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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 18)
THE UNITED STATES SHOE CORPORATION
(Name of Subject Company)
--------------
LUXOTTICA GROUP S.p.A.
LUXOTTICA ACQUISITION CORP.
(Bidders)
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COMMON SHARES, WITHOUT PAR VALUE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
912605102
(CUSIP Number of Class of Securities)
CLAUDIO DEL VECCHIO
44 HARBOR PARK DRIVE
PORT WASHINGTON, NEW YORK 11050
(516) 484-3800
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
WITH A COPY TO:
JONATHAN GOLDSTEIN
WINSTON & STRAWN
175 WATER STREET
NEW YORK, NEW YORK 10038
(212) 269-2500
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* $1,201,654,248
AMOUNT OF FILING FEE** $240,330.85
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* Pursuant to, and as provided by, Rule 0-11(d), this amount is based upon the
purchase of 50,068,927 Common Shares of the Subject Company and the
associated Rights at $24.00 cash per share, which is equal to the sum of (i)
the number of Shares outstanding as reported in the Quarterly Report on Form
10-Q of the Subject Company for the quarter ended October 29, 1994 and (ii)
the number of Shares subject to outstanding options as reported in the Annual
Report on Form 10-K of the Subject Company for the fiscal year ended January
29, 1994.
** 1/50 of 1% of Transaction Valuation.
X Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: $240,330.85
Form or Registration No.: Schedule 14D-1
Filing Party: Luxottica Group S.p.A.; Luxottica Acquisition Corp.
Date Filed: March 3, 1995
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Page 1 of 6 Pages
The Exhibit Index is located on Page 4
<PAGE>
Luxottica Group S.p.A. and Luxottica Acquisition Corp. hereby amend and
supplement their Tender Offer Statement on Schedule 14D-1, filed on March 3,
1995 (as amended, the "Schedule 14D-1"), with respect to the offer to purchase
all of the outstanding Common Shares, without par value, of The United States
Shoe Corporation, including the associated preference share purchase rights, as
set forth in this Amendment No. 18. Unless otherwise indicated, all capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Schedule 14D-1.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 4 is hereby amended to add the following:
(a)-(b) On April 19, 1995, Parent and Credit Suisse entered into a revised
commitment letter relating to the Facility (the "April 19 Commitment Letter").
The April 19 Commitment Letter generally restates the terms of the Commitment
Letter except that it (i) increases the amount of the Revolving Credit Facility
to $550 million (thereby increasing the aggregate amount of the Facility to
$1.55 billion) and (ii) contemplates that the price per Share to be paid
pursuant to the Offer and the Proposed Merger will be $28.00. The foregoing
description of the April 19 Commitment Letter is qualified in its entirety by
reference to the text of the April 19 Commitment Letter filed as Exhibit
(b)(2) hereto.
ITEM 10. ADDITIONAL INFORMATION
Item 10 is hereby amended to add the following:
(e) On April 20, 1995 Parent and the Company issued a joint press release
announcing that, when the Section 831 Meeting is convened on Friday, April 21,
1995, they will move jointly to adjourn the meeting to a later date to be
announced at the meeting. A copy of the joint press release is attached hereto
as Exhibit (a)(31) and is incorporated by reference herein.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
Item 11 is hereby amended and supplemented by adding the following exhibits:
(a)(31) --Text of Joint Press Release issued by Parent and the Company, dated
April 20, 1995.
(b)(2) --Commitment Letter, dated April 19, 1995, from Credit Suisse.
2
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
LUXOTTICA GROUP S.P.A.
Dated: April 20, 1995 By: /s/ Claudio Del Vecchio
..............................
Claudio Del Vecchio
Managing Director
LUXOTTICA ACQUISITION CORP.
Dated: April 20, 1995 By: /s/ Claudio Del Vecchio
..............................
Claudio Del Vecchio
President
3
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EXHIBIT INDEX
<TABLE><CAPTION>
EXHIBIT PAGE
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<S> <C> <C>
(a)(1) --Offer to Purchase, dated March 3, 1995.................................... *
(a)(2) --Letter of Transmittal..................................................... *
(a)(3) --Notice of Guaranteed Delivery............................................. *
(a)(4) --Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees........................................ *
(a)(5) --Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.............................................. *
(a)(6) --Guidelines for Certification of Taxpayer Identification Number on
Substitute
Form W-9.................................................................. *
(a)(7) --Summary Advertisement as published in The Wall Street Journal on March 3,
1995........................................................................ *
(a)(8) --Text of Press Release issued by Parent, dated March 3, 1995............... *
(a)(9) --Preliminary Proxy Statement dated March 6, 1995 of Luxottica Group S.p.A.
and Luxottica Acquisition Corp. for the Special Meeting of Shareholders
under Section 1701.831 of the Ohio Revised Code of The United States Shoe
Corporation, together with the form of Proxy relating thereto, as filed
with the Securities and Exchange Commission on March 6, 1995 and
incorporated herein by reference.
(a)(10) --Preliminary Solicitation Statement dated March 7, 1995 of Luxottica Group
S.p.A. and Luxottica Acquisition Corp. to call a Special Meeting of
Shareholders of The United States Shoe Corporation, together with the form
of Appointment of Designated Agents relating thereto, as filed with the
Securities and Exchange Commission on March 7, 1995 and incorporated
herein by reference.
(a)(11) --Text of Press Release issued by Parent, dated March 9, 1995............... *
(a)(12) --Acquiring Person Statement of Parent and the Purchaser, dated March 3,
1995, pursuant to Section 1701.831 of the Ohio Revised Code, filed with
the Securities and Exchange Commission March 10, 1995 as definitive
additional material pursuant to Section 14(a) of the Securities Exchange
Act of 1934, as amended, and incorporated herein by reference.
(a)(13) --Text of Press Release issued by Parent, dated March 10, 1995.............. *
(a)(14) --Text of Press Release issued by Parent, dated March 10, 1995.............. *
(a)(15) --Text of Press Release issued by Parent, dated March 14, 1995.............. *
(a)(16) --Text of Press Release issued by Parent, dated March 16, 1995.............. *
(a)(17) --Text of Press Release issued by Parent, dated March 17, 1995.............. *
(a)(18) --Text of Press Release issued by Parent, dated March 20, 1995.............. *
(a)(19) --Text of Press Release issued by Parent, dated March 21, 1995.............. *
(a)(20) --Definitive Proxy Statement dated March 21, 1995 of Luxottica Group S.p.A.
and Luxottica Acquisition Corp. for the Special Meeting of Shareholders
under Section 1701.831 of the Ohio Revised Code of The United States Shoe
Corporation, together with the form of proxy relating thereto, as filed
with the Securities and Exchange Commission on March 21, 1995 and
incorporated herein by reference.
(a)(21) --Text of Press Release issued by Parent, dated March 24, 1995.............. *
</TABLE>
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* Previously filed.
4
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<TABLE><CAPTION>
EXHIBIT PAGE
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<S> <C> <C>
(a)(22) --Text of Press Release issued by Parent, dated March 30, 1995.............. *
(a)(23) --Text of Press Release issued by Parent, dated March 30, 1995.............. *
(a)(24) --Letter to the Shareholders of The United States Shoe Corporation dated
March 28, 1995, to accompany the Definitive Proxy Statement dated March
21, 1995 of Luxottica Group S.p.A. and Luxottica Acquisition Corp. for the
Special Meeting of Shareholders under Section 1701.831 of the Ohio Revised
Code, as filed with the Securities and Exchange Commission on March 29,
1995 and incorporated herein by reference.
(a)(25) --Text of Press Release issued by Parent, dated March 31, 1995.............. *
(a)(26) --Text of Press Release issued by Parent, dated April 2, 1995............... *
(a)(27) --Text of Press Release issued by Parent, dated April 4, 1995 .............. *
(a)(28) --Letter to the Shareholders of The United States Shoe Corporation
dated April 12, 1995, delivered in connection with the solicitation
of proxies for the 831 Meeting, including an enclosure describing
certain recent developments, each as filed with the Securities and
Exchange Commission on April 13, 1995 and incorporated herein by
reference.
(a)(29) --Text of Press Release issued by Parent, dated April 14, 1995............. *
(a)(30) --Text of Joint Press Release issued by Parent and the Company, dated
April 16, 1995............................................................ *
(a)(31) --Text of Joint Press Release issued by Parent and the Company, dated
April 20, 1995............................................................
(b)(1) --Commitment Letter, dated March 2, 1995, from Credit Suisse................ *
(b)(2) --Commitment Letter, dated April 19, 1995, from Credit Suisse...............
(c)(1) --Proposed Confidentiality Agreement among Parent, the Purchaser and
the Company dated March 30, 1995 delivered by Parent's Counsel to
the Company on March 31, 1995............................................. *
(c)(2) --Executed Confidentiality Agreement among Parent, the Purchaser
and the Company dated March 31, 1995 ..................................... *
(g)(1) --Complaint Seeking Declaratory and Injunctive Relief filed in the United
States District Court for the Southern District of Ohio, Eastern Division,
on March 3, 1995, relating to the Ohio Take-Over Act, the Preference Share
Purchase Rights and the impairment of the voting rights of certain Shares
under Sections 1701.01(CC)(2) and 1701.831 of the Ohio Revised Code....... *
(g)(2) --First Amended Verified Complaint seeking Declaratory and Injunctive Relief
filed by Luxottica Group S.p.A., Luxottica Acquisition Corp. and
Avant-Garde Optics, Inc. in the United States District Court for the
Southern District of Ohio, Eastern Division, on March 6, 1995, relating to
the Ohio Take-Over Act, the Preference Share Purchase Rights and the
impairment of the voting rights of certain Shares under Sections
1701.01(CC)(2) and 1701.831 of the Ohio Revised Code........................ *
(g)(3) --Motion for Leave to File a Second Amended Complaint filed on March 10,
1995 by Luxottica Group S.p.A., Luxottica Acquisition Corp. and
Avant-Garde Optics, Inc. in the United States District Court for the
Southern District of Ohio, Eastern Division, in the action entitled
Luxottica Group S.p.A., et al. v. The United States Shoe Corporation, et
al. (C-2-95-244)............................................................ *
(g)(4) --Second Amended Verified Complaint seeking Declaratory and Injunctive
Relief filed by Luxottica Group S.p.A., Luxottica Acquisition Corp. and
Avant-Garde Optics, Inc. in the United States District Court for the
Southern District of Ohio, Eastern Division, on March 10, 1995, relating
to the Ohio Take-Over Act, the Preference Share Purchase Rights and the
impairment of the voting rights of certain Shares under Sections
1701.01(CC)(2) and 1701.831 of the Ohio Revised Code...................... *
(g)(5) --Motion of Plaintiff Avant-Garde Optics, Inc. for a Hearing and Order to
Show Cause filed on March 10, 1995 by Avant-Garde Optics, Inc. in the
United States District Court for the Southern District of Ohio, Eastern
Division, in the action entitled Luxottica Group S.p.A., et al. v. The
United States Shoe Corporation, et al. (C-2-95-244)....................... *
(g)(6) --Opinion and Order issued on March 16, 1995 by the United States District
Court for the Southern District of Ohio, Eastern Division, in the action
entitled Luxottica Group S.p.A., et al. v. The United States Shoe
Corporation, et al. (C-2-95-244)............................................ *
</TABLE>
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* Previously filed.
5
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<TABLE>
<CAPTION>
EXHIBIT PAGE
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<S> <C> <C>
(g)(7) --Answer of Defendants The United States Shoe Corporation, Joseph H.
Anderer, Philip E. Beekman, Gilbert Hahn, Jr., Roger L. Howe, Bannus B.
Hudson, Lorrence Kellar, Albert M. Kronick, Thomas Laco, Charles S.
Mechem, Jr., John L. Roy and Phyllis S. Sewell, and Counterclaim of
Defendant The United States Shoe Corporation Against Plantiffs for
Preliminary and Permanent Injunction for False and Misleading Statements
in SEC Filings and Tender Offer Materials, filed on March 22, 1995 by The
United States Shoe Corporation and Named Defendants in the United States
District Court for the Southern District of Ohio, Eastern Division, in the
action entitled Luxottica Group S.p.A., et al. v. The United States Shoe
Corporation, et al. (C-2-95-244)............................................ *
(g)(8) --Order issued on March 22, 1995 by the United States District Court for the
Southern District of Ohio, Eastern Division, in the action entitled
Luxottica Group S.p.A., et al. v. The United States Shoe Corporation, et
al. (C-2-95-244)............................................................ *
(g)(9) --Order issued on March 23, 1995 by the United States District Court for the
Southern District of Ohio, Eastern Division, in the action entitled
Luxottica Group S.p.A., et al.v. The United States Shoe Corporation, et
al. (C-2-95-244)............................................................ *
(g)(10) --Order issued on March 23, 1995 by the United States District Court for the
Southern District of Ohio, Eastern Division, in the action entitled
Luxottica Group S.p.A., et al.v. The United States Shoe Corporation, et
al. (C-2-95-244)............................................................ *
(g)(11) --Motion for Leave to File a Third Amended Complaint filed on March 24, 1995
by Luxottica Group S.p.A., Luxottica Acquisition Corp. and Avant-Garde
Optics, Inc. in the United States District Court for the Southern District
of Ohio, Eastern Division, in the action entitled Luxottica Group S.p.A.,
et al. v. The United States Shoe Corporation, et al. (C-2-95-244)......... *
(g)(12) --Answer of Defendants The United States Shoe Corporation, Joseph H.
Anderer, Philip E. Beekman, Gilbert Hahn, Jr., Roger L. Howe, Bannus B.
Hudson, Lorrence Kellar, Albert M. Kronick, Thomas Laco, Charles S.
Mechem, Jr., John L. Roy and Phyllis S. Sewell, and Amended Counterclaim
of Defendant The United States Shoe Corporation Against Plantiffs for
Preliminary and Permanent Injunction for False and Misleading Statements
in SEC Filings and Tender Offer Materials, filed on March 30, 1995 by The
United States Shoe Corporation and Named Defendants in the United States
District Court for the Southern District of Ohio, Eastern Division, in the
action entitled Luxottica Group S.p.A., et al. v. The United States Shoe
Corporation, et al. (C-2-95-244)......................................... *
(g)(13) --Amended Answer of Defendants The United States Shoe Corporation, Joseph H.
Anderer, Philip E. Beekman, Gilbert Hahn, Jr., Roger L. Howe, Bannus B.
Hudson, Lorrence Kellar, Albert M. Kronick, Thomas Laco, Charles S.
Mechem, Jr., John L. Roy and Phyllis S. Sewell to Third Amended
Complaint and Amended Counterclaim of Defendant The United States
Shoe Corporation Against Plantiffs for Preliminary and Permanent
Injunction for Misstatements and Omissions in SEC Filings and
Tender Offer Materials, filed on April 6, 1995 by The United
States Shoe Corporation and Named Defendants in the United States
District Court for the Southern District of Ohio, Eastern
Division, in the action entitled Luxottica Group S.p.A., et al. v.
The United States Shoe Corporation, et al. (C-2-95-244).................. *
(g)(14) --Agreed Pre-Hearing Order entered by the District Court on April 7, 1995.. *
(g)(15) --Reply to Second Amended Counterclaim filed by the Luxottica Plaintiffs
on April 11, 1995 in the District Court.................................. *
</TABLE>
6
Exhibit (a)(31)
LUXOTTICA
G R O U P
FOR IMMEDIATE RELEASE
For more information, contact
Mark Harnett, MacKenzie Partners, Inc. Information Agent, 212-929-5877
Felicia Vonella, Dewe Rogerson Inc., at 212-688-6840
Robert M. Burton, Director of Corporate Communications, The U.S. Shoe
Corporation, 513-527-7471
THE UNITED STATES SHOE CORPORATION AND LUXOTTICA GROUP WILL
-----------------------------------------------------------
ADJOURN 831 MEETING TO LATER DATE
---------------------------------
(Milan, Italy and Cincinnati, Ohio, April 20, 1995) -- The United States Shoe
Corporation (NYSE:USR) and Luxottica Group S.p.A. (NYSE:LUX) today announced
that, when the special meeting of shareholders to approve Luxottica's proposed
acquisition of US Shoe shares under Ohio law is convened on Friday, April 21,
they will move jointly to adjourn the meeting to a later date, which date will
be announced at the meeting on April 21.
In accordance with the provisions of applicable Ohio law, US Shoe shareholders
of record at the close of business on Tuesday, March 21, 1995 will continue to
be entitled to vote at the adjourned meeting.
###
Exhibit (b)(2)
[Letterhead of Credit Suisse]
April 19, 1995
Luxottica Group S.p.A.
Via Valcozzena 10
32021 Agordo (Belluno)
Italy
Attention: Roberto Chemello
Chief Financial Officer
re Senior Secured Financing
----------------------------
Gentlemen:
You have advised Credit Suisse ("CS") that (x) a
newly-formed indirect wholly-owned subsidiary of Luxottica
Group S.p.A. ("Luxottica Group"), which subsidiary ("Newco
1") shall be incorporated under the laws of Delaware,
intends to acquire, through another newly-formed indirect
wholly-owned Delaware subsidiary of Luxottica Group
("Bidco"), the issued and outstanding shares of common
stock (the "Shares") (calculated on a fully-diluted basis)
of The United States Shoe Corporation ("Target") by means
of a takeover bid (the "Tender Offer") and (y) as soon as
practicable after the purchase of the Shares under the Tender
Offer, Bidco shall effect a merger pursuant to which Bidco
will be merged with and into Target (the "Merger"), and as a
result of the Merger, Target shall become an indirect wholly-owned
subsidiary of Luxottica Group. The Tender Offer and the
Merger are referred to herein as the "Acquisition." You have
advised CS that the price per share to be paid by Luxottica Group
for each outstanding share of the Target pursuant to the Tender
Offer and the Merger shall be $28.00. CS understands that (i)
Avant-Garde Optics, Inc. ("Avant-Garde"), currently a direct
wholly-owned subsidiary of Luxottica Group, will prior to (or
concurrently with) the consummation of the Tender Offer become
an approximately 99.9% subsidiary of Newco 1, with the remaining
equity interest in Avant-Garde of approximately .1% to be owned by
Luxottica Group and (ii) Bidco's direct parent company will
be Avant-Garde.
CS further understands that senior secured bank
financing (the "Senior Secured Financing") is required by
Newco 1 in connection with the Acquisition, and that such
Senior Secured Financing will be in the form of (i) a term
loan facility in the
<PAGE>
amount of U.S. $1.0 billion (the "Term Loan Facility") and
(ii) a revolving credit facility in the amount of U.S. $550
million (the "Revolving Credit Facility" and, together with
the Term Loan Facility, the "Credit Facility"). A summary
of certain of the terms and conditions of the Credit
Facility are set forth in the attached Summary of Certain
Terms and Conditions (the "Term Sheet").
CS also understands that the proceeds from the
Credit Facility shall be used to finance the acquisition of
Shares pursuant to the Tender Offer, to refinance existing
indebtedness of Target after giving effect to the Merger,
to pay consideration in connection with the Merger, to pay
related fees and expenses in connection with the
Acquisition and to provide for the working capital and
general corporate needs of Newco 1 and its subsidiaries.
CS further understands that the Credit Facility will be (i)
guaranteed on a joint and several basis by Luxottica Group,
Luxottica S.p.A. and La Meccanoptica Leonardo S.p.A. (the
"Luxottica Guarantors"), (ii) guaranteed on a joint and
several basis by all subsidiaries of Newco 1, (iii)
guaranteed on a joint and several basis by all other U.S.
subsidiaries of Luxottica Group and (iv) secured by (x)
100% of the capital stock of Newco 1 and Avant-Garde and
(y) substantially all of the assets of Newco 1 and its
subsidiaries.
CS is pleased to advise you of its commitment to
provide, subject to the terms and conditions contained in
this letter and in the Term Sheet, 100% of the Credit
Facility. In connection with the Senior Secured Financing,
CS shall act as sole administrative agent. CS reserves the
right, prior to or after execution of the definitive credit
documentation for the Credit Facility, to syndicate all or
part of its commitments to one or more financial
institutions or other "accredited investors" (as defined in
Regulation D of the Securities Act of 1933, as amended)
(collectively, the "Lenders" and each a "Lender") that will
become parties to such definitive credit documentation
pursuant to a syndication to be managed by CS. You agree
actively to assist CS in achieving a syndication that is
satisfactory to CS and to you. Such syndication will be
accomplished by a variety of means, including direct
contact during the syndication between your senior
management and advisors and the proposed Lenders. Without
limiting our commitment as set forth above, your assistance
in connection with the syndication will also include, if CS
so requests, your restructuring, in a manner mutually
acceptable to CS and you, the component facilities of the
Senior Secured Financing if, in our judgment, such
restructuring would result in a successful syndication,
provided that in no event will the aggregate amount of the
Credit Facility be reduced or the aggregate pricing be
increased. To assist CS in its syndication efforts, you
hereby agree (i) to provide and cause your advisors to
provide CS and the other Lenders upon request with all
reasonable information deemed necessary by us to complete
syndication, including but not limited to, information and
evaluations prepared by you, (ii) to assist CS upon request
in the preparation of an Information Memorandum to be used
in connection with the syndication of the Senior Secured
Financing, including making available your officers from
time to time to attend and make presentations regarding the
business and prospects of Luxottica Group and its
subsidiaries and Target and its subsidiaries, as
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<PAGE>
appropriate, at a meeting or meetings of Lenders or
prospective Lenders and (iii) to use your reasonable
efforts to ensure that the syndication benefits from your
existing bank relationships.
As you are aware, we have reviewed certain
historical and projected pro forma financial statements of
Luxottica Group and its subsidiaries prior to giving effect
to the Acquisition, and of Newco 1 and its subsidiaries
after giving effect to the Acquisition and are satisfied
with the results thereof. If additional information comes
to our attention which we reasonably believe is materially
negative information with respect to the business,
property, assets, operations, liabilities, condition
(financial or otherwise) or prospects of the Acquisition,
Luxottica Group and its subsidiaries or Target and its
subsidiaries, we may, in our sole discretion, suggest
alternative financing amounts or structures that assure
adequate protection for the Lenders or decline to provide
or participate in the proposed financing.
CS's commitments in respect of the Senior Secured
Financing are also expressly subject to (i) the absence of
any material adverse change after the date hereof in the
market for syndicated facilities similar in nature to the
Senior Secured Financing and the absence of any material
disruption of or a material adverse change in financial,
banking or capital markets generally, in each case as
determined by us in our sole discretion and (ii) the absence,
prior to and during the syndication of the Credit Facility,
of any competing bank credit facilities of Luxottica Group
and its subsidiaries being arranged, offered or placed in
connection with the Acquisition.
You hereby represent and covenant that (i) all
information, other than the Projections (as defined below),
which has been or is hereafter made available to CS or the
other Lenders by you or any of your representatives in
connection with the transactions contemplated hereby (the
"Information") is and will be complete and correct in all
material respects and does not and will not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained
therein not materially misleading (it being understood by
CS that any representation by you as to any information
relating to Target and its subsidiaries is made to your
best knowledge and is based solely on publicly available
information) and (ii) all financial projections concerning
Luxottica Group and its subsidiaries and Target and its
subsidiaries that have been or are hereafter made available
to CS or the other Lenders by you in connection with the
transactions contemplated hereby (the "Projections") have
been or will be prepared in good faith based upon
reasonable assumptions. You agree to supplement the
Information and the Projections from time to time until the
closing date of the Tender Offer so that the representation
and warranty in the preceding sentence is true and correct
on such closing date. You acknowledge that in arranging
and syndicating the Senior Secured Financing, CS will be
-3-
<PAGE>
using and relying on the Information and Projections
without independent verification thereof. In issuing this
commitment and undertaking, as the case may be, CS is
relying on the accuracy of the information furnished by you
or on your behalf.
Whether or not the transactions contemplated by
this letter are consummated, you hereby agree to indemnify
and hold harmless CS and each of the other Lenders, each
affiliate thereof (including CS First Boston Corporation)
and each director, officer, employee, agent or
representative thereof (each an "indemnified person") in
connection with any losses, claims, damages, liabilities or
other expenses to which such indemnified persons may become
subject, insofar as such losses, claims, damages,
liabilities (or actions or other proceedings commenced or
threatened in respect thereof) or other expenses arise out
of or in any way relate to or result from the Acquisition,
this letter (as used in this paragraph, "this letter" shall
include any previous letter or letters dealing with the subject
matter hereof), or the extension of the Senior Secured
Financing contemplated by this letter, or in any way arise
from any use or intended use of this letter or the proceeds
of any of the Senior Secured Financing contemplated by this
letter, and you agree to reimburse each indemnified person
for any legal or other expenses incurred in connection with
investigating, defending or participating in any such loss,
claim, damage, liability or action or other proceeding
(whether or not such indemnified person is a party to any
action or proceeding out of which indemnified expenses
arise), provided that you shall have no obligation
hereunder to indemnify any indemnified person for any loss,
claim, damage, liability or expense which resulted primar-
ily from the gross negligence or willful misconduct of such
indemnified person. This letter is furnished for your
benefit, and may not be relied upon by any other person or
entity. Neither CS nor any other Lender shall be respon-
sible or liable to you or any other person for
consequential damages which may be alleged as a result of
this letter.
In addition, whether or not the transactions
contemplated by this letter are consummated, you hereby
agree to pay upon request but not prior to the earlier of
(i) any termination of the commitments under this letter
and (ii) the Closing Date, all out-of-pocket costs and
expenses (including the reasonable fees and expenses of
U.S., Italian and such other local counsel as may be
retained by CS in connection with the transactions
contemplated hereby) incurred by CS and its affiliates in
connection with the preparation, execution and delivery of
this letter and the Credit Facility and our due diligence
and syndication efforts in connection therewith (which
costs and expenses shall include, but not be limited to,
printing, distribution, transportation, computer,
duplication, audit, insurance, third party consultants
(which, if retained, shall be done in consultation with
you), bank meetings, UCC, judgment, tax lien and similar
searches and recording and filing fees).
CS reserves the right to employ the services of
its affiliates (including CS First Boston Corporation) in
providing the services contemplated by this letter and to
allocate, in whole or in part, to such affiliates certain
fees payable to CS in such manner as CS and its affiliates
may agree in their sole discretion. You acknowledge that
CS may share with any of its affiliates, and such
affiliates may share with CS, any information relating
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<PAGE>
to Luxottica Group and its affiliates and subsidiaries or
Target and its affiliates and subsidiaries (including,
without limitation, any non-public customer information
regarding the creditworthiness of such entities) or the
Acquisition, subject to CS's customary treatment of
customer confidential information. You should also be
aware that CS or its respective affiliates may be providing
financing or other services to parties whose interests may
conflict with yours. However, be assured that, consistent
with its long-standing policies to hold in confidence the
affairs of our customers, CS and its affiliates will not
furnish information obtained from you to any of our other
customers.
The provisions of the immediately preceding three
paragraphs shall survive any termination of this letter.
CS's willingness to provide the Senior Secured
Financing as set forth above will terminate on July 3,
1995, if definitive documentation evidencing the Senior
Secured Financing, satisfactory in form and substance to
CS, shall not have been entered into prior to such date and
the Tender Offer shall not have been consummated. You
shall have the right, at any time upon written notice to
CS, to terminate the commitments of CS under this letter.
You are not authorized to disclose this letter or
its contents to any other person or entity other than your
legal and financial advisors in connection with your
evaluation of this letter until such time as you have
accepted this letter and the accompanying fee letter as
provided in the immediately succeeding paragraph. You
agree that this letter is for your confidential use only
and will not be disclosed by you to any person or entity
other than your accountants, attorneys and other advisors,
and then only in connection with the Credit Facility and on
a confidential basis, except that, following your
acceptance of this letter, you may make public disclosure
of the existence and amount of CS's commitment, you may
file a copy of this letter in any public record in which it
is required by law to be filed and you may make such other
public disclosures of the terms and conditions hereof as
you are required by law, in the opinion of your counsel, to
make.
Upon your execution and delivery of this letter and
the related fee letter in accordance with the immediately
succeeding paragraph hereof, this letter and the provisions
contained herein shall supersede and replace our previous
financing letter addressed to you and dated March 2, 1995 with
respect to the Acquisition.
This letter and the rights and obligations of the
parties hereunder shall be construed in accordance with and
governed by the law of the State of New York. You hereby
irrevocably waive all right to trial by jury of any
actions, proceedings or counterclaims (whether based on
contract, tort or otherwise) arising out of or relating to
this letter, the transactions contemplated hereby or the
actions of CS in negotiation, performance or enforcement
hereof. If you are in agreement with the foregoing, please
sign and return to us (including by way of facsimile) the
enclosed copy of this letter, together with a copy of the
fee letter enclosed herewith and any amounts then payable
thereunder, no later than 11:59 P.M. (New York time) on
April 20, 1995. If you decide not to take the foregoing
actions, you are to return all copies of this letter and
such fee letter to CS as promptly as
-5-
<PAGE>
possible and in such event you are not authorized to
disclose this letter or the contents thereof to any other
party (except as may be required by applicable law or an
order of a court of competent jurisdiction).
Very truly yours,
CREDIT SUISSE
By /s/ Peter R. Hardin
---------------------------
Peter R. Hardin
Title: Member of Senior Management
By /s/ Kathleen D. O'Brien
---------------------------
Kathleen D. O'Brien
Title: Member of Senior Management
Agreed to and Accepted this
19th day of April 1995
LUXOTTICA GROUP S.p.A.
By /s/ Claudio Del Vecchio
-----------------------
Title:
-6-
<PAGE>
SUMMARY OF CERTAIN TERMS
AND CONDITIONS*
---------------------------------
I. Description of the Credit Facility
----------------------------------
A. Description of the Term Loan Facility
-------------------------------------
Amount: $1.0 billion.
Maturity: The sixth anniversary of the date of
initial borrowing under the Senior
Secured Financing, which date shall be
the date on which the Tender Offer is
consummated (the "Closing Date"). The
loans under the Term Loan Facility
("Term Loans") shall amortize quarterly
on the dates, and in the amounts, set
forth below:
Date Amount
---- ------
12/31/95 $25 million
3/31/96 $25 million
6/30/96 $25 million
9/30/96 $25 million
12/31/96 $25 million
3/31/97 $25 million
6/30/97 $25 million
9/30/97 $25 million
12/31/97 $25 million
3/31/98 $25 million
6/30/98 $25 million
9/30/98 $25 million
12/31/98 $25 million
3/31/99 $25 million
6/30/99 $30 million
9/30/99 $30 million
12/31/99 $30 million
3/31/2000 $25 million
--------------------
* All capitalized terms used herein but not defined herein
shall have the meanings provided in the Commitment Letter
to which this summary is attached.
<PAGE>
6/30/2000 $25 million
9/30/2000 $25 million
12/31/2000 $25 million
3/31/2001 $25 million
6/30/2001 $10 million
On a date (to be selected by the Borrower,
such date, the "Additional Amortization Date")
within 18 months following the Closing Date
(or if no such date is selected, on the 18th
month anniversary of the Closing Date), the
Borrower also shall be required to repay an
additional $425 million of Term Loans.
In the event that less than $1.0
billion of Term Loans are incurred, the
amortization payments set forth
above (including as an amortization payment,
for all purposes herein the payment required
on the Additional Amortization Date) will be
reduced on a pro rata basis.
--- ----
Use of Proceeds: Term Loans shall be contributed as
a cash equity contribution by the
Borrower (as defined below) to
Avant-Garde, which in turn shall
immediately contribute such amount
as a cash equity contribution to
Bidco and shall only be utilized
by Bidco (i) to finance the
Acquisition and (ii) to pay fees
and expenses incurred in con-
nection with the Acquisition.
Availability: Term Loans may only be incurred on
(i) the Closing Date and (ii) the
date that the Merger is
consummated. No amount of Term
Loans once repaid may be rebor-
rowed.
B. Description of the Revolving Credit Facility
--------------------------------------------
Amount: $550 million. A portion (to be
determined) of the Revolving Credit
Facility may be utilized to issue
commercial and standby letters of
credit (collectively, the "Letters of
Credit") to support specified
obligations of the Borrower and its
subsidiaries reasonably acceptable to
the Administrative Agent. The
Revolving Credit Facility will provide
protective provisions for the Lender
issuing the Letters of Credit and
making the Swingline Loans (as defined
below) in the event that any other
Lender cannot meet its obligations
thereunder as a result of such Lender
being taken over by any regulatory
authority or agency.
CS, in its individual capacity, shall,
if requested by the Borrower, make
loans (the "Swingline Loans", and
together with the Revolving Loans (as
defined below) and the Term Loans, the
"Loans") provided that such Swingline
Loans (i) shall be maintained at all
times as Base Rate Loans (as
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<PAGE>
described below), (ii) shall not
exceed in the aggregate at any time
outstanding an amount to be determined
and (iii) may only be incurred if there
is sufficient availability under the
Revolving Credit Facility at such time
(with Swingline Loans being treated as
an incurrence of Revolving Loans for
purposes of determining availability
pursuant to the Revolving Credit
Facility, but not for purposes of cal-
culating Commitment Fees as described
below). The Credit Facility shall
contain mechanisms which allow CS to
require that the Lenders, in proportion
to their respective commitments, fund
borrowings of Revolving Loans to
refinance any outstanding Swingline
Loans, regardless of whether any
conditions to borrowing could then be
met.
Maturity: The sixth anniversary of the Closing
Date, with all Loans made under the
Revolving Credit Facility (the
"Revolving Loans"), including all
Swingline Loans, to be repaid in full
on such date and all Letters of Credit
to expire on or before such date.
Use of Proceeds: The proceeds of Revolving Loans
and Swingline Loans shall be
utilized for the Borrower's and
its subsidiaries' general
corporate and working capital
requirements, provided that a
portion (to be determined), and
only such portion, of the
Revolving Credit Facility may be
utilized for the same purposes as
Term Loans and to refinance no
more than approximately $140
million of existing indebtedness
of Target after giving effect to
the Merger.
Availability: Revolving Loans and Swingline
Loans may be borrowed, repaid and
reborrowed on and after the
Closing Date, provided that (i)
--------
Revolving Loans and Swingline
Loans may only be incurred after
the Term Loan Facility has been
(or concurrently is being) fully
utilized, (ii) Revolving Loans and
Swingline Loans incurred for
purposes other than to finance the
purchase of Shares pursuant to the
Tender Offer and to pay fees and
expenses incurred in connection
with the Acquisition may only be
incurred after (or concurrently
with) the consummation of the
Merger and (iii) for a period of
30 consecutive days (to be
determined) during each twelve
month period after the Closing
Date no more than a
-3-
<PAGE>
certain amount (to be determined) of
Revolving Loans and Swingline Loans may
be outstanding.
Drawdowns: Drawdowns of Revolving Loans will
be available in minimum amounts of
$10 million with additional
increments of $1 million.
Drawdowns of Swingline Loans will
be available in minimum amounts of
$1 million. Swingline Loans may be
drawn down on same day notice,
Revolving Loans maintained as Base
Rate Loans may be drawn down on
one business day's prior notice,
Revolving Loans maintained as
Eurodollar Loans may be drawn down
on three business days' prior
notice and Letters of Credit may
be issued on five business days'
prior notice (or such shorter
period of time as may be
acceptable to the issuing Lender).
II. Terms Applicable to the
Term Loan Facility and the
Revolving Credit Facility
----------------------------
Borrower: Newco 1 (the "Borrower").
Administrative Credit Suisse ("CS").
Agent:
Lenders: A syndicate of lenders (the "Lenders")
formed by CS.
Guaranties: Luxottica Group and the other
Luxottica Guarantors, all direct
and indirect subsidiaries of the
Borrower and all other U.S.
subsidiaries of Luxottica Group
(each a "Guarantor" and,
collectively, the "Guarantors")
shall be required to provide an
unconditional guaranty of all
amounts owing under the Credit
Facility (the "Guaranties"),
subject to exceptions satisfactory
to the Administrative Agent.
The Guaranties shall contain terms and
conditions satisfactory to the
Administrative Agent, including, in the
case of Luxottica Group and the other
Luxottica Guarantors, a negative pledge
(with appropriate exceptions to be
determined). The Guaranty given by
each Luxottica
-4-
<PAGE>
Guarantor shall provide that (i) in the
case of a payment default under the
Credit Facility, an acceleration based
upon a payment default or a bankruptcy
or insolvency of such Luxottica
Guarantor or the Borrower, the Lenders
may immediately call on such Guaranty
and (ii) in all other cases, the
Lenders may call on such Guaranty only
after making formal written demand (to
the extent such demand is permitted to
be made under applicable law) on the
Borrower and all U.S. Guarantors and
such demand has not been fully complied
with within a specified number of days.
Security: All amounts owing under the Credit
Facility (and all obligations under the
Guaranties) will be secured by (x) a
first priority perfected pledge of (A)
all capital stock of the Borrower and
Avant-Garde and (B) all capital stock
and notes owned by the Borrower and its
subsidiaries (including all Shares
purchased in the Tender Offer and all
shares of capital stock of Target after
the Merger) as well as all notes and
capital stock owned by all other U.S.
subsidiaries of Luxottica Group and (y)
a first priority perfected security
interest in substantially all other
assets (including receivables,
contracts, contract rights, securities,
patents, trademarks, other intellectual
property, inventory, equipment and real
estate (other than leasehold
interests)) owned by the Borrower and
its subsidiaries and by all other U.S.
subsidiaries of Luxottica Group,
subject (in each case) to exceptions
satisfactory to the Administrative
Agent. The Credit Facility will also
be secured by a negative pledge on
substantially all assets of Luxottica
Group and its subsidiaries, including
the capital stock of Luxottica Group's
non-U.S. subsidiaries.
All documentation evidencing the
security required pursuant to the
immediately preceding paragraph shall
be in form and substance satisfactory
to the Administrative Agent, and shall
effectively create first priority
security interests in the property
purported to be covered thereby, with
such exceptions as are acceptable to
the Administrative Agent in its sole
discretion.
Interest Rates: At the option of the
Borrower, Loans under the
Credit Facility may be
maintained from time to time
as (x) Base
-5-
<PAGE>
Rate Loans which shall bear interest at
the Applicable Margin in excess of the
Base Rate in effect from time to time
or (y) except for Swingline Loans,
Eurodollar Loans which shall bear
interest at the Applicable Margin in
excess of the Eurodollar Rate as
determined by three reference Lenders
for the respective interest period.
"Base Rate" shall mean the higher of
(x) 1/2 of 1% in excess of the Federal
Reserve reported certificate of deposit
rate and (y) the rate that the
Administrative Agent announces from
time to time as its base rate, as in
effect from time to time.
"Applicable Margin" for the Loans shall
mean a percentage per annum equal to
(x) in the case of Base Rate Loans,
1.00% and (y) in the case of Eurodollar
Loans, 2.00%, provided that the
foregoing percentages shall be subject
to an adjustment (upward or downward)
(as has been agreed to) during such
times as (i) the ratio of Total Debt to
EBITDA (to be defined) and the ratio of
EBITDA to Interest Expense (to be
defined) achieve certain thresholds as
has been agreed to and (ii) no default
or event of default under the Credit
Facility exists.
Interest periods of 1, 2, 3, 6 and,
subject to availability by all Lenders,
9 and 12 months shall be available in
the case of Eurodollar Loans.
The Credit Facility shall include the
standard protective provisions for such
matters as defaulting banks, capital
adequacy, increased costs, reserves,
funding losses, illegality and with-
holding taxes.
Interest in respect of Base Rate Loans
shall be payable quarterly in arrears
on the last business day of each
calendar quarter. Interest in respect
of Eurodollar Loans shall be payable in
arrears at the end of the applicable
interest period and every three months
in the case of interest periods in
excess of three months. Interest will
also be payable at the time of repay-
ment of any Loans and at maturity. All
interest on Base Rate Loans and
commitment fee and other fee
calculations shall be based on a
365/366-day year and actual
-6-
<PAGE>
days elapsed. All interest on
Eurodollar Loans shall be based on a
360-day year and actual days elapsed.
Default Interest: Overdue principal, interest and
other amounts shall bear interest
at a rate per annum equal to the
greater of (i) the rate which is
2% in excess of the rate otherwise
applicable to Base Rate Loans from
time to time and (ii) the rate
which is 2% in excess of the rate
then borne by such borrowings.
Such interest shall be payable on
demand.
Voluntary Voluntary prepayments may be made
Prepayments: at any time without premium or penalty,
provided that voluntary prepayments of
Eurodollar Loans made on a date
other than the last day of an interest
period applicable thereto shall be
subject to customary breakage costs.
Voluntary prepayments of Term Loans
shall be applied to reduce future
scheduled amortization payments on a
pro rata basis (based on the amount of
--- ----
remaining amortization payments).
Mandatory Repay- Mandatory repayments of Term
ments: Loans to be required from (a) 100% of
the net proceeds from asset sales by
Luxottica Group and its subsidiaries
(including the Borrower and its
subsidiaries) (other than certain
ordinary course of business exceptions
to be mutually agreed upon), (b)
100% of the net proceeds from issuances
of debt (with appropriate exceptions to
be mutually agreed upon) by Luxottica
Group and its subsidiaries (including the
Borrower and its subsidiaries), (c) 100%
of the net proceeds from equity
issuances or capital contributions by
(or to) Luxottica Group and its
subsidiaries (including the Borrower and
its subsidiaries) (with appropriate
exceptions to be mutually agreed upon),
(d) 75% of annual excess cash flow of
Luxottica Group and its subsidiaries
(including the Borrower and its
subsidiaries) (the definition of which
will be mutually agreed upon) and (e)
100% of the net proceeds from insurance
recovery events by Luxottica Group and
its subsidiaries (including the Borrower
and its subsidiaries) (subject to certain
rights of replacement). The percentage
set forth in clause (d) above will be
subject to reduction based on financial
performance and certain other criteria
(all in a manner to be mutually agreed
upon).
-7-
<PAGE>
All mandatory repayments of Term Loans
will be applied to reduce future
scheduled amortization payments on a
pro rata basis (based on the amount of
--- ----
remaining amortization payments),
provided that the net sale proceeds
from the sale of the Footwear Division
and the Apparel Division, to the extent
that such sales occur on or before
the Additional Amortization Date,
will be first applied to the
amortization payment due on the Additional
Amortization Date. After the Term Loans
have been repaid in full, the amounts
referred to in clauses (a)-(e) above shall
apply to permanently reduce the commitments
under the Revolving Credit Facility.
In addition, in the event that the
Merger does not occur within 120 days
following the Closing Date, the
Borrower shall be required to repay all
outstanding Loans and all commitments
shall terminate.
Commitment Fees: 1/2 of 1% per annum of the
unutilized total commitments under
the Credit Facility, as in effect
from time to time, commencing on
the Closing Date to and including
the termination of the Credit
Facility, payable quarterly in
arrears and upon the termination
of the Credit Facility, provided
that the Commitment Fee shall be
subject to a reduction (as has
been agreed to) based on the same
criteria as the Applicable Margins
are subject to reduction.
Letter of Credit The equivalent of the Applicable
Fees: Margin (as in effect from
time to time) for Eurodollar Loans
on the aggregate outstanding
stated amount of Letters of
Credit.
Administrative The Administrative Agent and the
Agent/Lender Fees: Lenders shall receive such
fees as have been separately agreed upon.
Conditions Those conditions precedent which
Precedent: are usual and customary for these types
of facilities, and such additional
conditions precedent as are appropriate
under the circumstances, including, but
not limited to:
A. To the
Closing Date
------------ (i) The Tender Offer
documentation (collectively,
the "Tender Offer Materials")
shall be in form and
-8-
<PAGE>
substance satisfactory to the
Administrative Agent and the
Required Lenders (as hereinafter
defined) (including, without
limitation, the price paid for
shares of Target, the
minimum share tender condition,
revocation (or action equivalent
thereto) of Target's shareholders'
rights program, if any, and any
other conditions contained in the
offer to purchase) and shall be in
full force and effect, all
material conditions precedent
thereunder to the consummation of
the Tender Offer shall have been
satisfied (and not waived), and
any amendment to the Tender Offer
Materials shall be satisfactory in
form and substance to the
Administrative Agent and the
Required Lenders. The Tender
Offer shall have been consummated
after the receipt of all necessary
governmental, regulatory and third
party approvals and Bidco shall
have purchased a sufficient number
of Shares of the Target to effect
the Merger without any affirmative
vote or approval of any other
person or entity. Any state anti-
takeover law, if any, regulating
the Acquisition shall have been
complied with or shall have been
determined by the Administrative
Agent and the Required Lenders to
be invalid or inapplicable to the
Tender Offer and the Merger. At
the time of the consummation of
the Tender Offer, neither the
fair price provisions under
applicable Ohio law nor the
fair price provisions of Target's
articles of incorporation shall
require a higher price be
paid for shares of Target in the Merger
than that paid in the Tender Offer.
(ii) If a definitive merger agreement with
respect to the Acquisition shall have been
entered into, such merger
agreement shall be in form and
substance satisfactory to the
Administrative Agent and the
Required Lenders and shall be in
full force and effect. Any
consent of the shareholders of the
Borrower or Bidco which may be
required to authorize the Merger
shall be obtained.
(iii) After giving effect to the
consummation of the Tender
Offer and the repayment of no
more than
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<PAGE>
approximately $140 million of
existing indebtedness of Target,
Luxottica Group and its
subsidiaries (including the
Borrower and its subsidiaries)
shall have no indebtedness other
than (x) under the Credit
Facility, (y) no more than
approximately $50 million of
existing indebtedness of Luxottica
Group and its non-U.S.
subsidiaries and (z) such other
indebtedness as may be acceptable
to the Administrative Agent and
the Required Lenders.
(iv) The Borrower shall own directly
approximately 99.9% of the capital
stock of Avant-Garde, with such
ownership to be accomplished
pursuant to a transaction in form
and substance satisfactory to the
Administrative Agent and the
Required Lenders.
(v) The documentation evidencing the
Credit Facility (the "Credit
Documents") shall have been
executed and delivered reflecting
the terms and conditions set forth
in this Summary of Certain Terms
and Conditions and shall otherwise
be in form and substance
satisfactory to the Administrative
Agent and the Required Lenders and
all conditions to the making of
the Loans set forth therein shall
have been satisfied or waived on
or prior to the date of funding.
(vi) No litigation by any entity
(private or governmental) shall be
pending with respect to the
Acquisition, the Senior Secured
Financing or any documentation
executed in connection therewith
or which the Administrative Agent
or the Lenders representing at
least a majority of the aggregate
amount of the commitments (the
"Required Lenders") shall
reasonably determine could have a
materially adverse effect on the
business, assets, liabilities,
condition (financial or otherwise)
or prospects of Luxottica Group
and its subsidiaries, the Borrower
and its subsidiaries or Target and
its subsidiaries.
-10-
<PAGE>
(vii) All necessary governmental,
regulatory and third party
approvals in connection with
the Tender Offer, the
transactions contemplated by
the Credit Facility and
otherwise referred to herein
shall have been obtained and
remain in effect, and all
applicable waiting periods
shall have expired without
any action being taken by any
competent authority which
restrains, prevents, or
imposes materially adverse
conditions upon, the consum-
mation of the Tender Offer or
the Merger or the incurrence
of Loans. Additionally,
there shall not exist any
judgment, order, injunction
or other restraint
prohibiting or imposing
materially adverse conditions
upon, or materially delaying,
or making economically
unfeasible, the purchase of
Shares pursuant to the Tender
Offer or the consummation of
the Acquisition.
(viii) All costs, fees, expenses
(including, without
limitation, legal fees and
expenses) and other
compensation contemplated
hereby payable to the
Administrative Agent and the
Lenders shall have been paid
to the extent due.
(ix) Since March 2, 1995 nothing
shall have occurred, nor shall the
Administrative Agent or the
Lenders become aware of any facts
not previously known, which the
Administrative Agent or the
Required Lenders shall determine
could reasonably be expected to
have a material adverse effect on
the business, operations,
property, assets, liabilities,
conditions (financial or
otherwise) or prospects of
Luxottica Group and its
subsidiaries, the Borrower and its
subsidiaries or Target and its
subsidiaries.
(x) During the period from March 2,
1995 through the Closing Date,
Luxottica Group and its
subsidiaries shall have operated
their respective businesses in the
ordinary course and Target and its
subsidiaries shall have operated
their respective businesses in the
ordinary course and shall not have
sold any substantial part of any
of the three main operating
-11-
<PAGE>
divisions other than the sale of
the Footwear Division and the
Apparel Division of Target on
terms acceptable to the
Administrative Agent and the
Required Lenders.
(xi) The Administrative Agent and the
Lenders shall have received legal
opinions from counsel, and in form
and substance and covering
matters, acceptable to the
Administrative Agent and the
Required Lenders, including local
opinions of counsel as to the
enforceability of the Guaranties
and security interests under the
relevant jurisdictions. The
Administrative Agent and the
Lenders shall have received a
third party solvency opinion or,
to the extent agreed to by the
Administrative Agent, a
certificate of Luxottica Group's
chief financial officer, with
respect to the Borrower and the
Guarantors taken as a whole
acceptable to the Administrative
Agent and the Required Lenders.
The Administrative Agent also
shall have received (i) if
required by law, real estate
appraisals, which appraisals shall
comply with all applicable
regulatory standards and otherwise
shall be in form and substance
satisfactory to the Administrative
Agent and the Required Lenders and
(ii) environmental and hazardous
substance analyses in scope, and
in form and substance,
satisfactory to the Administrative
Agent and the Required Lenders.
(xii) The corporate and capital
structure of Luxottica Group
and its subsidiaries,
including the Borrower and
its subsidiaries and Target
and its subsidiaries, and all
organizational documents of
such entities and all
material agreements related
to such corporate and capital
structure, shall be
satisfactory to the
Administrative Agent and the
Required Lenders.
(xiii) The Guaranties required above
under the heading "Guaran-
ties" shall have been
executed and delivered and
the security interests
required as described above
under the heading "Security"
shall have been granted and
perfected.
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<PAGE>
(xiv) All Loans and other financing
to the Borrower shall be in
full compliance with all
requirements of Regulations
G, T, U and X of the Board of
Governors of the Federal
Reserve System.
B. Conditions to Absence of material adverse
All Loans change, absence of default or
event of default under the Senior
Secured Financing, continued
accuracy of representations and
warranties and receipt of such
documentation (including, without
limitation, opinions of counsel)
as shall be required by the
Administrative Agent.
Representations
and Warranties: Those representations and
warranties which are usual and
customary for these types of
facilities, and such additional
representations and warranties as
are appropriate under the
circumstances (with such
representations to be applicable
to the Borrower and its
subsidiaries and Luxottica Group
and its subsidiaries), including,
but not limited to:
(i) Corporate existence.
(ii) Corporate power and
authority/enforceability.
(iii) No violation of law or
organizational documents or
material contracts.
(iv) No material litigation.
(v) Correctness of specified financial
statements and other financial
information and no material
adverse change.
(vi) No required governmental or third
party approvals (except as have
been obtained and which are in
full force and effect).
(vii) Use of proceeds/compliance
with margin regulations.
(viii) Material environmental
matters.
(ix) Perfected security interests.
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<PAGE>
(x) Payment of taxes.
(xi) Not an investment company or
public utility holding company.
(xii) Solvency.
(xiii) Compliance with laws
(including ERISA).
Covenants: Those covenants usual and
customary for these types of
facilities, and such additional
covenants as are appropriate under
the circumstances (with the
covenants to be applicable to the
Borrower and its subsidiaries and
Luxottica Group and its
subsidiaries) (with customary
exceptions to be agreed upon).
Although the covenants have not
yet been specifically determined,
we anticipate that the covenants
shall in any event include:
(i) Limitations on other indebtedness
(with appropriate baskets to be
agreed upon).
(ii) Limitations on mergers, acquisi-
tions, joint ventures, partner-
ships and acquisitions and
dispositions of assets, it being
understood that Target may sell
its Footwear Division and Apparel
Division on terms acceptable to
the Required Lenders.
(iii) Limitations on sale-leaseback
transactions and lease pay-
ments.
(iv) Limitations on dividends (with
appropriate baskets to be agreed
upon).
(v) Limitations on voluntary
prepayments of other indebtedness
and amendments thereto, and
amendments to organizational
documents.
(vi) Limitations on transactions with
affiliates and formation of U.S.
subsidiaries.
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<PAGE>
(vii) Limitations on investments
(with appropriate baskets to
be agreed upon, but in any
event, existing investments
shall be permitted).
(viii) Maintenance of existence and
properties.
(ix) Limitations on liens.
(x) Various financial covenants
customary for a transaction of
this type including a maximum
Debt/EBITDA, a minimum
EBITDA/Interest Expense and a
minimum EBITDA/Fixed Charges.
(xi) Limitations on capital
expenditures as follows:
Footwear Apparel Optical
Division Division Division**
-------- -------- --------
1995 (i.e., 1995 (i.e., 1995 (i.e.,
---- ---- ----
Closing Closing Closing
Date Date through Date
through $14 12/31/95) $35 through $60
12/31/95) million and each million 12/31/95) million
and each calendar 1996 and
calendar year each
year thereafter calendar $65
thereafter year million
and
thereafter
(xii) Adequate insurance coverage.
(xiii) ERISA covenants.
(xiv) If the Footwear Division of
Target is not sold by September
30, 1995, the obtaining of
interest rate protection
satisfactory to the
Administrative Agent within
45 days following September
30, 1995 with respect to a
notional amount (to be
--------------------
** Includes both the Optical Division of Target and the
existing business of Luxottica Group and its subsidiaries.
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<PAGE>
determined) of Term Loans for a
period through 12/31/96.
(xv) Financial reporting and visitation
and inspection rights.
(xvi) Compliance with laws.
including environmental and
ERISA.
(xvii) Payment of taxes.
(xviii) Lines of business.
Events of Default: Those events of default usual and
customary for these types of
facilities, and such additional
events of default as are
appropriate under the
circumstances (with the events of
default to be applicable to the
Borrower and its subsidiaries and
Luxottica Group and its
subsidiaries), including but not
limited to:
(i) Failure to pay principal and,
subject to appropriate grace
periods, interest, fees and other
amounts under the Credit Documents
when due.
(ii) Violation of covenants under the
Credit Documents (with grace
periods, where appropriate).
(iii) Representations and
warranties not true and
correct in any material
respect.
(iv) Cross payment defaults, cross non-
payment defaults permitting
acceleration and cross
acceleration to indebtedness in
each case in excess of a certain
dollar threshold.
(v) Judgment defaults (not paid or
fully paid or covered by
insurance) in excess of a certain
dollar threshold.
(vi) Bankruptcy and insolvency.
(vii) Change of ownership or
control.
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<PAGE>
(viii) ERISA.
Assignments and The Borrower may not assign its
Participations: rights or obligations under
the Senior Secured Financing without the
prior written consent of the Lenders. Any
Lender may assign, and may sell parti-
cipations in, its rights and obligations
under the Senior Secured Financing, subject
(x) in the case of participations, to
customary restrictions on the voting rights
of the participants and (y) in the case of
assignments, to such limitations as may be
established by the Administrative Agent,
including the consent of the Administrative
Agent, the payment of a fee equal to $3,500
to the Administrative Agent by the assignor
or assignee Lender (other than in connection
with an assignment to another existing
Lender, an existing Lender's affiliate or to
a Federal Reserve Bank) and a minimum
assignment amount of $5 million (other than
in connection with an assignment to another
existing Lender, an existing Lender's
affiliate or to a Federal Reserve Bank).
The Senior Secured Financing shall provide
for a mechanism which will allow for each
assignee to become a direct signatory to the
Senior Secured Financing and will relieve
the assigning Lender of its obligations with
respect to the assigned portion of its
commitment.
Governing Law;
Documentation: The rights and obligations of the
parties under the Credit Documents
shall be construed in accordance with
and governed by the law of the State of
New York. The Borrower and the
Guarantors will submit to the non-
exclusive jurisdiction and venue of the
federal and state courts of the State
of New York and will waive their right
to a trial by jury.
Indemnification: The Credit Documents will contain
customary indemnities for the
Lenders (other than as a result of
a Lender's gross negligence or
willful misconduct).
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