<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 1994
REGISTRATION NO. 33-52283
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
REEBOK INTERNATIONAL LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MASSACHUSETTS 04-2678061
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OR ORGANIZATION)
</TABLE>
100 TECHNOLOGY CENTER DRIVE
STOUGHTON, MASSACHUSETTS 02072
(617) 341-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN B. DOUGLAS III, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
REEBOK INTERNATIONAL LTD.
100 TECHNOLOGY CENTER DRIVE
STOUGHTON, MASSACHUSETTS 02072
(617) 341-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES OF COMMUNICATIONS TO:
<TABLE>
<S> <C>
DAVID B. WALEK, ESQ. LOUIS A. GOODMAN, ESQ.
ROPES & GRAY SKADDEN, ARPS, SLATE, MEAGHER & FLOM
ONE INTERNATIONAL PLACE ONE BEACON STREET
BOSTON, MASSACHUSETTS 02110 BOSTON, MASSACHUSETTS 02108
(617) 951-7388 (617) 573-4800
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
================================================================================
<PAGE> 2
- --------------------------------------------------------------------------------
P R O S P E C T U S
- --------------------------------------------------------------------------------
3,000,000 Shares
[REEBOK LOGO]
REEBOK INTERNATIONAL LTD.
Common Stock
($.01 par value)
------------------
The shares of Common Stock offered hereby are being offered by the Selling
Stockholders named herein. See "Selling Stockholders." The Company will not
receive any proceeds from the sale of the Common Stock by the Selling
Stockholders. The Company will purchase 1,000,000 shares of Common
Stock from the Selling Stockholders at the same price per share as
the per share public offering price of the shares of Common
Stock offered hereby, less the amount of all
underwriting discounts. See "Company Stock Repurchase."
The Common Stock is listed on the New York Stock Exchange under the symbol
"RBK." On February 24, 1994, the last reported sale price of the Common Stock
on the New York Stock Exchange was $33 1/8 per share.
See "Common Stock Price Range and Dividends."
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Proceeds
Price to Underwriting to Selling
Public Discount Stockholders(1)
- -----------------------------------------------------------------------------------
Per Share $33.125 $1.15 $31.975
- -----------------------------------------------------------------------------------
Total (2) $99,375,000 $3,450,000 $95,925,000
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
(1) Before deduction of expenses payable by the Selling Stockholders in
connection with the offering estimated at $275,000. See "Selling
Stockholders."
(2) The Selling Stockholders have granted the Underwriters an option,
exercisable within 30 days from the date hereof, to purchase up to 450,000
additional shares on the same terms and conditions as set forth above solely
to cover over-allotments, if any. If such option is exercised in full, the
total price to public will be $114,281,250, the underwriting discount will
be $3,967,500 and the proceeds to Selling Stockholders will be $110,313,750.
See "Underwriting."
------------------
The shares are offered by the several Underwriters when, as and if
delivered to and accepted by the Underwriters and subject to their right to
reject orders in whole or in part. It is expected that the shares will be ready
for delivery on or about March 4, 1994.
CS First Boston
Kidder, Peabody & Co.
Incorporated
Montgomery Securities
- --------------------------------------------------------------------------------
The date of this Prospectus is February 25, 1994
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part)
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the shares of Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and regulations of
the Commission. Statements contained in this Prospectus as to the contents of
any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by reference to such contract or document. For further
information regarding the Company and the shares of Common Stock offered hereby,
reference is hereby made to the Registration Statement and the exhibits and
schedules thereto which may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The Registration Statement, the exhibits and schedules forming a
part thereof and the reports, proxy statements and other information filed by
the Company with the Commission in accordance with the Exchange Act can be
inspected and copied at the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: Seven World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
In addition, the Company's Common Stock is listed on the New York Stock Exchange
and similar information concerning the Company can be inspected and copied at
the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
are incorporated herein by reference:
1. Annual Report on Form 10-K for the fiscal year ended December 31,
1993; and
2. The description of the Company's capital stock contained in the
Company's Registration Statement on Form 8-A dated July 12, 1985, and the
description of Common Stock Purchase Rights contained in the Company's
Registration Statement on Form 8-A dated July 27, 1990, Amendment No. 1
thereto dated March 8, 1991 and Amendment No. 2 thereto dated December 6,
1991, including any amendment or report filed for the purpose of updating
such descriptions.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and before the
termination of the offering of the Common Stock offered hereby shall be deemed
incorporated herein by reference, and such documents shall be deemed to be a
part hereof from the date of filing such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the request of any such person, a copy of any or all
of the above documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into the documents that this Prospectus incorporates). Requests should be
directed to Reebok International Ltd., 100 Technology Center Drive, Stoughton,
Massachusetts 02072, Attention: Office of Investor Relations, Telephone (617)
341-5000.
2
<PAGE> 4
THE COMPANY
Reebok International Ltd. ("Reebok" or the "Company") is a global company
engaged primarily in the design and marketing of sports and fitness footwear and
apparel, as well as the design and marketing of casual footwear and apparel. The
Company recently realigned its management responsibilities to establish two
major business groups: the Reebok Division, which is primarily responsible for
the REEBOK(R) brand, and the Specialty Business Group, which consists of REEBOK
brand outdoor products, golf products and retail operations, as well as the
Company's other major brands and casual products, including BOKS(TM) casual
footwear and the Company's subsidiaries, AVIA Group International, Inc. ("Avia")
and The Rockport Company, Inc. ("Rockport"). During calendar year 1993, the
Company generated sales of $2.894 billion and net income of $223.4 million.
REEBOK DIVISION
The Reebok Division designs, produces and markets sports and fitness
footwear, apparel and accessories that combine the attributes of athletic
performance with style. Reebok has targeted as its primary customer base
athletes and others who believe that technical and other performance features
are the critical attributes of athletic footwear and apparel. While Reebok
started as a performance running shoe company, much of its historical growth has
been due to its strength in aerobics footwear and other fitness products.
Recently, the Company has placed increased emphasis on developing its position
in the sports market, increasing its visibility through endorsement arrangements
with such athletes as National Basketball Association Rookie of the Year,
Shaquille O'Neal, and Super Bowl XXVIII Most Valuable Player, Emmitt Smith.
Hundreds of National Football League players and Major League Baseball players
(including American League Most Valuable Player, Frank Thomas) wear Reebok
products, as do many soccer players around the world.
The Company places significant emphasis on technology in its products,
highlighted by its development of THE PUMP(TM) inflatable technology, an
integrated system of one or more inflatable chambers that are adjustable to help
provide custom fit and support in footwear and other products, and its evolution
into INSTAPUMP(TM) technology. The INSTAPUMP technology is a new inflatable
technology that allows Reebok to bring the benefits of THE PUMP technology to
lightweight performance shoes through use of an INSTAPUMP carbon dioxide
inflator cartridge used to inflate the chambers instantly. The INSTAPUMP
technology was tested in both running and tennis shoes in the 1992 Summer
Olympic Games in Barcelona and the 1992 and 1993 U.S. Open tennis tournaments.
Running, basketball and tennis shoes incorporating the INSTAPUMP technology are
expected to be available in retail stores in Spring 1994. In addition to THE
PUMP and INSTAPUMP technologies, Reebok continues to emphasize HEXALITE(R)
technology, which provides lightweight cushioning, and GRAPHLITE(R) technology,
a lightweight high strength composite material used to create lightweight
footwear that does not compromise stability or strength.
The Company devotes substantial resources to advertising its products to a
wide variety of audiences through television, radio and print media. The Company
utilizes its relationships with major sports figures in a variety of sports to
gain visibility for the REEBOK brand. The Company has also entered into several
key sports sponsorships, including becoming the official footwear and apparel
sponsor of the Russian Olympic Committee and the approximately 25 individual
associated Russian sports federations through 1996 and sponsorship agreements
with the International Amateur Athletic Federation, the National Football
League, the International Triathlon Union and the U.S. Gymnastics Federation. In
connection with its strategic emphasis on the sports market, the Company
developed a new Performance Logo in 1993 which provides a single, easily
recognizable symbol for REEBOK athletic footwear and apparel around the world.
In addition, the Company unified its worldwide advertising in the Planet Reebok
campaign, the Company's first global marketing campaign.
The Reebok Division's apparel group has recently been growing rapidly,
taking on increased strategic importance as a means to gain visibility for the
REEBOK brand. The Company has expanded its product lines through the development
and marketing of related sports and fitness products, such as sports and fitness
videos, programming and equipment, including the STEP REEBOK(R) program and
adjustable platform, as well as the SLIDE REEBOK(TM) lateral motion training
device. In addition, to enhance brand awareness and
3
<PAGE> 5
gain credibility for its technologies, the Company has developed a strategic
licensing program pursuant to which the Company's technologies are licensed to
third parties for sporting goods, such as Bell bicycle helmets, CCM ice hockey
and in-line skates and Rawlings baseball gloves. The REEBOK trademark is also
licensed to third parties for use with products such as athletic gloves and
sports performance sunglasses.
The REEBOK footwear and apparel business is global, with products now
marketed in over 140 countries and territories worldwide through an
international distribution network consisting of wholly owned subsidiaries,
joint ventures and independent distributors. In the United States, the Reebok
Division's 1993 sales of footwear totalled approximately $1.271 billion
(including REEBOK outdoor products, golf footwear products and BOKS footwear),
distributed primarily through specialty athletic retailers, sporting goods
stores, department stores and Company-operated retail stores. The Reebok
Division's U.S. 1993 sales of apparel totalled approximately $125.4 million
(including golf apparel), distributed primarily through pro shops, health clubs
and department, sporting goods and specialty stores. The Reebok Division's 1993
international sales of footwear and apparel (including REEBOK outdoor products,
golf products and the BOKS casual line) totalled approximately $1.083 billion.
Management believes that opportunities to increase international sales exist in
Europe, South America, Asia and emerging markets such as Russia, where the
Company has opened a retail store in Moscow and expects to open a retail store
in St. Petersburg in February 1994.
SPECIALTY BUSINESS GROUP
The Company established the Specialty Business Group to provide a focus for
the Company's non-Reebok brands and non-athletic and outdoor products and to
pursue more aggressively markets outside Reebok's primary focus. The Specialty
Business Group includes the ROCKPORT(R) brand, the BOKS casual footwear line and
the Company's REEBOK brand outdoor products, through which the Company is
pursuing the growing casual and outdoor markets, as well as the Company's golf
products and retail operations. Rockport designs, develops and markets
lightweight and comfortable casual, dress, outdoor performance and fitness
walking shoes. Management believes that Rockport has been a leader in the
development of shoes structured specifically for the walking motion of the foot.
The BOKS line has built on the Company's athletic performance reputation by
creating casual footwear with fashionable styling and comfortable fit. It is
designed to appeal to the younger generation and to compete in the non-athletic
footwear market. To pursue the growing outdoor market, the Company has developed
authentic outdoor performance footwear under the REEBOK brand to appeal both to
outdoor enthusiasts and young people.
The Specialty Business Group also includes Avia, which designs, develops
and markets athletic footwear and apparel under the AVIA(R) brand. Recently,
Avia has eliminated certain marginal business lines in order to return to its
roots as a performance brand and made major design changes to several footwear
lines to become more responsive to market demands. The Specialty Business Group
also produces golf footwear and apparel, including a REEBOK line of golf
products and a collection of footwear and apparel marketed under the GREG
NORMAN(TM) name and logo. The Specialty Business Group is also responsible for
the Company's retail operations, including concept stores in Boston, Santa
Monica and New York City, as well as approximately 30 factory direct stores.
The foregoing summary of certain aspects of the Company's business is
qualified by, and should be read in conjunction with, the information set forth
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1993, which is incorporated herein by reference.
4
<PAGE> 6
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale by the
Selling Stockholders of the shares of Common Stock offered hereby.
<TABLE>
COMMON STOCK PRICE RANGE AND DIVIDENDS
The Common Stock is listed for trading on the New York Stock Exchange under
the symbol "RBK." The following table sets forth the high and low sale prices of
the Common Stock as reported on the New York Stock Exchange for the periods
indicated:
<CAPTION>
DIVIDENDS
HIGH LOW PAID
---- ---- ---------
<S> <C> <C> <C>
1992
First Quarter......................................... $35 5/8 $28 $.075
Second Quarter........................................ 33 5/8 21 3/8 .075
Third Quarter......................................... 31 23 7/8 .075
Fourth Quarter........................................ 35 5/8 25 1/2 .075
1993
First Quarter......................................... 38 32 7/8 .075
Second Quarter........................................ 38 5/8 26 7/8 .075
Third Quarter......................................... 28 3/8 23 .075
Fourth Quarter........................................ 32 1/8 23 3/4 .075
1994
First Quarter (through February 24, 1994)............. 35 1/2 29 3/4 .075
</TABLE>
The last reported sale price of the Common Stock on the New York Stock
Exchange as of a recent date is set forth on the cover page of this Prospectus.
5
<PAGE> 7
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial data are derived from the
consolidated financial statements of Reebok International Ltd. The data should
be read in conjunction with the consolidated financial statements, related notes
and other financial information incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1989 1990 1991 1992 1993
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF INCOME
DATA:
<S> <C> <C> <C> <C> <C>
Net sales............................ $1,822,092 $2,159,243 $2,734,474 $3,022,627 $2,893,900
Other income (expense)............... 11,377 (893) 2,893 39,719(2) 33
---------- ---------- ---------- ---------- ----------
1,833,469 2,158,350 2,737,367 3,062,346 2,893,933
---------- ---------- ---------- ---------- ----------
Costs and expenses:
Cost of sales........................ 1,071,751 1,288,314 1,644,635 1,809,304 1,719,869
Selling expenses..................... 278,939 353,983 441,030 552,240 515,963
General and administrative
expenses........................... 174,972 202,352 225,245 254,838 253,781
Restructuring charges(1)............. -- -- -- 155,000 8,449
Amortization of intangibles.......... 14,427 15,646 16,354 16,587 10,052
Minority interest.................... -- -- 1,311 1,787 8,261
Interest expense..................... 15,554 18,857 29,295 20,080 25,021
Interest income...................... (12,953) (15,637) (10,389) (5,454) (10,710)
---------- ---------- ---------- ---------- ----------
1,542,690 1,863,515 2,347,481 2,804,382 2,530,686
---------- ---------- ---------- ---------- ----------
Income before income taxes........... 290,779 294,835 389,886 257,964 363,247
Income taxes......................... 115,781 118,229 155,175 143,146 139,832
---------- ---------- ---------- ---------- ----------
Net income........................... $ 174,998 $ 176,606 $ 234,711 $ 114,818 $ 223,415
---------- ---------- ---------- ---------- ----------
Net income per common share.......... $ 1.53 $ 1.54 $ 2.37 $ 1.24 $ 2.53
---------- ---------- ---------- ---------- ----------
Dividends per common share........... $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30
---------- ---------- ---------- ---------- ----------
Weighted average common and common
equivalent shares outstanding...... 114,176 114,654 98,958 92,697 88,348
---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1992 1993
---------- ----------
(IN THOUSANDS)
CONSOLIDATED BALANCE SHEET DATA:
<S> <C> <C>
Working capital....................................................... $ 682,342 $ 730,757
Total assets.......................................................... 1,345,346 1,391,711
Long-term debt........................................................ 116,037 134,207
Stockholders' equity.................................................. 838,656 846,617(3)
- ---------------
<FN>
(1) Financial data for 1993 includes a restructuring charge ($7,037 after-tax)
related to the sale of Ellesse U.S.A., Inc. and Boston Whaler, Inc.
Financial data for 1992 includes restructuring charges ($135,439 after-tax)
principally related to the write-down of the Company's subsidiary, Avia
Group International, Inc., to estimated fair value and estimated losses from
the planned sales of Ellesse U.S.A., Inc. and Boston Whaler, Inc.
(2) Includes a gain of $29,648 ($17,967 after-tax) from the sale of CML Group,
Inc. common stock.
(3) Does not give effect to changes in stockholders' equity that have occurred
or may occur subsequent to December 31, 1993, including the repurchase and
retirement of 152.9 shares of Common Stock at a cost of $4,939 under the
Company's share repurchase program or the repurchase of 1,000 shares of
Common Stock by the Company from the Selling Stockholders, as described in
this Prospectus. See "Company Stock Repurchase."
</TABLE>
6
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS -- 1993
Net sales for the year decreased by 4.3%, or $128.7 million, to $2.894
billion in 1993 from $3.023 billion in 1992. On a pro forma basis, excluding the
1992 results of operations of Boston Whaler, Inc. ("Boston Whaler") and Ellesse
U.S.A., Inc. ("Ellesse") (both of which were sold and are excluded from 1993
results), net sales for the year decreased by $49.6 million, or 1.7%.
The Reebok Division's worldwide sales were $2.48 billion in 1993, a
decrease of 2.3% from $2.54 billion in 1992. This decrease is due entirely to
the Reebok Division's U.S. footwear sales which decreased 12.6% to $1.271
billion in 1993 from $1.455 billion in 1992, partially offset by an increase in
U.S. apparel sales and international sales. The decline in the Reebok Division's
U.S. footwear sales can be attributed mainly to volume decreases in the walking,
basketball, aerobics and BOKS footwear categories, as well as the negative
impact of the Company's Centennial resale pricing program, effective as of
January 1, 1993, on sales volume of certain Reebok footwear products. 1992's
sales levels for footwear and apparel reflect a reclassification of $17.2
million from footwear to apparel for Weebok and golf apparel. The Reebok
Division's U.S. apparel sales increased by 62.6% to $125.4 million in 1993 from
$77.1 million in 1992. The Reebok Division's International sales (including both
footwear and apparel) were $1.083 billion in 1993, an increase of 7.5% from
$1.008 billion in 1992, primarily due to improved sales in the United Kingdom,
Germany, several smaller European countries, Canada and South America, and
acquisition of a majority interest in the Company's Spanish distributor
effective January 1, 1993. Changes in foreign exchange rates had a negative
effect on the Reebok Division's International net sales of $65.1 million, or
6.5%.
Rockport sales reached a record level of $282.7 million in 1993, a 5.7%
increase from $267.4 million in 1992. This increase is due to an increase in the
number of pairs of footwear shipped both in the U.S. and internationally. Avia
sales decreased in 1993 by 3.8% to $131.0 million from $136.2 million in 1992.
The decrease in net sales at Avia is due to declines in both domestic and
international net sales. The decline in domestic net sales is mainly due to
lower volume in the tennis and basketball categories, partially offset by volume
increases in the walking and cross-training categories. The decline in
international net sales volume can be partly attributed to a change in the
Canadian distribution from a wholly owned subsidiary to an independent
distributor which changed the recording of Canadian sales from a wholesale basis
to a royalty basis. International sales were also affected by a volume decrease
in Avia's Germany subsidiary, offset by volume increases in sales to independent
distributors.
The decrease in other income is mainly due to the inclusion in 1992 of a
non-recurring pre-tax gain of $29.6 million on the sale of CML Group, Inc.
("CML") common stock. The common stock was acquired from the exercise of
warrants which were obtained as part of the Company's 1989 purchase of Boston
Whaler. In addition, recognized losses on foreign exchange transactions in 1993
compared to recognized gains in 1992 reduced other income by $6.2 million.
Gross margin increased as a percentage of sales from 40.1% in 1992 to 40.6%
in 1993. This improvement is due entirely to the exclusion in 1993 of the
operating results of businesses held for sale, which generally carried lower
gross margins. This improvement was offset in part by lower margins in the
Reebok Division's U.S. footwear operations, mainly because of higher markdowns.
Selling expenses decreased as a percentage of sales from 18.3% in 1992 to
17.8% in 1993 due to lower advertising expenditures. This decrease was partially
offset by increased endorsements and sports promotions in the Reebok Division.
Selling expenses decreased in absolute dollar amounts in part due to the
exclusion of businesses held for sale from 1993's financial results and lower
advertising expenses. General and administrative expenses also decreased in
absolute dollar amounts due to the exclusion of businesses held for sale from
1993's financial results. Included in 1992's financial results were selling and
general and administrative expenses of $19.4 million and $8.8 million,
respectively, from businesses held for sale. General and administrative expenses
increased as a percentage of sales from 8.4% in 1992 to 8.8% in 1993 partly due
to Reebok Division's International operations, which generally carry higher
general and administrative costs,
7
<PAGE> 9
representing a larger proportion of sales volume and the fixed nature of many of
the expenses classified as general and administrative costs.
During 1993, the Company recorded an additional pre-tax restructuring
charge of $8.5 million related to the sales of Boston Whaler and Ellesse, which
were completed during the third quarter. This restructuring charge was in
addition to the restructuring charges previously recorded in December 1992, when
the Company announced its intention to sell these businesses.
Amortization of intangibles decreased due to the write-down of the carrying
value of Avia in the fourth quarter of 1992.
Minority interest represents the minority shareholders' proportionate share
of the net income of the Company's Japanese and Spanish subsidiaries. Minority
interest increased in 1993 due in part to the acquisition of a 51% interest in
Reebok's Spanish distributor as of January 1, 1993.
Interest expense increased in 1993 due to the higher average borrowing
levels throughout the year. Interest income increased due to interest received
from the successful settlement of certain prior years' state tax matters.
The effective tax rate for the twelve months ended December 31 decreased
from 55.5% in 1992 to 38.5% in 1993. 1992's effective tax rate was abnormally
high because of certain restructuring charges which are not deductible for tax
purposes. The Company's 1993 tax rate is more in line with the Company's future
expectations. The decrease in the tax rate in 1993 was also caused in part by a
change in the geographic mix of worldwide income partially offset by an increase
in the U.S. federal tax rate.
The higher level of net income in 1993 as compared with 1992 was a result
primarily of a restructuring plan adopted by the Company during December 1992
which resulted in after-tax charges totaling $135.4 million ($1.46 per share).
Under the restructuring plan, the Company announced its intention to dispose of
two subsidiaries, Boston Whaler and Ellesse, a writedown of the carrying value
of its Avia subsidiary, and certain office relocation charges. The effect of the
restructuring charge was reduced by the after-tax gain of $18.0 million ($.19
per share) on the sale of common stock of CML obtained as part of the Company's
1989 purchase of Boston Whaler.
The Boston Whaler sale was completed on July 30, 1993 and the Ellesse sale
was completed on September 28, 1993. In connection with the sales, the Company
recorded an additional after-tax restructuring charge of $7.0 million in
addition to the restructuring charge recorded in 1992. Income from operations
(without the effect of the restructuring charge) for 1993 was $2.61 per share
compared to $2.51 per share in 1992 (after excluding the effect of the
restructuring charge and the gain on the sale of CML common stock). If the
restructuring had taken place as of the beginning of 1992, income from
operations in 1992 would have been about $.18 per share higher.
Year-to-year earnings per share comparisons benefited from the share
repurchase programs announced in July 1992 and July 1993. Weighted average
common shares outstanding for the year ended December 31, 1993 were 88.3
million, compared to 92.7 million for the year ended December 31, 1992.
BACKLOG
The Company's backlog of customer orders at December 31, 1993 was up
approximately 13% from the prior year. Reebok U.S. footwear order levels as of
the same date were up 14.4% from the prior year. The backlog position is not
necessarily indicative of future sales because the ratio of future orders to "at
once" shipments may vary from year to year.
8
<PAGE> 10
LIQUIDITY AND SOURCES OF CAPITAL
The Company's financial position remains strong. Working capital increased
by $48.4 million at December 31, 1993 as compared to December 31, 1992,
primarily due to increases in accounts receivable and inventory which were
offset in part by increases in borrowings and a decrease in cash. The current
ratio remained relatively constant at December 31, 1993 (2.84 to 1) as compared
to December 31, 1992 (2.81 to 1).
Accounts receivable increased from December 31, 1992 by $39.3 million
reflecting in part an increase in days sales outstanding attributable
principally to the Company's International business, where sales terms tend to
be longer, representing a larger relative share of sales volume.
Inventory increased by $79.8 million from December 31, 1992 as a result of
an increase in the footwear and apparel inventory levels in the Reebok Division.
The footwear increase can mainly be attributed to three factors: (1) an effort
to more evenly load factory orders to reduce factory costs and improve on-time
delivery, (2) an increase in Spring 1994 future orders, and (3) lower than
anticipated sales during the fourth quarter of 1993. The increase in Reebok
apparel inventory is due primarily to the overall increase in the Company's
apparel business.
On July 13, 1993, the Board of Directors authorized the repurchase of up to
$200 million in Reebok common stock in open market or privately-negotiated
transactions. This authorization was in addition to the $200 million share
repurchase program announced in July 1992. Since the start of the program in
1992, the Company has repurchased 8,572,200 shares at an average price of $30.82
per share through December 31, 1993. As of December 31, 1993, approximately
$135.8 million was authorized for future purchases.
During the twelve months ended December 31, 1993, cash and cash equivalents
decreased by $26.0 million, and outstanding borrowings increased by $36.9
million, while $194.0 million of common stock was repurchased. Net cash provided
by operating activities during 1993 was $142.5 million, compared to $187.6
million and $335.2 million for the years ended December 31, 1992 and 1991,
respectively. Net cash provided by investing activities in 1993 included cash
proceeds of $36.5 million received in connection with the sale of Boston Whaler
and Ellesse. Cash generated from operations, together with the Company's
financing sources, is expected to adequately finance all of the Company's
current and planned cash requirements.
EFFECTS OF CHANGING PRICES
The Company has generally been able to adjust selling prices and control
expenses in the environment of cost escalation that has existed in the recent
past. Product purchases require relatively short lead times
(4 - 6 months) and the Company sells a large part of its product for future
delivery on similar lead times, which generally permits a matching of committed
costs with committed revenues. The Company anticipates that this matching
ability will continue.
9
<PAGE> 11
<TABLE>
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the ownership
by the Selling Stockholders named below (the "Selling Stockholders") of the
Common Stock at February 14, 1994, and as adjusted for the sale of the Common
Stock offered hereby (assuming no exercise of the over-allotment option granted
by the Selling Stockholders to the Underwriters) and consummation of the Company
Stock Repurchase described below.
<CAPTION>
BENEFICIAL OWNERSHIP SHARES BENEFICIAL OWNERSHIP
NAME OF PRIOR TO OFFERING AND BEING COMPANY AFTER OFFERING AND
SELLING COMPANY STOCK OFFERED STOCK COMPANY STOCK
STOCKHOLDER REPURCHASE(1) HEREBY REPURCHASE REPURCHASE(1)
---------------- -------------------------- --------- ---------- --------------------------
SHARES PERCENT(3) SHARES PERCENT(3)
<S> <C> <C> <C> <C> <C> <C>
Paul B. Fireman 9,913,156(2) 11.51% 1,500,000 500,000 7,913,156(2) 9.30%
Phyllis Fireman 8,292,002 9.63% 1,500,000 500,000 6,292,002 7.39%
- ---------------
<FN>
(1) Mr. and Mrs. Fireman each disclaim beneficial ownership of the other's
shares.
(2) Includes 1,500,000 shares which are subject to stock options exercisable
within 60 days.
(3) Shares outstanding include 2,528,440 shares which are subject to stock
options exercisable within 60 days.
</TABLE>
Paul B. Fireman has served as the Company's Chief Executive Officer since
its founding in 1979 and as its Chairman of the Board since 1986. Mr. Fireman
served as President of the Company from 1979 to 1987 and was appointed again to
that position in 1989. Mr. Fireman has been a director since 1979. Phyllis
Fireman is the wife of Paul Fireman. The address of Mr. and Mrs. Fireman is c/o
Reebok International Ltd., 100 Technology Center Drive, Stoughton, Massachusetts
02072.
COMPANY STOCK REPURCHASE
The Company will purchase, subject to consummation of the sale of the
Common Stock offered hereby, 1,000,000 shares of Common Stock from the Selling
Stockholders at the same price per share as the per share public offering price
of the shares offered hereby, less the amount of all underwriting discounts. The
Company's repurchase of these shares of Common Stock (the "Company Stock
Repurchase") will occur simultaneously with the consummation of the sale of the
Common Stock offered hereby. The Company intends to fund the Company Stock
Repurchase with available cash and short-term borrowings. The repurchased shares
will be returned to the status of authorized and unissued capital stock of the
Company.
On July 13, 1993, the Company's Board of Directors authorized the
repurchase of up to $200 million in Common Stock in open market or privately
reported transactions. This was in addition to the $200 million share repurchase
program adopted by the Company in July 1992. Under these programs, the Company
has purchased 8,725,100 shares at an aggregate price of approximately $269.1
million through February 14, 1994, which leaves the Company with authority to
repurchase up to $130.9 million in additional shares of Common Stock. The
Company Stock Repurchase will be treated as a repurchase under the Company's
share repurchase program.
10
<PAGE> 12
<TABLE>
UNDERWRITING
The Underwriters named below have severally agreed to purchase from the
Selling Stockholders the following respective numbers of shares of Common Stock:
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
CS First Boston Corporation............................................... 1,000,000
Kidder, Peabody & Co. Incorporated........................................ 1,000,000
Montgomery Securities..................................................... 1,000,000
---------
Total........................................................... 3,000,000
=========
</TABLE>
The Company and the Selling Stockholders have entered into an Underwriting
Agreement (the "Underwriting Agreement") with the Underwriters which provides
that the obligations of the Underwriters are subject to certain conditions
precedent and that the Underwriters will be obligated to purchase all of the
shares offered hereby if any are purchased.
The Selling Stockholders have been advised by the Underwriters that the
Underwriters propose to offer the shares to the public initially at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession of $.70 per share; that the Underwriters
and such dealers may allow a discount of $.10 per share on sales to certain
other dealers; and that after the initial public offering, the public offering
price and concession and discount to dealers may be changed by the Underwriters.
The Selling Stockholders have granted to the Underwriters an option,
expiring at the close of business on the 30th day after the date of the public
offering of the Common Stock offered hereby, to purchase up to 450,000
additional shares at the public offering price less the underwriting discount,
all as set forth on the cover page of this Prospectus. The Underwriters may
exercise such option only to cover over-allotments in the sale of the shares of
Common Stock offered hereby.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters and others against certain liabilities, including civil liabilities
under the Securities Act, or contribute to payments which the Underwriters may
be required to make in respect thereof.
The Selling Stockholders have agreed that, without the consent of CS First
Boston Corporation, as representative of the Underwriters, they will not sell,
contract or offer to sell or otherwise dispose of, directly or indirectly, any
shares of Common Stock for a period of 120 days after the date of this
Prospectus.
CS First Boston Corporation and Montgomery Securities have provided
investment banking and financial advisory services to the Company in the past,
for which they have received customary fees.
LEGAL MATTERS
Certain legal matters in connection with the Common Stock being offered
hereby will be passed upon for the Company by Ropes & Gray, Boston,
Massachusetts. John E. Beard, Esq., Clerk of the Company, is a partner of Ropes
& Gray. Certain legal matters will be passed upon for the Underwriters by
Skadden, Arps, Slate, Meagher & Flom, Boston, Massachusetts.
EXPERTS
The consolidated financial statements of the Company appearing in its
Annual Report (Form 10-K) for the year ended December 31, 1993, have been
audited by Ernst & Young, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
11
<PAGE> 13
===============================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
<TABLE>
---------------------
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
Available Information............ 2
Incorporation of Certain
Documents by Reference......... 2
The Company...................... 3
Use of Proceeds.................. 5
Common Stock Price Range and
Dividends...................... 5
Selected Consolidated Financial
Information.................... 6
Management's Discussion and
Analysis of Financial Condition
and Results of Operations...... 7
Selling Stockholders............. 10
Company Stock Repurchase......... 10
Underwriting..................... 11
Legal Matters.................... 11
Experts.......................... 11
</TABLE>
===============================================================================
===============================================================================
[LOGO]
3,000,000 Shares
Common Stock
($.01 par value)
------------------------------------
PROSPECTUS
------------------------------------
CS First Boston
Kidder, Peabody & Co.
Incorporated
Montgomery Securities
===============================================================================
<PAGE> 14
<TABLE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
issuance and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates,
except the Securities and Exchange Commission ("SEC") registration fee and the
NASD filing fee.
<CAPTION>
AMOUNT
--------
<S> <C>
SEC registration fee...................................................... $ 38,962
NASD filing fee........................................................... 11,799
Printing and engraving expenses........................................... 50,000
Legal (including Blue Sky) fees and expenses.............................. 150,000
Accounting fees and expenses.............................................. 20,000
Miscellaneous............................................................. 4,239
--------
Total........................................................... $275,000
========
</TABLE>
All expenses in connection with the issuance and distribution of the
securities being registered will be paid by the Selling Stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 67 of Chapter 156B of the Massachusetts General Laws provides that
indemnification of directors and officers of the Registrant may be provided to
the extent specified or authorized by its articles of organization or a by-law
provision adopted by the stockholders.
Under Section 9 of the By-laws of the Registrant, the Registrant shall, to
the extent legally permissible, indemnify each of its directors and officers
(including persons who serve at its request as directors, officers or trustees
of another organization or in any capacity with respect to any employee benefit
plan) against all liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees, reasonably incurred by him in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, in which he
may be involved or with which he may be threatened, while in office or
thereafter, by reason of his having been adjudicated in any proceeding not to
have acted in good faith in the reasonable belief that his action was in the
best interests of the Registrant (any person serving another organization in one
or more of the indicated capacities at the request of the Registrant who shall
have acted in good faith in the reasonable belief that his action was in the
best interests of such other organization to be deemed as having acted in such
manner with respect to the Registrant) or, to the extent that such matter
relates to service with respect to any employee benefit plan, in the best
interests of the participants or beneficiaries of such employee benefit plan;
provided, however, that as to any matter disposed of by a compromise payment by
such director or officer, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses shall be
provided unless such compromise shall be approved as in the best interests of
the Registrant, after notice that it involves such indemnification: (a) by a
disinterested majority of the directors then in office; or (b) by a majority of
the disinterested directors then in office, provided that there has been
obtained an opinion in writing of independent legal counsel to the effect that
such director or officer appears to have acted in good faith in the reasonable
belief that his action was in the best interests of the Registrant; or (c) by
the holders of a majority of the outstanding stock at the time entitled to vote
for directors, voting as a single class, exclusive of any stock owned by any
interested director or officer. Expenses, including counsel fees, reasonably
incurred by any director or officer in connection with the defense or
disposition of any such action, suit or other proceeding may be paid from time
to time by the Registrant in advance of the final disposition thereof under
receipt of an undertaking by such director or officer to repay the amounts so
paid to the Registrant if it is ultimately determined that indemnification of
such expenses is not authorized under Section 9. The right of indemnification
provided by
II-1
<PAGE> 15
Section 9 of the By-laws is not to be exclusive of and is not to affect any
other rights to which any director or officer may be entitled. As used in said
Section 9, the terms "director" and "officer" include their respective heirs,
executors and administrators, and an "interested" director or officer is one
against whom in such capacity the proceedings in question or another proceeding
on the same or similar grounds is then pending. Nothing contained in Section 9
shall affect any rights to indemnification to which corporate personnel other
than directors and officers may be entitled by contract or otherwise under law.
<TABLE>
ITEM 16. EXHIBITS
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
NUMBER -------------------------------------------------------------------------
- ------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.*
4.1 -- Restated Articles of Organization of the Company, as amended, are
incorporated by reference to the Company's Report on Form 10-K, dated
March 30, 1987, for the year ended December 31, 1986.
4.2 -- Common Stock Rights Agreement dated as of July 14, 1990, as amended on
March 8, 1991 and December 6, 1991, between the Company and The First
National Bank of Boston, as Rights Agent, is incorporated by reference to
the Company's Report on Form 8-A, filed on July 31, 1990, and the
Company's Reports on Form 8 Amendment to Registration Statement on Form
8-A, filed on April 4, 1991 and December 13, 1991.
5.1 -- Opinion of Ropes & Gray.**
23.1 -- Consent of Ernst & Young.**
23.2 -- Consent of Counsel -- included in Exhibit 5.1.
24.1 -- Powers of Attorney.**
- ---------------
<FN>
* Filed herewith.
** Filed previously.
</TABLE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned Registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
2. For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
II-2
<PAGE> 16
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the question has already been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 17
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 2 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE TOWN OF
STOUGHTON, THE COMMONWEALTH OF MASSACHUSETTS, AS OF THE 24TH DAY OF FEBRUARY,
1994.
REEBOK INTERNATIONAL LTD.
By: /s/ PAUL R. DUNCAN
------------------------------------
Paul R. Duncan
Executive Vice President
and Chief Operating Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 24TH DAY OF FEBRUARY, 1994.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
PAUL B. FIREMAN* President, Chief Executive
- ------------------------------------------ Officer (Principal Executive
Paul B. Fireman Officer) and Chairman of the
Board of Directors
/s/ PAUL R. DUNCAN Executive Vice President and
- ------------------------------------------ Chief Financial Officer
Paul R. Duncan (Principal
Financial and Accounting
Officer) and Director
JOHN H. DUERDEN* Executive Vice President and
- ------------------------------------------ Director
John H. Duerden
ROBERT MEERS* Executive Vice President and
- ------------------------------------------ Director
Robert Meers
JILL E. BARAD* Director
- ------------------------------------------
Jill E. Barad
DANIEL E. GILL* Director
- ------------------------------------------
Daniel E. Gill
</TABLE>
II-4
<PAGE> 18
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
BERTRAM M. LEE* Director
- ------------------------------------------
Bertram M. Lee, Sr.
RICHARD G. LESSER* Director
- ------------------------------------------
Richard G. Lesser
WILLIAM M. MARCUS* Director
- ------------------------------------------
William M. Marcus
Director
- ------------------------------------------
Geoffrey Nunes
JOHN A. QUELCH* Director
- ------------------------------------------
John A. Quelch
<FN>
*By: /s/ PAUL R. DUNCAN
-------------------------------
Paul R. Duncan
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 19
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- ------ ----------- ----
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.*
4.1 -- Restated Articles of Organization of the Company, as amended, are incorporated
by reference to the Company's Report on Form 10-K, dated March 30, 1987, for
the year ended December 31, 1986.
4.2 -- Common Stock Rights Agreement dated as of July 14, 1990, as amended on March 8,
1991 and December 6, 1991, between the Company and The First National Bank of
Boston, as Rights Agent, is incorporated by reference to the Company's Report
on Form 8-A, filed on July 31, 1990, and the Company's Reports on Form 8
Amendment to Registration Statement on Form 8-A, filed on April 4, 1991 and
December 13, 1991.
5.1 -- Opinion of Ropes & Gray.**
23.1 -- Consent of Ernst & Young.**
23.2 -- Consent of Counsel -- included in Exhibit 5.1.
24.1 -- Powers of Attorney.**
- ---------------
<FN>
* Filed herewith.
** Filed previously.
</TABLE>
<PAGE> 1
3,000,000 Shares1
REEBOK INTERNATIONAL LTD.
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
, 1994
CS FIRST BOSTON CORPORATION
KIDDER, PEABODY & CO. INCORPORATED
MONTGOMERY SECURITIES
c/o CS First Boston Corporation
Park Avenue Plaza
New York, NY 10055
Ladies and Gentlemen:
1. INTRODUCTORY. Paul B. Fireman, President, Chief Executive
Officer and Chairman of the Board of Directors of Reebok International Ltd., a
Massachusetts corporation ("Company"), and Phyllis Fireman, his wife (together,
the "Selling Stockholders"), propose to sell 3,000,000 shares of the Company's
Common Stock, par value $.01 per share, held by such Selling Stockholders
("Firm Shares") to you, as the Underwriters named in Schedule A hereto
("Underwriters"), and to grant to the Underwriters an option to purchase up to
450,000 additional shares of the Company's Common Stock, par value $.01 per
share, held by such Selling Stockholders ("Option Shares"). Simultaneously
therewith, the Selling Stockholders also propose to sell to the Company
1,000,000 shares of the Company's Common Stock, par value $.01 per share. As
used in this Agreement, the term "Shares" shall include the Firm Shares and the
Option Shares. The Company's Common Stock, par value $.01 per share, is
hereinafter referred to as the "Common Stock".
_____________________
1 Plus an option to purchase up to 450,000 additional shares
of Common Stock from the Selling Stockholders to cover over-
allotments, if any.
<PAGE> 2
Based upon and subject to the foregoing, the Company and the Selling
Stockholders hereby agree with the several Underwriters as follows:
2. Representations, Warranties and Agreements of the Company and the
Selling Stockholders.
I. The Company and the Selling Stockholders jointly and
severally represent and warrant to and agree with the Underwriters that:
(a) A registration statement on Form S-3 (File No. 33-52283),
including a preliminary form of prospectus, relating to the Shares has
been filed with the Securities and Exchange Commission ("Commission")
and either (i) has been declared effective under the Securities Act of
1933, as amended ("Act"), and is not proposed to be amended or (ii) is
proposed to be amended by amendment or post-effective amendment. If
the Company does not propose to amend such registration statement and
if any post-effective amendment to such registration statement has been
filed with the Commission prior to the execution and delivery of this
Underwriting Agreement ("Agreement"), the most recent such amendment
has been declared effective by the Commission. For purposes of this
Agreement, "Effective Time" means (i) if the Company has advised you
that it does not propose to amend such registration statement, the date
and time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution
and delivery of this Agreement, was declared effective by the
Commission, or (ii) if the Company has advised you that it proposes to
file an amendment or post- effective amendment to such registration
statement, the date and time as of which such registration statement,
as amended by such amendment or post-effective amendment, as the case
may be, is declared effective by the Commission. "Effective Date" means
the date of the Effective Time. Such registration statement, as
amended at the Effective Time, including all material incorporated by
reference therein and all information (if any) deemed to be a part of
such registration statement as of the Effective Time pursuant to Rule
430A(b) under the Act, is hereinafter referred to as the "Registration
2
<PAGE> 3
Statement" and the form of prospectus relating to the Shares, as first
filed with the Commission pursuant to and in accordance with Rule
424(b) under the Act ("Rule 424(b)") or (if no such filing is required)
as included in the Registration Statement, including all material
incorporated by reference in such prospectus (and, with respect to the
Company's annual report on Form 10-K for the year ended December 31,
1993 so incorporated by reference, the information incorporated therein
from the Company's Proxy Statement to be filed with the Commission in
connection with its 1994 Annual Meeting of Stockholders), is
hereinafter referred to as the "Prospectus". Copies of such
registration statement and amendments and of each related preliminary
prospectus, including all material incorporated by reference in each
such prospectus ("Preliminary Prospectuses"), have been delivered to
you.
(b) If the Effective Time is prior to the execution and
delivery of this Agreement: (i) on the Effective Date, the Registration
Statement conformed in all respects to the requirements of the Act and
the rules and regulations of the Commission promulgated thereunder
("Rules and Regulations") and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
(ii) on the date of this Agreement, the Registration Statement
conforms, and at the time of filing of the Prospectus pursuant to Rule
424(b) and at all times subsequent thereto up to and at the Closing
Date (as defined below) and any Option Closing Date (as defined below),
as the case may be, the Registration Statement and the Prospectus and
any amendments or supplements thereto will conform, in all respects to
the requirements of the Act and the Rules and Regulations, and neither
of such documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading. If the Effective Time is subsequent to the
execution and delivery of this Agreement: on the Effective Date and at
all times subsequent thereto up to and at the Closing Date and any
Option Closing Date, as the case may be, the
3
<PAGE> 4
Registration Statement and the Prospectus and any amendments or
supplements thereto will conform in all respects to the requirements of
the Act and the Rules and Regulations, and neither of such documents
will include any untrue statement of a material fact or will omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The two preceding
sentences do not apply to statements in or omissions from the
Registration Statement or the Prospectus based upon written information
furnished to the Company by any Underwriter through you specifically
for use therein. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each such
Preliminary Prospectus, at the time of filing thereof, has conformed in
all material respects to the requirements of the Act and the Rules and
Regulations.
II. The Company represents and warrants to and agrees
with the Underwriters that:
(a) Except for the Registration Rights Agreement dated as
of February 28, 1990 between the Company and the Selling Stockholders,
there are no contracts, agreements or understandings between the
Company or any of its subsidiaries and any person granting such person
any preemptive right, co-sale right, right of first refusal or right to
require the Company or any of its subsidiaries to file a registration
statement under the Act with respect to any securities of the Company
or any of its subsidiaries owned or to be owned by such person or to
require the Company or any of its subsidiaries to include such
securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company or any of its subsidiaries
under the Act.
(b) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of The
Commonwealth of Massachusetts with full power and authority (corporate
and other) to own, lease and operate its properties and conduct its
business as described in the Registration Statement; each of the
Company's oper-
4
<PAGE> 5
ating subsidiaries has been duly incorporated and is validly existing
as a corporation in good standing under the laws of its jurisdiction of
incorporation; each of the Company and its subsidiaries is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership or leasing of
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified would not have a material
adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries taken as a whole ("Material Adverse Effect"); each of the
Company and its subsidiaries is and at the Closing Date and any Option
Closing Date, as the case may be, will be, in possession of and
operating in compliance with all licenses, certificates and permits
from state, federal and other regulatory authorities which are material
to the conduct of its business (except where the failure to possess
such licenses, certificates and permits would not have a Material
Adverse Effect), all of which are valid and in full force and effect;
the Company is not in violation of its Restated Articles of
Organization, as amended to date, or by- laws, as currently in effect;
no operating subsidiary of the Company is in violation of its charter
or by-laws, as currently in effect; neither the Company nor any of its
subsidiaries is in breach of or default, except as set forth in the
Prospectus, in the performance or observance of any obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, bond, debenture, note or other evidence
of indebtedness or in any lease, contract or other agreement or
instrument to which the Company or any such subsidiary is a party or by
which any of them or any of their respective properties may be bound
(including without limitation the agreements described in the
Prospectus) or in violation of any law, order, rule, regulation, writ,
injunction, judgment or decree of any court or governmental agency or
body, except for such breaches, defaults or violations which, in the
aggregate, would not have a Material Adverse Effect.
(c) No consent, approval, authorization or order of, or
filing with, any governmental agency
5
<PAGE> 6
or body or any court is required for the consummation by the Company of
the transactions contemplated by this Agreement in connection with the
sale of the Shares by the Selling Stockholders, except such as may be
required under the Act or the Rules and Regulations or under state
or other securities or Blue Sky laws, rules or regulations.
(d) The Company has full legal right, power and authority to
enter into this Agreement and perform the transactions contemplated
hereby; this Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
the indemnification and contribution provisions hereunder may be
limited by applicable law and except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally
or by general equitable principles.
(e) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated
will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) the Restated Articles
of Organization, as amended to date, or by-laws of the Company, as
currently in effect, or the charter or by-laws of any subsidiary of the
Company, as currently in effect; (ii) any material indenture, mortgage,
deed of trust, loan agreement, bond, debenture, note or other evidence
of indebtedness or any material lease, contract or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which any of them or any of their respective properties may be
bound; or (iii) any law or any order, rule or regulation of any
governmental agency or body or any court having jurisdiction over the
Company or any of its subsidiaries or over the properties of the
Company or any of its subsidiaries.
(f) Except as set forth in the Prospectus, there is not any
pending or, to the Company's knowledge, any threatened action, suit,
claim or
6
<PAGE> 7
proceeding before any court or governmental agency or body or
otherwise against the Company, any of the Company's subsidiaries or any
of their respective officers or any of their respective properties,
assets or rights which would result in any material adverse change in
the condition (financial or otherwise), earnings, operations, business
or business prospects of the Company and its subsidiaries taken as a
whole or have a material adverse effect on the properties, assets or
rights of the Company and its subsidiaries taken as a whole or prevent
consummation of the transactions contemplated herein; and there are no
contracts or documents of the Company or any of its subsidiaries that
are required to be described in the Prospectus or to be filed as
exhibits to the Registration Statement by the Act or by the Rules and
Regulations which have not been accurately described in all material
respects in the Prospectus or filed as exhibits to the Registration
Statement, or both, as the case may be; and all material relationships
between the Company and its directors, executive officers and
stockholders have been fully and accurately described in the
Registration Statement as required by the Rules and Regulations.
(g) The outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable; the
capital stock of the Company conforms in all material respects to the
statements relating thereto contained in the Registration Statement and
the Prospectus (and such statements correctly state the substance of
the instruments defining the capitalization of the Company in all
material respects); the form of certificate used to evidence the Common
Stock is in due and proper form and otherwise complies with all
statutory requirements under the laws of the Commonwealth of
Massachusetts; except as set forth in Schedule B hereto and as
described in or contemplated by the Prospectus, there are no
outstanding options, warrants or other rights for the issuance of, and
there are no commitments, plans or arrangements to issue, any shares of
capital stock of the Company or any security convertible into,
exercisable for or exchangeable for any shares of capital stock of the
Company; no further approval or autho
7
<PAGE> 8
rization of any stockholder, the Board of Directors or others is
required for the sale or transfer of the Shares, except as may be
required under the Act or the Rules and Regulations or under state or
other securities or Blue Sky laws, rules or regulations; and the
description of the Company's plans, policies or arrangements, and of
the options, rights or benefits granted thereunder, set forth in the
Prospectus accurately and fairly presents the information required to
be set forth therein with respect to and in connection with such plans,
policies or arrangements.
(h) Ernst & Young, who have audited the financial
statements, together with the related schedules and notes, of the
Company and its subsidiaries filed with the Commission as a part of the
Registration Statement, some of which are included in the Prospectus,
are, to the best of the Company's knowledge, independent accountants
within the meaning of the Act and the Rules and Regulations; the
audited financial statements of the Company and its subsidiaries,
together with the related schedules and notes, forming part of the
Registration Statement and Prospectus, fairly present the financial
position and the results of operations of the Company at the respective
dates and for the respective periods to which they apply; all audited
financial statements of the Company and its subsidiaries, together with
the related schedules and notes, have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as may be otherwise stated
therein; the selected financial data included in the Registration
Statement present fairly the information shown therein and have been
compiled on a basis substantially consistent with the financial
statements presented therein; and no other financial statements or
schedules or notes are required to be included in the Registration
Statement.
(i) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
except as set forth therein or in the letter referred to in Section 6(a)
below, there has not been or occurred (i) any material adverse change in
the business, property or
8
<PAGE> 9
assets described or referred to in the Registration Statement or the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries taken as a whole,
(ii) any transaction which is material to the Company and its
subsidiaries taken as a whole, except transactions in the ordinary
course of business, (iii) any obligation, direct or contingent, incurred
by the Company or any of its subsidiaries which is material to the
Company and its subsidiaries taken as a whole, except obligations
incurred in the ordinary course of business, (iv) any change in the
capital stock or outstanding indebtedness of the Company or any of its
subsidiaries which is material to the Company and its subsidiaries taken
as a whole or (v) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company.
(j) Except as otherwise stated in the Prospectus, (i) each of
the Company and its subsidiaries has good and marketable title to all
properties and material assets described in the Prospectus as owned by
it, free and clear of any pledge, lien, charge, security interest,
encumbrance, restriction, claim or equitable interest other than such
as are not material to the business of the Company, (ii) each of the
Company and its subsidiaries has sufficient interests in its properties
and other assets to conduct its business as currently conducted and as
proposed to be conducted and (iii) any agreements to which the Company
or any of its subsidiaries is a party described in the Prospectus are
valid agreements, enforceable in accordance with their terms, except as
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or by general equitable
principles and, to the best knowledge of the Company or such
subsidiary, the other contracting party or parties thereto are not in
breach or default under any of such agreements, except, with respect to
this Section 2.II.(j)(iii), where the failure of such agreements to be
valid and enforceable or the occurrence of such breaches or defaults,
when taken in the aggregate, would not have a Material Adverse Effect.
(k) No labor disturbance by the employees of the Company or any
of its subsidiaries exists or to the best of the Company's knowledge, is
imminent; the Company is not aware of any existing or imminent labor
disturbance by the employees of any principal supplier, manufacturer,
authorized dealer or dis
9
<PAGE> 10
tributor that might be expected to result in any material adverse change
in the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company.
(l) The Company owns or possesses adequate rights to use all
material patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names and copyrights described or
referred to in the Prospectus as owned or used by it and which are
material to the conduct of its business as described in the Prospectus;
except as described in the Prospectus, the Company has not received any
notice of infringement of or conflict with asserted rights of others
with respect to any patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names or copyrights which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect.
(m) The Shares are listed on the New York Stock Exchange and
the Company has received no notice of any proceeding having the purpose
or effect of discontinuing such listing.
(n) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(o) Other than repurchases made by the Company under its
share repurchase program and as otherwise described in the Prospectus
(which the Company does not concede constitute stabilizing or
manipulative activities in violation of federal or state securities
laws), the Company has not taken and will not take, directly or
indirectly, any action designed to, or which might reasonably be
expected to, cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the
Shares.
(p) The Company has not distributed and will not distribute
any prospectus or other offering materials in connection with the
offering and sale of the Shares other than the Preliminary Prospectus
and the Prospectus or other material permitted by the Act.
III. Each of the Selling Stockholders represents and warrants
to and agrees with the Underwriters that:
10
<PAGE> 11
(a) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is required
for the consummation by such Selling Stockholder of the transactions
contemplated by this Agreement in connection with the sale of the Shares
by such Selling Stockholder, except such as may be required under the
Act or the Rules and Regulations or under state or other securities or
Blue Sky laws, rules and regulations.
(b) Such Selling Stockholder has full legal capacity to enter
into this Agreement and perform the transactions contemplated hereby;
this Agreement has been duly executed and delivered by such Selling
Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable against such Selling Stockholder in accordance
with its terms, except as the indemnification and contribution
provisions hereunder may be limited by applicable law and except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles.
(c) The execution, delivery and performance of this Agreement
and the consummation of the transactions herein contemplated by such
Selling Stockholder will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, (i) any
mortgage, deed of trust, loan agreement, note or other evidence of
indebtedness or any lease, contract or other agreement or instrument to
which such Selling Stockholder is a party or by which it or any of its
properties may be bound or (ii) any law or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over
such Selling Stockholder, or over the properties of such Selling
Stockholder, except for such breaches, violations or defaults which, in
the aggregate, would not have a Material Adverse Effect.
(d) Other than the Company Stock Repurchase (as defined in
the Prospectus) (which the Selling Stockholders do not concede
constitutes stabilizing or manipulative activity in violation of federal
or state securities laws), neither of the Selling Stockholders has taken
nor will take, directly or indirectly, any action designed to, or which
might reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of the Shares.
11
<PAGE> 12
(e) Neither of the Selling Stockholders has distributed nor
will distribute any prospectus or other offering materials in connection
with the offering and sale of the Shares other than any Preliminary
Prospectus and the Prospectus or other material permitted by the Act.
(f) Such Selling Stockholder has good, valid and marketable
title to the Shares to be sold by such Selling Stockholder pursuant to
this Agreement, free and clear of all liens, encumbrances, claims,
security interests, restrictions on transfer, stockholder agreements,
voting trusts and other defects in title whatsoever, with full power to
deliver such Shares hereunder, and upon delivery of and payment for such
Shares as contemplated herein, each of the Underwriters will receive
good, valid and marketable title to the Shares purchased by it from such
Selling Stockholder, free and clear of all liens, encumbrances, claims,
security interests, restrictions on transfer, stockholder agreements,
voting trusts and other defects in title whatsoever. Neither of the
Selling Stockholders has any options, warrants or other similar rights
to acquire, nor any right or arrangement to acquire, any capital stock
of the Company or any security convertible into, exercisable for or
exchangeable for any shares of capital stock of the Company other than
those described in the Registration Statement and the Prospectus.
3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Selling Stockholders agree to sell to
the Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Selling Stockholders, at a purchase price of $ per
share, the respective number of Firm Shares set forth opposite the name of such
Underwriter on Schedule A hereto.
The Selling Stockholders shall deliver the Firm Shares to CS First
Boston Corporation against payment of the aggregate purchase price therefor by
certified or official bank check or checks in New York Clearing House (next day)
funds drawn to the order of the Selling Stockholders at the Boston offices of
Skadden, Arps, Slate, Meagher & Flom (or at such other place as may be agreed
upon among you and the Selling Stockholders), at 9:00 A.M., New York time, on
the fifth full business day following the date of this Agreement, or at such
other time not later than seven full business days thereafter as you and the
Selling Stockholders determine (or at such
12
<PAGE> 13
time and date to which payment and delivery shall have been postponed pursuant
to Section 8 hereof), such time being herein referred to as the "Closing Date".
The certificates for the Firm Shares so to be delivered will be in definitive
form, in such denominations and registered in such names as you request, and
will be made available for checking and packaging at such office of CS First
Boston Corporation or other location as you may reasonably request at least 24
hours prior to the Closing Date.
In addition, upon written notice from you given to the Selling
Stockholders not more than 30 days subsequent to the date of the initial public
offering of the Firm Shares (or, if such 30th day shall be a Saturday, Sunday or
holiday, on the next business day thereafter when the New York Stock Exchange is
open for trading), the Underwriters may purchase from time to time up to all of
the Option Shares at the purchase price per share to be paid for the Firm
Shares. The number of Option Shares to be so purchased by each of the
respective Underwriters upon exercise of such option shall be the same
proportion of the total number of Option Shares being purchased by the several
Underwriters pursuant to the exercise of such option as the number of Firm
Shares purchased by such Underwriter (set forth in Schedule A hereto) bears to
the total number of Firm Shares purchased by the several Underwriters, adjusted
by you in such a manner as to avoid fractional shares. The Selling Stockholders
agree to sell to the Underwriters and the Underwriters agree, severally and not
jointly, to purchase from the Selling Stockholders the number of Option Shares
specified in such notice to the Selling Stockholders. Such Option Shares shall
be purchased by the Underwriters only for the purpose of covering
over-allotments made in connection with the sale of the Firm Shares. No Option
Shares shall be sold or delivered unless the Firm Shares have been
simultaneously or were previously sold and delivered. The right to purchase the
Option Shares or any portion thereof may be surrendered and terminated at any
time upon notice by you to the Selling Stockholders.
The Selling Stockholders shall deliver the Option Shares to you against
payment of the aggregate purchase price therefor by certified or official bank
check or checks in New York Clearing House (next day) funds drawn to the order
of the Selling Stockholders at the Boston offices of Skadden, Arps, Slate,
Meagher & Flom (or at such other place as may be agreed upon among you and the
Selling Stockholders), at such time as is determined by you, but such time shall
not be later than seven full business days after written notice of election to
purchase Option Shares is given, such time being herein referred to as the
"Option Closing Date" (which may be
13
<PAGE> 14
the Closing Date). The certificates for the Firm Shares so to be delivered
will be in definitive form, in such denominations and registered in such names
as you request, and will be made available for checking and packaging at such
office of CS First Boston Corporation or other location as you may reasonably
request at least 24 hours prior to the Option Closing Date.
4. OFFERING BY UNDERWRITERS. It is understood that the Underwriters
propose to offer the Shares for sale to the public as set forth in the
Prospectus.
5. CERTAIN ADDITIONAL AGREEMENTS OF THE COMPANY AND THE SELLING
STOCKHOLDERS. The Company and the Selling Stockholders agree with the
Underwriters as follows:
I. The Company agrees with the Underwriters that:
(a) If the Effective Time is prior to the execution and
delivery of this Agreement, the Company will file the Prospectus with
the Commission pursuant to and in accordance with subparagraph (1) (or,
if applicable and if consented to by you, subparagraph (4)) of Rule
424(b) not later than the earlier of (A) the second business day
following the execution and delivery of this Agreement or (B) the fifth
business day after the Effective Date. The Company will advise you
promptly of any such filing pursuant to Rule 424(b).
(b) The Company will advise you promptly of any proposal to
amend or supplement the registration statement as filed or the related
prospectus or the Registration Statement or the Prospectus and will not
effect such amendment or supplementation without your consent; and the
Company will also advise you promptly of the effectiveness of the
Registration Statement (if the Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment or
supplementation of the Registration Statement or the Prospectus and of
the institution by the Commission of any stop order proceedings in
respect of the Registration Statement and will use its best efforts to
prevent the issuance of any such stop order and to obtain as soon as
possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Act, any event occurs as a result
of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or
14
<PAGE> 15
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company promptly will prepare and
file with the Commission an amendment or supplement which will correct
such statement or omission or an amendment which will effect such
compliance. Neither your consent to, nor the Underwriters' delivery of,
any such amendment or supplement shall constitute a waiver of any of
the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its stockholders an earnings statement covering a period of
at least 12 months beginning after the Effective Date which will satisfy
the provisions of Section 11(a) of the Act. For the purpose of the
preceding sentence, "Availability Date" means the 45th day after the end
of the fourth fiscal quarter following the fiscal quarter that includes
the Effective Date, except that, if such fourth fiscal quarter is the
last quarter of the Company's fiscal year, "Availability Date" means the
90th day after the end of such fourth fiscal quarter.
(e) The Company will furnish to you copies of the
Registration Statement (one of which will be signed and will include all
exhibits), any Preliminary Prospectus, the Prospectus and all amendments
and supplements to such documents, including any prospectus prepared to
permit compliance with Section 10(a)(3) of the Act, in each case as soon
as available in such quantities as you request.
(f) The Company will arrange for the qualification of the
Shares for sale under the laws of such jurisdiction as you designate and
will continue such qualifications in effect so long as required for the
distribution. In each jurisdiction in which the Shares shall have been
qualified as above provided, the Company will make and file such
statements and reports in each year as are or may be reasonably required
by the laws of such jurisdiction, except that such registration or
qualification shall not be required in any jurisdiction in which the
Company would, as a condition to such qualification, be required to file
a general consent to service of process.
(g) During the period of two years after the date of this
Agreement, the Company will furnish
15
<PAGE> 16
to you and, upon request, to each of the other Underwriters, (i)
concurrently with furnishing such reports to its stockholders, quarterly
reports of operations of the Company for each of the first three
quarters in the form furnished to the Company's stockholders; (ii)
concurrently with furnishing such reports to its stockholders, annual
reports of the Company as of the end of each fiscal year (including
financial statements audited by independent public accountants); (iii)
as soon as they are available, copies of all other reports (financial or
other) furnished to stockholders; (iv) as soon as they are available,
copies of all reports and financial statements furnished to or filed
with the Commission, any securities exchange or the National Association
of Securities Dealers, Inc. ("NASD"); (v) every material press release
and every material news item or article in respect of the Company or its
affairs (in each case, only to the extent such press release, news item
or article relates to the financial condition or results of operations
of the Company) which was released or prepared by or on behalf of the
Company; and (vi) any additional information of a public nature
concerning the Company or its business which you may reasonably request.
(h) If at any time during the 30-day period after the
Effective Date, any rumor, publication or event relating to or affecting
the Company shall occur as a result of which, in your opinion, the
market price of the Common Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event
necessitates an amendment of or a supplement to the Prospectus), the
Company will, after written notice from you advising the Company to the
effect set forth above, consult with you concerning the rumor,
publication or event.
(i) The Selling Stockholders jointly and severally agree to
pay all expenses incident to the performance of the respective
obligations of the Company and the Selling Stockholders hereunder and
agree to reimburse the Underwriters for any expenses, including fees,
charges and disbursements of Skadden, Arps, Slate, Meagher & Flom, as
Underwriters' counsel ("Underwriters' Counsel"), incurred by them in
connection with qualification of the Shares for sale under the laws of
such jurisdictions as you designate and the printing of memoranda
relating thereto, for the filing fee of the NASD relating to the Shares
and for expenses incurred in distributing any Preliminary Prospectus and
the
16
<PAGE> 17
Prospectus (including any amendments and supplements thereto) to the
Underwriters.
II. Each of the Selling Stockholders agrees with each
Underwriter that:
(a) During a period of 120 days from the Effective Date, such
Selling Stockholder will not, without the prior written consent of CS
First Boston Corporation, as a representative of the Underwriters, offer
to sell, contract to sell or otherwise sell, dispose of, loan, pledge or
grant any rights with respect to any shares of Common Stock of the
Company, any options or warrants to purchase any shares of Common Stock
or any securities convertible into or exchangeable for shares of the
Common Stock now owned or hereafter acquired directly by such Selling
Stockholder or with respect to which such Selling Stockholder has or
hereafter acquires the power of disposition. Each Selling Stockholder
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent against the transfer of shares of Common Stock
held by such Selling Stockholder except in compliance with this
Agreement.
(b) Each of the Selling Stockholders will comply with all
agreements and satisfy all conditions on its part to be complied with or
satisfied pursuant to this Agreement on or prior to the Closing Date or
the Option Closing Date, as the case may be.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase and pay for the Shares will be
subject to the accuracy of the representations and warranties on the part of the
Company and the Selling Stockholders herein, to the accuracy of the statements
of Company officers made pursuant to the provisions hereof, to the performance
by the Company and the Selling Stockholders of their respective obligations
hereunder and to the following additional conditions precedent:
(a) You shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time is prior to the execution
and delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the
amendment or post-effective amendment to the registration statement to
be filed shortly prior to the Effective Time), of Ernst & Young
confirming that
17
<PAGE> 18
they are independent public accountants within the meaning of the Act
and the Rules and Regulations and stating in effect that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statement comply
in form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;
(ii) on the basis of a reading of the latest available
interim financial statements of the Company, inquiries of officials
of the Company who have responsibility for financial and accounting
matters and other specified procedures, nothing came to their
attention that caused them to believe that:
(A) at the date of the latest available balance sheet read
by Ernst & Young, or at a subsequent specified date not more
than five days prior to the date of this Agreement, there was
any change in the capital stock or any increase in short-term
indebtedness or long-term debt of the Company and its
subsidiaries consolidated or, at the date of the latest
available balance sheet read by such accountants, there was any
decrease in consolidated net assets, as compared with amounts
shown on the latest balance sheet included in the Prospectus; or
(B) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date
of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year, in the total or per
share amounts of consolidated net income;
except in all cases set forth in clauses (A) and (B) above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described or referred
to in such letter; and
18
<PAGE> 19
(iii) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statement (in each case to
the extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the
Company and its subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such
records by analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and other
procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in such
letter.
For purposes of this Section 6(a), if the Effective Time is subsequent
to the execution and delivery of this Agreement, "Registration
Statement" shall mean the registration statement as proposed to be
amended by the amendment or post-effective amendment to be filed
shortly prior to the Effective Time, and "Prospectus" shall mean the
prospectus included in the Registration Statement. All financial
statements and schedules included in material incorporated by reference
into the Prospectus shall be deemed included in the Registration
Statement for purposes of this subsection.
(b) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not
later than 10:00 P.M., New York time, on the date of this Agreement or
such later date as shall have been consented to by you. If the
Effective Time is prior to the execution and delivery of this Agreement,
the Prospectus shall have been filed with the Commission in accordance
with the Rules and Regulations and Section 5.I(a) of this Agreement.
Prior to the Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or, to the knowledge of the
Company or you, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any
development involving a prospective change, in or affecting particularly
the business or properties of the Company or
19
<PAGE> 20
its subsidiaries which, in the judgment of a majority in interest of the
Underwriters including you, materially impairs the investment quality of
the Shares; (ii) any downgrading in the rating of any debt securities of
the Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of
such rating); (iii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in
the over-the-counter market; (iv) any banking moratorium declared by
federal or New York authorities; or (v) any outbreak or escalation of
major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters including you, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the sale of and
payment for the Shares.
(d) You shall have received an opinion, dated the Closing
Date or the Option Closing Date, as the case may be, of Ropes & Gray,
counsel for the Company and the Selling Stockholders, to the effect
that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Massachusetts, with power and authority (corporate
and other) to own, lease and operate its properties and conduct its
business as described in the Prospectus;
(ii) The Firm Shares or the Option Shares, as the case
may be, and all other outstanding shares of the Common Stock have
been duly authorized, validly issued, fully paid and nonassessable;
the capital stock of the Company conforms in all material respects
to the statements relating thereto contained in the Registration
Statement and the Prospectus (and such statements correctly state
the substance of the instruments defining the capitalization of the
Company); no statutory preemptive right or preemptive right provided
for in the Restated Articles of Organization, as amended to date, or
by-laws of the Company, as currently in effect, exists with respect
to any of the Firm
20
<PAGE> 21
Shares or the Option Shares, as the case may be, or the sale
thereof; to the knowledge of Ropes & Gray, based upon reasonable
inquiry, no co-sale right, right of first refusal or other similar
right of stockholders exists with respect to any of the Firm Shares
or the Option Shares, as the case may be, or the sale thereof; the
form of certificate used to evidence the Common Stock is in due and
proper form and otherwise complies with all statutory requirements
under the laws of the Commonwealth of Massachusetts; except as
described in or contemplated by the Prospectus and as set forth in
Schedule B hereto, to the knowledge of Ropes & Gray, based upon
reasonable inquiry, there are no outstanding options, warrants or
other rights for the issuance of, and there are no commitments,
plans or arrangements to issue, any shares of capital stock of the
Company or any security convertible into, exercisable for or
exchangeable for any shares of capital stock of the Company; no
further approval or authorization of any stockholder, the Board of
Directors of the Company or others is required for the sale or
transfer of the Shares, as contemplated by this Agreement, except as
may be required under the Act or the Rules and Regulations or under
state or other securities or Blue Sky laws, rules or regulations;
(iii) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is
required for the consummation of the transactions contemplated by
this Agreement in connection with the sale of the Shares by the
Selling Stockholders, except such as may be required under the Act
and the Rules and Regulations or under state or other securities or
Blue Sky laws, rules and regulations, as to which Ropes & Gray need
express no opinion;
(iv) The Company has full legal right, power and authority
to enter into this Agreement and perform the transactions
contemplated hereby; this Agreement has been duly authorized,
executed and delivered by the Company;
(v) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a
21
<PAGE> 22
default under, (A) the Restated Articles of Organization, as amended
to date, or by-laws of the Company, as currently in effect; (B) any
indenture, mortgage, deed of trust, loan agreement, bond, debenture,
note or other evidence of indebtedness or any lease, contract or
other agreement or instrument filed as an exhibit to the Company's
annual report on Form 10-K for the year ended December 31, 1993; or
(C) any law or rule or regulation of any governmental agency or body
having jurisdiction over the Company or its subsidiaries or over
their respective properties, except that (1) Ropes & Gray need only
express an opinion as to such laws, rules and regulations which
are of a kind normally applicable to the Company or its subsidiaries
or to such transactions and (2) no opinion need be expressed under
this paragraph (vi)(C) as to compliance with the antifraud
provisions of federal or state securities laws;
(vi) The Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the
Prospectus either was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein or was included in the Registration Statement (as
the case may be), and Ropes & Gray does not know of the issuance of
any stop order suspending the effectiveness of the Registration
Statement or any part thereof or of any proceedings for that purpose
which have been instituted or are pending or contemplated under the
Act; Ropes & Gray has not independently verified the accuracy,
completeness or fairness of the statements made or the information
contained in the Registration Statement or the Prospectus and except
with respect to the statements referred to in the second clause of
paragraph (ii) above, Ropes & Gray is not passing upon and does not
assume any responsibility for such statements or information; in the
course of the preparation by the Company of the Registration
Statement and the Prospectus, Ropes & Gray has participated in
discussions with your representatives and those of the Company and
its independent accountants in which the business and affairs of the
Company and the contents of the Registration Statement and the
Prospectus were discussed, and (1) on the basis of information that
Ropes & Gray has gained in the course of their representation of the
Company in connection with the Company's
22
<PAGE> 23
preparation of the Registration Statement and the Prospectus and the
participation of Ropes & Gray in the discussions referred to above,
Ropes & Gray believes that the Registration Statement and the
Prospectus, as of their respective effective or issue dates and as
of the date of the opinion, complied as to form in all material
respects with the requirements of the Act and the Rules and
Regulations, and Ropes & Gray does not know of any legal or
governmental proceeding to which the Company or any of its
subsidiaries is a party or to which any of their respective
properties are subject required to be described in the Prospectus
which is not so described, nor of any contract or other document of
a character required to be described in the Prospectus or to be
filed as an exhibit to the Registration Statement which is not so
described or filed and (2) based on such information and
participation, Ropes & Gray has no reason to believe that the
Registration Statement, as of its effective date, or the Prospectus,
as of the date of the opinion, contained or contains any untrue
statement of a material fact or omitted or omits to state any
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
provided, however, that Ropes & Gray need express no opinion as to
the financial statements, including the notes and schedules thereto,
or any other financial or accounting information set forth or
referred to in the Registration Statement or Prospectus;
(vii) Upon registration of the Shares in the name of
the Underwriters in the stock records of the Company, assuming the
Underwriters purchased the Shares in good faith and without notice
of any adverse claim within the meaning of Section 8-302 of the
Massachusetts Uniform Commercial Code, the Underwriters will have
acquired all rights of each of the Selling Stockholders in the
Shares free from any adverse claim, any lien in favor of the Company
and any restrictions on transfer imposed by the Company; and the
owner of such Shares, if other than the Selling Stockholders, is
precluded from asserting against the Underwriters the
ineffectiveness of any unauthorized endorsement; and
23
<PAGE> 24
(viii) This Agreement has been duly executed and
delivered by each of the Selling Stockholders.
In rendering such opinion, Ropes & Gray may rely as to the materiality
of agreements and other factual matters on one or more written
certificates of officers of the Company or public officials, as and to
the extent they deem such reliance appropriate.
(e) You shall have received an opinion, dated the Closing
Date or the Option Closing Date, as the case may be, of John B. Douglas
III, Senior Vice President and General Counsel of the Company, to the
effect that:
(i) The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which the ownership or leasing of properties or the conduct of its
business requires such qualification, except where the failure to be
so qualified would not have a Material Adverse Effect;
(ii) The description of the Company's employment or
employee benefit plans, policies or arrangements, and of the
options, rights or benefits granted thereunder set forth in the
Prospectus, accurately and fairly presents the information required
to be set forth therein with respect to and in connection with such
plans, policies or arrangements in all material respects;
(iii) Except for the Registration Rights Agreement
dated as of February 28, 1990 between the Company and the Selling
Stockholders, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act
with respect to any securities of the Company owned or to be owned
by such person or to require the Company to include such securities
in the securities registered pursuant to the Registration Statement
or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act;
24
<PAGE> 25
(iv) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein
contemplated, to his knowledge, based upon reasonable inquiry, will
not result in a breach or violation of the terms and provisions of,
or constitute a default under, any order of any court having
jurisdiction over the Company or its subsidiaries or over their
respective properties; and
(v) No contractual preemptive right exists with
respect to any of the Firm Shares or the Option Shares, as the case
may be, or the sale thereof.
(f) You shall have received from Underwriters' Counsel such
opinion or opinions with respect to the incorporation of the Company,
the validity of the Firm Shares or the Option Shares, as the case may
be, the Registration Statement, the Prospectus and other related matters
as you may require, and the Company shall have furnished to
Underwriters' Counsel such documents as they request for the purpose of
enabling them to pass upon such matters. In rendering such opinion,
Underwriters' Counsel may rely as to the incorporation of the Company
and the validity of the Firm Shares or the Option Shares, as the case
may be, upon the opinion of Ropes & Gray referred to above.
(g) You shall have received a certificate, dated the Closing
Date, of (i) the President of the Company and (ii) the Executive Vice
President and Chief Financial Officer of the Company in which such
officers shall state that, to the best of their knowledge after
reasonable investigation, the representations and warranties of the
Company in this Agreement are true and correct as if made on and as of
the Closing Date or any Option Closing Date, as the case may be; that no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted
or, to the best knowledge of such officers, are contemplated by the
Commission and that subsequent to the date of the most recent financial
statements in the Prospectus there has been no material adverse change
in the financial position or results of operations of the Company except
as set forth in or contemplated by the Prospectus or described in such
certificate; and that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date or any Option Closing Date, as
the case may be.
25
<PAGE> 26
(h) You shall have received a certificate, dated the Closing
Date, of the Selling Stockholders in which such Selling Stockholders
shall state that, to the best of their knowledge after reasonable
investigation, the representations and warranties of the Selling
Stockholders in this Agreement are true and correct as if made on and as
of the Closing Date or any Option Closing Date, as the case may be; and
that each of the Selling Stockholders has complied with all agreements
and satisfied all conditions on his or her part to be performed or
satisfied hereunder at or prior to the Closing Date or any Option
Closing Date, as the case may be.
(i) You shall have received a letter, dated the Closing
Date, of Ernst & Young which meets the requirements of Section 6(a)
hereof, except that the specified date referred to in Section 6(a)
hereof will be a date not more than five days prior to the Closing Date
for the purposes of this Section 6(h).
The Company also will furnish you with such conformed copies of such opinions,
certificates, letters and documents as you reasonably request.
7. Indemnification and Contribution.
---------------------------------
(a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus or any amendment or
supplement thereto, or any Preliminary Prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter
in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon
and in conformity with
26
<PAGE> 27
written information furnished to the Company by any Underwriter
specifically for use therein. The indemnification provided for in this
Section 7(a) shall be in addition to any liabilities which the Company
may otherwise have and shall extend upon the same terms and
conditions to, and inure to the benefit of, each person, if any, who
controls any Underwriter within the meaning of the Act.
(b) Each of the Selling Stockholders, severally and not
jointly, will indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agree to
reimburse each Underwriter for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that such
Selling Stockholder shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any of such documents in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter specifically for use therein; and provided further, however,
that such Selling Stockholder shall not be liable or responsible for any
amount in excess of the gross proceeds from the offering (after
deducting all underwriting discounts and commissions, but before
deducting expenses) received by the Selling Stockholder. The
indemnification provided for in this Section 7(b) shall be in addition
to any liabilities which such Selling Stockholder may otherwise have and
shall extend upon the same terms and conditions to, and inure to the
benefit of, each person, if any, who controls any Underwriter within the
meaning of the Act.
(c) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company and each of the Selling
Stockholders against
27
<PAGE> 28
any losses, claims, damages or liabilities to which the Company or
either of such Selling Stockholders may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus or any amendment or
supplement thereto, or any Preliminary Prospectus, or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company or such
Selling Stockholder by such Underwriter through you specifically for use
therein. The indemnification provided for in this Section 7(c) shall be
in addition to any liabilities which each Underwriter may otherwise have
and shall extend upon the same terms and conditions to, and shall inure
to the benefit of, each officer and director of the Company and each
person, if any, who controls the Company within the meaning of the Act.
(d) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) or (c) above, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party under subsection (a) or (b)
or (c) above, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section
28
<PAGE> 29
7(d) for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof.
(e) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending
or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder
by such indemnified party unless such settlement includes a release of
such indemnified party reasonably acceptable in form and substance to
such indemnified party, from all liability on any claims that are the
subject matter of such action.
(f) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) or (c) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) or (c) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company or
the Selling Stockholders, on the one hand, and the Underwriters, on the
other hand, from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
Company or the Selling Stockholders, on the one hand, and the
Underwriters, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities
as well as any other relevant equitable considerations. The relative
benefits received by the Company or the Selling Stockholders, as the
case may be, on the one hand, and the Underwriters, on the other hand,
shall be deemed to be in the same proportion as the gross proceeds from
the offering (after deducting all underwriting discounts and commissions
but before deducting expenses) received (directly or indirectly) by the
Company and the Selling Stockholders bear to the total underwriting
discounts received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Selling Stockholders or the Underwriters and the parties'
relative intent, knowledge, ac-
29
<PAGE> 30
cess to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the
first sentence of this Section 7(f) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is
the subject of this Section 7(f). Notwithstanding the provisions of
this Section 7(f), (i) no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Shares underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission and (ii) no Selling Stockholder shall be
required to contribute any amount in excess of the amount by which the
gross proceeds of the offering (after deducting all underwriting
discounts and commissions, but before deducting expenses) received by
such Selling Stockholder exceeds the amount of any damages which such
Selling Stockholder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this Section 7(f) to contribute are several in proportion
to their respective underwriting obligations and not joint.
(g) Notwithstanding any other provision of this Agreement,
the Company and the Selling Stockholders may agree, as among themselves
and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of liability under the
representations and warranties contained in Section 2 hereof or the
indemnification and contribution provisions included in this Section 7
for which they each shall be responsible.
(h) The information set forth in the last paragraph on the
front cover page (insofar as such information relates to the
Underwriters), the legend regarding stabilization set forth on the
inside front cover page (to the extent the same varies from that
required by the Rules and Regulations) and under "Underwriting" in any
Preliminary Prospectus and in the final form of Prospectus filed
pursuant to Rule 424(b) constitutes the only information
30
<PAGE> 31
furnished by the Underwriters to the Company for inclusion in any
Preliminary Prospectus, the Prospectus or the Registration Statement,
and the Underwriters represent and warrant to the Company and the
Selling Stockholders that the statements made therein are materially
true and correct and do not omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(i) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof, including
without limitation the provisions of this Section 7, and are fully
informed regarding said provisions. They further acknowledge that the
provisions of this Section 7 fairly allocate the risks in light of the
ability of the parties to investigate the Company and its business in
order to assure that adequate disclosure is made in the Registration
Statement and Prospectus as required by the Act.
8. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters
default in their obligations to purchase Shares hereunder and the aggregate
number of Firm Shares or Option Shares, as the case may be, that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total number of Firm shares or Option Shares, as the case may be, you may
make arrangements satisfactory to the Selling Stockholders for the purchase of
such Firm Shares or Option Shares, as the case may be, by other persons,
including any of the Underwriters, but if no such arrangements are made by the
Closing Date or the Option Closing Date, as the case may be, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Firm Shares or Option Shares, as the case
may be, that such defaulting Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters so default and the aggregate number of Firm Shares
or Option Shares, as the case may be, with respect to which such default or
defaults occur exceeds 10% of the total number of Firm Shares or Option Shares,
as the case may be, and arrangements satisfactory to you and the Selling
Stockholders for the purchase of such Firm Shares or Option Shares, as the case
may be, by other persons are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or the Company or the Selling Stockholders, except as provided in
Section 9. As used in this Agreement, the term "Underwriter" includes any
person substi-
31
<PAGE> 32
tuted for an Underwriter under this Section 8. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
respective indemnities, agreements, representations, warranties and other
statements of the Company and the Selling Stockholders or the Company's officers
and of the Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation or statement as
to the results thereof, made by or on behalf of the Company or the Selling
Stockholders or any Underwriter or any of their respective representatives,
officers or directors or any controlling person, as applicable, and will survive
delivery of and payment for the Firm Shares or Option Shares, as the case may
be. If this Agreement is terminated pursuant to Section 8 or if for any reason
the purchase of the Firm Shares or Option Shares, as the case may be, by the
Underwriters is not consummated, the Selling Stockholders shall remain severally
responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling
Stockholders and the Underwriters pursuant to Section 7 shall remain in effect.
If the purchase of the Firm Shares or Option Shares, as the case may be, by the
Underwriters is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in clauses (iii), (iv) or (v) of Section 6(c) hereof, the
Selling Stockholders will reimburse the Underwriters for all out-of-pocket
expenses (including fees, charges and disbursements of Underwriters' Counsel)
reasonably incurred by them in connection with the offering of the Firm Shares
or Option Shares, as the case may be.
10. NOTICES. All communications hereunder will be in writing and,
if sent to the Underwriters, will be mailed, delivered, telecopied or
telegraphed and confirmed to you, c/o CS First Boston Corporation, Park Avenue
Plaza, New York, New York 10055, Attention: Investment Banking Department - New
Issue Processing Group, or, if sent to the Company, will be mailed, delivered,
telecopied or telegraphed and confirmed to it at Reebok International Ltd., 100
Technology Center Drive, Stoughton, Massachusetts 02072, Attention: General
Counsel; or, if sent to the Selling Stockholders, will be mailed, delivered,
telecopied or telegraphed and confirmed to them
c/o Reebok International Ltd., 100 Technology Center Drive, Stoughton,
Massachusetts 02072; provided, however, that any notice to an Underwriter
pursuant to Section 7
32
<PAGE> 33
will be mailed, delivered, telecopied or telegraphed and confirmed to such
Underwriter.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. REPRESENTATION OF UNDERWRITERS. CS First Boston Corporation will
act for the Underwriters in connection with this financing, and any action under
this Agreement taken by CS First Boston Corporation will be binding upon all the
Underwriters.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
33
<PAGE> 34
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the
Selling Stockholders, on the one hand, and the Underwriters, on the other hand,
in accordance with its terms.
Very truly yours,
REEBOK INTERNATIONAL LTD.
By__________________________
Name:
Title:
SELLING STOCKHOLDERS:
____________________________
Paul B. Fireman
____________________________
Phyllis Fireman
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
CS FIRST BOSTON CORPORATION
KIDDER, PEABODY & CO. INCORPORATED
MONTGOMERY SECURITIES
By: CS FIRST BOSTON CORPORATION,
as representative of the Underwriters
By_________________________
Name:
Title:
34
<PAGE> 35
<TABLE>
SCHEDULE A
<CAPTION>
Number of
Underwriter Shares
- ----------- ---------
<S> <C>
CS First Boston Corporation . . . . . . . . . . . . . . .
Kidder, Peabody & Co. Incorporated . . . . . . . . . . .
Montgomery Securities . . . . . . . . . . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . 3,000,000
=========
</TABLE>
35
