As filed with the Securities and Exchange Commission on March 28, 2002
Registration No. 333-57704
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2
TO
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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REEBOK INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2678061
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1895 J.W. Foster Boulevard
Canton, Massachusetts 02021
(781) 401-5000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
David A. Pace
Senior Vice President and General Counsel
Reebok International Ltd.
1895 J.W. Foster Boulevard
Canton, Massachusetts 02021
(781) 401-5000
(Name and address, including zip code, and telephone
number, including area code, of agent for service of process)
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Copies to:
Keith F. Higgins, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
(617) 951-7000
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined
by market conditions.
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. [X]
If this Registration Statement is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration number of the
earlier effective registration statement for the same offering: [_]
If this Registration Statement is a post-effective amendment filed pursuant
to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained in this prospectus is not complete and may be changed. +
+We may not sell these securities until the regisration statement filed with +
+the Securities and Exchange Commission is effective. This prospectus is not +
+an offer to sell these securities and it is not soliciting an offer to buy +
+these securities in any state where the offer or sale is not permitted. +
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PROSPECTUS
Subject to completion, Dated March 28, 2002.
$250,000,000
[Reebok logo]
4 1/4% Convertible Debentures due March 1, 2021
and
6,483,402 Shares of Common Stock Issuable upon Conversion of the Debentures
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Reebok International Ltd., or Reebok, issued the Debentures in a private
placement in February 2001. This prospectus will be used by selling
securityholders to resell their Debentures and the shares of common stock
issuable upon conversion of their Debentures.
The Debentures are unsecured unsubordinated obligations of Reebok
International Ltd. The Debentures will accrue interest at an initial rate of 4
1/4%, which will be reset (but not below 4 1/4% or above 6 1/4%) on September
1, 2007, September 1, 2010 and September 1, 2015. We will pay interest on the
Debentures on March 1 and September 1 of each year. The first interest payment
will be made on September 1, 2001. The Debentures are currently designated for
trading in The Portal SM Market, a subsidiary of The Nasdaq Stock Market, Inc.
On or after March 5, 2004, we may redeem for cash all or part of the
Debentures that have not been previously converted at the redemption prices set
forth in this prospectus. Holders may require us to repurchase for cash all or
part of their Debentures on March 1, 2008, March 1, 2011 or March 1, 2016 at a
price equal to 100% of the principal amount of the Debentures plus accrued
interest up to but not including the date of repurchase. In addition, upon a
change in control of our company occurring on or prior to March 1, 2021, each
holder may require us to repurchase all or a portion of such holder's
Debentures for cash.
The Debentures are convertible at the option of the holder into our common
stock at an initial conversion price of $38.56 per share of common stock,
subject to certain adjustments. Since December 2, 1997, our common stock has
not traded at or above $38.56. Holders may surrender Debentures for conversion
at any time prior to maturity, unless previously redeemed. Our common stock is
listed on the New York Stock Exchange under the symbol "RBK." On March 27,
2002, the last reported sale price on the New York Stock Exchange for our
common stock was $26.95.
Investing in the Debentures or our common stock involves risks. See "Risk
Factors" on page 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this prospectus is
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TABLE OF CONTENTS
Page
Where You Can Find More Information......................................... 2
Reebok ..................................................................... 3
Risk Factors ............................................................... 4
Special Note Regarding Forward-Looking Statements........................... 9
Use of Proceeds............................................................. 10
Ratio of Earnings to Fixed Charges.......................................... 10
Description of Debentures .................................................. 11
Page
Description of Common Stock ................................................ 22
United States Federal Income Tax Consequences............................... 25
Selling Securityholders..................................................... 32
Plan of Distribution........................................................ 36
Validity of Securities...................................................... 37
Experts..................................................................... 37
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You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. This prospectus may only be used where it is legal to
sell these securities. You should assume that the information appearing in this
prospectus or any documents incorporated by reference is accurate only as of
the date on the front cover of the applicable document. Our business, financial
condition, results of operations and prospects may have changed since that
date.
1
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Securities Exchange Act of 1934. You may
read and copy this information at the following location of the SEC:
Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, DC 20549
You may also obtain copies of this information at prescribed rates by mail
from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Room
1024, Washington, DC 20549. You may call the SEC at 1-800-SEC-0330 for further
information on the operation of its public reference rooms.
The SEC also maintains a web site that contains reports, proxy statements
and other information about issuers, like us, who file electronically with the
SEC. The address of that site is www.sec.gov.
You can also inspect reports, proxy statements and other information about
our company at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
We incorporate by reference information into this prospectus, which means
that we disclose important information to you by referring you to another
document filed separately with the SEC. The information incorporated by
reference is deemed to be part of this prospectus, except for any information
superseded by information contained directly in this prospectus. This
prospectus incorporates by reference the documents set forth below that we have
previously filed with the SEC. These documents contain important information
about us and our financial condition.
REEBOK SEC FILINGS (File No. 001-09340) PERIOD
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Annual Report on Form 10-K Fiscal year ended December 31,
2001
(filed on March 27, 2002)
Filed on July 12, 1985, July
The description of our common stock and 27, 1990, April 1, 1991,
associated common stock purchase rights December 13, 1991, February 24,
as set forth in our Registration Statements, 1999, June 8, 1999 and June 6,
on Forms 8-A and 8-A/A 2000
All documents that we file with the SEC from the date of this prospectus to
the end of the offering of the Debentures and common stock under this document
shall also be deemed to be incorporated herein by reference.
You may request a copy of these filings at no cost, by writing or calling us
at the following address or telephone number:
Reebok International Ltd.
1895 J. W. Foster Boulevard
Canton, Massachusetts 02021
(781) 401-5000
Attn: Office of Investor Relations
Exhibits to the filings will not be sent, however, unless those exhibits
have specifically been incorporated by reference in this prospectus.
2
REEBOK
You should read the entire prospectus, as well as the information
incorporated by reference, before making an investment decision. When used in
this prospectus, the terms "Reebok," "we," "our" and "us" refer to Reebok
International Ltd. and its consolidated subsidiaries, unless otherwise
specified.
We are engaged in the design and marketing of sports and fitness products,
including footwear and apparel, as well as the design and marketing of footwear
and apparel for non-athletic "casual" use. We have four major brand groups:
. the Reebok Division;
. The Rockport Company, LLC;
. Ralph Lauren Footwear Co., Inc.; and
. the Greg Norman Division.
Our strategy is to build upon our heritage and strengths in the fitness and
lifestyle categories, strong technology platform and reputation as an authentic
performance brand to offer products that appeal to a broad segment of the
marketplace. We devote significant resources to advertising our products to a
variety of audiences through television, radio, print and other media and
utilize our relationships with major sports figures and organizations to
maintain and enhance visibility for the REEBOK(R) brand. We also pursue
opportunities for licensing our trademarks, patents and other intellectual
property to third parties for sporting goods, apparel and related products and
services. We believe that our licensing program reinforces our reputation as a
market leader.
Our common stock is listed on the New York Stock Exchange under the symbol
"RBK."
We are a Massachusetts corporation whose principal executive offices are
located at 1895 J.W. Foster Boulevard, Canton, Massachusetts 02021. Our
telephone number at that address is (781) 401-5000.
For additional information regarding our business, please see our Form 10-K
for the fiscal year ended December 31, 2001 and our other filings with the SEC
which are incorporated by reference into this document. See "Where You Can Find
More Information."
3
RISK FACTORS
Prospective investors should carefully consider the following information in
addition to the other information contained in this prospectus and the
documents incorporated by reference into this prospectus before purchasing the
Debentures.
Risks Related to the Debentures
An active trading market for Debentures may not develop.
An active trading market for the Debentures may not develop. If a liquid and
sustainable market does not develop, it could adversely affect the ability of
holders to sell their Debentures or the price at which holders of the
Debentures will be able to sell their Debentures. Future trading prices of the
Debentures will depend on many factors, including, among other things,
prevailing interest rates, our operating results, the price of our common stock
and the market for similar securities.
We may not be able to raise the funds necessary to finance a change in control
purchase or a purchase at the option of the holder.
On March 1, 2008, March 1, 2011 and March 1, 2016 and upon the occurrence of
specific kinds of change in control events occurring on or before March 1,
2021, holders of Debentures may require us to purchase their Debentures for
cash. However, it is possible that we would not have sufficient funds at that
time to make the required purchase of Debentures. In addition, there are
important corporate events, such as leveraged recapitalizations that would
increase the level of our indebtedness, that would not constitute a change in
control under the indenture. See "Description of Debentures--Purchase of
Debentures at the Option of the Holder" and "--Change in Control Permits
Purchase of Debentures by Reebok at the Option of the Holder."
Holders of the Debentures will be required to include as ordinary interest
income amounts in excess of the interest payments received, including amounts
received upon sale, conversion, redemption or other disposition.
The Debentures are characterized as indebtedness of ours for United States
federal income tax purposes. Accordingly, you will be required to include, in
your income, interest with respect to the Debentures.
The indenture provides that the Debentures will be treated as contingent
payment debt instruments. As a result, you will be required to include amounts
in income, as ordinary income, in advance of the receipt of cash. The amount of
interest income required to be included by you for each year will be in excess
of the stated rate of interest on the Debentures. You will recognize gain or
loss on the sale, conversion, redemption or other disposition of a Debenture in
an amount equal to the difference between (i) the amount realized on the sale,
conversion, redemption or other disposition, including the fair market value of
any common stock received upon conversion or otherwise, and (ii) your adjusted
tax basis in the Debenture. Any gain recognized by you on the sale, conversion,
redemption or other disposition of a Debenture generally will be ordinary
interest income; any loss will be ordinary loss to the extent of the interest
previously included in income, and thereafter, capital loss. A summary of the
United States federal income tax consequences of ownership of the Debentures is
described in this prospectus under the heading "United States Federal Income
Tax Consequences."
The change in control purchase feature of the Debentures may delay or prevent
an otherwise beneficial takeover attempt of our company.
The terms of the Debentures require us to purchase the Debentures for cash
in the event of specific kinds of change in control events. A takeover of our
company would trigger the requirement that we purchase the Debentures. This may
have the effect of delaying or preventing a takeover of our company that would
otherwise be beneficial to investors.
4
Risks Related to Our Business
The market for athletic footwear and apparel is intensely competitive and if we
fail to compete effectively, we could lose our market position.
The athletic footwear and apparel industry is intensely competitive. The
principal methods of competition in this industry include price, quality,
product design, brand image, marketing and promotion, and our ability to meet
delivery commitments to retailers. We compete against a number of domestic and
international companies, some of which have greater financial resources than we
do. A major marketing or promotional success or technological innovation by one
of our competitors could adversely impact our competitive position.
Additionally, in countries where the athletic footwear market is mature, our
ability to maintain and increase our market share can principally come at the
expense of our competitors, which may be difficult to accomplish. Our results
of operations and market position may be adversely impacted by our competitors
and the competitive pressures in the athletic footwear and apparel industries.
Our athletic footwear and apparel business is subject to consumer preferences
and unanticipated shifts in consumer preferences could adversely affect our
sales and results of operations.
The footwear and apparel industry is subject to rapid changes in consumer
preferences. Consumer demand for athletic footwear and apparel is heavily
influenced by brand image. Our initiatives to strengthen our brand image, which
include conducting extensive market research, introducing new and innovative
products that emphasize fashion and initiating focused advertising campaigns,
may not be successful. Additionally, consumers place an emphasis on the
"performance" aspect of our athletic footwear. Consequently, we must utilize
current and future technology to continue to offer performance-enhancing
products. Our failure to anticipate, identify and react to shifts in consumer
preferences and maintain a strong brand image could have an adverse effect on
our sales and results of operations.
If we fail to accurately forecast consumer demand, we may experience
difficulties in handling customer orders or in liquidating excess inventories
and our sales and brand image may be adversely affected.
The athletic footwear industry has relatively long lead times for the design
and production of products. Consequently, we must commit to production tooling,
and in some cases to production, in advance of orders based on our forecasts of
consumer demand. If we fail to forecast consumer demand accurately, we may
under-produce or over-produce a product and encounter difficulty in handling
customer orders or in liquidating excess inventory. Additionally, if we over-
produce a product based on an aggressive forecast of consumer demand, retailers
may not be able to sell the product and may return the unsold quantities and
cancel future orders. These outcomes could have an adverse effect on our sales
and brand image.
Our advertising and marketing expenditures are based on our sales forecasts and
our failure to achieve these sales forecasts could adversely affect our
profitability.
Our advertising and marketing expenditures are based on sales forecasts.
These expenditures are made in advance of actual sales. Because the markets in
which we do business are highly competitive and our sales are affected by a
variety of factors, including brand awareness, changing consumer preferences,
and retail market conditions, we may be unable to achieve our sales forecasts.
Our failure to achieve our sales forecasts would result in our advertising and
marketing expenditures representing a higher percentage of revenues and we
could experience higher inventory levels and associated carrying costs, all of
which could adversely affect our profitability.
If we are required to decrease the price that we charge for our products, we
may earn lower gross margins and our revenues and profitability may be
adversely affected.
5
The prices that we are able to charge for our products depend on the type of
product offered, the consumer and retailer response to the product and the
prices charged by our competitors. To the extent that we are forced to lower
our prices, our gross margins will be lower and our revenues and profitability
may be adversely affected.
Our report of our backlog of open orders may not be indicative of our level of
future sales.
We report our backlog of open orders for our REEBOK brand. Our backlog
position may not be indicative of future sales because many customer orders are
cancelable with little or no penalty. In addition, our backlog position does
not reflect "at once" shipments, sales by retail stores that we own and sales
made by independent distributors.
Our sales and profitability may be adversely affected if our investments in
advertising and marketing and our athlete endorsement and athletic sponsorships
do not have the effect of increasing retailer acceptance and consumer purchases
of our products.
Because consumer demand for athletic footwear and apparel is heavily
influenced by brand image, our business requires substantial investments in
marketing and advertising, as well as athlete endorsements, athletic
sponsorships and retail presence. In the event that these investments do not
achieve the desired effect of increasing consumer purchases and retailer
acceptance of our products, our sales and profitability may be adversely
affected.
Our international sales and manufacturing operations are subject to the risks
of doing business abroad, which could affect our ability to sell or manufacture
our products in international markets, obtain products from foreign suppliers
or control the cost of our products.
We operate facilities and sell products in numerous countries outside the
United States. Additionally, a substantial portion of our products are
manufactured abroad and we have suppliers located in China, Indonesia, Thailand
and the Philippines. Our athletic footwear and apparel sales and manufacturing
operations are subject to the risks of doing business abroad. These risks
include:
. fluctuations in currency exchange rates;
. political instability;
. limitations on conversion of foreign currencies into United States
dollars;
. restrictions on dividend payments and other payments by our foreign
subsidiaries;
. withholding and other taxes on dividend payments and other payments by
our foreign subsidiaries;
. import duties, tariffs, quotas and other restrictions on free trade,
particularly as these regulations may affect our operations in China;
. hyperinflation in some foreign countries; and
. investment regulation and other restrictions by foreign governments.
If these risks limit or prevent us from selling or manufacturing products in
any significant international market, prevent us from acquiring products from
our foreign suppliers, or significantly increase the cost of our products, our
operations could be seriously disrupted until alternative suppliers are found
or alternative markets are developed.
Although we may enter into forward currency exchange contracts and options
to hedge the risk of exchange rate fluctuations, these steps may not fully
protect us against this risk and we may incur losses.
6
Because we rely on independent manufacturers to produce most of our products,
our sales and profitability may be adversely affected if our independent
manufacturers fail to meet pricing, product quality and timeliness requirements
or if we are unable to obtain some components used in our products from limited
supply sources.
We depend upon independent manufacturers to manufacture our products in a
timely and cost-efficient manner while maintaining specified quality standards.
We also rely upon the availability of sufficient production capacity at our
manufacturers. Additionally, it is essential that our manufacturers deliver our
products in a timely manner because our orders are cancelable by customers if
agreed-upon delivery windows are not met. A failure by one or more of our
manufacturers to meet established criteria for pricing, product quality or
timely delivery could adversely impact our sales and profitability.
In addition, some of the components used in our products are obtained from
only one or two sources. A loss of one of these supply sources could disrupt
and delay production and adversely affect our sales and profitability.
We have substantial existing debt and may incur additional debt in the future,
so we may be unable to make payments on the Debentures.
We have substantial amounts of outstanding indebtedness. Our substantial
level of indebtedness increases the possibility that we may be unable to
generate cash sufficient to pay the principal of, interest on and other amounts
due in respect of our indebtedness, including the Debentures, when due. We may
also obtain additional long-term debt and working capital lines of credit to
meet future financing needs, which would have the effect of increasing our
total leverage.
Our substantial leverage could have significant negative consequences,
including:
. increasing our vulnerability to general adverse economic and industry
conditions;
. limiting our ability to obtain additional financing;
. requiring the dedication of a substantial portion of our cash flow from
operations to service our indebtedness, thereby reducing the amount of
our cash flow available for other purposes, including capital
expenditures;
. limiting our flexibility in planning for, or reacting to, changes in our
business and the industries in which we compete; and
. placing us at a possible competitive disadvantage with less leveraged
competitors and competitors that may have better access to capital
resources.
In addition, our lending arrangements restrict our ability to incur liens
and require that we maintain a minimum interest coverage ratio and debt to cash
flow ratio. Our failure to comply with these requirements could result in a
default that, if not cured or waived, could cause our lenders to refuse to
extend us credit or require us to repay these borrowings before they are due.
Our competitive position could be harmed if we are unable to protect our
intellectual property rights.
We believe that our trademarks, patents, technologies and designs are of
great value. From time to time, third parties have challenged, and may in the
future try to challenge, our ownership of our intellectual property. In
addition, our business is subject to the risk of third parties counterfeiting
our products or infringing on our
7
intellectual property rights. We may need to resort to litigation in the future
to enforce our intellectual property rights. This litigation could result in
substantial costs and diversion of resources. Our failure to protect our
intellectual property rights, and in particular, the loss of the REEBOK,
ROCKPORT, RALPH LAUREN, GREG NORMAN or NFL and NBA trademark rights, could have
an adverse impact on our business and our competitive position.
We may not be able to realize the full value of our deferred tax assets.
We have approximately $120 million of net deferred tax assets, of which
approximately $65 million is attributable to the expected utilization of tax
net operating loss carryforwards and tax credit carryforwards. Our ability to
realize the full value of the deferred tax assets will depend on several
factors including the level of taxable income we generate, the countries in
which taxable income is generated and the effectiveness of our tax planning
strategies. If our estimates of future taxable income are not realized in the
near-term, the value of the deferred tax assets and our future net income could
be reduced.
A strengthening United States dollar reduces our reported results of operations
from our international business.
In 2001, we derived approximately 37.1% of our revenue from sales in foreign
currencies. In our combined financial statements, we translate local currency
financial results into United States dollars based on average exchange rates
prevailing during a reporting period. During times of a strengthening United
States dollar, our reported gross margins for merchandise purchased in United
States dollars and sold in other currencies may be negatively impacted.
8
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Various statements contained or incorporated by reference in this prospectus
are "forward-looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. All forward-looking statements
involve risks and uncertainties. In particular, any statement contained in this
prospectus or in any document incorporated by reference in this prospectus
regarding expectations with respect to future sales, earnings, cash flows,
operating efficiencies, product expansion, backlog, financings and share
repurchases are subject to risks, uncertainties and contingencies, many of
which are beyond our control, which may cause actual results, performance or
achievements to differ materially from anticipated results, performances or
achievements. You should specifically consider the numerous risks outlined
under "Risk Factors."
9
USE OF PROCEEDS
All of the Debentures and the shares of our common stock issuable upon
conversion of the Debentures are being sold by the selling securityholders or
their pledgees, donees, transferees or other successors in interest. We will
not receive any proceeds from the sale of the Debentures or the shares of our
common stock issuable upon conversion of the Debentures.
RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31,
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2001 2000 1999 1998 1997
---- ---- ---- ---- ----
4.03 3.39 1.32 1.47 2.85
The ratio of earnings to fixed charges is computed by dividing income before
taxes and fixed charges by fixed charges. Fixed charges consist of interest
expense, whether expensed or capitalized, plus the portion of rent expense
under operating leases that we consider to be representative of the interest
factor, plus amortization of debt issuance expenses.
10
DESCRIPTION OF DEBENTURES
We issued the Debentures under an indenture dated as of February 28, 2001
between us and State Street Bank and Trust Company, as trustee. The following
is a summary of the material provisions of the Debentures and the indenture. It
may not contain all of the information that is important to you. We urge you to
read the indenture that has been filed as an exhibit to this registration
statement, because it, and not this description, defines your rights as a
holder of the Debentures.
As used in this description, the words "Reebok," "we," "us" or "our" do not
include any of our current or future subsidiaries.
General
The Debentures are limited to $250,000,000 aggregate principal amount. The
Debentures were issued on February 28, 2001. The Debentures will mature on
March 1, 2021. The Debentures will be payable at the office of the paying
agent, which initially will be an office or agency of the trustee, or an office
or agency maintained by us for such purpose, in the Borough of Manhattan, the
City of New York. The Debentures were issued in denominations of $1,000 and
integral multiples thereof. The Debentures are convertible into our common
stock as described below under "Conversion Rights."
Interest on the Debentures will accrue at the initial rate of 4 1/4% per
annum and will be payable semiannually in arrears on March 1 and September 1,
commencing on September 1, 2001, to holders of record. The record dates for the
payment of interest will be February 15 and August 15. On September 1, 2007,
September 1, 2010 and September 1, 2015, the interest rate on the Debentures
will be reset to a rate per annum equal to the interest rate payable 120 days
prior to such reset date on 5-year U.S. Treasury Notes minus 0.66%. However, in
no event will the interest rate be reset below 4 1/4% per annum or above 6 1/4%
per annum. Interest on the Debentures will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
original issuance. We will calculate interest on the basis of a 360-day year
composed of twelve 30-day months. We may, at our option, pay interest on the
Debentures by check mailed to the holders. However, a holder with an aggregate
principal amount in excess of $2,000,000 will be paid by wire transfer in
immediately available funds at its election.
Interest will cease to accrue on a Debenture upon its maturity, conversion,
purchase by us at the option of a holder or redemption. We may not reissue a
Debenture that has matured or been converted, purchased by us at the option of
a holder, redeemed or otherwise cancelled, except for registration of transfer,
exchange or replacement of such Debenture.
Holders may present Debentures for conversion at the office of the
conversion agent and may present Debentures for registration of transfer at the
office of the trustee.
The indenture provides that, for United States federal income tax purposes,
each holder must treat the Debentures as "contingent payment debt instruments"
and is bound by our application of the Treasury regulations that govern
contingent payment debt instruments, including our determination that the rate
at which interest will be deemed to accrue for federal income tax purposes will
be 7%, which is the rate comparable to the rate at which we would borrow on a
noncontingent, nonconvertible borrowing. Accordingly, each holder is required
to accrue interest on a constant yield to maturity basis at that rate, with the
result that a holder will recognize taxable income significantly in excess of
cash received while the Debentures are outstanding. In addition, a holder will
recognize ordinary income upon a conversion of a Debenture into our common
stock equal to the excess, if any, between the value of the common stock
received on the conversion and the sum of the original purchase price of the
holder's Debenture and accrued but unpaid interest. However, the proper United
States federal income tax treatment of a holder of a Debenture is uncertain in
various respects. If our determinations with regard to the tax treatment of the
Debentures were successfully challenged by the Internal Revenue Service, it
might be determined that, among other differences, a holder should have accrued
interest income at a lower rate, should not have recognized income or gain upon
the conversion, and should not have recognized ordinary income upon a taxable
disposition of its Debentures.
11
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE TAX TREATMENT OF THE
DEBENTURES AND WHETHER A PURCHASE OF THE DEBENTURES IS ADVISABLE IN LIGHT OF
OUR DETERMINATIONS WITH REGARD TO THE TAX TREATMENT OF THE DEBENTURES AND THE
INVESTOR'S PARTICULAR TAX SITUATION.
Ranking of Debentures
The Debentures are our unsecured and unsubordinated obligations. The
Debentures rank equal in right of payment with all of our existing and future
unsecured and unsubordinated indebtedness.
Conversion Rights
You have the right, at your option, to convert your Debentures into shares
of our common stock at any time prior to maturity, unless previously redeemed
or purchased. Holders may only convert Debentures in integral multiples of
$1,000. The initial conversion price is $38.56 per share of common stock,
subject to adjustment upon the occurrence of events described below. The number
of shares of common stock deliverable upon conversion of a Debenture is
determined by dividing the principal amount of the Debenture being converted by
the conversion price in effect on the trading day prior to the day of surrender
for conversion. A holder of a Debenture otherwise entitled to a fractional
share will receive cash equal to the then-current market value of such
fractional share.
As soon as practicable after conversion of a Debenture, a holder will
receive a certificate for the number of full shares of our common stock
deliverable upon the conversion, together with any cash payment for such
holder's fractional shares. Except as described below, no payment or adjustment
will be made for accrued interest or Liquidated Damages (as defined below in
"Registration Rights"), if any, on a converted security.
We will not adjust the conversion price for accrued interest. We will adjust
the conversion price for:
. dividends or distributions on our common stock payable in common stock
or our other capital stock;
. subdivisions, combinations or certain reclassifications of our common
stock;
. distributions to all holders of our common stock of certain rights
entitling them to purchase shares of common stock for a period expiring
within 60 days at less than the quoted price per share at the time; and
. distributions to all holders of our common stock of our assets or debt
securities or certain rights to purchase our securities, but excluding
cash dividends or other cash distributions from current or retained
earnings unless the annualized amount thereof per share exceeds 5% of
the closing per share sale price of our common stock on the day
preceding the date of declaration of such dividend or other
distribution.
We will not adjust the conversion price, however, if holders of Debentures
are to participate in the transaction without conversion, or in certain other
cases.
The indenture permits us to decrease the conversion price from time to time
at our discretion.
Any holder of a Debenture surrendering the Debenture for conversion during
the period from the close of business on any regular record date to the opening
of business on the next succeeding interest payment date will be required to
pay to us an amount equal to the interest payable on the converted principal
amount of such Debenture at the time of such surrender. Notwithstanding the
preceding sentence, in the event a holder surrenders a Debenture or portion of
a Debenture (1) called for redemption by us, (2) subject to purchase by us
after a change in control or (3) presented for conversion prior to the
occurrence of specified corporate transactions, and the redemption date,
purchase date or ex-dividend date relating to the specified corporate
transaction, as the case may be, occurs during the period from the close of
business on a record date and ending on the opening of business on the first
business day after the next interest payment date, or if this
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interest payment date is not a business day, the second business day after the
interest payment date, such holder will not be required to pay to us an amount
equal to the interest payable on the converted principal amount of such
Debenture.
The specified corporate transactions referred to in the preceding paragraph
include our election to
. distribute to all holders of our common stock certain rights entitling
them to purchase, for a period expiring within 60 days, common stock at
less than the quoted price of the common stock at the time; and
. distribute to all holders of our common stock any assets, debt
securities or certain rights to purchase our securities, which
distribution has a per share value exceeding 15% of the closing per
share sale price of our common stock on the day preceding the
declaration date for such distribution.
We must notify the holders of Debentures at least 20 days prior to the ex-
dividend date for any such distribution.
If we are a party to a consolidation, merger or binding share exchange
pursuant to which our common stock is converted into cash, securities or other
property, then at the effective time of the transaction, the right to convert a
Debenture into our common stock will be changed into a right to convert it into
the kind and amount of cash, securities or other property which the holder
would have received if the holder had converted its Debenture immediately prior
to the transaction. If the transaction also constitutes a "change in control,"
as defined below, the holder can require us to purchase all or a portion of its
Debentures as described under "--Change in Control Permits Purchase of
Debentures by Reebok at the Option of the Holder."
In the event of:
. a taxable distribution to holders of our common stock which results in
an adjustment of the conversion price; or
. a decrease in the conversion price at our discretion,
the holders of the Debentures may, in certain circumstances, be deemed to have
received a distribution subject to United States Federal income tax as a
dividend. See "United States Federal Income Tax Consequences--U.S. Holders--
Constructive Dividends."
Redemption of Debentures at the Option of Reebok
No sinking fund is provided for the Debentures. Prior to March 5, 2004, we
cannot redeem the Debentures at our option. Beginning on March 5, 2004, we may
redeem the Debentures, in whole at any time, or in part from time to time, for
cash. We will give not less than 15 days nor more than 60 days notice of
redemption by mail to holders of Debentures.
The table below shows redemption prices (which are expressed as percentages
of the principal amount of the Debenture redeemed) of a Debenture on March 5,
2004 and the periods thereafter to maturity. Upon redemption, holders of
Debentures that are redeemed shall receive in exchange for such Debentures, the
redemption price, together with accrued and unpaid interest up to but not
including the redemption date and Liquidated Damages, if any. If the redemption
date is on or after an interest record date but on or prior to the related
interest payment date, interest will be paid to the record holder on the
relevant record date.
Period Redemption Price
------ ----------------
Beginning March 5, 2004 and ending on February 28,
2005.................................................. 102.125%
Beginning March 1, 2005 and ending on February 28,
2006.................................................. 101.417%
Beginning March 1, 2006 and ending on February 28,
2007.................................................. 100.708%
Beginning March 1, 2007 and thereafter................. 100.000%
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If we redeem less than all of the outstanding Debentures, the trustee shall
select the Debentures to be redeemed on a pro rata basis in principal amounts
of $1,000 or integral multiples of $1,000. If a portion of a holder's
Debentures is selected for partial redemption and the holder converts a portion
of the Debentures, the converted portion shall be deemed to be the portion
selected for redemption.
Purchase of Debentures at the Option of the Holder
On March 1, 2008, March 1, 2011 and March 1, 2016, each holder may require
us to purchase any outstanding Debenture for which such holder has properly
delivered and not withdrawn a written purchase notice, subject to certain
additional conditions. Holders may submit their Debentures for purchase to the
paying agent at any time from the opening of business on the date that is 20
business days prior to the purchase date until the close of business on the
fifth business day prior to the purchase date.
We will purchase each outstanding Debenture for which such holder has
properly delivered and not withdrawn a written purchase notice at a purchase
price equal to 100% of the principal amount of such Debenture, together with
accrued and unpaid interest up to but not including the redemption date and
Liquidated Damages, if any. If the purchase date is on or after an interest
record date but on or prior to the related interest payment date, interest will
be paid to the record holder on the relevant record date.
We will pay the purchase price in cash. For a discussion of the tax
treatment of a holder receiving cash, see "United States Federal Income Tax
Consequences--U.S. Holders--Sale, Exchange, Conversion or Redemption."
Required Notices and Procedure
On a date not less than 20 business days prior to each purchase date, we
will be required to give notice to all holders at their addresses shown in the
register of the registrar, and to beneficial owners as required by applicable
law, stating, among other things, the procedures that holders must follow to
require us to purchase their Debentures.
The purchase notice given by each holder electing to require us to purchase
Debentures must be given so as to be received by the paying agent no later than
the close of business on the fifth business day prior to the purchase date and
must state:
. the certificate numbers of the holder's Debentures to be delivered for
purchase;
. the aggregate principal amount of Debentures to be purchased; and
. that the Debentures are to be purchased by us pursuant to the applicable
provisions of the Debentures.
A holder may withdraw any purchase notice by delivering a written notice of
withdrawal to the paying agent prior to the close of business on the purchase
date. The notice of withdrawal shall state:
. the certificate numbers of the Debentures being withdrawn;
. the aggregate principal amount of the Debentures being withdrawn; and
. the aggregate principal amount, if any, of the Debentures that remain
subject to the purchase notice.
In connection with any purchase offer, we will:
. comply in all material respects with the provisions of Rule 13e-4, Rule
14e-1 and any other tender offer rules under the Exchange Act which may
then apply; and file Schedule TO or any other required schedule under
the Exchange Act.
Our obligation to pay the purchase price for a Debenture as to which a
purchase notice has been delivered and not validly withdrawn is conditioned
upon the holder delivering the Debenture, together with necessary
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endorsements, to the paying agent at any time after delivery of the purchase
notice. We will cause the purchase price for the Debenture to be paid promptly
following the later of the purchase date or the time of delivery of the
Debenture.
If the paying agent holds money or securities sufficient to pay the purchase
price of the Debenture on the business day following the purchase date in
accordance with the terms of the indenture, then, immediately after the
purchase date, the Debenture will cease to be outstanding and interest on such
Debenture will cease to accrue, whether or not the Debenture is delivered to
the paying agent. After the Debenture ceases to be outstanding, all other
rights of the holder shall terminate, other than the right to receive the
purchase price upon delivery of the Debenture.
The terms of our then-existing borrowing agreements may limit our ability to
purchase Debentures.
We may not purchase any Debentures at the option of holders if an event of
default with respect to the Debentures, other than a default in the payment of
the purchase price with respect to such Debentures, has occurred and is
continuing.
Change in Control Permits Purchase of Debentures by Reebok at the Option of
the Holder
In the event of a "change in control," as defined below, occurring on or
prior to March 1, 2021, each holder will have the right subject to the terms
and conditions of the indenture, to require us to purchase for cash all or any
portion of the holder's Debentures, in integral multiples of $1,000 principal
amount. The purchase price for such Debenture will equal the aggregate
principal amount of such Debenture plus the accrued interest to but excluding
the date of purchase and Liquidated Damages, if any. We will be required to
purchase the Debentures as of the date that is 45 business days after the
occurrence of the change in control. We refer to this date in this prospectus
as the "change in control purchase date."
Within 30 days after a change in control occurs, we must mail a notice
regarding the change in control to the trustee, to all holders of Debentures at
their addresses shown in the register of the registrar and to beneficial owners
as required by applicable law. The notice must state, among other things:
. the events causing a change in control;
. the date of the change in control;
. the last date on which a holder may exercise the purchase right;
. the change in control purchase price;
. the change in control purchase date;
. the name and address of the paying agent and the conversion agent;
. the conversion price and any adjustments to the conversion price;
. that Debentures with respect to which a change in control purchase
notice has been given by the holder may be converted only if the change
in control purchase notice has been withdrawn in accordance with the
terms of the indenture; and
. the procedures that holders must follow to exercise these rights.
To exercise this right, the holder must deliver a written notice to the
paying agent so that it is received by the paying agent no later than the close
of business on the fifth business day prior to the change in control purchase
date. The purchase notice must state:
. the certificate numbers of the Debentures to be delivered by the holder;
. the portion of the aggregate principal amount of Debentures to be
purchased; and
. that we are to purchase such Debentures pursuant to the applicable
provisions of the Debentures.
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A holder may withdraw any change in control purchase notice by delivering a
written notice of withdrawal to the paying agent so that it is received by the
paying agent prior to the close of business on the change in control purchase
date. The notice of withdrawal must state:
. the certificate numbers of the Debentures being withdrawn;
. the aggregate principal amount being withdrawn; and
. the aggregate principal amount, if any, of the Debentures that remain
subject to a change in control purchase notice.
Our obligation to pay the change in control purchase price for a Debenture
for which a holder has delivered, and not validly withdrawn, a change in
control purchase notice is conditioned upon delivery of the Debenture, together
with necessary endorsements, to the paying agent at any time after the delivery
of such change in control purchase notice. We will cause the change in control
purchase price for such Debenture to be paid promptly following the later of
the change in control purchase date or the time of delivery of such Debenture.
If the paying agent holds money sufficient to pay the change in control
purchase price of the Debenture on the change in control purchase date in
accordance with the terms of the indenture, then, immediately after the change
in control purchase date, the Debenture will cease to be outstanding and
interest on such Debenture will cease to accrue, whether or not the Debenture
is delivered to the paying agent. After the Debenture has ceased to be
outstanding, all other rights of the holder shall terminate, other than the
right to receive the change in control purchase price upon delivery of the
Debenture.
Under the indenture, a "change in control" is deemed to have occurred at
such time as:
. any person, including our affiliates and associates, other than us, our
subsidiaries or their employee benefit plans, files a Schedule 13D or
Schedule TO, or any successor schedule, form or report under the
Exchange Act, disclosing that such person has become the beneficial
owner of 50% or more of the voting power of our common stock or other
capital stock into which our common stock is reclassified or changed,
with certain exceptions; or
. any share exchange, consolidation or merger is consummated pursuant to
which our common stock would be converted into cash, securities or other
property, in each case other than any share exchange, consolidation or
merger of our company in which the holders of our common stock
immediately prior to the share exchange, consolidation or merger have,
directly or indirectly, at least a majority of the total voting power in
the aggregate of all classes of capital stock of the continuing or
surviving corporation immediately after the share exchange,
consolidation or merger.
The indenture does not permit our board of directors to waive its obligation
to purchase Debentures at the option of holders in the event of a change in
control.
In connection with any purchase offer in the event of a change in control,
we will:
. comply in all material respects with the provisions of Rule 13e-4, Rule
14e-1 and any other tender offer rules under the Exchange Act which may
then be applicable; and
. file Schedule TO or any other required schedule under the Exchange Act.
The change in control purchase feature of the Debentures may make more
difficult or discourage a takeover of our company. The change in control
purchase feature, however, is not the result of our knowledge of any specific
effort:
. to accumulate common stock;
. to obtain control of our company by means of a merger, tender offer,
solicitation or otherwise; or
. by management to adopt a series of anti-takeover provisions.
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Instead, the change in control purchase feature is a standard term contained
in other debenture offerings that have been marketed by Credit Suisse First
Boston Corporation, the initial purchaser of the Debentures. The terms of the
change in control purchase feature resulted from our negotiations with Credit
Suisse First Boston Corporation.
We could, in the future, enter into transactions, including
recapitalizations, that would not constitute a change in control with respect
to the change in control purchase feature of the Debentures but that would
increase the amount of our or our subsidiaries' outstanding indebtedness.
We may not purchase Debentures at the option of holders upon a change in
control if an event of default with respect to the Debentures, other than a
default in the payment of the change in control purchase price with respect to
the Debentures, has occurred and is continuing.
Merger and Sale of Assets by Reebok
The indenture provides that we may not consolidate with or merge with or
into any other person or convey, transfer or lease our properties and assets
substantially as an entirety to another person, unless among other items:
. we are the surviving person; or the resulting, surviving or transferee
person, if other than us, as the case may be, is organized and existing
under the laws of:
(a) the United States, any state thereof or the District of Columbia; or
(b) any other country, if the merger, consolidation or other transaction
would not impair the rights of holders;
. the successor person assumes all of our obligations under the Debentures
and the indenture; and
. we or such successor person will not be in default under the indenture
immediately after the transaction.
When such a person assumes our obligations in such circumstances, subject to
certain exceptions, we shall be discharged from all obligations under the
Debentures and the indenture. Although the indenture permits these
transactions, some of the transactions described above which occur on or prior
to March 1, 2021 could constitute a change in control of our company and permit
each holder to require us to purchase the Debentures of such holder as
described above.
Events of Default
The following will be events of default for the Debentures:
. default in payment of accrued interest, the principal amount, redemption
price, purchase price or change in control purchase price with respect
to any Debenture when such amount becomes due and payable;
. our failure to comply with any of our other agreements in the Debentures
or the indenture upon our receipt of notice of such default by the
trustee or by holders of not less than 25% in aggregate principal amount
of the Debentures then outstanding and the failure to cure (or obtain a
waiver of) such default within 90 days after receipt of such notice;
. our default in the payment at final maturity, after the expiration of
any applicable grace period, of principal of, or premium, if any, on
indebtedness for money borrowed, other than non-recourse indebtedness,
in the principal amount then outstanding of $25 million or more, or
acceleration of any indebtedness in such principal amount so that it
becomes due and payable prior to the date on which it would otherwise
have become due and payable and such acceleration is not rescinded
within 10 business days after notice to us in accordance with the
indenture; and
. specified events of bankruptcy, insolvency or reorganization affecting
us.
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If an event of default shall have happened and be continuing, either the
trustee or the holders of not less than 25% in aggregate principal amount of
the Debentures then outstanding may declare the principal amount plus the
interest on the Debentures accrued through the date of such declaration to be
immediately due and payable. In the case of certain events of bankruptcy or
insolvency of our company, the principal amount plus the interest on the
Debentures accrued through the occurrence of such event shall automatically
become and be immediately due and payable.
Modification
We, together with the trustee, may enter into supplemental indentures that
add, change or eliminate provisions of the indenture or modify the rights of
the holders of the Debentures with the consent of the holders of at least a
majority in aggregate principal amount of the Debentures then outstanding.
However, without the consent of each holder, no supplemental indenture may:
. change the record or payment dates for interest payments, reduce the
rate of interest on any Debenture or extend the time of payment;
. extend the stated maturity of any Debenture;
. reduce the principal amount, redemption price, purchase price or change
in control purchase price with respect to any Debenture;
. make any Debenture payable in money or securities other than that stated
in the Debenture;
. make any change that adversely affects the right of a holder to convert
any Debenture;
. make any change that adversely affects the right to require us to
purchase a Debenture;
. impair the right to convert, or receive payment with respect to, a
Debenture, or right to institute suit for the enforcement of any payment
with respect to, or conversion of, the Debentures; and
. change the provisions in the indenture that relate to modifying or
amending the indenture.
Without the consent of any holder of Debentures, we, together with the
trustee, may enter into supplemental indentures for any of the following
purposes:
. to evidence our successor and the assumption by that successor of our
obligations under the indenture and the Debentures;
. to add to our covenants for the benefit of the holders of the Debentures
or to surrender any right or power conferred upon us;
. to secure our obligations in respect of the Debentures;
. to make any changes or modifications to the indenture necessary in
connection with the registration of the Debentures under the Securities
Act and the qualification of the Debentures under the Trust Indenture
Act as contemplated by the indenture;
. to cure any ambiguity or inconsistency in the indenture.
No supplemental indenture entered into pursuant to the second, third, fourth
or fifth bullets of the preceding paragraph may be entered into without the
consent of the holders of a majority in aggregate principal amount of the
Debentures, however, if such supplemental indenture may materially and
adversely affect the interests of the holders of the Debentures.
The holders of a majority in aggregate principal amount of the outstanding
Debentures may, on behalf of the holders of all Debentures:
. waive our compliance with restrictive provisions of the indenture, as
detailed in the indenture; and
18
. waive any past default under the indenture and its consequences, except
a default in the payment of interest, the principal amount, redemption
price, purchase price or change in control purchase price or obligation
to deliver common stock upon conversion with respect to any Debenture or
in respect of any provision which under the indenture cannot be modified
or amended without the consent of the holder of each outstanding
Debenture affected.
Registration Rights
The registration statement of which this prospectus forms a part has been
filed under the terms of a registration rights agreement which we entered into
with the initial purchaser of the Debentures. In the registration rights
agreement we agreed, for the benefits of the holders of the Debentures and the
shares of common stock issuable upon conversion of the Debentures, which we
refer to together as the Registrable Securities, that we would, at our expense:
. file with the SEC a registration statement covering resale of the
Debentures and of the shares of our common stock issuable upon conversion
of the Debentures as soon as is practicable, but in any event within 90
days after the first date of original issuance of the Debentures;
. use our reasonable efforts to cause the shelf registration statement to
be declared effective as promptly as practicable, but in any event within
210 days after the date the debentures are originally issued; and
. use our reasonable efforts to keep the shelf registration statement
effective until the earlier of (1) the sale pursuant to the shelf
registration statement of all the securities registered thereunder and
(2) the expiration of the holding period applicable to such securities
held by persons that are not affiliates of us under Rule 144(k) under the
Securities Act or any successor provision, subject to permitted
exceptions.
We will be permitted to suspend the use of this prospectus, which is part of
the shelf registration statement, under circumstances relating to pending
corporate developments, public filings with the Commission and similar events
for a period not to exceed 45 days in any three-month period and not to exceed
an aggregate of 120 days in any 12-month period.
We agreed to pay predetermined liquidated damages ("Liquidated Damages") to
holders of Debentures and holders of our common stock if the shelf registration
statement is not timely filed or made effective or if the prospectus is
unavailable for the periods in excess of those permitted above. Such Liquidated
Damages shall accrue until such failure to file or become effective or
unavailability is cured,
(i) in respect of each $1,000 principal amount of Debentures, at a rate
per year equal to 0.25% for the first 90 day period after the occurrence of
such event and 0.5% thereafter of such principal amount, plus accrued
interest thereon to the date of determination, and
(ii) in respect of any common stock issued upon conversion of each
$1,000 principal amount of Debentures, at a rate per year equal to 0.25%
for the first 90 day period and 0.5% thereafter of such principal amount,
plus accrued interest to the date of determination divided by the
conversion price.
So long as the failure to file or become effective or such unavailability
continues, we will pay Liquidated Damages in cash on March 1 and September 1
(the "Damages Payment Date") of each year to the holder of record of the
Debentures or common stock issuable in respect of the Debentures on the
immediately preceding February 15 or August 15. When such registration default
is cured, accrued and unpaid Liquidated Damages will be paid in cash on the
Damages Payment Date immediately following the date of such cure to the record
holder as of the date of such cure.
A holder who sells Debentures and our common stock issued in respect of the
Debentures pursuant to the shelf registration statement is required to be named
as a selling shareholder in this prospectus, may be required to deliver a
prospectus to purchasers and is bound by the provisions of the registration
rights agreement that apply to such holder, including indemnification
provisions. We will pay all expenses of the shelf registration statement,
provide to each registered holder copies of this prospectus, notify each
registered holder when the
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shelf registration statement has become effective and take other actions as are
required to permit, subject to the foregoing, unrestricted resales of the
Debentures and the common stock issued in respect of the Debentures.
We agreed to give notice to all holders of the filing and effectiveness of
the shelf registration statement by release made to Reuters Economic Services
and Bloomberg Business News. We previously provided holders with a form of
selling securityholder notice and questionnaire, which we refer to as the
Notice and Questionnaire. No holder of Registrable Securities is entitled to be
named as a selling securityholder in this prospectus and no holder of
Registrable Securities is entitled to use this prospectus for offers and
resales of Registrable Securities at any time, unless the holder has returned a
completed and signed Notice and Questionnaire to us.
Beneficial owners of Registrable Securities who have not returned a Notice
and Questionnaire to us may receive another Notice and Questionnaire from us
upon request. Following our receipt of a completed and signed Notice and
Questionnaire, we will include the Registrable Securities covered thereby in
the shelf registration statement, subject to restrictions on the timing and
number of supplements to the shelf registration statement provided in the
registration rights agreement.
This summary of the material provisions of the registration rights agreement
may not contain all the information important to holders of Debentures. Holders
of Debentures may request from us a copy of the registration rights agreement.
Governing Law
The indenture and the Debentures are governed by, and will be construed in
accordance with, the law of the State of New York.
Information Concerning the Trustee
State Street Bank and Trust Company is the trustee, registrar, paying agent
and conversion agent.
Book-Entry System
The Debentures were issued in the form of global securities held in book-
entry form. DTC or its nominee will be the sole registered holder of the
Debentures for all purposes under the indenture. Owners of beneficial interests
in the Debentures represented by the global securities will hold their
interests pursuant to the procedures and practices of DTC. As a result,
beneficial interests in any such securities will be shown on, and transfers
will be effected only through, records maintained by DTC and its direct and
indirect participants. Any such interest may not be exchanged for certificated
securities, except in limited circumstances. Owners of beneficial interests
must exercise any rights in respect of their interests, including any right to
convert or require repurchase of their interests in the Debentures, in
accordance with the procedures and practices of DTC. Beneficial owners will not
be holders and will not be entitled to any rights under the global securities
or the indenture. We and the trustee, and any of their respective agents, may
treat DTC as the sole holder and registered owner of the global securities.
Exchange of Global Securities
The Debentures, represented by a global security, will be exchangeable for
certificated securities with the same terms only if:
. DTC is unwilling or unable to continue as depositary or if DTC ceases to
be a clearing agency registered under the Exchange Act and we do not
appoint a successor depositary within 90 days;
. we decide to discontinue use of the system of book-entry transfer
through DTC or any successor depositary; or
. a default under the indenture occurs and is continuing.
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DTC has advised us as follows: DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency" for
registered participants, and it facilitates the settlement of transactions
among its participants in those securities through electronic computerized
book-entry changes in participants' accounts, eliminating the need for physical
movement of securities certificates. DTC's participants include securities
brokers and dealers, including the agent, banks, trust companies, clearing
corporation and other organizations, some of whom and/or their representatives
own DTC. Access to DTC's book-entry system is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
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DESCRIPTION OF COMMON STOCK
The following description is a summary of the terms of our common stock. We
have authorized 250,000,000 shares of common stock. As of March 8, 2002, there
were 58,700,027 shares of common stock outstanding.
General
All outstanding shares of common stock are, and those issued upon conversion
of the Debentures will be, validly issued, fully paid and nonassessable. As of
March 8, 2002 there were 6,082 record holders of our common stock.
The transfer agent for our common stock is American Stock Transfer & Trust
Company.
Voting Rights
Holders of common stock are entitled to one vote for each share held and
have no preemptive or other rights to subscribe for additional shares. There
are no cumulative voting rights, with the result that holders of more than 50%
of the shares of common stock are able to elect 100% of the board of directors.
Dividends
Holders of common stock are entitled to such dividends as may be declared by
the board of directors out of funds legally available therefor. We do not
anticipate declaring or paying dividends in the foreseeable future.
Liquidation
On liquidation, dissolution or winding up of Reebok, the holders of our
common stock are entitled to receive pro rata our net assets remaining after
the payment of all creditors and liquidation preferences, if any.
Massachusetts Law and Certain Provisions of Our Restated Articles of
Organization and By-laws
Our By-laws include a provision excluding us from the applicability of
Chapter 110F of the Massachusetts General Laws, an anti-takeover law. In
general, this statute prohibits a publicly-held Massachusetts corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
becomes an interested stockholder, unless (i) the interested stockholder
obtains the approval of the board of directors prior to becoming an interested
stockholder, (ii) the interested stockholder acquires 90% of the outstanding
voting stock of the corporation (excluding shares held by certain affiliates of
the corporation) at the time it becomes an interested stockholder, or (iii) the
business combination is approved by both the board of directors and the holders
of two-thirds of the outstanding voting stock of the corporation (excluding
shares held by the interested stockholder). An "interested stockholder" is a
person who, together with affiliates and associates, owns (or at any time
within the prior three years did own) 5% or more of the outstanding voting
stock of the corporation. A "business combination" includes a merger, a stock
or asset sale, and certain other transactions resulting in a financial benefit
to the interested stockholders.
Massachusetts General Laws Chapter 156B, Section 50A generally requires that
a publicly-held Massachusetts corporation have a classified board of directors
consisting of three classes as nearly equal in size as possible, unless the
corporation elects to opt out of the statute's coverage. Our By-laws contain
provisions which give effect to Section 50A.
Our By-laws include a provision excluding us from the applicability of
Massachusetts General Laws Chapter 110D, entitled "Regulation of Control Share
Acquisitions." In general, this statute provides that any
22
stockholder of a corporation subject to this statute who acquires 20% or more
of the outstanding voting stock of a corporation may not vote such stock unless
the stockholders of the corporation so authorize. The board of directors may
amend our By-laws at any time to subject us to this statute prospectively.
Our Restated Articles of Organization, as amended, provide that our
directors will not be personally liable for monetary damages to us for breaches
of their fiduciary duty as directors, unless they violated their duty of
loyalty to us or our stockholders, acted in bad faith, knowingly or
intentionally violated the law, authorized illegal dividends or redemptions,
authorized a loan of any of our assets to one of our officers or directors
which is not repaid or derived an improper personal benefit from their action
as directors. This provision does not eliminate director liability under
federal securities laws or preclude non-monetary relief under state law. In
addition, our By-laws provide that we may indemnify our directors and officers
against all liabilities and expenses incurred in connection with service for us
or on our behalf.
Rights Plan
On June 14, 1990, we declared a dividend of one common stock purchase right
(a "Right") for every outstanding share of our common stock. The Rights were
distributed on June 29, 1990 to stockholders of record as of the close of
business on that date. The terms of the Rights are set forth in a common stock
Rights Agreement (the "Rights Agreement") between Reebok and American Stock
Transfer & Trust Company, as successor Rights Agent to The First National Bank
of Boston (the "Rights Agent"). The Rights Agreement provides for the issuance
of one Right for every share of common stock issued and outstanding on June 29,
1990 and for each share of common stock which is issued after that date and
prior to the "Distribution Date" (as defined below).
Each Right entitles the holder to purchase from us one share of common stock
at a price of $60 per share, subject to adjustment. The Rights will expire on
June 14, 2010 (the "Expiration Date"), or the earlier redemption or exchange of
the Rights, and are not exercisable until the Distribution Date.
Under the Rights Agreement, a Committee which consists of independent
directors will review and evaluate the Rights Agreement at least once every
three years to consider whether its maintenance continues to be in our best
interests and the best interests of our stockholders and any of our other
constituencies.
The Distribution Date will occur on the earlier of (i) the 10th business day
following the later of the date of a public announcement that a person,
including affiliates or associates of such person (an "Acquiring Person"),
except as described below, has acquired or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding shares of common stock
or the date on which one of our executive officers has actual knowledge that an
Acquiring Person became such (the "Stock Acquisition Date") or (ii) the 10th
business day following commencement of a tender offer or exchange offer that
would result in any Person or its affiliates and associates owning 15% or more
of our outstanding common stock or such later date on or after such
commencement date as may be determined by a majority of the Directors then in
office. In such event, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of our common stock as of
the close of business on the Distribution Date and such separate Rights
Certificates alone will evidence the Rights.
As long as the Rights are attached to the common stock, we will issue one
Right with each newly issued share of common stock which may be issued pursuant
to employee benefit plans, and may issue one Right with each newly issued share
of common stock otherwise issued by us, so that all shares of common stock
outstanding on the Distribution Date will have attached Rights.
If at any time after the Stock Acquisition Date, we are acquired in a merger
or other business combination, or more than 50% of our assets or earnings power
are sold, each holder of a Right will have the right to exercise such Right and
thereby receive common stock of the acquiring company with a market value of
two
23
times the exercise price of the Right. Also, in the event that any person or
group of affiliated or associated persons (other than our company and our
affiliates) shall become an Acquiring Person, each holder of a Right will have
the right to receive shares of our common stock (or, in certain circumstances,
cash, property or other securities of our company) having a market value of two
times the exercise price of the Right. Following the occurrence of any of the
events described in this paragraph (as defined in the Rights Agreement, a
"Common Stock Event"), any Rights that are, (or under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person (or any affiliates, associates, or transferees of any Acquiring Person)
shall immediately become null and void.
Our board of directors may, at its option, at any time after any person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights for shares of common stock at an exchange ratio of one share
of common stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the Declaration Date
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
The board of directors, however, may not effect an exchange at any time after
any person (other than us, any of our subsidiaries, any of our or our
subsidiaries' employee benefit plans, or any entity holding our common stock
for or pursuant to the terms of any such plan), together with all affiliates or
associates of such person, becomes the Beneficial Owner of 50% or more of our
common stock then outstanding. Immediately upon the action of the board of
directors ordering the exchange of any Rights and without any further action or
notice, the right to exercise such Rights will terminate and the only right
thereafter of a holder of such Rights will be to receive that number of shares
of common stock equal to the number of such Rights held by the holder
multiplied by the Exchange Ratio. Any such actions by the board of directors
shall be by a majority of the directors then in office.
At any time prior to the earlier of the Distribution Date or Expiration
Date, we, by a majority vote of the directors then in office, may redeem the
Rights at a redemption price of $.01 per Right (the "Redemption Price"), as
described in the Rights Agreement. Immediately upon the action of the board of
directors electing to redeem the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of our company, including, without limitation, the right to
vote or to receive dividends.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended to be a general summary of the material
United States federal income tax consequences of the ownership and disposition
of Debentures and common stock into which the Debentures have been converted.
Due to the complexity of the tax laws of the United States and other taxing
jurisdictions, the uncertainty, in some instances, as to the manner in which
such laws apply to holders, and possible changes in law, it is particularly
important that each holder consult with its own tax advisor regarding the tax
treatment of the ownership and disposition of Debentures and common stock into
which the Debentures have been converted under the laws of any federal, state,
local or other taxing jurisdiction.
This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change or differing
interpretations at any time, possibly with retroactive effect. There can be no
assurance that the Internal Revenue Service will not challenge one or more of
the conclusions described herein, and the Company has not obtained, nor does
the Company intend to obtain, a ruling from the Internal Revenue Service with
respect to the United States federal income tax consequences of acquiring or
holding Debentures or common stock. Moreover, this summary deals only with
purchasers who hold Debentures or common stock into which Debentures have been
converted as "capital assets" within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended, or the Code, and does not purport to
deal with persons in special tax situations, such as financial institutions,
insurance companies, S corporations, regulated investment companies, tax exempt
investors, dealers in securities and currencies, U.S. expatriates, persons
holding Debentures as a position in a "straddle," "hedge," "conversion
transaction," "constructive sale" or other integrated transaction for tax
purposes, persons who own, directly or indirectly, 10% or more of our voting
power, or U.S. holders, as defined below, whose functional currency is not the
U.S. dollar. Further, this discussion does not address the consequences under
United States alternative minimum tax rules, United States federal estate or
gift tax laws (except as specifically described below with respect to non-U.S.
holders), the laws of any U.S. state or locality, or any foreign tax laws.
Prospective purchasers of the Debentures are urged to consult their own tax
advisors concerning the consequences, in their particular circumstances, of
ownership and disposition of the Debentures, and common stock into which the
Debentures have been converted, under the U.S. federal tax laws and the laws of
any relevant state, local or non-United States taxing jurisdiction.
As used herein, the term "U.S. holder" means a beneficial owner of
Debentures or common stock into which Debentures have been converted that is,
for United States federal income tax purposes:
. a citizen or individual resident of the United States;
. a corporation, or other entity that has elected to be treated as a
corporation, created or organized in or under the laws of the United
States, any state thereof or the District of Columbia;
. an estate, the income of which is subject to United States federal
income tax regardless of its source; or
. a trust if, in general, a court within the United States is able to
exercise primary supervision over its administration and one or more
U.S. persons have authority to control all of its substantial decisions.
As used herein, the term "non-U.S. holder" means a beneficial owner, other
than a partnership, of Debentures or common stock into which Debentures have
been converted that is not a U.S. holder for United States federal income tax
purposes.
If a partnership, including for this purpose any entity treated as a
partnership for United States tax purposes, is a beneficial owner of Debentures
or common stock into which Debentures have been converted, the treatment of a
partner in the partnership will generally depend upon the status of the partner
and upon the activities of the partnership. A holder of Debentures that is a
partnership, and partners in such a partnership, should consult their tax
advisors about the United States federal income tax consequences of holding and
disposing of Debentures and common stock into which Debentures have been
converted.
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Classification of the Debentures
Pursuant to the terms of the indenture, we and each holder of the Debentures
must, for United States federal income tax purposes, treat the Debentures as
indebtedness for United States federal income tax purposes subject to the
regulations governing contingent payment debt instruments ("CPDI"). The
indenture also provides that each holder is bound by our application of those
regulations to the Debentures, including our determination of the rate at which
interest will be deemed to accrue on the Debentures for United States federal
income tax purposes. The remainder of this discussion assumes that the
Debentures will be treated in accordance with that agreement and our
determinations. However, the proper United States federal income tax treatment
of a holder of a Debenture is uncertain in various respects, and no assurance
can be given that the IRS will not assert that the Debentures should be treated
differently. Such treatment could affect the amount, timing and character of
income, gain or loss in respect of an investment in Debentures. In particular,
it might be determined that a holder should have accrued interest income at a
lower rate, should not have recognized income or gain upon the conversion, and
should have recognized capital gain upon a taxable disposition of its
Debenture.
U.S. Holders
Accrual of Interest on the Debentures
Under the rules governing contingent payment debt obligations, a United
States person generally will be required to accrue interest income on the
Debentures, in the amounts described below, regardless of whether the U.S.
holder uses the cash or accrual method of tax accounting. Accordingly, U.S.
holders will be required to include interest in taxable income in each year in
excess of the accruals on the Debentures and in excess of any interest payments
actually received in that year.
The CPDI regulations provide that a U.S. holder must accrue an amount of
ordinary interest income, as original issue discount for United States federal
income tax purposes, for each accrual period prior to and including the
maturity date of the Debentures that equals:
(1) the product of (i) the adjusted issue price (as defined below) of the
Debentures as of the beginning of the actual period; and (ii) the
comparable yield to maturity (as defined below) of the Debentures,
adjusted for the length of the accrual period;
(2) divided by the number of days in the accrual period; and
(3) multiplied by the number of days during the accrual period that the
U.S. holder held the Debentures.
A Debenture's issue price is the first price at which a substantial amount
of the Debentures is sold to the public, excluding sales to bond houses,
brokers or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers. The adjusted issue price of a
Debenture is its issue price increased by any interest income previously
accrued, determined without regard to any adjustments to interest accruals
described below, and decreased by the projected amount of any payments
previously made with respect to the Debentures.
Under the rules governing contingent payment debt obligations, we are
required to establish the "comparable yield," and we have determined that the
comparable yield for the Debentures is the annual yield we would incur, as of
the initial issue date, on a fixed rate nonconvertible debt security with no
contingent payments, but with terms and conditions otherwise comparable to
those of the Debentures. Accordingly, we have determined the comparable yield
to be 7% compounded semiannually.
We are required to provide to U.S. holders, solely for United States federal
income tax purposes, a schedule of the projected amounts of payments on the
Debentures. This schedule must produce the comparable yield. The projected
payment schedule for the Debentures includes estimates for payments of interest
and an estimate for a payment at maturity taking into account the conversion
feature. U.S. holders may obtain the projected payment schedule by submitting a
written request for such information to: Reebok International Ltd., 1895 J.W.
Foster Boulevard, Canton, Massachusetts 02021, Attention: Office of Investor
Relations.
26
Under the indenture, each U.S. holder for United States federal income tax
purposes, is required to use the comparable yield and the schedule of projected
payments in determining its interest accruals, and the adjustments thereto
described below, in respect of the Debentures.
THE COMPARABLE YIELD AND THE SCHEDULE OF PROJECTED PAYMENTS ARE NOT
DETERMINED FOR ANY OTHER PURPOSE OTHER THAN FOR THE DETERMINATION OF A U.S.
HOLDER'S INTEREST ACCRUALS AND ADJUSTMENTS THEREOF IN RESPECT OF THE
DEBENTURES FOR UNITED STATES FEDERAL INCOME TAX PURPOSES AND DO NOT
CONSTITUTE A PROJECTION OR REPRESENTATION REGARDING THE ACTUAL AMOUNTS
PAYABLE WITH RESPECT TO THE DEBENTURES.
Amounts treated as interest under the CPDI regulations are treated as
original issue discount for all purposes of the Code.
Adjustments to Interest Accruals on the Debentures
If, during any taxable year, a U.S. holder receives actual payments with
respect to the Debentures for that taxable year that in the aggregate exceed
the total amount of projected payments for that taxable year, the U.S. holder
will incur a "net positive adjustment" under the CPDI regulations equal to the
amount of such excess. This adjustment will treat a "net positive adjustment"
as additional interest income for the taxable year. For this purpose, the
payments in a taxable year include the fair market value of property received
in that year.
If a U.S. holder receives in a taxable year actual payments with respect to
the Debentures for that taxable year that in the aggregate were less than the
amount of projected payments for that taxable year, the U.S. holder will incur
a "net negative adjustment" under the CPDI regulations equal to the amount of
such deficit. This adjustment will (a) reduce the U.S. holder's interest income
on the Debentures for that taxable year, and (b) to the extent of any excess
after the application of (a), give rise to an ordinary loss to the extent of
the U.S. holder's interest income on the Debentures during the prior taxable
years, reduced to the extent such interest was offset by prior net negative
adjustments.
Purchase for Premium or Discount
If a U.S. holder purchases a Debenture at a premium or discount to the
Debenture's adjusted issue price at the time of purchase, the U.S. holder must
reasonably allocate any difference between the adjusted issue price of the
Debenture at the time of the purchase and the price paid by the U.S. holder to
daily portions of interest or projected payments over the remaining term of the
Debenture. If the price paid by the U.S. holder is less than the adjusted issue
price at the time of purchase, the amount of the difference allocated to a
daily portion of interest or to a projected payment is treated as a positive
adjustment on the date the daily portion accrues or the payment is made. If the
price paid by the U.S. holder is greater than the adjusted issue price at the
time of purchase, the amount of the difference allocated to a daily portion of
interest or to a projected payment is treated as a negative adjustment on the
date the daily portion accrues or the payment is made. U.S. holders should
consult their own tax advisors concerning the operation of these rules and the
allocation of the premium or discount.
Sales, Exchange, Conversion or Redemption
Generally, the sale, exchange, redemption or other disposition of a
Debenture will result in taxable gain or loss to a U.S. holder. In addition, as
described above, our calculation of the comparable yield and the schedule of
projected payments for the Debentures includes the receipt of common stock upon
conversion as a contingent payment with respect to the Debentures. Accordingly,
we intend to treat the receipt of our common stock by a U.S. holder upon the
conversion of a Debenture as a contingent payment under the CPDI regulations.
As described above, holders are generally bound by our determination of the
comparable yield and the schedule of projected payments. Under this treatment,
a conversion will also result in taxable gain or loss to
27
the U.S. holder. The amount of gain or loss on a taxable sale, exchange,
conversion, redemption or other disposition will be equal to the difference
between (a) the amount of cash plus the fair market value of any other property
received by the U.S. holder, including the fair market value of any of our
common stock received, and (b) the U.S. holder's adjusted tax basis in the
Debenture. A U.S. holder's adjusted tax basis in a Debenture will generally be
equal to the U.S. holder's original purchase price for the Debenture, increased
by any interest income previously accrued by the U.S. holder (determined
without regard to any adjustments to interest accruals described above), and
decreased by the amount of any projected payments previously made on the
Debentures to the U.S. holder. Gain recognized upon a sale, exchange,
conversion, redemption or other disposition of a Debenture will generally be
treated as ordinary interest income; any loss will be ordinary loss to the
extent of interest previously included in income, and thereafter, capital loss
(which will be long-term if the Debenture is held for more than one year). The
deductibility of net capital losses by individuals and corporations is subject
to limitations. All holders should consult their tax advisors regarding the
treatment of capital gains and losses.
A U.S. holder's tax basis in our common stock received upon a conversion of
a Debenture will equal the then current fair market value of such common stock.
The U.S. holder's holding period for the common stock received will commence on
the day immediately following the date of conversion.
Dividends on Common Stock
If a U.S. holder converts Debentures into common stock, in general,
distributions on the common stock that are paid out of our current or
accumulated earnings and profits, as defined for United States federal income
tax purposes, will constitute dividends and will be includible in income by a
holder and taxable as ordinary income when received or accrued, in accordance
with that holder's method of accounting for United States federal income tax
purposes. If a distribution exceeds our current and accumulated earnings and
profits, the excess will be treated first as a tax-free return of the U.S.
holder's investment, up to the holder's basis in the common stock. Any
remaining excess will be treated as capital gain.
Constructive Dividends
The conversion price of the Debentures is subject to adjustment under
certain circumstances. Under Section 305 of the Code and the Treasury
Regulations issued thereunder, an adjustment in the conversion price, or the
failure to make such an adjustment, may under particular circumstances be
treated as a constructive taxable dividend to U.S. holders of our Debentures or
common stock to the extent of our current or accumulated earnings and profits.
Adjustments to the conversion price made pursuant to a bona fide reasonable
adjustment formula which has the effect of preventing the dilution of the
proportionate interest of a U.S. holder of Debentures in our earnings and
profits generally should not result in a constructive distribution where the
adjustment does not compensate the U.S. holder of Debentures for taxable
distributions to our stockholders. However, in other circumstances, adjustments
(or the failure to make adjustments) may result in a constructive distribution
to U.S. holders of Debentures or common stock, taxable to the holders even
though they did not receive any cash or property. For example, if at any time
we make a distribution of property to our stockholders that would be taxable to
the stockholders as a dividend for United States federal income tax purposes
and, in accordance with the anti-dilution provisions of the Debentures, the
conversion rate of the Debentures is increased, such increase may be deemed to
be the payment of a taxable dividend to holders of the Debentures. Conversely,
if an event occurs that dilutes the interests of holders of our Debentures and
the conversion price is not adjusted, the resulting increase in the
proportionate interests of holders of common stock could be treated as a
taxable stock dividend to the holders of our common stock.
Backup Withholding and Information Reporting
Non-exempt U.S. holders may be subject to information reporting with respect
to certain "reportable payments," including payments of principal and interest
on Debentures, dividends on common stock and the
28
proceeds of the sale or other disposition of the Debentures or common stock.
Non-exempt U.S. holders that are subject to information reporting and that do
not provide appropriate information when requested may be subject to backup
withholding at a 31% rate. U.S. holders should consult their tax advisors
regarding the applicability of backup withholding.
We will report to the U.S. holders of Debentures and common stock and to the
IRS the amount of any "reportable payments" for each calendar year and the
amount of tax withheld, if any, with respect to such payments.
Special Rules Applicable to Non-U.S. Holders
Although the following discussion applies specifically to non-U.S. holders,
it is not exhaustive. The discussion preceding this section may also apply to
non-U.S. holders. Non-U.S. holders should consult their own tax advisors
concerning the applicability of the United States federal tax laws and the laws
of any relevant state, local or non-United States taxing jurisdiction.
Payment of Interest
Generally, payments of interest to nonresident persons or entities are
subject to a United States withholding tax at a rate of 30%, except where an
applicable tax treaty provides for the reduction or elimination of such
withholding tax and the recipient of the interest payments complies with all
certification requirements necessary to qualify for the treaty benefit.
However, payments to a non-U.S. holder of interest income that is not
effectively connected with a United States trade or business will not be
subject to a United States withholding tax under the "portfolio interest
exemption" provided that:
. the non-U.S. holder does not actually or constructively own (pursuant to
the conversion feature of the Debentures or otherwise) 10% or more of
the combined voting power of all of our classes of stock entitled to
vote;
. the non-U.S. holder is not a "controlled foreign corporation" related to
us actually or constructively through stock ownership; and
. the non-U.S. holder is not a bank which acquired the Debentures in
consideration for an extension of credit made pursuant to a loan
agreement entered into in the ordinary course of business.
The portfolio interest exemption and several of the special rules for non-
U.S. holders described below apply only if the non-U.S. holder certifies its
nonresident status. A non-U.S. holder can meet this certification requirement
by providing a Form W-8BEN or appropriate substitute form to us, or our paying
agent. If a non-U.S. holder holds the Debenture through a financial institution
or other agent acting on the holder's behalf, the non-U.S. holder will be
required to provide appropriate documentation to the agent. The agent will then
be required to provide certification to us or our paying agent, either directly
or through other intermediaries. For payments made to a foreign partnership,
the certification requirements will generally apply to the partners rather than
the partnership.
We may be required to report annually to the IRS and to each non-U.S. holder
the amount of interest paid to, and the tax withheld, if any, with respect to,
each non-U.S. holder.
Except to the extent that an applicable treaty otherwise provides, generally
a non-U.S. holder will be taxed in the same manner as a U.S. holder with
respect to interest if the interest income is effectively connected with the
non-U.S. holder's conduct of a United States trade or business. A corporate
non-U.S. holder may also, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate (or, if applicable, a lower
treaty rate). Even though such effectively connected interest is subject to
income tax, and may be subject to the branch profits tax, it may not be subject
to withholding tax if the non-U.S. holder delivers proper certification to the
payor.
29
Conversion of Debentures
In general, a non-U.S. holder will not be subject to United States federal
income tax or withholding tax upon the conversion of a Debenture into common
stock. However, cash (if any) received a lieu of a fractional share will be
subject to United States federal income tax if it is U.S. trade or business
income. Cash received in lieu of a fractional share may give rise to gain that
would be subject to the rules described above under "Sale, Exchange, Conversion
or Redemption."
In general, a non-U.S. holder will not be subject to United States federal
income or withholding tax with respect to gain upon the disposition of
Debentures or common stock, unless:
. the income or gain is "U.S. trade or business income," which means
income or gain that is effectively connected with the conduct by the
non-U.S. holder of a trade or business, or, in the case of a treaty
resident, attributable to a permanent establishment or a fixed base, in
the United States;
. such non-U.S. holder is an individual who is present in the United
States for 183 days or more in the taxable year of disposition and
certain other conditions are met;
. such non-U.S. holder is subject to tax pursuant to the provisions of the
Code applicable to certain United States expatriates; or
. we are, or have been at any time, within the shorter of the five year
period preceding such sale or other disposition and the period the non-
U.S. holder held the Debenture, a United States real property holding
corporation within the meaning of Section 897 of the Code. We do not
believe that we are currently a "United States real property holding
corporation" within the meaning of Section 897 of the Code and do not
expect that we will become one in the future.
U.S. trade or business income of a non-U.S. holder will generally be subject
to regular United States income tax in the same manner as if it were realized
by a U.S. holder. Non-U.S. holders that realize U.S. trade or business income
with respect to the Debentures or common stock should consult their tax
advisers as to the treatment of such income or gain. In addition, U.S. trade or
business income of a non-U.S. holder that is a non-U.S. corporation may be
subject to a branch profits tax at a rate of 30%, or such lower rate provided
by an applicable income tax treaty.
Dividends
A non-U.S. holder of our common stock will generally be subject to United
States federal withholding tax at a 30% rate (or lower rate provided under any
applicable income tax treaty) on distributions by us with respect to our common
stock that are treated as dividends paid (and on dividends deemed paid on the
Debentures or common stock, as described above under "Constructive Dividends").
Except to the extent that an applicable tax treaty otherwise provides,
generally a non-U.S. holder will be taxed in the same manner as a U.S. holder
on dividends paid (or deemed paid) that are effectively connected with the non-
U.S. holder's conduct of a trade or business in the United States, and a
corporate non-U.S. holder may also be subject to a United States branch profits
tax at a 30% rate or such lower rate as may be specified in an applicable
income tax treaty.
Death of a Non-U.S. Holder
An individual who is not a citizen or resident of the United States and who
holds a Debenture at the time of death will not be required to include the
Debenture in the individual's gross estate for United States estate tax
purposes, provided that interest payments with respect to such Debenture would
have qualified for the portfolio interest exemption described above. However,
if such an individual holds our common stock, actually or beneficially, at the
time of the individual's death (or previously transferred the common stock
subject to certain retained rights or powers), the common stock will be
included in the individual's gross estate and subject to United States federal
estate tax unless otherwise provided by an applicable estate tax treaty.
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Backup Withholding and Information Reporting
Generally, information reporting and backup withholding do not apply to
payments that are subject to the 30% withholding tax on dividends or interest
paid to non-U.S. holders, or to interest or dividends that are exempt from that
tax by application of a tax treaty or special exception. Also, generally, if
payments are made to a non-U.S. holder by a broker upon a sale of Debentures or
common stock, the payments will not be subject to information reporting or
backup withholding. In order to avoid backup withholding, a non-U.S. holder may
be required to certify the holder's foreign status. Non-U.S. holders of
Debentures or common stock should consult their tax advisors regarding the
application of information reporting and backup withholding in their particular
situations, the availability of exemptions and the procedure for obtaining any
available exemption.
THE PRECEDING DISCUSSION OF THE MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF DEBENTURES IS FOR GENERAL
INFORMATION ONLY AND IS NOT TAX ADVICE. THE PROPER TAX TREATMENT OF A HOLDER OF
DEBENTURES IS UNCERTAIN IN VARIOUS RESPECTS. ACCORDINGLY, EACH INVESTOR SHOULD
CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR TAX CONSEQUENCES TO IT OF
PURCHASING, HOLDING AND DISPOSING OF THE DEBENTURES AND SHARES OF OUR COMMON
STOCK, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN
TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAWS.
31
SELLING SECURITYHOLDERS
We originally issued the Debentures in a private placement in February 2001.
The Debentures were resold by the initial purchaser to qualified institutional
buyers under Rule 144A under the Securities Act. Selling securityholders may
offer and sell the Debentures and the underlying common stock pursuant to this
prospectus.
The following table sets forth information as of March 27, 2002 about the
principal amount of Debentures and the underlying common stock, beneficially
owned by each selling securityholder, that may be offered using this
prospectus.
Unless otherwise described below, to our knowledge, no selling
securityholder nor any of its affiliates has held any position or office with,
been employed by or otherwise has had any material relationship with us or our
affiliates during the three years prior to the date of this prospectus.
A selling securityholder may offer all or some portion of the Debentures and
shares of the common stock issuable upon conversion of the Debentures.
Accordingly, no estimate can be given as to the amount or percentage of
Debentures or our common stock that will be held by the selling securityholders
upon termination of sales pursuant to this prospectus. In addition, the selling
securityholders identified below may have sold, transferred or disposed of all
or a portion of their Debentures since the date on which they provided the
information regarding their holdings in transactions exempt from the
registration requirements of the Securities Act without having notified us of
such sale, transfer or disposition.
Principal Amount
of Debentures
Owned Before Percentage of Number of Shares Percentage of
The Offering And Debentures of Common Stock Common Stock
Name That May Be Sold Outstanding That May Be Sold(1) Outstanding(2)
- ---- ---------------- ------------- ------------------- --------------
Allstate Insurance
Company(3)............. $ 600,000 * 15,560 *
Allstate Life Insurance
Company(3)............. $ 2,300,000 * 59,647 *
American Fidelity
Assurance Company...... $ 500,000 * 12,966 *
Amerisure
Companies/Michigan
Mutual Insurance
Company................ $ 500,000 * 12,966 *
Arbitex Master Fund
L.P.................... $15,000,000 6.00% 389,004 *
Associated Electric &
Gas Insurance Services
LTD.................... $ 500,000 * 12,966 *
Aventis Pension Master
Trust.................. $ 400,000 * 10,373 *
BCS Life Insurance
Company................ $ 350,000 * 9,076 *
Blue Cross Blue Shield
of Florida............. $ 600,000 * 15,560 *
Boilermaker-Blacksmith
Pension Trust.......... $ 2,860,000 1.14% 74,170 *
BTES-Convertible
Arbitrage.............. $ 3,500,000 1.40% 90,767 *
BTPO Growth Vs Value.... $ 9,000,000 3.60% 233,402 *
Calamos Convertible
Fund-Calamos Investment
Trust.................. $ 5,300,000 2.12% 137,448 *
Calamos Convertible
Growth and Income Fund-
Calamos Investment
Trust.................. $ 2,940,000 1.18% 76,244 *
Calamos Convertible
Portfolio-Calamos
Advisors Trust......... $ 240,000 * 6,224 *
Calamos Global
Convertible Fund-
Calamos Investment
Trust.................. $ 180,000 * 4,668 *
California State Auto
Assoc. Inter-
Insurance.............. $ 330,000 * 8,558 *
California State Auto
Assoc. Retirement
Pension Plan........... $ 70,000 * 1,815 *
CareFirst BlueChoice,
Inc.................... $ 70,000 * 1,815 *
CareFirst of Maryland,
Inc.................... $ 300,000 * 7,780 *
Catholic Mutual Relief
Society of America..... $ 700,000 * 18,153 *
Central States Health
and Life Company of
Omaha.................. $ 350,000 * 9,076 *
City of Albany Pension
Plan................... $ 250,000 * 6,483 *
City of Birmingham
Retirement & Relief
System................. $ 1,300,000 * 33,713 *
City of Knoxville
Pension System......... $ 570,000 * 14,782 *
32
Principal Amount
of Debentures
Owned Before Percentage of Number of Shares Percentage of
The Offering And Debentures of Common Stock Common Stock
Name That May Be Sold Outstanding That May Be Sold(1) Outstanding(2)
- ---- ---------------- ------------- ------------------- ---------------
Clarica Life Insurance Co.-U.S............... $ 700,000 * 18,153 *
Clinton Multistrategy Master Fund, Ltd....... $2,000,000 * 51,867 *
Clinton Riverside Convertible Portfolio
Limited..................................... $3,500,000 1.40% 90,767 *
Convertible Securities Fund.................. $ 105,000 * 2,723 *
Credit Suisse First Boston Corporation (4)... $1,094,000 * 28,371 *
CSFB Convertible & Quantitative Strategies... $ 700,000 * 18,153 *
Cumberland Insurance Company................. $ 100,000 * 2,593 *
Cumberland Mutual Fire Insurance Company..... $ 450,000 * 11,670 *
Delta Airlines Master Trust.................. $3,155,000 1.26% 81,820 *
Delta Pilots Disability and Survivorship
Trust....................................... $ 975,000 * 25,285 *
Dorinco Reinsurance Company.................. $ 825,000 * 21,395 *
Drury University............................. $ 95,000 * 2,463 *
Equity & Convertibles Fund................... $ 615,000 * 15,949 *
Equity Income Fund........................... $ 60,000 * 1,556 *
Farmers Home Mutual Insurance Company........ $ 250,000 * 6,483 *
First Mercury Insurance Company.............. $ 500,000 * 12,966 *
Free State Health Plan, Inc.................. $ 85,000 * 2,204 *
Frontier Insurance Company................... $ 60,000 * 1,556 *
Genesee County Employees' Retirement System.. $ 525,000 * 13,615 *
Goldman Sachs and Company.................... $ 400,000 * 10,373 *
Greek Catholic Union of the USA.............. $ 75,000 * 1,945 *
Group Hospitalization and Medical Services,
Inc......................................... $ 350,000 * 9,076 *
Guaranty Income Life Insurance Company....... $ 400,000 * 10,373 *
Hannover Life Reassurance Company of
America..................................... $1,400,000 * 36,307 *
HealthNow New York, Inc...................... $ 100,000 * 2,593 *
HFR Master Fund, Ltd......................... $ 200,000 * 5,186 *
H.K. Porter Company, Inc..................... $ 70,000 * 1,815 *
Jackson County Employees' Retirement System.. $ 175,000 * 4,538 *
KBC Financial Products (Cayman Islands)...... $8,550,000 3.42% 221,732 *
KBC Financial Products USA................... $1,300,000 * 33,713 *
Kettering Medical Center Funded Depreciation
Account..................................... $ 170,000 * 4,408 *
Knoxville Utilities Board Retirement System.. $ 400,000 * 10,373 *
Landmark Life Insurance Company.............. $ 100,000 * 2,593 *
LDG Limited.................................. $ 300,000 * 7,780 *
Lebanon Mutual Insurance Company............. $ 140,000 * 3,630 *
Lexington Vantage Fund, Ltd.................. $ 100,000 * 2,593 *
Lincoln Heritage Life Insurance Company...... $ 120,000 * 3,112 *
Lincoln National Global Asset Allocation
Fund, Inc................................... $ 19,000 * 492 *
Louisiana Workers' Compensation Corporation.. $ 380,000 * 9,854 *
Loyal Christian Benefit Association.......... $ 140,000 * 3,630 *
Lyxor Master Fund............................ $1,000,000 * 25,933 *
Macomb County Employees' Retirement System... $ 700,000 * 18,153 *
Marquette Indemnity and Life Insurance
Company..................................... $ 100,000 * 2,593 *
McMahan Securities Co. L.P................... $ 275,000 * 7,131 *
Medmarc Insurance Company.................... $ 630,000 * 16,338 *
Middle Cities Risk Management Trust.......... $ 170,000 * 4,408 *
MILIC/Woodsmill Limited #1................... $ 20,000 * 518 *
MILIC/Woodsmill Limited #2................... $ 10,000 * 259 *
MLQA Convertible Securities Arbitrage, Ltd... $7,000,000 2.80% 181,535 *
Morgan Stanley............................... $1,000,000 * 25,933 *
33
Principal Amount
of Debentures
Owned Before Percentage of Number of Shares Percentage of
The Offering And Debentures of Common Stock Common Stock
Name That May Be Sold Outstanding That May Be Sold(1) Outstanding(2)
- ---- ---------------- ------------- ------------------- ---------------
Nashville Electric Service.................. $ 250,000 * 6,483 *
Nations Convertible Securities Fund......... $3,405,000 1.36% 88,303 *
Nations Equity Fund......................... $ 615,000 * 15,949 *
NCMIC....................................... $ 400,000 * 10,373 *
New York Life Insurance and Annuity
Corporation................................ $1,200,000 * 31,120 *
New York Life Insurance Company............. $9,600,000 3.84% 248,962 *
Nicholas Applegate Investment Grade
Convertible................................ $ 10,000 * 259 *
NORCAL Mutual Insurance Company............. $ 480,000 * 12,448 *
Northern Income Equity Fund................. $1,000,000 * 25,933 *
Oklahoma Attorneys Mutual Insurance
Company.................................... $ 40,000 * 1,037 *
Onyx Fund Holdings, LDC..................... $2,000,000 * 51,867 *
Parker Key--Convertible..................... $ 28,000 * 726 *
Physicians Life Insurance Company........... $ 600,000 * 15,560 *
Physicians' Reciprocal Insurers Account #7.. $2,000,000 * 51,867 *
Port Authority of Allegheny County
Retirement and Disability Allowance Plan
for the Employees Represented by Local 85
of the Amalgamated Transit Union........... $1,460,000 * 37,863 *
Premera Blue Cross.......................... $1,000,000 * 25,933 *
Prisma Foundation........................... $ 80,000 * 2,074 *
Prudential Financial, Inc................... $4,000,000 1.60% 103,734 *
Putnam Asset Allocation Funds-Balanced
Portfolio.................................. $ 126,000 * 3,267 *
Putnam Asset Allocation Funds-Conservative
Portfolio.................................. $ 99,000 * 2,567 *
Putnam Convertible Income-Growth Trust...... $1,186,000 * 30,757 *
Putnam Convertible Opportunities and Income
Trust...................................... $ 37,000 * 959 *
Putnam Variable Trust-Putnam VT Global Asset
Allocation Fund............................ $ 39,000 * 1,011 *
Quattro Fund, Ltd........................... $4,250,000 1.70% 110,217 *
SCI Endowment Care Common Trust Fund-First
Union...................................... $ 85,000 * 2,204 *
SCI Endowment Care Common Trust Fund-
National Fiduciary Services................ $ 340,000 * 8,817 *
SCI Endowment Care Common Trust Fund-
Suntrust................................... $ 150,000 * 3,890 *
Scor Life Re Convertible Program............ $ 400,000 * 10,373 *
SEI Private Trust Company(5)................ $1,350,000 * 35,010 *
SG Cowen Securities Corp.................... $3,386,000 1.35% 87,811 *
Southdown Pension Plan...................... $ 250,000 * 6,483 *
Southern Farm Bureau Life Insurance
Company.................................... $ 750,000 * 19,450 *
SPT......................................... $1,445,000 * 37,474 *
State of Florida, Office of the Treasurer... $2,000,000 * 51,867 *
Texas Builders Insurance Company............ $ 180,000 * 4,668 *
The Cockrell Foundation..................... $ 75,000 * 1,945 *
The Dow Chemical Company Employees'
Retirement Plan............................ $5,150,000 2.06% 133,558 *
The Fondren Foundation...................... $ 180,000 * 4,668 *
TQA Master Fund, Ltd........................ $3,250,000 1.30% 84,284 *
TQA Master Plus Fund, Ltd................... $1,300,000 * 33,713 *
Transguard Insurance Company of America,
Inc. ...................................... $ 500,000 * 12,966 *
Union Carbide Retirement Account............ $1,700,000 * 44,087 *
United Food and Commercial Workers Local
1262 and Employers Pension Fund............ $1,350,000 * 35,010 *
34
Principal Amount
of Debentures
Owned Before Percentage of Number of Shares Percentage of
The Offering And Debentures of Common Stock Common Stock
Name That May Be Sold Outstanding That May Be Sold(1) Outstanding(2)
- ---- ---------------- ------------- ------------------- ---------------
United National Insurance Company........ $ 800,000 * 20,746 *
Value Line Convertible Fund, Inc......... $ 500,000 * 12,966 *
Van Kampen Harbor Fund................... $ 2,500,000 1.00% 64,834 *
Vesta-Inex Insurance Exchange IASA....... $ 540,000 * 14,004 *
Vopak USA, Inc. Retirement Plan.......... $ 760,000 * 19,709 *
William Blair & Co....................... $ 2,000,000 * 51,867 *
Wilmington Trust Co., as owner Trustee
for the Forrestal Funding Master Trust.. $ 25,742,000 10.30% 667,582 1.12%
------------ ------ --------- -----
Total.................................... $180,886,000 -- 4,690,977 --
- --------
* Less than 1%.
(1) Assumes conversion of all of the holder's Debentures at a conversion rate
of 25.9336 shares of common stock per $1,000 principal amount of
Debentures. However, this conversion rate will be subject to adjustment as
described under "Description of Debentures - Conversion Rights." As a
result, the number of shares of common stock issuable upon conversion of
the Debentures may increase or decrease in the future.
(2) Calculated based on 58,700,027 shares of common stock outstanding as of
March 8, 2002. In calculating this amount, we treated as outstanding that
number of shares of common stock issuable upon conversion of all of a
particular holder's Debentures. However, we did not assume the conversion
of any other holder's Debentures.
(3) Allstate Life Insurance Company is a subsidiary of Allstate Insurance
Company. Allstate Insurance Company beneficially owns 4,900 shares of our
common stock. Allstate Life Insurance Company beneficially owns 300 shares
of our common stock.
(4) Credit Suisse First Boston Corporation served as the initial purchaser of
the Debentures in February 2001.
(5) SEI Private Trust Company beneficially owns 25,300 shares of our common
stock.
If, after the date of this prospectus, a securityholder notifies us pursuant
to the registration rights agreement of its intent to dispose of Debentures
pursuant to the registration statement, we will file a post-effective amendment
to the registration statement to include that information.
35
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the Debentures and
the underlying common stock offered by this prospectus. The Debentures and the
underlying common stock may be sold from time to time to purchasers:
. directly by the selling securityholders; or
. through underwriters, broker-dealers or agents who may receive
compensation in the form of discounts, concessions or commissions from
the selling securityholders or the purchasers of the Debentures and the
underlying common stock (which discounts, concessions or commissions as
to particular underwriters, brokers, dealers or agents may be in excess
of those customary in the types of transactions involved).
The selling securityholders and any such broker-dealers or agents who
participate in the distribution of the Debentures and the underlying common
stock may be deemed to be "underwriters." As a result, any profits on the sale
of the underlying common stock by selling securityholders and any discounts,
commissions or concessions received by any such broker-dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities
Act. If the selling securityholders were deemed to be underwriters, the selling
securityholders may be subject to statutory liabilities as underwriters under
the Securities Act.
If the Debentures and the underlying common stock are sold through
underwriters or broker-dealers, the selling securityholders will be responsible
for underwriting discounts or commissions or agent's commissions.
The Debentures and the underlying common stock may be sold in one or more
transactions at:
. fixed prices;
. prevailing market prices at the time of sale;
. prices related to prevailing market prices;
. varying prices determined at the time of sale; or
. negotiated prices.
These sales may be effected in transactions:
. on any national securities exchange or quotation service on which the
Debentures and underlying common stock may be listed or quoted at the
time of the sale, including the New York Stock Exchange in the case of
the common stock;
. in the over-the-counter market;
. in transactions otherwise than on such exchanges or services or in the
over-the-counter market;
. through the writing of options;
. through the distribution by any selling securityholder to its partners,
members or shareholders; or
. through a combination of the above.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with the sales of the Debentures and the underlying common
stock or otherwise, the selling securityholders may enter into hedging
transactions with broker-dealers. These broker-dealers may in turn engage in
short sales of the Debentures and the underlying common stock in the course of
hedging their positions. The selling securityholders may also sell the
Debentures and the underlying common stock short and deliver Debentures and the
underlying common stock to close out short positions, or loan or pledge
Debentures
36
and the underlying common stock to broker-dealers that in turn may sell the
Debentures and the underlying common stock.
Under the securities laws of some states, the Debentures and the underlying
common stock may be sold in these states only through registered or licensed
brokers or dealers. In addition, in some states, the Debentures and underlying
common stock may not be sold unless the Debentures and underlying common stock
have been registered or qualified for sale in these states or an exemption from
registration or qualification is available and is complied with.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any underwriter, broker-
dealer or agent regarding the sale of the Debentures and the underlying common
stock by the selling securityholders. Selling securityholders may not sell any
or all of the Debentures and the underlying common stock offered by them
pursuant to this prospectus. In addition, we cannot assure you that any such
selling securityholder will not transfer, devise or gift the Debentures and the
underlying common stock by other means not described in this prospectus.
Our common stock trades on the New York Stock Exchange under the symbol
"RBK." The Debentures are currently available for trading among qualified
institutional buyers in The PortalSM Market, a subsidiary of The Nasdaq Stock
Market, Inc. However, no assurance can be given as to the development of
liquidity or any trading market for the Debentures.
There can be no assurance that any selling securityholder will sell any or
all of the Debentures or the underlying common stock pursuant to this
prospectus. In addition, any Debentures or underlying common stock covered by
this prospectus that qualify for sale pursuant to Rule 144 or Rule 144A of the
Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to
this prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the Debentures and the underlying common stock by
the selling securityholders and any such other person. In addition, Regulation
M of the Exchange Act may restrict the ability of any person engaged in the
distribution of the Debentures and the underling common stock being distributed
for a period of up to five business days prior to the commencement of such
distribution. This may affect the marketability of the Debentures and the
underlying common stock and the ability of any person or entity to engage in
market-making activities with respect to the Debentures and the underlying
commons stock.
Pursuant to the registration rights agreement that has been filed as an
exhibit to this registration statement, we and the selling securityholders will
each indemnify the other against specified liabilities, including liabilities
under the Securities Act, or will be entitled to contribution in connection
with these liabilities.
We have agreed to pay substantially all of the expenses incidental to the
registration, offering and sale of the Debentures and the underlying common
stock to the public other than commissions, fees and discounts of underwriters,
brokers, dealers and agents.
VALIDITY OF SECURITIES
The validity of the Debentures and the common stock issuable upon conversion
will be passed upon for Reebok by Ropes & Gray, Boston, Massachusetts.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K
for the year ended December 31, 2001, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our consolidated financial statements and schedule are incorporated
by reference in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.
37
$250,000,000
[Reebok logo]
4 1/4% Convertible Debentures
due March 1, 2021
and
6,483,402 Shares of Common Stock Issuable Upon
Conversion of the Debentures
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the distribution of the securities being registered. All of the amounts
shown are estimates, except the Securities and Exchange Commission registration
fee.
Securities and Exchange Commission registration fee.............. $ 59,766
Printing and engraving fees...................................... 10,000
Accountant's fees and expenses................................... 50,000
Legal fees and expenses.......................................... 25,000
Trustee and Transfer Agent fees and expenses..................... 16,000
Rating agency fees and expenses.................................. 145,000
Miscellaneous expenses........................................... 20,000
--------
Total.......................................................... $325,766
Item 15. Indemnification of Directors and Officers
Section 67 of Chapter 156B of the Massachusetts General Laws provides that
indemnification of directors, officers, employees, and agents of the Registrant
may be provided to the extent specified in or authorized by (i) its articles of
organization, (ii) a by-law provision adopted by the stockholders, or (iii) a
vote adopted by the holders of a majority of the shares of stock entitled to
vote on the election of directors.
As permitted by Section 67 of Chapter 156B of the Massachusetts General
Laws, Section 9 of the By-laws of the Registrant provides that the Registrant
shall, to the extent legally permissible, indemnify each of its directors and
officers (including persons who serve at its request as directors and 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 being or having been such a director or
officer, except with respect to any matter as to which he shall have 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.
Section 9 further provides 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 the compromise payment or for any other expenses
shall be provided unless the compromise is 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.
Additionally, Section 9 provides that expenses, including counsel fees,
reasonably incurred by any director or officer in connection with the defense
or disposition of any action, suit or other proceeding may be paid from time to
time by the Registrant in advance of the final disposition thereof upon receipt
of an undertaking by the director or officer to repay the amounts so paid to
the Registrant if it is ultimately determined that indemnification for these
expenses is not authorized under Section 9.
II-1
The right of indemnification provided by Section 9 of the By-laws is not to
be exclusive of or affect any other rights to which any director or officer may
be entitled. As used in 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.
Article 6(k) of the Registrant's Restated Articles of Organization, as
amended, provides that no director of the Registrant shall be personally liable
to the Registrant or its stockholders for monetary damages by breach of
fiduciary duty as a director to the extent provided by applicable law
notwithstanding any provision of law imposing such liability; provided,
however, that Article 6(k) shall not eliminate the liability of a director (i)
for any breach of the director's duty of loyalty to the Registrant or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violating of law, (iii) under section 61 or
62 of the Business Corporation Law of The Commonwealth of Massachusetts, or
(iv) for any transaction from which the director derived an improper personal
benefit. This provision shall not be construed in any way so as to impose or
create liability. The foregoing provisions of Article 6(k) shall not eliminate
the liability of a director for any act or omission occurring prior to the date
on which Article 6(k) became effective. No amendment to or repeal of Article
6(k) shall apply to or have any effect on the liability or alleged liability of
any director of the corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.
The Registrant maintains directors and officers liability insurance.
Item 16. Exhibits
4.1 Indenture between the Company and State Street Bank and Trust Company
dated as of February 28, 2001 (previously filed).
4.2 Registration Rights Agreement dated as of February 28, 2001 between
the Company and Credit Suisse First Boston Corporation (previously
filed).
5.1 Opinion of Ropes & Gray (previously filed).
12.1 Statement Regarding Computation of Ratios of Earnings to Fixed
Charges (filed herewith).
23.1 Consent of Ernst & Young LLP (filed herewith).
23.2 Consent of Ropes & Gray (see Exhibit 5.1) (previously filed).
24.1 Power of Attorney (previously filed).
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1
(previously filed).
Item 17. Undertakings
a. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase and decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any
II-2
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
b. 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 the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the 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
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by 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, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the financial adjudication of such issue.
d. 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
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be a 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.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Post-Effective Amendment No. 2 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the Town of Canton, Commonwealth of Massachusetts.
Reebok International Ltd.
Dated: March 28, 2002
By: /s/ Kenneth I. Watchmaker
----------------------------------
Kenneth I. Watchmaker
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 2 to the Registration Statement has been signed
below by the following persons on behalf of the Registrant and in the
capacities and on the date indicated.
/s/ Paul B. Fireman* /s/ Kenneth I. Watchmaker
_____________________________________
_____________________________________
Paul B. Fireman Kenneth I. Watchmaker
Chief Executive Officer and Chairman Executive Vice President and Chief
Financial Officer
/s/ Paul R. Duncan*
_____________________________________ /s/ Mannie L. Jackson*
_____________________________________
Paul R. Duncan
Director Mannie L. Jackson
Director
/s/ Richard G. Lesser*
_____________________________________ /s/ Geoffrey Nunes*
_____________________________________
Richard G. Lesser
Director Geoffrey Nunes
Director
/s/ Dorothy E. Puhy*
_____________________________________ /s/ Thomas M. Ryan*
_____________________________________
Dorothy E. Puhy
Director Thomas M. Ryan
Director
Dated: March 28, 2002
*By: /s/ Kenneth I. Watchmaker
-------------------------
Kenneth I. Watchmaker
Attorney-in-Fact
II-4
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
4.1 Indenture between the Company and State Street Bank and Trust
Company dated as of February 28, 2001 (previously filed).
4.2 Registration Rights Agreement dated as of February 28, 2001
between the Company and Credit Suisse First Boston Corporation
(previously filed).
5.1 Opinion of Ropes & Gray (previously filed).
12.1 Statement Regarding Computation of Ratios of Earnings to Fixed
Charges (filed herewith).
23.1 Consent of Ernst & Young LLP (filed herewith).
23.2 Consent of Ropes & Gray (see Exhibit 5.1) (previously filed).
24.1 Power of Attorney (previously filed).
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1
(previously filed).