Coach 2002 Annual Report Download - page 102

the Participating Director ("Credit Dates").
(b) Each Participating Director must make an investment election
at the time such Participating Director elects to defer compensation pursuant to
Section 1. The Participating Director shall, pursuant to the applicable Deferred
Compensation Agreement, designate the portion of the Deferred Compensation which
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
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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 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.