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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE UNITED STATES SHOE CORPORATION
(Name of Registrant as Specified in Its Charter)
LUXOTTICA GROUP S.P.A.
LUXOTTICA ACQUISITION CORP.
(Name of Person(s) Filing Proxy Statement)
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Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Shares, without par value, and the associated preference share
purchase rights (the "Rights")
2) Aggregate number of securities to which transaction applies:
50,068,927 Common Shares
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $24.00
4) Proposed maximum aggregate value of transaction: $1,201,654,248
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Pursuant to, and as provided by, Rule 0-11(c), the filing fee of $240,330.85
is based upon 1/50th of 1% of the Transaction Valuation of the purchase of
50,068,927 Common Shares of the Registrant and the associated Rights at $24.00
cash per share, which number of Common Shares is equal to the sum of (i) the
number of Common Shares outstanding as reported in the Quarterly Report on Form
10-Q of the Registrant for the quarter ended October 29, 1994 and (ii) the
number of Common Shares subject to outstanding options as reported in the Annual
Report on Form 10-K of the Registrant for the fiscal year ended January 29,
1994.
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $240,330.85
2) Form, Schedule or Registration Statement No.: Schedule 14D-1, File
No. 005-10927
3) Filing Party: Luxottica Group S.p.A.; Luxottica Acquisition Corp.
4) Date Filed: March 3, 1995
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<PAGE>
44 Park Harbor Drive
Port Washington, New York 11050 USA LUXOTTICA
Phone: 516-484-3800 GROUP
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April 12, 1995
VOTE TO REMOVE ONE ROADBLOCK TO OUR TENDER OFFER
KEEP THE PRESSURE ON THE U.S. SHOE BOARD
PLEASE ACT TODAY--SPECIAL MEETING
10:00 A.M. FRIDAY, APRIL 21
DEAR U.S. SHOE SHAREHOLDER:
In one week, shareholders of The United States Shoe Corporation will have
the opportunity to cast an important vote eliminating one impediment to
Luxottica's tender offer to purchase U.S. Shoe shares. Unfortunately, under Ohio
law, unless the owners of a majority of the shares present at this important
meeting vote "FOR" the approval of our purchase of shares, LUXOTTICA MAY NOT BE
ABLE TO ACQUIRE U.S. SHOE AT ANY PRICE UNDER OUR TENDER OFFER.
VOTE TO KEEP ALL YOUR OPTIONS OPEN
SIGN, DATE AND MAIL YOUR BLUE PROXY TODAY!
There are four important facts to remember when you are considering how to
vote:
1. VOTING FOR THE PROPOSAL DOES NOT OBLIGATE SHAREHOLDERS TO TENDER THEIR
SHARES TO LUXOTTICA AT ANY TIME OR AT ANY SPECIFIC PRICE.
2. Approval of the proposal will simply remove one of the many anti-takeover
hurdles that prevent shareholders from freely accepting any offer by
Luxottica.
3. U.S. Shoe's other anti-takeover roadblocks include a "Poison Pill", a
super-majority vote to remove directors, and another Ohio law which could
prevent the proposed second-step merger for at least three years.
4. U.S. SHOE'S BOARD HAS ALREADY TAKEN CARE OF ITS SENIOR MANAGEMENT WITH
LUCRATIVE GOLDEN PARACHUTES AND SEVERANCE GUARANTEES.
In addition, you should ask yourself if U.S. Shoe would have ever signed any
Nine West deal or agreed to "seriously" consider selling its LensCrafters
division, its apparel division, or the entire company without Luxottica's tender
offer. We think not!
But don't just take our word for it -- ask your own broker or financial
advisor. It is indeed ironic that less than one year ago this same Board and
management argued vehemently against a proposal, made by one of U.S. Shoe's
largest institutional shareholders, that the Board should consider breaking up
the company to maximize values.
<PAGE>
IF YOU WANT U.S. SHOE TO NEGOTIATE WITH LUXOTTICA
VOTE "FOR" THE "831 PROPOSAL"
MANAGEMENT HAS ITS GOLDEN PARACHUTES
NOW IT IS TIME TO TAKE CARE OF THE SHAREHOLDERS
Remember -- by voting for the "831 Proposal" on the enclosed BLUE proxy you
are not in any way committing to tender your shares to Luxottica at $24 per
share or at any other price. You are, however, keeping your options open to
maximize shareholder value. Please sign, date and mail your BLUE proxy promptly.
Since a majority of all of U.S. Shoe's outstanding common shares must be
represented in person or by proxy at the Special Meeting, please take a moment
to execute your proxy and return it in the envelope provided. FAILURE TO VOTE
MAY HAVE THE SAME PRACTICAL EFFECT AS A VOTE AGAINST THE PROPOSAL.
DO NOT DELAY--EVERY VOTE COUNTS!
If you have any questions about voting your shares or need further
assistance, please call our information agent, MacKenzie Partners, Inc., at
(800) 322-2885 Toll-Free. We would be pleased to provide another copy of the
proxy statement previously furnished to you which describes in detail the
requirements of voting at the "831 Special Meeting" or of the enclosed summary
of recent developments.
Thank you for your prompt attention and careful consideration of this
important vote.
Sincerely,
/s/ Claudio Del Vecchio
CLAUDIO DEL VECCHIO
Managing Director
------- ADDITIONAL "GOLD" CARD FROM LUXOTTICA -------
It is important for U.S. Shoe shareholders to know that Luxottica is also
soliciting an additional "GOLD" card pursuant to a separate solicitation
statement asking shareholders to join in calling a second Special Meeting to
remove the current Board of U.S. Shoe.
<PAGE>
IMPORTANT
Your proxy vote is important regardless of how many shares of U.S. Shoe you
own. To support the 831 Proposal:
1. Please mark, sign and date the enclosed BLUE proxy card.
2. Please mail the BLUE proxy card in the the enclosed postage paid envelope
promptly.
3. Remember--if your shares are held in the name of a bank or brokerage
firm, only that institution can vote your shares. You must give specific
instructions to your bank or broker for your vote to count, so please mail the
enclosed voting instruction form or BLUE card in the envelope provided.
4. Please vote today. If you have questions or need assistance in voting
your shares, please contact:
[LOGO]
(212) 929-5500
or
CALL TOLL-FREE (800) 322-2885
<PAGE>
RECENT DEVELOPMENTS
The following information on recent developments is being provided to
holders of common shares, without par value ("Shares"), of The United States
Shoe Corporation (the "Company") in connection with the solicitation of proxies
by Luxottica Group S.p.A. ("Parent") and Luxottica Acquisition Corp. (the
"Purchaser") for a special meeting of shareholders of the Company (the "Section
831 Meeting") to be held at 10:00 a.m. on Friday, April 21, 1995 pursuant to
Section 1701.831 of the Ohio Revised Code (the "ORC"). The purpose of the
Section 831 Meeting is for shareholders to vote to approve a control share
acquisition by the Purchaser or Parent (or one or more corporations directly or
indirectly owned by Parent) on the terms and subject to the conditions set forth
in the Offer to Purchase dated March 3, 1995, as the same may be amended from
time to time (the "Offer to Purchase"), and the related Letter of Transmittal.
Confidentiality Agreement. After attempts by Parent and its financial
advisor to reopen direct communications between Parent and the Company, on March
23, 1995, Bannus B. Hudson, President and Chief Executive Officer of the
Company, sent a letter to Claudio Del Vecchio, a Managing Director of Parent,
stating: "If Luxottica is interested in pursuing a transaction in which the
value received by shareholders of U.S. Shoe would be enhanced, we would be
prepared to explore that with you. As with all other interested parties, we
would be prepared to share with Luxottica certain non-public information on the
condition that Luxottica executes and delivers an appropriate confidentiality
agreement."
On March 31, 1995, Parent, the Purchaser and the Company executed a
confidentiality agreement (the "Confidentiality Agreement"). Parent and the
Purchaser have received certain confidential information from the Company
pursuant to the Confidentiality Agreement and are reviewing and analyzing such
information.
Certain Litigation. On March 6, 1995, the action brought by the Purchaser
and Parent on March 3, 1995 in the United States District Court for the Southern
District of Ohio, Eastern Division (the "District Court") was amended to, among
other things, add Avant-Garde Optics, Inc., a wholly owned subsidiary of Parent,
as a plaintiff (Avante-Garde Optics, Inc., Parent and the Purchaser are
collectively referred to herein as the "Luxottica Plaintiffs").
On March 10, 1995, the Luxottica Plaintiffs filed the Second Amended
Verified Complaint Seeking Declaratory and Injunctive Relief (the "Second
Amended Complaint") in the District Court relating to Sections 1707.41, 1707.42,
1707.23 and 1707.26 of the ORC (the "Ohio Takeover Act"), the Rights and the
impairment of the voting rights of certain Shares ("Disqualified Shares") under
Sections 1701.01(CC)(2) and 1701.831 of the ORC.
On March 16, 1995, the District Court issued a preliminary injunction (the
"March 16 Order") enjoining the Company and the State of Ohio from applying to
the offer to purchase Shares made pursuant to the Offer to Purchase (the
"Offer") the provisions of Section 1701.01(CC)(2) of the ORC which, by their
terms, would have impaired the voting rights of Disqualified Shares at the
Section 831 Meeting.
On March 22, 1995, the Company and the other defendants in the litigation
pending in the District Court (collectively, the "Company Defendants") filed
with the District Court an Answer and Counterclaim (the "Answer and
Counterclaim") for preliminary and permanent injunction denying the material
allegations in the Second Amended Complaint. The allegations in the Answer and
Counterclaim have been amended and, as amended, are described below in the
description of the Answer and Amended Counterclaim (as defined below) filed by
the Company Defendants on March 29, 1995.
On March 22, 1995, the District Court issued an order (the "March 22 Order")
denying the motion of the Luxottica Plaintiffs to require the Company to obtain
and produce a list (the "NOBO list") of beneficial owners of Shares who do not
object to the disclosure of their name and address by the
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registered owner of such Shares to the Company for the limited purpose of
soliciting direct communication on corporate matters. The order further
provides, however, that in the event the Company obtains a NOBO list it will so
notify the Luxottica Plaintiffs and allow such parties to inspect and copy such
list.
On March 23, 1995, the District Court issued an order (the "First March 23
Order") permanently enjoining the Luxottica Plaintiffs from making any public
statement, including any direct statement to shareholders of the Company,
representing that such parties have the ability to set either alone, separately
or in conjunction with one another and Claudio and Debra Del Vecchio, any record
date in connection with any meeting of the shareholders of the Company or any
record date for soliciting consents or agent designations for the purpose of
calling any special meeting of the Company's shareholders.
On March 23, 1995, the District Court issued an order (the "Second March 23
Order") denying the Company's motion to enjoin the Luxottica Plaintiffs from
using the list of shareholders of the Company previously provided to Avant-Garde
Optics, Inc. in connection with the proxy solicitations relating to the Section
831 Meeting and a special meeting of the Company's shareholders (the "Special
Meeting") to, among other things, remove and replace the Company's incumbent
directors.
On March 24, 1995, the Luxottica Plaintiffs filed a motion with the District
Court for leave to file a Third Amended Complaint (the "Third Amended
Complaint") and filed the Third Amended Complaint which renews the allegations
made in the Second Amended Complaint and further seeks an order declaring that
(i) the incumbent directors of the Company have breached their fiduciary duties
by failing to negotiate with Parent and the Purchaser and taking certain actions
with respect to the Company's compensation and retirement plans and arrangements
designed to entrench existing management and increase the cost of acquiring the
Shares, (ii) the incumbent directors of the Company have violated Section
1701.76 of the ORC by failing to hold a shareholder vote with respect to the
proposed sale of the Company's footwear operations to Nine West Group, Inc.
("Nine West") and the Company's announced intention to sell or otherwise dispose
of substantially all of its remaining assets, (iii) the proposed sale of the
Company's footwear operations to Nine West may not be consummated without a vote
of the shareholders adopting an amendment to the Company's Articles and (iv)
certain disclosures made by the Company following the commencement of the Offer,
including disclosures in the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, as amended (the "Company Schedule 14D-9"), contain false and
misleading statements that violate the Exchange Act in certain respects,
including, among others, the failure of the Company 14D-9 to describe the
estimated after-tax proceeds of the proposed sale to Nine West and the manner in
which such proceeds will be used by the Company, the fact that certain schedules
to the Company's agreement with Nine West are omitted from the Company 14D-9 and
the failure of the Company 14D-9 to adequately disclose the Company's plans to
auction off the Company's businesses. The motion for leave to file the Third
Amended Complaint was granted by the District Court on March 27, 1995.
On March 29, 1995, the Company Defendants filed with the District Court an
Answer and Amended Counterclaim (the "Answer and Amended Counterclaim") denying
the material allegations in the Third Amended Complaint and alleging, among
other things, that the Tender Offer Statement on Schedule 14D-1 filed by Parent
and the Purchaser, as amended (the "Schedule 14D-1"), the Offer to Purchase, and
the definitive Proxy Statement dated March 21, 1995 of Parent and the Purchaser
for the Section 831 Meeting (the "831 Proxy Statement") contain false and
misleading statements and fail to make required disclosures in violation of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the Ohio
Take-Over Act, which violations purportedly require preliminary and permanent
injunctive relief restraining consummation of the Offer or any other transaction
to gain control of the Company.
Count I of the Answer and Amended Counterclaim alleges that the Schedule
14D-1 and the Offer to Purchase fail to disclose as alleged purposes of the
Offer, Parent's intention to cause Lenscrafters, Inc., a wholly owned subsidiary
of the Company, to shift its sourcing of merchandise from the Far East
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to European suppliers (including Parent), and an attempt on Parent's part to
prevent Lenscrafters, Inc. from obtaining a certain market share in North
America. The Company apparently makes these assertions on the basis of
statements attributed by the press to Leonardo Del Vecchio, the Chairman of the
Board and Chief Executive Officer of Parent. The Luxottica Plaintiffs deny that
the Schedule 14D-1 and Offer to Purchase are false or misleading, and believe
that the purpose of the Tender Offer, as well as their plans and proposals, are
fully and adequately set forth in those documents. As the Schedule 14D-1 and
Offer to Purchase disclose, once the Tender Offer is consummated and the
proposed merger (the "Proposed Merger") between the Company and another direct
or indirect wholly owned subsidiary of Parent occurs, Parent will control the
entire equity interest in the Company, and it and the Purchaser will conduct a
detailed review of the Company's assets and business operations to determine
what, if any, changes would be desirable in light of the circumstances which
then exist. Parent is pursuing the Offer for strategic business reasons.
Although it has not adopted any firm plans, subject to its completion of a
detailed review of the Company's operations, Parent presently intends to sell or
otherwise dispose of the Company's footwear and women's apparel divisions and to
retain the optical division.
Count II of the Answer and Amended Counterclaim alleges that the Schedule
14D-1 and the Offer to Purchase fail to adequately disclose the corporate
organization of Parent and its subsidiaries, including the Purchaser, and that
Avant-Garde Optics, Inc. may acquire certain Shares purchased by the Purchaser
pursuant to the Offer. The Luxottica Plaintiffs deny that the Schedule 14D-1 and
the Offer fail to disclose any material facts regarding the structure of the
Offer. Luxottica U.S. Holdings Corp., an indirect wholly owned subsidiary of
Parent, is the Borrower under the commitment letter dated March 2, 1995 with
Credit Suisse (the "Commitment Letter"), which refers to it as "Newco 1". The
Purchaser is referred to as "Bidder" in the Commitment Letter. Luxottica U.S.
Holdings Corp. will invest as capital in Avant-Garde Optics, Inc. the proceeds
of the credit facility (the "Facility"), to be entered into pursuant to the
Commitment Letter, necessary to fund the Purchaser's acquisition of the Shares
and the Proposed Merger. Avant-Garde Optics, Inc., which is currently a direct
wholly owned subsidiary of Parent, will invest as capital in Luxottica
Acquisition Corp. an amount equal to the entire proceeds received by it from
Luxottica U.S. Holdings Corp. Upon consummation of the Proposed Merger, the
surviving corporation will be a wholly owned subsidiary of Avante-Garde Optics,
Inc.
Count III of the Answer and Amended Counterclaim alleges that the Schedule
14D-1 fails to disclose the identity of Mr. Leonardo Del Vecchio, the Chairman
of the Board and Chief Executive Officer of Parent, as a "controlling person" of
Parent within the meaning of the Exchange Act. The Luxottica Plaintiffs deny
that the Schedule 14D-1 and the Offer to Purchase fail to disclose any material
information regarding Mr. Del Vecchio, who together with other members of the
Del Vecchio family, owns approximately 71.5% of Parent's stock. Mr. Del Vecchio
founded Parent in 1961, and has served as its Chief Executive Officer since that
time. He has served as Chairman of its Board of Directors since 1981. All of the
information concerning "controlling persons" which is required to be disclosed
by the Exchange Act is in fact disclosed in the Schedule 14D-1 with respect to
Mr. Del Vecchio, as well as the other Directors and Officers identified in
Schedule I to the Offer to Purchase.
Count IV of the Answer and Amended Counterclaim alleges, among other things,
that the Schedule 14D-1 and the Offer to Purchase fail to disclose material
facts pertaining to the proposed financing of the Offer, including the identity
of the actual borrower under the Facility, the risk that the financing
contemplated by the Facility may be challenged for noncompliance with the margin
regulations promulgated by the Board of Governors of the Federal Reserve System
(the "Board of Governors"), the amount of funds that may be borrowed under the
Facility to purchase Shares, and the fact that the documentation evidencing the
Facility is subject to the approval of Credit Suisse. The Luxottica Plaintiffs
intend to deny that the Schedule 14D-1 and the Offer to Purchase fail to
disclose any material facts pertaining to the financing of the Offer. As noted
above, Luxottica U.S. Holdings Corp., a newly formed Delaware corporation, will
be the Borrower under the Facility. The Luxottica Plaintiffs believe the
Facility is and will be in full compliance with the margin regulations
promulgated
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by the Board of Governors, and thus, there is no "risk" of non-compliance. The
Borrower will borrow under the Facility sufficient funds to finance the Offer,
as set forth in the Offer to Purchase. The fact that the Commitment Letter
contains customary conditions, including the negotiation, execution and delivery
of definitive documentation, clearly requiring the execution, and thus the
approval, thereof by Credit Suisse, is also fully disclosed in the Schedule
14D-1 and the Offer to Purchase.
Count IV also alleges that the Fourth Amendment to the Schedule 14D-1 filed
on March 16, 1995 (the "Fourth Amendment") falsely states that "Credit Suisse is
prepared to fund their commitment on the expiration date of our offer . . . ."
The Luxottica Plaintiffs deny that the Fourth Amendment was false or misleading
with respect to the Credit Suisse Commitment. The quoted statement was contained
in a letter dated March 16, 1995 from Claudio Del Vecchio, Managing Director of
Parent, to Bannus Hudson, President and Chief Executive Officer of the Company,
in response to the Company's press release rejecting the Offer. That press
release described the Offer as being subject to "significant conditions". The
Company's Count IV quotes Mr. Del Vecchio's statement out of context. The full
text of Section 1 of Mr. Del Vecchio's letter is as follows:
"1. Your characterization of our offer as conditional is ironic and
misleading. One of the conditions you refer to in your press release is the
financing condition. As you must know by reviewing the Credit Suisse
commitment letter which has been publicly filed, our offer is fully
underwritten by Credit Suisse. Credit Suisse is prepared to fund their
commitment on the expiration date of our offer. Credit Suisse is prepared to
meet with you and explain the nature of its commitment if you desire. We
also note with interest that, although you have rejected our fully
underwritten offer, you have entered into an agreement with Nine West which
appears to be conditioned on financing.
The only other conditions we have in our offer which you might find
objectionable are solely within the control of your Board to satisfy. All
you have to do is enter into negotiations with us and approve a transaction
containing mutually agreeable terms, and our offer would no longer be
subject to the conditions you find objectionable."
The March 16, 1995 letter points out that Credit Suisse has agreed to underwrite
100% of the Facility and that its commitment is therefore not conditioned on the
participation of other lenders. The letter also refers specifically to the
Commitment Letter, which contains specified conditions, and which was filed as
an Exhibit to the Schedule 14D-1, and offers, in addition, to have Credit Suisse
meet with Mr. Hudson to "explain the nature of its commitment". Neither the
Company, nor Mr. Hudson have accepted this invitation.
Count V of the Answer and Amended Counterclaim alleges that the Fourth
Amendment to the Schedule 14D-1 erroneously indicates that the Company's
agreement with Nine West regarding the disposition of the Company's footwear
division "appears to be conditioned on financing". The Luxottica Plaintiffs deny
that they have made any material misstatements regarding the Company's agreement
with Nine West. The quoted statement that financing "appears" to be a condition
to the agreement's consummation, was based on press reports that "[f]inancing
for the transaction has been committed to by Citibank and Merrill Lynch", and
that "[t]he [purchase] agreement is subject to customary closing conditions", as
well as a review of Nine West's current financial statements, which do not
reflect sufficient cash to consummate the purchase absent financing by a third
party. Confirming the reliance by the Luxottica Plaintiff's on such press
reports and review, an additional press report was issued on April 4, 1995,
quoting Richard White, the Chief Financial Officer of Nine West, who was
discussing Nine West's financing for the acquisition of the Company's footwear
division, as follows: "We already have the bank commitments with Citibank and
Merrill Lynch Credit Corp." "We're working with the banks to finish up the
syndication, and we hope to close by June 1st but not before." Since the filing
of the Fourth Amendment to the Schedule 14D-1, the Luxottica Plaintiffs have had
an opportunity to review the written agreement between the Company and Nine West
for the sale of the footwear division. (A copy of that agreement was filed as an
Exhibit to the Company 14D-9). That agreement does not
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contain as a condition precedent to Nine West's obligation to close its receipt
of sufficient financing to consummate the purchase; nor does it contain any
representation by Nine West that it has financing to consummate the purchase.
Nevertheless, as confirmed by the April 4, 1995 press report referred to above,
it is apparent that Nine West will require financing or some other infusion of
cash in order to consummate the purchase of the Company's footwear division.
Count VI of the Answer and Amended Counterclaim alleges that the Schedule
14D-1 and the Offer to Purchase fail to disclose that the Facility is subject
to, and does not satisfy, the requirements of Regulation U of the Board of
Governors that limit the amount of credit allowable for the purchaser of "margin
stock", and that future changes in value of the Italian lire may profoundly
affect the valuation of Parent's non-stock assets and the Borrower's ability to
comply with the regulations of the Board of Governors. The Luxottica Plaintiffs
deny that the Facility is in any way violative of Regulation U, and believe that
any borrowings thereunder will comply fully with the applicable margin
requirements. It is a condition precedent to the Facility that all loans
thereunder be in full compliance with Regulation U. The Commission and the
United States Justice Department possess enforcement power with respect to
Regulation U, and if the Facility did violate its terms, the federal government
could, among other remedies, seek to restrain the consummation of the Offer and
Facility. The Schedule 14D-1 and the Offer to Purchase do not contain any
material false or misleading statements or non-disclosures with respect to
Regulation U. Further, the Luxottica Plaintiffs do not believe that fluctuations
in the Italian lire will have any material impact upon the valuation of the
collateral under the Commitment Letter for purposes of Regulation U, and to
suggest otherwise could be false and misleading.
Count VII of the Answer and Amended Counterclaim alleges that Schedule III
to the 831 Proxy Statement ("Schedule III"), contains a false and misleading
description of the Shares owned by Mellon Bank Corporation ("Mellon") and its
subsidiaries. In particular, the Company alleges that the manner by which the
Luxottica Plaintiffs described the ownership of these Shares could lead an
investor to reasonably conclude that Mellon and its subsidiaries own 16,158,000
(34.85%), rather than 4,678,000 (10.09%), of the Shares, which the Company
asserted in its definitive proxy statement for the Section 831 Meeting were the
correct number of Shares and percentages.
The Luxottica Plaintiffs deny that Schedule III is false and misleading. The
designation "c/o Mellon Bank" specifically appears after the three Mellon
subsidiaries mentioned in Schedule III. Moreover, to the extent that Schedule
III could be read to suggest that Mellon and its subsidiaries own more than
10.09% of the Shares, the Luxottica Plaintiffs relied in good faith on a
description of the ownership of Shares set forth in Amendment No. 3 to a
schedule 13G Statement ("Schedule 13G") filed by Mellon on March 8, 1995. The
Schedule 13G is a publicly filed document and was the sole source of the
Luxottica Plaintiffs' information, which, as stated in Schedule III, was derived
from the Schedule 13G.
Count VIII of the Answer and Amended Counterclaim alleges that the Luxottica
Plaintiffs improperly established record dates for special meetings of the
Company's shareholders and for the execution of "Agent Designations." On March
23, 1995, the District Court issued the First March 23 Order permanently
enjoining the Luxottica Plaintiffs from making any public statement, including
any direct statement to shareholders of the Company, representing that such
parties have the ability to set either alone, separately or in conjunction with
one another and Claudio and Debra Del Vecchio, any record date in connection
with any meeting of the shareholders of the Company or any record date for
soliciting consents or agent designations for the purpose of calling any special
meeting of the Company's shareholders. Parent and Purchaser have distributed the
831 Proxy Statement and a Solicitation Statement (the "Solicitation Statement")
to call the Special Meeting, neither of which violate the First March 23 Order.
Count IX of the Answer and Amended Counterclaim alleges that Parent and the
Purchaser have failed to mail or deliver to the Company's shareholders certain
information required to be disclosed
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pursuant to the Ohio Take-Over Act. The Company dismissed this count, without
prejudice, on April 10, 1995.
On April 6, 1995, the Company Defendants filed with the District Court an
Amended Answer and Amended Counterclaim (the "Second Answer and Amended
Counterclaim") denying the material allegations of the Third Amended Complaint,
restating Counts I through IX of the Answer and Amended Counterclaim, which are
described above, and adding five additional counts to their counterclaim.
Count X of the Second Answer and Amended Counterclaim alleges that the
Luxottica Plaintiffs made false and misleading statements in two letters to the
Company's shareholders, one of which accompanied the 831 Proxy Statement and one
of which accompanied the Solicitation Statement. In these letters to
shareholders, the Luxottica Plaintiffs urged shareholders of the Company to
"keep the pressure on" the Company's Board of Directors to negotiate in good
faith and to encourage the Board to negotiate in good faith. The Company alleges
that these statements were false and misleading because at the time they were
made, as noted in the Solicitation Statement, counsel to the Luxottica
Plaintiffs and counsel to the Company were discussing a form of confidentiality
agreement. The Luxottica Plaintiffs deny the allegations that the statements in
the shareholder letters were false and misleading. At the time the statements
were made the Luxottica Plaintiffs' efforts to obtain confidential information,
which had already been given to other parties, were being frustrated by the
inability of the parties to agree on a confidentiality agreement, principally
due to the Company's insistence that the confidentiality agreement contain a
two-year standstill provision applicable to Parent and its affiliates. There
were no negotiations between the Luxottica Plaintiffs and the Company taking
place on any transaction with the Company. Therefore, it was not in any way
false or misleading for the Luxottica Plaintiffs to urge the Company's
shareholders to encourage the Company's Board of Directors to negotiate in good
faith with the Luxottica Plaintiffs.
Count XI of the Second Answer and Amended Counterclaim alleges that the
Solicitation Statement is false and misleading because it provides information
on the price of the Shares prior to the commencement of the Offer but does not
state that the Shares traded at $24 per Share as recently as the Company's
fiscal quarter ended October 29, 1994 and have traded at prices more than $2 in
excess of the $24 per share Offer price since the commencement of the Offer. The
Luxottica Plaintiffs deny the allegations that their statements about the price
of the Shares were false and misleading. The statements were true, and the
Company Defendants do not deny this fact. Moreover, the $24 per Share trading
price in the quarter ended October 29, 1994 was disclosed in the Offer to
Purchase of Parent and the Purchaser previously delivered to the Company's
shareholders. Further, such $24 per Share price was reached shortly after the
public announcement of a proposal by Nine West for a transaction with the
Company, and the price declined shortly thereafter when the Company's Board of
Directors rejected the proposal. The other information about the price of the
Company's Shares is publicly available to holders of Shares, and the Luxottica
Plaintiffs were not required to include it in the Solicitation Statement.
Count XII of the Second Answer and Amended Counterclaim relates to the
Solicitation Statement and is similar to Count VII which relates to the 831
Proxy Statement. Count XII alleges that Schedule III to the Solicitation
Statement (the "Solicitation Schedule III") contains a false and misleading
description of the Company's Shares owned by Mellon and its subsidiaries. In
particular, the Company alleges that the manner in which the Luxottica
Plaintiffs described the ownership of these Shares could lead an investor to
reasonably conclude that Mellon and its subsidiaries own 16,158,000 (34.85%),
rather than 4,678,000 (10.09%), of the Shares, which the Company asserts are the
correct number of Shares and percentages. The Luxottica Plaintiffs deny that the
Solicitation Schedule III is false and misleading. The designation "c/o Mellon
Bank" specifically appears after the three Mellon subsidiaries mentioned in the
Solicitation Schedule III. Moreover, to the extent that the Solicitation
Schedule III could be read to suggest that Mellon and its subsidiaries own more
than 10.09% of the Shares, the Luxottica Plaintiffs relied in good faith on a
description of the ownership of the Shares set
6
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forth in Amendment No. 3 to the Schedule 13G filed by Mellon on March 8, 1995.
The Schedule 13G is a publicly filed document and was the sole source of the
Luxottica Plaintiffs' information, which as stated in the Solicitation Schedule
III, was derived from the Schedule 13G.
Count XIII of the Second Answer and Amended Counterclaim alleges that the
form of agent designation for the Solicitation Statement is misleading because
while the Solicitation Statement states that the Luxottica Plaintiffs may elect
to make additional proposals at the Special Meeting, the form of agent
designation does not clearly state that additional proposals may be made. The
Luxottica Plaintiffs deny that the form of agent designation is misleading since
it clearly contemplates that other matters may come before the Special Meeting.
Any other matter proposed by the Luxottica Plaintiffs would be identified in the
proxy material for the Special Meeting and the Company's shareholders would have
the right to vote on it. As the Solicitation Statement clearly states on its
cover, the agent designations will not confer any rights to vote on matters
brought before the Special Meeting and, if the Special Meeting is called,
separate proxy materials will be sent with respect to such matters.
Count XIV of the Second Answer and Amended Counterclaim alleges that the
Solicitation Statement is false and misleading because it states (i) that the
date for determining shareholders of the Company entitled to call the Special
Meeting is the date that the meeting is called (the "Call Date") rather than a
record date determined by the Company's Board of Directors after the Company
"determines preliminary" that at least 50% of the Company's shareholders have
attempted to call the Special Meeting and (ii) that revocations of agent
designations will not affect actions taken prior to such revocation. The
Luxottica Plaintiffs deny that the date for determining Company shareholders
entitled to call the Special Meeting is any date other than the Call Date
because Ohio law and the Company's regulations clearly and unambiguously afford
to the holders of 50% of its Shares the right to call the Special Meeting,
without reference to any requirement that the calling shareholders continue to
hold their Shares after the Call Date. The Luxottica Plaintiffs also deny that
revocations of agent designations would affect actions taken prior to such
revocation because the revocation of the authority of an agent does not
retroactively invalidate actions previously taken by the agent within the scope
of his authority.
On April 11, 1995, the Luxottica Plaintiffs filed a Reply to Second Amended
Counterclaim (the "Reply") denying the allegations set forth in the Second
Answer and Amended Counterclaim as described above.
The foregoing descriptions of the Reply, the Second Amended Complaint, the
March 16 Order, the Answer and Counterclaim, the March 22 Order, the First March
23 Order, the Second March 23 Order, the Third Amended Complaint, the Answer and
Amended Counterclaim and the Second Answer and Amended Counterclaim Amendment
are qualified in their entirety by reference to the text of such documents, each
of which has been filed as an exhibit to the Schedule 14D-1, copies of which may
be obtained from the offices of the Securities and Exchange Commission in the
manner set forth in Section 7 of the Offer to Purchase (except that such
information will not be available at the regional offices of the Securities and
Exchange Commission).
7
