{"id":43761,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/tax-sharing-agreement-sara-lee-corp-and-coach-inc.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"tax-sharing-agreement-sara-lee-corp-and-coach-inc","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/tax-sharing-agreement-sara-lee-corp-and-coach-inc.html","title":{"rendered":"Tax Sharing Agreement &#8211; Sara Lee Corp. and Coach Inc."},"content":{"rendered":"<pre>                              TAX SHARING AGREEMENT\n\n                                  by and among\n\n                              SARA LEE CORPORATION\n\n                               AND ITS AFFILIATES\n\n                                       and\n\n                                   COACH, INC.\n\n                               AND ITS AFFILIATES\n\n\n\n\n\n\n                                TABLE OF CONTENTS\n\n                                                                           PAGE\n\nARTICLE I PREPARATION AND FILING OF TAX RETURNS.............................2\n       Section 1.1  Sara Lee's Responsibility...............................2\n       Section 1.2  Coach's Responsibility..................................2\n       Section 1.3  Agent...................................................2\n       Section 1.4  Manner of Tax Return Preparation........................2\n       Section 1.5  Tax Services............................................3\n\nARTICLE II LIABILITY FOR TAXES..............................................4\n       Section 2.1  Coach's Liability for Section 1.1(b) Taxes..............4\n       Section 2.2  Sara Lee's Liability for Section 1.1(a) and \n                    Section 1.1(c) Taxes....................................4\n       Section 2.3  Coach's Liability for Section 1.2 Taxes.................4\n       Section 2.4  Puerto Rico Toll Gate Tax...............................4\n       Section 2.5  Certain Tax Benefits....................................4\n       Section 2.6  Payment of Tax Liability................................5\n       Section 2.7  Computation.............................................5\n\nARTICLE III DISTRIBUTION TAXES AND DECONSOLIDATION..........................6\n       Section 3.1  Distribution Taxes......................................6\n       Section 3.2  Private Letter Rulings; Tax Opinion.....................7\n       Section 3.3  Carrybacks..............................................8\n       Section 3.4  Allocation of Tax Items.................................9\n       Section 3.5  Continuing Covenants....................................9\n       Section 3.6  Allocation of Tax Assets................................9\n\nARTICLE IV STOCK OPTIONS...................................................10\n       Section 4.1  Deduction..............................................10\n       Section 4.2  Withholding and Reporting..............................10\n       Section 4.3  Adjustments............................................10\n\nARTICLE V INDEMNIFICATION..................................................11\n       Section 5.1  Generally..............................................11\n       Section 5.2  Inaccurate, Incomplete or Untimely Information.........11\n       Section 5.3  Adjustments to Payments................................11\n       Section 5.4  Reporting of Indemnifiable Loss........................12\n       Section 5.5  No Indemnification for Tax Items.......................12\n\nARTICLE VI PAYMENTS........................................................13\n       Section 6.1  Estimated Tax Payments.................................13\n\n                                     i\n\n\n       Section 6.2   True-Up Payments.......................................13\n       Section 6.3   Payments Under This Agreement..........................13\n\nARTICLE VII TAX PROCEEDINGS.................................................14\n       Section 7.1   Audits.................................................14\n       Section 7.2   Notice.................................................14\n       Section 7.3   Remedies...............................................15\n       Section 7.4   Control of Distribution Tax Proceedings................15\n\nARTICLE VIII MISCELLANEOUS PROVISIONS.......................................15\n       Section 8.1   Effectiveness..........................................15\n       Section 8.2   Cooperation and Exchange of Information................15\n       Section 8.3   Dispute Resolution.....................................16\n       Section 8.4   Notices................................................17\n       Section 8.5   Changes in Law.........................................17\n       Section 8.6   Confidentiality........................................18\n       Section 8.7   Assignment.............................................18\n       Section 8.8   Affiliates.............................................18\n       Section 8.9   Authority..............................................19\n       Section 8.10  Entire Agreement.......................................19\n       Section 8.11  Governing Law and Jurisdiction.........................19\n       Section 8.12  Counterparts...........................................19\n       Section 8.13  Severability...........................................20\n       Section 8.14  Parties in Interest....................................20\n       Section 8.15  Failure or Indulgence Not Waiver.......................20\n       Section 8.16  Setoff.................................................20\n       Section 8.17  Amendments.............................................20\n       Section 8.18  Interpretation.........................................20\n\nARTICLE IX DEFINITIONS......................................................21\n       Section 9.1   Affiliated Group.......................................21\n       Section 9.2   After Tax Amount.......................................21\n       Section 9.3   Audit..................................................21\n       Section 9.4   Coach Affiliate........................................21\n       Section 9.5   Coach Business.........................................21\n       Section 9.6   Coach Employee.........................................21\n       Section 9.7   Coach Group............................................21\n       Section 9.8   Coach Puerto Rico......................................21\n       Section 9.9   Coach Representation Letter ...........................22\n       Section 9.10  Code...................................................22\n       Section 9.11  Combined Return........................................22\n       Section 9.12  Consolidated Return....................................22\n       Section 9.13  Control ...............................................22\n\n                                     ii\n\n\n       Section 9.14  Dispute................................................22\n       Section 9.15  Dispute Resolution Commencement Date ..................22\n       Section 9.16  Distribution...........................................22\n       Section 9.17  Distribution Date......................................22\n       Section 9.18  Distribution Taxes.....................................22\n       Section 9.19  Estimated Tax Installment Date.........................23\n       Section 9.20  Filing Party...........................................23\n       Section 9.21  Final Determination ...................................23\n       Section 9.22  Income Tax.............................................23\n       Section 9.23  Indemnifiable Loss Deduction ..........................23\n       Section 9.24  Indemnified Loss.......................................23\n       Section 9.25  Indemnitee.............................................23\n       Section 9.26  Indemnifying Party.....................................23\n       Section 9.27  Independent Firm.......................................23\n       Section 9.28  Initial Ruling.........................................23\n       Section 9.29  Interim Period.........................................23\n       Section 9.30  IPO....................................................24\n       Section 9.31  IPO Closing Date.......................................24\n       Section 9.32  IPO Registration Statement.............................24\n       Section 9.33  IRS....................................................24\n       Section 9.34  Non-Income Distribution Taxes..........................24\n       Section 9.35  Option.................................................24\n       Section 9.36  Owed Party.............................................24\n       Section 9.37  Owing Party............................................24\n       Section 9.38  Payment Period.........................................24\n       Section 9.39  Person.................................................24\n       Section 9.40  Post-Distribution Period...............................24\n       Section 9.41  Pre-Distribution Period................................24\n       Section 9.42  Pre-Separation Period..................................25\n       Section 9.43  Puerto Rico Toll Gate Tax..............................25\n       Section 9.44  Restated Tax Saving Amount.............................25\n       Section 9.45  Ruling Documents.......................................25\n       Section 9.46  Sara Lee Affiliate.....................................25\n       Section 9.47  Sara Lee Employee......................................25\n       Section 9.48  Sara Lee Group.........................................25\n       Section 9.49  Sara Lee Representation Letter.........................25\n       Section 9.50  Separate Tax Liability.................................25\n       Section 9.51  Separation.............................................26\n       Section 9.52  Separation Agreement...................................26\n       Section 9.53  Separation Date........................................26\n       Section 9.54  Supplemental Ruling....................................26\n       Section 9.55  Supplemental Ruling Documents..........................26\n       Section 9.56  Tax and Taxes..........................................26\n\n                                     iii\n\n\n       Section 9.57  Tax Asset..............................................27\n       Section 9.58  Tax Benefit............................................27\n       Section 9.59  Tax Detriment..........................................27\n       Section 9.60  Tax Item...............................................27\n       Section 9.61  Tax Opinion............................................27\n       Section 9.62  Tax Return.............................................27\n       Section 9.63  Tax Saving Amount......................................27\n       Section 9.64  Taxing Services........................................28\n       Section 9.65  Taxing Authority.......................................28\n       Section 9.66  Transitional Services Agreement........................28\n       Section 9.67  Treasury Regulations...................................28\n\n                                      iv\n\n\n                              TAX SHARING AGREEMENT\n\n         This Tax Sharing Agreement (this \"Agreement\") is dated as of August \n24, 2000, by and among Sara Lee Corporation (\"Sara Lee\"), a Maryland \ncorporation, each Sara Lee Affiliate, Coach, Inc. (\"Coach\"), a Maryland \ncorporation and currently a direct, wholly owned subsidiary of Sara Lee, and \neach Coach Affiliate. Capitalized terms used herein and not otherwise defined \nshall have the meanings ascribed to such terms in Article IX hereof.\n\n                                     RECITALS\n\n                  WHEREAS, as of the date specified in the preamble to this \nAgreement, Sara Lee and its direct and indirect domestic subsidiaries are \nmembers of an Affiliated Group, of which Sara Lee is the common parent \ncorporation;\n\n                  WHEREAS, the Boards of Directors of Sara Lee and Coach have\neach determined that it is appropriate and desirable for Sara Lee to contribute\nand transfer to Coach, and for Coach to receive and assume, directly or\nindirectly, assets and liabilities currently held by Sara Lee and associated\nwith the Coach Business (the \"Separation\");\n\n                  WHEREAS, as set forth in the Master Separation Agreement \ndated as of August 24, 2000 (the \"Separation Agreement\"), and subject to the \nterms and conditions thereof, Sara Lee and Coach currently contemplate that, \nfollowing the Separation, Coach will make an initial public offering (the \n\"IPO\") of an amount of its common stock pursuant to a registration statement \non Form S-1 pursuant to the Securities Act of 1933, as amended (the \"IPO \nRegistration Statement\"), that will reduce Sara Lee's ownership of Coach to \nnot less than 80.5%;\n\n                  WHEREAS, as set forth in the Separation Agreement, and \nsubject to the terms and conditions thereof, Sara Lee intends, sometime after \nthe IPO, to distribute all of its shares of Coach common stock to Sara Lee \nshareholders (the \"Distribution\");\n\n                  WHEREAS, the Separation and the Distribution are intended \nto qualify as a tax-free reorganization and distribution under sections \n368(a)(1)(D) and 355 of the Code;\n\n                  WHEREAS, in contemplation of the Distribution pursuant to\nwhich Coach and its direct and indirect domestic subsidiaries will cease to be\nmembers of the Sara Lee Group, the parties hereto have determined to enter into\nthis Agreement, setting forth their agreement with respect to certain Tax\nmatters; and\n\n                  WHEREAS, Sara Lee and Coach desire to set forth their \nagreement on the rights and obligations of Sara Lee and Coach and their \nrespective groups with respect to handling and allocating federal, state and \nlocal and foreign Taxes, in periods beginning prior to the Distribution\n\n\n\nDate, Taxes resulting from transactions effectuated in connection with \nthe Distribution and various other Tax matters.\n\n                  NOW, THEREFORE, in consideration of the foregoing and the\nterms, conditions, covenants and provisions of this Agreement, Sara Lee and\nCoach mutually covenant and agree as follows:\n\n                                    ARTICLE I\n\n                      PREPARATION AND FILING OF TAX RETURNS\n\n                  Section 1.1 SARA LEE'S RESPONSIBILITY. Sara Lee shall have \nsole and exclusive responsibility for the preparation and filing of:\n\n                         (1)  all Tax Returns and Taxes with respect to\nSara Lee, any Sara Lee Affiliate, Coach, and\/or any Coach Affiliate for\nPre-Separation Periods;\n\n                         (2)  all Consolidated Returns, Combined Returns and \nseparate United States federal, state, local, and foreign Income Tax Returns \nfor any Interim Periods; and\n\n                         (3)  all Tax Returns with respect to Sara Lee and\nany Sara Lee Affiliate for Post-Distribution Periods.\n\n                  Section 1.2 COACH'S RESPONSIBILITY. Coach shall have sole and\nexclusive responsibility for the preparation and filing of:\n\n                         (1)  all Tax Returns (other than Income Tax\nReturns) and Taxes (other than Income Taxes) for Coach and any Coach Affiliate\nfor any Interim Periods and\n\n                         (2)  all Tax Returns with respect to Coach and\nany Coach Affiliate for Post-Distribution Periods.\n\n                  Section 1.3 AGENT. Subject to the other applicable provisions\nof this Agreement, Coach hereby irrevocably designates, and agrees to cause\neach Coach Affiliate to so designate, Sara Lee as its sole and exclusive agent\nand attorney-in-fact to take such action (including execution of documents) as\nSara Lee, in its reasonable discretion, may deem appropriate in any and all\nmatters (including Audits) relating to any Tax Return described in Section 1.1.\n\n                  Section 1.4 MANNER OF TAX RETURN PREPARATION.\n\n                          (1) Unless otherwise required by a Taxing \nAuthority, the parties hereby agree to prepare and file all Tax Returns, and \nto take all other actions, in a manner\n\n                                     2\n\n\n\nconsistent with this Agreement and the Separation Agreement, and, to the \nextent not inconsistent with this Agreement, the Separation Agreement or \napplicable law, any Ruling Documents and any Supplemental Ruling Documents. \nAll Tax Returns shall be filed on a timely basis (taking into account \napplicable extensions) by the party responsible for filing such Tax Returns \nunder this Agreement.\n\n                          (2) Subject to Section 1.4(a), Sara Lee shall have \nthe exclusive right, in its reasonable discretion, with respect to any Tax \nReturn described in Section 1.1 to determine (1) the manner in which such Tax \nReturn shall be prepared and filed, including the elections, methods of \naccounting, positions, conventions and principles of taxation to be used and \nthe manner in which any Tax Item shall be reported, (2) whether any \nextensions may be requested, (3) the elections that will be made by Sara Lee, \nany Sara Lee Affiliate, Coach, or any Coach Affiliate on such Tax Return, (4) \nwhether any amended Tax Return(s) shall be filed, (5) whether any claim(s) \nfor refund shall be made, (6) whether any refund shall be paid by way of \nrefund or credited against any liability for the related Tax, and (7) whether \nto retain outside firms to prepare or review such Tax Returns; PROVIDED, that \nSara Lee shall prepare all Tax Returns described in Section 1.1(b) in a \nmanner consistent with its past Tax reporting practices with respect to the \nCoach Business, except that Sara Lee shall prepare Tax Returns for Coach \nPuerto Rico in a manner consistent with the IRS private letter ruling issued \nto Coach Puerto Rico on April 12, 2000.\n\n                          (3) Within ninety (90) days after filing the \nConsolidated Return for the tax year that includes the Distribution Date, \nSara Lee shall notify Coach of the Tax attributes associated with Coach and \neach Coach Affiliate, and the Tax bases of the assets and liabilities, \ntransferred to Coach in connection with the Separation. Sara Lee shall \nprovide Coach with preliminary estimates of such information within ninety \n(90) days after the Separation Date.\n\n                  Section 1.5 TAX SERVICES.\n\n                          (1) IN GENERAL. Sara Lee shall provide to Coach the \nServices (as defined in the Transitional Services Agreement) set forth under \nthe heading \"Taxation\" on the Transition Services Schedule attached to the \nTransitional Services Agreement (the \"Tax Services\").\n\n                          (2) RIGHT TO REVIEW. Upon Coach's request, Sara Lee \nshall provide Coach with any Tax Return (or portion or excerpt thereof \nrelating exclusively to Coach or any Coach Affiliate) to be filed by Sara Lee \non behalf of Coach or any Coach Affiliate pursuant to Sara Lee's provision of \nTax Services at least ten (10) days prior to the due date of such Tax Return. \nCoach shall have the right to comment on any such Tax Return (or portion or \nexcerpt thereof, as applicable), and Sara Lee shall reasonably consider \nCoach's comments.\n\n                          (3) INFORMATION. Sara Lee shall provide Coach with \ncopies of all Tax Returns (or portions or excerpts thereof relating \nexclusively to Coach or any Coach Affiliate)\n\n                                     3\n\n\n\nfiled on behalf of Coach or any Coach Affiliate, in each case within fifteen \n(15) days of filing, pursuant to Sara Lee's provision of Tax Services and any \nnotices or communications from any Taxing Authority relating to any Tax or \nTax Return of Coach or any Coach Affiliate covered by the Tax Services.\n\n                         (4) LIST OF TAX RETURNS. As soon as practicable \nafter the date hereof, Sara Lee shall provide to Coach a list of all Tax \nReturns to be filed by Sara Lee on behalf of Coach and\/or any Coach Affiliate \npursuant to Section 1.1(b). As soon as practicable after the Distribution \nDate, Sara Lee shall provide to Coach an updated list of all Tax Returns \nfiled by Sara Lee on behalf of Coach and\/or any Coach Affiliate pursuant to \nSection 1.1(b).\n\n                                   ARTICLE II\n\n                               LIABILITY FOR TAXES\n\n                  Section 2.1 COACH'S LIABILITY FOR SECTION 1.1(b) TAXES. \nCoach shall be liable for the Separate Tax Liability with respect to Tax \nReturns described in Section 1.1(b). Sara Lee shall be liable for any Tax \ndeficiency assessed with respect to such Tax Returns, and shall be entitled \nto receive and retain all refunds of Taxes previously paid with respect to \nthe Separate Tax Liability.\n\n                  Section 2.2 SARA LEE'S LIABILITY FOR SECTION 1.1(a) AND\nSECTION 1.1(c) TAXES. Sara Lee shall be liable for all Taxes due with respect to\nall Tax Returns described in Section 1.1(a) and Section 1.1(c), and shall be\nliable for any Tax deficiency assessed with respect to such Tax Returns. Sara\nLee shall be entitled to receive and retain all refunds of Taxes previously paid\nby Sara Lee with respect to such Taxes.\n\n                  Section 2.3 COACH'S LIABILITY FOR SECTION 1.2 TAXES. Coach \nshall be liable for all Taxes due with respect to Tax Returns described in \nSection 1.2, and shall be liable for any Tax deficiency assessed with respect \nto such Tax Returns. Coach shall be entitled to receive and retain all \nrefunds of Taxes previously paid by Coach with respect to such Taxes.\n\n                  Section 2.4 PUERTO RICO TOLL GATE TAX. For the avoidance of \ndoubt, Sara Lee shall be liable for any Puerto Rico Toll Gate Tax incurred \nprior to the Separation Date. Coach shall be liable for any Puerto Rico Toll \nGate Tax incurred on or after the Separation Date.\n\n                  Section 2.5 CERTAIN TAX BENEFITS.\n\n                          (1) FSC BENEFIT. Coach shall be solely entitled to \nany Tax Benefit resulting from Coach's participation in any \"foreign sales \ncorporation\" (as such term is defined in section 922(a) of the Code) of Sara \nLee during any Pre-Distribution Period (the \"FSC Benefit\").\n\n                                       4\n\n\n\n\n\n\n                           (2) FTC BENEFIT. Sara Lee shall compensate Coach \nfor Sara Lee's actual use, against Sara Lee's excess foreign tax credit \nlimitation, of any carryback or carryover within the meaning of section \n904(c) of the Code (the \"FTC Benefit\") attributable to Coach's or any Coach \nAffiliate's payment or accrual of excess foreign taxes during any Interim \nPeriod.\n\n                           (3) FOREIGN SOURCE INCOME. For the avoidance of \ndoubt, to the extent that Sara Lee derives any additional Tax Benefit (other \nthan the FSC Benefit and the FTC Benefit) as a result of foreign source \nincome generated by Coach's export sales during any Interim Period, Sara Lee \nshall be solely entitled to, and shall not compensate Coach for, such \nadditional Tax Benefit.\n\n                           (4) PUERTO RICO WAGE CREDIT. For the avoidance of \ndoubt, Sara Lee shall be solely entitled to, and shall not compensate Coach \nfor, any Tax Benefit arising to Sara Lee or any Sara Lee Affiliate during any \nInterim Period by reason of any excess of (i) Coach's limitation (described \nin section 936(a)(4) of the Code) on the Puerto Rico \"possession tax credit\" \nprovided in section 936(a) of the Code over (ii) the amount of the Puerto \nRico possession tax credit actually utilized by Coach.\n\n                  Section 2.6 PAYMENT OF TAX LIABILITY. If one party is liable\nfor Taxes, under Sections 2.1 through 2.3, with respect to Tax Returns for which\nanother party has the preparation and filing responsibility, then the liable\nparty shall pay the Taxes to the other party pursuant to Section 6.3. One\nparty's failure to pay Taxes pursuant to this Section 2.6 shall not relieve the\nother party of its obligation to prepare and file any Tax Return and to make any\nrelated payment of Taxes to a Taxing Authority. If a party (the \"Non-Paying\nParty\") shall fail to pay over to a Taxing Authority any payment received by it\nfrom the other party in respect of Taxes owed by such other party, the\nNon-Paying Party shall indemnify the other party for such Taxes.\n\n                  Section 2.7 COMPUTATION. Sara Lee shall provide Coach with a\ncalculation of the amount of any Separate Tax Liability, estimated Separate Tax\nLiability (for purposes of Section 6.1) or True-Up Payment (for purposes of\nSection 6.2). Such calculation shall provide sufficient detail to permit Coach\nto reasonably understand such calculation. Coach shall have the right to review,\ncomment on and contest such calculation. Any Dispute with respect to such\ncalculation shall be resolved pursuant to Section 8.3; PROVIDED, that,\nnotwithstanding any Dispute with respect to any such calculation, in no event\nshall any payment attributable to the amount of any Separate Tax Liability or\nestimated Separate Tax Liability be paid later than the date provided in Article\nVI; PROVIDED FURTHER, that, all or a part of any such contested payment may be\nsubject to return based on the resolution of the Dispute, and any payments owing\nfrom one party to the other shall be made promptly.\n\n                                    5\n\n\n\n\n\n\n                                  ARTICLE III\n\n                     DISTRIBUTION TAXES AND DECONSOLIDATION\n\n                  Section 3.1 DISTRIBUTION TAXES.\n\n                  (a) SARA LEE'S LIABILITY FOR DISTRIBUTION TAXES. \nNotwithstanding Sections 2.1 through 2.3, Sara Lee and each Sara Lee \nAffiliate shall be liable for one hundred percent (100%) of any Distribution \nTaxes that are attributable to, or result from, one or more of the following:\n\n                                     (1) any action or omission by Sara Lee\n         (or any Sara Lee Affiliate) that is materially inconsistent with any\n         material or information, or that constitutes a material breach of any\n         material covenant or material representation, pertaining to Sara Lee\n         in the Ruling Documents, Supplemental Ruling Documents, Initial Ruling,\n         or Supplemental Ruling, or the Sara Lee Representation Letter, if any;\n\n                                    (2) any action or omission by Sara Lee\n         (or any Sara Lee Affiliate) after the date of the Distribution,\n         including, without limitation, a cessation, transfer to affiliates, or\n         disposition of its active trades or businesses, or an issuance of\n         stock, stock buyback or payment of an extraordinary dividend by Sara\n         Lee (or any Sara Lee Affiliate) following the Distribution;\n\n                                    (3) any acquisition of any stock or\n         assets of Sara Lee (or any Sara Lee Affiliate) by one or more other\n         persons occurring prior to or following the Distribution; or\n\n                                    (4) any issuance of stock by Sara Lee\n         (or any Sara Lee Affiliate), or change in ownership of stock in Sara\n         Lee (or any Sara Lee Affiliate), that causes section 355(d) or section\n         355(e) of the Code to apply to the Distribution.\n\n                           (2) COACH'S LIABILITY FOR DISTRIBUTION TAXES. \nNotwithstanding Sections 2.1 through 2.3, Coach and each Coach Affiliate \nshall be liable for one hundred percent (100%) of any Distribution Taxes that \nare attributable to, or result from, one or more of the following:\n\n                                    (1) any action or omission by Coach (or \nany Coach Affiliate) that is materially inconsistent with any material or \ninformation, or that constitutes a material breach of any material covenant \nor material representation, pertaining to Coach in the Ruling Documents, \nSupplemental Ruling Documents, Initial Ruling, or Supplemental Ruling, or the \nCoach Representation Letter, if any;\n\n                                      6\n\n\n\n\n\n\n                                    (2) any action or omission by Coach (or \nany Coach Affiliate) after the date of the Distribution, including without \nlimitation, a cessation, transfer to affiliates or disposition of its active \ntrades or businesses, or an issuance of stock, stock buyback or payment of an \nextraordinary dividend by Coach (or any Coach Affiliate) following the \nDistribution;\n\n                                    (3) any acquisition of any stock or \nassets of Coach (or any Coach Affiliate) by one or more other persons \nfollowing the Distribution; or\n\n                                    (4) any issuance of stock by Coach (or \nany Coach Affiliate), or change in ownership of stock in Coach (or any Coach \nAffiliate), that causes section 355(d) or section 355(e) of the Code to apply \nto the Distribution.\n\n                           (3) FIRST PARTY RESPONSIBLE. The first party to \nact or fail to act in a manner that results in the imposition of Distribution \nTaxes shall be liable for one hundred percent (100%) of such Distribution \nTaxes pursuant to Section 3.1(a) or 3.1(b), as applicable; PROVIDED, that if \nsuch first party is able to act, and does act, in a manner that results in \nDistribution Taxes not being imposed, then such first party shall not be \nliable for any Distribution Taxes imposed as a result of any act or omission \nby the other party subsequent to the first party's action or omission.\n\n                           (4) LIABILITY FOR NON-INCOME DISTRIBUTION TAXES. \nThe liability for any Non-Income Distribution Taxes shall be borne by Coach \nonly if such liability arises with respect to assets transferred to Coach by \nSara Lee pursuant to the Separation. The liability for all other Non-Income \nDistribution Taxes shall be borne by Sara Lee.\n\n                  Section 3.2 PRIVATE LETTER RULINGS; TAX OPINION.\n\n                           (1) INFORMATION. Sara Lee has provided Coach with \ncopies of the Ruling Documents, if any, submitted on or prior to the date \nspecified in the preamble to this Agreement, and shall provide Coach with \ncopies of any Ruling Documents or Supplemental Ruling Documents prepared \nafter such date prior to the submission of such Ruling Documents or \nSupplemental Ruling Documents, as applicable, to a Taxing Authority. Sara Lee \nshall provide Coach with a copy of the Sara Lee Representation Letter and a \ncopy of the Tax Opinion, if any.\n\n                           (2) COOPERATION BY COACH. Coach shall cooperate \nwith Sara Lee, and shall take any and all actions reasonably requested by \nSara Lee, in connection with (i) Sara Lee's submission of any Ruling \nDocuments prepared after the date specified in the preamble to this Agreement \nand (ii) Sara Lee's request, if any, for a Tax Opinion.\n\n                           (3) SUPPLEMENTAL RULINGS.\n\n                                     7\n\n\n\n                                    (1) IN GENERAL. Sara Lee agrees that at\n         the reasonable request of Coach, Sara Lee shall cooperate with Coach\n         and use its reasonable best efforts to seek to obtain, as expeditiously\n         as possible, a Supplemental Ruling or other guidance from the IRS or\n         any other Taxing Authority for the purpose of confirming (1) the\n         continuing validity of any ruling issued by any Taxing Authority\n         addressing the application of the law to the Distribution and (2)\n         compliance on the part of Coach (or any Coach Affiliate) with its\n         obligations under Section 3.1(b). However, Sara Lee shall not be\n         obligated to seek a Supplemental Ruling if it reasonably believes that\n         seeking such Supplemental Ruling would adversely affect Sara Lee, its\n         shareholders or any Sara Lee Affiliate. Further, in no event shall Sara\n         Lee be required to file any Supplemental Ruling Documents unless Coach\n         represents that (1) it has read the Supplemental Ruling Documents and\n         (2) all information and representations, if any, relating to Coach (or\n         any Coach Affiliate) contained in the Supplemental Ruling Documents are\n         true, correct and complete in all material respects. Coach shall\n         reimburse Sara Lee for all costs and expenses incurred by Sara Lee in\n         obtaining a Supplemental Ruling requested by Coach. Neither Coach nor\n         any Coach Affiliate shall seek any guidance (whether written or oral)\n         from the IRS or any other Taxing Authority concerning the Distribution\n         except as set forth in this Section 3.2(c).\n\n                                    (2) PARTICIPATION RIGHTS. If Sara Lee\n         requests a Supplemental Ruling or other guidance after the date\n         specified in the preamble to this Agreement: (A) Sara Lee shall keep\n         Coach informed in a timely manner of all material actions taken or\n         proposed to be taken by Sara Lee in connection therewith; (B) Sara Lee\n         shall (1) reasonably in advance of the submission of any such\n         Supplemental Ruling Documents provide Coach with a draft copy thereof,\n         (2) reasonably consider Coach's comments on such draft copy, (3)\n         provide Coach with a final copy of the Supplemental Ruling Documents,\n         and (4) provide Coach with notice reasonably in advance of, and Coach\n         shall have the right to attend, any meetings with the Taxing Authority\n         (subject to the approval of the Taxing Authority) that relate to such\n         Supplemental Ruling.\n\n                  Section 3.3 CARRYBACKS.\n\n                           (1) IN GENERAL. Sara Lee agrees to pay to Coach\nthe United States federal Income Tax Benefit from the use, in any period or\nportion thereof beginning before the IPO Closing Date, of a carryback of any Tax\nAsset of the Coach Group from a period (other than a Post-Distribution Period)\nor portion thereof beginning on or after the IPO Closing Date (other than a\ncarryback of any Tax Asset attributable to Distribution Taxes). Subject to the\nfollowing sentence, if any Tax Asset of the Coach Group from a Post-Distribution\nPeriod is required by the Code or the Treasury Regulations to be carried back to\nany period or portion thereof beginning before the Distribution Date, then Sara\nLee shall pay to Coach the United States federal Income Tax Benefit, if any,\nfrom Sara Lee's actual use of the carryback of such Tax Asset. If there is a\n\n                                     8\n\n\ncarryback of any Tax Asset of the Sara Lee Group to the same taxable year to\nwhich there is a carryback of a Tax Asset of the Coach Group, then the carryback\nof the Sara Lee Group shall be used prior the carryback of the Coach Group. If,\nsubsequent to the payment by Sara Lee to Coach of the United States federal\nIncome Tax Benefit of a carryback of a Tax Asset of the Coach Group, there shall\nbe a Final Determination which results in a (1) change to the amount of the Tax\nAsset so carried back or (2) change to the amount of such United States federal\nIncome Tax Benefit, Coach shall repay to Sara Lee, or Sara Lee shall repay to\nCoach, as the case may be, any amount which would not have been payable to such\nother party pursuant to this Section 3.3(a) had the amount of the benefit been\ndetermined in light of these events. Nothing in this Section 3.3(a) shall\nrequire Sara Lee to file an amended Tax Return or claim for refund of United\nStates federal Income Taxes; PROVIDED, that Sara Lee shall use its reasonable\nbest efforts to use any carryback of a Tax Asset of the Coach Group that is\ncarried back under this Section 3.3(a).\n\n                           (2)      NET OPERATING LOSSES. Notwithstanding any\nother provision of this Agreement, Coach hereby expressly agrees to elect (under\nsection 172(b)(3) of the Code and, to the extent feasible, any similar provision\nof any state, local or foreign Tax law) to relinquish any right to carry back\nnet operating losses.\n\n                  Section 3.4 ALLOCATION OF TAX ITEMS. All Tax computations for\n(1) any Interim Periods ending on the Distribution Date and (2) the immediately\nfollowing taxable period of Coach or any Coach Affiliate, shall be made pursuant\nto the principles of section 1.1502-76(b) of the Treasury Regulations or of a\ncorresponding provision under the laws of other jurisdictions, as determined by\nSara Lee, taking into account all reasonable suggestions made by Coach with\nrespect thereto.\n\n                  Section 3.5 CONTINUING COVENANTS. Sara Lee (for itself and\neach Sara Lee Affiliate) and Coach (for itself and each Coach Affiliate) agree\n(1) not to take any action reasonably expected to result in an increased Tax\nliability to the other, a reduction in a Tax Asset of the other or an increased\nliability to the other under this Agreement and (2) to take any action\nreasonably requested by the other that would reasonably be expected to result in\na Tax Benefit or avoid a Tax Detriment to the other, provided that such action\ndoes not result in any additional cost not fully compensated for by the\nrequesting party. The parties hereby acknowledge that the preceding sentence is\nnot intended to limit, and therefore shall not apply to, the rights of the\nparties with respect to matters otherwise covered by this Agreement.\n\n                  Section 3.6 ALLOCATION OF TAX ASSETS. In connection with the\nDistribution, Sara Lee and Coach shall cooperate in determining the allocation\nof any Tax Assets among Sara Lee, each Sara Lee Affiliate, Coach, and each Coach\nAffiliate. The parties hereby agree that in the absence of controlling legal\nauthority or unless otherwise provided under this Agreement, Tax Assets shall be\nallocated to the legal entity that incurred the cost or burden associated with\nthe creation of such Tax Asset.\n\n\n                                       9\n\n\n\n                                   ARTICLE IV\n\n                                  STOCK OPTIONS\n\n                  Section 4.1 DEDUCTION.\n\n                           (1)      To the extent permitted by law, Sara Lee \n(or the appropriate member of the Sara Lee Group) shall claim all Tax \ndeductions arising by reason of exercises of Options to acquire Sara Lee \nstock held by Coach Employees. To the extent permitted by law, Coach (or the \nappropriate member of the Coach Group) shall claim all Tax deductions arising \nby reason of exercises of Options to acquire Coach stock held by Sara Lee \nEmployees.\n\n                           (2)      If, pursuant to a Final Determination, all\nor any part of a Tax deduction claimed pursuant to Section 4.1(a) is disallowed\nto Sara Lee (or any member of the Sara Lee Group), then, to the extent permitted\nby law, Coach (or the appropriate member of the Coach Group) shall claim such\nTax deduction. If, pursuant to a Final Determination, all or any part of a Tax\ndeduction claimed pursuant to Section 4.1(a) is disallowed to Coach (or any\nmember of the Coach Group), then, to the extent permitted by law, Sara Lee (or\nthe appropriate member of the Sara Lee Group) shall claim such Tax deduction.\n\n                  Section 4.2 WITHHOLDING AND REPORTING. Sara Lee shall \nwithhold applicable Taxes and satisfy applicable Tax reporting obligations \nwith respect to exercises of Options to acquire Sara Lee stock held by Coach \nEmployees. Coach shall withhold applicable Taxes and satisfy applicable Tax \nreporting obligations with respect to exercises of Options to acquire Coach \nstock held by Sara Lee Employees.\n\n                  Section 4.3 ADJUSTMENTS. If Coach (or any Coach Affiliate)\nreceives any Tax Benefit in any taxable period as a result of any deduction\nclaimed by Coach (or any Coach Affiliate) pursuant to Section 4.1(b), Coach\nshall pay the amount of such Tax Benefit (net of any Tax Detriment suffered by\nCoach (or any Coach Affiliate) in such taxable period to Sara Lee. If Sara Lee\n(or any Sara Lee Affiliate) receives any Tax Benefit in any taxable period as a\nresult of any deduction claimed by Sara Lee (or any Sara Lee Affiliate) pursuant\nto Section 4.1(b), Sara Lee shall pay the amount of such Tax Benefit (net of any\nTax Detriment suffered by Sara Lee (or any Sara Lee Affiliate) in such taxable\nperiod to Coach.\n\n\n                                         10\n\n\n\n                                    ARTICLE V\n\n                                 INDEMNIFICATION\n\n                  Section 5.1 GENERALLY. The Sara Lee Group shall jointly \nand severally indemnify Coach, each Coach Affiliate, and their respective \ndirectors, officers and employees, and hold them harmless from and against \nany and all Taxes or Tax deficiencies for which Sara Lee or any Sara Lee \nAffiliate is liable under this Agreement and any loss, cost, damage or \nexpense, including reasonable attorneys' fees and costs, that is attributable \nto, or results from the failure of Sara Lee, any Sara Lee Affiliate or any \ndirector, officer or employee to make any payment required to be made under \nthis Agreement. The Coach Group shall jointly and severally indemnify Sara \nLee, each Sara Lee Affiliate, and their respective directors, officers and \nemployees, and hold them harmless from and against any and all Taxes or Tax \ndeficiencies for which Coach or any Coach Affiliate is liable under this \nAgreement and any loss, cost, damage or expense, including reasonable \nattorneys' fees and costs, that is attributable to, or results from, the \nfailure of Coach, any Coach Affiliate or any director, officer or employee to \nmake any payment required to be made under this Agreement.\n\n                  Section 5.2 INACCURATE, INCOMPLETE OR UNTIMELY INFORMATION.\nThe Sara Lee Group shall jointly and severally indemnify Coach, each Coach\nAffiliate, and their respective directors, officers and employees, and hold them\nharmless from and against any loss, cost, damage, fine, penalty, or other\nexpense of any kind attributable to the negligence of Sara Lee or any Sara Lee\nAffiliate in supplying Coach or any Coach Affiliate with inaccurate, incomplete\nor untimely information, in connection with the preparation of any Tax Return.\nThe Coach Group shall jointly and severally indemnify Sara Lee, each Sara Lee\nAffiliate, and their respective directors, officers and employees, and hold them\nharmless from and against any loss, cost, damage, fine, penalty, or other\nexpense of any kind attributable to the negligence of Coach or any Coach\nAffiliate in supplying Sara Lee or any Sara Lee Affiliate with inaccurate,\nincomplete or untimely information, in connection with the preparation of any\nTax Return.\n\n                  Section 5.3 ADJUSTMENTS TO PAYMENTS. Any party that is\nentitled to receive a payment (the \"Indemnitee\") under this Agreement from\nanother party (the \"Indemnifying Party\") with respect to any Taxes, losses,\ncosts, damages or expenses suffered or incurred by the Indemnitee (an\n\"Indemnified Loss\") shall pay to such Indemnifying Party, or the Indemnifying\nParty shall pay to the Indemnitee, as applicable, an amount equal to the\ndifference between any \"Tax Saving Amount\" actually realized by the Indemnitee\nin the year of the payment and the amount of the Indemnified Loss. For purposes\nof this Section 5.3, the Tax Saving Amount shall equal the amount by which the\nIncome Taxes of the Indemnitee or any of its affiliates are reduced (including,\nwithout limitation, through the receipt of a refund, credit or otherwise), plus\nany related interest received by the Indemnitee (net of Tax) from a Taxing\nAuthority, as a result of claiming as a deduction or offset on any relevant Tax\nReturn amounts attributable to an Indemnified Loss (the \"Indemnifiable Loss\nDeduction\").\n\n                                  11\n\n\n\n\n\n\n                  Section 5.4 REPORTING OF INDEMNIFIABLE LOSS. In the event \nthat an Indemnitee incurs an Indemnified Loss, such Indemnitee shall claim as \na deduction or offset on any relevant Tax Return (including, without \nlimitation, any claim for refund) such Indemnified Loss to the extent such \nposition is supported by \"substantial authority\" (within the meaning of \nSection 1.6662-4(d) of the Treasury Regulations) with respect to United \nStates federal, state and local Tax Returns or has similar appropriate \nauthoritative support with respect to any Tax Return other than a United \nStates federal, state or local Tax Return. Except as otherwise provided in \nthis Agreement, the Indemnitee shall have primary responsibility for the \npreparation of its Tax Returns and reporting thereon such Indemnifiable Loss \nDeduction; PROVIDED, that the Indemnitee shall consult with, and provide the \nIndemnifying Party with a reasonable opportunity to review and comment on the \nportion of the Indemnitee's Tax Return relating to the Indemnified Loss. If a \nDispute arises between the Indemnitee and the Indemnifying Party as to \nwhether there is \"substantial authority\" (with respect to United States \nfederal, state and local Tax Returns) or similar appropriate authoritative \nsupport (with respect to any Tax Return other than a United States federal, \nstate or local Tax Return) for the claiming of an Indemnifiable Loss \nDeduction, such Dispute shall be resolved in accordance with the principles \nand procedures set forth in Section 8.3. Both Sara Lee and Coach shall act in \ngood faith to coordinate their Tax Return filing positions with respect to \nthe taxable periods that include an Indemnifiable Loss Deduction. There shall \nbe an adjustment to any Tax Saving Amount calculated under Section 5.3 hereof \nin the event of an Audit which results in a Final Determination that \nincreases or decreases the amount of the Indemnifiable Loss Deduction \nreported on any relevant Tax Return of the Indemnitee. The Indemnitee shall \npromptly inform the Indemnifying Party of any such Audit and shall attempt in \ngood faith to sustain the Indemnifiable Loss Deduction at issue in the Audit. \nUpon receiving a written notice of a Final Determination in respect of an \nIndemnifiable Loss Deduction, the Indemnitee shall redetermine the Tax Saving \nAmount attributable to the Indemnifiable Loss Deduction under Section 5.3 \nhereof, taking into account the Final Determination (the \"Restated Tax Saving \nAmount\"). If the Restated Tax Saving Amount is greater than the Tax Saving \nAmount, the Indemnitee shall promptly pay the Indemnifying Party an amount \nequal to the difference between such amounts. If the Restated Tax Saving \nAmount is less than the Tax Saving Amount, then the Indemnifying Party shall \npay to the Indemnitee an amount equal to the difference between such amounts \npromptly after receipt of written notice setting forth the amount due and the \ncomputation thereof.\n\n                  Section 5.5 NO INDEMNIFICATION FOR TAX ITEMS. Nothing in \nthis Agreement shall be construed as a guarantee of the existence or amount \nof any loss, credit, carryforward, basis or other Tax Item, whether past, \npresent or future, of Sara Lee, any Sara Lee Affiliate, Coach or any Coach \nAffiliate.\n\n                                   ARTICLE VI\n\n                                    PAYMENTS\n\n\n                                        12\n\n\n\n\n                  Section 6.1 ESTIMATED TAX PAYMENTS. Not later than ten (10)\nbusiness days prior to each Estimated Tax Installment Date with respect to a\ntaxable period for which a Consolidated Return or a Combined Return will be\nfiled, Coach shall pay to Sara Lee on behalf of the Coach Group an amount equal\nto the amount of any estimated Separate Tax Liability that Coach would have\notherwise been required to pay to a Taxing Authority on such Estimated Tax\nInstallment Date.\n\n                  Section 6.2 TRUE-UP PAYMENTS. Not later than ten (10) \nbusiness days after completion of a Tax Return, Coach shall pay to Sara Lee, \nor Sara Lee shall pay to Coach, as appropriate, an amount equal to the \ndifference, if any, between the Separate Tax Liability and the aggregate \namount paid by Coach with respect to such period under Section 6.1.\n\n                  Section 6.3 PAYMENTS UNDER THIS AGREEMENT. In the event \nthat one party (the \"Owing Party\") is required to make a payment to another \nparty (the \"Owed Party\") pursuant to this Agreement, then such payments shall \nbe made according to this Section 6.3.\n\n                           (1)      IN GENERAL. All payments shall be made to\nthe Owed Party or to the appropriate Taxing Authority as specified by the Owed\nParty within the time prescribed for payment in this Agreement, or if no period\nis prescribed, within twenty (20) days after delivery of written notice of\npayment owing together with a computation of the amounts due.\n\n                           (2)      TREATMENT OF PAYMENTS. Unless otherwise\nrequired by any Final Determination, the parties agree that any payments made by\none party to another party (other than payments of interest pursuant to Section\n6.3(e) and payments of After Tax Amounts pursuant to Section 6.3(d)) pursuant to\nthis Agreement shall be treated for all Tax and financial accounting purposes as\nnontaxable payments (dividend distributions or capital contributions, as the\ncase may be) made immediately prior to the Distribution and, accordingly, as not\nincludible in the taxable income of the recipient.\n\n                           (3)      PROMPT PERFORMANCE. All actions required to\nbe taken by any party under this Agreement shall be performed within the time\nprescribed for performance in this Agreement, or if no period is prescribed,\nsuch actions shall be performed promptly.\n\n                           (4)      AFTER TAX AMOUNTS. If pursuant to a Final\nDetermination it is determined that the receipt or accrual of any payment made\nunder this Agreement (other than payments of interest pursuant to Section\n6.3(e)) is subject to any Tax, the party making such payment shall be liable for\n(a) the After Tax Amount with respect to such payment and (b) interest at the\nrate described in Section 6.3(e) on the amount of such Tax from the date such\nTax accrues through the date of payment of such After Tax Amount. A party making\na demand for a payment pursuant to this Agreement and for a payment of an After\nTax Amount with respect to such payment shall separately specify and compute\nsuch After Tax Amount. However, a party may choose not to specify an After Tax\nAmount in a demand for payment pursuant to this \n\n                                          13\n\n\n\n\nAgreement without thereby being deemed to have waived its right subsequently \nto demand an After Tax Amount with respect to such payment.\n\n                           (5)      INTEREST. Payments pursuant to this\nAgreement that are not made within the period prescribed in this Agreement (the\n\"Payment Period\") shall bear interest for the period from and including the date\nimmediately following the last date of the Payment Period through and including\nthe date of payment at a per annum rate equal to the prime rate as published in\nTHE WALL STREET JOURNAL on the last day of such Payment Period, plus two percent\n(2%). Such interest shall be payable at the same time as the payment to which it\nrelates and shall be calculated on the basis of a year of 365 days and the\nactual number of days for which due.\n\n                                   ARTICLE VII\n\n                                 TAX PROCEEDINGS\n\n                  Section 7.1 AUDITS. The party responsible for preparing \nand filing a Tax Return pursuant to Article I (the \"Filing Party\") shall have \nthe exclusive right to control, contest, and represent the interests of Sara \nLee, any Sara Lee Affiliate, Coach, and any Coach Affiliate in any Audit \nrelating to such Tax Return and, in its reasonable discretion, to resolve, \nsettle or agree to any deficiency, claim or adjustment proposed, asserted or \nassessed in connection with or as a result of any such Audit. The Filing \nParty's rights shall extend to any matter pertaining to the management and \ncontrol of an Audit, including execution of waivers, choice of forum, \nscheduling of conferences and the resolution of any Tax Item. Any costs \nincurred in handling, settling, or contesting an Audit shall be borne by the \nFiling Party. The Filing Party shall, to the extent such information is \navailable, advise the non-Filing Party of any significant Tax issue subject \nto an Audit by any Taxing Authority, and shall keep the non-Filing Party \ninformed with respect to any contest, compromise or settlement thereof.\n\n                  Section 7.2 NOTICE. Within ten (10) days after a party \nreceives a written notice or other information from a Taxing Authority of the \nexistence of a Tax issue that may give rise to an indemnification obligation \nunder this Agreement, such party shall notify the other party of such issue, \nand thereafter shall promptly forward to the other party copies of notices \nand material communications with any Taxing Authority relating to such issue. \nThe failure of one party to notify the other party of any matter relating to \na particular Tax for a taxable period or to take any action specified in this \nAgreement shall not relieve such other party of any liability and\/or \nobligation which it may have under this Agreement with respect to such Tax \nfor such taxable period, except to the extent that such other party's rights \nunder this Agreement are materially prejudiced by such failure.\n\n                  Section 7.3 REMEDIES. Coach agrees that no claim against Sara\nLee and no defense to Coach's liabilities and\/or obligations to Sara Lee under\nthis Agreement shall arise from the resolution by Sara Lee of any deficiency,\nclaim or adjustment relating to the redetermination of any Tax Item of Sara Lee\nor any Sara Lee Affiliate.\n\n                                        14\n\n\n\n                  Section 7.4 CONTROL OF DISTRIBUTION TAX PROCEEDINGS. Sara Lee\nshall have the exclusive right and sole discretion to control, contest, and\nrepresent the interests of Sara Lee, any Sara Lee Affiliate, Coach, and any\nCoach Affiliate in any Audits relating to Distribution Taxes and to resolve,\nsettle or agree to any deficiency, claim or adjustment proposed, asserted or\nassessed in connection with or as a result of any such Audit. Sara Lee's rights\nshall extend to any matter pertaining to the management and control of such\nAudit, including execution of waivers, choice of forum, scheduling of\nconferences and the resolution of any Tax Item. Coach may assume sole control of\nany Audits relating to Distribution Taxes if it acknowledges in writing that it\nhas sole liability for any Distribution Taxes that might arise in such Audit.\n\n                                  ARTICLE VIII\n\n                            MISCELLANEOUS PROVISIONS\n\n                  Section 8.1 EFFECTIVENESS. This Agreement shall become\neffective on the Separation Date.\n\n                  Section 8.2 COOPERATION AND EXCHANGE OF INFORMATION.\n\n                           (1)      COOPERATION. Coach and Sara Lee shall each\ncooperate fully (and each shall cause its respective affiliates to cooperate\nfully) with all reasonable requests from another party hereto, or from an agent,\nrepresentative or advisor to such party, in connection with the preparation and\nfiling of Tax Returns, claims for refund, and Audits concerning issues or other\nmatters covered by this Agreement. Such cooperation shall include, without\nlimitation:\n\n                                    (1)     the retention until the expiration\n         of the applicable statute of limitations, and the provision upon\n         request, of Tax Returns, books, records (including information\n         regarding ownership and Tax basis of property), documentation and other\n         information relating to the Tax Returns, including accompanying\n         schedules, related work papers, and documents relating to rulings or\n         other determinations by Taxing Authorities;\n\n                                    (2)     the execution of any document that\n         may be necessary or reasonably helpful in connection with any Tax\n         Proceeding, or the filing of a Tax Return or refund claim by a member\n         of the Sara Lee Group or the Coach Group, including certification, to\n         the best of a party's knowledge, of the accuracy and completeness of\n         the information it has supplied; and\n\n                                    (3)     the use of the party's reasonable \n         best efforts to obtain any documentation that may be necessary or \n         reasonably helpful in connection with any of the foregoing.\n\n                                      15\n\n\n\nEach party shall make its employees and facilities available on a reasonable \nand mutually convenient basis in connection with the foregoing matters.\n\n                           (2)      FAILURE TO PERFORM. If a party materially \nfails to comply with any of its obligations set forth in Section 8.2(a) upon \nreasonable request and notice by the other party, and such failure results in \nthe imposition of additional Taxes, the non-performing party shall be liable \nin full for such additional Taxes notwithstanding anything to the contrary in \nthis Agreement.\n\n                           (3)      RETENTION OF RECORDS. A party intending \nto dispose of documentation of Sara Lee (or any Sara Lee Affiliate) or Coach \n(or any Coach Affiliate), including without limitation, Tax Returns, books, \nrecords, documentation and other information relating to the Tax Returns, \nincluding accompanying schedules, related work papers, and documents relating \nto rulings or other determinations by Taxing Authorities (after the \nexpiration of the applicable statute of limitations), shall provide written \nnotice to the other party describing the documentation to be destroyed or \ndisposed of sixty (60) business days prior to taking such action. The other \nparty may arrange to take delivery of the documentation described in the \nnotice at its expense during the succeeding sixty (60) day period.\n\n                  Section 8.3 DISPUTE RESOLUTION. Any dispute, controversy \nor claim arising out of or relating to this Agreement or the breach, \ntermination or validity hereof (\"Dispute\") which arises between Sara Lee and \nCoach shall first be negotiated between the appropriate senior executives of \nSara Lee and Coach who shall have the authority to resolve the matter. Such \nexecutives shall meet to attempt in good faith to negotiate a resolution of \nthe Dispute prior to pursuing other available remedies, within ten (10) days \nof receipt by Sara Lee or Coach, as applicable, of notice of a Dispute, which \ndate of receipt shall be referred to herein as the \"Dispute Resolution \nCommencement Date.\" If the senior executives are unable to resolve the \nDispute within thirty (30) days from the Dispute Resolution Commencement \nDate, then Sara Lee and Coach shall jointly retain an Independent Firm that \nis a \"big five\" accounting firm to resolve the Dispute. If Sara Lee and Coach \ncannot mutually agree upon an Independent Firm that is a \"big five\" \naccounting firm, or if there is no Independent Firm that is a \"big five\" \naccounting firm, then any Dispute which Sara Lee and Coach cannot resolve \nwithin thirty (30) days from the Dispute Resolution Commencement Date shall \nbe resolved by a \"big five\" accounting firm selected by the American \nArbitration Association; PROVIDED, that the American Arbitration Association \nshall not select any accounting firm that is then providing auditing services \nto Sara Lee, any Sara Lee Affiliate, Coach or any Coach Affiliate. The \naccounting firm selected by the American Arbitration Association shall act as \nan arbitrator to resolve all points of disagreement, and its decision shall \nbe final and binding upon all parties involved. Following the decision of \nsuch firm, Sara Lee and Coach shall each take or cause to be taken any action \nnecessary to implement the decision of such firm. Sara Lee and Coach shall \nshare equally the administrative costs of the arbitration and such firm's \nfees and expenses, and shall each bear their respective other costs and \nexpenses related to the arbitration.\n\n                                    16\n\n\n\n                  Section 8.4 NOTICES. Notices, offers, requests or other\ncommunications required or permitted to be given by any party pursuant to the\nterms of this Agreement shall be given in writing to Sara Lee or Coach, as\napplicable, to the following addresses or facsimile numbers:\n\n                  If to Sara Lee, at:\n\n                         Sara Lee Corporation\n                         Three First National Plaza\n                         70 West Madison\n                         Chicago, Illinois  60602-4260\n                         Fax Number:  312\/558-4956\n                         Attention:  Senior Vice-President - Taxes\n\n                  If to Coach, at:\n\n                         Coach, Inc.\n                         516 West 34th Street\n                         New York, New York  10001\n                         Fax Number:  212\/629-2344\n                         Attention:  Chief Financial Officer and General Counsel\n\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 receipt\nconfirmed, if transmitted by facsimile or similar electronic transmission\nmethod; one (1) working day after it is sent, if sent by recognized overnight\ncourier; and three (3) days after it is postmarked, if mailed by first class\nmail or certified mail, return receipt requested, with postage prepaid.\n\n                  Section 8.5 CHANGES IN LAW.\n\n                           (1)      Any reference to a provision of the Code,\nTreasury Regulations, or a law of another jurisdiction shall include a reference\nto any applicable successor provision or law.\n\n                           (2)      If, due to any change in applicable law \nor regulations or their interpretation by any court of law or other governing \nbody having jurisdiction subsequent to the date specified in the preamble to \nthis Agreement, performance of any provision of this Agreement or any \ntransaction contemplated hereby shall become impracticable or impossible, the \n\n                                      17\n\n\n\nparties hereto shall use their commercially reasonable efforts to find and \nemploy an alternative means to achieve the same or substantially the same \nresult as that contemplated by such provision.\n\n                  Section 8.6 CONFIDENTIALITY. Each of the parties hereto shall\nhold and cause its directors, officers, employees, advisors and consultants to\nhold in strict confidence, unless compelled to disclose by judicial or\nadministrative process or, in the opinion of its counsel, by other requirements\nof law, all information (other than any such information relating solely to the\nbusiness or affairs of such party) concerning the other parties hereto furnished\nit by such other party or its representatives pursuant to this Agreement (except\nto the extent that such information can be shown to have been (1) in the public\ndomain through no fault of such party or (2) later lawfully acquired from other\nsources not under a duty of confidentiality by the party to which it was\nfurnished), and no party shall release or disclose such information to any other\nperson, except its directors, officers, employees, auditors, attorneys,\nfinancial advisors, bankers or other consultants who shall be advised of and\nagree to be bound by the provisions of this Section 8.6. Each of the parties\nhereto shall be deemed to have satisfied its obligation to hold confidential\ninformation concerning or supplied by the other parties if it exercises the same\ncare as it takes to preserve confidentiality for its own similar information.\n\n                  Section 8.7 ASSIGNMENT. This Agreement shall inure to the\nbenefit of and 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. No party may assign this Agreement or any rights or obligations\nhereunder, without the prior written consent of the other parties hereto, and\nany such assignment shall be void; PROVIDED, that each of Sara Lee and Coach may\nassign this Agreement to a successor entity in conjunction with such party's\nreincorporation.\n\n                  Section 8.8 AFFILIATES. Sara Lee shall cause to be performed,\nand hereby guarantees the performance of, all actions, agreements and\nobligations set forth herein to be performed by any Sara Lee Affiliate, and\nCoach shall cause to be performed, and hereby guarantees the performance of, all\nactions, agreements and obligations set forth herein to be performed by any\nCoach Affiliate; PROVIDED, that (1) if it is contemplated that a Coach Affiliate\nmay cease to be a Coach Affiliate as a result of a transfer of its stock or\nother ownership interests to a third party in exchange for consideration in an\namount approximately equal to the fair market value of the stock or other\nownership interests transferred and such consideration is not distributed\noutside of the Coach Group to the shareholders of Coach, then Coach shall\nrequest in writing no later than thirty (30) days prior to such cessation that\nSara Lee execute a release of such Coach Affiliate from its obligations under\nthis Agreement effective as of such transfer, provided that Coach shall succeed\nto the rights of such Coach Affiliate under this Agreement and shall have\nconfirmed in writing the obligations Coach and its remaining Coach Affiliates\nwith respect to their own obligations and those of the departing Coach\nAffiliate, and that such \n\n                                          18\n\n\n\ndeparting Coach Affiliate shall have executed a release of any rights it may \nhave against Sara Lee or any Sara Lee Affiliate by reason of this Agreement, \nand (2) if it is contemplated that a Sara Lee Affiliate may cease to be a \nSara Lee Affiliate as a result of a transfer of its stock or other ownership \ninterests to a third party in exchange for consideration in an amount \napproximately equal to the fair market value of the stock or other ownership \ninterests transferred and such consideration is not distributed outside of \nthe Sara Lee Group to the shareholders of Sara Lee, then Sara Lee shall \nrequest in writing no later than thirty (30) days prior to such cessation \nthat Coach execute a release of such Sara Lee Affiliate from its obligations \nunder this Agreement effective as of such transfer, provided that Sara Lee \nshall succeed to the rights of such Sara Lee Affiliate under this Agreement \nand shall have confirmed in writing the obligations of Sara Lee and its \nremaining Sara Lee Affiliates with respect to their own obligations and the \nobligations of the departing Sara Lee Affiliate, and that such departing Sara \nLee Affiliate shall have executed a release of any rights it may have against \nCoach or any Coach Affiliate by reason of this Agreement.\n\n                  Section 8.9 AUTHORITY. Each of the parties hereto \nrepresents, on behalf of itself and its affiliates, to the other that (a) it \nhas the corporate power and authority to execute, deliver and perform this \nAgreement, (b) the execution, delivery and performance of this Agreement by \nit have been duly authorized by all necessary corporate or other action, (c) \nit has duly and validly executed and delivered this Agreement and (d) this \nAgreement is a legal, valid and binding obligation, enforceable against it in \naccordance with its terms subject to applicable bankruptcy, insolvency, \nreorganization, moratorium or other similar laws affecting creditors' rights \ngenerally and general equity principles.\n\n                  Section 8.10 ENTIRE AGREEMENT. This Agreement, the \nSeparation Agreement, the other Ancillary Agreements and the Exhibits and \nSchedules attached hereto and thereto, constitute the entire agreement \nbetween the parties with respect to the subject matter hereof and shall \nsupersede all prior written and oral and all contemporaneous oral agreements \nand understandings with respect to the subject matter hereof.\n\n                  Section 8.11 GOVERNING LAW AND JURISDICTION. This Agreement\nshall be construed in accordance with, and all Disputes hereunder shall be\ngoverned by, the laws of the State of Illinois, excluding its conflict of law\nrules.\n\n                  Section 8.12 COUNTERPARTS. This Agreement, including the\nSchedules and Exhibits hereto, and the other documents referred to herein, may\nbe executed in counterparts, each of which shall be deemed to be an original but\nall of which shall constitute one and the same agreement.\n                              \n                  Section 8.13 SEVERABILITY. If any term or other provision of\nthis Agreement or the Schedules or Exhibits attached hereto is determined by a\nnon-appealable decision by a court, administrative agency or arbitrator to be\ninvalid, illegal or incapable of being enforced by any rule of law or public\npolicy, all other conditions and provisions of this Agreement shall \nnevertheless\n\n\n                                          19\n\n\n\nremain in full force and effect so long as the economic or legal substance of \nthe transactions contemplated hereby is not affected in any manner materially \nadverse to any party. Upon such determination that any term or other \nprovision is invalid, illegal or incapable of being enforced, the parties \nhereto shall negotiate in good faith to modify this Agreement so as to effect \nthe original intent of the parties as closely as possible in an acceptable \nmanner to the end that transactions contemplated hereby are fulfilled to the \nfullest extent possible.\n\n                  Section 8.14 PARTIES IN INTEREST. This Agreement, including \nthe Schedules and Exhibits hereto, and the other documents referred to \nherein, shall be binding upon Sara Lee, the Sara Lee Affiliates, Coach and \nthe Coach Affiliates and inure solely to the benefit of the Coach Indemnitees \nand the Sara Lee Indemnitees and their respective permitted assigns, and \nnothing in this Agreement, express or implied, is intended to confer upon any \nother Person any rights or remedies of any nature whatsoever under or by \nreason of this Agreement.\n\n                  Section 8.15 FAILURE OR INDULGENCE NOT WAIVER. No failure \nor delay on the part of any party hereto in the exercise of any right \nhereunder shall impair such right or be construed to be a waiver of, or \nacquiescence in, any breach of any representation, warranty or agreement \nherein, nor shall any failure to exercise, or any single or partial exercise, \nof any such right preclude other or further exercise thereof or of any other \nright.\n\n                  Section 8.16 SETOFF. All payments to be made by any party \nunder this Agreement may be netted against payments due to such party under \nthis Agreement, but otherwise shall be made without setoff, counterclaim or \nwithholding, all of which are hereby expressly waived.\n\n                  Section 8.17 AMENDMENTS. No change or amendment will be made\nto this Agreement except by an instrument in writing signed on behalf of each of\nthe parties to this Agreement.\n\n                  Section 8.18 INTERPRETATION. When a reference is made in this\nAgreement to an Article or a Section, or to an Exhibit or a Schedule, such\nreference shall be to an Article or Section of, or an Exhibit or Schedule to,\nthis Agreement unless otherwise indicated. The headings contained in this\nAgreement, in any Exhibit or Schedule, and in the table of contents to this\nAgreement are for reference purposes only and shall not affect in any way the\nmeaning or interpretation of this Agreement. Any capitalized term used in any\nSchedule or Exhibit but not otherwise defined therein, shall have the meaning\nassigned to such term in this Agreement.\n\n                                       20\n\n\n\n\n                                   ARTICLE IX\n\n                                   DEFINITIONS\n\n                  Section 9.1 AFFILIATED GROUP. \"Affiliated Group\" means an\naffiliated group of corporations within the meaning of section 1504(a)(1) of the\nCode that files a Consolidated Return.\n\n                  Section 9.2 AFTER TAX AMOUNT. \"After Tax Amount\" means any\nadditional amount necessary to reflect (through a gross-up mechanism) the\nhypothetical Tax consequences of the receipt or accrual of any payment required\nto be made under this Agreement (including payment of an additional amount or\namounts hereunder and the effect of the deductions available for interest paid\nor accrued and for Taxes such as state and local Income Taxes), determined by\nusing the highest marginal corporate Tax rate (or rates, in the case of an item\nthat affects more than one Tax) for the relevant taxable period (or portion\nthereof).\n\n                  Section 9.3 AUDIT. \"Audit\" includes any audit, assessment of\nTaxes, other examination by any Taxing Authority, proceeding, or appeal of such\na proceeding relating to Taxes, whether administrative or judicial, including\nproceedings relating to competent authority determinations.\n\n                  Section 9.4 COACH AFFILIATE. \"Coach Affiliate\" means any\ncorporation or other entity directly or indirectly Controlled by Coach.\n\n                  Section 9.5 COACH BUSINESS. \"Coach Business\" means the\nbusiness of producing, marketing and selling handbags, accessories, business\ncases, luggage and travel accessories, time management products, outerwear,\ngloves, scarves, watches, footwear, eyewear, home furnishings and furniture.\n\n                  Section 9.6 COACH EMPLOYEE. \"Coach Employee\" means an \nemployee of Coach or any Coach Affiliate immediately after the Distribution.\n\n                  Section 9.7 COACH GROUP. \"Coach Group\" means the \nAffiliated Group, or similar group of entities as defined under corresponding \nprovisions of the laws of other jurisdictions, of which Coach will be the \ncommon parent corporation immediately after the Distribution, and any \ncorporation or other entity which may become a member of such group from time \nto time.\n\n                  Section 9.8 COACH PUERTO RICO. \"Coach Puerto Rico\" means \nCoach Leatherware International, Inc., a Delaware corporation.\n\n                                       21\n\n\n\n\n\n\n                  Section 9.9 COACH REPRESENTATION LETTER. \"Coach \nRepresentation Letter\" means an officer's certificate in which certain \nrepresentations, warranties and covenants are made on behalf of Coach in \nconnection with the issuance of a Tax Opinion.\n\n                  Section 9.10 CODE. \"Code\" means the Internal Revenue Code of\n1986, as amended, and any successor thereto.\n\n                  Section 9.11 COMBINED RETURN. \"Combined Return\" means any Tax\nReturn, other than with respect to United States federal Income Taxes, filed on\na consolidated, combined (including nexus combination, worldwide combination,\ndomestic combination, line of business combination or any other form of\ncombination) or unitary basis wherein Coach or one or more Coach Affiliates\njoins in the filing of such Tax Return (for any taxable period or portion\nthereof) with Sara Lee or one or more Sara Lee Affiliates.\n\n                  Section 9.12 CONSOLIDATED RETURN. \"Consolidated Return\" means\nany Tax Return with respect to United States federal Income Taxes filed on a\nconsolidated basis wherein Coach and one or more Coach Affiliates join in the\nfiling of such Tax Return (for any taxable period or portion thereof) with Sara\nLee and one or more Sara Lee Affiliates.\n\n                  Section 9.13 CONTROL. \"Control\" means the ownership of stock\npossessing at least 50 percent of the total combined voting power of all classes\nof stock entitled to vote.\n\n                  Section 9.14 DISPUTE. \"Dispute\" has the meaning set forth in\nSection 8.3.\n\n                  Section 9.15 DISPUTE RESOLUTION COMMENCEMENT DATE. \"Dispute\nResolution Commencement Date\" has the meaning set forth in Section 8.3.\n\n                  Section 9.16 DISTRIBUTION. \"Distribution\" has the meaning set\nforth in the recitals to this Agreement.\n\n                  Section 9.17 DISTRIBUTION DATE. \"Distribution Date\" means the\nclose of business on the earlier of (a) the date on which the Distribution is\neffected and (b) the date on which Sara Lee disposes of shares of Coach common\nstock in an amount sufficient to result in Sara Lee failing to satisfy the \"80\npercent vote and value test\" described in Section 1504(a)(2) of the Code.\n\n                  Section 9.18 DISTRIBUTION TAXES. \"Distribution Taxes\" means\nany Taxes imposed on Sara Lee or any Sara Lee Affiliate resulting from, or\narising in connection with, the failure of the Distribution to be tax-free to\nsuch party under section 355 and section 368(a)(1)(D) of the Code (including,\nwithout limitation, any Tax resulting from the application of section 355(d) or\nsection 355(e) of the Code to the Distribution) or corresponding provisions of\nthe laws of any other jurisdictions. Each Tax referred to in the immediately\npreceding sentence shall be determined using the highest marginal corporate\nIncome Tax rate for the relevant taxable period (or portion thereof).\n\n                                  22\n\n\n\n\n\n\n                  Section 9.19 ESTIMATED TAX INSTALLMENT DATE. \"Estimated Tax\nInstallment Date\" means the estimated Tax installment due dates prescribed in\nsection 6655(c) of the Code and any other date on which an installment of Taxes\nis required to be made.\n\n                  Section 9.20 FILING PARTY. \"Filing Party\" has the meaning set\nforth in Section 7.1.\n\n                  Section 9.21 FINAL DETERMINATION. \"Final Determination\" means\nthe final resolution of liability for any Tax for any taxable period, by or as a\nresult of: (i) a final and unappealable decision, judgment, decree or other\norder by any court of competent jurisdiction; (ii) a final settlement with the\nIRS, a closing agreement or accepted offer in compromise under Code sections\n7121 or 7122, or a comparable agreement under the laws of other jurisdictions,\nwhich resolves the entire Tax liability for any taxable period; (iii) any\nallowance of a refund or credit in respect of an overpayment of Tax, but only\nafter the expiration of all periods during which such refund may be recovered by\nthe jurisdiction imposing the Tax; or (iv) any other final disposition,\nincluding by reason of the expiration of the applicable statute of limitations.\n\n                  Section 9.22 INCOME TAX. \"Income Tax\" means any federal,\nstate, local or foreign Tax determined by reference to income, net worth, gross\nreceipts or capital, or any such Taxes imposed in lieu of such Tax.\n\n                  Section 9.23 INDEMNIFIABLE LOSS DEDUCTION. \"Indemnifiable Loss\nDeduction\" has the meaning set forth in Section 5.3.\n\n                  Section 9.24 INDEMNIFIED LOSS. \"Indemnified Loss\" has the\nmeaning set forth in Section 5.3.\n\n                  Section 9.25 INDEMNITEE. \"Indemnitee\" has the meaning set\nforth in Section 5.3.\n\n                  Section 9.26 INDEMNIFYING PARTY. \"Indemnifying Party\" has the\nmeaning set forth in Section 5.3.\n\n                  Section 9.27 INDEPENDENT FIRM. \"Independent Firm\" means an\naccounting firm which has not, except pursuant to Section 8.3, performed any\nservices since January 1, 1999 for Sara Lee, any Sara Lee Affiliate, Coach or\nany Coach Affiliate.\n\n                  Section 9.28 INITIAL RULING. \"Initial Ruling\" means any\nprivate letter ruling issued by the IRS in connection with the IPO and the\nDistribution in response to Sara Lee's initial request for such a letter ruling.\n\n                  Section 9.29 INTERIM PERIOD. \"Interim Period\" means a taxable\nperiod beginning on or after the Separation Date but before the Distribution\nDate.\n\n                                          23\n\n\n\n\n\n                  Section 9.30 IPO. \"IPO\" has the meaning set forth in the\nrecitals to this Agreement.\n\n                  Section 9.31 IPO CLOSING DATE. \"IPO Closing Date\" means the\ndate on which the IPO is consummated.\n\n                  Section 9.32 IPO REGISTRATION STATEMENT. \"IPO Registration\nStatement\" shall have the meaning set forth in the recitals to this Agreement.\n\n                  Section 9.33 IRS. \"IRS\" means the United States Internal\nRevenue Service or any successor thereto, including, but not limited to its\nagents, representatives, and attorneys.\n\n                  Section 9.34 NON-INCOME DISTRIBUTION TAXES. \"Non-Income\nDistribution Taxes\" means any Taxes other than Income Taxes imposed on Sara Lee,\nany Sara Lee Affiliate, Coach or any Coach Affiliate as a result of or in\nconnection with the Distribution that would not have been imposed but for the\nDistribution.\n\n                  Section 9.35 OPTION. \"Option\" means an option to acquire\ncommon stock, or other equity-based incentives the economic value of which is\ndesigned to mirror that of an option, including non-qualified stock options,\ndiscounted non-qualified stock options, cliff options to the extent stock is\nissued or issuable (as opposed to cash compensation), and tandem stock options\nto the extent stock is issued or issuable (as opposed to cash compensation).\n\n                  Section 9.36 OWED PARTY. \"Owed Party\" has the meaning set\nforth in Section 6.3.\n\n                  Section 9.37 OWING PARTY. \"Owing Party\" has the meaning set\nforth in Section 6.3.\n\n                  Section 9.38 PAYMENT PERIOD. \"Payment Period\" has the meaning\nset forth in Section 6.3(e).\n\n                  Section 9.39 PERSON. \"Person\" means an individual, a\npartnership, a corporation, a limited liability company, an association, a\njoint stock company, a trust, a joint venture, an unincorporated organization or\na governmental entity or any department, agency or political subdivision\nthereof.\n\n                  Section 9.40 POST-DISTRIBUTION PERIOD. \"Post-Distribution\nPeriod\" means a taxable period beginning after the Distribution Date.\n\n                  Section 9.41 PRE-DISTRIBUTION PERIOD. \"Pre-Distribution\nPeriod\" means any Pre-Separation Period and\/or Interim Period.\n\n                                  24\n\n\n\n\n\n\n                  Section 9.42 PRE-SEPARATION PERIOD. \"Pre-Separation Period\"\nmeans a taxable period beginning before the Separation Date.\n\n                  Section 9.43 PUERTO RICO TOLL GATE TAX. \"Puerto Rico Toll Gate\nTax\" means any amount paid to the government of the Commonwealth of Puerto Rico\nwith respect to a distribution of a dividend by Coach Puerto Rico, such amount\nto be computed and paid pursuant to the Decree dated February 15, 1994 and\nsigned by Jorge N. Navas, Acting Secretary of State of the Commonwealth of\nPuerto Rico and Pedro Rossello, Governor of the Commonwealth of Puerto Rico.\n\n                  Section 9.44 RESTATED TAX SAVING AMOUNT. \"Restated Tax Saving\nAmount\" has the meaning set forth in Section 5.4.\n\n                  Section 9.45 RULING DOCUMENTS. \"Ruling Documents\" means (1)\nthe initial request for a private letter ruling under section 355 and various\nother sections of the Code, filed with the IRS in connection with the IPO and\nthe Distribution, together with any supplemental filings or ruling requests or\nother materials subsequently submitted in connection with such request on behalf\nof Sara Lee, its subsidiaries and shareholders to the IRS, the appendices and\nexhibits thereto, and any rulings issued by the IRS to Sara Lee (or any Sara Lee\nAffiliate) in response to such request or (2) any similar filings submitted to,\nor rulings issued by, any other Tax Authority in connection with the\nDistribution.\n\n                  Section 9.46 SARA LEE AFFILIATE. \"Sara Lee Affiliate\" means\nany corporation or other entity directly or indirectly Controlled by Sara Lee,\nbut excluding Coach and any Coach Affiliate.\n\n                  Section 9.47 SARA LEE EMPLOYEE. \"Sara Lee Employee\" means an\nemployee of Sara Lee or any Sara Lee Affiliate immediately after the\nDistribution.\n\n                  Section 9.48 SARA LEE GROUP. \"Sara Lee Group\" means the\nAffiliated Group, or similar group of entities as defined under corresponding\nprovisions of the laws of other jurisdictions, of which Sara Lee is the common\nparent corporation, and any corporation or other entity which may be, may have\nbeen or may become a member of such group from time to time, but excluding any\nmember of the Coach Group.\n\n                  Section 9.49 SARA LEE REPRESENTATION LETTER. \"Sara Lee\nRepresentation Letter\" means an officer's certificate in which certain\nrepresentations, warranties and covenants are made on behalf of Sara Lee in\nconnection with the issuance of a Tax Opinion.\n\n                  Section 9.50 SEPARATE TAX LIABILITY. \"Separate Tax Liability\"\nmeans (a) with respect to federal Income Taxes other than federal Income Taxes\ncovered in clause (b) below, an amount equal to the Tax liability that Coach and\neach eligible Coach Affiliate would have\n\n                                     25\n\n\n\n\n\n\nincurred if Coach had filed a consolidated return for itself and each eligible\nCoach Affiliate separate from the Sara Lee Group and any member thereof, (b)\nwith respect to federal, state or local Income Taxes for which Sara Lee will\nfile an Income Tax Return for Coach and\/or each Coach Affiliate separate from\nthe Sara Lee Group and any member thereof, an amount equal to the Tax liability\nthat Coach and\/or each Coach Affiliate would have incurred if Coach and\/or such\nCoach Affiliate had filed such Income Tax Return for itself, and (c) with\nrespect to all Taxes other than Income Taxes covered in clauses (a) and (b)\nabove, an amount equal to the positive difference between (i) the Tax liability\nof the Sara Lee Group computed as if Coach and each Coach Affiliate were members\nof the Sara Lee Group and (ii) the Tax liability of the Sara Lee Group computed\nwithout treating Coach and each Coach Affiliate as members of the Sara Lee\nGroup; PROVIDED, that no deficiency with respect to any Tax liability described\nin (a), (b) or (c) above shall be included in the Separate Tax Liability. Sara\nLee shall compute the applicable Tax liability in a manner consistent with (x)\ngeneral Tax accounting principles, (y) the Code, the Treasury Regulations, and\nany applicable state or local Tax statutes and Tax regulations and (z) past\npractice, if any.\n\n                  Section 9.51 SEPARATION. \"Separation\" has the meaning set\nforth in the recitals to this Agreement.\n\n                  Section 9.52 SEPARATION AGREEMENT. \"Separation Agreement\" has\nthe meaning set forth in the recitals to this Agreement.\n\n                  Section 9.53 SEPARATION DATE. \"Separation Date\" means the\neffective date and time of each transfer of property, assumption of liability,\nlicense, undertaking or agreement in connection with the Separation, which shall\nbe 12:01 a.m., Central Time, on the date that is two days prior to the date on\nwhich the IPO Registration Statement is declared effective, or such other date\nas may be fixed by the Board of Directors of Sara Lee.\n\n                  Section 9.54 SUPPLEMENTAL RULING. \"Supplemental Ruling\" means\n(1) any ruling issued by the IRS in connection with the IPO or the Distribution\nother than a ruling in response to Sara Lee's initial request for a private\nletter ruling, and (2) any similar ruling issued by any other Taxing Authority\naddressing the application of a provision of the laws of another jurisdiction to\nthe IPO or the Distribution.\n\n                  Section 9.55 SUPPLEMENTAL RULING DOCUMENTS. \"Supplemental\nRuling Documents\" means (1) any request for a Supplemental Ruling and any\nmaterials, appendices and exhibits submitted or filed therewith and any\nSupplemental Rulings issued by the IRS to Sara Lee in response to any such\nrequest and (2) any similar filings submitted to, or rulings issued by, any\nother Taxing Authority in connection with the IPO or the Distribution.\n\n                  Section 9.56 TAX AND TAXES. \"Tax\" and \"Taxes\" include all\ntaxes, charges, fees, duties, levies, imposts, rates or other assessments\nimposed by any federal, state, local or foreign Taxing Authority, including, but\nnot limited to, income, gross receipts, excise, property, sales,\n\n                                        26\n\n\n\nuse, license, capital stock, transfer, franchise, payroll, withholding, social\nsecurity, value added and other taxes, and any interest, penalties or additions\nattributable thereto.\n\n                  Section 9.57 TAX ASSET. \"Tax Asset\" means any Tax Item that\nhas accrued for Tax purposes, but has not been used during a taxable period, and\nthat could reduce a Tax in another taxable period, including a net operating\nloss, net capital loss, investment tax credit, foreign tax credit, charitable\ndeduction, credit related to alternative minimum tax and any other Tax credit.\n\n                  Section 9.58 TAX BENEFIT. \"Tax Benefit\" means a reduction in\nthe Tax liability of a taxpayer (or of the Affiliated Group of which it is a\nmember) for any taxable period. A Tax Benefit shall be deemed to have been\nrealized or received from a Tax Item in a taxable period only if and to the\nextent that the Tax liability of the taxpayer (or of the Affiliated Group of\nwhich it is a member) for such period, after taking into account the effect of\nthe Tax Item on the Tax liability of such taxpayer in the current period and all\nprior periods, is less than it would have been if such Tax liability were\ndetermined without regard to such Tax Item.\n\n                  Section 9.59 TAX DETRIMENT. \"Tax Detriment\" means an increase\nin the Tax liability of a taxpayer (or of the Affiliated Group of which it is a\nmember) for any taxable period. A Tax Detriment shall be deemed to have been\nrealized or received from a Tax Item in a taxable period only if and to the\nextent that the Tax liability of the taxpayer (or of the Affiliated Group of\nwhich it is a member) for such period, after taking into account the effect of\nthe Tax Item on the Tax liability of such taxpayer in the current period and all\nprior periods, is more than it would have been if such Tax liability were\ndetermined without regard to such Tax Item.\n\n                  Section 9.60 TAX ITEM. \"Tax Item\" means any item of income,\ngain, loss, deduction or credit, or other attribute that may have the effect of\nincreasing or decreasing any Tax.\n\n                  Section 9.61 TAX OPINION. \"Tax Opinion\" means an opinion\nissued to Sara Lee by a law firm or an accounting firm with respect to the\nqualification of the IPO and the Distribution for treatment under sections\n368(a)(1)(D) and 355 of the Code.\n\n                  Section 9.62 TAX RETURN. \"Tax Return\" means any return,\nreport, certificate, form or similar statement or document (including any\nrelated or supporting information or schedule attached thereto and any\ninformation return, amended tax return, claim for refund or declaration of\nestimated tax) required to be supplied to, or filed with, a Taxing Authority in\nconnection with the determination, assessment or collection of any Tax or the\nadministration of any laws, regulations or administrative requirements relating\nto any Tax.\n\n                  Section 9.63 TAX SAVING AMOUNT. \"Tax Saving Amount\" has the\nmeaning set forth in Section 5.3.\n\n                                     27\n\n\n\n                  Section 9.64 TAX SERVICES. \"Tax Services\" has the meaning set\nforth in Section 1.5(a).\n\n                  Section 9.65 TAXING AUTHORITY. \"Taxing Authority\" means any\ngovernmental authority or any subdivision, agency, commission or authority\nthereof or any quasi-governmental or private body having jurisdiction over the\nassessment, determination, collection or imposition of any Tax (including the\nIRS).\n\n                  Section 9.66 TRANSITIONAL SERVICES AGREEMENT. \"Transitional\nServices Agreement\" means the Master Transitional Services Agreement between\nSara Lee and Coach dated as of August 24, 2000.\n\n                  Section 9.67 TREASURY REGULATIONS. \"Treasury Regulations\"\nmeans the final and temporary (but not proposed) income tax regulations\npromulgated under the Code, as such regulations may be amended from time to time\n(including corresponding provisions of succeeding regulations).\n\n                            [SIGNATURE PAGE FOLLOWS]\n\n\n                                      28\n\n\n\n                  WHEREFORE, the parties have signed this Tax Sharing Agreement\neffective as of the date first set forth above.\n\n                            SARA LEE CORPORATION\n                            on behalf of itself and the Sara Lee Affiliates\n\n                            _______________________________________________\n                            Name:\n                            Title:\n\n                            COACH, INC.\n                            on behalf of itself and the Coach Affiliates\n\n                            _______________________________________________\n                            Name:\n                            Title:\n\n\n\n\n\n\n\n\n\n                                      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