{"id":43390,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/employee-matters-agreement-sara-lee-corp-and-coach-inc.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"employee-matters-agreement-sara-lee-corp-and-coach-inc","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/employee-matters-agreement-sara-lee-corp-and-coach-inc.html","title":{"rendered":"Employee Matters Agreement – Sara Lee Corp. and Coach Inc."},"content":{"rendered":"
                           Employee Matters Agreement\n\n                                     between\n\n                              SARA LEE CORPORATION\n\n                                       and\n\n                                   COACH, INC.\n\n                       Effective as of the Effective Date\n   2\n                                TABLE OF CONTENTS\n\n<\/pre>\n\n
\n                                                                                                                    PAGE
\n                                                                                                              
\nARTICLE I                      GENERAL PRINCIPLES…………………………………………………………….1<\/p>\n
         Section 1.1               Assumption of Coach Liabilities……………………………………………..1<\/p>\n
         Section 1.2               Establishment of Coach Plans………………………………………………..2<\/p>\n
         Section 1.3               Coach Under No Obligation to Maintain Plans…………………………………..2<\/p>\n
         Section 1.4               Coach’s Participation in Sara Lee Plans………………………………………2<\/p>\n
         Section 1.5               Terms of Participation by Coach Employees and Coach Transferred Employees
\n                                   in Coach Plans…………………………………………………………….3<\/p>\n
         Section 1.6               Foreign Plans……………………………………………………………..4<\/p>\n
ARTICLE II                     RETIREMENT PLANS………………………………………………………………4<\/p>\n
         Section 2.1               401(k) Plan……………………………………………………………….4<\/p>\n
         Section 2.2               Pension Plan………………………………………………………………5<\/p>\n
         Section 2.3               ESOP……………………………………………………………………..5<\/p>\n
         Section 2.4               Puerto Rico Plans………………………………………………………….6<\/p>\n
         Section 2.5               Other Coach Retirement Plans………………………………………………..7<\/p>\n
ARTICLE III                    NON-QUALIFIED PLANS……………………………………………………………7<\/p>\n
         Section 3.1               Deferred Compensation Plan………………………………………………….7<\/p>\n
         Section 3.2               SERP……………………………………………………………………..7<\/p>\n
ARTICLE IV                     HEALTH AND WELFARE PLANS……………………………………………………….8<\/p>\n
         Section 4.1               Health Plans as of the Distribution Date……………………………………..8<\/p>\n
         Section 4.2               Health Plans from the Separation Date through the Distribution Date……………..8<\/p>\n
         Section 4.3               Section 125 Plan…………………………………………………………..9<\/p>\n
         Section 4.4               Severance Plans……………………………………………………………9<\/p>\n
         Section 4.5               Disability Plans………………………………………………………….10<\/p>\n
         Section 4.6               Business Travel Accident Insurance………………………………………….10<\/p>\n
         Section 4.7               Group Insurance Plan………………………………………………………10<\/p>\n
         Section 4.8               Workers’ Compensation Plan…………………………………………………10<\/p>\n
         Section 4.9               Key Executive Plans……………………………………………………….10<\/p>\n
ARTICLE V                      EQUITY AND OTHER COMPENSATION………………………………………………….11<\/p>\n
         Section 5.1               Coach Incentive Plans……………………………………………………..11<\/p>\n
         Section 5.2               Sara Lee Long-Term Incentive Plan…………………………………………..11
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
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\n                                TABLE OF CONTENTS
\n                                   (CONTINUED)<\/p>\n\n
\n                                                                                                                    PAGE
\n                                                                                                              
\n         Section 5.3               Executive Restricted Stock Plan…………………………………………….11<\/p>\n
         Section 5.4               Sara Lee Options………………………………………………………….13<\/p>\n
         Section 5.5               Administrative Services……………………………………………………15<\/p>\n
         Section 5.6               Certification of Ownership…………………………………………………15<\/p>\n
ARTICLE VI                     FRINGE AND OTHER BENEFITS……………………………………………………..16<\/p>\n
         Section 6.1               Fringe Benefit Plans………………………………………………………16<\/p>\n
ARTICLE VII                    ADMINISTRATIVE PROVISIONS……………………………………………………..16<\/p>\n
         Section 7.1               Intercompany Transitional Services………………………………………….16<\/p>\n
         Section 7.2               Payment of Liabilities, Plan Expenses and Related Matters……………………..16<\/p>\n
         Section 7.3               Sharing of Participant Information………………………………………….17<\/p>\n
         Section 7.4               Reporting and Disclosure Communications to Participants……………………….17<\/p>\n
         Section 7.5               Employee Identification Numbers…………………………………………….18<\/p>\n
         Section 7.6               Beneficiary Designation……………………………………………………18<\/p>\n
         Section 7.7               Requests for IRS and DOL Opinions…………………………………………..18<\/p>\n
         Section 7.8               Fiduciary Matters…………………………………………………………18<\/p>\n
         Section 7.9               Consent of Third Parties…………………………………………………..18<\/p>\n
         Section 7.10              Tax Cooperation…………………………………………………………..18<\/p>\n
         Section 7.11              Financial Reporting Cooperation…………………………………………….18<\/p>\n
ARTICLE VIII                   EMPLOYMENT-RELATED MATTERS…………………………………………………….19<\/p>\n
         Section 8.1               Terms of Coach Employment………………………………………………….19<\/p>\n
         Section 8.2               HR Data Support Systems……………………………………………………19<\/p>\n
         Section 8.3               Employment of Employees with U.S. Work Visas…………………………………19<\/p>\n
         Section 8.4               Confidentiality and Proprietary Information………………………………….19<\/p>\n
         Section 8.5               Personnel Records…………………………………………………………19<\/p>\n
         Section 8.6               Medical Records…………………………………………………………..20<\/p>\n
         Section 8.7               Unemployment Insurance Program……………………………………………..20<\/p>\n
         Section 8.8               Non-Termination of Employment; No Third-Party Beneficiaries……………………20<\/p>\n
ARTICLE IX                     GENERAL PROVISIONS……………………………………………………………20<\/p>\n
         Section 9.1               Effect if Separation, IPO and\/or Distribution Does Not Occur…………………..20<\/p>\n
         Section 9.2               Relationship of Parties……………………………………………………21
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
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\n                                TABLE OF CONTENTS
\n                                   (CONTINUED)<\/p>\n\n
\n                                                                                                                    PAGE
\n                                                                                                              
\n         Section 9.3               Affiliates……………………………………………………………….21<\/p>\n
         Section 9.4               Incorporation of Separation Agreement Provisions……………………………..21<\/p>\n
         Section 9.5               Notices………………………………………………………………….21<\/p>\n
         Section 9.6               Governing Law and Jurisdiction……………………………………………..22<\/p>\n
         Section 9.7               Assignment……………………………………………………………….22<\/p>\n
         Section 9.8               Severability……………………………………………………………..22<\/p>\n
         Section 9.9               Interpretation……………………………………………………………22<\/p>\n
         Section 9.10              Amendment………………………………………………………………..23<\/p>\n
         Section 9.11              Termination………………………………………………………………23<\/p>\n
         Section 9.12              Conflict…………………………………………………………………23<\/p>\n
         Section 9.13              Counterparts……………………………………………………………..23<\/p>\n
ARTICLE X                      DEFINITIONS………………………………………………………………….23<\/p>\n
         Section 10.1              401(k) Plan………………………………………………………………24<\/p>\n
         Section 10.2              Affiliate………………………………………………………………..24<\/p>\n
         Section 10.3              Agreement………………………………………………………………..24<\/p>\n
         Section 10.4              Ancillary Agreements………………………………………………………24<\/p>\n
         Section 10.5              Assets…………………………………………………………………..24<\/p>\n
         Section 10.6              Business Travel Accident Insurance………………………………………….24<\/p>\n
         Section 10.7              Coach……………………………………………………………………24<\/p>\n
         Section 10.8              Coach Business……………………………………………………………24<\/p>\n
         Section 10.9              Coach Claims……………………………………………………………..25<\/p>\n
         Section 10.10             Coach Employee……………………………………………………………25<\/p>\n
         Section 10.11             Coach GIP………………………………………………………………..25<\/p>\n
         Section 10.12             Coach Group………………………………………………………………25<\/p>\n
         Section 10.13             Coach Stock Value…………………………………………………………25<\/p>\n
         Section 10.14             Coach Terminated Employee………………………………………………….25<\/p>\n
         Section 10.15             Coach Transferred Employee…………………………………………………26<\/p>\n
         Section 10.16             COBRA……………………………………………………………………26<\/p>\n
         Section 10.17             Code…………………………………………………………………….26<\/p>\n
         Section 10.18             Deferred Compensation Plan…………………………………………………26
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
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\n                                TABLE OF CONTENTS
\n                                   (CONTINUED)<\/p>\n\n
\n                                                                                                                    PAGE
\n                                                                                                              
\n         Section 10.19             Dispute………………………………………………………………….27<\/p>\n
         Section 10.20             Disability Plans………………………………………………………….27<\/p>\n
         Section 10.21             Distribution……………………………………………………………..27<\/p>\n
         Section 10.22             Distribution Date…………………………………………………………27<\/p>\n
         Section 10.23             DOL……………………………………………………………………..27<\/p>\n
         Section 10.24             Effective Date……………………………………………………………27<\/p>\n
         Section 10.25             Elective Option Assumption Ratio……………………………………………27<\/p>\n
         Section 10.26             ERISA……………………………………………………………………27<\/p>\n
         Section 10.27             ESOP…………………………………………………………………….27<\/p>\n
         Section 10.28             Executive Bonus Plan………………………………………………………27<\/p>\n
         Section 10.29             Executive Restricted Stock Plan…………………………………………….27<\/p>\n
         Section 10.30             FMLA…………………………………………………………………….27<\/p>\n
         Section 10.31             Foreign Plan……………………………………………………………..27<\/p>\n
         Section 10.32             Fringe Benefit Plans………………………………………………………28<\/p>\n
         Section 10.33             FSA Plan…………………………………………………………………28<\/p>\n
         Section 10.34             General Assignment and Assumption Agreement………………………………….28<\/p>\n
         Section 10.35             Group Insurance Plan………………………………………………………28<\/p>\n
         Section 10.36             HCFA…………………………………………………………………….28<\/p>\n
         Section 10.37             Health and Welfare Plans…………………………………………………..28<\/p>\n
         Section 10.38             Health Plans……………………………………………………………..28<\/p>\n
         Section 10.39             HMO……………………………………………………………………..29<\/p>\n
         Section 10.40             IPO……………………………………………………………………..29<\/p>\n
         Section 10.41             IPO Closing Date………………………………………………………….29<\/p>\n
         Section 10.42             IPO Registration Statement…………………………………………………29<\/p>\n
         Section 10.43             IRS……………………………………………………………………..29<\/p>\n
         Section 10.44             Key Executive Plans……………………………………………………….29<\/p>\n
         Section 10.45             Liabilities………………………………………………………………29<\/p>\n
         Section 10.46             Long-Term Incentive Plan…………………………………………………..29<\/p>\n
         Section 10.47             Master Transitional Services Agreement………………………………………29<\/p>\n
         Section 10.48             NYSE…………………………………………………………………….29
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\n                                TABLE OF CONTENTS
\n                                   (CONTINUED)<\/p>\n\n
\n                                                                                                                     PAGE
\n                                                                                                                   <\/p>\n
         Section 10.49             Option…………………………………………………………………..29<\/p>\n
         Section 10.50             Outsource………………………………………………………………..30<\/p>\n
         Section 10.51             Participating Company……………………………………………………..30<\/p>\n
         Section 10.52             Pension Plan……………………………………………………………..30<\/p>\n
         Section 10.53             Person…………………………………………………………………..30<\/p>\n
         Section 10.54             Plan…………………………………………………………………….30<\/p>\n
         Section 10.55             Post-Distribution Period…………………………………………………..30<\/p>\n
         Section 10.56             Premium Plan……………………………………………………………..30<\/p>\n
         Section 10.57             Puerto Rico Plans…………………………………………………………30<\/p>\n
         Section 10.58             QDRO…………………………………………………………………….30<\/p>\n
         Section 10.59             QMCSO……………………………………………………………………30<\/p>\n
         Section 10.60             Ratio……………………………………………………………………31<\/p>\n
         Section 10.61             Record Date………………………………………………………………31<\/p>\n
         Section 10.62             Restricted Stock Unit……………………………………………………..31<\/p>\n
         Section 10.63             Revenue………………………………………………………………….31<\/p>\n
         Section 10.64             Sara Lee…………………………………………………………………31<\/p>\n
         Section 10.65             Sara Lee Employee…………………………………………………………31<\/p>\n
         Section 10.66             Sara Lee Group……………………………………………………………31<\/p>\n
         Section 10.67             Sara Lee Plans……………………………………………………………31<\/p>\n
         Section 10.68             Sara Lee Stock Value………………………………………………………31<\/p>\n
         Section 10.69             Sara Lee Terminated Employee……………………………………………….32<\/p>\n
         Section 10.70             SEC……………………………………………………………………..32<\/p>\n
         Section 10.71             Section 125 Plan………………………………………………………….32<\/p>\n
         Section 10.72             Separation……………………………………………………………….32<\/p>\n
         Section 10.73             Separation Agreement………………………………………………………32<\/p>\n
         Section 10.74             Separation Date…………………………………………………………..32<\/p>\n
         Section 10.75             SERP…………………………………………………………………….32<\/p>\n
         Section 10.76             Severance Plans…………………………………………………………..32<\/p>\n
         Section 10.77             Stock Plan……………………………………………………………….32<\/p>\n
         Section 10.78             Subsidiary……………………………………………………………….32
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\n                                      TABLE OF CONTENTS
\n                                         (CONTINUED)<\/p>\n\n
\n                                                                                                                    PAGE
\n                                                                                                              
\n         Section 10.79             Unemployment Insurance Program……………………………………………..33<\/p>\n
         Section 10.80             Workers’ Compensation Plan…………………………………………………33<\/p>\n
SCHEDULE 1.6                   FOREIGN PLANS………………………………………………………………..35<\/p>\n
SCHEDULE 4.1(a)                COACH HEALTH PLANS……………………………………………………………36<\/p>\n
SCHEDULE 4.2                   SARA LEE HEALTH PLANS…………………………………………………………37<\/p>\n
SCHEDULE 5.4                   SARA LEE RESTRICTED STOCK HELD BY NON-U.S. COACH TRANSFERRED EMPLOYEES……………..38
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
                                      -vi-
\n   8
\n                           EMPLOYEE MATTERS AGREEMENT<\/p>\n
         This EMPLOYEE MATTERS AGREEMENT is signed on August 24, 2000, to be
\neffective on the Effective Date, between Sara Lee Corporation, a Maryland
\ncorporation (“Sara Lee”), and Coach, Inc., a Maryland corporation (“Coach”).
\nCapitalized terms used herein (other than the formal names of Sara Lee Plans (as
\ndefined below) and related trusts of Sara Lee) and not otherwise defined, shall
\nhave the respective meanings assigned to them in Article X hereof.<\/p>\n
         WHEREAS, the Board of Directors of Sara Lee has determined that it is
\nin the best interests of Sara Lee and its shareholders to disaggregate Sara
\nLee’s existing Coach division into a wholly-owned Subsidiary; and<\/p>\n
         WHEREAS, in furtherance of the foregoing, Sara Lee and Coach have
\nagreed to enter into this Agreement to allocate between them Assets, Liabilities
\nand responsibilities with respect to certain employee compensation, benefit
\nplans, programs and arrangements, and certain employment matters.<\/p>\n
         NOW, THEREFORE, in consideration of the foregoing and the covenants and
\nagreements set forth below, the parties hereto agree as follows:<\/p>\n
                                   ARTICLE I<\/p>\n
                               GENERAL PRINCIPLES<\/p>\n
         Section 1.1 Assumption of Coach Liabilities. Except as specified
\notherwise in this Agreement or as mutually agreed upon by Coach and Sara Lee
\nfrom time to time, Coach and the Coach Plans hereby assume and agree to pay,
\nperform, fulfill and discharge, in accordance with their respective terms, all
\nof the following: (a) effective as of the Separation Date with respect to the
\nCoach Employees: (i) all Liabilities relating to, arising out of, or resulting
\nfrom future, present or former employment with the Coach Business (including
\nLiabilities relating to, arising out of, or resulting from Sara Lee Plans and
\nCoach Plans); (ii) all Liabilities relating to, arising out of, or resulting
\nfrom any other actual or alleged employment relationship with the Coach Group;
\nand (iii) all other Liabilities relating to, arising out of, or resulting from
\nobligations, liabilities and responsibilities expressly assumed or retained by
\nthe Coach Group, or a Coach Plan pursuant to this Agreement; and (b) effective
\nas of the Distribution Date with respect to the Coach Transferred Employees: (i)
\nall Liabilities relating to, arising out of, or resulting from future, present
\nor former employment with the Coach Business (including Liabilities relating to,
\narising out of, or resulting from Sara Lee Plans and Coach Plans); (ii) all
\nLiabilities relating to, arising out of, or resulting from any other actual or
\nalleged employment relationship with the Coach Group; and (iii) all other
\nLiabilities relating to, arising out of, or resulting from obligations,
\nliabilities and responsibilities expressly assumed or retained by the Coach
\nGroup, or <\/p>\n
                                      -1-
\n   9
\na Coach Plan pursuant to this Agreement.<\/p>\n
         Section 1.2 Establishment of Coach Plans.<\/p>\n
                  (a) Health and Welfare Plans and Fringe Benefit Plans.
\n         Effective as of or before the Distribution Date, Coach shall adopt the
\n         Coach Health and Welfare Plans and the Coach Fringe Benefit Plans.<\/p>\n
                  (b) 401(k) Plan. Effective as of or before the Distribution
\n         Date, Coach shall adopt the Coach 401(k) Plan.<\/p>\n
                  (c) Equity and Other Compensation. Effective as of or before
\n         the IPO Closing Date, Coach shall adopt (i) the Coach Stock Plans and
\n         (ii) the Coach Executive Bonus Plan.<\/p>\n
                  (d) Nonqualified Plan. Effective as of June 1, 2000, Coach
\n         adopted the Coach Deferred Compensation Plan.<\/p>\n
                  (e) Assistance by Sara Lee. If Coach so elects, Sara Lee shall
\n         use its commercially reasonable best efforts for and on behalf of Coach
\n         to assist Coach in establishing the Coach Plans set forth herein and in
\n         procuring such contracts (including, but not limited to, trust
\n         agreements, insurance policies, service agreements, HMO agreements,
\n         vendor arrangements, funding arrangements, and investment
\n         arrangements), either via Sara Lee’s existing relationships under the
\n         Sara Lee Plans or with suitable new parties, as is necessary or
\n         desirable for purposes of establishing and administering the Coach
\n         Plans.<\/p>\n
         Section 1.3 Coach Under No Obligation to Maintain Plans. Except as
\nspecified otherwise in this Agreement, nothing in this Agreement shall preclude
\nCoach, at any time after Coach establishes any Plan, from amending, merging,
\nmodifying, terminating, eliminating, reducing, or otherwise altering in any
\nrespect any Coach Plan, any benefit under any Coach Plan or any trust, insurance
\npolicy or funding vehicle related to any Coach Plans, or any employment or other
\nservice arrangement with Coach Employees, independent contractors or vendors (to
\nthe extent permitted by law).<\/p>\n
         Section 1.4 Coach’s Participation in Sara Lee Plans.<\/p>\n
                  (a) Participation in Sara Lee Plans. Except as specified
\n         otherwise in this Agreement, Coach shall, until the Distribution Date,
\n         continue to be a Participating Company in the Sara Lee Plans to the
\n         extent that Coach has not established a corresponding Plan.<\/p>\n
                                      -2-
\n   10
\n                  (b) Sara Lee’s General Obligations as Plan Sponsor. To the
\n         extent that Coach is a Participating Company in any Sara Lee Plan, Sara
\n         Lee shall continue to administer, or cause to be administered, in
\n         accordance with its terms and applicable law, such Sara Lee Plan, and
\n         shall have the sole and absolute discretion and authority to interpret
\n         the Sara Lee Plan, as set forth therein. Effective as of the
\n         Distribution Date or such earlier date as Coach establishes a
\n         corresponding Plan (as specified in Section 1.2 or otherwise in this
\n         Agreement), Coach shall automatically cease to be a Participating
\n         Company in the corresponding Sara Lee Plan (regardless of whether,
\n         prior to the Distribution Date, Coach terminates or otherwise modifies
\n         its Plans).<\/p>\n
                  (c) Coach’s General Obligations as Participating Company.
\n         Coach shall perform, with respect to its participation in the Sara Lee
\n         Plans, the duties of a Participating Company as set forth in each such
\n         Plan or any procedures adopted pursuant thereto, including (without
\n         limitation): (i) assistance in the administration of claims, to the
\n         extent requested by the claims administrator of the applicable Sara Lee
\n         Plan; (ii) full cooperation with Sara Lee Plan auditors, benefit
\n         personnel and benefit vendors; (iii) preservation of the
\n         confidentiality of all financial arrangements Sara Lee has or may have
\n         with any vendors, claims administrators, trustees, service providers or
\n         any other entity or individual with whom Sara Lee has entered into an
\n         agreement relating to the Sara Lee Plans; and (iv) preservation of the
\n         confidentiality of participant information (including, without
\n         limitation, health information in relation to FMLA leaves) to the
\n         extent not specified otherwise in this Agreement.<\/p>\n
Section 1.5 Terms of Participation by Coach Employees and Coach Transferred
\nEmployees in Coach Plans.<\/p>\n
                  (a) Non-Duplication of Benefits. Except as specified otherwise
\n         in this Agreement, as of the Separation Date, or other later date that
\n         applies to the particular Coach Plan established thereafter, the Coach
\n         Plans shall not provide benefits that duplicate benefits provided by
\n         the corresponding Sara Lee Plans. Sara Lee and Coach shall agree on
\n         methods and procedures, including amending the respective Plan
\n         documents, to prevent Coach Employees from receiving duplicate benefits
\n         from the Sara Lee Plans and the Coach Plans; provided, that nothing
\n         shall prevent Sara Lee from unilaterally amending the Sara Lee Plans to
\n         avoid any such duplication.<\/p>\n
                  (b) Service Credit. Except as specified otherwise in this
\n         Agreement, with respect to Coach Transferred Employees, each Coach Plan
\n         shall provide that all service and compensation that, as of the
\n         Distribution Date, were recognized under the corresponding Sara Lee
\n         Plan shall, as of the Distribution Date, receive full recognition and
\n         credit and be taken into account under such Coach Plan to the same
\n         extent as if such items occurred under such Coach Plan, except to the
\n         extent that duplication of benefits would result. The service crediting
\n         provisions shall be subject to any respectively <\/p>\n
                                      -3-
\n   11
\n         applicable “service bridging,” “break in service,” “employment date,”
\n         or “eligibility date” rules under the Coach Plans and the Sara Lee
\n         Plans.<\/p>\n
         Section 1.6 Foreign Plans. Coach and Sara Lee each intend that matters,
\nissues, or Liabilities relating to, arising out of, or resulting from Foreign
\nPlans and non-U.S.-related employment matters be handled in a manner that is
\nconsistent with comparable U.S. matters, issues, or Liabilities as reflected in
\nthis Agreement (to the extent permitted by applicable law or as otherwise
\nspecified in the applicable Section or Schedule thereto or Schedule 1.6). The
\nForeign Plans are to be listed in Schedule 1.6.<\/p>\n
                                   ARTICLE II<\/p>\n
                                RETIREMENT PLANS<\/p>\n
         Section 2.1 401(k) Plan.<\/p>\n
                  (a) 401(k) Plan Trust. Effective as of or before the
\n         Distribution Date, Coach shall establish, or cause to be established, a
\n         separate trust, which is intended to be tax-qualified under Code
\n         Section 401(a), to be exempt from taxation under Code Section
\n         501(a)(1), and to form a part of the Coach 401(k) Plan. To the extent
\n         permitted by law, the Coach 401(k) Plan shall (i) accept rollover
\n         contributions that satisfy Section 402 of the Code from the Sara Lee
\n         ESOP, Sara Lee Pension Plan, and Sara Lee Puerto Rico Plans, and (ii)
\n         be capable of covering Puerto Rico employees.<\/p>\n
                  (b) 401(k) Plan: Assumption of Liabilities and Transfer of
\n         Assets. Effective as of or before the Distribution Date: (i) the Coach
\n         401(k) Plan shall assume and be solely responsible for all Liabilities
\n         relating to, arising out of, or resulting from Coach Transferred
\n         Employees under the Sara Lee 401(k) Plan including, without limitation,
\n         outstanding loans of Coach Transferred Employees; and (ii) Sara Lee
\n         shall cause the accounts of the Coach Transferred Employees under the
\n         Sara Lee 401(k) Plan that are held by its related trust, including
\n         promissory notes evidencing outstanding loans of Coach Transferred
\n         Employees, to be transferred to the Coach 401(k) Plan and its related
\n         trust in cash (or, if mutually agreed by Sara Lee and Coach, other
\n         property), and Coach shall cause such transferred accounts to be
\n         accepted by such Plan and its related trust. Coach and Sara Lee
\n         acknowledge and agree that such transfer of assets and liabilities
\n         comply with Sections 401(a)(12), 414(l) and 411(d)(6) of the Code and
\n         the regulations thereunder. Sara Lee shall take all actions necessary
\n         and appropriate to provide that all amounts credited to the accounts of
\n         Coach Transferred Employees participating in the Sara Lee 401(k) Plan
\n         (excluding employer matching contributions) shall be fully vested and
\n         nonforfeitable, effective as of the Distribution Date. Following the
\n         Distribution Date, Sara Lee shall retain sole responsibility for all
\n         benefit obligations under the Sara Lee 401(k) Plan, and Coach shall
\n         have no obligation with respect thereto.<\/p>\n
                                      -4-
\n   12
\n                  (c) 401(k) Plan: Stock Considerations. As a result of the
\n         spin-off of the Sara Lee 401(k) Plan and the Distribution, participant
\n         accounts in each of the Sara Lee 401(k) Plan and the Coach 401(k) Plan
\n         may both contain, in part, Sara Lee and Coach employer securities.
\n         Coach and Sara Lee shall assume sole responsibility for ensuring that
\n         their respective company stock funds, and underlying employer
\n         securities held in each such fund, are maintained in compliance with
\n         all requirements of ERISA and applicable securities laws.<\/p>\n
                  (d) No Distribution to Coach Transferred Employees. The Sara
\n         Lee 401(k) Plan and the Coach 401(k) Plan shall provide that no
\n         distribution of account balances shall be made to any Coach Transferred
\n         Employee solely on account of the Distribution.<\/p>\n
                  (e) Administration of Coach 401(k) Plan. Prior to the
\n         Distribution Date, Coach shall contract with a third party
\n         administrator to administer the Coach 401(k) Plan, which contract shall
\n         include the administration of participant loans transferred from the
\n         Sara Lee 401(k) Plan to the Coach 401(k) Plan. Coach or such third
\n         party administrator shall provide Sara Lee with at least sixty (60)
\n         days written notice of the transfer of assets under Subsection 2.1(b).<\/p>\n
         Section 2.2 Pension Plan. Each Coach Transferred Employee who is
\nactively employed by the Coach Companies on the Distribution Date shall be
\ntreated as terminating employment with Sara Lee on the Distribution Date for
\npurposes of the Sara Lee Pension Plan; provided, that Sara Lee shall amend the
\nSara Lee Pension Plan to provide that for each Coach Transferred Employee who
\nwas actively employed by the Coach Companies on the IPO Closing Date, service
\nwith the Coach Companies after the Distribution Date shall be treated as vesting
\nservice under the Sara Lee Pension Plan.<\/p>\n
         Section 2.3 ESOP.<\/p>\n
                  (a) Termination Under ESOP. Each Coach Transferred Employee
\n         who is actively employed by the Coach Companies on the Distribution
\n         Date shall be treated as terminating employment with Sara Lee on the
\n         Distribution Date for purposes of the Sara Lee ESOP.<\/p>\n
                  (b) ESOP: Assumption of Liabilities and Transfer of Assets.
\n         Effective as of or before the Distribution Date: (i) the Coach 401(k)
\n         Plan (or such other defined contribution Plan established by Coach that
\n         is qualified under Section 401(a) of the Code) shall assume and be
\n         solely responsible for all Liabilities relating to, arising out of, or
\n         resulting from each Coach Transferred Employee who is actively employed
\n         by the Coach Companies on the Distribution Date under the Sara Lee
\n         ESOP; and (ii) Sara Lee shall cause the accounts of such Coach
\n         Transferred Employees under the Sara Lee ESOP that are held by its
\n         related trust to be transferred to the Coach 401(k) Plan (or such other
\n         defined contribution Plan established by Coach that is qualified under
\n         Section 401(a) of <\/p>\n
                                      -5-
\n   13
\n         the Code) and its related trust in cash (or, if mutually agreed by Sara
\n         Lee and Coach, other property), and Coach shall cause such transferred
\n         accounts to be accepted by such Plan and its related trust. Coach and
\n         Sara Lee acknowledge and agree that such transfer of assets and
\n         liabilities comply with Sections 401(a)(12), 414(l) and 411(d)(6) of
\n         the Code and the regulations thereunder. Coach shall take all actions
\n         necessary and appropriate to provide that all amounts transferred to
\n         the accounts of Coach Transferred Employees under this Subsection
\n         2.3(b) shall continue to vest on and after the Distribution Date.
\n         Following the Distribution Date, Sara Lee shall retain sole
\n         responsibility for all benefit obligations under the Sara Lee ESOP, and
\n         Coach shall have no obligation with respect thereto. Coach shall
\n         provide Sara Lee with at least sixty (60) days written notice of the
\n         transfer of assets under this Subsection 2.3(b).<\/p>\n
         Section 2.4 Puerto Rico Plans.<\/p>\n
                  (a) Termination Under Puerto Rico Plans. Each Coach
\n         Transferred Employee who is actively employed by the Coach Companies on
\n         the Distribution Date shall be treated as terminating employment with
\n         Sara Lee on the Distribution Date for purposes of the Sara Lee Puerto
\n         Rico Plans.<\/p>\n
                  (b) Puerto Rico Plans: Assumption of Liabilities and Transfer
\n         of Assets. Effective as of or before the Distribution Date: (i) the
\n         Coach 401(k) Plan (or such other defined contribution Plan established
\n         by Coach that is qualified under Section 401(a) of the Code and
\n         satisfies the requirements of Puerto Rico law) shall assume and be
\n         solely responsible for all Liabilities relating to, arising out of, or
\n         resulting from each Coach Transferred Employee who is actively employed
\n         by the Coach Companies on the Distribution Date under the Sara Lee
\n         Puerto Rico Plans; and (ii) Sara Lee shall cause the accounts of such
\n         Coach Transferred Employees under the Sara Lee Puerto Rico Plans that
\n         are held by its related trust to be transferred to the Coach 401(k)
\n         Plan (or such other defined contribution Plan established by Coach that
\n         is qualified under Section 401(a) of the Code and satisfies the
\n         requirements of Puerto Rico law) and its related trust in cash (or, if
\n         mutually agreed by Sara Lee and Coach, other property), and Coach shall
\n         cause such transferred accounts to be accepted by such Plan and its
\n         related trust. Coach and Sara Lee acknowledge and agree that such
\n         transfer of assets and liabilities comply with Sections 401(a)(12),
\n         414(l) and 411(d)(6) of the Code and the regulations thereunder and all
\n         other applicable requirements of Puerto Rico law. Coach shall take all
\n         actions necessary and appropriate to provide that all amounts
\n         transferred to the accounts of Coach Transferred Employees under this
\n         Subsection 2.4(b) shall continue to vest on and after the Distribution
\n         Date. Following the Distribution Date, Sara Lee shall retain sole
\n         responsibility for all benefit obligations under the Sara Lee Puerto
\n         Rico Plans, and Coach shall have no obligation with respect thereto.
\n         Coach shall provide Sara Lee with at least sixty (60) days written
\n         notice of the transfer of assets under this Subsection 2.4(b).<\/p>\n
                                      -6-
\n   14
\n         Section 2.5 Other Coach Retirement Plans. As of the Separation Date,
\nCoach maintains the Coach Leatherware Company, Inc. Supplemental Pension Plan.
\nOn and after the Separation Date, Coach may continue to maintain the Coach
\nLeatherware Company, Inc. Supplemental Pension Plan.<\/p>\n
                                  ARTICLE III<\/p>\n
                              NON-QUALIFIED PLANS <\/p>\n
         Section 3.1 Deferred Compensation Plan.<\/p>\n
                  (a) Elective Allocation of Assets and Assumption of
\n         Liabilities. As of the IPO Closing Date, Sara Lee shall determine the
\n         amount of Liabilities under the Sara Lee Deferred Compensation Plan
\n         attributable to Coach Employees who elect to transfer their account
\n         balances to the Coach Deferred Compensation Plan. As soon as
\n         administratively practicable thereafter, Sara Lee shall pay to Coach
\n         cash equal to such Liabilities. Coincident with the receipt of such
\n         transfer, Coach shall assume all responsibilities and obligations
\n         relating to, arising out of, or resulting from such Liabilities.<\/p>\n
                  (b) Participation in Deferred Compensation Plan. Effective as
\n         of June 1, 2000, eligible Coach Employees may commence participation in
\n         the Coach Deferred Compensation Plan. Coach Employees who are currently
\n         participating in the Sara Lee Deferred Compensation Plan shall continue
\n         their participation in that Plan (according to its terms) unless and
\n         until either (i) such Coach Employees elect to transfer their account
\n         balances to the Coach Deferred Compensation Plan, or (ii) the
\n         Distribution Date. Coach Terminated Employees who are currently
\n         participating in the Sara Lee Deferred Compensation Plan shall continue
\n         their participation in that Plan (according to its terms).<\/p>\n
                  (c) Mandatory Allocation of Assets and Assumption of
\n         Liabilities. As of the Distribution Date, Coach Transferred Employees
\n         shall cease all future participation in the Sara Lee Deferred
\n         Compensation Plan and Sara Lee shall determine the amount of
\n         Liabilities under the Sara Lee Deferred Compensation Plan attributable
\n         to Coach Transferred Employees who did not elect to transfer their
\n         account balances to the Coach Deferred Compensation Plan in accordance
\n         with Subsection 3.1(a). As soon as administratively practicable
\n         thereafter, Sara Lee shall pay to Coach cash equal to such Liabilities.
\n         Coincident with the receipt of such transfer, Coach shall assume all
\n         responsibilities and obligations relating to, arising out of, or
\n         resulting from such Liabilities.<\/p>\n
         Section 3.2 SERP. Each Coach Transferred Employee who is actively
\nemployed by the Coach Companies on the Distribution Date shall be treated as
\nterminating employment with Sara Lee on the Distribution Date for purposes of
\nthe Sara Lee SERP; provided, that Sara Lee <\/p>\n
                                       -7-
\n   15
\nshall amend the Sara Lee SERP to provide that for each Coach Transferred
\nEmployee who was actively employed by the Coach Companies on the IPO Closing
\nDate, service with the Coach Companies after the Distribution Date shall be
\ntreated as vesting service under the Sara Lee SERP.<\/p>\n
                                   ARTICLE IV<\/p>\n
                            HEALTH AND WELFARE PLANS <\/p>\n
         Section 4.1 Health Plans as of the Distribution Date.<\/p>\n
                  (a) Coach Health Plans. As of or before the Distribution Date,
\n         Coach shall have established the Coach Health Plans listed on Schedule
\n         4.1(a) and, correspondingly, Coach shall cease to be a Participating
\n         Company in the Sara Lee Health Plans with respect to Coach Transferred
\n         Employees and Coach Terminated Employees who are not receiving retiree
\n         medical coverage under the Sara Lee Health Plans. Sara Lee shall retain
\n         benefit obligations for Coach Transferred Employees and Coach
\n         Terminated Employees who are receiving retiree medical coverage under
\n         the Sara Lee Health Plans as of the earlier of the Distribution Date or
\n         the date the Coach Health Plans are established, subject to the terms
\n         of the Sara Lee Health Plans (including, without limitation, Sara Lee’s
\n         right to amend and\/or terminate the Sara Lee Health Plans; provided
\n         that Coach Employees and Coach Transferred Employees shall be treated
\n         consistently with other similarly situated participants in the event of
\n         any amendment and\/or termination of the Sara Lee Health Plans). Coach
\n         shall be solely responsible for the administration of the Coach Health
\n         Plans, including the payment of all employer-related costs in
\n         establishing and maintaining the Coach Health Plans, and for the
\n         collection and remittance of participant contributions and premiums,
\n         subject to Section 7.2. Following the earlier of the Distribution Date
\n         or the date the Coach Health Plans are established, Sara Lee shall
\n         retain sole responsibility for all benefit obligations under the Sara
\n         Lee Health Plans (except as provided in Section 4.2), and Coach shall
\n         have no obligation (except as provided in Section 4.2) with respect
\n         thereto.<\/p>\n
                  (b) HCFA. As of the earlier of (i) the Distribution Date or
\n         (ii) the date the Coach Health Plans are established pursuant to
\n         Subsection 4.1(a), Coach shall assume all Liabilities relating to,
\n         arising out of, or resulting from claims, if any, under the HCFA data
\n         match reports that relate to Coach Transferred Employees or the Coach
\n         Terminated Employees who are not receiving retiree medical coverage
\n         under the Sara Lee Health Plans.<\/p>\n
         Section 4.2 Health Plans from the Separation Date through the
\nDistribution Date.<\/p>\n
                  (a) Coach Participating Company. Except as otherwise agreed by
\n         Sara Lee <\/p>\n
                                      -8-
\n   16
\n         and Coach, for the period beginning with the Separation Date and ending
\n         on the Distribution Date (or such earlier date that Coach establishes
\n         the Coach Health Plans), Coach shall be a Participating Company in the
\n         Sara Lee Health Plans listed on Schedule 4.2. Sara Lee shall administer
\n         claims incurred under the Sara Lee Health Plans by Coach Employees
\n         before the Distribution Date but only to the extent that Coach has not,
\n         before the Distribution Date, established and assumed administrative
\n         responsibility for a corresponding Health Plan. Any determination made
\n         or settlements entered into by Sara Lee with respect to such claims
\n         shall be final and binding. Coach shall retain financial and
\n         administrative (“run-out”) Liability and all related obligations and
\n         responsibilities for all claims incurred by Coach Transferred Employees
\n         and Coach Employees before the Distribution Date (or such earlier date
\n         that Coach establishes the Coach Health Plans), including any claims
\n         that were administered by Sara Lee as of, on, or after the Distribution
\n         Date. Any such run-out Liability and all related claims, charges, and
\n         expenses shall be settled in a manner consistent with past practices
\n         and policies, including an interim accounting and a final accounting
\n         between Sara Lee and Coach.<\/p>\n
                  (b) COBRA. Coach shall continue to be responsible through the
\n         Distribution Date (or, if earlier, the date that Coach establishes the
\n         Coach Health Plans) for compliance with the health care continuation
\n         coverage requirements of COBRA and the Sara Lee Health Plans with
\n         respect to Coach Employees, Coach Transferred Employees, Coach
\n         Terminated Employees and qualified beneficiaries (as such term is
\n         defined under COBRA). Effective as of the earlier of the date that
\n         Coach establishes the Coach Health Plans or the Distribution Date,
\n         Coach shall be solely responsible for compliance with the health care
\n         continuation coverage requirements of COBRA and the Coach Health Plans
\n         for Coach Transferred Employees and their qualified beneficiaries (as
\n         such term is defined under COBRA).<\/p>\n
         Section 4.3 Section 125 Plan. Through the Distribution Date, Coach
\nshall remain a Participating Company in the Sara Lee Section 125 Plan. The
\nexisting elections for Coach Transferred Employees participating in the Sara Lee
\nSection 125 Plan and for newly-eligible employees of Coach who elect to
\nparticipate in the Sara Lee Section 125 Plan shall remain in effect through the
\nend of the applicable Section 125 plan year in which the Distribution Date
\noccurs. Effective on the Distribution Date (or, if earlier, such other date
\nimmediately following the date that Coach’s participation in the Sara Lee
\nSection 125 Plan terminates), Coach shall establish, or caused to be
\nestablished, the Coach Section 125 Plan and Coach shall be solely responsible
\nfor the Coach Section 125 Plan. In the event that Coach establishes the Coach
\nSection 125 Plan after the beginning of the Section 125 plan year under the Sara
\nLee FSA Plan, Sara Lee shall cause the accounts of Coach Transferred Employees
\nwho are participating in the Sara Lee FSA Plan to be transferred to the Coach
\nSection 125 Plan.<\/p>\n
         Section 4.4 Severance Plans. Coach shall, until the earlier of the IPO
\nClosing Date or the date Coach establishes the Coach Severance Plans, continue
\nto be a Participating Company in<\/p>\n
                                      -9-
\n   17
\nthe Sara Lee Severance Plans.<\/p>\n
         Section 4.5 Disability Plans. As of the Separation Date, Coach was not
\na Participating Company in the Sara Lee Disability Plans. Accordingly, on and
\nafter the Separation Date, Coach shall not be eligible to become a Participating
\nCompany in the Sara Lee Disability Plans.<\/p>\n
         Section 4.6 Business Travel Accident Insurance. Through the
\nDistribution Date, Coach shall remain a Participating Company in the Sara Lee
\nBusiness Travel Accident Insurance policy. Sara Lee shall be responsible for
\nadministering or causing to be administered the Sara Lee Business Travel
\nAccident Insurance policy with respect to Coach Employees. Effective as of the
\nDistribution Date, Coach shall be solely responsible for maintaining its own
\nBusiness Travel Accident Insurance policy.<\/p>\n
         Section 4.7 Group Insurance Plan. Coach shall, until the earlier of the
\nDistribution Date or the date Coach establishes the Coach Group Insurance Plan,
\ncontinue to be a Participating Company in the Sara Lee Group Insurance Plan.<\/p>\n
         Section 4.8 Workers’ Compensation Plan.<\/p>\n
                  (a) Participation in the Sara Lee Workers’ Compensation Plan.
\n         Until the Distribution Date, Coach shall continue to be a Participating
\n         Company in the Sara Lee Workers’ Compensation Plan. Sara Lee shall
\n         assume and be solely responsible for all Liabilities relating to,
\n         arising out of, or resulting from all claims by Coach Employees, Coach
\n         Terminated Employees and Coach Transferred Employees based on
\n         employment with the Coach Business (“Coach Claims”) prior to the
\n         Distribution Date. Sara Lee shall continue to administer, or cause to
\n         be administered, the Sara Lee Workers’ Compensation Plan in accordance
\n         with its terms and applicable law. Coach shall fully cooperate with
\n         Sara Lee and its insurance company in the administration and reporting
\n         of Coach Claims under the Sara Lee Workers’ Compensation Plan. Any
\n         determination made, or settlement entered into, by or on behalf of Sara
\n         Lee or its insurance company with respect to Coach Claims under the
\n         Sara Lee Workers’ Compensation Plan shall be final and binding. Until
\n         the Distribution Date, Coach shall continue to reimburse Sara Lee and
\n         its insurance company for all costs related to Coach’s participation in
\n         the Sara Lee Workers’ Compensation Plan.<\/p>\n
                  (b) Establishment of the Coach Workers’ Compensation Plan. As
\n         of the Distribution Date, Coach shall be responsible for complying with
\n         the workers’ compensation requirements of the states in which the Coach
\n         Group conducts business and for obtaining and maintaining insurance
\n         programs for its risk of loss. Such insurance arrangements shall be
\n         separate and apart from the Sara Lee Workers’ Compensation Plan.<\/p>\n
         Section 4.9 Key Executive Plans. As of the Distribution Date, Coach
\nTransferred Employees who were participants in the Sara Lee Key Executive Plans
\nshall cease participation <\/p>\n
                                      -10-
\n   18
\nin such plans. Coach may establish plans for its key executives, in its sole
\ndiscretion.<\/p>\n
                                   ARTICLE V<\/p>\n
                          EQUITY AND OTHER COMPENSATION<\/p>\n
         Section 5.1 Coach Incentive Plans.<\/p>\n
                  (a) Coach GIP. As of the Separation Date, Coach maintained the
\n         Coach GIP. The Coach GIP shall continue on and after the IPO Closing
\n         Date and any bonus that has been earned and finally determined under
\n         the Coach GIP for the benefit of, or that is allocable to, a Coach
\n         Employee shall be paid at such time and pursuant to the terms and
\n         conditions as specified in the Coach GIP.<\/p>\n
                  (b) Coach Annual Incentive Plan. Effective as of June 29, 2000
\n         Coach has established an annual incentive plan subject to the
\n         parameters of the Coach Executive Bonus Plan for Coach Employees.<\/p>\n
         Section 5.2 Sara Lee Long-Term Incentive Plan. Any performance shares
\nthat a Coach Employee has been awarded under the Sara Lee Long-Term Incentive
\nPlan for a performance period beginning prior to the Distribution Date shall
\ncontinue to vest and such Coach Employee shall continue to participate in the
\nSara Lee Long-Term Incentive Plan with respect to such performance shares
\nthrough the end of the performance period pursuant to the terms and conditions
\nof the award and the Sara Lee Long-Term Incentive Plan. Sara Lee shall charge
\nCoach for the fair market value of awards earned by Coach Employees under the
\nSara Lee Long-Term Incentive Plan.<\/p>\n
         Section 5.3 Executive Restricted Stock Plan.<\/p>\n
                  (a) Elective Restricted Stock Unit Conversion by Coach at IPO
\n         Pricing Date. Effective as of the date the IPO is priced (and subject
\n         to the IPO being consummated), Coach Employees shall cease all future
\n         participation in the Sara Lee Executive Restricted Stock Plan. As of
\n         the date the IPO is priced (and subject to the IPO being consummated),
\n         all Sara Lee Restricted Stock Units held by those officers and key
\n         employees of Coach identified by Coach and Sara Lee in writing shall be
\n         assumed by Coach to the extent that the individual (i) elects to have
\n         such Sara Lee Restricted Stock Units assumed and (ii) executes a
\n         release and waiver that satisfies Sara Lee. Subject to the specific
\n         provisions of the agreements governing the Restricted Stock Units, the
\n         Sara Lee Restricted Stock Units shall be converted to Coach Restricted
\n         Stock Units as of the date the IPO is priced for each individual who
\n         makes an election in accordance with this Subsection 5.3(a) by (1)
\n         multiplying (A) the number of such individual’s Sara Lee Restricted
\n         Stock Units, and (B) the Sara Lee Stock Value, (2) dividing that number
\n         by the Coach Stock Value, and (3) <\/p>\n
                                      -11-
\n   19
\n         rounding down the resulting number to the nearest whole number of Coach
\n         Restricted Stock Units. As soon as administratively practicable
\n         thereafter, Sara Lee shall pay to Coach cash equal to the accrued value
\n         of such Sara Lee Restricted Stock Units that are assumed under this
\n         Subsection 5.3(a). Each Restricted Stock Unit so assumed by Coach shall
\n         be subject to the terms and conditions set forth in the Coach Stock
\n         Plan and as provided in the respective agreements governing such
\n         assumed Restricted Stock Units. All Restricted Stock Units held by each
\n         Coach Employee that are not assumed by Coach in accordance with the
\n         previous two sentences shall continue to vest in accordance with the
\n         provisions of the Sara Lee Executive Restricted Stock Plan.<\/p>\n
                  (b) Restricted Stock Unit Conversion by Coach at Distribution
\n         Date. At the Distribution Date, each outstanding Sara Lee Restricted
\n         Stock Unit held by Coach Transferred Employees shall be assumed by
\n         Coach and mandatorily converted to Coach Restricted Stock Units.
\n         Subject to the specific provisions of the agreements governing the
\n         Restricted Stock Units, such outstanding Sara Lee Restricted Stock
\n         Units shall be converted to Coach Restricted Stock Units by (1)
\n         multiplying (A) the number of such Sara Lee Restricted Stock Units, and
\n         (B) the Sara Lee Stock Value, (2) dividing that number by the Coach
\n         Stock Value, and (3) rounding down the resulting number to the nearest
\n         whole number of Coach Restricted Stock Units. As soon as
\n         administratively practicable thereafter, Sara Lee shall pay to Coach
\n         cash equal to the accrued value of such assumed Sara Lee Restricted
\n         Stock Units. Each Sara Lee Restricted Stock Unit so assumed by Coach
\n         shall continue to have, and be subject to, substantially the same terms
\n         and conditions set forth in the Coach Stock Plan and as provided in the
\n         respective agreements governing such assumed Restricted Stock Units.<\/p>\n
                  (c) Limitations on Release of Restricted Stock Unit Awards.
\n         The agreements under which any Coach Restricted Stock Units are granted
\n         shall provide that Coach common stock may not be released to satisfy
\n         the Coach Restricted Stock Unit award under any condition: (i) prior to
\n         the date that is six (6) months after the IPO Closing Date; (ii) prior
\n         to the date that is twelve (12) months after the IPO Closing Date
\n         unless, at the time of release, Sara Lee certifies to Coach that it no
\n         longer owns either (A) shares of Coach common stock representing
\n         “control” of Coach (within the meaning of Section 368(c) of the Code),
\n         or (B) shares of Coach common stock sufficient to satisfy the
\n         “80-percent voting and value test” described in Section 1504(a)(2) of
\n         the Code; or (iii) on and after the date that is twelve (12) months
\n         after the IPO Closing Date unless, at the time of release, either (A)
\n         Sara Lee certifies to Coach that it no longer owns either (I) shares of
\n         Coach common stock representing “control” of Coach (within the meaning
\n         of Section 368(c) of the Code), or (II) shares of Coach common stock
\n         sufficient to satisfy the “80-percent voting and value test” described
\n         in Section 1504(a)(2) of the Code, or (B) Coach demonstrates to the
\n         satisfaction of Sara Lee that it has purchased shares on the open
\n         market prior to the release in a number sufficient to cover the
\n         release. Notwithstanding the foregoing, prior to the Distribution Date,
\n         Coach agrees to take such actions as may be <\/p>\n
                                      -12-
\n   20
\n         required by Sara Lee to process Coach Restricted Stock Unit Awards,
\n         including purchasing shares of Coach common stock on the open market,
\n         to ensure that Sara Lee continues to hold either shares of Coach common
\n         stock representing “control” of Coach (within the meaning of Section
\n         368(c) of the Code) or shares of Coach common stock sufficient to
\n         satisfy the “80-percent voting and value test” described in Section
\n         1504(a)(2) of the Code after each Option exercise. Coach further agrees
\n         that, to the extent it may legally do so, it shall promptly repurchase
\n         shares of Coach common stock on the open market to enable any Coach
\n         Transferred Employee who has satisfied the restrictions of Coach
\n         Restricted Stock Unit award to receive the number of shares of Coach
\n         common stock subject to such award.<\/p>\n
         Section 5.4 Sara Lee Options.<\/p>\n
                  (a) Elective Option Assumption by Coach at IPO Pricing Date.<\/p>\n
                           (i) As of the date the IPO is priced (and subject to
\n                  the IPO being consummated), each outstanding Sara Lee Option
\n                  held by those officers and key employees of Coach identified
\n                  by Coach and Sara Lee in writing, whether vested or unvested,
\n                  shall be assumed by Coach to the extent that such individual
\n                  elects to have any such Option assumed and executes a release
\n                  and waiver that satisfies Sara Lee. Each Sara Lee Option so
\n                  assumed by Coach shall be subject to the terms and conditions
\n                  set forth in the Coach Stock Plan and as provided in the
\n                  respective option agreements governing such assumed Options.
\n                  Subject to the specific provisions of the governing option
\n                  agreements, (A) each assumed Option shall be exercisable for
\n                  that number of whole shares of Coach common stock (rounded
\n                  down to the nearest whole number of shares of Coach common
\n                  stock) equal to the ratio of (I) the number of shares of Sara
\n                  Lee common stock that were issuable upon exercise of such Sara
\n                  Lee Option as of the date the IPO is priced, to (II) the
\n                  Elective Option Assumption Ratio, and (B) the per share
\n                  exercise price for the shares of Coach common stock issuable
\n                  upon exercise of such assumed Sara Lee Option (rounded up to
\n                  the nearest whole cent) shall be equal to the product of (I)
\n                  the exercise price per share of Sara Lee common stock subject
\n                  to such Sara Lee Option as of the date the IPO is priced, and
\n                  (II) the Elective Option Assumption Ratio.<\/p>\n
                           (ii) In the event that, as of the date the IPO is
\n                  priced, the Coach Stock Value divided by the Sara Lee Stock
\n                  Value is less than one (1) (and subject to the IPO being
\n                  consummated), each individual who elects to have a Sara Lee
\n                  Option assumed as provided in Subsection 5.4(a)(i) above,
\n                  shall be eligible to receive an additional option to purchase
\n                  that number of shares of Coach common stock as of the date the
\n                  IPO is priced equal to (A) the ratio of (I) the number of
\n                  shares of Sara Lee common stock that were subject to such Sara
\n                  Lee Option, to (II) the Ratio,<\/p>\n
                                      -13-
\n   21
\n                  minus (B) the number of whole shares of Coach common stock
\n                  equal to the ratio of (I) the number of shares of Sara Lee
\n                  common stock that were issuable upon exercise of such Sara Lee
\n                  Option, to (II) the Elective Option Assumption Ratio. Each
\n                  such additional option shall be granted as of the date the IPO
\n                  is priced (subject to the IPO being consummated) and shall be
\n                  subject to the terms and conditions of the Coach Stock Plan
\n                  and the applicable option agreement. The exercise price per
\n                  share of each such additional option shall be equal to the
\n                  Coach Stock Value as of the date the IPO is priced.
\n                  Notwithstanding the foregoing, if the parties determine that
\n                  the grant of additional options pursuant to this Subsection
\n                  5.4(a)(ii) would result in variable accounting treatment, or
\n                  would otherwise cause Coach or Sara Lee to recognize an
\n                  expense, with respect to such additional options, then Coach
\n                  and Sara Lee agree (x) that such additional options will not
\n                  be granted, and (y) to use their respective commercially
\n                  reasonable best efforts, in good faith, to agree upon an
\n                  alternative equity-based or other compensation method that
\n                  provides to those individuals who otherwise would have
\n                  received additional options under this Subsection 5.4(a)(ii)
\n                  compensation that has substantially the same intrinsic value
\n                  represented by the forgone options.<\/p>\n
                  (b) Option Assumption by Coach at Distribution Date. At the
\n         Distribution Date, each outstanding Sara Lee Option held by Coach
\n         Transferred Employees, whether vested or unvested, shall be assumed by
\n         Coach and mandatorily converted to Coach Options. Subject to the
\n         specific provisions of the governing option agreements, each Sara Lee
\n         Option so assumed by Coach shall be subject to substantially the same
\n         terms and conditions set forth in the Sara Lee Stock Plans and as
\n         provided in the respective option agreements governing such Sara Lee
\n         Option as of the Distribution Date, except that (i) such Sara Lee
\n         Option shall be exercisable for that number of whole shares of Coach
\n         common stock (rounded down to the nearest whole number of shares of
\n         Coach common stock) equal to the ratio of (A) the number of shares of
\n         Sara Lee common stock that were subject to such Sara Lee Option as of
\n         the Distribution Date, to (B) the Ratio, and (ii) the per share
\n         exercise price for the shares of Coach common stock issuable upon
\n         exercise of such assumed Sara Lee Option (rounded up to the nearest
\n         whole cent) shall be equal to the product of (A) the exercise price per
\n         share of Sara Lee common stock subject to such Sara Lee Option as of
\n         the Distribution Date, and (B) the Ratio.<\/p>\n
                  (c) Assumption Criteria. It is the intention of Sara Lee and
\n         Coach that the assumption of Sara Lee Options by Coach pursuant to
\n         Subsections (a) and (b) above and the issuance of Coach Options under
\n         this Section 5.4 meet the following criteria: (i) the aggregate
\n         intrinsic value of the assumed Sara Lee Options immediately after the
\n         assumption is not greater than such value immediately before the
\n         assumption; (ii) with respect to each such assumed Sara Lee Option, the
\n         ratio of the exercise price per share to the Coach Stock Value of the
\n         assumed Sara Lee Options immediately after the assumption is not less
\n         than the ratio of the exercise price per share to the Sara Lee Stock<\/p>\n
                                      -14-
\n   22
\n         Value immediately before the assumption; and (iii) the vesting and
\n         option term of the assumed Sara Lee Options shall not be changed.<\/p>\n
                  (d) Restrictions on Exercise. The agreements under which Coach
\n         Options are granted shall provide that a Coach Option may not be
\n         exercised under any condition: (i) prior to the date that is six (6)
\n         months after the IPO Closing Date; (ii) prior to the date that is
\n         twelve (12) months after the IPO Closing Date unless, at the time of
\n         exercise, Sara Lee certifies to Coach that it no longer owns either (A)
\n         shares of Coach common stock representing “control” of Coach (within
\n         the meaning of Section 368(c) of the Code), or (B) shares of Coach
\n         common stock sufficient to satisfy the “80-percent voting and value
\n         test” described in Section 1504(a)(2) of the Code; or (iii) on and
\n         after the date that is twelve (12) months after the IPO Closing Date
\n         unless, at the time of exercise, either (A) Sara Lee certifies to Coach
\n         that it no longer owns either (I) shares of Coach common stock
\n         representing “control” of Coach (within the meaning of Section 368(c)
\n         of the Code), or (II) shares of Coach common stock sufficient to
\n         satisfy the “80-percent voting and value test” described in Section
\n         1504(a)(2) of the Code, or (B) Coach demonstrates to the satisfaction
\n         of Sara Lee that it has purchased shares on the open market prior to
\n         the exercise in a number sufficient to cover the exercise.
\n         Notwithstanding the foregoing, prior to the Distribution Date, Coach
\n         agrees to take such actions as may be required by Sara Lee to process
\n         Option exercises, including purchasing shares of Coach common stock on
\n         the open market, to ensure that Sara Lee continues to hold either
\n         shares of Coach common stock representing “control” of Coach (within
\n         the meaning of Section 368(c) of the Code) or shares of Coach common
\n         stock sufficient to satisfy the “80-percent voting and value test”
\n         described in Section 1504(a)(2) of the Code after each Option exercise.
\n         Coach further agrees that, to the extent it may legally do so, it shall
\n         promptly repurchase shares of Coach common stock on the open market to
\n         enable any Coach Transferred Employee who has properly submitted an
\n         option exercise notice and satisfied the option exercise price to
\n         receive such number of shares of Coach common stock subject to such
\n         exercise.<\/p>\n
         Section 5.5 Administrative Services. Prior to the IPO Closing Date,
\nCoach shall contract with a third party administrator, bank or stock transfer
\nagent (“Outsource”) to administer any awards granted under the Coach Stock Plan
\non or after the IPO Date. Until the Distribution Date, Sara Lee shall provide
\nadministrative assistance to Coach in connection with the administration of
\nawards granted under the Coach Stock Plan in accordance with Section 4.17 of the
\nSeparation Agreement.<\/p>\n
         Section 5.6 Certification of Ownership. Sara Lee agrees that it will
\npromptly certify to Coach its ownership of Coach common stock at such time as it
\nno longer owns either (A) shares of Coach common stock representing “control” of
\nCoach (within the meaning of Section 368(c) of the Code), or (B) shares of Coach
\ncommon stock sufficient to satisfy the “80-percent voting and value test”
\ndescribed in Section 1504(a)(2) of the Code.<\/p>\n
                                      -15-
\n   23
\n                                   ARTICLE VI<\/p>\n
                            FRINGE AND OTHER BENEFITS<\/p>\n
         Section 6.1 Fringe Benefit Plans. As of or before the Distribution
\nDate, Coach shall adopt the Coach Fringe Benefit Plans.<\/p>\n
                                  ARTICLE VII<\/p>\n
                            ADMINISTRATIVE PROVISIONS<\/p>\n
         Section 7.1 Intercompany Transitional Services. On the Separation Date,
\nSara Lee and Coach shall enter into a Master Transitional Services Agreement
\ncovering the provisions of interim services, including financial, accounting,
\nlegal, benefits-related and other services by Sara Lee to Coach or, in certain
\ncircumstances, vice versa. The provision of such interim services by each of
\nSara Lee and Coach is intended to be covered exclusively by the terms and
\nconditions of the Master Transitional Services Agreement. Accordingly, Coach and
\nSara Lee shall each be responsible for their own internal fees, costs and
\nexpenses (e.g., salaries of personnel) incurred in connection with the provision
\nof services under this Agreement.<\/p>\n
         Section 7.2 Payment of Liabilities, Plan Expenses and Related Matters.<\/p>\n
                  (a) Expenses and Costs Chargeable to a Trust. Effective
\n         beginning on the Separation Date, Coach shall pay its share of any
\n         contributions made to any trust maintained in connection with a Sara
\n         Lee Plan while Coach is a Participating Company in that Sara Lee Plan.<\/p>\n
                  (b) Expenses and Costs of Plan Not Chargeable to a Trust.
\n         Effective on and after the Separation Date, Coach shall be responsible
\n         for (through either direct payment or reimbursement to Sara Lee) Sara
\n         Lee’s costs and expenses associated with Coach’s participation in each
\n         Sara Lee Plan while Coach is a Participating Company in that Sara Lee
\n         Plan including, but not limited to, the cost of all claims incurred
\n         under the Sara Lee Health and Welfare Plans, the cost of all claims
\n         incurred under the Sara Lee Section 125 Plan (to the extent such claims
\n         are not reimbursed by payroll deduction), the cost of all claims
\n         incurred under the Sara Lee Workers’ Compensation Plan, the cost of all
\n         payments or other distributions (including the fair market value of all
\n         Sara Lee securities issued by Sara Lee) made under the Sara Lee
\n         Long-Term Incentive Plan, the cost of all restricted stock awards made
\n         under the Sara Lee Executive Restricted Stock Plan, the cost of all
\n         payments or other distributions made under any other Sara Lee Stock
\n         Plan (excluding, for this purpose options exercised under any Sara Lee
\n         Stock Plan) and the cost of any other benefit provided or payment made
\n         under any Sara Lee Plan to the extent not otherwise specifically
\n         provided in this Agreement. Any such payment or <\/p>\n
                                      -16-
\n   24
\n         reimbursement shall be made within thirty (30) business days after Sara
\n         Lee provides Coach with notice of such expenses or costs.<\/p>\n
                  (c) Contributions to Trusts. With respect to Sara Lee Plans to
\n         which Coach Employees and Coach Transferred Employees make
\n         contributions, Sara Lee shall use reasonable procedures to determine
\n         Coach Assets and Liabilities associated with each such Plan, taking
\n         into account such contributions, settlements, refunds and similar
\n         payments.<\/p>\n
                  (d) Administrative Expenses Not Chargeable to a Trust.
\n         Effective as of the Separation Date, to the extent not covered by the
\n         Master Transitional Services Agreement (as contemplated by Section 7.1)
\n         or another Ancillary Agreement, and to the extent not otherwise agreed
\n         to in writing by Sara Lee and Coach, and to the extent not chargeable
\n         to a trust established in connection with a Sara Lee Plan (as provided
\n         in paragraph (a)), Coach shall be responsible, through either direct
\n         payment or reimbursement to Sara Lee, for its allocable share of actual
\n         third party and\/or vendor costs and expenses incurred by Sara Lee and
\n         additional costs and expenses in the administration of (i) the Sara Lee
\n         Plans while Coach participates in such Sara Lee Plans, and (ii) the
\n         Coach Plans, to the extent Sara Lee procures, prepares, implements
\n         and\/or administers such Coach Plans. Coach’s allocable share of such
\n         costs and expenses will be determined in a manner consistent with the
\n         manner in which the allocable share of such costs and expenses were
\n         determined prior to the Separation Date.<\/p>\n
         Section 7.3 Sharing of Participant Information. Sara Lee and Coach
\nshall share, or cause to be shared, all participant information that is
\nnecessary or appropriate for the efficient and accurate administration of each
\nof the Sara Lee Plans and the Coach Plans during the respective periods
\napplicable to such Plans. Sara Lee and Coach and their respective authorized
\nagents shall, subject to applicable laws of confidentiality and data protection,
\nbe given reasonable and timely access to, and may make copies of, all
\ninformation relating to the subjects of this Agreement in the custody of the
\nother party or its agents, to the extent necessary or appropriate for such
\nadministration.<\/p>\n
         Section 7.4 Reporting and Disclosure Communications to Participants.
\nFor any period Coach is a Participating Company in the Sara Lee Plans, Coach
\nshall take, or cause to be taken, all actions necessary or appropriate to
\nfacilitate the distribution of all Sara Lee Plan-related communications and
\nmaterials to employees, participants and beneficiaries, including (without
\nlimitation) summary plan descriptions and related summaries of material
\nmodification(s), summary annual reports, investment information, prospectuses,
\ncertificates of creditable coverage, notices and enrollment material for the
\nSara Lee Plans and Coach Plans. Coach shall assist Sara Lee in complying with
\nall reporting and disclosure requirements of ERISA, including the preparation of
\nForm Series 5500 annual reports for the Sara Lee Plans, where applicable.<\/p>\n
                                      -17-
\n   25
\n         Section 7.5 Employee Identification Numbers. Until the Distribution
\nDate, Sara Lee and Coach shall not change any employee identification numbers
\nassigned by Sara Lee. Sara Lee and Coach mutually agree to establish a policy
\npursuant to which employee identification numbers assigned to either employees
\nof Sara Lee or Coach shall not be duplicated between Sara Lee and Coach.<\/p>\n
         Section 7.6 Beneficiary Designation. Subject to Section 7.10, all
\nbeneficiary designations made by Coach Employees and Coach Transferred Employees
\nfor the Sara Lee Plans shall be transferred to and be in full force and effect
\nunder the corresponding Coach Plans, in accordance with the terms of each such
\napplicable Coach Plan and to the extent permissible under such Plan, until such
\nbeneficiary designations are replaced or revoked by the Coach Employees and
\nCoach Transferred Employee who made the beneficiary designation.<\/p>\n
         Section 7.7 Requests for IRS and DOL Opinions. Sara Lee and Coach shall
\nmake such applications to regulatory agencies, including the IRS and DOL, as may
\nbe necessary or appropriate. Coach and Sara Lee shall cooperate fully with one
\nanother on any issue relating to the transactions contemplated by this Agreement
\nfor which Sara Lee and\/or Coach elects to seek a determination letter or private
\nletter ruling from the IRS or an advisory opinion from the DOL.<\/p>\n
         Section 7.8 Fiduciary Matters. Sara Lee and Coach each acknowledge that
\nactions contemplated to be taken pursuant to this Agreement may be subject to
\nfiduciary duties or standards of conduct under ERISA or other applicable law,
\nand that no party shall be deemed to be in violation of this Agreement if such
\nparty fails to comply with any provisions hereof based upon such party’s good
\nfaith determination that to do so would violate such a fiduciary duty or
\nstandard.<\/p>\n
         Section 7.9 Consent of Third Parties. If any provision of this
\nAgreement is dependent on the consent of any third party (such as a vendor) and
\nsuch consent is withheld, Sara Lee and Coach shall use their commercially
\nreasonable best efforts to implement the applicable provisions of this
\nAgreement. If any provision of this Agreement cannot be implemented due to the
\nfailure of such third party to consent, Sara Lee and Coach shall negotiate in
\ngood faith to implement the provision in a mutually satisfactory manner.<\/p>\n
         Section 7.10 Tax Cooperation. In connection with the interpretation and
\nadministration of this Agreement, Sara Lee and Coach shall comply with all
\nagreements, covenants, procedures and policies established pursuant to the
\nSeparation Agreement and the other Ancillary Agreements (as defined below) and
\nthe parties’ intent to qualify the Distribution as a tax-free reorganization
\nunder Code Sections 355 and 368(a)(1)(D).<\/p>\n
         Section 7.11 Financial Reporting Cooperation. Coach shall provide to
\nSara Lee such financial or other information as Sara Lee shall reasonably
\nrequest to allow Sara Lee to satisfy its financial reporting obligations with
\nrespect to any period for which Coach impacts Sara Lee financial reporting.<\/p>\n
                                      -18-
\n   26
\n                                  ARTICLE VIII<\/p>\n
                           EMPLOYMENT-RELATED MATTERS<\/p>\n
         Section 8.1 Terms of Coach Employment. All basic terms and conditions
\nof employment for Coach Employees and Coach Transferred Employees including,
\nwithout limitation, their pay and benefits in the aggregate shall, to the extent
\nlegally and practicably possible, remain substantially the same through the
\nDistribution Date (other than reasonable raises and bonuses provided in the
\nordinary course of business and consistent with past practice) as the terms and
\nconditions that were in place when the Coach Employee or Coach Transferred
\nEmployee was employed by the Sara Lee Group, as applicable. In addition, nothing
\nin the Separation Agreement, this Agreement, or any Ancillary Agreement should
\nbe construed to change the at-will status of the employment of any of the
\nemployees of the Sara Lee Group or the Coach Group.<\/p>\n
         Section 8.2 HR Data Support Systems. Sara Lee shall provide human
\nresources data support for Coach Employees and Coach Transferred Employees
\nthrough the date that is ninety (90) days following the Distribution Date (the
\n“Support Termination Date”). In the event that Sara Lee and Coach agree to
\nextend the time period beyond the Support Termination Date, then the costs and
\nexpenses will be computed in accordance with Section 7.2; provided, however,
\nthat an additional ten percent (10%) charge will be incurred by Coach. Following
\nthe Support Termination Date, Sara Lee and Coach each reserves the right to
\ndiscontinue Coach’s access to any Sara Lee human resources data support systems
\nwith sixty (60) days notice.<\/p>\n
         Section 8.3 Employment of Employees with U.S. Work Visas. Coach
\nEmployees with U.S. work visas authorizing them to work for Coach will continue
\nto hold work authorization for the Coach Group after the Separation Date. Coach
\nwill request amendments to the nonimmigrant visa status of Coach Employees and
\nCoach Transferred Employees with U.S. work visas authorizing them to work for
\nSara Lee, excluding the Coach Group, to request authorization to work for Coach.<\/p>\n
         Section 8.4 Confidentiality and Proprietary Information. No provision
\nof the Separation Agreement or any Ancillary Agreement shall be deemed to
\nrelease any individual for any violation of the Sara Lee non-competition
\nguideline or any agreement or policy pertaining to confidential or proprietary
\ninformation of any member of the Sara Lee Group, or otherwise relieve any
\nindividual of his or her obligations under such non-competition guideline,
\nagreement, or policy.<\/p>\n
         Section 8.5 Personnel Records. Subject to applicable laws on
\nconfidentiality and data protection, Sara Lee shall deliver to Coach prior to
\nthe Distribution Date, personnel records of Coach Employees and Coach
\nTransferred Employees to the extent such records relate to Coach Employees’ and
\nCoach Transferred Employees’ active employment by, leave of absence from, or<\/p>\n
                                      -19-
\n   27
\ntermination of employment with Coach.<\/p>\n
         Section 8.6 Medical Records. Subject to applicable laws on
\nconfidentiality and data protection, Sara Lee shall deliver to Coach prior to
\nthe Distribution Date, medical records of Coach Employees and Coach Transferred
\nEmployees to the extent such records (a) relate to Coach Employees’ and Coach
\nTransferred Employees’ active employment by, leave of absence from, or
\ntermination of employment with Coach, and (b) are necessary to administer and
\nmaintain employee benefit plans, including Health Plans and Workers’
\nCompensation Plan and for determining eligibility for paid and unpaid Leaves of
\nAbsence for medical reasons.<\/p>\n
         Section 8.7 Unemployment Insurance Program.<\/p>\n
                  (a) Claims Administration Through Distribution Date. Unless
\n         otherwise directed by Coach, Sara Lee shall assist Coach in receiving
\n         service from Sara Lee’s third party unemployment insurance
\n         administrator through the Distribution Date. Coach shall cooperate with
\n         the unemployment insurance administrator by providing any and all
\n         necessary or appropriate information reasonably available to Coach.<\/p>\n
                  (b) Claim Administration Post-Distribution Date. As of the
\n         Distribution Date, Coach shall be responsible for complying with the
\n         unemployment insurance requirements of the states in which the Coach
\n         Group conducts business and for obtaining and maintaining third party
\n         insurance programs for its risk of loss.<\/p>\n
         Section 8.8 Non-Termination of Employment; No Third-Party
\nBeneficiaries. No provision of this Agreement, the Separation Agreement, or any
\nAncillary Agreement shall be construed to create any right or accelerate
\nentitlement to any compensation or benefit whatsoever on the part of any Coach
\nEmployee, Coach Transferred Employee or other former, present or future employee
\nof Sara Lee or Coach under any Sara Lee Plan or Coach Plan or otherwise. Without
\nlimiting the generality of the foregoing: (a) neither the Distribution or
\nSeparation, nor the termination of the Participating Company status of Coach or
\nany member of the Coach Group shall cause any employee to be deemed to have
\nincurred a termination of employment (except for purposes of the Sara Lee
\nPension Plan, the Sara Lee ESOP, the Sara Lee Puerto Rico Plans and the Sara Lee
\nSERP); and (b) no transfer of employment between Sara Lee and Coach before the
\nDistribution Date shall be deemed a termination of employment for any purpose
\nhereunder.<\/p>\n
                                   ARTICLE IX<\/p>\n
                               GENERAL PROVISIONS<\/p>\n
         Section 9.1 Effect if Separation, IPO and\/or Distribution Does Not
\nOccur. Subject to Section 9.10, if the Separation, IPO and\/or Distribution does
\nnot occur, then all actions and events that are, under this Agreement, to be
\ntaken or occur effective as of the Separation Date, <\/p>\n
                                      -20-
\n   28
\nIPO, and\/or Distribution Date, or otherwise in connection with the Separation,
\nIPO and\/or Distribution, shall not be taken or occur except to the extent
\nspecifically agreed by Coach and Sara Lee.<\/p>\n
         Section 9.2 Relationship of Parties. Nothing in this Agreement shall be
\ndeemed or construed by the parties or any third party as creating the
\nrelationship of principal and agent, partnership or joint venture between the
\nparties, the understanding and agreement being that no provision contained
\nherein, and no act of the parties, shall be deemed to create any relationship
\nbetween the parties other than the relationship set forth herein.<\/p>\n
         Section 9.3 Affiliates. Each of Sara Lee and Coach shall cause to be
\nperformed and hereby guarantee the performance of any and all actions of the
\nSara Lee Group or the Coach Group, respectively.<\/p>\n
         Section 9.4 Incorporation of Separation Agreement Provisions. The
\nfollowing provisions of the Separation Agreement are hereby incorporated herein
\nby reference, and unless otherwise expressly specified herein, such provisions
\nshall apply as if fully set forth herein (references in this Section to an
\n“Article” or “Section” shall mean Articles or Sections of the Separation
\nAgreement, and, except as expressly set forth below, references within the
\nmaterial incorporated herein by reference shall be references to the Separation
\nAgreement): Section 4.3 (relating to Agreement for Exchange of Information);
\nSection 4.11 (relating to Dispute Resolution); Section 4.13 (relating to No
\nRepresentation or Warranty); and Article IV (relating to Covenants and Other
\nMatters).<\/p>\n
         Section 9.5 Notices. Notices, demands, offers requests or other
\ncommunications required or permitted to be given by either party pursuant to the
\nterms of this Agreement shall be given in writing to the respective parties to
\nthe following addresses and facsimile numbers:<\/p>\n
                  (a)      if to Sara Lee:<\/p>\n
                           Sara Lee Corporation
\n                           Three First National Plaza
\n                           70 West Madison
\n                           Chicago, Illinois 60602-4260
\n                           Attention:  General Counsel
\n                           Facsimile No.:  (312) 345-5706<\/p>\n
                  (b)      if to Coach:<\/p>\n
                           Coach
\n                           516 West 34th Street
\n                           New York, New York 10001
\n                           Attention:  General Counsel
\n                           Facsimile No.:  (212) 629-2398<\/p>\n
                                      -21-
\n   29
\nor to such other address or facsimile number as the party to whom notice is
\ngiven may have previously furnished to the other in writing as provided herein.
\nAny notice involving non-performance, termination, or renewal shall be sent by
\nhand delivery, recognized overnight courier or, within the United States, may
\nalso be sent via certified mail, return receipt requested. All other notices may
\nalso be sent by facsimile, confirmed by first class mail. All notices shall be
\ndeemed to have been given when received, if hand delivered; when transmitted, if
\ntransmitted by facsimile or similar electronic transmission method; one working
\nday after it is sent, if sent by recognized overnight courier; and three days
\nafter it is postmarked, if mailed first class mail or certified mail, return
\nreceipt requested, with postage prepaid.<\/p>\n
         Section 9.6 Governing Law and Jurisdiction. This Agreement shall be
\nconstrued in accordance with and all Disputes hereunder shall be governed by the
\nlaws of the State of Illinois, excluding its conflict of law rules. The parties
\nagree that the Circuit Court of Cook County, Illinois and\/or the United States
\nDistrict Court for the Northern District of Illinois shall have exclusive
\njurisdiction over all actions between the parties for preliminary relief in aid
\nof arbitration pursuant to Section 4.11 of the Separation Agreement, and
\nnonexclusive jurisdiction over any action for enforcement of an arbitral award.<\/p>\n
         Section 9.7 Assignment. This Agreement shall inure to the benefit of
\nand be binding upon the parties hereto and their respective legal
\nrepresentatives and successors, and nothing in this Agreement, express or
\nimplied, is intended to confer upon any other Person any rights or remedies of
\nany nature whatsoever under or by reason of this Agreement. This Agreement may
\nbe enforced separately by each member of the Sara Lee Group and each member of
\nthe Coach Group. Neither party may assign this Agreement or any rights or
\nobligations hereunder, without the prior written consent of the other party, and
\nany such assignment shall be void; provided, however, either party may assign
\nthis Agreement to a successor entity in conjunction with such party’s
\nreincorporation.<\/p>\n
         Section 9.8 Severability. If any term or other provision of this
\nAgreement is determined to be invalid, illegal or incapable of being enforced by
\nany rule of law or public policy, all other conditions and provisions of this
\nAgreement shall nevertheless remain in full force and effect so long as the
\neconomic or legal substance of the transactions contemplated hereby is not
\naffected in any manner materially adverse to either party. Upon such
\ndetermination that any term or other provision is invalid, illegal or incapable
\nof being enforced, the parties hereto shall negotiate in good faith to modify
\nthis Agreement so as to effect the original intent of the parties as closely as
\npossible and in an acceptable manner to the end that transactions contemplated
\nhereby are fulfilled to the fullest possible extent.<\/p>\n
         Section 9.9 Interpretation. The headings contained in this Agreement or
\nany Schedule hereto and in the table of contents to this Agreement are for
\nreference purposes only and shall <\/p>\n
                                      -22-
\n   30
\nnot affect in any way the meaning or interpretation of this Agreement. Any
\ncapitalized term used in any Schedule but not otherwise defined therein shall
\nhave the meaning assigned to such term in this Agreement. When a reference is
\nmade in this Agreement to an Article, Section or Schedule, such reference shall
\nbe to an Article of, Section of, or Schedule to this Agreement unless otherwise
\nindicated.<\/p>\n
         Section 9.10 Amendment. The Board of Directors of Coach and Sara Lee
\nmay mutually agree to amend the provisions of this Agreement at any time or
\ntimes, for any reason, either prospectively or retroactively, to such extent and
\nin such manner as the Boards mutually deem advisable. Each Board (or the Sara
\nLee Corporation Employee Benefits Administrative Committee) may delegate its
\namendment power, in whole or in part, to one or more Persons or committees as it
\ndeems advisable. The Senior Vice President, Human Resources of Sara Lee and the
\nSenior Vice President, Human Resources of Coach have full power and authority to
\nmutually adopt an amendment to this Agreement; provided that if such amendment
\nrequires a Plan amendment, an individual or entity with the authority to amend
\nthe Plan must consent to such amendment of the Agreement. No change or amendment
\nwill be made to this Agreement, except by an instrument in writing signed by
\nauthorized individuals.<\/p>\n
         Section 9.11 Termination. This Agreement may be terminated at any time
\nprior to the IPO Closing Date by and in the sole discretion of Sara Lee without
\nthe approval of Coach and, if so terminated, all transactions taken in
\nconnection therewith shall be void. This Agreement may be terminated at any time
\nafter the IPO Closing Date and before the Distribution Date by mutual consent of
\nSara Lee and Coach. In the event of termination pursuant to this Section 9.11,
\nno party shall have any liability of any kind to the other party.<\/p>\n
         Section 9.12 Conflict. In the event of any conflict between the
\nprovisions of this Agreement and the Separation Agreement, any Ancillary
\nAgreement, or Plan, the provisions of this Agreement shall control.<\/p>\n
         Section 9.13 Counterparts. This Agreement, including the Schedules
\nhereto and the other documents referred to herein, may be executed in
\ncounterparts, each of which shall be deemed to be an original, but all of which
\ntogether shall constitute one and the same agreement.<\/p>\n
                                    ARTICLE X<\/p>\n
                                   DEFINITIONS<\/p>\n
         Wherever used in this Agreement, the following terms shall have the
\nmeanings indicated below, unless a different meaning is plainly required by the
\ncontext. The singular shall include the plural, unless the context indicates
\notherwise. Headings of sections are used for convenience of reference only, and
\nin case of conflict, the text of this Agreement, rather than such headings,
\nshall control:<\/p>\n
                                      -23-
\n   31
\n         Section 10.1 401(k) Plan. “401(k) Plan,” when immediately preceded by
\n“Sara Lee,” means the Sara Lee Corporation 401(k) Supplemental Savings Plan, a
\ndefined contribution plan. When immediately preceded by “Coach,” “401(k) Plan”
\nmeans the defined contribution plan to be established by Coach pursuant to
\nSection 1.2 and Article II.<\/p>\n
         Section 10.2 Affiliate. “Affiliate” means, with respect to any
\nspecified Person, means any entity that Controls, is Controlled by, or is under
\ncommon Control with such Person. For this purpose, “Control” means the
\npossession, directly or indirectly, of the power to direct or cause the
\ndirection of the management and policies of such entity, whether through
\nownership of voting securities or other interests, by control, or otherwise.<\/p>\n
         Section 10.3 Agreement. “Agreement” means this Employee Matters
\nAgreement, including all the Schedules hereto, and all amendments made hereto
\nfrom time to time.<\/p>\n
         Section 10.4 Ancillary Agreements. “Ancillary Agreements” means all of
\nthe underlying agreements, documents and instruments referred to, contemplated
\nby, or made a part of the Separation Agreement.<\/p>\n
         Section 10.5 Assets. “Assets” is has the meaning set forth in the
\nGeneral Assignment and Assumption Agreement.<\/p>\n
         Section 10.6 Business Travel Accident Insurance. “Business Travel
\nAccident Insurance,” when immediately preceded by “Sara Lee,” means the policy
\nor policies covering Sara Lee Business Travel Accident Insurance in the U.S. and
\nto the extent applicable, outside the U.S. When immediately preceded by “Coach,”
\n“Business Travel Accident Insurance” means the policy or policies covering the
\nbusiness travel accident insurance to be established by Coach pursuant to
\nSections 1.2 and 4.6.<\/p>\n
         Section 10.7 Coach. “Coach” means Coach, Inc., a Maryland corporation.
\nIn all such instances in which Coach is referred to in this Agreement, it shall
\nalso be deemed to include a reference to each member of the Coach Group, unless
\nit specifically provides otherwise; Coach shall be solely responsible to Sara
\nLee for ensuring that each member of the Coach Group complies with the
\napplicable terms of this Agreement.<\/p>\n
         Section 10.8 Coach Business. “Coach Business” means the business of
\nproducing lifestyle branded handbags, accessories, business cases, luggage and
\ntravel accessories, time management products, outerwear, gloves and scarves,
\nwatches footwear, eyewear, home furnishings and furniture as described in the
\nIPO Registration Statement.<\/p>\n
         Section 10.9 Coach Claims. “Coach Claims” has the meaning set forth in
\nSubsection 4.8(a).<\/p>\n
         Section 10.10 Coach Employee. “Coach Employee” means any individual who
\nis: (a) <\/p>\n
                                      -24-
\n   32
\neither actively employed by, or on leave of absence from, the Coach Group on the
\nSeparation Date; (b) either actively employed by, or on leave of absence from,
\nthe Sara Lee Group as either part of a work group or organization, or common
\nsupport function that, at any time after the Separation Date and before the
\nDistribution Date, moves to the employ of the Coach Group from the employ of the
\nSara Lee Group; (c) a Coach Terminated Employee; (d) designated as a Coach
\nEmployee (as of the specified date) by Sara Lee and Coach by mutual agreement;
\nor (e) an alternate payee under a QDRO, alternate recipient under a QMCSO,
\nbeneficiary, covered dependent, or qualified beneficiary (as such term is
\ndefined under COBRA), in each case, of an employee or former employee, described
\nin Subsections 10.10(a) through (d) with respect to that employee’s or former
\nemployee’s benefit under the applicable Plan(s) (unless specified otherwise in
\nthis Agreement, such an alternate payee, alternate recipient, beneficiary,
\ncovered dependent, or qualified beneficiary shall not otherwise be considered a
\nCoach Employee with respect to any benefits he or she accrues or accrued under
\nany applicable Plan(s), unless he or she is a Coach Employee by virtue of
\nSubsections 10.10(a) through (d)).<\/p>\n
         Section 10.11 Coach GIP. “Coach GIP” means the Coach Growth Incentive
\nPlan.<\/p>\n
         Section 10.12 Coach Group. “Coach Group” means Coach and each
\nSubsidiary and Affiliate of Coach immediately after the Separation Date, or that
\nis contemplated to be a Subsidiary or Affiliate of Coach and each Person that
\nbecomes a Subsidiary or Affiliate of Coach after the Separation Date.<\/p>\n
         Section 10.13 Coach Stock Value. “Coach Stock Value” means (a) from the
\ndate the IPO is priced through the IPO Closing Date, the initial per-share
\npublic offering price of Coach common stock, and (b) after the IPO Closing Date,
\nthe average of the highest and lowest per-share sale prices of Coach common
\nstock on the NYSE Composite Transactions Tape on the five (5) trading days
\npreceding the date of determination; provided, that if there should be no sales
\nof Coach common stock on any of the five (5) trading days preceding the date of
\ndetermination, the Coach Stock Value shall be the average of the highest and
\nlowest per-share sale prices of Coach common stock on such Composite Tape for
\nthe last preceding date on which sales of Coach common stock were reported.<\/p>\n
         Section 10.14 Coach Terminated Employee. “Coach Terminated Employee”
\nmeans any individual who is: (a) a former employee of the Sara Lee Group who was
\nterminated from the Coach Business on or before the Separation Date; or (b) a
\nformer employee of the Coach Group; or (c) an alternate payee under a QDRO,
\nalternate recipient under a QMCSO, beneficiary, covered dependent, or qualified
\nbeneficiary (as such term is defined under COBRA), in each case, of a former
\nemployee, described in Subsections 10.14(a) or (b) with respect to that former
\nemployee’s benefit under the applicable Plan(s). Notwithstanding the foregoing,
\n“Coach Terminated Employee” shall not, unless otherwise expressly provided to
\nthe contrary in this Agreement, include: (a) an individual who is a Sara Lee
\nEmployee or a Coach Transferred Employee at the Distribution Date; or (b) an
\nindividual who is otherwise a Coach Terminated <\/p>\n
                                      -25-
\n   33
\nEmployee, but who is subsequently employed by the Sara Lee Group or the Coach
\nGroup prior to the Distribution Date.<\/p>\n
         Section 10.15 Coach Transferred Employee. “Coach Transferred Employee”
\nmeans any individual who, as of the Distribution Date, is: (a) either actively
\nemployed by, or on a leave of absence from, the Coach Group; (b) an employee or
\na member of a group of employees designated by Sara Lee and Coach, by mutual
\nagreement, as Coach Transferred Employees; or (c) an alternate payee under a
\nQDRO, alternate recipient under a QMCSO, beneficiary, covered dependent, or
\nqualified beneficiary (as such term is defined under COBRA), in each case, of an
\nemployee, described in Subsections 10.15(a) or (b) with respect to that
\nemployee’s or former employee’s benefit under the applicable Plan(s) (unless
\nspecified otherwise in this Agreement, such an alternate payee, alternate
\nrecipient, beneficiary, covered dependent, or qualified beneficiary shall not
\notherwise be considered a Coach Transferred Employee with respect to any
\nbenefits he or she accrues or accrued under any applicable Plan(s), unless he or
\nshe is a Coach Transferred Employee by virtue of Subsections 10.15(a) and (b));
\nprovided, that a “Coach Transferred Employee” shall include, with respect to a
\nCoach Plan established prior to the Distribution Date, an individual who would
\nconstitute a Coach Transferred Employee under Subsections 10.15(a), (b) or (c)
\nabove if the date such Plan was established was the Distribution Date. An
\nemployee may be a Coach Transferred Employee pursuant to this Section regardless
\nof whether such employee is, as of the Distribution Date, actively employed, on
\na temporary leave of absence from active employment, on layoff, or on any other
\ntype of employment relative to a Sara Lee Plan, and regardless of whether, as of
\nthe Distribution Date, such employee is then receiving any coverage under or
\nbenefits from a Sara Lee Plan. Where the context permits, a Coach Transferred
\nEmployee shall also mean an employee hired by Coach after the Distribution Date.<\/p>\n
         Section 10.16 COBRA. “COBRA” means the continuation coverage
\nrequirements for “group health plans” under Title X of the Consolidated Omnibus
\nBudget Reconciliation Act of 1985, as amended from time to time, and as codified
\nin Code Section 4980B and ERISA Sections 601 through 608.<\/p>\n
         Section 10.17 Code. “Code” means the Internal Revenue Code of 1986, as
\namended from time to time.<\/p>\n
         Section 10.18 Deferred Compensation Plan. “Deferred Compensation Plan,”
\nwhen immediately preceded by “Sara Lee,” means the Sara Lee Executive Deferred
\nCompensation Plan. When immediately preceded by “Coach,” “Deferred Compensation
\nPlan” means the deferred compensation plan that was established by Coach
\neffective June 1, 2000.<\/p>\n
         Section 10.19 Dispute. “Dispute” means any dispute, controversy or
\nclaim arising out of or relating to this Agreement or the Ancillary Agreements
\nor the breach, termination or validity thereof.<\/p>\n
                                      -26-
\n   34
\n         Section 10.20 Disability Plans. “Disability Plan,” means the Sara Lee
\nshort term disability program and the Sara Lee Long Term Disability Plan.<\/p>\n
         Section 10.21 Distribution. “Distribution” means the distribution by
\nSara Lee of all or a significant portion of the shares of capital stock of Coach
\nowned by Sara Lee after the IPO Closing Date, which divestiture may be
\neffectuated by Sara Lee as a dividend, an exchange with existing Sara Lee
\nstockholders for shares of Coach capital stock, a spin-off or otherwise;
\nprovided, that such distribution results in Coach no longer constituting a
\nmember of the Sara Lee controlled group, as determined in accordance with Code
\nSections 414(b), 414(c) and 414(m).<\/p>\n
         Section 10.22 Distribution Date. “Distribution Date” means the date
\nthat the Distribution is effective.<\/p>\n
         Section 10.23 DOL. “DOL” means the United States Department of Labor.<\/p>\n
         Section 10.24 Effective Date. “Effective Date” means the date that is
\ntwo (2) days prior to the date that the registration statement relating to the
\nIPO is declared effective.<\/p>\n
         Section 10.25 Elective Option Assumption Ratio. “Elective Option
\nAssumption Ratio” means the ratio determined by dividing the Coach Stock Value
\nas of the date the IPO is priced by the Sara Lee Stock Value as of that date;
\nprovided, that the Elective Option Assumption Ratio shall never be less than one
\n(1.0).<\/p>\n
         Section 10.26 ERISA. “ERISA” means the Employee Retirement Income
\nSecurity Act of 1974, as amended from time to time.<\/p>\n
         Section 10.27 ESOP. “ESOP” means the Sara Lee Employee Stock Ownership
\nPlan.<\/p>\n
         Section 10.28 Executive Bonus Plan. “Executive Bonus Plan” means the
\nCoach Annual Performance-Based Incentive Plan to be established by Coach
\npursuant to Sections 1.2 and 5.1.<\/p>\n
         Section 10.29 Executive Restricted Stock Plan. “Executive Restricted
\nStock Plan” means the Sara Lee Long-Term Restricted Stock Plan.<\/p>\n
         Section 10.30 FMLA. “FMLA” means the Family and Medical Leave Act of
\n1993, as amended from time to time.<\/p>\n
         Section 10.31 Foreign Plan. “Foreign Plan,” when immediately preceded
\nby “Sara Lee,” means a Plan maintained by the Sara Lee Group for the benefit of
\nits employees outside the U.S. When immediately preceded by “Coach,” “Foreign
\nPlan” means a Plan to be established by Coach for the benefit of its employees
\noutside the U.S.<\/p>\n
         Section 10.32 Fringe Benefit Plans. “Fringe Benefit Plans,” when
\nimmediately preceded <\/p>\n
                                      -27-
\n   35
\nby “Sara Lee,” means the Sara Lee Employee Assistance Program, the Sara Lee
\nEducational Assistance Plan and other fringe benefit plans, programs and
\narrangements, sponsored and maintained by Sara Lee. When immediately preceded by
\n“Coach,” “Fringe Benefit Plans” means the fringe benefit plans, programs and
\narrangements to be established by Coach pursuant to Section 1.2 and Article VI.<\/p>\n
         Section 10.33 FSA Plan. “FSA Plan,” when immediately preceded by “Sara
\nLee,” means the Sara Lee Flexible Spending Account Plan. When immediately
\npreceded by “Coach,” “FSA Plan” means the flexible spending account plan to be
\nestablished by Coach pursuant to Sections 1.2 and 4.3.<\/p>\n
         Section 10.34 General Assignment and Assumption Agreement. “General
\nAssignment and Assumption Agreement” means the Ancillary Agreement which is
\nExhibit C to the Separation Agreement.<\/p>\n
         Section 10.35 Group Insurance Plan. “Group Insurance Plan,” when
\nimmediately preceded by “Sara Lee,” means the Sara Lee Group Insurance Plan.
\nWhen immediately preceded by “Coach,” “Group Insurance Plan” means the group
\ninsurance plan to be established by Coach pursuant to Section 1.2.<\/p>\n
         Section 10.36 HCFA. “HCFA” means the United States Health Care
\nFinancing Administration.<\/p>\n
         Section 10.37 Health and Welfare Plans. “Health and Welfare Plans,”
\nwhen immediately preceded by “Sara Lee,” means the Sara Lee Health Plans, the
\nSara Lee Section 125 Plan, the Sara Lee Business Travel Accident Insurance
\nprogram, the Sara Lee Group Insurance Plan, the Sara Lee Workers’ Compensation
\nPlan and the health and welfare plans established and maintained by Sara Lee for
\nthe benefit of eligible employees of the Sara Lee Group, and such other welfare
\nplans or programs as may apply to such employees as of the Distribution Date.
\nWhen immediately preceded by “Coach,” “Health and Welfare Plans” means the Coach
\nHealth Plans, the Coach Section 125 Plan, and the health and welfare plans to be
\nestablished by Coach pursuant to Section 1.2 and Article IV.<\/p>\n
         Section 10.38 Health Plans. “Health Plans,” when immediately preceded
\nby “Sara Lee,” means the Sara Lee Employee Health Benefit Plan, any other
\nmedical, HMO, vision, and dental plans and any similar or successor Plans. When
\nimmediately preceded by “Coach,” “Health Plans” means the medical, HMO, vision
\nand dental plans to be established by Coach pursuant to Section 1.2 and Article
\nIV.<\/p>\n
         Section 10.39 HMO. “HMO” means a health maintenance organization that
\nprovides benefits under the Sara Lee Health Plans or the Coach Health Plans.<\/p>\n
         Section 10.40 IPO. “IPO” means the initial public offering of Coach
\ncommon stock <\/p>\n
                                      -28-
\n   36
\npursuant to a registration statement on Form S-1 pursuant to the Securities Act
\nof 1933, as amended.<\/p>\n
         Section 10.41 IPO Closing Date. “IPO Closing Date” means the date on
\nwhich the IPO is consummated.<\/p>\n
         Section 10.42 IPO Registration Statement. “IPO Registration Statement”
\nmeans the registration statement on Form S-1 pursuant to the Securities Act of
\n1933 as amended, to be filed with the SEC registering the shares of common stock
\nof Coach to be issued in the IPO, together with all amendments thereto.<\/p>\n
         Section 10.43 IRS. “IRS” means the United States Internal Revenue
\nService.<\/p>\n
         Section 10.44 Key Executive Plans. “Key Executive Plans” means the
\nwelfare plans maintained by Sara Lee on behalf of its key executives.<\/p>\n
         Section 10.45 Liabilities. “Liabilities” means all debts, liabilities,
\nguarantees, assurances, commitments, and obligations, whether fixed, contingent
\nor absolute, asserted or unasserted, matured or unmatured, liquidated or
\nunliquidated, accrued or not accrued, known or unknown, due or to become due,
\nwhenever or however arising (including, without limitation, whether arising out
\nof any Contract or tort based on negligence or strict liability) and whether or
\nnot the same would be required by generally accepted accounting principles to be
\nreflected in financial statements or disclosed in the notes thereto. For this
\npurpose, “Contract” means any contract, agreement, lease, license, sales order,
\npurchase order, instrument or other commitment that is binding on any Person or
\nany part of its property under applicable law.<\/p>\n
         Section 10.46 Long-Term Incentive Plan. “Long-Term Incentive Plan”
\nmeans the Sara Lee Long-Term Performance Incentive Plan.<\/p>\n
         Section 10.47 Master Transitional Services Agreement. “Master
\nTransitional Services Agreement” means the Ancillary Agreement which is Exhibit
\nF to the Separation Agreement.<\/p>\n
         Section 10.48 NYSE. “NYSE” means the New York Stock Exchange.<\/p>\n
         Section 10.49 Option. “Option,” when immediately preceded by “Sara
\nLee,” means an option to purchase Sara Lee common stock pursuant to a Stock
\nPlan; provided, that for purposes of Subsection 5.4(a), “Option” does not
\ninclude any options to purchase Sara Lee common stock pursuant to the Sara Lee
\nShare 2000 Plan. When immediately preceded by “Coach,” “Option” means an option
\nto purchase Coach common stock pursuant to a Stock Plan.<\/p>\n
         Section 10.50 Outsource. “Outsource” is defined in Section 5.5.<\/p>\n
         Section 10.51 Participating Company. “Participating Company” means: (a)
\nSara Lee; <\/p>\n
                                      -29-
\n   37
\n(b) any Person (other than an individual) that Sara Lee has approved
\nfor participation in, has accepted participation in, and which is participating
\nin, a Plan sponsored by Sara Lee; and (c) any Person (other than an individual)
\nwhich, by the terms of such Plan, participates in such Plan or any employees of
\nwhich, by the terms of such Plan, participate in or are covered by such Plan.<\/p>\n
         Section 10.52 Pension Plan. “Pension Plan” when immediately preceded by
\n“Sara Lee,” means the Sara Lee Consolidated Pension and Retirement Plan.<\/p>\n
         Section 10.53 Person. “Person” means an individual, a partnership, a
\ncorporation, a limited liability company, an association, a joint stock company,
\na trust, a joint venture, an unincorporated organization, and a governmental
\nentity or any department, agency or political subdivision thereof.<\/p>\n
         Section 10.54 Plan. “Plan” means any plan, policy, program, payroll
\npractice, arrangement, contract, trust, insurance policy, or any agreement or
\nfunding vehicle providing compensation or benefits to employees, former
\nemployees, directors or consultants of Sara Lee or Coach.<\/p>\n
         Section 10.55 Post-Distribution Period. “Post-Distribution Period”
\nmeans, for each designated Plan, the period beginning as of the Distribution
\nDate and ending on the date that no member of the Coach Group is using Sara Lee
\nbenefit delivery and administrative services with respect to that Plan.<\/p>\n
         Section 10.56 Premium Plan. “Premium Plan,” when immediately preceded
\nby “Sara Lee,” means the Sara Lee Flexible Compensation Plan, the vehicle by
\nwhich employees participating in the Sara Lee Health and Welfare Plans can
\ncontribute their portion of the premium payments with pre-tax dollars. When
\nimmediately preceded by “Coach,” “Premium Plan” means the medical\/dental pre-tax
\npremium plan to be established by Coach pursuant to Sections 1.2 and 4.3.<\/p>\n
         Section 10.57 Puerto Rico Plans. “Puerto Rico Plans” when immediately
\npreceded by “Sara Lee,” means the Sara Lee Personal Products Retirement Savings
\nPlan of Puerto Rico and the Sara Lee Personal Products Hourly Retirement Plan of
\nPuerto Rico.<\/p>\n
         Section 10.58 QDRO. “QDRO” means a domestic relations order which
\nqualifies under Code Section 414(p) and ERISA Section 206(d) and which creates
\nor recognizes an alternate payee’s right to, or assigns to an alternate payee,
\nall or a portion of the benefits payable to a participant under the Sara Lee
\n401(k) Plan, the Sara Lee Pension Plan or the Sara Lee ESOP.<\/p>\n
         Section 10.59 QMCSO. “QMCSO” means a medical child support order which
\nqualifies under ERISA Section 609(a) and which creates or recognizes the
\nexistence of an alternate recipient’s right to, or assigns to an alternate
\nrecipient the right to, receive benefits for which a participant or beneficiary
\nis eligible under any of the Health Plans.<\/p>\n
                                      -30-
\n   38
\n         Section 10.60 Ratio. “Ratio” means the ratio determined by dividing the
\nCoach Stock Value by the Sara Lee Stock Value.<\/p>\n
         Section 10.61 Record Date. “Record Date” means the close of business on
\nthe date to be determined by the Board of Directors of Sara Lee as the record
\ndate for determining the stockholders of Sara Lee entitled to receive shares of
\ncommon stock of Coach in the Distribution<\/p>\n
         Section 10.62 Restricted Stock Unit. “Restricted Stock Unit,” when
\nimmediately preceded by “Sara Lee,” means a right to receive shares of Sara Lee
\ncommon stock that are subject to transfer restrictions or to employment and\/or
\nperformance vesting conditions, pursuant to a Sara Lee Stock Plan. When
\nimmediately preceded by “Coach,” “Restricted Stock Unit” means a right to
\nreceive shares of Coach common stock that are subject to transfer restrictions
\nor to employment and\/or performance vesting conditions, pursuant to a Coach
\nStock Plan.<\/p>\n
         Section 10.63 Revenue. “Revenue” means net revenue as determined in
\naccordance with generally accepted accounting principles.<\/p>\n
         Section 10.64 Sara Lee. “Sara Lee” means Sara Lee Corporation, a
\nMaryland corporation. In all such instances in which Sara Lee is referenced in
\nthis Agreement, it shall also be deemed to include a reference to each member of
\nthe Sara Lee Group, unless it specifically provides otherwise; Sara Lee shall be
\nsolely responsible to Coach for ensuring that each member of the Sara Lee Group
\ncomplies with the applicable terms of this Agreement.<\/p>\n
         Section 10.65 Sara Lee Employee. “Sara Lee Employee” means an
\nindividual who, on the Distribution Date, is: (a) either actively employed by,
\nor on leave of absence from, the Sara Lee Group; (b) a Sara Lee Terminated
\nEmployee; or (c) an employee or group of employees designated as Sara Lee
\nEmployees by Sara Lee and Coach, by mutual agreement.<\/p>\n
         Section 10.66 Sara Lee Group. “Sara Lee Group” means Sara Lee and each
\nSubsidiary and Affiliate of Sara Lee (or any predecessor organization thereof).<\/p>\n
         Section 10.67 Sara Lee Plans. “Sara Lee Plans” means the Plans
\nmaintained by Sara Lee and shall include the Sara Lee Pension Plan, Sara Lee
\nESOP, Sara Lee 401(k) Plan, Sara Lee Health and Welfare Plans, Sara Lee Group
\nInsurance Plan, Sara Lee Severance Plans, Sara Lee Fringe Benefit Plans, and the
\nSara Lee Puerto Rico Plans.<\/p>\n
         Section 10.68 Sara Lee Stock Value. “Sara Lee Stock Value” means the
\naverage of the highest and lowest per-share sale prices of Sara Lee common stock
\non the NYSE Composite Transactions Tape on the five (5) trading days preceding
\nthe date of determination.<\/p>\n
         Section 10.69 Sara Lee Terminated Employee. “Sara Lee Terminated
\nEmployee” means any individual who is a former employee of the Sara Lee Group
\nand who, on the Distribution Date, is not a Coach Transferred Employee.<\/p>\n
                                      -31-
\n   39
\n         Section 10.70 SEC. “SEC” means the United States Securities and
\nExchange Commission.<\/p>\n
         Section 10.71 Section 125 Plan. “Section 125 Plan,” when immediately
\npreceded by “Sara Lee,” means the Sara Lee Premium Plan and the Sara Lee FSA
\nPlan. When immediately preceded by “Coach,” “Section 125 Plan” means the Coach
\nPremium Plan and the Coach FSA Plan to be established by Coach pursuant to
\nSections 1.2 and 4.3.<\/p>\n
         Section 10.72 Separation. “Separation” means the contribution and
\ntransfer from Sara Lee to Coach, and Coach’s receipt and assumption of, directly
\nor indirectly, substantially all of the Assets and Liabilities currently
\nassociated with the Coach Business and the stock, investments or similar
\ninterests currently held by Sara Lee in subsidiaries and other entities that
\nconduct such business.<\/p>\n
         Section 10.73 Separation Agreement. “Separation Agreement” means the
\nMaster Separation and Distribution Agreement of which this is Exhibit D thereto.<\/p>\n
         Section 10.74 Separation Date. “Separation Date” means the effective
\ndate and time of each transfer of property, assumption of liability, license,
\nundertaking, or agreement in connection with the Separation and\/or such other
\ndate(s) as may be fixed by the Board of Directors of Sara Lee.<\/p>\n
         Section 10.75 SERP. “SERP,” when immediately preceded by “Sara Lee,”
\nmeans the Sara Lee Supplemental Benefit Plan.<\/p>\n
         Section 10.76 Severance Plans. “Severance Plans,” when immediately
\npreceded by “Sara Lee,” means the Sara Lee Severance Pay Plan and the Sara Lee
\nSeverance Pay Plan for A&B Players. When immediately preceded by “Coach,”
\n“Severance Plans” means the severance plans to be established by Coach pursuant
\nto Sections 1.2 and 4.4.<\/p>\n
         Section 10.77 Stock Plan. “Stock Plan,” when immediately preceded by
\n“Sara Lee,” means any plan, program, or arrangement pursuant to which employees
\nand other service providers hold Options, Sara Lee Restricted Stock Units, or
\nother Sara Lee equity incentives. When immediately preceded by “Coach,” “Stock
\nPlan” means the Coach 2000 Stock Incentive Plan to be established by Coach
\npursuant to Section 1.2.<\/p>\n
         Section 10.78 Subsidiary. “Subsidiary” of any person means a
\ncorporation or other organization, whether incorporated or unincorporated, of
\nwhich at least a majority of the securities or interest having by the terms
\nthereof ordinary voting power to elect at least a majority of the board of
\ndirectors or others performing similar functions with respect to such
\ncorporation or other organization, is directly or indirectly owned or controlled
\nby such Person or by any one or more of its Subsidiaries, or by such Person and
\none or more of its Subsidiaries; provided, however that no Person that is not
\ndirectly or indirectly wholly-owned by any other <\/p>\n
                                      -32-
\n   40
\nPerson shall be a Subsidiary of such other Person unless such other Person
\ncontrols, or has the right, power or ability to control that Person. Unless the
\ncontext otherwise requires, reference to Sara Lee and its Subsidiaries shall not
\ninclude the subsidiaries of Sara Lee that will be transferred to Coach after
\ngiving effect to the Separation.<\/p>\n
         Section 10.79 Unemployment Insurance Program. “Unemployment Insurance
\nProgram,” when immediately preceded by “Sara Lee,” means the group unemployment
\ninsurance policies purchased by Sara Lee from time to time. When immediately
\npreceded by “Coach,” “Unemployment Insurance Program” means any group
\nunemployment insurance program to be established by Coach pursuant to Section
\n8.7.<\/p>\n
         Section 10.80 Workers’ Compensation Plan. “Workers’ Compensation Plan”
\nwhen immediately preceded by “Sara Lee” means the Sara Lee Workers’ Compensation
\nPlan, comprised of the various arrangements established by a member of the Sara
\nLee Group to comply with the workers’ compensation requirements of the states in
\nwhich the Sara Lee Group conducts business. When immediately preceded by
\n“Coach,” “Workers’ Compensation Plan” means the workers’ compensation program to
\nbe established by Coach pursuant to Section 4.8.<\/p>\n
              [THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]<\/p>\n
                                      -33-
\n   41
\n         IN WITNESS WHEREOF, each of the parties have caused this Agreement to
\nbe executed on its behalf by its officers thereunto duly authorized on the day
\nand year first above written.<\/p>\n
                              SARA LEE CORPORATION<\/p>\n
                              By: _______________________
\n                              Name:
\n                              Title:<\/p>\n
                              COACH, INC.<\/p>\n
                              By: _______________________
\n                              Name:
\n                              Title:<\/p>\n
                                      -34-
\n   42
\n                                  SCHEDULE 1.6
\n                                  FOREIGN PLANS<\/p>\n
[TO BE INSERTED.]<\/p>\n
                                      -35-
\n   43
\n                                 SCHEDULE 4.1(a)
\n                               COACH HEALTH PLANS<\/p>\n
                           Coach Employee Health Plan<\/p>\n
                                      -36-
\n   44
\n                                  SCHEDULE 4.2
\n                              SARA LEE HEALTH PLANS<\/p>\n
                Sara Lee Corporation Employee Health Benefit Plan
\n                 Sara Lee Corporation Flexible Compensation Plan
\n               Sara Lee Corporation Flexible Spending Account Plan<\/p>\n
                                      -37-
\n   45
\n                                  SCHEDULE 5.4
\n                        SARA LEE RESTRICTED STOCK HELD BY
\n                      NON-U.S. COACH TRANSFERRED EMPLOYEES<\/p>\n
DELETE SCHEDULE UNLESS APPLICABLE.<\/p>\n
                                      -38-<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7133,8758],"corporate_contracts_industries":[9424,9401],"corporate_contracts_types":[9622,9628],"class_list":["post-43390","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-coach-inc","corporate_contracts_companies-sara-lee-corp","corporate_contracts_industries-food__diversified","corporate_contracts_industries-consumer__leather","corporate_contracts_types-planning","corporate_contracts_types-planning__separation"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43390","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43390"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43390"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43390"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43390"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}