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EXHIBIT 10.2
FORM OF
COACH, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
(Conformed Through the Revised Draft First Amendment)
SECTION 1
INTRODUCTION
1.1 THE PLAN AND ITS EFFECTIVE DATE. The Coach, Inc. Executive
Deferred Compensation Plan ("Plan") is established as of June 1, 2000 (the
"Effective Date") by action of the Compensation and Employee Benefits Committee
of the Board of Directors of Sara Lee Corporation taken at its meeting on April
26, 2000.
1.2 PURPOSE. The Plan is established by Coach, Inc. (the
"Company") to enable Eligible Employees (as defined in Section 2.1) to defer
future compensation from the Company or an Employer (as defined in Section 6)
and to permit such employees to elect to transfer all amounts deferred and not
yet paid under the Sara Lee Corporation Executive Deferred Compensation Plan
(the "Prior Plan") to the Plan. To the extent that an Eligible Employee elects a
transfer of all amounts deferred and not yet paid under the Prior Plan to the
Plan, the provisions of the Plan amend and supercede the provisions of the Prior
Plan; provided, that elections and beneficiary designations made by such
Eligible Employee under the Prior Plan shall remain in effect under the Plan,
except as specifically provided in subsection 2.2(i) below. The Plan is intended
to be a top-hat plan described in Section 201(2) of the Employee Retirement
Income Security Act of 1974 ("ERISA").
1.3 ADMINISTRATION. The Plan shall be administered by the
Compensation and Employee Benefits Committee of the Board of Directors of the
Company (the "Committee"). The Committee shall have the powers set forth in the
Plan and the power to interpret its provisions. Any decisions of the Committee
shall be final and binding on all persons with regard to the Plan. The Committee
may delegate its authority hereunder to the Senior Vice President, Human
Resources of the Company or to such other officers of the Company as it may deem
appropriate.
1.4 PLAN YEAR. The Plan shall be administered on the basis of
the calendar year (the "Plan Year"). The first Plan Year shall be a short Plan
Year beginning on the Effective Date and ending on the next following December
31st.
SECTION 2
PARTICIPATION AND DEFERRAL ELECTIONS
2.1 ELIGIBILITY AND PARTICIPATION. Subject to the conditions
and limitations of the Plan, all officers and key employees of the Company at
the "C" level and above shall be eligible to participate in the Plan ("Eligible
Employees"). Any Eligible Employee who makes a Deferral Election as described in
Section 2.2 below shall become a participant in the Plan ("Participant") and
shall remain a Participant until the entire balance of his Deferral Account
(defined in Section 3.1 below) is distributed to him.
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2.2 RULES FOR DEFERRAL ELECTIONS. Any Eligible Employee may
make irrevocable elections to defer receipt of the amounts described in Section
2.3 below (each such election shall be referred to as a "Deferral Election" and
the amount deferred pursuant to such an election the "Deferral") for a Plan Year
in accordance with the rules set forth below.
(a) An Eligible Employee shall be eligible to make a
Deferral Election only if he is an active, regular,
full-time employee of an Employer on the date such
election is made.
(b) For each Plan Year, an Eligible Employee may make no
more than one Deferral Election for the Eligible
Employee's Annual Bonus and such number of Deferral
Elections with respect to the Eligible Employee's
Annual Base Salary as the Committee may prescribe.
(c) Subject to the following, all Deferral Elections must
be made in such manner as the Committee may prescribe
and must be received by the Committee no later than
the date specified by the Committee:
(i) In no event will the date specified by the
Committee with respect to an Annual Bonus be
later than: (A) for the first Plan Year, the
thirtieth (30th) day following the Effective
Date, or (B) for each Plan Year thereafter,
the end of the Plan Year preceding the Plan
Year in which the Annual Bonus is
anticipated to be paid.
(ii) Any Deferral Election with respect to an
Eligible Employee's Annual Base Salary shall
only apply to that portion of the Eligible
Employee's Annual Base Salary remaining to
be paid for service during the Plan Year
after the date the Deferral Election is
made.
(d) As part of each Deferral Election, the Eligible
Employee must specify the date on which the Deferral
will be paid (the "Distribution Date"); provided,
that notwithstanding the Eligible Employee's Deferral
Election, in no event shall such Deferral be paid
prior to the date that Sara Lee Corporation certifies
to the Company that it no longer owns either (i)
shares of Coach, Inc. common stock representing
"control" of the Company (within the meaning of
Section 368(c) of the Internal Revenue Code of 1986,
as amended (the "Code")) or (ii) shares of Coach,
Inc. common stock sufficient to satisfy the
"80-percent voting and value test" (described in
Section 1504(a)(2) of the Code) (the "Spin-Off
Date"), unless the Company demonstrates to the
satisfaction of Sara Lee Corporation that it has
purchased shares of Coach, Inc. common stock on the
open market in a number sufficient to cover the
payment, and actually re-issues such repurchased
shares
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pursuant to such payment. The Distribution Dates
specified in an Eligible Employee's Deferral
Elections may, but need not necessarily, be the same
for all Deferrals. Except as provided in subsection
(f) below, each Distribution Date is irrevocable and
shall apply only to that portion of the Participant's
Deferral Account which is attributable to the
Deferral.
(e) The Distribution Date selected by an Eligible
Employee shall not be earlier than the January 1
immediately following the first anniversary of the
date on which the Deferral Election is made.
(f) A Participant may make an irrevocable election to
extend a Distribution Date (a "Re-Deferral
Election"); provided, that no Re-Deferral Election
shall be effective unless (i) the Committee receives
the election prior to the December 1 of the Plan Year
preceding the Plan Year in which the Distribution
Date to be changed occurs, and (ii) the new
Distribution Date is not earlier than the January 1
immediately following the first anniversary of the
date the Re-Deferral Election is made. All
Re-Deferral Elections must be made in such manner and
pursuant to such rules as the Committee may
prescribe.
(g) As part of each Deferral Election, an Eligible
Employee must elect the manner in which the Deferral
will be paid beginning on the selected Distribution
Date. The Deferral may be paid in a single lump sum
or in substantially equal annual installments over a
period not exceeding five (5) years as provided under
Section 4.1. Except as provided in Section 4.1, an
Eligible Employee's election as to the manner of
payment shall be irrevocable. If the Participant
elects an installment method of payment the
Distribution Date must be as of January 1.
(h) A Deferral Election shall be irrevocable; provided,
that if the Committee determines that a Participant
has an Unforeseeable Financial Emergency (as defined
in Section 4.7), then the Participant's Deferral
Elections then in effect shall be revoked with
respect to all amounts not previously deferred.
(i) Any Eligible Employee who was a participant in the
Prior Plan on the Effective Date may elect to
transfer his or her Prior Plan Deferral Account to
the Plan at such time and in accordance with such
rules as may be established by the Committee. Amounts
transferred under this subsection shall be subject to
the Deferral Election and any beneficiary designation
made under the Prior Plan and shall be treated as a
separate Deferral for all purposes of this Plan.
Notwithstanding the foregoing, in the event that the
Distribution Date specified in the Prior Plan
Deferral Election occurs before the Spin-Off Date,
distribution of the Prior Plan Deferral Account
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shall not be made until the Spin-Off Date, unless the
Company demonstrates to the satisfaction of Sara Lee
Corporation that it has purchased shares of Coach,
Inc. common stock on the open market in a number
sufficient to cover the Prior Plan Deferral payment,
and actually re-issues such repurchased shares
pursuant to such payment.
2.3 AMOUNTS DEFERRED. An Eligible Employee may make a Deferral
Election to defer receipt of the following amounts:
(a) All or any portion of the Eligible Employee's annual
bonus for a year due under an annual bonus plan or
any other short-term incentive plan of the Company or
an Employer (an "Annual Bonus").
(b) All or any portion of the Eligible Employee's Annual
Base Salary. "Annual Base Salary" shall mean the
regular rate of compensation to be paid to the
Eligible Employee for services rendered during the
Plan Year excluding severance or termination
payments, commissions, foreign service payments,
payments for consulting services and such other
unusual or extraordinary payments as the Committee
may determine.
(c) Such other bonuses and incentive payments under any
plan or arrangement established by the Company or an
Employer as the Committee may designate as
compensation eligible for deferral under this Plan in
such increments and subject to such limitations and
restrictions as the Committee may establish.
SECTION 3
DEFERRAL ACCOUNTS
3.1 DEFERRAL ACCOUNTS. All amounts deferred pursuant to a
Participant's Deferral Elections under the Plan shall be allocated to a
bookkeeping account in the name of the Participant ("Deferral Account") and the
Committee shall maintain a separate subaccount under a Participant's Deferral
Account for each Deferral. Deferrals shall be credited to the Deferral Account
as of the Deferral Crediting Date coinciding with or next following the date on
which, in the absence of a Deferral Election, the Participant would otherwise
have received the Deferral. A "Deferral Crediting Date" shall mean the business
day coinciding with or next following the 15th day of each calendar month and
the business day coinciding with or next following the last day of each calendar
month.
3.2 INVESTMENT OF DEFERRAL ACCOUNT. A Participant's Deferral
Account shall be invested as follows:
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(a) PRE-INITIAL PUBLIC OFFERING. Prior to the date of the
Company's initial public offering (the "IPO Date"),
interest will be credited to the Participant's
Deferral Account as of (i) each business day
coinciding with or next following the last day of
each month and (ii) the business day immediately
preceding the IPO Date. The rate of interest to be
credited shall be equal to 7.5 percent, compounded
annually.
(b) POST-INITIAL PUBLIC OFFERING. On and after the IPO
Date, the amount of the Participant'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 on the Distribution Date (subject to Sections
4.1 and 4.11 below). On the IPO Date, the number of
Deferred Stock Units to be credited to the
Participant's Deferral Account and appropriate
subaccounts shall be determined by dividing the
balance of the Participant's Deferral Account on that
date by the initial offering price of the common
stock of Coach, Inc. After the IPO Date, the number
of Coach, Inc. Deferred Stock Units to be credited to
the Participant's Deferral Account and appropriate
subaccounts on each Deferral Crediting Date shall be
determined by dividing the Deferral to be "invested"
on that date by the average of the high and low
quotes of Coach, Inc. 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 and after the Spin-Off Date, an amount
equal to the number of Deferred Stock Units held as
of each dividend record date multiplied by the
dividend paid on Coach, Inc. common stock on each
dividend payment date shall either (a) be credited to
the Participant'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 a Deferral or (b) at the
election of the Participant at such time and in
accordance with such rules as established by the
Committee, be paid in cash to the Participant 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 Committee
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
Participant's Deferral Account.
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Subject to Sections 4.1 and 4.11, the number of
shares of Coach, Inc. common stock to be paid to a
Participant 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. Except provided in Section
4.11, all payments from the Plan shall be made in
whole shares of Coach, Inc. common stock with
fractional shares credited to federal income taxes
withheld.
3.3 VESTING. A Participant shall be fully vested at all times
in the balance of his Deferral Account.
SECTION 4
PAYMENT OF BENEFITS
4.1 TIME AND METHOD OF PAYMENT. Payment of a Participant's
Deferral shall be made in a single lump sum or shall commence in installments as
elected by the Participant in the Deferral Election. A Participant may make a
one-time election after the original Deferral Election to change the method of
payment elected by the Participant; provided, that such election shall not be
effective unless the election to change the method of payment is received by the
Committee prior to the December 1 of the Plan Year preceding the Plan Year in
which the Distribution Date specified in the original Deferral Election occurs.
If a Participant's Deferral Account is payable in a single lump sum, the payment
shall be made as soon as practicable following the Distribution Date but not
later than thirty (30) days following the Distribution Date. If a Participant's
Deferral is payable in installment payments, then the Participant's Deferral
shall be paid in annual installments of substantially equal shares over the
period as elected by the Participant in the Deferral Election commencing as soon
as practicable following the Distribution Date but not later than thirty (30)
days following the Distribution Date. Notwithstanding anything contained in the
Plan or a Participant's Deferral Election(s) to the contrary, no distributions
or payments shall be made from the Plan prior to the Spin-Off Date, unless the
Company demonstrates to the satisfaction of Sara Lee Corporation that it has
purchased shares of Coach, Inc. common stock on the open market in a number
sufficient to cover such distributions or payments, and actually re-issues such
repurchased shares pursuant to such distributions or payments.
4.2 PAYMENT UPON TOTAL DISABILITY. In the event a Participant
becomes totally disabled before all amounts credited to his Deferral Account
have been paid, payment of the Participant's Deferral Account shall be made or
shall commence in the method of payment elected by the disabled Participant;
provided, that the disabled Participant requests payment in writing within
one-hundred eighty (180) days of becoming disabled; and provided further, that
no payment shall be made prior to the Spin-Off Date, unless the Company
demonstrates to the satisfaction of Sara Lee Corporation that it has purchased
shares of Coach, Inc. common stock on the open market in a number sufficient to
cover the payment, and actually re-issues such repurchased shares pursuant to
such payment. If such a request is not made, the disabled
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Participant's Deferrals will be paid pursuant to the Deferral Elections and the
normal provisions of the Plan. A Participant will be considered to be totally
disabled for purposes of the Plan if the Participant is determined to be totally
disabled under the Company's disability plan applicable to the Participant.
4.3 PAYMENT UPON RETIREMENT OR OTHER TERMINATION OF
EMPLOYMENT. In the event the Participant retires or otherwise terminates
employment with the Company for any reason before the entire balance in the
Participant's Deferral Account has been paid, the Participant's Deferral Account
shall continue to be maintained for the benefit of the Participant and Deferrals
shall be paid pursuant to the Deferral Elections and the normal provisions of
the Plan; provided, that a Participant's Deferral Election may provide for the
immediate payment of the Participant's Deferral Account upon his retirement or
other termination of employment; and provided further, that no payment shall be
made prior to the Spin-Off Date, unless the Company demonstrates to the
satisfaction of Sara Lee Corporation that it has purchased shares of Coach, Inc.
common stock on the open market in a number sufficient to cover the payment, and
actually re-issues such repurchased shares pursuant to such payment.
4.4 PAYMENT UPON DEATH OF A PARTICIPANT. In the event a
Participant dies before all amounts credited to his Deferral Account have been
paid, payment of the Participant's Deferral Account shall be made or shall
commence in the method of payment elected by the Participant's Beneficiary or
the Executor/Executrix of the Participant's estate; provided, that the request
is made in writing within one-hundred eighty (180) days of the Participant's
death; and provided further, that no payment shall be made prior to the Spin-Off
Date, unless the Company demonstrates to the satisfaction of Sara Lee
Corporation that it has purchased shares of Coach, Inc. common stock on the open
market in a number sufficient to cover the Deferral payment, and actually
re-issues such repurchased shares pursuant to such payment. If such a request is
not made, the deceased Participant's Deferrals will be paid pursuant to the
Deferral Elections and the normal provisions of the Plan.
4.5 BENEFICIARY. A Participant's Beneficiary shall mean the
individual(s) or entity designated by the Participant to receive the balance of
the Participant's Deferral Account in the event of the Participant's death prior
to the payment of his entire Deferral Account. To be effective, any Beneficiary
designation shall be filed in writing with the Committee. A Participant may
revoke an existing Beneficiary designation by filing another written Beneficiary
designation with the Committee. The latest Beneficiary designation received by
the Committee shall be controlling. If no Beneficiary is named by a Participant
or if he survives all of his named Beneficiaries, the Deferral Account shall be
paid in the following order of precedence:
(a) the Participant's spouse;
(b) the Participant's children (including adopted
children), per stirpes; or
(c) the Participant's estate.
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4.6 FORM OF PAYMENT. Except as provided in Section 4.11, all
payments from the Plan shall be made in whole shares of Coach, Inc. common stock
with fractional shares credited to federal income taxes withheld.
4.7 UNFORESEEABLE FINANCIAL EMERGENCY. If the Committee or its
designee determines that a Participant has incurred an Unforeseeable Financial
Emergency (as defined below), the Participant may withdraw in cash and/or stock
the portion of the balance of his Deferral Account needed to satisfy the
Unforeseeable Financial Emergency, to the extent that the Unforeseeable
Financial Emergency may not be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the Participant's assets, to the
extent the liquidation of such assets would not itself cause severe financial
hardship. An "Unforeseeable Financial Emergency" is a severe financial hardship
to the Participant resulting from (i) a sudden and unexpected illness or
accident of the Participant or of a dependent of the Participant; (ii) loss of
the Participant's property due to casualty; or (iii) such other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant as determined by the Committee. A
withdrawal on account of an Unforeseeable Financial Emergency shall be paid as
soon as possible following the date on which the withdrawal is approved;
provided, that no withdrawal shall be made prior to the Spin-Off Date, unless
the Company demonstrates to the satisfaction of Sara Lee Corporation that it has
purchased shares of Coach, Inc. common stock on the open market in a number
sufficient to cover the withdrawal, and actually re-issues such repurchased
shares pursuant to such withdrawal.
4.8 EARLY WITHDRAWAL WITH PENALTY. Notwithstanding the other
provisions of the Plan to the contrary, a Participant may request a withdrawal
from his Deferral Account by filing a request with the Committee or its designee
in writing. Payment will be made to the Participant within thirty (30) days of
the approval of such a request; provided, that no withdrawal shall be made prior
to the Spin-Off Date, unless the Company demonstrates to the satisfaction of
Sara Lee Corporation that it has purchased shares of Coach, Inc. common stock on
the open market in a number sufficient to cover the withdrawal, and actually
re-issues such repurchased shares pursuant to such withdrawal. Any amount
withdrawn under this provision will be charged with a ten (10) percent early
withdrawal penalty which will be withheld from the amount withdrawn and
forfeited as provided in Section 5.5.
4.9 WITHHOLDING OF TAXES. The Company shall withhold any
applicable minimum statutory Federal, state or local income tax from payments
due under the Plan. The Company shall also withhold Social Security taxes,
including the Medicare portion of such taxes, and any other employment taxes as
necessary to comply with applicable laws.
4.10 SMALL AMOUNTS. Notwithstanding any election by the
Participant regarding the timing and manner of payment of his Deferrals, in the
event of a Participant's retirement or other termination of employment, the
Employer may elect to pay the Participant a lump sum distribution of the entire
value of the Participant's Deferral Account; provided, that the value is less
than ten-thousand dollars ($10,000) determined as of the Valuation Date
coinciding with or immediately following the Participant's termination of
employment; provided further, that no payment shall be made prior to the
Spin-Off Date, unless the Company demonstrates to the satisfaction of Sara Lee
Corporation that it has purchased shares of Coach, Inc. common stock on
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the open market in a number sufficient to cover the payment, and actually
re-issues such repurchased shares pursuant to such payment.
4.11 PAYMENT UPON BANKRUPTCY LIQUIDATION. Notwithstanding
anything contained in the Plan to the contrary, in the event that the Company is
liquidated in bankruptcy, (a) no distributions from the Plan shall be made in
shares of Coach, Inc. common stock and (b) distributions to a Participant shall
be made in cash in an amount determined by multiplying each Deferred Stock Unit
in the Participant's Deferral Account by the Market Value of Coach, Inc. common
stock on the date such Deferred Stock Unit was first credited to the
Participant's Deferral Account.
SECTION 5
MISCELLANEOUS
5.1 FUNDING. Benefits payable under the Plan to any
Participant shall be paid directly by the Participant's Employer (including the
Company if the Participant is employed by the Company). The Company and the
Employers shall not be required to fund, or otherwise segregate assets to be
used for payment of benefits under the Plan.
5.2 ACCOUNT STATEMENTS. As soon as practical after the end of
each calendar year (or after such additional date or dates as the Committee, in
its discretion, may designate), each Participant shall be provided with a
statement of the balance of his Deferral Account hereunder as of the last day of
such calendar year (or as of such other dates as the Committee, in its
discretion, may designate).
5.3 EMPLOYMENT RIGHTS. Establishment of the Plan shall not be
construed to give any Eligible Employee the right to be retained in the
Company's service or to any benefits not specifically provided by the Plan.
5.4 INTERESTS NOT TRANSFERABLE. Except as (a) provided under
(i) Section 4.9 or (ii) an agreement between a Participant and the Company, or
(b) required for purposes of withholding of any tax under the laws of the United
States or any state or locality, no benefit payable at any time under the Plan
shall be subject in any manner to alienation, sale, transfer, assignment,
pledge, attachment, or other legal process, or encumbrance of any kind. Any
attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any
such benefits, whether currently or thereafter payable, shall be void. No person
shall, in any manner, be liable for or subject to the debts or liabilities of
any person entitled to such benefits. If any person shall attempt to, or shall
alienate, sell, transfer, assign, pledge or otherwise encumber his benefits
under the Plan, or if by any reason of his bankruptcy or other event happening
at any time, such benefits would devolve upon any other person or would not be
enjoyed by the person entitled thereto under the Plan, then the Committee, in
its discretion, may terminate the interest in any such benefits of the person
entitled thereto under the Plan and hold or apply them for or to the benefit of
such person entitled thereto under the Plan or his spouse, children or other
dependents, or any of them, in such manner as the Committee may deem proper.
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5.5 FORFEITURES AND UNCLAIMED AMOUNTS. Unclaimed amounts shall
consist of the amounts of the Deferral Account of a Participant that are not
distributed because of the Committee's inability, after a reasonable search, to
locate a Participant or his Beneficiary, as applicable, within a period of two
(2) years after the date upon which the payment of any benefits becomes due and
the amount by which a Participant's Account is reduced under Section 4.8.
Unclaimed amounts shall be forfeited at the end of such two-year period. These
forfeitures will reduce the obligations of the Company under the Plan and the
Participant or Beneficiary, as applicable, shall have no further right to his
Deferral Account unless the Committee determines otherwise in a particular case.
5.6 CONTROLLING LAW. The law of New York, except its law with
respect to choice of law, shall be controlling in all matters relating to the
Plan to the extent not preempted by ERISA.
5.7 GENDER AND NUMBER. Words in the masculine gender shall
include the feminine, and the plural shall include the singular and the singular
shall include the plural.
5.8 ACTION BY THE COMPANY. Except as otherwise specifically
provided herein, any action required of or permitted by the Company under the
Plan shall be by resolution of the Board of Directors of the Company or by
action of any member of the Committee or person(s) authorized by resolution of
the Board of Directors of the Company.
SECTION 6
EMPLOYER PARTICIPATION
Any subsidiary or affiliate of the Company incorporated under
the laws of any state in the United States (an "Employer") may, with the
approval of the Committee and under such terms and conditions as the Committee
may prescribe, adopt the corresponding portions of the Plan. The Committee may
amend the Plan as necessary or desirable to reflect the adoption of the Plan by
an Employer; provided, however, that an adopting Employer shall not have the
authority to amend or terminate the Plan under Section 7.
SECTION 7
AMENDMENT AND TERMINATION
The Company intends the Plan to be permanent, but reserves the
right at any time by action of its Board of Directors to modify, amend or
terminate the Plan; provided, however, that any amendment or termination of the
Plan shall not reduce or eliminate any Deferral Account accrued through the date
of such amendment or termination. The Committee shall have the same authority to
adopt amendments to the Plan as the Board of Directors of the Company in the
following circumstances:
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(a) to adopt amendments to the Plan which the Committee
determines are necessary or desirable for the Plan to
comply with or to obtain benefits or advantages under
the provisions of applicable law, regulations or
rulings or requirements of the Internal Revenue
Service or other governmental or administrative
agency or changes in such law, regulations, rulings
or requirements; and
(b) to adopt any other procedural or cosmetic amendment
that the Committee determines to be necessary or
desirable that does not materially change benefits to
Participants or their Beneficiaries or materially
increase the Company's or adopting Employers'
obligations under the Plan.
The Committee shall provide notice of amendments adopted by the Committee to the
Board of Directors of the Company on a timely basis.
Executed in multiple originals this ___ day of _____________,
2000
COACH, INC.
By:__________________________
Its: _________________________
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APPENDIX A
TO
COACH, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
GLOSSARY OF TERMS
As used herein, the term:
(1) "Annual Base Salary" means the regular rate of
compensation to be paid to the Eligible Employee for services rendered during
the Plan Year excluding severance or termination payments, commissions, foreign
service payments, payments for consulting services and such other unusual or
extraordinary payments as the Committee may determine.
(2) "Annual Bonus" means an Eligible Employee's annual bonus
for a year due under an annual bonus plan or any other short-term incentive plan
of the Company or an Employer.
(3) "Beneficiary" means the individual(s) or entity designated
by a Participant to receive the balance of the Participant's Deferral Account in
the event of the Participant's death prior to the payment of the Participant's
entire Deferral Account.
(4) "Code" means the Internal Revenue Code of 1986, as
amended.
(5) "Committee" means the Compensation and Employee Benefits
Committee of the Board of Directors of the Company.
(6) "Company" means Coach, Inc.
(7) "Deferral" means the amount deferred pursuant to a
Deferral Election.
(8) "Deferral Account" means the bookkeeping account
established in the name of the Participant to hold all amounts deferred pursuant
to a Participant's Deferral Elections under the Plan.
(9) "Deferral Crediting Date" means the business day
coinciding with or next following the 15th day of each calendar month and the
business day coinciding with or next following the last day of each calendar
month.
(10) "Deferral Election" means a Participant's irrevocable
election to defer receipt of amounts described in Section 2.3 of the Plan for a
Plan Year.
(11) "Deferred Stock Unit" means the investment vehicle under
the Plan under which each Deferred Stock Unit represents the right to receive
one share of Coach, Inc. common stock on the Distribution Date (subject to
Sections 4.1 and 4.11).
(12) "Distribution Date" means the date on which an Eligible
Employee elects to have a Deferral paid pursuant to a Deferral Election.
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(13) "Effective Date" means the effective date of the Plan,
June 1, 2000.
(14) "Eligible Employee" means each officer or key executive
of the Company who is at the "C" level or above.
(15) "Employer" means any subsidiary of the Company
incorporated under the laws of any state in the United States.
(16) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(17) "Financial Gain" means the difference between the fair
market value of the common stock of the Company on the date of exercise and the
exercise price, multiplied by the number of shares of common stock purchased
pursuant to that exercise (without reduction for any shares of common stock
surrendered or attested to).
(18) "IPO Date" means the date of the Coach, Inc. initial
public offering.
(19) "Market Value" of Coach, Inc. common stock means the
average of the high and low quotes for Coach, Inc. common stock on the
applicable day on the New York Stock Exchange Composite Transaction Tape.
(20) "Participant" means any Eligible Employee who makes a
Deferral Election or has an Account under the Plan.
(21) "Plan" means the Coach, Inc. Executive Deferred
Compensation Plan.
(22) "Plan Year" means the calendar year.
(23) "Prior Plan" means the Sara Lee Corporation Executive
Deferred Compensation Plan.
(24) "Re-Deferral Election" means a Participant's irrevocable
election to extend a Distribution Date.
(25) "Spin-Off Date" means the date that Sara Lee Corporation
certifies to the Company that it no longer owns either (a) shares of Coach, Inc.
common stock representing "control" of the Company (within the meaning of
Section 368(c) of the Code) or (b) shares of Coach, Inc. common stock sufficient
to satisfy the "80-percent voting and value test" (described in Section
1504(a)(2) of the Code).
(26) "Unforeseeable Financial Emergency" means a severe
financial hardship to the Participant resulting from (i) a sudden and unexpected
illness or accident of the Participant or of a dependent of the Participant;
(ii) loss of the Participant's property due to casualty; or (iii) such other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant as determined by the Committee.
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