INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT

                                     between

                              SARA LEE CORPORATION

                                       and

                                   COACH, INC.



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                                TABLE OF CONTENTS

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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 Sara Lee........................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 Sara Lee
                                     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         Sara Lee Affiliate................................25
               Section 4.43         Sara Lee Business.................................25
               Section 4.44         Sara Lee Facilities...............................25
               Section 4.45         Sara Lee Group....................................26
               Section 4.46         Sara Lee Guarantee................................26
               Section 4.47         Sara Lee Indemnitees..............................26
               Section 4.48         Sara Lee 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 Sara Lee 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 Sara Lee Corporation, a 
Maryland corporation ("Sara Lee"), 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, Sara Lee 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 Sara Lee 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 Sara Lee 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) SARA LEE RELEASE. Except as provided in Section 1.1(c), 
effective as of the Separation Date, Sara Lee does hereby, for itself and as 
agent for each member of the Sara Lee 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 Sara Lee 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 
Sara Lee or any member of the Sara Lee Group, or any other Person released 
pursuant to Section 1.1(a), with respect to any Liabilities released pursuant 
to Section 1.1(a). Sara Lee agrees, for itself and as agent for each member 
of the Sara Lee 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 Sara Lee 
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 Sara Lee Indemnitees from and against, and shall 
reimburse such Sara Lee Indemnitees with respect to, any and all Losses that 
any third party seeks to 

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impose upon the Sara Lee Indemnitees, or which are imposed upon the Sara Lee 
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 Sara Lee
        Portions.

In the event that any member of the Coach Group makes a payment to the Sara 
Lee Indemnitees hereunder, and any of the Sara Lee 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 Sara Lee), Sara Lee will promptly repay (or will procure a Sara Lee 
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 SARA LEE. Except as otherwise provided 
in this Agreement, Sara Lee shall, for itself and as agent for each member of 
the Sara Lee 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 Sara Lee 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 Sara Lee Business;

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                      (ii) any breach by Sara Lee or any member of the Sara Lee
        Group of the Separation Agreement or any of the Ancillary Agreements
        (including this Agreement); and

                      (iii) any IPO Liabilities with respect to the Sara Lee
        Portions only.


In the event that any member of the Sara Lee 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 Sara Lee Group the amount by which the 
payment made by such member of the Sara Lee 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 Sara Lee 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 Sara Lee 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 SARA LEE. Sara Lee shall, for itself 
and as agent for each member of the Sara Lee 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 Sara Lee 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 Sara Lee 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, Sara Lee 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 Sara Lee 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. Sara Lee 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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Sara Lee or a member of the Sara Lee Group is named as a party thereto; 
PROVIDED, HOWEVER, that Sara Lee 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, 
Sara Lee 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, Sara Lee 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 Sara Lee 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 Sara Lee 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, 
Sara Lee 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"), 
Sara Lee 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 Sara Lee; PROVIDED, HOWEVER, that 
if Sara Lee 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, 
Sara Lee 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 Sara Lee, as the case may be, 
for premium expenses, deductibles or retention amounts and Coach Covered 
Parties shall promptly pay or reimburse Sara Lee for any costs and expenses 
which Sara Lee 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 Sara Lee 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. Sara Lee, at the 
request of Coach, shall cooperate with and use commercially reasonable 
efforts to assist Coach 

                                       11
<PAGE>

in recovering Insurance Proceeds under Sara Lee 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 
Sara Lee 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 Sara 
Lee 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 Sara Lee 
Group or the Coach Group thereunder. However, nothing in this Section 2.2 
shall (A) preclude any member of the Sara Lee Group or the Coach Group from 
presenting any claim or from exhausting any policy limit, (B) require any 
member of the Sara Lee Group or the Coach Group to pay any premium or other 
amount or to incur any Liability, or (C) require any member of the Sara Lee 
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 Sara Lee's insurance programs. Notwithstanding the 
foregoing, Sara Lee, 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 Sara Lee 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) SARA LEE GUARANTEES. Coach agrees that from and after the 
expiration of the Insurance Transition Period and for so long as there is a 
Sara Lee 

                                       12
<PAGE>

Guarantee obligation outstanding, Coach (i) will take all actions necessary 
and consistent with Sara Lee's 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 Sara Lee Guarantee then in effect and (ii) provide that Sara 
Lee be a "named insured" under those liability policies of Coach which are 
solely controlled by Coach in respect of Liabilities that Sara Lee may incur 
as a result of any Sara Lee Guarantee obligation with respect to the Coach 
Business, the Coach Assets or the Coach Liabilities, at no premium cost to 
Sara Lee therefor, such that Sara Lee 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 Sara Lee 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 Sara Lee as 
a "named insured," and Coach shall not cancel any such policy or reduce the 
coverage available thereunder in any manner detrimental to Sara Lee, without 
Sara Lee's prior written consent, not to be unreasonably withheld. Sara Lee 
agrees to promptly release Coach from its obligations under this Section 
2.3(b) following the date on which there are no Sara Lee Guarantee 
obligations outstanding.

        Section 2.4 RESPONSIBILITIES FOR DEDUCTIBLES AND/OR SELF-INSURED 
OBLIGATIONS. Coach will reimburse Sara Lee 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 Sara Lee is 
required to pay any such amounts.

        Section 2.5 PROCEDURES WITH RESPECT TO INSURED COACH LIABILITIES.

               (a) REIMBURSEMENT. Coach will reimburse Sara Lee 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 Sara Lee's 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
<PAGE>

        Section 2.6 INSUFFICIENT LIMITS OF LIABILITY FOR SARA LEE LIABILITIES 
AND COACH LIABILITIES.

               (a) INSUFFICIENT LIMITS OF LIABILITY. In the event that there 
are insufficient limits of liability available under Sara Lee's Insurance 
Policies in effect prior to the Distribution Date to cover the Liabilities of 
Sara Lee and/or Coach that would otherwise be covered by such Insurance 
Policies, then to the extent that other insurance is not available to Sara 
Lee 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
        Sara Lee's Insurance Policies in effect prior to the Distribution Date
        net of uncollectible amounts attributable to insurer insolvencies, and
        (B) the proceeds received from Sara Lee's Insurance Policies if the
        Liabilities are the subject of disputed coverage claims and, following
        consultation with each other, Sara Lee and/or Coach agree to accept less
        than full policy limits from Sara Lee's 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.

                                       14
<PAGE>

               (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 Sara Lee 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 Sara Lee 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
        Sara Lee. The Coach Liabilities are incurred prior to the Sara Lee
        Liabilities, and paid for by Sara Lee's 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 Sara
        Lee and $10 million is allocated to Coach. Coach should pay Sara Lee
        $190 million, Sara Lee's share of the Coverage Amount.

                      (iii) Illustration No. 3. Same as Illustration No. 2,
        except that Sara Lee's claims ($200 million) were paid for by Sara Lee's
        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). Sara Lee 
        should pay Coach $10 million.

                                       15
<PAGE>

        Section 2.7 COOPERATION. Sara Lee 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 Sara Lee Group in respect of any Insurance Policy or any 
other contract or policy of insurance.


















                                       16
<PAGE>

        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 Sara 
Lee Group or any Sara Lee Indemnitee shall have any Liability whatsoever as a 
result of the insurance policies and practices of Sara Lee 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 Sara Lee 
and Coach shall work together to evaluate insurance options and secure 
additional or alternate insurance for Coach and/or Sara Lee if desired by and 
cost effective for Coach and Sara Lee. 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
<PAGE>

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 Cook 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 Sara Lee 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 
Sara Lee 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
<PAGE>

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 Cook 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 Cook County, 
Illinois. There shall be three (3) neutral arbitrators of whom Sara Lee 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
<PAGE>

if to Sara Lee :

                      Sara Lee Corporation
                      Three First National Plaza
                      70 West Madison
                      Chicago, Illinois  60602-4260
                      Attention: General Counsel
                      Facsimile No.:  (312) 345-5706

if to Coach:

                      Coach, Inc.
                      516 West 34th Street
                      New York, New York  10001
                      Attention:  General Counsel
                      Facsimile No.:  (212) 629-2398

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 Sara Lee, Sara Lee's Subsidiaries, Coach and Coach's 
Subsidiaries and inure solely to the benefit of the Coach Indemnitees and the 
Sara Lee 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. 
Sara Lee hereby agrees to execute, for the benefit of any Coach Indemnitee, 
such documents as may be reasonably requested by such Coach Indemnitee, 
evidencing Sara Lee's agreement that the indemnification obligations of Sara 
Lee set forth in this Agreement inure to the benefit of and are enforceable 
by such Coach Indemnitee. 

                                       20
<PAGE>

Coach hereby agrees to execute, for the benefit of any Sara Lee Indemnitee, 
such documents as may be reasonably requested by such Sara Lee 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 Sara Lee 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 Sara Lee 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
<PAGE>

        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
<PAGE>

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
<PAGE>

        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 
Sara Lee of all or a significant portion of the shares of capital stock of 
Coach owned by Sara Lee, which divestiture may be effected by Sara Lee as a 
dividend, an exchange with existing Sara Lee stockholders for shares of Sara 
Lee capital stock, a spin-off or otherwise, as a result of which Sara Lee 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 

                                       24
<PAGE>

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.

                                       25
<PAGE>

        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.




















                                       26
<PAGE>

        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 
Sara Lee's 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. Sara 
Lee 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 SARA LEE AFFILIATE. "Sara Lee Affiliate" means any 
corporation or other entity directly or indirectly Controlled by Sara Lee, 
but excluding Coach and any Coach Affiliate.

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        Section 4.43 SARA LEE BUSINESS. "Sara Lee Business" means any 
business of Sara Lee other than the Coach Business.

        Section 4.44 SARA LEE FACILITIES. "Sara Lee 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 Sara Lee Group, whether 
for the Sara Lee Business or the Coach Business, excluding the Coach 
Facilities.

        Section 4.45 SARA LEE GROUP. "Sara Lee Group" means the Affiliated 
Group, or similar group of entities as defined under corresponding provisions 
of the laws of other jurisdictions, of which Sara Lee 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 SARA LEE GUARANTEE. "Sara Lee 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 Sara Lee is or may be liable, as guarantor, original 
tenant, primary obligor or otherwise.

        Section 4.47 SARA LEE INDEMNITEES. "Sara Lee Indemnitees" means Sara 
Lee, each member of the Sara Lee Group and each of their respective 
directors, officers and employees.

        Section 4.48 SARA LEE PORTIONS. "Sara Lee 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) Sara Lee and the Sara Lee Group, (b) the Sara Lee Business, (c) Sara 
Lee's 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 Sara Lee.

        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 Sara Lee Percentage, as the case may be.

        Section 4.55 SHARED SARA LEE PERCENTAGE. "Shared Sara Lee 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.

                                            SARA LEE CORPORATION

                                            By:
                                               -----------------------------
                                               Name:
                                               Title:

                                            COACH, INC.

                                            By:
                                               -----------------------------
                                               Name:
                                               Title:


<PAGE>

                                 Schedule 2.1(a)

                               Insurance Policies