Coach 2013 Annual Report Download - page 168

(b) Liabilities shall be allocated as follows:
(i) The Coach Unit Loan and all deductions attributable thereto shall be allocated to the Coach Unit Member.
(ii) The Third Party Loan and all deductions attributable thereto shall be allocated to the Fund Member.
(iii) Any remaining liabilities shall be allocated in proportion to each Member’s Percentage Interest.
(c) Nonrecourse Deductions, if any, for any Fiscal Year and any “excess nonrecourse liabilities” of the Company within the meaning
of Treasury Regulations Section 1.752-3(a)(3) shall be specially allocated among the Members in a manner consistent with the allocation of liabilities provided
in Section 5.1(b). Any Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-
2(i)(1).
(d) The parties hereto agree that, notwithstanding anything herein to the contrary, including, without limitation, in the definition of
Gross Asset Value, (i) the Gross Asset Values of the assets of the Company (or Gross Asset Value of any subset thereof) shall not be revalued by the
Company, and (ii) no Profits, Losses or any items thereof shall be realized by the Company, in each case by reason of or in connection with the transfer or
distribution (or deemed transfer or deemed distribution) of any Unit (including any Leasehold Estate with respect thereto) to any Member (including, for the
avoidance of doubt, the transfer or distribution (or deemed transfer or deemed distribution) of the Coach Unit (and any Leasehold Estate with respect thereto)
to the Coach Member or the Coach Designee).
(e) Tax Allocations.
(i) For federal, state and local income tax purposes, each item of income, gain, loss, deduction and credit of the Company
shall be allocated among the Members as nearly as possible in the same manner as the corresponding item of income, gain, loss or expense is allocated
pursuant to Section 5.1(a), Section 5.1(b), Section 5.1(c) and Section 5.1(d).
(ii) In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss, and deduction with respect to
any property contributed to the capital of the Company shall, solely for 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 initial Gross Asset Value.
(iii) In the event the Gross Asset Value of any Company asset is adjusted pursuant to the definition of such term, subsequent
allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the Regulations thereunder.
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