Coach 2014 Annual Report Download - page 20

TABLE OF CONTENTS
nor the HDR holders will have the benefit of those Hong Kong rules, regulations and the listing rules of the Hong Kong Stock Exchange for which we have
applied, and been granted, waivers or exemptions by the Hong Kong Stock Exchange and SFC.
Additionally, if any of these waivers or exemptions were to be revoked in circumstances including our non-compliance with applicable undertakings for
any reason, additional legal and compliance obligations might be costly and time consuming, and might result in issues of interjurisdictional compliance,
which could adversely affect us and HDR holders.
As the SFC does not have extra-territorial jurisdiction on any of its powers of investigation and enforcement, it will also have to rely on the regulatory
regimes of Maryland state authorities and the SEC to enforce any corporate governance breaches committed by us in the United States. Investors in the HDRs
should be aware that it could be difficult to enforce any judgment obtained outside the United States against us or any of our associates.
Furthermore, prospective investors in the HDRs should be aware, among other things, that there are U.S. federal withholding and estate tax implications
for HDR holders.
HDR holders are not stockholders of the Company and must rely on the depositary for the HDRs (the “HDR Depositary”) to exercise on their behalf the
rights that are otherwise available to the stockholders of the Company.
HDR holders do not have the rights of stockholders. They only have the contractual rights set forth for their benefit under the deposit agreement for the
HDRs (the “Deposit Agreement”). Holders of HDRs are not permitted to vote at stockholders’ meetings, and they may only vote by providing instructions to
the HDR Depositary. There is no guarantee that holders of HDRs will receive voting materials in time to instruct the HDR Depositary to vote and it is possible
that holders of HDRs, or persons who hold their Hong Kong depositary shares through brokers, dealers or other third parties, will not have the opportunity to
exercise a right to vote, although both we and the HDR Depositary will endeavor to make arrangements to ensure as far as practicable that all holders of HDRs
will be able to vote. As the HDR Depositary or its nominee will be the registered owner of the common stock underlying their HDRs, holders of HDRs must
rely on the HDR Depositary (or its nominee) to exercise rights on their behalf. In addition, holders of HDRs will also incur charges on any cash distribution
made pursuant to the Deposit Agreement and on transfers of certificated HDRs.
Holders of HDRs will experience dilution in their indirect interest in the Company in the event of an equity offering which is not extended to them.
If we decide to undertake an equity offering (that is not a rights or other offering that is extended to HDR holders), HDR holders may suffer a dilution in
their indirect ownership and voting interest in the common stock, as compared to their holdings in the HDRs immediately prior to such an offering.
Holders of HDRs will be reliant upon the performance of several service providers. Any breach of those service providers of their contractual obligations
could have adverse consequences for an investment in HDRs.
An investment in HDRs will depend for its continuing viability on the performance of several service providers, including but not limited to the HDR
Depositary, the registrar for the HDRs, the custodian and any sub-custodian appointed in respect of the underlying common stock. A failure by any of those
service providers to meet their contractual obligations, whether or not by culpable default, could detract from the continuing viability of the HDRs as an
investment. Coach will not have direct contractual recourse against the custodian, any sub-custodian or the registrar; hence the potential for redress in
circumstances of default will be limited. However, Coach and the HDR Depositary have executed a deed poll in favor of HDR holders in relation to the
exercise by them of their rights as HDR holders under the Deposit Agreement against the Company or the HDR Depositary.
Withdrawals and exchanges of HDRs into common stock traded on the NYSE might adversely affect the liquidity of the HDRs.
Our common stock is presently traded on the NYSE. Any HDR holder may at any time request that their HDRs be withdrawn and exchanged into
common stock for trading on the NYSE. Upon the exchange of HDRs into common stock, the relevant HDRs will be cancelled. In the event that a substantial
number of HDRs are withdrawn and exchanged into Common Stock and subsequently cancelled, the liquidity of the HDRs on the Hong Kong Stock
Exchange might be adversely affected.
The time required for HDRs to be exchanged into common stock (and vice versa) might be longer than expected and investors might not be able to settle
or effect any sales of their securities during this period.
There is no direct trading or settlement between the NYSE and the Hong Kong Stock Exchange on which the common stock and the HDRs are
respectively traded. In addition, the time differences between Hong Kong and New York and unforeseen market circumstances or other factors may delay the
exchange of HDRs into common stock (and vice versa). Investors will be prevented from settling or effecting the sale of their securities across the various
stock exchanges during such periods of delay. In addition, there is no assurance that any exchange of HDRs into common stock (and vice versa) will be
completed in accordance with the timelines investors might anticipate.
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