TRANSITION EMPLOYMENT
AGREEMENT
This Transition Employment Agreement (hereafter
this “ Agreement ”), dated as of July 4, 2008,
is hereby entered into by and between Keith Monda (the “
Executive ”), and Coach, Inc., a Maryland corporation
(together with its subsidiaries and affiliates, the “
Company ”).
WHEREAS, the Executive has been an employee of
the Company prior to the execution of this agreement but has
informed the Company of his intention to leave his full-time
employment with the Company;
WHEREAS, the Company wishes to engage the
Executive on a part-time basis and to ensure that the Executive
adheres to certain restrictive covenants in his employee stock
option agreements and to extend the scope and duration of these
covenants in exchange for additional consideration to the
Executive;
THEREFORE, in exchange for the good and valuable
consideration set forth herein, the adequacy of which is
specifically acknowledged, the Executive and Company hereby agree
as follows:
1. Transition of Employment
.
(a) The Executive shall resign his
full-time employment with the Company, effective July 4, 2008 (the
“ Transition Date ”). Effective as of the end of
business on the Transition Date, Executive’s status shall
convert to that of a part-time employee, and he shall no longer
serve as an Executive Officer of the Company. Notwithstanding
anything contained herein to the contrary, after the Transition
Date, the Executive shall remain a Director of the Board of
Directors of Coach (the “ Board ”). The
Executive, however, will not be deemed an Outside Director and
shall not receive additional compensation for such service to the
Board. From the Transition Date until August 31, 2009 (the “
Term ”), the Executive’s employment with the
Company shall be governed by this Agreement. The Executive’s
job duties shall consist of consulting on an as-needed basis to Lew
Frankfort, Coach’s Chairman and Chief Executive Officer, or
such other corporate officer(s) as Mr. Frankfort shall designate.
As consideration for the services the Executive performs during the
Term, the Executive shall receive a salary for these services of
$14,819 per month.
The Executive is a party to an
Employment Agreement, dated June 1, 2003 and amended by Letter
Agreement, dated August 22, 2005 (collectively, the “
Employment Agreement ”). All terms not otherwise
defined herein shall have the meaning set forth in the Employment
Agreement. Upon the Transition Date, the Employment Agreement shall
be deemed null and void except as provided for in this Agreement.
Additionally, upon the Transition Date, Executive’s Extension
Options shall be cancelled. As consideration for the services the
Executive performs during the Term, the Executive shall remain
eligible to receive continued vesting of all other stock options
and restricted stock units during the period of his part-time
employment, except for the Extension Options. Executive agrees that
during the Term he shall not defer any compensation pursuant to
Coach’s retirement or supplemental retirement plans for
purposes of accruing additional benefits. This Agreement shall not
effect the retirement benefits previously earned by the Executive
(which includes, but is not limited to, all company matching and
profit-sharing contributions with respect to fiscal year 2008 under
Coach’s Savings and Profit Sharing Plan and Supplemental
Retirement Plan, whether paid prior to or after the Transition
Date). For the avoidance of doubt, the parties acknowledge and
agree that, notwithstanding any provision of this Agreement, the
Executive’s rights pursuant to Section 13 of the Employment
Agreement shall survive in accordance with the terms thereof. Other
than bonuses earned for fiscal year 2008, Executive shall not
receive any bonus (including the make-whole special retirement
bonus) for his part-time employment. Executive’s part-time
employment shall terminate on the completion of the Term, or
immediately upon Executive’s violation of any of the
covenants set forth in this Agreement or by written agreement
between Executive and Coach (either a “ Termination
Date ”).
(b) During the Term, as an active
employee, the Executive shall continue to participate in the
Company’s group medical, dental, vision, long-term disability
and executive life insurance plans. For the avoidance of doubt, any
payments due during the Term with respect to the Executive’s
coverage under the executive life insurance plan, including the
December 2008 payment, shall be paid by the Company. Following the
Termination Date, Executive shall continue to participate in the
Company’s group medical plan through the date he becomes
eligible for Medicare. The premium charged after the Transition
Date shall be the same rate charged to other employees of the
Company for similar coverage. After the Termination Date,
participation in the medical plan will be on an after-tax basis and
Executive shall make payment by check to the Company at the higher
of (i) the same rate charged to other employees of the Company for
similar coverage or (ii) the same rate charged other participants
of any executive retiree medical plan then maintained by the
Company. Executive acknowledges that he has received and read the
summary plan description for the plan. Notwithstanding the
foregoing, should the Company implement a Medicare supplement plan
for retired employees or any other post-termination medical plan
for executives subsequent to the Termination Date, Executive shall
be considered eligible for such plan.
(c) Notwithstanding anything to the
contrary in the Coach Supplemental Retirement Plan, the
Executive’s vested account balance under such plan shall be
distributed to the Executive on March 1, 2010.
(d) Executive shall retain his leased
automobile during the period of his part-time employment, and the
Company shall continue to provide insurance coverage on the
automobile. Following the Termination Date, Executive may purchase
his leased automobile or return it to the Company.
(e) The Company shall reimburse the
Executive for his travel expenses incurred in accordance with the
Company’s Travel and Entertainment Policy and for other
reasonable and documented out-of-pocket expenses incurred in
performing his duties under this Agreement. Executive shall retain
his Company-provided cell phone, Blackberry and Portal access card
for use during the term of his part-time employment.
(f) Notwithstanding any other provision
of this Section 1, all reimbursement of expenses pursuant to this
Section 1 shall be made in accordance with the terms of Section
7(c).
2. Stock Options and Restricted Stock
Units.
(a) Subject to the Executive’s
compliance with Section 2(b) of this Agreement, Stock Options
(other than the Extension Options) held by the Executive (the
“ Options ”) and Restricted Stock Units (“
RSUs ”) shall continue to vest during and subsequent
to the period of the Executive’s part-time employment. The
Company acknowledges that the Executive has achieved retirement
status and all existing Options shall continue to vest according to
their terms regardless of Executive’s status under this
Agreement.
(b) Executive shall be permitted to
exercise vested Options and/or sell the shares underlying those
Options. Notwithstanding anything contained in this Agreement to
the contrary, if Executive engages in any activity prohibited by
Section 3 below (collectively, “ Prohibited Conduct
”) during the Non-Compete Period (as defined below), then (i)
Executive’s unexercised stock options and RSUs shall be
forfeited automatically on the date on which Executive first
engaged in such Prohibited Conduct, and (ii) Executive shall pay to
the Company in cash any Financial Gain (as defined in the
applicable Option or RSU grant agreement) Executive realized from
exercising all or a portion of Executive’s stock options or
RSUs within the six (6) month period immediately preceding such
Prohibited Conduct.
(c) The Executive agrees that after the
Transition Date and until the Termination Date, he will not engage
in any “stock swap” exercises of Coach stock options,
and that if he does so the Company shall be permitted to cancel any
restoration stock options he receives in such
transactions.
(d) In the event of any conflict
between (i) the Option Plan and/or any grant agreement relating to
any Option or (ii) and RSU grant agreement, on one hand, and this
Agreement, on the other hand, this Agreement shall
control.
(e) Provided the Executive is not in
material breach of this Agreement, he shall receive (i) the full
benefit of RSUs vesting prior to the Termination Date and (ii) the
pro rata benefit as of the Termination Date of any RSUs vesting
after the Termination Date, which shall be distributed on the date
such RSUs would have otherwise been issued to the Executive
pursuant to the terms of the applicable RSU grant
agreement.
3. Non-Compete; Non-Solicitation;
Confidentiality; etc. In exchange for the payments and
other benefits set forth in this Agreement, which the Executive
acknowledges is good, valuable and sufficient consideration for the
covenants set forth in this Section 3, the parties agree as
follows:
(a) During the period beginning on the
Transition Date and ending on August 10, 2010 (the “
Non-Compete Period ”), the Executive will comply with
the provisions of Section 9(a) of the Employment Agreement. The
Executive acknowledges that compliance with this Paragraph 3(a) is
necessary to protect the business and good will of the Company and
that a breach of any of these provisions will irreparably and
continually damage the Company, for which money damages may not be
adequate.
(b) During the Non-Compete Period, the
Executive will not (and will not permit any employee in his chain
of command employed at a level equivalent to a director level
employee of the Company or above) directly or indirectly, hire,
recruit or otherwise solicit or induce any employee, consultant,
director, wholesale customer, vendor, supplier, lessor or lessee of
the Company to terminate its employment or arrangement with the
Company, or, for employees only, establish any relationship with
the Executive or employees in his chain of command for any business
purpose.
(c) Except as required in the good
faith opinion of the Executive in connection with the performance
of the Executive’s duties hereunder, the Executive shall
maintain in confidence and shall not directly, indirectly or
otherwise, use, disseminate, disclose or publish, or use for his
benefit or the benefit of any person, firm, corporation or other
entity any confidential or proprietary information or trade secrets
of or relating to the Company (or which the Company has a right to
use), including, without limitation, confidential or proprietary
information with respect to the Company’s operations,
processes, systems, access codes or passwords, security protocols,
databases, products, inventions, business practices, finances,
principals, vendors, suppliers, customers (including credit card
information or other customer private information), potential
customers, marketing methods, costs, prices, contractual
relationships, regulatory status, compensation paid to employees,
other terms of employment or employee confidential information, or
deliver to any person, firm, corporation or other entity any
document, record, notebook, computer program or similar repository
of or containing any such confidential or proprietary information
or trade secrets. The parties hereby stipulate and agree that as
between them the foregoing matters are important, material and
confidential proprietary information and trade secrets and
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