Coach 2001 Annual Report Download - page 92

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is to be treated as invested in each investment alternative. The two investment
alternatives shall be as follows:
(i) Stock Equivalent Account. Under the Stock Equivalent Account,
the Participating Director's Deferral Account shall be invested in "Deferred
Stock Units" under which each Deferred Stock Unit represents the right to
receive one share of Coach, Inc. common stock, par value $0.01 per share
("Common Stock"), on the Distribution Date (subject to Section 5(a)). The number
of Coach, Inc. Deferred Stock Units to be credited to the Participating
Director's Deferral Account and appropriate subaccounts on each Credit Date
shall be determined by dividing the Deferred Compensation to be "invested" on
that date by the average of the high and low quotes of a share of Common Stock
on the applicable day on the New York Stock Exchange Composite Transaction Tape
("Market Value"). Fractional Deferred Stock Units will be computed to two
decimal places. On any Common Stock dividend record date, an amount equal to the
number of Deferred Stock Units held as of such dividend record date multiplied
by the dividend paid on Common Stock on the applicable dividend payment date
shall either (A) be credited to the Participating Director's Deferral Account
and appropriate subaccount as of the March 31st, June 30th, September 30th or
December 31st coincident with or next following the dividend payment date and
"invested" in additional Deferred Stock Units as though such dividend credits
were Deferred Compensation or (B) at the election of the Participating Director
at such time and in accordance with such rules as established by the Board, be
paid in cash to the Participating Director as of the March 31st, June 30th,
September 30th or December 31st coincident with or next following the dividend
payment date. In the event of any stock dividend, stock split, combination or
exchange of securities, merger, consolidation, recapitalization, spin-off or
other distribution (other than normal cash dividends) of any or all of the
assets of the Company to stockholders, or any other similar change or event
effected without receipt of consideration, such proportionate adjustments, if
any, as the Board in its discretion may deem appropriate to reflect such change
or event shall be made with respect to the number of Deferred Stock Units
credited to a Participating Director's Deferral Account. Subject to Section
5(a), the number of shares of Common Stock to be paid to a Participating
Director on a Distribution Date shall be equal to the number of Deferred Stock
Units accumulated in
-2-
the Deferral Account on such date divided by the total of the payments to be
made. Deferred Stock Units shall not have voting rights.
(ii) Interest Account. Under the Interest Account, interest will be
credited to the Participating Director's Deferral Account as of the business day
coinciding with or next following each June 30 and December 31 (a "Valuation
Date") and on the date the final payment of Deferred Compensation is to be made
based on the balance in the Participating Director's Deferral Account "invested"
in the Interest Account on the Valuation Date or such final payment date. The
rate of interest to be credited for a Plan Year (as defined in Section 4) will
be set at the beginning of each calendar year based upon the U.S. Prime Rate in
effect as of such date as reported in the Wall Street Journal or such other
source as may be designated by the Board. If installment payments are elected,
the amount to be paid to the Participating Director on a Distribution Date shall
be determined as follows: the amount of the principal payment of each
installment shall be determined by dividing the current principal balance by the
number of remaining installment payments and the amount of the interest payment
shall be determined by dividing the current interest balance by the number of
remaining installment payments. All payments from the Interest Account shall be
made in cash.
(c) A Participating Director's investment election shall be subject to
the following rules:
(i) If the Participating Director fails to make an investment
election with respect to Deferred Compensation, the Deferred Compensation shall
be deemed to be invested in the Interest Account.
(ii) All investments in the Stock Equivalent Account shall be