Coach 2009 Annual Report Download - page 84

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3) Notwithstanding any of the foregoing, the Usage Payments that Reed Krakoff is entitled to under the provisions of this Section IV will only
accrue to the extent MOI for such Fiscal Year equals or exceeds Twenty (20) million US Dollars. In other words, the Usage Payment
amount in any Fiscal Year will be adjusted downward such that the Usage Payment that accrues in such Fiscal Year does not cause MOI to
be less than Twenty (20) million US Dollars for such Fiscal Year.
4) Notwithstanding any of the foregoing, the Usage Payments that Reed Krakoff is entitled to under the provisions of this Section IV shall not
be payable in cash until the earlier of (a) the Reed Krakoff Brand achieves a Positive Cumulative MOI or (b) Coach experiences a Change in
Control. All Usage Payments not yet paid in cash to Reed Krakoff shall be carried forward and shall accrue interest at the annual rate
Coach receives on its cash based investments. Such accrued interest shall be paid along with the Usage Payments pursuant to the terms
and conditions of this Section IV. A “Change in Control” shall be deemed to have occurred if any “person” or “group” (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act of 1934 (the “Exchange Act”)) is or becomes the beneficial owner (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of voting stock or equity interests of Coach representing more than 50% of
the total outstanding voting stock or equity interests of Coach.
5) Commencing with the Fiscal Year in which the Reed Krakoff Brand first achieves a Positive Cumulative MOI, all current and deferred
Usage Payments and interest accrued thereon will be paid within Sixty (60) days of the end of the applicable Fiscal Year in an amount not
to exceed such Fiscal Year’s Positive Cumulative MOI. All current and deferred Usage Payments and interest accrued thereon will be paid
simultaneously with the occurrence of the Change in Control.
6) If Coach sells the Reed Krakoff Brand, (a) the net proceeds of such sale shall be treated at Net Sales for purposes of calculating MOI and
Cumulative MOI under this Agreement and (b) Coach will require that the buyer will have a continuing obligation to make Usage Payments
on the terms set forth in this Agreement (and that Krakoff will have enforceable rights against such buyer) on sales by such buyer of
products and services marketed and sold under the Reed Krakoff Brand.
7) For purposes of illustration and not based on any forecast or plan, the following table sets forth hypothetical results and Usage Payments
for a five-Fiscal-Year period, assuming Reed Krakoff’s continued employment at Coach during this period (in thousands):
7