Exhibit 2.7
INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT
between
▇▇▇▇ ▇▇▇ CORPORATION
and
COACH, INC.
TABLE OF CONTENTS
Page
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ARTICLE I MUTUAL RELEASES; INDEMNIFICATION.............................................1
Section 1.1 Release of Pre-Separation Date Claims..............1
Section 1.2 Indemnification by Coach...........................2
Section 1.3 Indemnification by ▇▇▇▇ ▇▇▇........................3
Section 1.4 Indemnification With Respect to Environmental
Actions and Conditions............................4
Section 1.5 Reductions for Insurance Proceeds
and Other Recoveries .............................5
Section 1.6 Procedures for Defense, Settlement and
Indemnification of Third Party Claims.............7
Section 1.7 Additional Matters.................................8
Section 1.8 Survival of Indemnities............................9
ARTICLE II INSURANCE MATTERS..........................................................10
Section 2.1 Coach Insurance Coverage During
the Insurance Transition Period..................10
Section 2.2 Cooperation; Payment of Insurance
Proceeds to Coach; Agreement
Not to Release Carriers..........................10
Section 2.3 Coach Insurance Coverage After the Insurance
Transition Period................................11
Section 2.4 Responsibilities for Deductibles and/or
Self-insured Obligations.........................12
Section 2.5 Procedures With Respect to Insured
Coach Liabilities................................12
Section 2.6 Insufficient Limits of Liability for ▇▇▇▇ ▇▇▇
Liabilities and Coach Liabilities................12
Section 2.7 Cooperation.......................................14
Section 2.8 No Assignment or Waiver...........................14
Section 2.9 No Liability......................................15
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Section 2.10 Additional or Alternate Insurance.................15
Section 2.11 Further Agreements................................15
Section 2.12 Matters Governed by Employee Matters
Agreement........................................15
ARTICLE III MISCELLANEOUS.............................................................15
Section 3.1 Entire Agreement..................................15
Section 3.2 Governing Law and Jurisdiction....................16
Section 3.3 Termination.......................................16
Section 3.4 Dispute Resolution................................16
Section 3.5 Notices...........................................17
Section 3.6 Parties in Interest...............................18
Section 3.7 Other Agreements Evidencing
Indemnification Obligations......................18
Section 3.8 Counterparts......................................19
Section 3.9 Assignment........................................19
Section 3.10 Severability......................................19
Section 3.11 Failure or Indulgence Not Waiver..................19
Section 3.12 Amendment.........................................19
Section 3.13 Authority.........................................20
Section 3.14 Interpretation....................................20
ARTICLE IV DEFINITIONS................................................................20
Section 4.1 AAA...............................................20
Section 4.2 Action............................................20
Section 4.3 Affiliated Company................................20
Section 4.4 Ancillary Agreements..............................20
Section 4.5 Assets............................................21
Section 4.6 Assignment Agreement..............................21
Section 4.7 Coach Affiliate...................................21
Section 4.8 Coach Assets......................................21
Section 4.9 Coach Business....................................21
Section 4.10 Coach Covered Parties.............................21
Section 4.11 Coach Facilities..................................21
Section 4.12 Coach Group.......................................21
Section 4.13 Coach Indemnitees.................................21
Section 4.14 Coach Liabilities.................................21
Section 4.15 Contract..........................................22
Section 4.16 Dispute...........................................22
Section 4.17 Dispute Resolution Commencement Date..............22
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Section 4.18 Distribution......................................22
Section 4.19 Distribution Date.................................22
Section 4.20 Employee Matters Agreement........................22
Section 4.21 Environmental Actions.............................22
Section 4.22 Environmental Conditions..........................22
Section 4.23 Environmental Laws................................23
Section 4.24 Final Determination...............................23
Section 4.25 Governmental Authority............................23
Section 4.26 Hazardous Materials...............................23
Section 4.27 Indemnifying Party................................23
Section 4.28 Indemnitee........................................23
Section 4.29 Insurance Policies................................23
Section 4.30 Insurance Proceeds................................23
Section 4.31 Insurance Transition Period.......................24
Section 4.32 Insured Coach Liability...........................24
Section 4.33 IPO...............................................24
Section 4.34 IPO Closing Date..................................24
Section 4.35 IPO Liabilities...................................24
Section 4.36 IPO Registration Statement........................24
Section 4.37 Lemelson Litigation...............................24
Section 4.38 Liabilities.......................................25
Section 4.39 Loss and Losses...................................25
Section 4.40 Person............................................25
Section 4.41 Release...........................................25
Section 4.42 ▇▇▇▇ ▇▇▇ Affiliate................................25
Section 4.43 ▇▇▇▇ ▇▇▇ Business.................................25
Section 4.44 ▇▇▇▇ ▇▇▇ Facilities...............................25
Section 4.45 ▇▇▇▇ ▇▇▇ Group....................................26
Section 4.46 ▇▇▇▇ ▇▇▇ Guarantee................................26
Section 4.47 ▇▇▇▇ ▇▇▇ Indemnitees..............................26
Section 4.48 ▇▇▇▇ ▇▇▇ Portions.................................26
Section 4.49 Securities Act....................................26
Section 4.50 Separation........................................26
Section 4.51 Separation Agreement..............................26
Section 4.52 Separation Date...................................26
Section 4.53 Shared Coach Percentage...........................26
Section 4.54 Shared Percentage.................................27
Section 4.55 Shared ▇▇▇▇ ▇▇▇ Percentage........................27
Section 4.56 Subsidiary........................................27
Section 4.57 Tax Sharing Agreement.............................27
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Section 4.58 Tax and Taxes.....................................27
Section 4.59 Third Party Claim.................................27
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Schedule 2.1(a) Insurance Policies...................................................29
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INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT
This Indemnification and Insurance Matters Agreement (this
"Agreement") is dated as of August 24, 2000 between ▇▇▇▇ ▇▇▇ Corporation, a
Maryland corporation ("▇▇▇▇ ▇▇▇"), and Coach, Inc., a Maryland corporation
("Coach"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in Article IV below.
RECITALS
WHEREAS, ▇▇▇▇ ▇▇▇ has transferred or will transfer to Coach
effective as of the Separation Date, substantially all of the Assets of the
Coach Business in accordance with the Master Separation Agreement dated as of
August 24, 2000 between ▇▇▇▇ ▇▇▇ and Coach (the "Separation Agreement").
WHEREAS, the parties desire to set forth certain agreements
regarding indemnification and insurance.
NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements set forth below, the parties hereto agree as follows:
ARTICLE I
MUTUAL RELEASES; INDEMNIFICATION
Section 1.1 RELEASE OF PRE-SEPARATION DATE CLAIMS.
(a) COACH RELEASE. Except as provided in Section 1.1(c),
effective as of the Separation Date, Coach does hereby, for itself and as
agent for each member of the Coach Group, remise, release and forever
discharge the ▇▇▇▇ ▇▇▇ Indemnitees from any and all Liabilities whatsoever,
whether at law or in equity (including any right of contribution), whether
arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any past acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or before the Separation
Date, including in connection with the transactions and all other activities
to implement any of the Separation, the IPO and any Distribution.
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(b) ▇▇▇▇ ▇▇▇ RELEASE. Except as provided in Section 1.1(c),
effective as of the Separation Date, ▇▇▇▇ ▇▇▇ does hereby, for itself and as
agent for each member of the ▇▇▇▇ ▇▇▇ Group, remise, release and forever
discharge the Coach Indemnitees from any and all Liabilities whatsoever,
whether at law or in equity (including any right of contribution), whether
arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any past acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or before the Separation
Date, including in connection with the transactions and all other activities
to implement any of the Separation, the IPO and any Distribution.
(c) NO IMPAIRMENT. Nothing contained in Section 1.1(a) or
Section 1.1(b) shall limit or otherwise affect any party's rights or
obligations pursuant to or contemplated by the Separation Agreement or any
other Ancillary Agreement (including this Agreement), in each case in
accordance with its terms, including, without limitation, any obligations
relating to indemnification, Coach's assumption of the Coach Liabilities and
any Insurance Proceeds under any ▇▇▇▇ ▇▇▇ Insurance Policies relating to the
Coach Business which Coach is entitled to be paid.
(d) NO ACTIONS AS TO RELEASED PRE-SEPARATION DATE CLAIMS.
Coach agrees, for itself and as agent for each member of the Coach Group, not
to make any claim or demand, or commence any Action asserting any claim or
demand, including any claim of contribution or any indemnification, against
▇▇▇▇ ▇▇▇ or any member of the ▇▇▇▇ ▇▇▇ Group, or any other Person released
pursuant to Section 1.1(a), with respect to any Liabilities released pursuant
to Section 1.1(a). ▇▇▇▇ ▇▇▇ agrees, for itself and as agent for each member
of the ▇▇▇▇ ▇▇▇ Group, not to make any claim or demand, or commence any
Action asserting any claim or demand, including any claim of contribution or
any indemnification, against Coach or any member of the Coach Group, or any
other Person released pursuant to Section 1.1(b), with respect to any
Liabilities released pursuant to Section 1.1(b).
(e) FURTHER INSTRUMENTS. At any time, at the request of any
other party, each party shall cause each member of its respective ▇▇▇▇ ▇▇▇
Group or Coach Group, as applicable, to execute and deliver releases
reflecting the provisions hereof.
Section 1.2 INDEMNIFICATION BY COACH. Except as otherwise provided in
this Agreement, Coach shall, for itself and as agent for each member of the
Coach Group, indemnify, defend (or, where applicable, pay the defense costs
for) and hold harmless the ▇▇▇▇ ▇▇▇ Indemnitees from and against, and shall
reimburse such ▇▇▇▇ ▇▇▇ Indemnitees with respect to, any and all Losses that
any third party seeks to
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impose upon the ▇▇▇▇ ▇▇▇ Indemnitees, or which are imposed upon the ▇▇▇▇ ▇▇▇
Indemnitees, and that result from, relate to or arise, whether prior to or
following the Separation Date, out of or in connection with any of the
following items (without duplication):
(i) any Coach Liability;
(ii) any breach by Coach or any member of the Coach Group
of the Separation Agreement or any of the Ancillary Agreements
(including this Agreement); and
(iii) any IPO Liabilities, other than the ▇▇▇▇ ▇▇▇
Portions.
In the event that any member of the Coach Group makes a payment to the ▇▇▇▇
▇▇▇ Indemnitees hereunder, and any of the ▇▇▇▇ ▇▇▇ Indemnitees subsequently
diminishes the Liability on account of which such payment was made, either
directly or through a third-party recovery (other than a recovery indirectly
from ▇▇▇▇ ▇▇▇), ▇▇▇▇ ▇▇▇ will promptly repay (or will procure a ▇▇▇▇ ▇▇▇
Indemnitee to promptly repay) such member of the Coach Group the amount by
which the payment made by such member of the Coach Group exceeds the actual
cost of the associated indemnified Liability. This Section 1.2 shall not
apply to any Liability indemnified under Section 1.4.
Section 1.3 INDEMNIFICATION BY ▇▇▇▇ ▇▇▇. Except as otherwise provided
in this Agreement, ▇▇▇▇ ▇▇▇ shall, for itself and as agent for each member of
the ▇▇▇▇ ▇▇▇ Group, indemnify, defend (or, where applicable, pay the defense
costs for) and hold harmless the Coach Indemnitees from and against, and
shall reimburse such Coach Indemnitee with respect to, any and all Losses
that any third party seeks to impose upon the Coach Indemnitees, or which are
imposed upon the Coach Indemnitees, and that result from, relate to or arise,
whether prior to or following the Separation Date, out of or in connection
with any of the following items (without duplication):
(i) any Liability of the ▇▇▇▇ ▇▇▇ Group other than the
Coach Liabilities, any Liability for Taxes (which are governed solely by
the Tax Sharing Agreement) and all Liabilities arising out of the
operation or conduct of the ▇▇▇▇ ▇▇▇ Business;
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(ii) any breach by ▇▇▇▇ ▇▇▇ or any member of the ▇▇▇▇ ▇▇▇
Group of the Separation Agreement or any of the Ancillary Agreements
(including this Agreement); and
(iii) any IPO Liabilities with respect to the ▇▇▇▇ ▇▇▇
Portions only.
In the event that any member of the ▇▇▇▇ ▇▇▇ Group makes a payment to the
Coach Indemnitees hereunder, and any of the Coach Indemnitees subsequently
diminishes the Liability on account of which such payment was made, either
directly or through a third-party recovery (other than a recovery indirectly
from Coach), Coach will promptly repay (or will procure a Coach Indemnitee to
promptly repay) such member of the ▇▇▇▇ ▇▇▇ Group the amount by which the
payment made by such member of the ▇▇▇▇ ▇▇▇ Group exceeds the actual cost of
the indemnified Liability. This Section 1.3 shall not apply to any Liability
indemnified under Section 1.4.
Section 1.4 INDEMNIFICATION WITH RESPECT TO ENVIRONMENTAL ACTIONS AND
CONDITIONS.
(a) INDEMNIFICATION BY COACH. Coach shall, for itself and as
agent for each member of the Coach Group, indemnify, defend and hold harmless
the ▇▇▇▇ ▇▇▇ Indemnitees from and against any and all Environmental Actions
relating to, arising out of or resulting from any of the following items:
(i) Environmental Conditions arising out of operations
occurring on or after the Separation Date at any of the Coach
Facilities;
(ii) Except to the extent arising out of the operations of
the ▇▇▇▇ ▇▇▇ Group on and after the Separation Date, Environmental
Conditions existing on, under, about or in the vicinity of any of the
Coach Facilities arising from an event causing contamination to the
extent occurring on or after the Separation Date (including any Release
of Hazardous Materials occurring after the Separation Date that migrates
to any of the Coach Facilities);
(iii) the violation of Environmental Law as a result of
the operation of any of the Coach Facilities on or after the Separation
Date; and
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(iv) Environmental Conditions at any third-party site to
the extent liability arises from Hazardous Materials generated at any
Coach Facility on or after the Separation Date.
(b) INDEMNIFICATION BY ▇▇▇▇ ▇▇▇. ▇▇▇▇ ▇▇▇ shall, for itself
and as agent for each member of the ▇▇▇▇ ▇▇▇ Group, indemnify, defend and
hold harmless the Coach Indemnitees from and against any and all
Environmental Actions relating to, arising out of or resulting from any of
the following items:
(i) Environmental Conditions (x) existing on, under, about
or in the vicinity of any of the Coach Facilities prior to the
Separation Date, or (y) arising out of operations occurring before the
Separation Date at any of the Coach Facilities;
(ii) Except as arising out of the operations of the Coach
Group on and after the Separation Date, Environmental Conditions on,
under, about or arising out of operations occurring at any time, whether
before or after the Separation Date, at any of the ▇▇▇▇ ▇▇▇ Facilities;
(iii) the violation of Environmental Law as a result of
the operation of any of the Coach Facilities prior to the Separation
Date; and
(iv) Environmental Conditions at any third- party site to
the extent liability arises from Hazardous Materials generated at any
Coach Facility prior to the Separation Date.
(c) AGREEMENT REGARDING PAYMENTS TO INDEMNITEE. In the event
an Indemnifying Party makes any payment to or on behalf of an Indemnitee with
respect to an Environmental Action for which the Indemnifying Party is
obligated to indemnify under this Section 1.4, and the Indemnitee
subsequently receives any payment from a third party on account of the same
financial obligation covered by the payment made by the Indemnifying Party
for that Environmental Action or otherwise diminishes the financial
obligation, the Indemnitee will promptly pay the Indemnifying Party the
amount by which the payment made by the Indemnifying Party exceeds the actual
cost of the financial obligation.
Section 1.5 REDUCTIONS FOR INSURANCE PROCEEDS AND OTHER RECOVERIES.
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(a) INSURANCE PROCEEDS. The amount that any Indemnifying Party
is or may be required to provide indemnification to or on behalf of any
Indemnitee pursuant to Sections 1.2, 1.3 or 1.4, as applicable, shall be
reduced (retroactively or prospectively) by any Insurance Proceeds or other
amounts actually recovered from third parties by or on behalf of such
Indemnitee in respect of the related Loss. The existence of a claim by an
Indemnitee for monies from an insurer or against a third party in respect of
any indemnifiable Loss shall not, however, delay any payment pursuant to the
indemnification provisions contained herein and otherwise determined to be
due and owing by an Indemnifying Party. Rather, the Indemnifying Party shall
make payment in full of the amount determined to be due and owing by it
against an assignment by the Indemnitee to the Indemnifying Party of the
entire claim of the Indemnitee for Insurance Proceeds or against such third
party. Notwithstanding any other provisions of this Agreement, it is the
intention of the parties that no insurer or any other third party shall be
(i) entitled to a benefit it would not be entitled to receive in the absence
of the foregoing indemnification provisions, or (ii) relieved of the
responsibility to pay any claims for which it is obligated. If an Indemnitee
has received the payment required by this Agreement from an Indemnifying
Party in respect of any indemnifiable Loss and later receives Insurance
Proceeds or other amounts in respect of such indemnifiable Loss, then such
Indemnitee shall hold such Insurance Proceeds or other amounts in trust for
the benefit of the Indemnifying Party (or Indemnifying Parties) and shall pay
to the Indemnifying Party, as promptly as practicable after receipt, a sum
equal to the amount of such Insurance Proceeds or other amounts received, up
to the aggregate amount of any payments received from the Indemnifying Party
pursuant to this Agreement in respect of such indemnifiable Loss (or, if
there is more than one Indemnifying Party, the Indemnitee shall pay each
Indemnifying Party, its proportionate share (based on payments received from
the Indemnifying Parties) of such Insurance Proceeds).
(b) TAX COST/TAX BENEFIT. The amount that any Indemnifying
Party is or may be required to provide indemnification to or on behalf of any
Indemnitee pursuant to Sections 1.2, 1.3 or 1.4, as applicable, shall be (i)
increased to take account of any net Tax cost incurred by the Indemnitee
arising from the receipt or accrual of an indemnification payment hereunder
(grossed up for such increase) and (ii) reduced to take account of any net
Tax benefit realized by the Indemnitee arising from incurring or paying such
loss or other liability. In computing the amount of any such Tax cost or Tax
benefit, the Indemnitee shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item arising
from the receipt or accrual of any indemnification payment hereunder or
incurring or paying any indemnified Loss. Any indemnification
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payment hereunder shall initially be made without regard to this Section
1.5(b) and shall be increased or reduced to reflect any such net Tax cost
(including gross-up) or net Tax benefit only after the Indemnitee has
actually realized such cost or benefit. For purposes of this Agreement, an
Indemnitee shall be deemed to have "actually realized" a net Tax cost or a
net Tax benefit to the extent that, and at such time as, the amount of Taxes
payable by such Indemnitee is increased above or reduced below, as the case
may be, the amount of Taxes that such Indemnitee would be required to pay but
for the receipt or accrual of the indemnification payment or the incurrence
or payment of such Loss, as the case may be. The amount of any increase or
reduction hereunder shall be adjusted to reflect any Final Determination with
respect to the Indemnitee's liability for Taxes, and payments between such
indemnified parties to reflect such adjustment shall be made if necessary.
Section 1.6 PROCEDURES FOR DEFENSE, SETTLEMENT AND INDEMNIFICATION OF
THIRD PARTY CLAIMS.
(a) NOTICE OF CLAIMS. If an Indemnitee shall receive notice or
otherwise learn of the assertion by a Person (including any Governmental
Authority) who is not a member of the ▇▇▇▇ ▇▇▇ Group or the Coach Group of
any claim or of the commencement by any such Person of any Action
(collectively, a "Third Party Claim") with respect to which an Indemnifying
Party may be obligated to provide indemnification, ▇▇▇▇ ▇▇▇ and Coach (as
applicable) will ensure that such Indemnitee shall give such Indemnifying
Party written notice thereof within 30 days after becoming aware of such
Third Party Claim. Any such notice shall describe the Third Party Claim in
reasonable detail. Notwithstanding the foregoing, the delay or failure of any
Indemnitee or other Person to give notice as provided in this Section 1.6(a)
shall not relieve the related Indemnifying Party of its obligations under
this Article I, except to the extent that such Indemnifying Party is actually
and substantially prejudiced by such delay or failure to give notice.
(b) DEFENSE BY INDEMNIFYING PARTY. An Indemnifying Party shall
be entitled to participate in the defense of any Third Party Claim, to the
extent that it wishes, at its cost, risk and expense, to assume the defense
thereof, with counsel reasonably satisfactory to the party seeking
indemnification. After timely notice from the Indemnifying Party to the
Indemnitee of such election to so assume the defense thereof, the
Indemnifying Party shall not be liable to the party seeking indemnification
for any legal expenses of other counsel or any other expenses subsequently
incurred by Indemnitee in connection with the defense thereof. The Indemnitee
agrees to cooperate in all reasonable respects with the Indemnifying Party
and its counsel in the defense against any Third Party Claim. The
Indemnifying Party
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shall be entitled to compromise or settle any Third Party Claim as to which
it is providing indemnification, which compromise or settlement shall be made
only with the written consent of the Indemnitee, such consent not to be
unreasonably withheld.
(c) DEFENSE BY INDEMNITEE. If an Indemnifying Party fails to
assume the defense of a Third Party Claim within 30 calendar days after
receipt of notice of such claim, Indemnitee will, upon delivering notice to
such effect to the Indemnifying Party, have the right to undertake the
defense, compromise or settlement of such Third Party Claim on behalf of and
for the account of the Indemnifying Party subject to the limitations as set
forth in this Section 1.6; PROVIDED, HOWEVER, that such Third Party Claim
shall not be compromised or settled without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. If the
Indemnitee assumes the defense of any Third Party Claim, it shall keep the
Indemnifying Party reasonably informed of the progress of any such defense,
compromise or settlement. The Indemnifying Party shall reimburse all such
costs and expenses of the Indemnitee in the event it is ultimately determined
that the Indemnifying Party is obligated to indemnify the Indemnitee with
respect to such Third Party Claim. In no event shall an Indemnifying Party be
liable for any settlement effected without its consent, which consent will
not be unreasonably withheld.
Section 1.7 ADDITIONAL MATTERS.
(a) COOPERATION IN DEFENSE AND SETTLEMENT. With respect to any
Third Party Claim that implicates both Coach and ▇▇▇▇ ▇▇▇ in a material
fashion due to the allocation of Liabilities, responsibilities for management
of defense and related indemnities set forth in the Separation Agreement,
this Agreement or any of the Ancillary Agreements, the parties agree to
cooperate fully and maintain a joint defense (in a manner that will preserve
the attorney-client privilege, joint defense or other privilege with respect
thereto) so as to minimize such Liabilities and defense costs associated
therewith. The party that is not responsible for managing the defense of such
Third Party Claims shall, upon reasonable request, be consulted with respect
to significant matters relating thereto and may, if necessary or helpful,
associate counsel to assist in the defense of such claims.
(b) PRE-SEPARATION ACTIONS. ▇▇▇▇ ▇▇▇ may, in its sole
discretion have exclusive authority and control over the investigation,
prosecution, defense and appeal of all Actions pending at the Separation Date
relating to or arising in connection with, in any manner (other then solely
with respect to or solely in connection with) the Coach Business, the Coach
Assets or the Coach Liabilities if
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▇▇▇▇ ▇▇▇ or a member of the ▇▇▇▇ ▇▇▇ Group is named as a party thereto;
PROVIDED, HOWEVER, that ▇▇▇▇ ▇▇▇ must obtain the written consent of Coach,
such consent not to be unreasonably withheld, to settle or compromise or
consent to the entry of judgment with respect to such Action. After any such
compromise, settlement, consent to entry of judgment or entry of judgment,
▇▇▇▇ ▇▇▇ shall reasonably and fairly allocate to Coach and Coach shall be
responsible for Coach's proportionate share of any such compromise,
settlement, consent or judgment attributable to the Coach Business, the Coach
Assets or the Coach Liabilities, including its proportionate share of the
costs and expenses associated with defending same. Notwithstanding the
foregoing, ▇▇▇▇ ▇▇▇ shall have exclusive authority and control over the
investigation, prosecution, defense and appeal of the Lemelson Litigation and
hereby indemnifies and holds harmless the Coach Indemnitees from and against,
and shall reimburse such Coach Indemnitees with respect to, any and all
Losses that any third party seeks to impose upon the Coach Indemnitees, or
which are imposed upon the Coach Indemnitees, and that result from, relate to
or arise, whether prior to or following the Separation Date, out of or in
connection with the Lemelson Litigation, including any and all costs and
expenses relating to the investigation, prosecution, defense and appeal of
the Lemelson Litigation.
(c) SUBSTITUTION. In the event of an Action in which the
Indemnifying Party is not a named defendant, if either the Indemnitee or the
Indemnifying Party shall so request, the parties shall endeavor to substitute
the Indemnifying Party for the named defendant. If such substitution or
addition cannot be achieved for any reason or is not requested, the rights
and obligations of the parties regarding indemnification and the management
of the defense of claims as set forth in this Article I shall not be altered.
(d) SUBROGATION. In the event of payment by or on behalf of
any Indemnifying Party to or on behalf of any Indemnitee in connection with
any Third Party Claim, such Indemnifying Party shall be subrogated to and
shall stand in the place of such Indemnitee, in whole or in part based upon
whether the Indemnifying Party has paid all or only part of the Indemnitee's
Liability, as to any events or circumstances in respect of which such
Indemnitee may have any right, defense or claim relating to such Third Party
Claim against any claimant or plaintiff asserting such Third Party Claim or
against any other person. Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense of
such Indemnifying Party, in prosecuting any subrogated right, defense or
claim.
(e) NOT APPLICABLE TO TAXES. This Agreement shall not apply to
Taxes (which are solely covered by the Tax Sharing Agreement).
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Section 1.8 SURVIVAL OF INDEMNITIES. Subject to Section 3.7, the
rights and obligations of the members of the ▇▇▇▇ ▇▇▇ Group and the Coach
Group under this Article I shall survive the sale or other transfer by any
party of any Assets or businesses or the assignment by it of any Liabilities
or the sale by any member of the ▇▇▇▇ ▇▇▇ Group or the Coach Group of the
capital stock or other equity interests of any Subsidiary to any Person.
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ARTICLE II
INSURANCE MATTERS
Section 2.1 COACH INSURANCE COVERAGE DURING THE INSURANCE TRANSITION
PERIOD.
(a) MAINTAIN COMPARABLE INSURANCE. As of the Separation Date,
▇▇▇▇ ▇▇▇ maintains insurance coverage under the Insurance Policies listed in
Schedule 2.1(a) hereto. Throughout the period beginning on the Separation
Date and ending on the Distribution Date (the "Insurance Transition Period"),
▇▇▇▇ ▇▇▇ shall, subject to insurance market conditions and other factors
beyond its control, maintain policies of insurance, including for the benefit
of Coach or any of its Subsidiaries, directors, officers, employees or other
covered parties (collectively, the "Coach Covered Parties") which are
comparable to those maintained generally by ▇▇▇▇ ▇▇▇; PROVIDED, HOWEVER, that
if ▇▇▇▇ ▇▇▇ determines that (i) the amount or scope of such coverage will be
reduced to a level materially inferior to the level of coverage in existence
immediately prior to the Insurance Transition Period or (ii) the retention or
deductible level applicable to such coverage, if any, will be increased to a
level materially greater than the levels in existence immediately prior to
the Insurance Transition Period (excluding the increases effective October ,
2000 of which Coach is aware), each other than as a result of the Separation,
▇▇▇▇ ▇▇▇ shall give Coach notice of such determination as promptly as
practicable. Upon notice of such determination, Coach shall be entitled to no
less than 60 days to evaluate its options regarding continuance of coverage
hereunder and may cancel its interest in all or any portion of such coverage
as of any day within such 60 day period.
(b) REIMBURSEMENT FOR PREMIUMS, DEDUCTIBLES AND RETENTION
AMOUNTS. Coach shall promptly pay or reimburse ▇▇▇▇ ▇▇▇, as the case may be,
for premium expenses, deductibles or retention amounts and Coach Covered
Parties shall promptly pay or reimburse ▇▇▇▇ ▇▇▇ for any costs and expenses
which ▇▇▇▇ ▇▇▇ may incur in connection with the insurance coverages
maintained pursuant to this Section 2.1, including but not limited to any
subsequent premium adjustments.
Section 2.2 COOPERATION; PAYMENT OF INSURANCE PROCEEDS TO COACH;
AGREEMENT NOT TO RELEASE CARRIERS. Each of ▇▇▇▇ ▇▇▇ and Coach will share such
information as is reasonably necessary in order to permit the other to manage
and conduct its insurance matters in an orderly fashion. ▇▇▇▇ ▇▇▇, at the
request of Coach, shall cooperate with and use commercially reasonable
efforts to assist Coach
11
in recovering Insurance Proceeds under ▇▇▇▇ ▇▇▇ Insurance Policies for claims
relating to the Coach Business, the Coach Assets or the Coach Liabilities,
whether such claims arise under any contract or agreement, by operation of
law or otherwise, existing or arising from any past acts or events occurring
or failing to occur or alleged to have occurred or to have failed to occur or
any conditions existing or alleged to have existed before the Separation
Date, on the Separation Date or during the Insurance Transition Period, and
shall promptly pay any such recovered Insurance Proceeds to Coach. Neither
▇▇▇▇ ▇▇▇ nor Coach, nor any of their Subsidiaries, shall take any action
which would intentionally jeopardize or otherwise interfere with either
party's ability to collect any proceeds payable pursuant to any insurance
policy. Except as otherwise contemplated by the Separation Agreement, this
Agreement or any Ancillary Agreement, after the Separation Date, neither ▇▇▇▇
▇▇▇ nor Coach shall (and each party shall ensure that no member of the such
party's Group shall), without the consent of the other, provide any insurance
carrier with a release, or amend, modify or waive any rights under any such
policy or agreement, if such release, amendment, modification or waiver would
adversely affect any rights or potential rights of any member of the ▇▇▇▇ ▇▇▇
Group or the Coach Group thereunder. However, nothing in this Section 2.2
shall (A) preclude any member of the ▇▇▇▇ ▇▇▇ Group or the Coach Group from
presenting any claim or from exhausting any policy limit, (B) require any
member of the ▇▇▇▇ ▇▇▇ Group or the Coach Group to pay any premium or other
amount or to incur any Liability, or (C) require any member of the ▇▇▇▇ ▇▇▇
Group or the Coach Group to renew, extend or continue any policy in force.
Section 2.3 COACH INSURANCE COVERAGE AFTER THE INSURANCE TRANSITION
PERIOD.
(a) GENERALLY. From and after expiration of the Insurance
Transition Period, Coach shall be responsible for obtaining and maintaining
insurance programs for its risk of loss and such insurance arrangements shall
be separate and apart from ▇▇▇▇ ▇▇▇'▇ insurance programs. Notwithstanding the
foregoing, ▇▇▇▇ ▇▇▇, upon the request of Coach, shall use all commercially
reasonable efforts to assist Coach in the transition to its own separate
insurance programs from and after the Insurance Transition Period, and shall
provide Coach with any information that is in the possession of ▇▇▇▇ ▇▇▇ and
is reasonably available and necessary to either obtain insurance coverages
for Coach or to assist Coach in preventing unintended self-insurance, in
whatever form.
(b) ▇▇▇▇ ▇▇▇ GUARANTEES. Coach agrees that from and after the
expiration of the Insurance Transition Period and for so long as there is a
▇▇▇▇ ▇▇▇
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Guarantee obligation outstanding, Coach (i) will take all actions necessary
and consistent with ▇▇▇▇ ▇▇▇'▇ current insurance practices, to purchase and
maintain insurance coverage of substantially the same types and amounts so as
to not reduce insurance coverage, if any, on any liability that is the
subject of any ▇▇▇▇ ▇▇▇ Guarantee then in effect and (ii) provide that ▇▇▇▇
▇▇▇ be a "named insured" under those liability policies of Coach which are
solely controlled by Coach in respect of Liabilities that ▇▇▇▇ ▇▇▇ may incur
as a result of any ▇▇▇▇ ▇▇▇ Guarantee obligation with respect to the Coach
Business, the Coach Assets or the Coach Liabilities, at no premium cost to
▇▇▇▇ ▇▇▇ therefor, such that ▇▇▇▇ ▇▇▇ has rights to coverage thereunder no
less than the rights conferred on any other insured to the extent of its
interest therein. During the applicable period set forth in the first
sentence of this Section 2.3(b), Coach will use all commercially reasonable
efforts to ensure that all of Coach's liability policies to which the
preceding sentence applies provide that ▇▇▇▇ ▇▇▇ will be given at least 60
days advance written notice by the insurer of any cancellation of such
policies, a reduction in coverage thereunder, or any deletion of ▇▇▇▇ ▇▇▇ as
a "named insured," and Coach shall not cancel any such policy or reduce the
coverage available thereunder in any manner detrimental to ▇▇▇▇ ▇▇▇, without
▇▇▇▇ ▇▇▇'▇ prior written consent, not to be unreasonably withheld. ▇▇▇▇ ▇▇▇
agrees to promptly release Coach from its obligations under this Section
2.3(b) following the date on which there are no ▇▇▇▇ ▇▇▇ Guarantee
obligations outstanding.
Section 2.4 RESPONSIBILITIES FOR DEDUCTIBLES AND/OR SELF-INSURED
OBLIGATIONS. Coach will reimburse ▇▇▇▇ ▇▇▇ for all amounts necessary to
exhaust or otherwise satisfy all applicable self-insured retentions, amounts
for fronted policies, deductibles and retrospective premium adjustments and
similar amounts not covered by Insurance Policies in connection with Coach
Liabilities and Insured Coach Liabilities to the extent that ▇▇▇▇ ▇▇▇ is
required to pay any such amounts.
Section 2.5 PROCEDURES WITH RESPECT TO INSURED COACH LIABILITIES.
(a) REIMBURSEMENT. Coach will reimburse ▇▇▇▇ ▇▇▇ for all
amounts incurred to pursue insurance recoveries from Insurance Policies for
Insured Coach Liabilities.
(b) MANAGEMENT OF CLAIMS. The defense of claims, suits or
actions giving rise to potential or actual Insured Coach Liabilities will be
managed (in conjunction with ▇▇▇▇ ▇▇▇'▇ insurers, as appropriate) by the
party that would have had responsibility for managing such claims, suits or
actions had such Insured Coach Liabilities been Coach Liabilities.
13
Section 2.6 INSUFFICIENT LIMITS OF LIABILITY FOR ▇▇▇▇ ▇▇▇ LIABILITIES
AND COACH LIABILITIES.
(a) INSUFFICIENT LIMITS OF LIABILITY. In the event that there
are insufficient limits of liability available under ▇▇▇▇ ▇▇▇'▇ Insurance
Policies in effect prior to the Distribution Date to cover the Liabilities of
▇▇▇▇ ▇▇▇ and/or Coach that would otherwise be covered by such Insurance
Policies, then to the extent that other insurance is not available to ▇▇▇▇
▇▇▇ and/or Coach for such Liabilities an adjustment will be made in
accordance with the following procedures:
(i) To the extent the parties are able to specifically
quantify and verify the actual Liabilities incurred by each party to the
exclusion of the other party, such Liabilities shall be allocated to
each party;
(ii) To the extent that the parties are unable to
specifically quantify and verify any such Liabilities or any part of
such Liabilities to each party (to the exclusion of the other party),
each party will be allocated an amount equal to their Shared Percentage
of the lesser of (A) the available limits of liability available under
▇▇▇▇ ▇▇▇'▇ Insurance Policies in effect prior to the Distribution Date
net of uncollectible amounts attributable to insurer insolvencies, and
(B) the proceeds received from ▇▇▇▇ ▇▇▇'▇ Insurance Policies if the
Liabilities are the subject of disputed coverage claims and, following
consultation with each other, ▇▇▇▇ ▇▇▇ and/or Coach agree to accept less
than full policy limits from ▇▇▇▇ ▇▇▇'▇ and Coach's insurers (the
"Coverage Amount").
(iii) A party who receives more than its share of the
Coverage Amount (the "Overallocated Party") agrees to reimburse the
other party (the "Underallocated Party") to the extent that the
Liabilities of the Underallocated Party that would have been covered
under such Insurance Policies is less than the Underallocated Party's
share of the Coverage Amount.
(iv) This Section 2.6(a) shall terminate ten years
following the Distribution Date.
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(b) ILLUSTRATIONS. The following illustrations are intended to
provide guidance concerning how this Section 2.6 is intended to apply to
claims implicating insurance policies issued prior to the Distribution Date.
(i) Illustration No.1. Ten separate claims are brought
arising from ten separate "occurrences," each resulting in Coach
Liability of $10 million. The self-insured retention is $10 million "per
occurrence." Result: This Section 2.6 is inapplicable. Coach may pursue
self-insurance, to the extent it is permitted to do so by law, subject
to reimbursement of ▇▇▇▇ ▇▇▇ under Section 2.4 of this Agreement.
(ii) Illustration No. 2. Ten separate claims are brought
arising from ten separate "occurrences," each resulting in a Coach
Liability of $40 million, for a total of $400 million. Fifteen separate
claims are brought arising from fifteen separate "occurrences," each
resulting in a ▇▇▇▇ ▇▇▇ Liability of $40 million, for a total of $600
million. The limits of liability in the Insurance Policies applicable to
the claims is $200 million. The self-insured retention is $10 million
"per occurrence," leaving a remaining liability (after the payment of
self-insured retentions) of $30 million "per occurrence," or $300
million in the aggregate for Coach and $450 million in the aggregate for
▇▇▇▇ ▇▇▇. The Coach Liabilities are incurred prior to the ▇▇▇▇ ▇▇▇
Liabilities, and paid for by ▇▇▇▇ ▇▇▇'▇ Insurance Policies in effect
prior to the Distribution Date, which are exhausted by these payments.
This leaves Coach with an additional liability of $100 million (plus its
self-insured retentions of $100 million). Result: The $200 million from
the Insurance Policies is split 95/5: $190 million is allocated to ▇▇▇▇
▇▇▇ and $10 million is allocated to Coach. Coach should pay ▇▇▇▇ ▇▇▇
$190 million, ▇▇▇▇ ▇▇▇'▇ share of the Coverage Amount.
(iii) Illustration No. 3. Same as Illustration No. 2,
except that ▇▇▇▇ ▇▇▇'▇ claims ($200 million) were paid for by ▇▇▇▇ ▇▇▇'▇
Insurance Policies in effect prior to the Distribution Date, which are
exhausted by these payments. This leaves Coach with a liability of $300
million (plus its self-insured retentions of $100 million). ▇▇▇▇ ▇▇▇
should pay Coach $10 million.
15
Section 2.7 COOPERATION. ▇▇▇▇ ▇▇▇ and Coach will cooperate with each
other in all respects, and they shall execute any additional documents which
are reasonably necessary, to effectuate the provisions of this Article II.
Section 2.8 NO ASSIGNMENT OR WAIVER. This Agreement shall not be
considered as an attempted assignment of any policy of insurance or as a
contract of insurance and shall not be construed to waive any right or remedy
of any member of the ▇▇▇▇ ▇▇▇ Group in respect of any Insurance Policy or any
other contract or policy of insurance.
16
Section 2.9 NO LIABILITY. Coach does hereby, for itself and as agent
for each other member of the Coach Group, agree that no member of the ▇▇▇▇
▇▇▇ Group or any ▇▇▇▇ ▇▇▇ Indemnitee shall have any Liability whatsoever as a
result of the insurance policies and practices of ▇▇▇▇ ▇▇▇ and its
Subsidiaries as in effect at any time prior to the end of the Insurance
Transition Period, including as a result of the level or scope of any such
insurance, the creditworthiness of any insurance carrier, the terms and
conditions of any policy, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.
Section 2.10 ADDITIONAL OR ALTERNATE INSURANCE. Notwithstanding any
provision of this Agreement, during the Insurance Transition Period ▇▇▇▇ ▇▇▇
and Coach shall work together to evaluate insurance options and secure
additional or alternate insurance for Coach and/or ▇▇▇▇ ▇▇▇ if desired by and
cost effective for Coach and ▇▇▇▇ ▇▇▇. Nothing in this Agreement shall be
deemed to restrict any member of the Coach Group from acquiring at its own
expense any other insurance policy in respect of any Liabilities or covering
any period.
Section 2.11 FURTHER AGREEMENTS. The parties acknowledge that they
intend to allocate financial obligations without violating any laws regarding
insurance, self-insurance or other financial responsibility. If it is
determined that any action undertake pursuant to the Separation Agreement,
this Agreement or any Ancillary Agreement is violative of any insurance,
self-insurance or related financial responsibility law or regulation, the
parties agree to work together to do whatever is necessary to comply with
such law or regulation while trying to accomplish, as much as possible, the
allocation of financial obligations as intended in the Separation Agreement,
this Agreement and any Ancillary Agreement.
Section 2.12 MATTERS GOVERNED BY EMPLOYEE MATTERS AGREEMENT. This
Article II shall not apply to any insurance policies that are the subject of
the Employee Matters Agreement.
ARTICLE III
MISCELLANEOUS
Section 3.1 ENTIRE AGREEMENT. This Agreement, the Separation
Agreement, the other Ancillary Agreements and the Exhibits and Schedules
attached hereto and thereto, constitute the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all
prior written and oral and all
17
contemporaneous oral agreements and understandings with respect to the
subject matter hereof.
Section 3.2 GOVERNING LAW AND JURISDICTION. This Agreement shall be
construed in accordance with and all Disputes hereunder shall be governed by
the laws of the State of Illinois, excluding its conflict of law rules. The
parties agree that the Circuit Court of ▇▇▇▇ County, Illinois and/or the
United States District Court for the Northern District of Illinois shall have
exclusive jurisdiction over all actions between the parties for preliminary
relief in aid of arbitration pursuant to Section 3.4 herein, and non
exclusive jurisdiction over any action for enforcement of an arbitral award.
Section 3.3 TERMINATION. This Agreement, the Separation Agreement and
all Ancillary Agreements may be terminated at any time prior to the IPO
Closing Date by and in the sole discretion of ▇▇▇▇ ▇▇▇ without the approval
of Coach and, if so terminated, all transactions taken in connection
therewith shall be void. This Agreement may be terminated at any time after
the IPO Closing Date and before the Distribution Date by mutual consent of
▇▇▇▇ ▇▇▇ and Coach. In the event of termination pursuant to this Section 3.3,
no party shall have any liability of any kind to the other party.
Section 3.4 DISPUTE RESOLUTION.
(a) Any dispute, controversy or claim arising out of or
relating to this Agreement or the Ancillary Agreements or the breach,
termination or validity thereof ("Dispute") which arises between the parties
shall first be negotiated between appropriate senior executives of each party
who shall have the authority to resolve the matter. Such executives shall
meet to attempt in good faith to negotiate a resolution of the Dispute prior
to pursuing other available remedies, within 10 days of receipt by a party of
notice of a dispute, which date of receipt shall be referred to herein as the
"Dispute Resolution Commencement Date." Discussions and correspondence
relating to trying to resolve such Dispute shall be treated as confidential
information developed for the purpose of settlement and shall be exempt from
discovery or production and shall not be admissible in any subsequent
proceeding between the parties. If the senior executives are unable to
resolve the Dispute within thirty (30) days from the Dispute Resolution
Commencement Date, then, on the request of any party, the Dispute will be
mediated by a mediator appointed pursuant to the mediation rules of the
American Arbitration Association ("AAA"). Both parties will share the
administrative costs of the mediation and the mediator's fees and expenses
equally, and each party shall bear all of its other costs
18
and expenses related to the mediation, including but not limited to
attorney's fees, witness fees, and travel expenses. The mediation shall take
place in ▇▇▇▇ County Illinois or in whatever alternative forum on which the
parties may agree.
(b) Any Dispute which the parties cannot resolve through
mediation within forty-five days of the appointment of the mediator, shall at
the request of any party be submitted to final and binding arbitration under
the then current Commercial Arbitration Rules of the AAA in ▇▇▇▇ County,
Illinois. There shall be three (3) neutral arbitrators of whom ▇▇▇▇ ▇▇▇ shall
appoint one and Coach shall appoint one within 30 days of the receipt by the
respondent of the demand for arbitration. The two arbitrators so appointed
shall select the chair of the arbitral tribunal within 30 days of the
appointment of the second arbitrator. If any arbitrator is not appointed
within the time limit provided herein, such arbitrator shall be appointed by
the AAA by using a list striking and ranking procedure in accordance with the
Rules. Any arbitrator appointed by the AAA shall be a retired judge or a
practicing attorney with no less than fifteen years of experience and an
experienced arbitrator. The prevailing party in such arbitration shall be
entitled to be awarded its expenses, including its share of administrative
and arbitrator fees and expenses and reasonable attorneys' and other
professional fees, incurred in connection with the arbitration (but excluding
any costs and fees associated with prior negotiation or mediation). The
decision of the arbitrators shall be final and binding on the parties and may
be enforced in any court of competent jurisdiction.
(c) By agreeing to arbitration, the parties do not intend to
deprive any court of its jurisdiction to issue a pre-arbitral injunction,
pre-arbitral attachment, or other order in aid of arbitration proceedings and
the enforcement of any award. Without prejudice to such provisional remedies
as may be available under the juris diction of a court, the arbitral tribunal
shall have full authority to grant provisional remedies or modify or vacate
any temporary or preliminary relief issued by a court, to issue an award for
temporary or permanent injunctive relief (including specific performance) and
to award damages for the failure of any party to respect the arbitral
tribunal's orders to that effect.
Section 3.5 NOTICES. Notices, offers, requests or other
communications required or permitted to be given by either party pursuant to
the terms of this Agreement shall be given in writing to the respective
parties to the following addresses or facsimile numbers:
19
if to ▇▇▇▇ ▇▇▇ :
▇▇▇▇ ▇▇▇ Corporation
Three First National Plaza
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to Coach:
Coach, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or facsimile number as the party to whom notice is
given may have previously furnished to the other in writing as provided
herein. Any notice involving non-performance, termination, or renewal shall
be sent by hand delivery, recognized overnight courier or, within the United
States, may also be sent via certified mail, return receipt requested. All
other notices may also be sent by facsimile, confirmed by first class mail.
All notices shall be deemed to have been given when received, if hand
delivered; when transmitted, if transmitted by facsimile or similar
electronic transmission method; one working day after it is sent, if sent by
recognized overnight courier; and three days after it is postmarked, if
mailed first class mail or certified mail, return receipt requested, with
postage prepaid.
Section 3.6 PARTIES IN INTEREST. This Agreement, including the
Schedules and Exhibits hereto, and the other documents referred to herein,
shall be binding upon ▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇'▇ Subsidiaries, Coach and Coach's
Subsidiaries and inure solely to the benefit of the Coach Indemnitees and the
▇▇▇▇ ▇▇▇ Indemnitees and their respective permitted assigns, and nothing in
this Agreement, express or implied, is intended to confer upon any other
Person any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
Section 3.7 OTHER AGREEMENTS EVIDENCING INDEMNIFICATION OBLIGATIONS.
▇▇▇▇ ▇▇▇ hereby agrees to execute, for the benefit of any Coach Indemnitee,
such documents as may be reasonably requested by such Coach Indemnitee,
evidencing ▇▇▇▇ ▇▇▇'▇ agreement that the indemnification obligations of ▇▇▇▇
▇▇▇ set forth in this Agreement inure to the benefit of and are enforceable
by such Coach Indemnitee.
20
Coach hereby agrees to execute, for the benefit of any ▇▇▇▇ ▇▇▇ Indemnitee,
such documents as may be reasonably requested by such ▇▇▇▇ ▇▇▇ Indemnitee,
evidencing Coach's agreement that the indemnification obligations of Coach
set forth in this Agreement inure to the benefit of and are enforceable by
such ▇▇▇▇ ▇▇▇ Indemnitee.
Section 3.8 COUNTERPARTS. This Agreement, including the Schedules and
Exhibits hereto, and the other documents referred to herein, may be executed
in counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement.
Section 3.9 ASSIGNMENT. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective legal
representatives and successors, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies
of any nature whatsoever under or by reason of this Agreement. This Agreement
may be enforced separately by each member of the ▇▇▇▇ ▇▇▇ Group and each
member of the Coach Group. Neither party may assign this Agreement or any
rights or obligations hereunder, without the prior written consent of the
other party, and any such assignment shall be void; provided, however, either
party may assign this Agreement to a successor entity in conjunction with
such party's reincorporation.
Section 3.10 SEVERABILITY. If any term or other provision of this
Agreement or the Schedules or Exhibits attached hereto is determined by a
nonappealable decision by a court, administrative agency or arbitrator to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the fullest extent possible.
Section 3.11 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on
the part of either party hereto in the exercise of any right hereunder shall
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further
exercise thereof or of any other right.
21
Section 3.12 AMENDMENT. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to this Agreement.
Section 3.13 AUTHORITY. Each of the parties hereto represents to the
other that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement, (b) the execution, delivery and
performance of this Agreement by it have been duly authorized by all
necessary corporate or other action, (c) it has duly and validly executed and
delivered this Agreement, and (d) this Agreement is a legal, valid and
binding obligation, enforceable against it in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general equity
principles.
Section 3.14 INTERPRETATION. The headings contained in this
Agreement, in any Exhibit or Schedule hereto and in the table or contents to
this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Any capitalized term
used in any Schedule or Exhibit but not otherwise defined therein, shall have
the meaning assigned to such term in this Agreement. When a reference is made
in this Agreement to an Article or a Section, Exhibit or Schedule, such
reference shall be to an Article or Section of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated.
ARTICLE IV
DEFINITIONS
Section 4.1 AAA. "AAA" has the meaning set forth in Section 3.4(a) of
this Agreement.
Section 4.2 ACTION. "Action" means any demand, action, suit,
countersuit, arbitration, inquiry, proceeding or investigation by or before
any federal, state, local, foreign or international governmental authority or
any arbitration or mediation tribunal, other than any demand, action, suit,
countersuit, arbitration, inquiry, proceeding or investigation relating to
Taxes.
Section 4.3 AFFILIATED COMPANY. "Affiliated Company" of any Person
means any entity that controls, is controlled by, or is under common control
with such Person. As used herein, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such
22
entity, whether through ownership of voting securities or other interests, by
contract or otherwise.
Section 4.4 ANCILLARY AGREEMENTS. "Ancillary Agreements" has the
meaning set forth in the Separation Agreement.
Section 4.5 ASSETS. "Assets" has the meaning set forth in the
Assignment Agreement.
Section 4.6 ASSIGNMENT AGREEMENT. "Assignment Agreement" means the
General Assignment and Assumption Agreement attached as Exhibit C to the
Separation Agreement.
Section 4.7 COACH AFFILIATE. "Coach Affiliate" means any corporation
or other entity directly or indirectly controlled by Coach.
Section 4.8 COACH ASSETS. "Coach Assets" has the meaning set forth in
the Assignment Agreement.
Section 4.9 COACH BUSINESS. "Coach Business" means the business and
operations of Coach, as described in the IPO Registration Statement and
except as otherwise expressly provided herein, any terminated, divested or
discontinued businesses or operations that at the time of termination,
divestiture or discontinuation primarily related to the Coach Business as
then conducted.
Section 4.10 COACH COVERED PARTIES. "Coach Covered Parties" has the
meaning set forth in Section 2.1(a) of this Agreement.
Section 4.11 COACH FACILITIES. "Coach Facilities" means all of those
interests in real estate to be transferred to Coach on or after the
Separation Date as set forth on Schedule 1 to the Real Estate Matters
Agreement.
Section 4.12 COACH GROUP. "Coach Group" means the Affiliated Group,
or similar group of entities as defined under corresponding provisions of the
laws of other jurisdictions, of which Coach will be the common parent
corporation immediately after the Distribution, and any corporation or other
entity which may become a member of such group from time to time.
23
Section 4.13 COACH INDEMNITEES. "Coach Indemnitees" means Coach, each
member of the Coach Group and each of their respective directors, officers
and employees.
Section 4.14 COACH LIABILITIES. "Coach Liabilities" has the meaning
set forth in the Assignment Agreement.
Section 4.15 CONTRACT. "Contract" means any contract, agreement,
lease, license, sales order, purchase order, instrument or other commitment
that is binding on any Person or any part of its property under applicable
law.
Section 4.16 DISPUTE. "Dispute" has the meaning set forth in Section
3.4(a) of this Agreement.
Section 4.17 DISPUTE RESOLUTION COMMENCEMENT DATE. "Dispute
Resolution Commencement Date" has the meaning set forth in Section 3.4(a) of
this Agreement.
Section 4.18 DISTRIBUTION. A "Distribution" means the divestiture by
▇▇▇▇ ▇▇▇ of all or a significant portion of the shares of capital stock of
Coach owned by ▇▇▇▇ ▇▇▇, which divestiture may be effected by ▇▇▇▇ ▇▇▇ as a
dividend, an exchange with existing ▇▇▇▇ ▇▇▇ stockholders for shares of ▇▇▇▇
▇▇▇ capital stock, a spin-off or otherwise, as a result of which ▇▇▇▇ ▇▇▇ is
no longer required to consolidate Coach's results of operations and financial
position (determined in accordance with generally accepted accounting
principles consistently applied).
Section 4.19 DISTRIBUTION DATE. "Distribution Date" means the date on
which a Distribution is consummated.
Section 4.20 EMPLOYEE MATTERS AGREEMENT. "Employee Matters Agreement"
means the Employee Matters Agreement attached as Exhibit E to the Separation
Agreement.
Section 4.21 ENVIRONMENTAL ACTIONS. "Environmental Actions" means any
notice or disclosure to or any, claim, act, cause of action, order, decree or
investigation by any third party (including, without limitation, any
Governmental Authority) alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental response
costs, natural resources damages, damage to flora or fauna caused by
Environmental Conditions, real property damages, personal injuries or
penalties) arising out of, based on or resulting from the
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Release of or exposure of any individual to any Hazardous Materials or any
violation of Environmental Laws.
Section 4.22 ENVIRONMENTAL CONDITIONS. "Environmental Conditions"
means the presence in the environment, including the soil, groundwater,
surface water or ambient air, of any Hazardous Materials at a level which
exceeds any applicable standard or threshold under any Environmental Law or
otherwise requires investigation or remediation (including, without
limitation, investigation, study, health or risk assessment, monitoring,
removal, treatment or transport) under any applicable Environmental Laws.
Section 4.23 ENVIRONMENTAL LAWS. "Environmental Laws" means all laws
and regulations of any Governmental Authority with jurisdiction that relate
to the protection of the environment (including ambient air, surface water,
ground water, land surface or subsurface strata) including laws, regulations,
ordinances, permits, licenses or any other binding legal obligation in effect
now or in the future relating to the Release of Hazardous Materials, or
otherwise relating to the treatment, storage, disposal, transport or handling
of Hazardous Materials, or to the exposure of any individual to a Release of
Hazardous Materials.
Section 4.24 FINAL DETERMINATION. "Final Determination" has the
meaning set forth in the Tax Sharing Agreement.
Section 4.25 GOVERNMENTAL AUTHORITY. "Governmental Authority" means
any federal, state, local, foreign or international court, government,
department, commission, board, bureau, agency, official or other regulatory,
administrative or governmental authority.
Section 4.26 HAZARDOUS MATERIALS. "Hazardous Materials" means
chemicals, pollutants, contaminants, wastes, toxic substances, radioactive
and biological materials, hazardous substances, petroleum and petroleum
products or any fraction thereof, including, without limitation, such
substances referred to by such terms as defined in any Environmental Laws.
Section 4.27 INDEMNIFYING PARTY. "Indemnifying Party" means any party
which may be obligated to provide indemnification to an Indemnitee pursuant
to Sections 1.2, 1.3 or 1.4 hereof or any other section of the Separation
Agreement or any Ancillary Agreement.
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Section 4.28 INDEMNITEE. "Indemnitee" means any party which may be
entitled to indemnification from an Indemnifying Party pursuant to Sections
1.2, 1.3 or 1.4 hereof or any other section of the Separation Agreement or
any Ancillary Agreement.
Section 4.29 INSURANCE POLICIES. "Insurance Policies" means insurance
policies pursuant to which a Person makes a true risk transfer to an insurer.
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Section 4.30 INSURANCE PROCEEDS. "Insurance Proceeds" means those
monies:
(a) received by an insured from an insurance carrier; or
(b) paid by an insurance carrier on behalf of the insured;
(c) from Insurance Policies.
Section 4.31 INSURANCE TRANSITION PERIOD. "Insurance Transition Period"
has the meaning set forth in Section 2.1(a) of this Agreement.
Section 4.32 INSURED COACH LIABILITY. "Insured Coach Liability" means
any Coach Liability to the extent that (i) it is covered under the terms of
▇▇▇▇ ▇▇▇'▇ Insurance Policies in effect prior to the end of the Insurance
Transition Period, and (ii) Coach is not a named insured under, or otherwise
entitled to the benefits of, such Insurance Policies.
Section 4.33 IPO. "IPO" means Coach's initial public offering of
common stock.
Section 4.34 IPO CLOSING DATE. "IPO Closing Date" has the meaning set
forth in the Separation Agreement.
Section 4.35 IPO LIABILITIES. "IPO Liabilities" means any Liabilities
relating to, arising out of or resulting from any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, with respect to all information contained
in the IPO Registration Statement or any preliminary, final or supplemental
prospectus forming a part of a IPO Registration Statement.
Section 4.36 IPO REGISTRATION STATEMENT. "IPO Registration Statement"
means the registration statement on Form S-1 pursuant to the Securities Act
to be filed with the SEC registering the shares of common stock of Coach to
be issued in the IPO, together with all amendments thereto.
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Section 4.37 LEMELSON LITIGATION. "Lemelson Litigation" means
Lemelson Medical, Research & Education Foundation Limited Partnership v. ▇▇▇▇
▇▇▇ Corporation.
Section 4.38 LIABILITIES. "Liabilities" means all debts, liabilities,
guarantees, assurances, commitments and obligations, whether fixed,
contingent or absolute, asserted or unasserted, matured or unmatured,
liquidated or unliquidated, accrued or not accrued, known or unknown, due or
to become due, whenever or however arising (including, without limitation,
whether arising out of any Contract or tort based on negligence or strict
liability) and whether or not the same would be required by generally
accepted principles and accounting policies to be reflected in financial
statements or disclosed in the notes thereto.
Section 4.39 LOSS AND LOSSES. "Loss and Losses" mean any and all
damages, losses, deficiencies, Liabilities, obligations, penalties,
judgments, settlements, claims, payments, fines, interest, costs and expenses
(including, without limitation, the costs and expenses of any and all Actions
and demands, assessments, judgments, settlements and compromises relating
thereto and the costs and expenses of attorneys', accountants', consultants'
and other professionals' fees and expenses incurred in the investigation or
defense thereof or the enforcement of rights hereunder), including direct and
consequential damages, but excluding punitive damages (other than punitive
damages awarded to any third party against an indemnified party).
Section 4.40 PERSON. "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision
thereof.
Section 4.41 RELEASE. "Release" means any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment, including,
without limitation, the movement of Hazardous Materials through ambient air,
soil, surface water, groundwater, wetlands, land or subsurface strata.
Section 4.42 ▇▇▇▇ ▇▇▇ AFFILIATE. "▇▇▇▇ ▇▇▇ Affiliate" means any
corporation or other entity directly or indirectly Controlled by ▇▇▇▇ ▇▇▇,
but excluding Coach and any Coach Affiliate.
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Section 4.43 ▇▇▇▇ ▇▇▇ BUSINESS. "▇▇▇▇ ▇▇▇ Business" means any
business of ▇▇▇▇ ▇▇▇ other than the Coach Business.
Section 4.44 ▇▇▇▇ ▇▇▇ FACILITIES. "▇▇▇▇ ▇▇▇ Facilities" means all of
the real property and improvements thereon owned or occupied at any time on
or before the Separation Date by any member of the ▇▇▇▇ ▇▇▇ Group, whether
for the ▇▇▇▇ ▇▇▇ Business or the Coach Business, excluding the Coach
Facilities.
Section 4.45 ▇▇▇▇ ▇▇▇ GROUP. "▇▇▇▇ ▇▇▇ Group" means the Affiliated
Group, or similar group of entities as defined under corresponding provisions
of the laws of other jurisdictions, of which ▇▇▇▇ ▇▇▇ is the common parent
corporation, and any corporation or other entity which may be, may have been
or may become a member of such group from time to time, but excluding any
member of the Coach Group.
Section 4.46 ▇▇▇▇ ▇▇▇ GUARANTEE. "▇▇▇▇ ▇▇▇ Guarantee" means any loan,
financing, lease, contract or other obligation in existence as of the
Separation Date pertaining to the Coach Business, Coach Assets or Coach
Liabilities for which ▇▇▇▇ ▇▇▇ is or may be liable, as guarantor, original
tenant, primary obligor or otherwise.
Section 4.47 ▇▇▇▇ ▇▇▇ INDEMNITEES. "▇▇▇▇ ▇▇▇ Indemnitees" means ▇▇▇▇
▇▇▇, each member of the ▇▇▇▇ ▇▇▇ Group and each of their respective
directors, officers and employees.
Section 4.48 ▇▇▇▇ ▇▇▇ PORTIONS. "▇▇▇▇ ▇▇▇ Portions" means all
information set forth in, or incorporated by reference into, the IPO
Registration Statement, to the extent such information relates exclusively to
(a) ▇▇▇▇ ▇▇▇ and the ▇▇▇▇ ▇▇▇ Group, (b) the ▇▇▇▇ ▇▇▇ Business, (c) ▇▇▇▇
▇▇▇'▇ intentions with respect to the Distribution or (d) the terms of the
Distribution, including, without limitation, the form, structure and terms of
any transaction(s) and/or offering(s) to effect the Distribution and the
timing of and conditions to the consummation of the Distribution.
Section 4.49 SECURITIES ACT. "Securities Act" means the Securities
Act of 1933, as amended.
Section 4.50 SEPARATION. "Separation" has the meaning set forth in
the Separation Agreement.
Section 4.51 SEPARATION AGREEMENT. "Separation Agreement" has the
meaning set forth in the preamble of this Agreement.
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Section 4.52 SEPARATION DATE. "Separation Date" means the effective
date and time of each transfer of property, assumption of liability, license,
undertaking, or agreement in connection with the Separation, which shall be
12:01 a.m., Central Time, the date two days prior to the date the IPO
Registration Statement is declared effective, or such date as may be fixed by
the Board of Directors of ▇▇▇▇ ▇▇▇.
Section 4.53 SHARED COACH PERCENTAGE. "Shared Coach Percentage" means
5%.
Section 4.54 SHARED PERCENTAGE. "Shared Percentage" means the Shared
Coach Percentage or the Shared ▇▇▇▇ ▇▇▇ Percentage, as the case may be.
Section 4.55 SHARED ▇▇▇▇ ▇▇▇ PERCENTAGE. "Shared ▇▇▇▇ ▇▇▇ Percentage"
means 95%.
Section 4.56 SUBSIDIARY. "Subsidiary" of any Person means a
corporation or other organization whether incorporated or unincorporated of
which at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or
controlled by such Person or by any one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries; provided, however, that no
Person that is not directly or indirectly wholly-owned by any other Person
shall be a Subsidiary of such other Person unless such other Person controls,
or has the right, power or ability to control, that Person.
Section 4.57 TAX SHARING AGREEMENT. "Tax Sharing Agreement" means the
Tax Sharing Agreement, attached as Exhibit E to the Separation Agreement.
Section 4.58 TAX AND TAXES. "Tax and Taxes" have the meaning set
forth in the Tax Sharing Agreement.
Section 4.59 THIRD PARTY CLAIM. "Third Party Claim" has the meaning
set forth in Section 1.6(a) of this Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this
Indemnification and Insurance Matters Agreement to be executed on its behalf
by its officers hereunto duly authorized on the day and year first above
written.
▇▇▇▇ ▇▇▇ CORPORATION
By:
-----------------------------
Name:
Title:
COACH, INC.
By:
-----------------------------
Name:
Title:
Schedule 2.1(a)
Insurance Policies