<PAGE>
STOCK PURCHASE AGREEMENT
AMONG
COACH JAPAN HOLDINGS, INC.,
COACH INC.,
COACH JAPAN, INC.,
COACH JAPAN INVESTMENTS, INC.
AND
SUMITOMO CORPORATION
25 APRIL, 2005
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TABLE OF CONTENTS
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1.
Definitions...........................................................
1
2. Purchase and Sale of
Shares and Repayment of TK Investment............ 4
(a)
Basic
Transaction...............................................
4
(b)
The
Closing.....................................................
4
(c)
Purchase Price
for Shares and Payment in respect of TK
Investment......................................................
4
(d)
Deliveries at
the Closing....................................... 5
(e)
Termination of
Existing Agreements.............................. 5
3. Representations and Warranties
Concerning the Transaction............. 5
(a)
Representations
and Warranties of the Seller.................... 5
(b)
Representations
and Warranties of the Coach Parties............. 6
(c)
Survival of Representations and
Warranties...................... 7
(d)
Exclusivity of
Representations.................................. 7
4. Pre-Closing
Covenants.................................................
8
(a)
General.........................................................
8
(b)
Notices and
Consents............................................ 8
(c)
Standstill......................................................
8
(d)
Share
Certificates..............................................
8
(e)
Funding
Notices.................................................
8
(f)
Price
Increases.................................................
8
(g)
Financial
Statements............................................ 8
(h)
Sumitomo
Secondees..............................................
8
5. Post-Closing
Covenants................................................
9
(a)
General.........................................................
9
(b)
Transition......................................................
9
(c)
Confidentiality.................................................
9
(d)
Financial
Statements............................................ 10
(e)
Restrictive
Covenants........................................... 10
6. Conditions to
Obligation to Close.....................................
11
(a)
Conditions to
Obligation of the Coach Parties and the
Company.........................................................
11
(b)
Conditions to
Obligation of the Seller.......................... 12
7.
Indemnities...........................................................
13
(a)
Seller's
Indemnities............................................
13
(b)
Coach Parties'
Indemnity........................................ 13
(c)
Procedures for
Indemnification.................................. 13
(d)
Determination of
Adverse Consequences........................... 14
(e)
Other
Indemnification Provisions................................
14
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8.
Termination...........................................................
15
(a)
Termination of
Agreement........................................ 15
(b)
Effect of
Termination........................................... 15
9.
Miscellaneous.........................................................
15
(a)
Press Releases
and Public Announcements......................... 15
(b)
No Third-Party
Beneficiaries.................................... 15
(c)
Entire
Agreement................................................
16
(d)
Succession and
Assignment....................................... 16
(e)
Counterparts....................................................
16
(f)
Headings........................................................
16
(g)
Notices.........................................................
16
(h)
Governing
Law................................................... 17
(i) Consent to Jurisdiction and
Service of Process.................. 17
(j)
Waiver of Jury
Trial............................................ 18
(k)
Amendments and
Waivers.......................................... 18
(l)
Severability....................................................
18
(m)
Expenses........................................................
18
(n)
Construction....................................................
18
(o)
Incorporation of
Exhibits, Annexes, and Schedules............... 19
(p)
Specific
Performance............................................
19
Exhibit A Seller's
Release................................................
A-1
Exhibit B Coach Parties'
Release.......................................... B-1
Schedule 1 Sumitomo
Secondees..............................................
S-1
Schedule 2 Support
Contracts...............................................
S-2
Schedule 3 Competing
Brands................................................ S-3
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STOCK PURCHASE AGREEMENT
STOCK
PURCHASE AGREEMENT (the "Agreement") entered into on 25 April,
2005
(the "Effective Date"), by and among Coach
Japan Holdings, Inc., a corporation
registered in Delaware, United States of
America whose principal place of
business is at 516 West 34th Street, New
York, New York 10001, United States of
America (the "Buyer"), Coach Inc., a
corporation registered in Maryland, United
States of America whose principal place of
business is at 516 West 34th Street,
New York, New York 10001, United States of
America ("Coach Inc."), Coach Japan,
Inc., a company incorporated in Japan whose
principal place of business is at
Aoyama Palacio Tower, 6-3, Kitaaoyama
3-chome, Minato-ku, Tokyo 107-0061, Japan
(the "Company"), Coach Japan Investments,
Inc., a corporation registered in
Delaware, United States of America whose
principal place of business is at 516
West 34th Street, New York, New York 10001,
United States of America ("TK
Investor No. 1"), and Sumitomo Corporation,
a company incorporated in Japan
whose principal place of business is at
1-8-11 Harumi, Chuo-ku, Tokyo 104-8610,
Japan (the "Seller"). The Buyer, Coach
Inc., the Company, TK Investor No. 1 and
the Seller are sometimes referred to herein
collectively as the "Parties" or
individually as a "Party." Coach Inc. and
the Buyer are sometimes referred to
herein collectively as the "Coach Parties"
or individually as a "Coach Party."
The Seller
owns 500 ordinary shares in the capital of the Company and, in
its capacity as TK Investor No. 2 (as
defined below), has an outstanding TK
Investment (as defined below) in the
Company.
This
Agreement contemplates a transaction in which the Buyer wishes
to
purchase from the Seller, and the Seller
wishes to sell to the Buyer, the Shares
(as defined below) in return for cash and
the Company will repay the TK
Investment to TK Investor No.2 and TK
Investor No.2 will accept such repayment
of the TK Investment in full.
Now,
therefore, in consideration of the premises and the mutual
promises
herein made, and in consideration of the
respective representations, warranties,
covenants and agreements herein contained,
and for other good and valuable
consideration, the receipt and adequacy of
which are hereby acknowledged, the
Parties agree as follows.
1.
Definitions.
"Adverse
Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints,
claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues,
penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations,
Taxes, liens, losses, expenses, and
fees, including court costs and reasonable
attorneys' fees and expenses.
"Affiliate," in relation to a Party, means a Person Controlled by
or
Controlling that Party or a Person under
common Control with that Party.
"Buyer"
has the meaning set forth in the preface above.
"Closing"
has the meaning set forth in Section 2(b) below.
"Closing
Date" has the meaning set forth in Section 2(b) below.
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"Coach
Indemnified Parties" has the meaning set forth in Section 7(a)
below.
"Company"
has the meaning set forth in the preface above.
"Confidential Information" means any information which the Seller
(or any
of its Affiliates, officers, employees and
agents) may have or acquire in
relation to the customers, business,
finances, assets or affairs of the Company
or its Affiliates, save for (i) any
information which is publicly available or
becomes publicly available through no act
of the Seller (or any of its
Affiliates), (ii) any information disclosed
to Seller by a third party that did
not acquire the information under any
obligation of confidentiality, and (iii)
information independently acquired by
Seller as the result of work carried out
by an employee to whom no disclosure of
such information had been made.
"Control":
A Person shall be deemed to have Control of another Person if
it exercises, is able to exercise, is
entitled to exercise or is entitled to
acquire direct or indirect control over
that other Person's affairs including if
it possesses or is entitled to:
(a)
a majority of
the outstanding capital stock or voting rights
of that other Person as of the date of
determination; or
(b)
a majority of
any distributions from that other Person or assets on
a winding up of that other Person as of the
date of determination;
and
"Controlled" and "Controlling" shall be construed accordingly.
"Cooperation Agreement" means the agreement to be entered into on
the
Closing Date between the Company and the
Seller in substantially the form agreed
as initialed on the Effective Date by the
parties thereto for identification.
"Effective
Date" has the meaning set forth in the preface above.
"Existing
Agreements" means, collectively and individually, the
Shareholders Agreement, the Funding
Agreement and TK Agreement No. 2.
"Funding
Agreement" means the funding agreement entered into between the
Company, TK Investor No.1 and TK Investor
No.2 on July 30, 2001.
"Indemnified Party" has the meaning set forth in Section 7(c)
below.
"Indemnifying Party" has the meaning set forth in Section 7(c)
below.
"Letter of
Indemnity" means the letter of indemnity dated July 28, 2004
between Seller and Coach Inc.
"Letter
Regarding Foreign Exchange Hedging Policy" means the letter
agreement dated September 21, 2001 between
the Seller and Coach Inc. relating to
the Company's foreign exchange hedging
policy.
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"Liability" means any liability (whether known or unknown,
whether
asserted or unasserted, whether absolute or
contingent, whether accrued or
unaccrued, whether liquidated or
unliquidated, and whether due or to become
due), including any liability for
Taxes.
"Net
Losses" has the meaning set forth in TK Agreement No. 2.
"Net
Profits" has the meaning set forth in TK Agreement No. 2.
"New
Letter of Indemnity" means the letter of indemnity to be entered
into
on the Closing Date between the Seller and
Coach Inc. in substantially the form
agreed as initialed on the Effective Date
by the parties thereto for
identification.
"Ordinary
Course of Business" means the ordinary course of business
consistent with past custom and practice
(including with respect to quantity and
frequency).
"Ordinary
Shares" means ordinary shares of non-par value in the capital
of
the Company.
"Party"
has the meaning set forth in the preface above.
"Person"
means an individual, a partnership, a corporation, an
association, a joint stock company, a
trust, a joint venture, an unincorporated
organization, or a governmental entity (or
any department, agency, or political
subdivision thereof).
"Security
Interest" means any mortgage, pledge, lien, encumbrance,
charge,
or other security interest, other than (a)
mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet
due and payable or for Taxes that the
taxpayer is contesting in good faith
through appropriate proceedings, (c)
purchase money liens and liens securing
rental payments under capital lease
arrangements, and (d) other liens arising
in the Ordinary Course of Business and
not incurred in connection with the
borrowing of money.
"Seller"
has the meaning set forth in the preamble above.
"Seller
Indemnified Parties" has the meaning set forth in Section 7(a)
below.
"Shareholders Agreement" means the shareholders agreement relating
to the
Company entered into between the Buyer,
Coach Inc., the Seller and the Company
on July 30, 2001.
"Share Payment" has
the meaning set forth in Section 2(c) below.
"Shares"
means the 500 Ordinary Shares in the capital of the Company
held
by the Seller.
"Sumitomo
Directors" has the meaning ascribed to it in the Shareholders
Agreement.
"Sumitomo
Secondees" means each of the persons whose names are set forth
in Schedule 1 who are seconded by the
Seller to the Company as of the date of
this Agreement.
"Support
Contracts" means contracts entered into between the Company and
Affiliates of the Seller set forth in
Schedule 2 for the provision of certain
services for the benefit of the
Company.
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"Tax"
means any federal, state, local, or foreign income, gross
receipts,
license, payroll, employment, excise,
severance, stamp, occupation, premium,
windfall profits, environmental, customs
duties, capital stock, franchise,
profits, withholding, social security (or
similar), unemployment, disability,
real property, personal property, sales,
use, transfer, registration, value
added, alternative or add-on minimum,
estimated, or other tax of any kind
whatsoever, including any interest,
penalty, or addition thereto, whether
disputed or not.
"TK
Agreement No.2" means the Tokumei Kumiai Agreement entered into
between the Company and TK Investor No.2 on
July 30, 2001.
"TK
Investment" means the aggregate Advances (as such term is defined
in
the Funding Agreement) made by TK Investor
No.2 to the Company pursuant to the
Funding Agreement and TK Agreement
No.2.
"TK
Investor No.1" has the meaning set forth in the preamble.
"TK
Investor No.2" means the Seller as a tokumei kumiai investor in
the
Company.
"TK
Payment" has the meaning set forth in Section 2(c) below.
"Waiver
Letter"
means the letter agreement dated June 15, 2001
between the Seller and Coach Inc.
2.
Purchase and Sale of Shares and Repayment of TK Investment
(a) Basic Transaction. At the Closing (as defined below), and
subject to the terms and conditions of this
Agreement, for the consideration
specified below in Section 2(c): (i) the
Buyer agrees to purchase from the
Seller, and the Seller agrees to sell,
transfer and deliver to the Buyer, all of
the Shares, and (ii) the Company agrees to
pay to TK Investor No. 2, and TK
Investor No. 2 agrees to accept, the TK
Payment (as defined below) in complete
satisfaction of TK Investor No. 2's rights
under TK Agreement No. 2 and the
Funding Agreement with respect to the TK
Investment, Net Losses and Net Profits.
(b) The Closing. The closing of the transactions contemplated
by
this Agreement (the "Closing") shall take
place at the offices of Coach Inc. at
516 West 34th Street, New York, New York
10001, United States of America
commencing at 9:00 a.m. local time on July
1, 2005 or such other date as the
Parties may mutually agree (the "Closing
Date").
(c) Purchase Price for Shares and Payment in respect of TK
Investment. At the Closing: (i) the Buyer
shall pay to the Seller the sum of six
million U.S. Dollars ($6,000,000) (the
"Share Payment") in consideration for the
Shares by delivery in cash payable by wire
transfer or delivery of other
immediately available funds, and (ii) the
Company shall pay to TK Investor No.2
the sum of two hundred and ninety four
million U.S. Dollars ($294,000,000) (the
"TK Payment"), which shall constitute the
repayment in full of the TK
Investment, the distribution in full of all
accrued Net Profits and Net Losses
and a termination payment to compensate TK
Investor No.2 for loss of benefit
under TK Agreement No.2., by delivery in
cash payable by wire transfer or
delivery of other immediately available
funds and TK Investor No. 2 shall accept
such amount in complete satisfaction of its
rights under TK Agreement No.2 and
the
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Funding Agreement. At the Closing the Buyer
shall determine the allocation of
the amount of the TK Payment among (i) the
repayment of the TK Investment, (ii)
the distribution of all accrued Net Profits
and Net Losses, and (iii) the
termination payment to compensate TK
Investor No.2 for loss of benefit under TK
Agreement No.2.
(d) Deliveries at the Closing. At the Closing, (i) the Seller
will
deliver to the Coach Parties the various
certificates, instruments, and
documents referred to in Section 6(a), (ii)
the Coach Parties will deliver to
the Seller the various certificates,
instruments, and documents referred to in
Section 6(b), (iii) the Seller will deliver
to the Buyer the stock certificates
representing all of the Shares and any
other document which the Buyer reasonably
requests in order to obtain good title to
the Shares and to enable the Buyer to
ensure the registration of the Shares free
from any encumbrance in its name or
the name of its nominee, as applicable,
(iv) the Company and the Seller shall
each execute and deliver the Cooperation
Agreement, (v) the Seller will deliver
to the Buyer all documentation the Buyer
reasonably requests to certify its
acceptance of the TK Payment in complete
satisfaction of its rights under TK
Agreement No. 2 and the Funding Agreement
with respect to the TK Investment, Net
Losses and Net Profits, (vi) the Buyer will
deliver to the Seller the Share
Payment, and (vii) the Company will deliver
to the Seller the TK Payment.
(e) Termination of Existing Agreements. Upon the occurrence of
the
Closing, the Existing Agreements, the
Letter of Indemnity and the Letter
Regarding Foreign Exchange Hedging Policy
shall immediately and automatically
terminate and be of no further force or
effect, including without limitation any
provisions thereof that are specified to
survive termination, and neither the
Seller, the Coach Parties, the Company or
the TK Investor No.1 shall have any
further liability thereunder.
3.
Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer that
the statements contained in this
Section 3(a) are correct and complete as of
the date of this Agreement and will
be correct and complete as of the Closing
Date (as though made then and as
though the Closing Date were substituted
for the date of this Agreement
throughout this Section 3(a)).
(i) Organization of Seller. The Seller is duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Seller has full
corporate power and authority to execute and deliver this
Agreement
and to perform its obligations hereunder. This Agreement
constitutes
the valid and legally binding obligation of the Seller,
enforceable
in accordance with its terms and conditions except to the
extent
that the enforceability thereof may be limited by: (x)
applicable
bankruptcy, insolvency, fraudulent conveyance, organization,
moratorium or similar laws from time to time in effect
affecting
generally the enforcement of creditors' rights and remedies; and
(y)
general principles of equity. The Seller need not give any
notice
to, make any filing with, or obtain any authorization,
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consent, or approval of any government or governmental agency
in
order to consummate the transactions contemplated by this
Agreement.
The execution of this Agreement by the Seller and the
transactions
contemplated hereunder has been approved by the Seller's board
of
directors.
(iii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution,
statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency,
or court to which the Seller is subject or any provision of its
charter or bylaws or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create
in
any party the right to accelerate, terminate, modify, or cancel,
or
require any notice or consent under any agreement, contract,
lease,
license, instrument, or other arrangement to which the Seller is
a
party or by which it is bound or to which any of its assets is
subject.
(iv) Brokers' Fees. The Seller has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent
with
respect to the transactions contemplated by this Agreement for
which
the Buyer could become liable or obligated.
(v) Shares. The Seller holds of record and owns beneficially
the Shares, free and clear of any restrictions on transfer,
Taxes,
Security Interests, options, warrants, purchase rights,
contracts,
commitments, equities, claims, and demands. The Seller is not a
party to any option, warrant, purchase right, or other contract
or
commitment that could require the Seller to sell, transfer, or
otherwise dispose of any capital stock of the Company (other
than
this Agreement). The Seller is not a party to any voting trust,
proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Company.
(vi) TK Agreement No.2. The Seller is beneficially entitled to
its rights under TK Agreement No.2, free and clear of any
restrictions on transfer, Taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities,
claims,
and demands. The Seller is not a party to any option, warrant,
purchase right, or other contract or commitment that could
require
the Seller to sell, transfer, or otherwise dispose of its rights
and
interest under TK Agreement No.2 (other than this Agreement).
TK
Agreement No.2 has not been varied, amended or waived.
(b) Representations and Warranties of the Coach Parties. The
Coach
Parties jointly and severally represent and
warrant to the Seller that the
statements contained in this Section 3(b)
are correct and complete as of the
date of this Agreement and will be correct
and complete as of the Closing Date
(as though made then and as though the
Closing Date were substituted for the
date of this Agreement throughout this
Section 3(b)).
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(i) Organization of the Buyer. Each of the Coach Parties, the
Company and TK Investor No.1 is a corporation duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. Each of the Coach Parties,
the Company and TK Investor No.1 has full corporate power and
authority to execute and deliver this Agreement and to perform
its
obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of each of the Coach Parties, the
Company
and TK Investor No.1, enforceable in accordance with its terms
and
conditions except to the extent that the enforceability thereof
may
be limited by: (x) applicable bankruptcy, insolvency,
fraudulent
conveyance, organization, moratorium or similar laws from time
to
time in effect affecting generally the enforcement of
creditors'
rights and remedies; and (y) general principles of equity. None
of
the Coach Parties, the Company or TK Investor No.1 need to give
any
notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency
in
order to consummate the transactions contemplated by this
Agreement.
The execution of this Agreement by Coach Inc., the Buyer and TK
Investor No.1 and the transactions contemplated hereunder has
been
approved by their respective boards of directors.
(iii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution,
statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency,
or court to which any of the Coach Parties, the Company or TK
Investor No.1 is subject or any provision of its charter or
bylaws
or (B) conflict with, result in a breach of, constitute a
default
under, result in the acceleration of, create in any party the
right
to accelerate, terminate, modify, or cancel, or require any
notice
or consent under any agreement, contract, lease, license,
instrument, or other arrangement to which any of the Coach
Parties,
the Company or TK Investor No.1 is a party or by which it is
bound
or to which any of its assets is subject.
(c) Survival of Representations and Warranties. The
representations
and warranties of the Parties contained in
this Agreement shall survive the
Closing hereunder (even if the damaged
Party knew or had reason to know of any
misrepresentation or breach of warranty or
covenant at the time of Closing) and
continue in full force and effect for a
period of twelve months thereafter;
provided, however, that the representations
and warranties of the Seller
contained in Section 3(a)(v) and Section
3(a)(vi) shall survive the Closing
hereunder and continue in full force and
effect in accordance with the statutes
of limitations applicable thereto.
(d) Exclusivity of Representations. The representations and
warranties made by the Parties in this
Agreement are the exclusive
representations and warranties made by the
Parties. Each of the Parties hereby
disclaims any other express or implied
representations or warranties.
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4.
Pre-Closing Covenants. The Parties agree as follows with respect to
the
period from the execution of this Agreement
until the Closing (or until
termination of this Agreement pursuant to
Section 8).
(a) General. Each of the Parties will use its reasonable best
efforts to take all actions and to do all
things necessary, proper or advisable
in order to consummate and make effective
the transactions contemplated by this
Agreement (including the satisfaction, but
not the waiver, of the closing
conditions set forth in Section 6).
(b) Notices and Consents. Each of the Parties will give any
notices
to, make any filings with, and use its
commercially reasonable best efforts to
obtain any authorizations, consents, and
approvals of governments, governmental
agencies or third parties required in
connection with the transactions
contemplated by this Agreement.
(c) Standstill. Neither the Seller, on the one hand, nor the
Coach
Parties, the Company and TK Investor No. 1,
on the other hand, will commence any
legal action or otherwise assert any rights
against the other arising under the
Existing Agreements or at law with respect
to any breach or alleged breach of
the Existing Agreements prior to the date
of this Agreement.
(d) Share Certificates. The Company shall issue to the Seller
share
certificates representing the Shares, to
facilitate the transfer of the Shares
to Buyer at the Closing.
(e) Funding Notices. The Company shall not issue any Funding
Notice
(as defined in the Funding Agreement) to
the Seller in its capacity as TK
Investor No. 2.
(f) Price Increases. Notwithstanding anything to the contrary
contained in Section 8.1 of the
Shareholders Agreement, the Buyer and the Seller
agree that the current Business Plan (as
defined in the Shareholders Agreement)
shall remain in effect through the Closing
and that no revision to the Business
Plan shall be submitted to the Company's
Board of Directors for approval until
after the Closing. Coach, Inc. further
agrees that no modifications to the
prices payable by the Company under that
certain License and Distribution
Agreement dated July 30, 2001 between
Coach, Inc. and the Company (the
"Distribution Agreement") for Products (as
defined in the Distribution
Agreement) shall be made until after the
Closing. Notwithstanding the foregoing,
if this Agreement is terminated prior to
the Closing in accordance with Section
8, this Section 4(f) shall be of no further
effect.
(g) Financial Statements. Through the Closing Date, the Coach
Parties and the Company shall continue to
deliver a monthly balance sheet and
statement of income for the
