and
warrants to the Company and the other Members as follows:

         (a) JM hereby represents and warrants that he is acquiring the Class B
     Membership Interests for investment for his own account and not with a view
     to, or for resale in connection with, the distribution or other disposition
     thereof. JM agrees and acknowledges that he will not, directly or
     indirectly, offer, transfer, sell, assign, pledge,



     hypothecate or otherwise dispose of any Class B Membership Interests or any
     other securities issued or otherwise transferred to him pursuant to this
     Agreement (whether as a distribution to the holders of Membership
     Interests, in exchange for Membership Interests, in payment for Membership
     Interests, on redemption of Membership Interests or otherwise)
     (collectively, "JM Interests") (any such act being herein referred to as a
     "JM Transfer") unless such JM Transfer complies with Sections 11.1 and 11.2
     of this Agreement and (A) the JM Transfer is pursuant to an effective
     registration statement under the Securities Act, and in compliance with
     applicable provisions of State securities laws or (B) (I) counsel for JM
     (which counsel shall be reasonably acceptable to the Management Committee)
     shall have furnished the Management Committee with an opinion, reasonably
     satisfactory in form and substance to the Management Committee, that no
     such registration is required because of the availability of an exemption
     from registration under the Securities Act and (II) if any transferee is a
     citizen or resident of any country other than the United States, or JM
     desires to effect any JM Transfer in any such country, counsel for JM
     (which counsel shall be reasonably satisfactory to the Management
     Committee) shall have furnished the Company with an opinion or other advice
     reasonably satisfactory in form and substance to the Management Committee
     to the effect that such transfer will comply with the securities laws of
     such jurisdiction.

         (b) JM acknowledges that he has been advised that (A) the JM Interests
     have not been registered under the Securities Act, (B) JM Interests must be
     held indefinitely and JM must continue to bear the economic risk of the
     investment in JM Interests unless subsequently registered under the
     Securities Act or an exemption from such registration is available, (C) it
     is not anticipated that there will be any public market for the JM
     Interests, (D) Rule 144 promulgated under the Securities Act is not
     currently available with respect to the sales of any securities of the
     Company, and the Company has made no covenant to make such Rule available,
     (E) when and if JM Interests may be disposed of without registration in
     reliance on Rule 144, such disposition can be made only in limited amounts
     in accordance with the terms and conditions of such Rule, (F) if the Rule
     144 exemption is not available, public sale without registration will
     require compliance with Regulation D or some other exemption under the
     Securities Act, and (G) a notation shall be made in the appropriate records
     of the Company indicating that JM Interests are subject to restriction on
     transfer.

         (c) If any JM Interests are to be disposed of in accordance with Rule
     144 under the Securities Act or otherwise, JM shall promptly notify the
     Company of such intended disposition and shall deliver to the Company at or
     prior to the time of such disposition such documentation as the Management
     Committee may reasonably request in connection with such sale and, in the
     case of a disposition pursuant to Rule 144, shall deliver to the Company an
     executed copy of any notice on Form 144 required to be filed with the SEC.



         (d) JM represents and warrants that he has been given the opportunity
     to obtain any additional information or documents and to ask questions and
     receive answers about such documents, the Company and the business and
     prospects of the Company which he deems necessary to evaluate the merits
     and risks related to his investment in the JM Interests and to verify such
     information and has relied solely on such information.

         (e) JM represents and warrants that (A) his financial condition is such
     that he can afford to bear the economic risk of holding JM Interests for an
     indefinite period of time and has adequate means for providing for his
     current needs and personal contingencies, (B) he can afford to suffer a
     complete loss of his investment, either directly or indirectly, in the JM
     Interests, (C) he understands and has taken cognizance of all risk factors
     related to the purchase of the JM Interests, and (D) his knowledge and
     experience in financial and business matters are such that he is capable of
     evaluating the merits and risks of his investment, either direct or
     indirect, in the JM Interests as contemplated by this Agreement.

         4.4 Title to Company Assets. Except as otherwise set forth herein or in
any Ancillary Agreement all Company Assets, wherever located, will be owned by
the Company as an entity, and no Member, individually, will have, by reason of
being a Member, any ownership of such assets. The Company may hold the Company
Assets in its own name or in the name of a nominee, which may be a Member or an
Affiliate thereof or any trustee or agent, agreed upon by the Members.


                                    ARTICLE V

                                   MANAGEMENT

         5.1 Management by Managers. Except for situations in which the approval
of Polo and the Media Representative is expressly required by Section 5.3, this
Agreement, the Operating Agreement or by nonwaivable provisions of applicable
law, (i) the powers of the Company will be exercised by or under the authority
of, and the business and affairs of the Company will be managed under the
direction of, a committee of Managers (the "Management Committee"), and (ii) the
day-to-day activities of the Company will be conducted by the CEO and the other
Officers, who will be agents of the Company.

         5.2 Management Committee.

         (a) Number; Composition. The number of Managers of the Company will be
a number agreed upon by Polo and the Media Representative from time to time.
Initially, the number of Managers will be six. No Manager may be an Officer or
employee of the Company.

         (b) Appointment of Managers. Polo, on the one hand, and the Media



Members, collectively, on the other hand, shall appoint an equal number of
individuals to serve as their representative Managers. The Media Members hereby
initially appoint James H. Schwab, Stuart Goldfarb and Marc Sznajderman as
Managers (collectively, the "Media Managers"), and Polo hereby initially
appoints F. Lance Isham, Douglas L. Williams and Victor Cohen as Managers
(collectively, the "Polo Managers"). In addition, the CEO shall have a non-
voting seat on the Management Committee.

         (c) Voting. For purposes of taking any action or voting on any matter
coming before the Management Committee, the Media Managers will collectively
have one vote and the Polo Managers will collectively have one vote.

         (d) Quorum. At all meetings of the Management Committee, the presence
in person, by telephone or by proxy at a meeting of at least one Media Manager
and at least one Polo Manager will constitute a quorum at any meeting for the
transaction of business, unless a greater number is required by law.

         (e) Required Vote for Action. All Management Committee actions will
require the unanimous affirmative vote of the Media Managers and the Polo
Managers voting in accordance with clause (c) above.

         (f) Term. Each Manager will hold office until his or her successor has
been appointed and qualified, or until the earlier of his or her death,
resignation or removal as provided in this Agreement.

         (g) Vacancy. Any vacancy occurring in the Managers may be filled only
by the Class A Member, or by the Media Representative on behalf of the Media
Members, that originally appointed such Manager.

         (h) Removal. Any Manager may be removed at any time, with or without
cause, only by the Class A Member, or by the Media Representative on behalf of
the Media Members, that appointed such Manager.

         (i) Resignation. Any Manager may resign at any time upon written notice
to the Management Committee and Polo and the Media Representative. Such
resignation will take effect at the time specified in the written notice or, if
no time is specified therein, at the time of its receipt by Polo and the Media
Representative; provided, however, that acceptance of a resignation will not be
necessary to make it effective, unless so expressly provided in the resignation.

         5.3 Action Requiring Unanimous Vote of Polo Managers and the Media
Managers; Unanimous Vote of the Class A Members.



         (a) Unanimous Vote of the Managers. The following actions may be taken
only upon the unanimous affirmative vote of the Polo Managers and the Media
Managers (voting in accordance with Section 5.2(c)) and upon such unanimous
vote, the right, power and authority to take any of such actions may be
delegated to one or more Managers or Officers:

         (i) any act by the Company in contravention of this Agreement, any
     Ancillary Agreement or the Business Purpose;

         (ii) amendment or modification to this Agreement, the Certificate of
     Formation or any Ancillary Agreement other than as set forth in Section 2.6
     of the Operating Agreement;

         (iii) admission of additional Members or issuance of additional
     Membership Interests or other equity securities, including any award of
     equity to the Company's employees, excluding permitted transfers of
     Membership Interests in accordance with Sections 3.12, 3.13, 3.14, 3.15 or
     Article XI;

         (iv) approval of any Business Plan (other than the Initial Plan) as
     provided in Section 5.4 and any amendments to, or material deviations from,
     or commitments that would cause material deviations therefrom, including
     the making of, or any commitment to make, any individual or related group
     of capital expenditures in excess of $75,000 above the amount(s) specified
     in the then current Business Plan;

         (v) declaration of Distributions to Members;

         (vi) merger or consolidation into or with, or acquisition of all or
     part of the business of, another Person;

         (vii) liquidation, dissolution, winding up, voluntary bankruptcy or
     insolvency of the Company;

         (viii) sale, lease, transfer or other Disposition of any Company Asset
     or group of Company Assets having a fair market value or a book value in
     excess of $100,000 in any single transaction or series of related
     transactions;

         (ix) other actions which materially affect all or a substantial portion
     of the Company Assets or the Business;

         (x) issuance, purchase or redemption by the Company of any securities
     of the Company and any change, increase or reduction in the capitalization
     of the Company, including any Initial Public Offering;



         (xi) incurrence or guarantee by the Company of indebtedness for money
     borrowed, or incurrence of any obligation on behalf of the Company, or the
     grant of any pledge, mortgage, security interest or other encumbrance of
     any Company Asset, which would cause the aggregate of all such
     indebtedness, obligations and security interests (without duplication of
     amounts) to exceed $1,000,000, except for obligations incurred pursuant to
     the then current Business Plan;

         (xii) guarantee, assurance or undertaking of the performance of any
     contract by any third party, any Member or any Affiliate of any Member;

         (xiii) transactions between the Company, on the one hand, and the
     Company's Affiliates (other than the Company's wholly-owned subsidiaries),
     a Member or a Member's Affiliates, on the other hand, which involves an
     aggregate amount in excess of $100,000 in any single transaction or series
     of related transactions and which is not pursuant to the then current
     Business Plan;

         (xiv) entrance into, amendment, modification or termination of any
     agreement or group of related agreements of the Company involving
     consideration in excess of $100,000 other than in the ordinary course of
     business or pursuant to the then current Business Plan or in accordance
     with Section 2.6 of the Operating Agreement;

         (xv) employment actions with respect to the hiring, termination and
     compensation of the CEO and any other senior level officers other than
     those referred to in Section 6.1, and approving, amending, modifying,
     waiving, renewing, extending or terminating any employment agreement with
     any employee (including Officers) of the Company which provides for annual
     total compensation (including payment in kind and in equity interests) in
     excess of $200,000;

         (xvi) change of the Fiscal Year;

         (xvii) change of the Auditors;

         (xviii) requiring Additional Contributions by the Class A Members as
     provided in Section 8.2;

         (xix) approval of the annual audited and unaudited quarterly financial
     statements of the Company;

         (xx) the initiation, commencement or settlement of any material claim,
     litigation or arbitration to which the Company is, or is to be, a party
     ("Litigation") involving or potentially involving an amount in excess of
     $250,000, except that (A) any



     Litigation relating to the Marks shall not require the consent of, and
     cannot be brought by, the Media Representative, subject to Section 3.1 of
     the Operating Agreement and Section 5.3 of the License Agreement, and (B)
     any Litigation brought by a Class A Member to enforce the rights of the
     Company against another Member shall not require the consent of the Class A
     Member against whom the Litigation is brought, it being understood that in
     the event that the Company has a claim against Polo or one of the Media
     Members, the Media Representative (in the case of a claim against Polo) or
     Polo (in the case of a claim against any of the Media Members), shall have
     the right to control the Company's enforcement of such claim;

         (xxi) amending the Business Purpose or otherwise entering a line of
     business not expressly contemplated by the terms of this Agreement or the
     Operating Agreement; and

         (xxii) any decision, or the entering into of any agreement, commitment
     or arrangement, to effect any of the foregoing.

         (b) Unanimous Vote of the Class A Members. The following actions may be
taken only upon the unanimous affirmative vote of the Class A Members, and upon
such unanimous vote, the right, power and authority to take any of such actions
may be delegated to one or more Managers or Officers:

         (i) amendment or modification to this Agreement, the Certificate of
     Formation or any Ancillary Agreement other than as set forth in Section 2.6
     of the Operating Agreement; and

         (ii) merger or consolidation into or with, or acquisition of all or
     part of the business of, another Person.

         5.4 Business Plan.

         (a) Not later than 45 days prior to the end of each Fiscal Year, the
CEO shall present to the Management Committee a written business plan for the
Company for the following Fiscal Year (the "Business Plan"), which will include
a Budget for the following Fiscal Year, advertising and marketing plan and
three-year strategic plan with projected capital requirements. The Management
Committee shall review such Business Plan and its adoption will be subject to
the approval of the Management Committee in accordance with Section 5.2(e). The
Class A Members shall use commercially reasonable efforts to agree to and adopt
an "Initial Business Plan" within 90 days of the date of the Existing Agreement.

         (b) In the event that Polo and the Media Representative are unable to
reach agreement on the Budget for any Fiscal Year, the Class A Members agree
that the Company shall



operate without interruption consistent with prudent management practices and in
a manner most likely to continue its operations in the ordinary course of
business consistent with past practice.

         (c) In addition, the Management Committee shall adopt an operations
manual, which will set forth, in reasonable detail, procedures relating to sales
processing, billing, returns and other similar matters, including ticketing
information, purchase orders, invoices and sales slips (the "Operations
Manual"). To the extent any business materials utilize a Mark, use of such Mark
shall be in accordance with the standards referred to in Sections 2.1(a) and
2.3(d) of the Operating Agreement.

         (d) Notwithstanding anything else set forth in this Section 5.4 or
elsewhere in this Agreement or the Operating Agreement, the Budget for each year
shall be required to include, and the Company shall be authorized to spend, all
amounts required by the Annual Advertising Obligation and all amounts required
by the License Agreement.

         5.5 Limitation on Management Committee Authority. Except as otherwise
specifically provided in this Agreement or the Operating Agreement or by
agreement of Polo and the Media Representative, (i) no Manager or group of
Managers will have any actual, implied or apparent authority to enter into
contracts on behalf of, or to otherwise bind, the Company, nor take any action
or incur any obligation, liability, debt, cost or expense in the name of or on
behalf of the Company or conduct any business of the Company other than by
action of the Management Committee taken in accordance with the provisions of
this Agreement, and (ii) no Manager will have the power or authority to delegate
to any Person such Manager's rights and powers as a Manager to manage the
business and affairs of the Company.

         5.6 Meetings of the Management Committee. The Management Committee may
meet from time to time but will meet at least quarterly to discuss generally the
business of the Company. Meetings of the Management Committee may be called by
either Polo or the Media Representative. The Class A Member calling any meeting
will cause notice to be given of such meeting, including therein the time, date
and place of such meeting, to each Manager at least two Business Days before
such meeting. The business to be transacted at, or the purpose of, any meeting
of the Management Committee will be specified in the notice. Attendance of a
Manager at any meeting will constitute a waiver of notice of such meeting,
except where a Manager attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called or convened. All meetings of the Management Committee may be held either
within or without the State of Delaware at such place or places as determined
from time to time by the Managers. If a quorum is not present in person, by
telephone or by proxy at any meeting of the Management Committee, the Managers
present in person, by telephone or by proxy at the meeting may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present in person, by telephone or by proxy.



         5.7 Methods of Voting; Proxies. A Manager may vote either in person, by
telephone or by proxy executed in writing by such Manager, provided, however,
that the Person designated to act as proxy is a Manager. A photocopy, facsimile
or similar reproduction of a writing executed by a Manager will be treated as an
execution in writing for purposes of this Section 5.7. Proxies for use at any
meeting of the Management Committee or in connection with the taking of any
action by written consent will be filed with the Management Committee, before or
at the time of the meeting or execution of the written consent, as the case may
be. No proxy will be valid after 30 calendar days from the date of its execution
unless otherwise provided in the proxy. A proxy will be revocable unless the
proxy form conspicuously states that the proxy is irrevocable and the proxy is
coupled with an interest. A proxy may designate only one Manager to act as
proxy.

         5.8 Order of Business. The Management Committee may adopt such rules
and procedures relating to its activities as it may deem appropriate, provided
that such rules and procedures are not inconsistent with or do not violate the
provisions of this Agreement, and provided that such rules and procedures permit
telephonic meetings and provided that one Media Manager and one Polo Manager
will be required to attend Management Committee meetings for a quorum to be
present. The secretary of the meeting shall prepare minutes of the meeting and
place a copy thereof in the minute books of the Company. A copy of the minutes
of the meeting will be delivered promptly to each Manager and each Member.

         5.9 Actions Without a Meeting. Any action required or permitted to be
taken at a meeting of the Management Committee may be taken without a meeting,
without notice and without a vote, if a consent in writing, setting forth the
action so taken, is signed by one Media Manager and one Polo Manager. Such
consent will have the same force and effect, as of the date stated therein, as a
vote of the Managers and may be stated as such in any document or instrument
filed with the Secretary of State of the State of Delaware or in any certificate
or other document delivered to any person or entity. The signed consent will be
placed in the minute book of the Company.

         5.10 Telephone and Similar Meetings. The Managers may participate in
and hold meetings by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Such participation in any such meeting will constitute presence in
person at such meeting, except where a Person participates in such meeting for
the express purpose of objecting to the transaction of any business on the
ground that such meeting is not lawfully called or convened.

         5.11 Compensation of Managers. Managers will not receive any salary for
their services.

         5.12 Media Representative. No action required to be taken (including
the



granting or denial of any required consent or approval) by the Media
Representative hereunder shall be unreasonably delayed because of the need of
the Media Representative to consult with the Media Members. The Media
Representative has delivered (or will deliver, to the extent any such
agreements, arrangements or understandings are entered into or modified after
the date of this Agreement) to Polo copies or summaries of the provisions of any
agreements, arrangements or understandings in place among any of the Media
Members and/or the Media Representative with respect to the exercise of any of
their respective governance or consent rights or obligations hereunder.

         5.13 Waiver of Certain Claims. Each Member hereby agrees, on behalf of
itself and its Affiliates, to waive and to release and hold harmless any
officers or employees of any of the Members, or any individuals serving at the
request of any of the foregoing, who serve as Managers of the Company from any
liability whatsoever in respect of any alleged breach of fiduciary duty in the
discharge of such persons' duties as Managers of the Company.


                                   ARTICLE VI

                                    OFFICERS

         6.1 Designation Term; Qualifications. Subject to Section 5.3, Polo and
the Media Representative together, or the Management Committee may, from time to
time, designate and appoint the chief executive officer of the Company ("CEO").
The CEO so designated will have the authority to retain executive-level officers
and employees of the Company (the "Officers"); provided, however, that with
respect to the Vice President of Public Relations, the Vice President of
Advertising & Marketing and the Vice President of Merchandising (i) Polo shall
propose to the CEO a number of qualified individuals for those positions (which
may involve combining two positions), (ii) the CEO shall then choose among the
nominated individuals the persons most qualified for the positions of Vice
President of Public Relations, Vice President of Advertising & Marketing and
Vice President of Merchandising that he will then recommend to the Media
Representative, and (iii) the Media Representative's consent shall be required
for each such individual's appointment, which consent shall not be unreasonably
withheld; provided, further, that with respect to the chief financial officer
("CFO") (A) the Media Representative shall propose to the CEO a number of
qualified individuals for the position of CFO, (B) the CEO shall then choose
among the nominated individuals the persons most qualified for the position of
CFO that he will then recommend to Polo, and (C) Polo's consent shall be
required for such individual's appointment, which consent shall not be
unreasonably withheld. Any Officer so designated will have such authority and
perform such duties as Polo and the Media Representative together or the
Management Committee may, from time to time, delegate to them. Polo and the
Media Representative together or the Management Committee may assign titles to
particular Officers, and the assignment of such title will constitute the



delegation to such Officer of the authority and duties that are normally
associated with such office in a corporation for profit incorporated under the
General Corporation Law of the State of Delaware, subject to any specific
delegation of authority and duties made to such Officer by Polo and the Media
Representative together or the Management Committee pursuant to this Section
6.1. Each Officer will hold office for the term for which such Officer is
designated and until such Officer's successor is duly designated and qualified
or until the earlier of such Officer's death, resignation or removal as provided
in this Agreement. Any person may hold any number of offices. An Officer need
not be a Delaware resident or a United States citizen. All Officers will be
natural persons. Designation of a person as an Officer of the Company will
not\of itself create any contract rights.

         6.2 Chief Executive Officer. Subject to the supervision and authority
of Polo, the Media Representative and the Management Committee, the CEO (i) will
be the chief executive officer of the Company, (ii) will have responsibility and
authority for management of the day-to-day operations of the Company in a manner
generally consistent with the Business Plan and the Business Purpose and in the
best interests of the Company, independent of the separate business interests of
the Members, (iii) will keep the Class A Members informed of the affairs of the
Company, (iv) subject to Section 6.1, will retain and terminate Officers and (v)
will be empowered to and will engage in all appropriate and necessary activities
to accomplish the purposes of the Company as set forth herein. Polo and the
Media Representative shall cause the Company to employ at all times as Chief
Executive Officer an individual with suitable qualifications and experience in
the operation of an e-commerce operation such as the Site, and, if reasonably
possible, in the operation of a direct marketing vehicle such as the Catalog, it
being understood that if the CEO does not have sufficient experience in the
operation of a direct marketing vehicle, the Company shall hire an executive to
be responsible for such operations who does.

         6.3 Chief Financial Officer. Subject to the supervision and authority
of Polo, the Media Representative and the CEO, the CFO will keep and maintain,
or cause to be kept and maintained, adequate and correct books and records of
accounts, of the properties and business transactions of the Company, including
accounts of its assets, liabilities, receipts, disbursements, gains, losses,
capital and Membership Interests. The CFO will perform all the duties incident
to the office of chief financial officer and such other duties as from time to
time may be assigned to the CFO.

         6.4 Vice President. The CEO shall appoint one or more Vice Presidents
of the Company (a "Vice President"), except as provided in Sections 5.3(xv) and
6.1. Each Vice President will have such powers and duties as generally pertain
to the office of Vice President and as the CEO or the Management Committee may
from time to time prescribe.

         6.5 Secretary. The CEO shall appoint a secretary of the Company (the



"Secretary"). The Secretary, at the direction of the CEO and the Management
Committee, will prepare and distribute to each Manager an agenda in advance of
each meeting and will prepare and distribute to each Manager and each Class A
Member written minutes of all meetings of the Management Committee and the Class
A Members. The Secretary also will be responsible for preparing and distributing
to the Managers and the Class A Members any notices received by the Company or
otherwise called for by this Agreement or the Operating Agreement to be given by
the Company.

         6.6 Treasurer. The CEO shall appoint a treasurer of the Company (the
"Treasurer"). Subject to the supervision and authority of the CEO and the
Management Committee, the Treasurer will (i) have charge of and be responsible
for the receipt, disbursement and safekeeping of funds and securities of the
Company, (ii) deposit all funds of the Company in the name of the Company in
such banks, trust companies or other depositories as directed by the Management
Committee and (iii) perform all the duties incident to the office of treasurer
and such other duties as from time to time may be assigned to the Treasurer.

         6.7 Other Officers. The Management Committee may designate any other
Officers of the Company, including one or more Assistant Secretaries and one or
more Assistant Treasurers, who will exercise the powers and will perform the
duties incident to their offices, subject to the direction of the Management
Committee.

         6.8 Removal and Resignation. Any Officer may be removed as such, with
or without cause, by the CEO or the Management Committee whenever in his or
their judgment the best interests of the Company will be served thereby. Any
Officer may resign as such at any time upon written notice to the Management
Committee, and in the case of the CEO only, to Polo and the Media
Representative. Such resignation will take effect at the time specified in the
written notice or, if no time is specified therein, at the time of its receipt
by Polo and the Media Representative or the CEO, as the case may be. The
acceptance of a resignation will not be necessary to make it effective, unless
expressly so provided in the resignation.

         6.9 Vacancies. Subject to Section 6.1, any vacancy occurring in any
office of the Company may be filled by the CEO.

         6.10 Duties. The Officers shall manage the Company's business
activities in the Company's best interests.


                                   ARTICLE VII

                           MEETINGS OF CLASS A MEMBERS

         7.1 Meetings of Class A Members. A meeting of the Class A Members may



be called at any time by Polo or the Media Representative to vote on, or to
obtain consent for, any action which, pursuant to this Agreement or the
Operating Agreement, permits or requires a vote or consent of Polo and the Media
Representative or Polo and the Media Members. The Class A Members will meet at
least once in each Fiscal Year.

         7.2 Place of Meetings of Class A Members. Unless the date, time, and
place of the meeting is designated by either Polo or the Media Representative
calling a meeting, such meeting will be held at the principal office of the
Company.

         7.3 Notice of Meetings of Class A Members.

         (a) Except as otherwise provided by law, written or printed notice
stating the date, time and place of each meeting of the Class A Members, and the
purpose or purposes for which the meeting is called, will be given to each Class
A Member not less than five Business Days before the date of the meeting.

         (b) Any notice to be given to the Class A Members for any Meeting will
be deemed to be waived by any party who (i) attends such Meeting without
protesting prior thereto or at its commencement the lack of notice to such Class
A Member or (ii) submits a signed waiver of notice whether before or after such
Meeting, which waiver of notice may be delivered by proxy.

         7.4 Fixing of Record Date. For purposes of determining the Class A
Members entitled to notice of or to vote at any meeting of Class A Members or
any adjournment thereof, or Class A Members entitled to receive payment of any
Distribution, or in order to make a determination of Class A Members for any
other proper purpose, the date on which notice of the meeting is delivered or
mailed or the date on which the resolution declaring such Distribution or
relating to such other purpose is adopted, as the case may be, will be the
record date for such determination of Class A Members. When a determination of
Class A Members entitled to vote at any meeting of Class A Members has been made
as provided in this Section, such determination will apply to any adjournment
thereof.

         7.5 Quorum. A quorum will be present at any meeting of the Class A
Members if the holders of 80% of Class A Membership Interests are represented at
the meeting in person or by proxy. Once a quorum is present at the meeting of
the Class A Members, the Class A Members represented in person or by proxy and
entitled to vote at the meeting may conduct such business as properly may be
brought before the meeting until it is adjourned, and the subsequent withdrawal
from the meeting of any Class A Member prior to adjournment or the refusal of
any Class A Member to vote will not affect the presence of a quorum at the
meeting. If, however, such quorum is not present at any meeting of the Class A
Members, the Class A Members represented in person or by proxy and entitled to
vote at such meeting will have the power to adjourn the meeting from time to
time, without notice other than announcement at the



meeting, until all Class A Members are present or represented.

         7.6 Methods of Voting; Proxies. A Class A Member, or the Media
Representative on behalf of the Media Members, may vote either in person, by
telephone or by proxy executed in writing by the Class A Member or the Media
Representative on behalf of the Media Members. A photocopy, facsimile or similar
reproduction of a writing executed by a Class A Member, or the Media
Representative on behalf of the Media Members, will be treated as an execution
in writing for purposes of this Section 7.6. Proxies for use at any meeting of
Class A Members or in connection with the taking of any action by written
consent will be filed with the Management Committee, before or at the time of
the meeting or execution of the written consent, as the case may be. All proxies
will be received and taken charge of and all ballots will be received and
canvassed by the Management Committee, which will decide all questions touching
upon the qualification of voters, the validity of the proxies, and the
acceptance or rejection of votes. No proxy will be valid after 11 months from
the date of its execution unless otherwise provided in the proxy. A proxy will
be revocable unless the proxy form conspicuously states that the proxy is
irrevocable and the proxy is coupled with an interest. A proxy may designate
only one Person to act as proxy.

         7.7 Conduct of Meetings. Meetings of the Class A Members may be
presided over by a chairman of the meeting, who may be designated by the Class A
Member who called such meeting. Such chairman of the meeting shall determine the
order of business and the procedure at the meeting, including regulation of the
manner of voting and the conduct of discussion.

         7.8 Voting on Matters. Each Class A Member will be entitled to vote at
any meeting of the Class A Members in person or by proxy. Each Class A Member
shall be entitled to vote its percentage interest in the Company in accordance
with its Sharing Ratio as set forth in Exhibit A. For purposes of voting on
matters, at any meeting of the Class A Members at which a quorum is present, the
act of the Class A Members will be the affirmative vote of 80% of the Class A
Membership Interests represented in person, by telephone or by proxy at such
meeting.

         7.9 Registered Members. The Company will be entitled to treat the
holder of record of any Class A Membership Interest as the holder in fact of
such Class A Membership Interest for all purposes, and, accordingly, will not be
bound to recognize any equitable or other claim to interest in such Class A
Membership Interest on the part of any other Person, whether or not the Company
has express or other notice of such claim or interest, except as expressly
provided in this Agreement or the laws of the State of Delaware.

         7.10 Actions Without a Meeting.

         (a) Except as otherwise provided by law or by the Certificate of
Formation,



any action required or permitted to be taken, or which may be taken, by law or
the Certificate of Formation or this Agreement or the Operating Agreement, at
any meeting of Class A Members, may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken, is signed by the holder or holders of Class A Membership
Interests constituting not less than the minimum amount of Class A Membership
Interests that would be necessary to authorize or take such action at a meeting
at which the holders of all Class A Membership Interests entitled to vote on the
action were present and voted. Every written consent will bear the date of
signature of each Class A Member who signs the consent. The signed consent or
consents of Class A Members will be placed in the minute book of the Company.
The record date for determining Class A Members entitled to take action without
a meeting will be the date the first Class A Member signs a written consent. A
photocopy, facsimile or similar reproduction of a writing signed by a Class A
Member will be regarded as signed by the Class A Member for purposes of this
Section 7.10.

         (b) If any action by Class A Members is taken by written consent, any
articles or documents filed with the Secretary of State of the State of Delaware
as a result of the taking of the action will state, in lieu of any statement
required by applicable law concerning any vote of Class A Members, that written
consent has been given in accordance with the provisions of applicable law and
that any written notice required by applicable law has been given.

         7.11 Telephone and Similar Meetings. The Class A Members may
participate in and hold meetings by means of conference telephone or similar
communications equipment by means of which all Persons participating in the
meeting can hear each other. Participation in any such meeting will constitute
presence in person at such meeting, except where a Person participates in such
meeting for the express purpose of objecting to the transaction of any business
on the ground that such meeting is not lawfully called or convened.


                                  ARTICLE VIII

                         CONTRIBUTIONS; CAPITAL ACCOUNTS

         8.1 Initial Contributions.

         (a) On the Closing Date, concurrently with the execution of the
Existing Agreement, ValueVision contributed to the Company and the Company
received an amount in cash equal to $10,000,000 (the "ValueVision Initial
Capital Contribution").

         No Member will have the right to withdraw or be repaid any Capital
Contribution, except as provided in this Agreement.

         (b) As of the date of this Agreement, the Sharing Ratio of each Member
in the Company shall be as set forth on Exhibit A.



         8.2 Additional Contributions.

         (a) ValueVision shall make additional Capital Contributions in cash, in
addition to the ValueVision Initial Capital Contribution ("ValueVision
Additional Contributions"), consistent with the Business Plan (except as may
otherwise be agreed to by the Class A Members) as may be requested by the CEO in
writing (stating that in the CEO's business judgment further cash contributions
in the amount specified are reasonably required by the Company under the current
Business Plan and that such amounts will be used in accordance with the current
Business Plan) at any time and from time to time upon not less than 20 days
prior notice to ValueVision; provided, however, that in no event shall the
ValueVision Initial Capital Contribution and the aggregate ValueVision
Additional Contribution(s) total more than $50 million. If the Class A Members
agree to make any Additional Contributions to the Company, the Class A Members'
respective amount of the proposed Additional Contribution shall be funded by the
Class A Members in proportion to their respective Sharing Ratios on the fifth
Business Day following such agreement; provided, that a new class of units will
be issued to reflect the additional contribution by such Class A Members and
such new class will be assigned a Distribution Interest in accordance with
Section 9.7(a)(iv). Any such new class shall have substantially the same rights,
preferences and obligations hereunder as the Class A Membership Interests and
shall vote with the Class A Membership Interests on all matters to be voted on
by the Class A Members. Any new class shall not have the right to a separate
class vote with respect to any matters whatsoever. Any such Additional
Contribution agreed to by the Class A Members shall not reduce the ValueVision
Commitment.

         (b) None of the Members will be obligated to make Additional
Contributions other than as set forth herein.

         8.3 Enforcement of Commitments. In the event any Class A Member fails
to perform its Commitment, the Management Committee shall give such Delinquent
Member a notice of such failure. If the Delinquent Member fails to perform the
Commitment (including the payment of any costs associated with the failure and
interest at the Default Interest Rate) within ten Business Days of the giving of
such notice, the Management Committee and/or the non-delinquent Member may take
such action as deemed appropriate, including enforcing the Commitment in the
court of appropriate jurisdiction in the state in which the Principal Office is
located or the state of the Delinquent Member's address as reflected in this
Agreement. Each Class A Member expressly agrees to the jurisdiction of such
courts but only for purposes of such enforcement.

         8.4 Maintenance of Capital Accounts.

         A separate capital account shall be maintained for each Member
throughout the term of the Company in accordance with the rules of Section
1.704-1(b)(2)(iv) of the Regulations



as in effect from time to time, and, to the extent not inconsistent therewith,
to which the following provisions apply:

         (a) To each Member's Capital Account there will be credited (i) the
     amount of money contributed by such Member to the Company (including
     liabilities of the Company assumed by such Member as provided in Section
     1.704-1(b)(2)(iv)(c) of the Regulations); (ii) the fair market value of any
     property contributed to the Company by such Member (net of liabilities
     secured by such contributed property that the Company is considered to
     assume or take subject to under Section 752 of the Code); and (iii) such
     Member's share of Profits and items of income and gain that are specially
     allocated to such Member pursuant to Section 9.4 hereof or otherwise
     pursuant to this Agreement (other than items of income or gain allocated
     pursuant to Section 9.6(b)).

         (b) To each Member's Capital Account there will be debited (i) the
     amount of money distributed by the Company to such Member other than
     amounts which are in repayment of debt obligations of the Company to such
     Member; (ii) the fair market value of property distributed to such Member
     (net of liabilities secured by such distributed property that such Member
     is considered to assume or take subject to under Section 752 of the Code);
     (iii) such Member's share of Losses or items of loss or deduction that are
     specially allocated pursuant to Section 9.4 hereof or otherwise pursuant to
     this Agreement (other than items of loss or deduction allocated pursuant to
     Section 9.6(b)); and (iv) such Member's share of any excess of depreciation
     or amortization expense reflected in the Company's financial statements
     prepared in accordance with generally accepted accounting principles over
     such Member's share under Section 9.6(b) of the corresponding depreciation
     or amortization expense allowable for federal income tax purposes with
     respect to the related property.

         (c) The Capital Account of a transferee Member will include the
     appropriate portion of the Capital Account of the Members from whom the
     transferee Member's interest was obtained.

         (d) The foregoing provisions and the other provisions of this Agreement
     relating to the maintenance of Capital Accounts are intended to comply with
     Section 1.704-1(b) of the Regulations, and will be interpreted and applied
     in a manner consistent with such Regulations. Consistent with the Members'
     intention of maintaining Capital Accounts in a manner consistent with the
     principles of Section 1.704-1(b) of the Regulations, the value of any
     Property (other than cash) (i) contributed to the Company by a Member, (ii)
     distributed to a Member from the Company or (iii) owned by the Company and
     subject to a revaluation upon the occurrence of certain events shall be the
     fair market value of such Property (net of liabilities secured by such
     property that the Company or such Member, as the case may be, is considered
     to assume or take subject to



     under Section 752 of the Code) on the date of contribution, distribution or
     revaluation, as applicable.

         8.5 No Obligation to Restore Deficit Balance. Except as required by law
or as otherwise provided in this Agreement, no Member will be required to
restore any deficit balance in its Capital Account.

         8.6 Withdrawal; Successors. A Member will not be entitled to withdraw
any part of its Capital Account or to receive any distribution from the Company,
except as specifically provided in this Agreement, and no Member will be
entitled to or required to make any capital contribution to the Company other
than the Commitments. Any Member, including any additional or substitute Member,
who receives an interest in the Company or whose interest in the Company is
increased by means of a transfer to it of all or part of the interest of another
Member, will have a Capital Account with respect to such interest initially
equal to the Capital Account with respect to such interest of the Member from
whom such interest is acquired.

         8.7 Interest. No Member will be entitled to interest on such Member's
Capital Contribution or on any Profits retained by the Company.

         8.8 Investment of Capital Contributions. The cash portion of the
Capital Contributions of the Class A Members will be invested by the Management
Committee in demand, money market or time deposits, obligations, securities,
investments or other instruments constituting cash equivalents, until such time
as such funds are used by the Management Committee for Company purposes. Such
investments will be made by the Management Committee for the benefit of the
Company.

         8.9 Advances to the Company. Except with the express written consent of
Polo, in the case of the Media Members, or the Media Representative, in the case
of Polo, no Member may make loans or advance funds to the Company other than the
ValueVision Initial Capital Contribution, the ValueVision Additional
Contributions and any Additional Contributions required to be contributed to the
Company pursuant to this Agreement.

         8.10 Initial Public Offering. In the event that Polo and the Media
Representative agree in accordance with Section 5.3, or the Media Representative
determines in accordance with Section 3.16, to conduct an Initial Public
Offering, Polo shall have the right to increase its total equity investment in
the Company by contribution, by way of conversion, of a portion of its royalty
under the License Agreement into additional equity in the Company. The amount of
such additional equity shall be calculated, taking into account the valuation of
the Company for purposes of the Initial Public Offering and the totality of the
circumstances, by a reputable, nationally recognized investment banking firm
chosen by Polo and the Media Representative in good faith at the time of such
conversion; provided, however, if Polo and the Media Representative are unable
to agree on the selection of an investment banking firm, each



party shall appoint one nationally recognized investment banking firm, each of
which shall select a third investment banking firm, which shall calculate the
amount of additional equity. All costs associated with the valuation process
shall be paid by the Company.

         In order to effect the foregoing, Polo shall have the right to require
the Company to agree to an amendment of the License Agreement in which the
royalty is reduced in accordance with the foregoing procedure. Polo shall have
30 days after the determination by the Company or, in the case of Section 3.16,
the Media Representative, to conduct an Initial Public Offering in accordance
with this Agreement to exercise its conversion option. If Polo exercises its
conversion option, the closing with respect to such exercise shall take place no
earlier than the consummation of the Initial Public Offering.


                                   ARTICLE IX

                          ALLOCATIONS AND DISTRIBUTIONS

         9.1 Profits and Losses. Profits and Losses, and each item of Company
income, gain, loss, deduction, credit and tax preference with respect thereto,
for each Fiscal Year (or shorter period in respect of which such items are to be
allocated) will be allocated among the Members as provided in Sections 9.2
through 9.6 for tax accounting purposes.

         9.2 Profits. After giving effect to the special allocations set forth
in Section 9.4, the allocation of Profits for any Fiscal Year will be allocated
among the Members in the following order of priority:

         (i) first, 100% to the Class A Members pro rata in proportion to their
     relative Sharing Ratios until the aggregate amount of Profits previously
     allocated to such Class A Members pursuant to this Section 9.2 minus the
     sum of (y) the aggregate amount of Losses previously allocated to such
     Members pursuant to Section 9.3 plus (z) the aggregate amount of
     distributions previously made to such Members pursuant to Section 9.7(c)
     equals $400,000,000;

         (ii) thereafter, to the Class A Members, Class B Members and Class C
     Members pro rata in proportion to their respective Sharing Ratios; and

         (iii) notwithstanding clause (i) and (ii) above, if there is an Initial
     Public Offering, sale or other disposition of substantially all of the
     assets of the Company or a liquidation of the Company pursuant to Article
     XII, Profits shall be allocated (x) first, to Polo until the ratio of
     Polo's Capital Account balance to the sum of the Members' Capital Account
     balances equals Polo's Sharing Ratio, (y) second, to the Class A Members
     pro



     rata in proportion to their respective Sharing Ratios (provided that, for
     purposes of this clause (y), Profits shall be reallocated among the
     Original Media Members so as to cause, as nearly as possible, the balances
     in such entities' Capital Accounts to bear the same ratios to one another
     as do such entities' respective Sharing Ratios) until the sum of the
     Capital Account balances of the Class A Members plus distributions to such
     Class A Members pursuant to Section 9.7(a) equals $400,000,000 and (z)
     thereafter, to the Class A Members, Class B Members and Class C Members pro
     rata in proportion to their respective Sharing Ratios.

         9.3 Losses. After giving effect to the special allocations set forth in
Section 9.4, Losses will be allocated (i) first, so as to cause, as nearly as
possible, the balances in the Class A Members' respective Capital Accounts to
bear the same ratios to one another as do the Members' respective Sharing Ratios
and (ii) second, to the extent any Class A Member, Class B Member or Class C
Member has a positive Capital Account balance, to such Class A Members, Class B
Members and Class C Members pro rata in accordance with such Members' respective
Sharing Ratios.

         9.4 Special Allocations. The following special allocations will be
made:

         (a) Qualified Income Offset. In the event any Member unexpectedly
     receives any adjustments, allocations or distributions described in Section
     1.704-l(b)(2)(ii)(d)(4), Section 1.704-l(b)(2)(ii)(d)(5), or Section
     1.704-l(b)(2)(ii)(d)(6) of the Regulations, items of Company income and
     gain will be specially allocated to the Member in an amount and manner
     sufficient to eliminate, to the extent required by the Regulations, the
     Adjusted Capital Account Deficit of the Member as quickly as possible,
     provided that an allocation pursuant to this Section 9.4(a) will be made
     only if and to the extent that the Member would have an Adjusted Capital
     Account Deficit after all other allocations provided for in this Article IX
     have been tentatively made as if this Section 9.4(a) were not in this
     Agreement.

         (b) Gross Income Allocation. In the event any Member has a deficit
     Capital Account at the end of any Fiscal Year which is in excess of the sum
     of the amounts such Member is deemed to be obligated to restore pursuant to
     the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of
     the Regulations, each such Member will be specially allocated items of
     Company income and gain in the amount of such excess as quickly as
     possible, provided that an allocation pursuant to this Section 9.4(b) will
     be made only if and to the extent that such Member would have a deficit
     Capital Account in excess of such sum after all other allocations provided
     for in this Article IX have been made as if Section 9.4(a) and this Section
     9.4(b) were not in this Agreement.

         (c) Curative Allocations. The allocations set forth in Sections 9.4 (a)
     and (b)



     (the "Regulatory Allocations") are intended to comply with certain
     requirements of the Regulations. It is the intent of the Members that, to
     the extent possible, all Regulatory Allocations will be offset either with
     other Regulatory Allocations or with special allocations of other items of
     Company income, gain, loss, or deduction pursuant to this Section 9.4(c).
     Therefore, notwithstanding any other provision of this Article IX (other
     than the Regulatory Allocations), the Managers may make such offsetting
     special allocations of Company income, gain, loss or deduction in any
     manner they determine appropriate so that, after such offsetting
     allocations are made, each Member's Capital Account balance is, to the
     extent possible, equal to the Capital Account balance such Member would
     have had if the Regulatory Allocations were not part of this Agreement.

         (d) Elective Gross Allocations. The Members will have the ability to
     make reasonable allocations of Company income and expense (including,
     without limitation, amortization deductions under Section 195 of the Code)
     pursuant to Section 9.3 and the proviso of Section 9.2 in order to cause
     the balances in the Members' respective Capital Accounts to bear the same
     ratio to one another as do the Members' respective Sharing Ratios.

         (e) Subsequent Adjustments to Income.

                  (i) To the extent, if any, that the taxable income of a Member
         is deemed to be increased by any taxing authority pursuant to Section
         482 of the Code or other similar provision (other than an increase
         described in subsection (ii) below), then the correlative deduction
         shall be specially allocated to such Member.

                  (ii) To the extent, if any that the taxable income of Polo
         arising out of a transfer of inventory to the Partnership is increased,
         directly or indirectly, by any taxing authority pursuant to Section 482
         of the Code or other similar provision and such adjustment or
         reallocation results in increased cost-of-goods-sold with respect to
         such inventory, then income or gain of the Partnership upon the sale or
         disposition of such inventory shall be specially allocated to the
         Members other than Polo (in a manner consistent with the profit
         allocations set forth in Section 9.2 of this Agreement) to the extent
         of such deemed increase. If there are insufficient items of income or
         gain attributable to such inventory sale or disposition to specially
         allocate to the Members other than Polo an amount of income or gain
         equal to the amount of such Section 482 adjustment, then any other
         Company items of income or gain for such taxable year shall be
         specially allocated to such Members to the extent of such shortfall.

         9.5 Other Allocation Rules.



         (a) The allocation provisions set forth in this Article IX are intended
to comply with Regulations Section 1.704-1(b) and shall be interpreted and
applied in a manner consistent with such Regulations (including the "minimum
gain chargeback" provisions set forth in Regulations Sections 1.704-2(f) and
1.704-2(i)(4)).

         (b) For purposes of determining the Profits, Losses, or any other item
allocable to any period (including allocations to take into account any changes
in any Member's Sharing Ratio during a Fiscal Year and any transfer of any
interest in the Company), Profits, Losses, and any such other item will be
determined on a daily, monthly, or other basis, as determined by the Managers
using any permissible method under Section 706 of the Code and the Regulations
thereunder.

         (c) Except as otherwise provided in this Article IX, an allocation of
Profits or Losses to a Member will be treated as an allocation to such Member of
the same share of each item of income, gain, loss and deduction taken into
account in computing such Profits or Losses.

         (d) For purposes of determining the character (as ordinary income or
capital gain) of any Profits allocated to the Members pursuant to this Article
IX, such portion of Profits that is treated as ordinary income attributable to
the recapture of depreciation, to the extent possible, will be allocated among
the Members in the proportion which (i) the amount of depreciation previously
allocated to each Member bears to (ii) the total of such depreciation allocated
to all Members. This Section 9.5(d) will not alter the amount of allocations
among the Members pursuant to this Article IX, but merely the character of
income so allocated.

         (e) The allocation of Profits and Losses to any Member will
appropriately reflect adjustments required as a result of any Section 754
election filed on behalf of the Company.

         9.6 Tax Allocations.

         (a) General Rules. Except as otherwise provided in Section 9.6(b), for
each fiscal period, items of the Company's income, gain, loss, deduction and
expense shall be allocated, for federal, state and local income tax purposes,
among the Members in the same manner as the Profits (and items thereof) or
Losses (and items thereof) of which such items are components were allocated
pursuant to this Article IX.

         (b) Mandatory Allocations Under Code Section 704(c). Income, gains,
losses and deductions with respect to any property (other than cash) contributed
or deemed contributed to the capital of the Company shall, solely for income tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its fair market value at the time of the contribution or deemed
contribution in accordance with Section 704(c) of the Code and the



Treasury regulations promulgated thereunder. If there is a revaluation of
property pursuant to Section 8.4(d) hereof, subsequent allocations of income,
gains, losses or deductions with respect to such property shall be allocated
among the Members so as to take account of any variation between the adjusted
tax basis of such property to the Company for federal income tax purposes and
its fair market value in accordance with Section 704(c) of the Code and the
Regulations promulgated thereunder. Except as otherwise agreed by the Members,
such allocations shall be made using the "traditional method" described in
Section 1.704-3(b) of the Regulations.

         (c) Tax Allocations Binding. The Members are aware of the income tax
consequences of the allocations made by this Article IX and hereby agree to be
bound by the provisions of this Article IX in reporting their shares of the
Company's income and loss for income tax purposes.

         (d) Contributions. The Members agree to treat contributions made
pursuant to this Agreement as governed by Section 721 of the Code, unless a
final determination (which shall include the execution of a Form 870-AD or
successor form) requires a different treatment for U.S. Federal income tax
purposes. In the event that any taxing authority contests such agreed treatment
of the contributions or the treatment of any other item as agreed to by the
Members in this Agreement, a Member receiving notice of such contest from such
taxing authority shall promptly give written notice of such contest to each
other Member. Such other Members may, at their own expense, participate in the
defense of such contest. The Members shall reasonably cooperate in defending any
such contest, and no Member shall settle or otherwise compromise such a contest
without the written consent of the other Members (which shall not be
unreasonably delayed or withheld). In the event of a Member's refusal to consent
to a settlement, such Member shall, to the extent permitted by law, assume
control of the defense of such contest, and such Member shall bear any legal
fees incurred by such Member in undertaking such defense to the extent incurred
after the assumption.

         9.7 Distributions to Members.

         (a) Amounts and Timing. If decided by the Members in accordance with
Section 5.3, Distributions will be made to the Members in such amounts and at
such times as the Class A Members shall determine from time to time. Each
Distribution shall be made to the Members as follows:

         (i) the amount to be distributed shall be allocated and paid to the
     different Classes pro rata in accordance with the relative Distribution
     Interests (as defined below) of each Class;

         (ii) except as otherwise provided in this Section 9.7, all
     Distributions allocated and paid to a Class shall be distributed pro rata
     to the Members of such Class in accordance with the relative Sharing Ratios
     of such Members;



         (iii) the Class A Members, Class B Members and Class C Members shall
     each be treated as one Class for purposes of Sections 9.7(a)(i) and (ii)
     and all Distributions allocable to such Classes pursuant to Section
     9.7(a)(i) shall be distributed as follows:

                  (A) first, one hundred percent (100%) to the Class A Members
         pro rata in accordance with the Sharing Ratio of each Class A Member,
         until the Class A Members have received aggregate Distributions
         pursuant to Section 9.7(a) in an amount equal to $400,000,000 (it being
         understood that distributions pursuant to Section 9.7(c) shall not be
         included in calculating such $400,000,000 threshold); and

                  (B) second, to the Class A Members, Class B Members and the
         Class C Members pro rata in accordance with their respective Sharing
         Ratios;

         (iv) The "Distribution Interest" of a Class (or Classes in the case of
     the Class A Members, the Class B Members and the Class C Members) is the
     relative interest of such Class in Distributions made by the Company, as
     established at the time of the initial issuance of the Membership Interests
     of such Class (except that in the case of Class C Members, the Distribution
     Interest shall be adjusted in connection with new issuances of Class C
     Membership Interests, subject to compliance with Section 2.11(c)(y)(iii)).
     The Class A/Class B/Class C Distribution Interest equals 100% as of the
     date hereof. Upon the issuance of new Classes of Membership Interests by
     the Company to existing Members or to other Persons pursuant to Section
     2.12, the Distribution Interest of the Class A/Class B/Class C Members
     shall be reduced proportionately by the amount of the Distribution Interest
     assigned to the new Class pursuant to Section 2.12.

         (b) Amounts Withheld. All amounts withheld pursuant to the Code or any
provision of any state or local tax law with respect to any payment,
distribution, or allocation to the Company or the Members will be treated as
amounts distributed to the Members pursuant to this Section 9.7 for all purposes
under this Agreement. The Company is authorized to withhold from Distributions
to the Members and to pay over to any federal, state, or local government any
amounts required to be so withheld pursuant to the Code or any provisions of any
other federal, state, or local law, and shall allocate any such amounts to the
Members with respect to which such amount was withheld.

         (c) Draws for Payment of Estimated Taxes. Unless Polo and the Media
Representative otherwise agree, the Company shall pay to each Member a quarterly
draw (calculated at the higher of the applicable individual or corporate rate,
as the case may be), not to exceed the amount reasonably necessary to provide
for payment by the Members of any federal, state and local estimated taxes with
respect to Profits allocated to the Members pursuant to this Article IX;
provided, however, that in no event shall Polo and the Media Representative
agree



that the Company shall refrain from making any such payment that would otherwise
be required to be made to the Class B Member(s), without the prior consent of
the Class B Member(s). All draws hereunder will be made to the Members receiving
such distributions pro rata based on their estimated respective shares of
Profits allocated to each of them for such Fiscal Year under this Article IX.
Any draw by any Member made pursuant to this Section 9.7(c) will not result in
any decrease in the Sharing Ratio of such Member.


                                    ARTICLE X

                                      TAXES

         10.1 Tax Characterization. It is intended that the Company be
characterized and treated as a partnership for, and solely for, federal, state
and local income tax purposes. For such purposes, (i) the Company will be
subject to all of the provisions of Subchapter K of Chapter 1 of Subtitle A of
the Code, (ii) all references to a "Partner," to "Partners" and to the
"Partnership" in this Agreement (including Article IX) and in the provisions of
the Code and Regulations cited in this Agreement will be deemed to refer to a
Member, the Members and the Company, respectively.

         10.2 Tax Matters Partner, Etc. (a) NBC is hereby appointed the "Tax
Matters Partner" within the meaning of Section 6231(a)(7) of the Code. NBC will
act in good faith in fulfilling the responsibilities of a Tax Matters Partner
under the Code, the Regulations and pursuant to this Agreement and in fulfilling
any similar role under state, local or foreign law.

         (b) NBC shall promptly take such action as may be necessary to cause
NBC to become a "Notice Partner" within the meaning of Section 6231(a)(8) of the
Code. NBC shall keep the other Members informed of all material matters that may
come to its attention in its capacity as Tax Matters Partner by giving the other
Members notice thereof within five Business Days after it becomes informed of
any such matter or within such shorter period as may be required to comply with
any appropriate statutory or regulatory provisions NBC shall furnish the other
Members copies of all written communications from the Internal Revenue Service
within ten Business Days after the receipt thereof or within such shorter period
as may be required to comply with any appropriate statutory or regulatory
provisions. NBC also shall provide the other Members with reasonable advance
notice of meetings and conferences with the Internal Revenue Service so that the
other Members will have a reasonable opportunity to participate in such meetings
and conferences. Without limiting the generality of the foregoing, NBC and the
other Members shall each give to the other prompt notice of receipt of any
written notice that the Internal Revenue Service or any other taxing authority
intends to examine any federal, state, local or foreign tax return, or the books
and records, of the Company.

         (c) NBC, in its capacity as Tax Matters Partner, shall not take any
action



contemplated by Section 6222 through Section 6233, inclusive, of the Code
without the approval of Polo; provided, however, that nothing contained herein
will be construed to limit the ability of Polo or NBC to take any action under
Section 6222 through Section 6233, inclusive, of the Code that is left to the
determination of a Member so long as such action is not legally binding on the
other Members or the Company. Without limiting the generality of the foregoing,
NBC shall not, and will have no power to, enter into any extension of the period
of limitations for making assessments on behalf of another Member, or any
settlement agreement that binds another Member.

         (d) If any Member enters into a written settlement or closing agreement
with the Internal Revenue Service with respect to any partnership tax item in
respect of the Company, it shall notify the other Members of such agreement and
its terms at least ten Business Days prior to the execution of such written
agreement.

         (e) In the event that NBC ceases to be a Member, Polo will become the
Tax Matters Partner, unless NBC has transferred its Membership Interest to a
wholly-owned Affiliate in accordance with the terms of this Agreement, in which
case such Affiliate will become the Tax Matters Partner.

         (f) The provisions of this Section 10.2 will survive the termination of
the Company, and will remain binding on the Members for a period of time
necessary to resolve with the Internal Revenue Service or the Department of the
Treasury or other taxing authority any and all matters regarding the Federal
income taxation of the Company and any state, local, or foreign tax matters.

         10.3 Tax Returns. As soon as practicable after the end of each Fiscal
Year, the Company shall cause to be prepared and filed, to the extent required,
tax returns for the Company and shall supply copies of all United States
Federal, state and local income tax returns to the Members for their review 30
days prior to the filing thereof with the appropriate governmental agencies. In
preparing and filing such tax returns, the Company shall reasonably consult with
the Members. All returns filed by the Company in respect of Federal income taxes
will be filed on the basis that the Company is a partnership for Federal income
tax purposes.

         10.4 Section 83(b) Elections. Each Class B and Class C Member agrees to
file an election with the Internal Revenue Service under Section 83(b) of the
Code with respect to such Member's receipt of a Membership Interest hereunder
within 30 days of such Member's admission as a Member of the Company. A copy of
such election shall be submitted to the Company and submitted with the Member's
income tax return for the taxable year in which such Member was admitted to the
Company.


                                   ARTICLE XI



                         TRANSFER OF MEMBERSHIP INTEREST

         11.1 Compliance with Securities Laws. No Membership Interest has been
registered under the Securities Act or under any applicable state securities
laws. A Member may not transfer (a transfer, for purposes of this Agreement,
shall be deemed to include, but not be limited to, any sale, transfer,
assignment, pledge, creation of a security interest or other disposition) all or
any part of such Member's Membership Interest, except upon compliance with the
applicable federal and state securities laws and the provisions of this Article
XI; provided further, however, each of the Original Media Members may freely
transfer their respective Membership Interests amongst themselves without regard
to the restrictions in Section 11.2. The Managers will have no obligation to
register any Member's interest under the Securities Act, as amended, or under
any applicable state securities laws, or to make any exemption therefrom
available to any Member.

         11.2 Transfer of Membership Interest. (a) A Class A Member may not
sell, transfer, assign or otherwise dispose, directly or indirectly, of all or
any portion of its Membership Interest, except in accordance with the provisions
of Sections 3.12, 3.13, 3.14 and 3.15 or this Article XI. JM agrees that he will
not transfer any JM Interests at any time except as expressly permitted by the
provisions of Sections 2.13, 2.14, 2.17, 2.18, 3.5 and 3.6 or this Article XI.
No transfer of any Membership Interests in violation hereof shall be made or
recorded on the books of the Company and any such transfer shall be void and of
no effect. Except as otherwise provided below, a Member may sell, transfer,
assign or otherwise dispose of all or any portion of its Membership Interest (a
"Transfer") only if such Member (the "Withdrawing Member") obtains the prior
written consent of Polo, in the case of transfers by any Media Member, or the
Media Representative on behalf of the Media Members, in the case of transfers by
Polo (the "Continuing Member"), which consent may be given or withheld in the
sole and absolute discretion of the Continuing Member; provided, however, that
no prior written consent of the Continuing Member shall be required in the case
of any transfer specifically contemplated by this Agreement as not requiring
consent. Except as otherwise provided below or in Sections 2.17, 2.18, 3.5 and
3.6, JM may sell, transfer, assign or otherwise dispose of all or any JM
Interests only if JM obtains the prior written consent of Polo and the Media
Representative on behalf of the Media Members. Upon any acquisition of a
Withdrawing Member's Membership Interest by a transferee in accordance with this
Article XI, such transferee will be admitted as a Member of the Company for
purposes of this Agreement, with the same rights, privileges, duties and
obligations of the Withdrawing Member and immediately following such admission,
the Withdrawing Member will cease to be a Member of the Company; provided,
however, that no Transfer shall be made if such Transfer would, in the opinion
of counsel to the Company, jeopardize the status of the Company as a partnership
for United States federal income tax purposes. A Transfer by a Withdrawing
Member of its entire Membership Interest to a Majority-Owned Affiliate of such
Member may be made without the prior written consent of the Continuing Member if
(i) the Withdrawing Member executes and delivers to the Continuing Member a
guaranty of the performance by such Majority-Owned Affiliate of its



obligations under this Agreement and the Operating Agreement in form and
substance reasonably satisfactory to the Continuing Member, (ii) such
Majority-Owned Affiliate executes an instrument pursuant to which it agrees to
adopt and to be bound by, and to perform, all the obligations of the Withdrawing
Member under this Agreement and the Operating Agreement, (iii) the Withdrawing
Member agrees to indemnify the Continuing Member for any Damages suffered by the
Continuing Member if such Transfer results in a termination of the status of the
Company as a partnership for United States federal income tax purposes and (iv)
the other owners of such Majority-Owned Affiliate do not include, in the case of
a Transfer by Polo, a Media Competitor, and in the case of a Transfer by any of
the Media Members, any of Polo's competitors (as agreed to by the parties
hereto); provided, however, that in no event shall Polo transfer its Membership
Interest to a Majority-Owned Affiliate and subsequently transfer its interest in
such Majority-Owned Affiliate to a Media Competitor nor shall any Media Member
transfer its Membership Interest to a Majority-Owned Affiliate and subsequently
transfer its interest in such Majority-Owned Affiliate to any of Polo's
competitors (as agreed to by the parties hereto). Notwithstanding any of the
foregoing, no Transfer shall relieve NBC of its obligations to provide $100
million aggregate credits for advertising time or NBCi and CNBC.com of their
obligations to provide $40 million and $10 million, respectively, of credits in
Online services as provided in the Operating Agreement and, where applicable,
the other applicable Ancillary Agreement.

         (b) Notwithstanding any of the foregoing, the restrictions on Transfer
of the JM Interests set forth in this Article XI shall not apply to a gratuitous
transfer of any JM Interests made by JM to JM's spouse or to JM's lineal
descendants, including adopted children, or to trusts for the benefit of JM's
spouse or lineal descendants. In the event of a Transfer accomplished in
accordance with this Section 11.2(b), the transferee shall receive and hold any
and all JM Interests so transferred subject to the terms and provisions of this
Agreement and subject to the obligations of JM hereunder.

         11.3 Obligations of a Withdrawing Member.

         (a) Generally. No disposition by a Withdrawing Member of its Membership
Interest will relieve such Withdrawing Member of any of its liabilities and
obligations, including those to the Company or to the Continuing Member, which
arose or accrued from events, acts or omissions occurring prior to the effective
date of such disposition. The Withdrawing Member will be responsible for all
costs incurred by the Company in connection with any Transfer.

         (b) Non-Disclosure by a Withdrawing Member. In the case of a sale or
other transfer of a Withdrawing Member's Membership Interest pursuant to this
Article XI, the Withdrawing Member will continue to be subject to the provisions
of Section 2.4 of the Operating Agreement (Non-Disclosure).



         (c) Survival. The rights and obligations of the Members under this
Section 11.3 will survive any termination of this Agreement and the Operating
Agreement.

         11.4 Encumbrances. No Member will at any time mortgage, pledge, charge
or encumber, or create or suffer to exist a mortgage, pledge, lien, charge,
encumbrance or security interest ("Lien"), with respect to all or any part of
its Membership Interest. If a Lien attaches to a Member's Membership Interest,
such Member agrees to cause such Lien to be discharged promptly at its own
expense.

         11.5 Effect of Unauthorized Transfer. No transfer or other disposition
of any Membership Interest in violation of any provision of this Agreement will
be effective to pass any title to, or create any interest in favor of, any
Person, but the Member which attempted to so effect such transfer or other
disposition will be deemed to have committed a material breach of its
obligations to the other Member hereunder.

         11.6 Standstill Agreement.

         (a) From February 7, 2000 and continuing until one year after the
earlier of the termination of this Agreement or, with respect to any Original
Media Member, the date on which such Original Media Member ceases to be a
Member, none of the Original Media Members, their Majority-Owned Affiliates and
their representatives (to the extent such representatives are acting on behalf
of any of the Original Media Members or their Majority- Owned Affiliates) will,
except as expressly set forth in this Agreement and except in accordance with
the terms of a specific written approval or request made by Polo, initiate
contact with any director, officer, employee, or Person or group or Persons
known by such Original Media Member or who reasonably should be known by such
Original Media Members, to beneficially own (within the meaning of Rule 13d-3 of
the General Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement) Securities (as hereinafter defined) of Polo representing
in excess of 10% of the total voting power or total equity value of Polo in
connection with any matter relating to the purchase, sale or voting of such
Securities representing 10% of the total voting power of Polo or total equity
value of Polo. For purposes of this Section 11.6, the term "Securities" means
any equity securities of Polo or any Affiliate of Polo, and any direct or
indirect options or other rights to acquire any equity securities of Polo,
including any securities that are exercisable or exchangeable for or convertible
into, such equity securities.

         (b) As of the date of this Agreement and for so long as any Original
Media Member is a Member, each Original Media Member confirms to Polo that it
does not beneficially own any Securities of Polo representing in excess of 10%
of the total voting power or total equity power of Polo. Each Original Media
Member agrees that for the duration of this Agreement, except in accordance with
the terms of a specific request or approval by Polo, it will not:



         (i) propose or publicly announce or otherwise disclose an intent to
     propose or enter into or agree to enter into, singly or with any other
     Person, directly or indirectly, (A) any form of business combination,
     acquisition, or other transaction relating to Polo or any of its
     Majority-Owned Affiliates, excluding the Company and the Business, (B) any
     form of restructuring, recapitalization, or similar transaction with
     respect to Polo or any Majority-Owned Affiliate thereof, excluding the
     Company and the Business or (C) make, initiate, or participate in any
     demand, request or proposal to amend, waive or terminate any provision of
     this Section 11.6, or

         (ii) (A) acquire, or offer, propose or agree to acquire, by purchase or
     otherwise, any Securities of Polo (now existing or hereafter created)
     representing in excess of 10% of the total voting power or total equity
     value of Polo, (B) make, initiate, or in any way participate in, any
     solicitation of proxies with respect to any Securities of Polo (now
     existing or hereafter created) (including by the execution of action by
     written consent), (C) become a participant in any election contest with
     respect to Polo, (D) seek to influence any Person with respect to any
     Securities of Polo, (E) demand a copy of a list of stockholders of Polo or
     other books and records, (F) participate in or encourage the formation of
     any partnership, syndicate, or other group which owns or seeks or offers to
     acquire beneficial ownership of any Securities of Polo or which seeks to
     effect control of Polo for the purpose of circumventing any provision of
     this Agreement or (G) otherwise act, alone or in concert with others
     (including by providing financing for another Person), to seek or to offer
     to control or influence, in any manner, the management, board of directors,
     or policies of Polo, except with respect to the Company and the Business in
     accordance with this Agreement and the Operating Agreement.

         (c) The provisions of this Section 11.6 shall survive with respect to
the Original Media Members until one year after the earlier of the termination
of this Agreement and the date on which any Original Media Member ceases to be a
Member. This Section 11.6 shall also apply to any transferee of any of the
Original Media Members in accordance with the terms of this Agreement mutatis
mutandis.

         (d) Notwithstanding any other provisions of this Agreement, nothing
herein shall restrict any pension or other employee benefit plan of any of the
Media Members or their Affiliates from acquiring or beneficially owning any
Securities of Polo and otherwise taking any actions with respect to such
Securities, except to the extent done with an intent to circumvent the
provisions of this Section 11.6.


                                   ARTICLE XII

                                   DISSOLUTION



         12.1 Events of Dissolution. (a) The Company will be dissolved and this
Agreement and the Operating Agreement will terminate upon the occurrence of any
of the following events:

         (i) the written agreement of Polo and the Media Representative to
     dissolve the Company;

         (ii) the Delaware Court of Chancery has entered a final decree pursuant
     to Section 18-802 of the Act;

         (iii) the sale of all or substantially all of the Company's assets; or

         (iv) the termination of the License Agreement in accordance with its
     terms.

         (b) The withdrawal, resignation, expulsion, bankruptcy or dissolution
of a Member or the occurrence of any other event which terminated the Member's
continued membership in the Company shall not result in the dissolution of the
Company.

         (c) As soon as possible after the occurrence of any of the events
specified in Section 12.1(a) above, the Company shall make any filings required
by the Act and shall cease to carry on its business, except insofar as may be
necessary for the winding-up of its business, but the Company's separate
existence will continue until the certificate of cancellation of the Certificate
of Formation has been filed by the Secretary of State or until a decree
dissolving the Company has been entered by a court of competent jurisdiction, as
the case may be.

         12.2 Liquidation and Distribution Following Dissolution. If an event of
dissolution has occurred pursuant to Section 12.1, the Company will be wound up
and liquidated in accordance with applicable law and the following provisions
(unless the Company is continued on a basis mutually acceptable to Polo and the
Media Representative):

         (a) each Member shall pay to the Company all amounts owed by it to the
     Company, if any;

         (b) the CFO shall be directed to prepare a balance sheet of the Company
     in accordance with GAAP as of the date of dissolution, which balance sheet
     shall be reported upon by the Company's Auditors;

         (c) the Company Assets, including any monies received pursuant to
     Section 12.2(a), will be applied in the following order:

                  First, to the payment of creditors of the Company, including
         Members



         who are creditors, in the order of priority provided by law;

                  Second, to the establishment of any reserves that the Class A
         Members, in accordance with sound business judgment, deem reasonably
         necessary to provide for the payment when due of any contingent
         liabilities or obligations of the Company (which reserves may be paid
         over by the Members to a trustee or escrow agent selected by them to be
         held by such trustee or escrow agent for purposes of (i) distributing
         such reserves in payment of the aforementioned contingencies, and (ii)
         distributing the balance of such reserves in the manner provided herein
         upon the expiration of such period as the Class A Members may deem
         advisable).

                  Third, to the Members in accordance with their positive
         Capital Account balances.

         Consistent with the regulations pursuant to Section 704 of the Code, in
     the event of a liquidation, as defined in Treasury Regulations Section
     1.704-1(b)(2)(ii)(g), the value of all property of the Company to be
     distributed will be, or will have been, appropriately reflected in the
     Capital Accounts.

         (d) In the event of any liquidation pursuant to this Section 12.2, the
     Company Assets (other than as may otherwise be provided in this Agreement
     or any Ancillary Agreement) will be sold or otherwise liquidated as
     promptly as possible without material sacrifice, and any receivables will
     be collected or sold, all in an orderly and businesslike manner.
     Notwithstanding the foregoing, the Members may agree not to sell all or any
     portion of the Company Assets, in which event such Company Assets will be
     distributed in kind.

         (e) Notwithstanding anything to the contrary in this Agreement or the
     Operating Agreement, upon a liquidation (within the meaning of Treasury
     Regulations ~ 1.704-1(b)(2)(ii)(g)), if any Member has a deficit Capital
     Account (after giving effect to all contributions, distributions,
     allocations and other Capital Account adjustments for all Fiscal Years,
     including the year in which such liquidation occurs), such Member will have
     no obligation solely as a result of such deficit to make any capital
     contribution, and the negative balance of such Capital Account will not be
     considered a debt owed by the Member to the Company or to any other Person
     for any purpose whatsoever.

         (f) Any distributions to the Members in respect of their Capital
     Accounts pursuant to this Section 12.2 will be made in accordance with the
     time requirements set forth in Treasury Regulations ~
     1.704-1(b)(2)(ii)(b)(2).

         12.3 Final Accounting. Upon the liquidation of the Company, the
Auditors



shall prepare a final accounting statement as soon as reasonably practicable
after all of the business of the Company has been concluded, all monies payable
to the Company have been received and all expenses and obligations of the
Company have been paid, satisfied or otherwise provided for.

         12.4 Winding Up and Certificate of Dissolution. The winding up of the
Company will be completed when all debts, liabilities, and obligations of the
Company have been paid and discharged or reasonably adequate provision therefor
has been made, and all of the remaining Company Assets have been distributed to
the Members. Upon the completion of the winding up of the Company, a certificate
of dissolution will be delivered to the Secretary of State of the State of
Delaware for filing. The certificate of dissolution will set forth the
information required by the Act.

         12.5 Use of the Company Name, Etc. Upon Dissolution, Winding Up and
Termination. Each Media Member hereby agrees that neither it nor any of its
Affiliates shall, after dissolution of the Company in accordance with this
Article XII, without the prior written consent of Polo, use or exploit the
Company name or any Polo and Ralph Lauren Brand or other intellectual property
that is or has been provided or licensed to the Company under the License
Agreement, and in the case of Polo, Polo agrees not to use or exploit any Media
Member's trademarks or any other of the Media Members' intellectual property
that is or has been provided or licensed to the Company; provided, however, that
this Section shall not apply in the context of a separate commercial
relationship between Polo and any Media Member, such as an advertising
relationship.

         12.6 Payments Upon Certain Dissolutions. In the event that, any time
prior to the fourth anniversary of the Closing Date, (a) the Members shall agree
to a liquidation, dissolution, winding up, bankruptcy, insolvency or similar
event involving the Company or (b) the Company shall be the subject of an
involuntary liquidation, dissolution, winding up, bankruptcy, insolvency or
similar event, or the Company shall have ceased to have any substantial ongoing
operations, in either of cases (a) or (b) following the refusal or inability of
Polo to commit to fund its share of any Additional Capital Contributions (after
having exhausted the ValueVision Commitment, giving effect to any ValueVision
Additional Contributions to be made concurrently with such proposed Additional
Capital Contributions) that are required in order to fund the Company's
reasonably anticipated capital and operating needs (including, without
limitation, any amounts needed to avoid or cure a payment default under the
License Agreement) for the twelve months following any request of the Company or
the Media Representative for such Additional Capital Contributions but only in
the event that (i) the Company is unable to raise the required capital plus
sufficient capital to fund its capital and operating needs for an additional 12
months on a prudent basis and on commercially reasonable terms through bank
borrowings or otherwise in the capital markets and (ii) one or more of the
Original Media Members is willing and able to fund the aggregate amount of all
such Additional



Capital Contributions required of the Original Media Members, as evidenced by
appropriate supporting documentation, including all necessary corporate and
shareholder action of the Original Media Members and their shareholders to
authorize such funding, Polo agrees to pay to ValueVision 50% of the excess of
the aggregate amount of actual cash Capital Contributions ("Aggregate
Contributions") made by the Original Media Members to the Company, net of
distributions made to ValueVision with respect to which, and only to the extent
that, Polo does not receive a corresponding distribution in proportion to its
Sharing Ratio, over the Aggregate Contributions made by Polo to the Company, net
of distributions made to Polo with respect to which, and only to the extent
that, ValueVision does not receive a corresponding distribution in proportion to
its Sharing Ratio, which payment by Polo shall not exceed $25 million (the
"Liquidation Payment"). In consideration for the Liquidation Payment,
ValueVision or any permitted transferee of ValueVision shall, if requested by
Polo in its sole discretion, transfer to Polo that percentage of ValueVision's
Membership Interest equal to (a) the Liquidation Payment, divided by (b) the
aggregate cash Capital Contributions made to the Company by ValueVision and such
permitted transferees (the "ValueVision Contributions"). In the event that, for
U.S. federal income tax purposes, the Liquidation Payment is treated as a
contribution by Polo to the Company and a distribution to ValueVision, the
Liquidation Payment shall be treated as a "guaranteed payment" under section
707(c) of the Code and any deduction taken by the Company in respect of such
payment shall be specially allocated to Polo. This Section 12.6 shall be binding
upon any transferee of ValueVision's or Polo's Membership Interest.


                                  ARTICLE XIII

                                   [RESERVED]


                                   ARTICLE XIV

                INDEMNIFICATION OF MEMBERS, MANAGERS AND OFFICERS

         14.1 Indemnification by a Class A Member. Subject to Section 14.3, each
Class A Member (the "Indemnifying Member") shall indemnify, defend and hold
harmless the Company, the other Members, the other Members' Affiliates, and the
other Members' and each such Affiliate's officers, directors, employees, agents
and representatives, and the Company's Managers and officers (collectively the
"Other Indemnified Persons") from and against any and all claims, demands,
actions, suits, damages, liabilities, losses, costs and expenses (including
reasonable attorneys' fees and out-of-pocket disbursements), judgments, fines,
settlements and other amounts (collectively "Damages"), to the extent caused by,
resulting from or arising out of or in connection with any of the following:



         (a) the material breach of, or material misrepresentation contained in,
     any written representation or warranty made by the Indemnifying Member or
     its Affiliate in this Agreement or any Ancillary Agreement, or in any
     officer's certificate delivered hereunder;

         (b) the breach or default in any material respect in performance of any
     covenant or agreement required to be performed by the Indemnifying Member
     or its Affiliate contained in this Agreement or in any Ancillary Agreement;
     or

         (c) any claim, action, suit or proceeding or threat thereof, made or
     instituted as a result of acts or omissions of the Indemnifying Member or
     its Affiliates unrelated to the business and operations of the Company or
     outside the scope of the Indemnifying Member's rights or authority
     conferred by this Agreement, any Ancillary Agreement or any other
     understanding, agreement or arrangement between the Members and/or the
     Company and in which the Company, such Member, such Member's Affiliates or
     such Other Indemnified Persons may be involved or be made a party by reason
     of such Member being, or having been in the past, a Member.

         14.2 Indemnification by the Company. Subject to Section 14.3, the
Company shall indemnify, defend and hold harmless each Member (including any
Person who has been but is no longer a Member), each Member's Affiliates and the
officers, directors, employees, agents and representatives and the heirs,
executors, successors and assigns of each of the foregoing (individually an
"Indemnitee") from and against all Damages to the extent caused by, resulting
from or arising out of or in connection with any of the following:

         (a) any claim, action, suit or proceeding or threat thereof, made or
     instituted in which such Member, such Member's Affiliates or Indemnitee may
     be involved or be made a party by reason of such Member being, or having
     been in the past, a Member, or by reason of any action alleged to have been
     taken or omitted by such Member in such capacity, or by such Member's
     Affiliates or Indemnitees acting on behalf of the Company, provided that a
     Member, Member's Affiliate or Indemnitee shall only be entitled to
     indemnification hereunder to the extent such Indemnitee's conduct did not
     constitute bad faith, willful misconduct, gross negligence or a material
     breach of this Agreement or the Operating Agreement. The termination of any
     proceeding by settlement, judgment, order, conviction or upon a plea of
     nolo contendere or its equivalent shall not, of itself, create a
     presumption that such Member's, Member's Affiliate's or Indemnitee's
     conduct constituted bad faith, willful misconduct, gross negligence or a
     material breach of this Agreement or the Operating Agreement, such Member's
     Affiliate or such Indemnitee;

         (b) any guarantees or promises of performance of any obligations of the



     Company; and

         (c) any actions or omissions to act by the Company in connection with
     its business or operations, or the ownership of its assets and properties;
     provided, however, that nothing in this Section 14.2 will be construed to
     require the Company to reimburse, defend, indemnify or hold harmless any
     Member, its Affiliates, or Indemnitee with respect to any Damages in any
     circumstance in which this Agreement or any Ancillary Agreement requires
     such Member to reimburse, defend, indemnify or hold harmless any other
     Member, its Affiliates or Indemnitee or the Company in respect of such
     Damages.

         14.3 Survival; Limitations; Procedures.

         (a) The indemnification obligations contained in Section 14.1 will
survive any termination of this Agreement and the Operating Agreement or the
dissolution and winding up of the Company. The indemnification obligations
contained in Section 14.2 will survive any dissolution of the Company until its
affairs have been fully wound up and all of its properties and assets
distributed in accordance with this Agreement.

         (b) The rights and remedies provided to the Members and the Company in
this Agreement and to the Class A Members and the Company in the Operating
Agreement are cumulative and non-exclusive and will not preclude any other right
or remedy available to any Member or the Company at law or in equity.

         (c) Notwithstanding any other provision hereof, neither the Company nor
any Member will be liable to any other Member or its Affiliates, the Company, or
any Other Indemnified Person for special, indirect, punitive or consequential
damages, including but not limited to loss of profit.

         (d) If a Member or the Company is obligated hereunder to indemnify any
other Member, the Company, a Member's Affiliate or any Other Indemnified Person
or Indemnitee (in any case the "Indemnified Party") from any claim, suit, action
or proceeding brought by any other Person (a "Third Party Claim"), the
Indemnified Party shall give notice as promptly as is reasonably practicable to
the Indemnifying Party of such Third Party Claim; provided that the failure of
the Indemnified Party to give notice shall not relieve the Indemnifying Party of
its obligations under this Article XIV except to the extent (if any) that the
Indemnifying Party shall have been prejudiced thereby. Such Indemnifying Member
or the Company, as the case may be, will have the right to control the defense
and settlement of such Third Party Claim with counsel reasonably acceptable to
the Indemnified Party, provided that (i) such Indemnified Party may retain
counsel at its expense to assist in the defense and settlement of such Third
Party Claim and (ii) no settlement of any Third Party Claim will contain terms
or provisions requiring the Indemnified Party to take any action or perform any
undertaking, or prohibit or restrain the Indemnified Party from taking any
action, without



the written consent of the Indemnified Party.

         (e) Without the prior written consent of the Indemnifying Party, the
Indemnified Party shall not accept any settlement or compromise of any claim,
suit, action or proceeding of the nature referred to in paragraph (d) above;
provided that if such proposed settlement or compromise is rejected by the
Indemnifying Party, from and after such rejection, at the request of the
Indemnified Party, the Indemnifying Party shall assume the defense of and full
and complete liability and responsibility for such claim, suit, action or
proceeding, including any and all losses in connection therewith in excess of
the amount of losses which would have been payable under the proposed settlement
or compromise.

         14.4 Third-Party Dealings With Members. Except as permitted by this
Agreement or the Operating Agreement, no Member will have any right or authority
to take any action on behalf of the Company with respect to third parties.

         14.5 Insurance.

         (a) Generally. The Company may purchase and maintain insurance or other
arrangements or both, at its expense, on behalf of itself or any Person who is
or was serving as a Manager, Officer, employee or agent of the Company, or is or
was serving at the request of the Company as a manager, director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar functionary
of another foreign or domestic limited liability company, partnership,
corporation, partnership, joint venture sole proprietorship, trust, employee
benefit plan or other enterprise, against any liability, expense or loss,
whether or not the Company would have the power to indemnify such Person against
such liability under the provisions of this Article XIV. In addition, the
Company shall purchase such other insurance, in such amounts and with such
deductibles as is customary and prudent for Persons involved in conducting the
same business as the Company (i.e., Internet high-end apparel and other goods).

         (b) Liability Insurance. The Company shall obtain, as soon as possible
after the execution of this Agreement, and maintain in full force and effect for
the duration of this Agreement, liability insurance naming each Member as an
additional insured in the minimum amount, in addition to defense costs, of
$25,000,000 per occurrence and $25,000,000 per Person in order to protect each
Indemnified Party, including the Company, against any obligations, liabilities
or damages with which it or he may be charged in connection with Internet and
network activities, including the conduct of the business contemplated
hereunder. The maximum deductible with respect to such insurance shall be
$25,000. The Company shall cause each Indemnified Party to be entered in such
policy as additional named insureds and deliver to each Member a certificate of
insurance with respect thereto. Said insurance shall provide that it cannot be
amended or canceled without the insurer first giving each Member, not less than
thirty (30) days' advance notice thereof.



         14.6 Report to Members. Any indemnification of or payment of expenses
to a Person in accordance with this Article XIV will be reported in writing to
the Class A Members with or before the notice or waiver of notice of the next
Class A Members' meeting or with or before the next submission to the Class A
Members of a consent to action without a meeting pursuant to this Agreement and,
in any case, within the twelve-month period immediately following the date of
the indemnification or payment.


                                   ARTICLE XV

                               CLOSING DELIVERIES

         15.1 Closing Deliveries of Polo.

         (a) At the Closing, Polo delivered to the Original Media Members a
certificate, dated the Closing Date, from an authorized officer of Polo to the
effect that, to the best of such officer's knowledge, (i) Polo has performed in
all material respects its obligations under this Agreement and the Operating
Agreement required to be performed by it at the Closing or prior to the Closing
Date; and (ii) the representations and warranties applicable to Polo in this
Agreement and the Operating Agreement and to Licensor in the License Agreement
are true and correct in all material respects at and as of the Closing Date,
except to the extent that any such representation or warranty is made as of a
specified date, in which case such representation or warranty was true and
correct as of such date.

         (b) Concurrently with the Closing, the Operating Agreement and the
Supply Agreement were executed and delivered by Polo, and Polo caused the
License Agreement to be executed and delivered by PRL USA Holdings, Inc.

         15.2 Closing Deliveries of the Original Media Members.

         (a) At the Closing, each Original Media Member delivered to Polo a
certificate, dated the Closing Date, from an authorized officer of such Media
Member to the effect that, to the best of such officer's knowledge, (i) such
Media Member has performed in all material respects its obligations under this
Agreement and the Operating Agreement required to be performed by it at the
Closing or prior to the Closing Date and (ii) the representations and warranties
applicable to such Media Member in this Agreement and the Operating Agreement
and each other applicable Ancillary Agreement are true and correct in all
material respects at and as of the Closing Date, except to the extent that any
such representation or warranty is made as of a specified date, in which case
such representation or warranty was true and correct as of such date.

         (b) Concurrently with the Closing, the Operating Agreement was executed



and delivered by the Media Members.

         (c) Concurrently with the Closing, the Services Agreement was executed
and delivered by ValueVision.

         (d) Concurrently with the Closing, the Advertising Agreement was
executed and delivered by NBC.

         (e) Concurrently with the Closing, the Promotion Agreement was executed
and delivered by NBCi.


                                   ARTICLE XVI

                                  MISCELLANEOUS

         16.1 Notices. Notices to the Managers (i) appointed by the Media
Members will be sent to the principal office of NBC and (ii) appointed by Polo
will be sent to the principal office of Polo. Notices to the Members will be
sent to their addresses set forth on Exhibit A. Any Member may require notices
to be sent to a different address by giving notice to the other Members in
accordance with this Section 16.1. Any notice or other communication required or
permitted hereunder will be in writing, and will be deemed to have been given
upon receipt if and when delivered personally, sent by facsimile transmission
(the confirmation being deemed conclusive evidence of such delivery) or by
courier service or three Business Days after being sent by registered or
certified mail (postage prepaid, return receipt requested), to such Members at
such address.

         16.2 Public Announcements and Other Disclosure. None of the Members
will make any press release, public announcement or other disclosure (including
any SEC filings referred to below) with respect to this Agreement or any
Ancillary Agreement or the business operations and plans of the Company without
obtaining the prior written consent of either Polo or the Media Representative,
as the case may be, except as may be required by law or by the regulations of
any securities exchange or national market system upon which the securities of
such Member shall be listed or quoted.

         16.3 Headings and Interpretation. All Article and Section headings in
this Agreement are for convenience of reference only and are not intended to
qualify the meaning of any Article or Section. Both parties have participated
substantially in the negotiation and drafting of this Agreement and each party
hereby disclaims any defense or assertion in any litigation or arbitration that
any ambiguity herein should be construed against the draftsman.



         16.4 Entire Agreement. This Agreement, together with the Ancillary
Agreements (including all schedules and exhibits hereto and thereto), contain
the entire and only agreements between the parties concerning the subject matter
hereof, and any oral statements or representations or prior written matter with
respect thereto not contained herein or therein shall have no force and effect.

         16.5 Binding Agreement. This Agreement will be binding upon, and inure
to the benefit of, the parties hereto, their successors, heirs, legatees,
devisees, assigns, legal representatives, executors and administrators, except
as otherwise provided herein, including any successor in interest to the
Licensed Brands. Other than in accordance with the terms hereof, including
Sections 3.12, 3.13, 3.14 and 3.15, this Agreement and the rights hereunder
shall not be assignable or transferable, in whole or in part, by any of the
Media Members or Polo (including by operation of law in connection with a
merger, or sale of all or substantially all the assets, of the Media Members or
Polo) without the prior written consent of the other parties hereto; provided,
however, that either party may assign or transfer this Agreement and the rights
hereunder to a wholly-owned Affiliate in accordance with Section 11.2 so long as
such wholly- owned Affiliate is not subsequently sold to a Media Competitor, in
the case of Polo, or any of Polo's competitors (as agreed by the parties
hereto), in the case of the Media Members; provided, further, that such
transferor party will remain jointly and severally liable for any of its and its
wholly-owned Affiliate's obligations under this Agreement. Any actual or
purported transfer or assignment not complying with the requirements of Article
XI and this Section 16.5 will be void and will not bind any party hereto.

         16.6 Saving Clause. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, is held invalid,
the remainder of this Agreement, or the application of such provision to Persons
or circumstances other than those as to which it is held invalid, will not be
affected thereby. If the operation of any provision of this Agreement would
contravene the provisions of the Act, such provision will be void and
ineffectual. In the event that the Act is subsequently amended or interpreted in
such a way to make any provision of this Agreement that was formerly invalid
valid, such provision will be considered to be valid from the effective date of
such interpretation or amendment.

         16.7 Counterparts. This Agreement may be executed in several
counterparts, and all so executed will constitute one agreement, binding on all
the parties hereto, even though all parties are not signatory to the original or
the same counterpart.

         16.8 Governing Law. The construction and interpretation of this
Agreement shall be governed by the laws of the State of New York. The internal
affairs of the Company shall be governed by the Act.

         16.9 No Membership Intended for Nontax Purposes. The Members have
formed the Company under the Act, and expressly do not intend hereby to form a
partnership



under either the Delaware Uniform Partnership Act or the Delaware Uniform
Limited Partnership Act. The Members do not intend to be partners one to
another, or partners as to any third party. To the extent any Member, by word or
action, represents to another person that any Member is a partner or that the
Company is a partnership, the Member making such wrongful representation will be
liable to any other Members who incur personal liability by reason of such
wrongful representation.

         16.10 No Rights of Creditors and Third Parties under Agreement. This
Agreement is entered into among the Members for the exclusive benefit of the
Company, its Members, and their successors and assigns. This Agreement is
expressly not intended for the benefit of any creditor of the Company or any
other Person except as set forth below. Except and only to the extent provided
by applicable statute, no such creditor or any third party except as set forth
below will have any rights under this Agreement or any agreement between the
Company and any Member with respect to any Capital Contribution or otherwise.
The Licensor shall be a third party beneficiary of all provisions hereof that
relate to any of the Marks or the Licensed Brands.

         16.11 Amendment or Modification of Agreement. This Agreement may be
amended or modified from time to time only by a written instrument executed and
agreed to by all of the Class A Members. The Class B Members and the Class C
Members shall agree to any such amendment or modification agreed to by the Class
A Members, provided that such amendment or modification does not
disproportionately reduce the rights of the Class B Members or Class C Members
hereunder in any material respect.

         16.12 Specific Performance. The Members agree that irreparable damage
would occur in the event the provisions of this Agreement were not performed in
accordance with the terms hereof and that Polo, the Media Members and the
Management Committee will be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.

         16.13 General Interpretive Principles. For purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:

         (a) the terms defined in this Agreement include the plural as well as
     the singular, and the use of any gender herein shall be deemed to include
     the other gender;

         (b) accounting terms not otherwise defined herein have the meanings
     given to them in the United States in accordance with GAAP;

         (c) references herein to "Sections", "paragraphs", and other
     subdivisions without reference to a document are to designated Sections,
     paragraphs and other subdivisions of this Agreement;



         (d) a reference to a paragraph without further reference to a Section
     is a reference to such paragraph as contained in the same Section in which
     the reference appears, and this rule will also apply to other subdivisions;

         (e) the words "herein", "hereof", "hereunder" and other words of
     similar import refer to this Agreement as a whole and not to any particular
     provision; and

         (f) the term "include", "includes" or "including" will be deemed to be
     followed by the words "without limitation".

         16.14 Consent to Jurisdiction. Each Member irrevocably submits to the
exclusive jurisdiction of (i) the Courts of the State of New York and (ii) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding (including appeals to their
respective appellate courts) arising out of this Agreement or any transaction
contemplated hereby (and agrees not to commence any action, suit or proceeding
relating hereto except in such courts). Each Member irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Courts of the State of New York or (ii) the United States
District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.

         16.15 Certain Obligations. Whenever this Agreement or any Ancillary
Agreement requires that any Affiliate of Polo or any Media Member take any
action, including in the case of Polo, Licensor under the License Agreement,
this Agreement and such Ancillary Agreement will be deemed to include an
undertaking on the part of Polo or such Media Member to cause such Affiliate to
take such action.

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

                              POLO RALPH LAUREN CORPORATION

                              By:
                                 Name:
                                 Title:


                              NATIONAL BROADCASTING COMPANY, INC.



                              By:
                                 Name:
                                 Title:


                              VALUEVISION INTERNATIONAL, INC.

                              By:
                                 Name:
                                 Title:


                              NBC INTERNET, INC.

                              By:
                                 Name:
                                 Title:


                              CNBC.COM  LLC

                              By:
                                 Name:
                                 Title:


                              JEFFREY D. MORGAN


                              By:
                                 Title:



                                                                       EXHIBIT A
                                                                       ---------


Name and Address of Member              Class of             Initial Membership
                                        Membership               Interest and
                                         Interest                Sharing Ratio
--------------------------------------------------------------------------------
National Broadcasting Company, Inc.     Class A                  24.25%
30 Rockefeller Plaza
New York, New York  10112
Telephone:  (212) 664-4444
Fax:  (212) 977-7165
--------------------------------------------------------------------------------
Polo Ralph Lauren Corporation           Class A                  48.5%
650 Madison Avenue
New York, New York  10022
Telephone:  (212) 318-7000
Fax:  (212) 318-7183
--------------------------------------------------------------------------------
ValueVision International, Inc.         Class A                  12.125%
6740 Shady Oak Road
Eden Prairie, Minnesota  55344
Telephone:  (612) 947-5200
Fax:  (612) 947-0188
--------------------------------------------------------------------------------
NBC Internet, Inc.                      Class A                  9.7%
1 Beach Street
San Francisco, California  94133
Telephone:  (415) 875-7907
Fax:  (415) 392-9088
--------------------------------------------------------------------------------
CNBC.com                                Class A                  2.425%
2200 Fletcher Avenue
Fort Lee, New Jersey  07024
Telephone:  (201) 585-2622
Fax:  (201) 346-5834
--------------------------------------------------------------------------------
Jeffrey D. Morgan                       Class B                  3%
3 Searles Road
Darien, CT 06820
Telephone:  (203) 655-7003
--------------------------------------------------------------------------------