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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
---------------
THE UNITED STATES SHOE CORPORATION
(Name of Subject Company)
THE UNITED STATES SHOE CORPORATION
(Name of Person(s) Filing Statement)
COMMON SHARES, WITHOUT PAR VALUE
(AND ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
912605102
(CUSIP Number of Class of Securities)
---------------
James J. Crowe, Esq.
Vice President, Secretary and General Counsel
The United States Shoe Corporation
One Eastwood Drive
Cincinnati, Ohio 45227-1197
(513) 527-7501
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of the person(s) filing)
With a copy to:
William F. Henze II, Esq.
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
(212) 326-3939
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This Amendment No. 1 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), filed on March 16, 1995, by
The United States Shoe Corporation (the "Company"), with respect to the tender
offer by Luxottica Acquisition Corp., an indirect wholly-owned subsidiary of
Luxottica Group S.p.A., to purchase all outstanding common shares, without par
value, of the Company, including associated preference share purchase rights, at
a price of $24 per share (and associated right), upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated March 3, 1995, and in
the related Letter of Transmittal (the "Luxottica Offer"), as set forth in this
Amendment No. 1. All capitalized terms not otherwise defined herein shall have
the meanings assigned thereto in the Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND.
Item 3(b)(1) of the Schedule 14D-9 is hereby amended and supplemented by
adding at the end thereof the following:
On March 20, 1995, in accordance with the terms of the Severance
Agreements with its executive officers and the related Trust Agreements
and as a result of the Offer, the Company placed into the trusts created
thereunder the aggregate amount of $14.3 million.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4(a) of the Schedule 14D-9 is hereby amended and supplemented by
adding at the end thereof the following:
As previously disclosed, the Board of Directors believes that the best
means of providing value to shareholders is to explore fully all
alternatives to the Luxottica Offer, and has directed the Company's
financial adviser and management to continue to do so. One of the
factors considered by the Board of Directors in determining that the
Luxottica Offer is inadequate and not in the best interests of the
Company and its shareholders was the interest expressed by other parties
in exploring potential alternative transaction strategies. As previously
announced, the Company has entered into a definitive agreement to sell
the Footwear Group to Nine West Group Inc. for approximately $600
million in cash and warrants. For a discussion of the background to the
Board of Directors' authorization of the Company's financial adviser to
initiate preliminary discussions with certain third parties and to
authorize discussions with others, see Item 7 of the Schedule 14D-9.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
Item 7(a) of the Schedule 14D-9 is hereby amended and supplemented by
adding at the end thereof the following:
The Company and Wolfensohn are continuing to explore strategic
alternatives, including the sale of the Company or one or more of its
remaining businesses.
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On March 23, 1995, Mr. Bannus B. Hudson, President and Chief
Executive Officer of the Company, delivered a letter (the "March 23
Letter to Luxottica") to Mr. Claudio Del Vecchio, a Managing Director of
Luxottica, containing the following text:
March 23, 1995
Mr. Claudio Del Vecchio
Managing Director
Luxottica Group
44 Harbor Park Drive
Port Washington, New York 11050
Dear Claudio:
I am in receipt of your letter requesting an opportunity to reopen
communications between Luxottica and U.S. Shoe regarding a possible
transaction that might maximize value to the shareholders of U.S. Shoe.
As you know, the Directors of U.S. Shoe have determined that Luxottica's
$24 per share tender offer is inadequate and not in the best interests
of U.S. Shoe or its shareholders. We believe that, especially taking
into account the value represented by the agreement we have entered into
with Nine West, the value of U.S. Shoe as a whole is in excess of the
$24 Luxottica offer.
As we said in U.S. Shoe's Schedule 14D-9, our "Board of Directors
believes that the best means of providing value to shareholders is to
explore fully all alternatives . . . ." In that regard, we have been
engaged in discussions with other parties regarding potential
alternative transactions and we have furnished them with certain
non-public information. 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.
You have said you are confident that you can satisfy any concerns
we may have with respect to your offer. You know my concern. It is
value, and I have no doubt about the value of U.S. Shoe's businesses.
Sincerely,
/s/ Bannus B. Hudson
Bannus B. Hudson
President and Chief Executive Officer
Copies of the March 23 Letter to Luxottica and the text of the
press release regarding the March 23 Letter to Luxottica are filed as
Exhibits 16 and 17, respectively, and are incorporated herein by
reference.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 of the Schedule 14D-9 is hereby amended and supplemented by adding
at the end thereof the following:
The Luxottica Action. Prior to March 16, 1995, the Company
voluntarily agreed to furnish certain shareholder information requested
by the Luxottica Plaintiffs to them. The Company did not agree to
furnish certain information regarding non-objecting beneficial owners
("NOBO Information") which was not in the possession of the Company to
the Luxottica Plaintiffs. On March 22, 1995, the District Court ruled
that the Company is not obligated to furnish NOBO Information to
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the Luxottica Plaintiffs to the extent such NOBO Information is not in
the possession of the Company.
On March 16, 1995, the District Court issued an injunction
prohibiting the Company, the Company's Directors and the State of Ohio
from classifying or treating any Shares as "interested shares" pursuant
to ORC sec. 1701.01(CC)(2) for purposes of conducting the shareholder
vote on Luxottica's proposed control share acquisition at the Special
Meeting of the Company's shareholders to be held pursuant to the Control
Share Acquisition Act.
On March 22, 1995, the Company and all the Company's Directors
filed an Answer denying all claims of the Luxottica Plaintiffs, and the
Company filed a Counterclaim against the Luxottica Plaintiffs (the
Answer and the Counterclaim, together, the "Company Answer and
Counterclaim"). The Counterclaim asserts that the Luxottica Plaintiffs
are violating the disclosure requirements of federal securities law by
false and misleading statements and non-disclosures contained in
Luxottica's Offer and Schedule 14D-1, and that the Luxottica Plaintiffs
have not delivered to the Company's shareholders substantial information
required by Section 1707.041 of the Ohio Revised Code. The Counterclaim
seeks to declare Luxottica's acquisition of the Company's Shares to be
in violation of Section 14(d)-(e) of the Securities Exchange Act of
1934, as amended, and Section 1707.041 of the Ohio Revised Code, to
restrain further violations of these laws, to require Luxottica to
withdraw its Offer and to enjoin the Offer from being consummated, until
such time as the Luxottica Plaintiffs have complied with applicable
laws. A copy of the Company Answer and Counterclaim is filed as Exhibit
18 and is incorporated herein by reference. The foregoing description of
the Company Answer and Counterclaim is qualified in its entirety by
reference to the text of the Company Answer and Counterclaim.
On March 23, 1995, the District Court granted the Company's Motion
for an Injunction to prohibit the Luxottica Plaintiffs from distributing
false and misleading information regarding their ability to set record
dates for U.S. Shoe shareholder meetings and record dates for the
solicitation of agent designations for calling shareholder meetings. The
Court permanently enjoined the Luxottica Plaintiffs from making any
public statement, any direct statement to the Company's shareholders and
any statement in any proxy or tender offer materials to be delivered to
the Company's shareholders which represents that the Luxottica
Plaintiffs have the ability to set or have set any record date in
connection with any meeting of the Company's shareholders or any record
date for soliciting consents or agent designations for the purpose of
calling any special meeting of the Company's shareholders. The text of
the order of the District Court dated March 23, 1995 (the "March 23
District Court Order") and the text of the press release regarding the
March 23 District Court Order are filed as Exhibits 19 and 20,
respectively, and are incorporated herein by reference. The foregoing
description of the March 23 District Court Order is qualified in its
entirety by reference to the text of the March 23 District Court Order.
On March 23, 1995, the District Court denied the Company's Motion
for an Injunction to prohibit the Luxottica Plaintiffs from using the
shareholder list they obtained from the Company under Ohio law to mail
proxy materials directly to the Company's shareholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
Exhibit 16 - March 23 Letter to Luxottica.
Exhibit 17 - Text of Press Release issued by the Company, dated March
23, 1995, relating to the March 23 Letter to Luxottica.
Exhibit 18 - Company Answer and Counterclaim.
Exhibit 19 - March 23 District Court Order.
Exhibit 20 - Text of Press Release issued by the Company, dated March
23, 1995, relating to the March 23 District Court Order.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 24, 1995
THE UNITED STATES SHOE CORPORATION
By: /s/ Bannus B. Hudson
------------------------------------
Name: Bannus B. Hudson
Title: President and Chief
Executive Officer
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EXHIBIT INDEX
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Exhibit No. Description
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Exhibit 16 - March 23 Letter to Luxottica.
Exhibit 17 - Text of Press Release issued by the Company, dated March
23, 1995, relating to the March 23 Letter to Luxottica.
Exhibit 18 - Company Answer and Counterclaim.
Exhibit 19 - March 23 District Court Order.
Exhibit 20 - Text of Press Release issued by the Company, dated March
23, 1995, relating to the District Court Proceeding.
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Exhibit 16
T H E U N I T E D S T A T E S S H O E C O R P O R A T I O N
ONE EASTWOOD DRIVE
CINCINNATI, OHIO 45227-1197
TEL: (513) 527-7000
FAX NUMBER: (513) 527-7880 WRITER'S DIRECT NUMBER:
(513) 527-7907
March 23, 1995
Mr. Claudio Del Vecchio
Managing Director
Luxottica Group
44 Harbor Park Drive
Port Washington, New York 11050
Dear Claudio:
I am in receipt of your letter requesting an opportunity to
reopen communications between Luxottica and U.S. Shoe regarding a possible
transaction that might maximize value to the shareholders of U.S. Shoe. As you
know, the Directors of U.S. Shoe have determined that Luxottica's $24 per share
tender offer is inadequate and not in the best interests of U.S. Shoe or its
shareholders. We believe that, especially taking into account the value
represented by the agreement we have entered into with Nine West, the value of
U.S. Shoe as a whole is in excess of the $24 Luxottica offer.
As we said in U.S. Shoe's Schedule 14D-9, our "Board of
Directors believes that the best means of providing value to shareholders is to
explore fully all alternatives . . . ." In that regard, we have been engaged
in discussions with other parties regarding potential alternative transactions
and we have furnished them with certain non-public information. 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.
You have said you are confident that you can satisfy any
concerns we may have with respect to your offer. You know my concern. It is
value, and I have no doubt about the value of U.S. Shoe's businesses.
Sincerely,
/s/ Bannus B. Hudson
Bannus B. Hudson
President and Chief Executive Officer
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Exhibit 17
NEWS RELEASE
Contact: Robert M. Burton
Director of Corporate Communications
(513) 517-7471
FOR IMMEDIATE RELEASE
CINCINNATI, OHIO March 23, 1995 -- The United States Shoe
Corporation (NYSE: USR) today sent the following letter to Claudio Del Vecchio,
Managing Director of Luxottica Group, S.p.A.
March 23, 1995
Mr. Claudio Del Vecchio
Managing Director
Luxottica Group
44 Harbor Park Drive
Port Washington, NY 11050
Dear Claudio:
I am in receipt of your letter requesting an opportunity to
reopen communications between Luxottica and U.S. Shoe regarding a possible
transaction that might maximize value to the shareholders of U.S. Shoe. As you
know, the Directors of U.S. Shoe have determined that Luxottica's $24 per share
tender offer is inadequate and not in the best interests of U.S. Shoe or its
shareholders. We believe that, especially taking into account the value
represented by the agreement we have entered into with Nine West, the value of
U.S. Shoe as a whole is in excess of the $24 Luxottica offer.
As we said in U.S. Shoe's Schedule 14D-9, our Board of
Directors believes that the best means of providing value to shareholders is to
explore fully all alternatives...." In that regard, we have been engaged in
discussions with other parties regarding potential alternative transactions and
we have furnished them with certain non-public information. 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.
You have said you are confident that you can satisfy any
concerns we may have with respect to your offer. You know my concern. It is
value, and I have no doubt about the value of U.S. Shoe's businesses.
Sincerely,
Bannus B. Hudson
President and Chief Executive Officer
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Exhibit 18
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
:
Luxottica Group S.p.A., et al., : Civil Action C2-95-244
:
Plaintiffs, : Judge Graham
:
vs. : ANSWER OF DEFENDANTS THE
: UNITED STATES SHOE
The United States Shoe Corporation, : CORPORATION, JOSEPH H.
et al., : ANDERER, PHILIP E. BEEKMAN,
: GILBERT HAHN, JR., ROGER L.
Defendants, : 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
: PLAINTIFFS FOR PRELIMINARY
: AND PERMANENT INJUNCTION FOR
: FALSE AND MISLEADING
: STATEMENTS IN SEC FILINGS AND
: TENDER OFFER MATERIALS
FIRST DEFENSE
1. The following is an Answer to the Second Amended Complaint
filed by Plaintiffs Luxottica Group S.p.A. ("Luxottica"), Luxottica
Acquisition Corp. ("Luxottica Acquisition") and Avant Garde Optics, Inc.
(Avant-Garde") by Defendants The United States Shoe Corporation ("U. S. Shoe"),
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 (together, "U. S. Shoe Defendants"),
and Counterclaims by U. S. Shoe against Plaintiffs for violations of the
federal securities laws applicable to tender offers. The Counterclaim is
stated beginning on page seventeen.
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2. The U. S. Shoe Defendants admit so much of paragraph one of
the Second Amended Complaint ("Complaint") of Luxottica Group S.p.A
(Luxottica"), Luxottica Acquisition Corp. ("Luxottica Acquisition") and
Avant-Garde Optics, Inc. ("Avant-Garde") (Luxottica, Luxottica Acquisition and
Avant-Garde are referred to together as "Plaintiffs") as may aver that
Plaintiffs seek the relief described in paragraph one, deny that Plaintiffs are
entitled to such relief and deny all other averments of paragraph one of the
Complaint.
3. The U. S. Shoe Defendants admit so much of paragraph two of
the Complaint as may aver that Plaintiffs seek the relief described in
paragraph two, deny that Plaintiffs are entitled to such relief and deny all
other averments of paragraph two of the Complaint.
4. The U. S. Shoe Defendants are without knowledge or information
sufficient to form a belief as to the averments of paragraph three of the
Complaint.
5. The U. S. Shoe Defendants are without knowledge or information
sufficient to form a belief as to the first sentence and the first clause of
the second sentence of paragraph four of the Complaint. The U. S. Shoe
Defendants admit so much of the second clause of the second sentence of
paragraph four as may aver that Avant-Garde is a shareholder of U. S. Shoe, and
are without knowledge or information sufficient to form a belief as to all
other averments of the second clause. The U. S. Shoe Defendants admit the
averments of the third sentence of paragraph four of the Complaint.
6. The U. S. Shoe Defendants admit the averments of paragraph
five of the Complaint.
7. The U. S. Shoe Defendants admit the averments of paragraph six
of the Complaint.
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8. The U. S. Shoe Defendants admit the averments of the first
sentence of paragraph seven of the Complaint. In answer to the remaining
averments of paragraph seven, the U. S. Shoe Defendants say the Ohio Revised
Code speaks for itself, and deny all other averments of paragraph seven of the
Complaint.
9. The U. S. Shoe Defendants admit the averments of paragraph
eight of the Complaint.
10. The U. S. Shoe Defendants admit the averments of paragraph
nine of the Complaint.
11. The U. S. Shoe Defendants admit so much of paragraph ten as
may aver that Plaintiffs made certain averments under the Constitution, laws
and regulations of the United States, deny that Plaintiffs are entitled to
relief under the Constitution, laws or regulations of the United States, and
deny all other averments of paragraph ten of the Complaint.
12. In answer to paragraph eleven, the U. S. Shoe Defendants admit
that this Court has subject matter jurisdiction over certain of Plaintiffs
averments pursuant to 28 U.S.C. Section 1331 (federal question), and deny all
other averments of paragraph eleven of the Complaint.
13. The U. S. Shoe Defendants admit so much of paragraph twelve as
avers that venue is proper in this judicial district pursuant to 28 U.S.C.
Section 1391(b) and (c), and that venue in this division is proper pursuant to
Rule 3.3(c) of the S.D. Ohio L.R as to Counts One and Two of the Complaint, and
deny all other averments of paragraph twelve of the Complaint.
14. The U. S. Shoe Defendants deny the averments of paragraph
thirteen of the Complaint.
15. The U. S. Shoe Defendants admit the averments of paragraph
fourteen of the Complaint, except that Luxottica's stated motivation for
seeking non-public information is denied
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16. The U. S. Shoe Defendants are without knowledge or information
sufficient to form a belief as to the averments of paragraph fifteen of the
Complaint.
17. The U. S. Shoe Defendants admit so much of paragraph sixteen
as may aver that Plaintiffs commenced, on March 3, 1995, a tender offer (the
"Tender Offer") for all of the outstanding common shares of U. S. Shoe at a
price of $24 per share, and are without knowledge or information sufficient to
form a belief as to all other averments of paragraph sixteen of the Complaint.
18. The U. S. Shoe Defendants admit the averments of the first,
second and fifth sentences of paragraph seventeen. The U. S. Shoe Defendants
deny the averments of the third and fourth sentences of paragraph seventeen.
The U. S. Shoe Defendants are without knowledge or information sufficient to
form a belief as to all other averments of paragraph seventeen of the
Complaint.
19. The U. S. Shoe Defendants deny the averments of the first
sentence of paragraph eighteen. The U. S. Shoe Defendants admit the averments
of the second sentence of paragraph eighteen, except the U S. Shoe Defendants
deny that the Offer to Purchase sets forth the material terms of the Tender
Offer. The U. S. Shoe Defendants admit so much of the third and fourth
sentences of paragraph eighteen as may aver that Plaintiffs are filing certain
documents with the Division, and have delivered an Acquiring Person Statement
to U. S. Shoe, and are without knowledge or information sufficient to form a
belief as to all other averments of the third and fourth sentences of paragraph
eighteen of the Complaint.
20. In answer to paragraph nineteen, the U. S. Shoe Defendants say
the Williams Act and rules promulgated thereunder speak for themselves, and
deny all other averments of paragraph nineteen of the Complaint.
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21. In answer to paragraph twenty, the U. S. Shoe Defendants say
the Williams Act and rules promulgated thereunder speak for themselves, and
deny all other averments of paragraph twenty of the Complaint.
22. In answer to paragraph twenty-one, the U. S. Shoe Defendants
say the Williams Act and rules promulgated thereunder speak for themselves, and
deny all other averments of paragraph twenty-one of the Complaint.
23. In answer to paragraph twenty-two, the U. S. Shoe Defendants
say the Williams Act and rules promulgated thereunder speak for themselves, and
deny all other averments of paragraph twenty-two of the Complaint.
24. In answer to paragraph twenty-three, the U. S. Shoe Defendants
say the Williams Act and rules promulgated thereunder speak for themselves, and
deny all other averments of paragraph twenty-three of the Complaint.
25. In answer to paragraph twenty-four, the U. S. Shoe Defendants
say the Ohio Takeover Act speaks for itself, and deny all other averments of
paragraph twenty-four of the Complaint.
26. In answer to paragraph twenty-five, the U. S. Shoe Defendants
say the Ohio Takeover Act speaks for itself, and deny all other averments of
paragraph twenty-five of the Complaint.
27. In answer to paragraph twenty-six, the U. S. Shoe Defendants
say the Ohio Takeover Act speaks for itself, and deny all other averments of
paragraph twenty-six of the Complaint.
28. The U. S. Shoe Defendants deny the averments of paragraph
twenty-seven of the Complaint.
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29. In answer to paragraph twenty-eight, the U. S. Shoe Defendants
say the Ohio Takeover Act speaks for itself, and deny all other averments of
paragraph twenty-eight of the Complaint.
30. In answer to paragraph twenty-nine, the U. S. Shoe Defendants
say the Ohio Takeover Act speaks for itself, and deny all other averments of
paragraph twenty-nine of the Complaint.
31. In answer to paragraph thirty, the U. S. Shoe Defendants say
the Ohio Takeover Act speaks for itself, and deny all other averments of
paragraph thirty of the Complaint.
32. The U. S. Shoe Defendants deny the averments of paragraph
thirty-one of the Complaint.
33. In answer to paragraph thirty-two, the U. S. Shoe Defendants
say the Ohio Control Share Acquisition Act speaks for itself, and deny all
other averments of paragraph thirty-two of the Complaint.
34. In answer to paragraph thirty-three, the U. S. Shoe Defendants
say the Ohio Control Share Acquisition Act speaks for itself, and deny all
other averments of paragraph thirty-three of the Complaint.
35. In answer to paragraph thirty-four, the U. S. Shoe Defendants
say the Ohio Control Share Acquisition Act speaks for itself, and deny all
other averments of paragraph thirty-four of the Complaint.
36. The U. S. Shoe Defendants deny the averments of paragraph
thirty-five of the Complaint.
37. In answer to paragraph thirty-six, the U. S. Shoe Defendants
say Ohio Rev. Code Section 1701.01(CC)(2) speaks for itself, and no further
answer is required.
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38. The U. S. Shoe Defendants deny the averments of paragraph
thirty-seven of the Complaint.
39. The U. S. Shoe Defendants admit the averments of the first,
second and third sentences of paragraph thirty-eight, and are without knowledge
or information sufficient to form a belief as to the averments of the fourth
and fifth sentences of paragraph thirty-eight. The U. S. Shoe Defendants deny
all other averments of paragraph thirty-eight of the Complaint.
40. In answer to paragraph thirty-nine, the U. S. Shoe Defendants
say the Exchange Act and regulations promulgated thereunder speak for
themselves, and deny all other averments of paragraph thirty-nine of the
Complaint.
41. In answer to paragraph forty, the U. S. Shoe Defendants say
the Exchange Act and regulations promulgated thereunder speak for themselves,
and deny all other averments of paragraph forty of the Complaint.
42. The U. S. Shoe Defendants deny the averments of paragraph
forty-one of the Complaint.
43. In answer to paragraph forty-two, the U. S. Shoe Defendants
say the Williams Act and the regulations thereunder speak for themselves, admit
that U. S. Shoe and Luxottica Acquisition are subject to the Williams Act, and
deny all other averments of paragraph forty- two of the Complaint.
44. The U. S. Shoe Defendants deny the averments of paragraph
forty-three of the Complaint.
45. In answer to paragraph forty-four, the U. S. Shoe Defendants
say the Ohio Revised Code speaks for itself, and deny all other averments of
paragraph forty-four.
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46. The U. S. Shoe Defendants admit so much of paragraph
forty-five as may aver that U. S. Shoe adopted a plan providing for the
issuance of Preference Shares Purchase Rights (the "Rights") on March 31, 1986,
implemented such rights on April 14, 1986, and deny all other averments of
paragraph forty-five of the Complaint.
47. The U. S. Shoe Defendants admit so much of paragraph forty-six
as may aver that on March 23, 1988, U. S. Shoe amended the Preference Shares
Purchase Rights Agreement (the "Rights Agreement"), say that U.S. Shoe further
amended the Rights Agreement on June 1, 1993, and deny all other averments of
paragraph forty-six of the Complaint.
48. In answer to paragraph forty-seven, the U. S. Shoe Defendants
say that the Rights Agreement, as amended, speaks for itself, and deny all
other averments of paragraph forty-seven.
49. In answer to paragraph forty-eight, the U. S. Shoe Defendants
say that the Rights Agreement, as amended, speaks for itself, and deny all
other averments of paragraph forty-eight.
50. The U. S. Shoe Defendants admit the averments of the first
sentence of paragraph forty-nine, and is without knowledge or information
sufficient to form a belief as to all other averments of paragraph forty-nine
of the Complaint.
51. In answer to paragraph fifty, the U. S. Shoe Defendants say
that the Rights Agreement, as amended, speaks for itself, and deny all other
averments of paragraph fifty of the Complaint.
52. In answer to paragraph fifty-one, the U. S. Shoe Defendants
say that the Rights Agreement, as amended, speaks for itself, and deny all
other averments of paragraph fifty-one of the Complaint.
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53. In answer to paragraph fifty-two, the U. S. Shoe Defendants
say that the Rights Agreement, as amended, speaks for itself, and deny all
other averments of paragraph fifty-two of the Complaint.
54. In answer to paragraph fifty-three, the U. S. Shoe Defendants
say that the Rights Agreement, as amended, speaks for itself, and deny all
other averments of paragraph fifty-three of the Complaint.
55. In answer to paragraph fifty-four, the U. S. Shoe Defendants
say that the Rights Agreement, as amended, speaks for itself, and deny all
other averments of paragraph fifty-four of the Complaint.
56. In answer to paragraph fifty-five, the U. S. Shoe Defendants
say that the Rights Agreement, as amended, speaks for itself, and deny all
other averments of paragraph fifty-five of the Complaint.
57. In answer to paragraph fifty-six, the U. S. Shoe Defendants
say that the Rights Agreement, as amended, speaks for itself, and deny all
other averments of paragraph fifty-six of the Complaint.
58. In answer to paragraph fifty-seven, the U. S. Shoe Defendants
say that the Rights Agreement, as amended, speaks for itself, and deny all
other averments of paragraph fifty-seven of the Complaint.
59. In answer to paragraph fifty-eight, the U. S. Shoe Defendants
say that the Rights Agreement, as amended, speaks for itself, and deny all
other averments of paragraph fifty-eight of the Complaint.
60. The U. S. Shoe Defendants deny the averments of paragraph
fifty-nine of the Complaint.
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61. In answer to paragraph sixty, the U. S. Shoe Defendants say
that the Rights Agreement, as amended, speaks for itself, and deny all other
averments of paragraph sixty of the Complaint.
62. The U. S. Shoe Defendants deny the averments of paragraph
sixty-one of the Complaint.
63. The U. S. Shoe Defendants admit the averments of the first
three sentences of paragraph sixty-two, and deny all other averments of
paragraph sixty-two of the Complaint.
64. In answer to paragraph sixty-three, the U. S. Shoe Defendants
say that the Rights speak for themselves, and deny all other averments of
paragraph sixty-three of the Complaint.
65. In answer to paragraph sixty-four, the U. S. Shoe Defendants
say that the Rights Agreement, as amended, speaks for itself, and deny all
other averments of paragraph sixty-four of the Complaint.
66. The U. S. Shoe Defendants deny the averments of paragraph
sixty-five of the Complaint.
67. In answer to paragraph sixty-six, the U. S. Shoe Defendants
say the Rights Agreement speaks for itself, and deny all other averments of
paragraph sixty-six of the Complaint.
68. The U. S. Shoe Defendants deny the averments of paragraph
sixty-seven of the Complaint.
69. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph sixty-eight of the Complaint.
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70. In answer to paragraph sixty-nine of the Complaint, the U. S.
Shoe Defendants say the United States Constitution speaks for itself, and deny
all other averments of paragraph sixty-nine.
71. The U. S. Shoe Defendants admit the averments of paragraph
seventy of the Complaint.
72. The U. S. Shoe Defendants deny the averments of paragraph
seventy-one of the Complaint.
73. The U. S. Shoe Defendants deny the averments of paragraph
seventy-two of the Complaint.
74. The U. S. Shoe Defendants deny the averments of paragraph
seventy-three of the Complaint.
75. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph seventy-four of the Complaint.
76. In answer to paragraph seventy-five, the U. S. Shoe Defendants
say the United States Constitution speaks for itself, and deny all other
averments of paragraph seventy-five of the Complaint.
77. The U. S. Shoe Defendants deny the averments of paragraph
seventy-six of the Complaint.
78. The U. S. Shoe Defendants deny the averments of paragraph
seventy-seven of the Complaint.
79. The U. S. Shoe Defendants deny the averments of paragraph
seventy-eight of the Complaint.
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80. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph seventy-nine of the Complaint.
81. The U. S. Shoe Defendants deny the averments of paragraph
eighty of the Complaint.
82. The U. S. Shoe Defendants deny the averments of paragraph
eighty-one of the Complaint.
83. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph eighty-two of the Complaint.
84. The U. S. Shoe Defendants deny the averments of paragraph
eighty-three of the Complaint.
85. The U. S. Shoe Defendants deny the averments of paragraph
eighty-four of the Complaint.
86. The U. S. Shoe Defendants deny the averments of paragraph
eighty-five of the Complaint.
87. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph eighty-six of the Complaint.
88. In answer to paragraph eighty-seven of the Complaint, the U.
S. Shoe Defendants say its Amended Articles of Incorporation speak for
themselves, and deny all other averments of paragraph eighty-seven of the
Complaint.
89. The U. S. Shoe Defendants admit so much of paragraph
eighty-eight as may aver that the shares are a property right of the
shareholders, and deny all other averments of paragraph eighty-eight of the
Complaint.
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<PAGE> 13
90. The U. S. Shoe Defendants deny the averments of paragraph
eighty-nine of the Complaint.
91. In answer to paragraph ninety, the U. S. Shoe Defendants say
the United States Constitution and the Ohio Constitution speak for themselves,
and deny all other averments of paragraph ninety of the Complaint.
92. The U. S. Shoe Defendants deny the averments of paragraph
ninety-one of the Complaint.
93. The U. S. Shoe Defendants deny the averments of paragraph
ninety-two of the Complaint.
94. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph ninety-three of the Complaint.
95. In answer to paragraph ninety-four, the U. S. Shoe Defendants
say the Rights Agreement, as amended, speaks for itself, and deny all other
averments of paragraph ninety-four.
96. The U. S. Shoe Defendants admit the first clause of paragraph
ninety-five, and deny all other averments of paragraph ninety- five of the
Complaint.
97. The U. S. Shoe Defendants admit the first clause of paragraph
ninety-six, and deny all other averments of paragraph ninety- six of the
Complaint.
98. The U. S. Shoe Defendants deny the averments of paragraph
ninety-seven of the Complaint.
99. The U. S. Shoe Defendants deny the averments of paragraph
ninety-eight of the Complaint.
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<PAGE> 14
100. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph ninety-nine of the Complaint.
101. The U. S. Shoe Defendants deny the averments of paragraph 100
of the Complaint.
102. The U. S. Shoe Defendants deny the averments of paragraph 101
of the Complaint.
103. The U. S. Shoe Defendants admit so much of paragraph 102 as
may aver that its Board of Directors has not redeemed the Rights, and are
without knowledge or information sufficient to form a belief as to all other
averments of paragraph 102 of the Complaint.
104. The U. S. Shoe Defendants deny the averments of paragraph 103
of the Complaint.
105. The U. S. Shoe Defendants deny the averments of paragraph 104
of the Complaint.
106. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph 105 of the Complaint.
107. In answer to paragraph 106, the U. S. Shoe Defendants say the
Rights Agreement, as amended, speaks for itself, and deny all other averments
of paragraph 106 of the Complaint.
108. The U. S. Shoe Defendants deny the averments of paragraph 107
of the Complaint.
109. The U. S. Shoe Defendants admit the averments of paragraph 108
of the Complaint.
110. The U. S. Shoe Defendants deny the averments of paragraph 109
of the Complaint.
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<PAGE> 15
111. The U. S. Shoe Defendants deny the averments of paragraph 110
of the Complaint.
112. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph 111 of the Complaint.
113. The U. S. Shoe Defendants admit the averments of paragraph 112
of the Complaint, at least as of March 16, 1995
114. In answer to paragraph 113, the U. S. Shoe Defendants admit
that Avant-Garde delivered a letter dated March 7, 1995, to U. S. Shoe, say
that the letter speaks for itself, and deny all other averments of paragraph
113 of the Complaint.
115. The U. S. Shoe Defendants admit that U. S. Shoe sent a letter
to Avant-Garde dated March 10, 1995, say that the letter speaks for itself, and
deny all other averments of paragraph 114 of the Complaint.
116. The U. S. Shoe Defendants deny the averments of paragraph 115
of the Complaint.
117. The U. S. Shoe Defendants deny the averments of paragraph 116
of the Complaint.
118. In answer to paragraph 117, the U. S. Shoe Defendants say the
written request that Luxottica and Luxottica Acquisition delivered to U. S.
Shoe attached as Exhibit B to the Complaint speaks for itself, and deny all
other averments of paragraph 117.
119. In answer to paragraph 118, the U. S. Shoe Defendants say that
Luxottica Group, Luxottica Acquisition, Avant-Garde and certain other
shareholders submitted a written request to U. S. Shoe, attached as Exhibit C
to the Complaint, say such written request speaks for itself, and deny all
other averments of paragraph 118 of the Complaint.
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120. The U. S. Shoe Defendants admit the averments of paragraph 119
of the Complaint, and say that later that same day, March 10, 1995, the
directors of U. S. Shoe fixed the close of business on March 21, 1995, as the
record date for the 831 Special Meeting.
121. The U. S. Shoe Defendants deny the averments of paragraph 120
of the Complaint.
122. In answer to paragraph 121, the U. S. Shoe Defendants admit
that Plaintiffs seek a declaration by the Court, and deny all other averments
of paragraph 121.
123. The U. S. Shoe Defendants deny the averments of paragraph 122
of the Complaint.
124. The U. S. Shoe Defendants deny the averments of paragraph 123
of the Complaint.
125. The U. S. Shoe Defendants deny the averments of paragraph 124
of the Complaint.
126. The U. S. Shoe Defendants deny all other averments not
specifically admitted herein.
SECOND DEFENSE
127. Plaintiffs are not entitled to equitable relief, on the
grounds of unclean hands, because Luxottica and Luxottica Acquisition have made
misstatements and omissions of material fact in the Offer and their Schedule
14D-1, as described below.
THIRD DEFENSE
128. Plaintiffs, or one or more of them, may lack standing to
assert claims.
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COUNTERCLAIMS OF U. S. SHOE
JURISDICTION
129. U. S. Shoe asserts the following Counterclaims against
Plaintiffs. As detailed below, the Plaintiffs are violating the disclosure
requirements of the federal securities laws that apply to tender offers, and
should be enjoined from continuing the Luxottica tender offer until full and
fair disclosure is made to the investing public, as required by the federal
securities laws.
130. This Court has subject matter jurisdiction over Counts I through
VII of U. S. Shoe's Counterclaim pursuant to the provisions of Section 27 of
the Securities Exchange Act of 1934 ("Exchange Act"), 15 U. S.C. Section 78aa,
and 28 U. S. C. Section 1331 (a). These claims arise under Sections 14
(d) and (e) of the Exchange Act, 15 U.S.C. Section 78n, and the rules and
regulations promulgated thereunder.
131. This Court has subject matter jurisdiction over Counts VII and
VIII of U. S. Shoe's Counterclaim for violations of Ohio Rev. Code Section
1707.041 pursuant to the principles of pendant jurisdiction.
132. Venue for U. S. Shoe's Counterclaim is proper in this judicial
district because Plaintiffs conduct business in this district, and the claims
stated herein arose in this district.
133. The acts of Plaintiffs alleged herein occurred in and have a
substantial effect on interstate commerce.
FACTS COMMON TO ALL COUNTERCLAIMS
134. On or about March 3, 1995 Luxottica and Luxottica Acquisition,
an indirect wholly-owned Delaware subsidiary of Luxottica, commenced a takeover
bid (the "Tender Offer") for all the issued and outstanding common shares of U.
S. Shoe (the "Shares"). The Tender Offer is described in an Offer to Purchase
dated March 3, 1995 (the "Offer"). If consummated,
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the Tender Offer will result in the acquisition of U. S. Shoe by Luxottica,
Luxottica Acquisition, or some subsidiary or affiliate of one or both of them.
Shares are currently being tendered and, by its terms, the Tender Offer will
expire at 12:00 midnight, EST, March 30, 1995.
135. The Shares are a class of equity securities registered on the
New York and Pacific Stock Exchanges.
136. Luxottica and Luxottica Acquisition have filed a Schedule
14D-1, as amended, (the "14D-1"), under Section 14(d) of the Exchange Act, with
the Securities and Exchange Commission ("SEC") with respect to the Tender
Offer. The 14D-1 contains, among other exhibits, the Offer, purportedly setting
forth the material terms of the Tender Offer.
137. 17 CFR Section 240.14d-100 (Schedule 14D-1) requires
Luxottica and Luxottica Acquisition to disclose certain information, which the
SEC has determined to be material.
138. By letter dated March 2, 1995 (such letter, including the
accompanying term sheet (the "Term Sheet"), is referred to as the "Commitment
Letter"), Credit Suisse's New York branch ("Credit Suisse") issued a
"commitment" to an unidentified "Borrower" to provide, subject to the terms and
conditions set forth in the Commitment Letter, a term loan facility in the
amount of US$1.0 billion (the "Term Loan Facility") and a revolving credit
facility in the amount of US$450 million (the "Revolving Credit Facility",
which together are referred to collectively as the "Credit Facility").
139. The Offer indicates that after the purchase of the Shares
under the Tender Offer, Luxottica Acquisition will effect a merger pursuant to
which Luxottica Acquisition will be merged with and into U. S. Shoe (the
"Merger") and, as a result of the Merger, U. S. Shoe will become an indirect
wholly-owned subsidiary of Luxottica.
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<PAGE> 19
140. The Commitment Letter indicates that the "Borrower" for
purposes of the Commitment Letter, and the borrower under the Credit Facility,
will be another newly-formed indirect wholly-owned Delaware subsidiary of
Luxottica (the "Borrower").
141. The Commitment Letter indicates that the Borrower will make a
cash contribution of the loan proceeds under the Term Loan Facility to
Avant-Garde, an operating company based in Port Washington, New York, and an
existing direct wholly-owned subsidiary of Luxottica, which will in turn
contribute such amount as a cash contribution to Luxottica Acquisition.
142. The Commitment Letter indicates that the loans under the
Credit Facility will be used to finance the acquisition of the Shares pursuant
to the Tender Offer. The Term Sheet indicates that only the loans under the
Term Loan Facility (the "Term Loans") are to be utilized by Luxottica
Acquisition to finance the Tender Offer and the Merger and to pay fees and
expenses in connection therewith.
143. The Term Sheet indicates that the loans under the Revolving
Credit Facility are to 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 the Term
Loans and to refinance no more than $140 million of existing
indebtedness of [U. S. Shoe] after giving effect to the
Merger."
144. The Commitment Letter indicates that all amounts owing under
the Credit Facility (and all obligations under the guarantees referred to
below) will be secured by pledges of the capital stock of the Borrower and its
subsidiary Avant-Garde, as well as by "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 [U. S. Shoe] after the
merger)."
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<PAGE> 20
145. The Commitment Letter indicates that the Credit Facility will
be guaranteed by Luxottica, Luxottica S.p.A. and La Meccanoptica Leonardo
S.p.A., which are subsidiaries of Luxottica, by all subsidiaries of the
Borrower and by all other U.S. subsidiaries of Luxottica. The Commitment
Letter also indicates that the collateral security for the Credit Facility will
include all notes and capital stock owned by all other U.S. subsidiaries of
Luxottica and security interests in substantially all other assets owned by
the Borrower and its subsidiaries and by all other U.S. subsidiaries of
Luxottica. Finally, the Commitment Letter indicates that the Credit Facility
will also be secured by a negative pledge of substantially all assets of
Luxottica and its subsidiaries, including the capital stock of Luxottica's non-
U.S. subsidiaries.
146. By its terms, the Commitment Letter is made contingent upon
the fulfillment of a number of conditions, including that all loans and other
financing to the Borrower shall be in full compliance with all requirements of
Regulations G, T, U and X (together "the Board Regulations") of the Board of
Governors of the Federal Reserve System (the "Board").
147. In Amendment No. 4 to the 14D-1 ("Fourth Amendment") filed by
Luxottica and Luxottica Acquisition on March 16, 1995, Luxottica and Luxottica
Acquisition state: "Credit Suisse is prepared to fund their commitment on the
expiration date of our offer." This statement contradicts the terms and
conditions stated in the Commitment Letter, because certain of such terms and
conditions could not be met as of March 16, 1995, as described below.
148. In the Fourth Amendment, Luxottica and Luxottica Acquisition
state that U. S. Shoe's agreement for the sale of the Footwear Group to Nine
West Group, Inc. ("Nine West") "appears to be conditioned on financing."
149. U. S. Shoe's agreement with Nine West is not conditioned on
financing.
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<PAGE> 21
150. Luxottica manufactures and sells eyeglass frames worldwide.
Upon information and belief, in 1994, Luxottica sold approximately $504 million
of eyeglass frames (12.8 million pairs) worldwide. Upon information and
belief, approximately 40% of Luxottica's sales of eyeglass frames are made in
the United States. Luxottica sells eyeglass frames primarily to independent
eyeglass vendors and also to chains such as Sunglass Hut, Pearle and Vision
Works.
151. Through its LensCrafters subsidiary, U. S. Shoe operates the
largest chain of optical superstore retail outlets in the United States and
Canada, with 530 outlets in the United States and 59 outlets in Canada.
152. In fiscal 1994, LensCrafters purchased eyeglass frames from
approximately thirty-three frame manufacturers. Traditionally, LensCrafters
has purchased a relatively modest volume of frames from Luxottica. For
instance, in 1994 LensCrafters purchased approximately $5,524,000 in frames
from Luxottica, representing approximately 7% of U. S. Shoe's total fiscal 1994
eyeglass frame purchases. Upon information and belief, Luxottica has initiated
its acquisition as set forth below in order to force LensCrafters to purchase
frames from Luxottica, which frames LensCrafters would otherwise purchase from
competitors of Luxottica .
153. Upon information and belief, Leonardo Del Vecchio, an Italian
citizen ("Mr. Del Vecchio"), owns 36% of Luxottica directly. Upon information
and belief, he controls the voting rights to Luxottica's shares held by La
Leonardo Finanziaria, an Italian company ("Finanziaria"), which owns
approximately 35% of Luxottica. Upon information and belief, he controls an
aggregate of approximately 71% of Luxottica's shares.
154. Upon information and belief, Mr. Del Vecchio is quoted as
stating that one of the reasons for the Tender Offer was that LensCrafters was
sourcing a considerable amount of merchandise from the Far East, thereby
indicating that Mr. Del Vecchio intends to shift
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<PAGE> 22
LensCrafters purchasing toward European suppliers, including Luxottica.
(Financial Times, March 10, 1995).
155. Upon information and belief, Mr. Del Vecchio is quoted as
stating that another purpose of the Tender Offer is defensive, in an attempt to
prevent LensCrafters and Pearle Vision from attaining a 50% North American
market share. (Financial Times, March 10, 1995).
156. Upon information and belief, the Italian press has reported
that Mr. Del Vecchio, the wealthiest taxpayer in Italy, is personally worth two
trillion lira (about $1.2 billion dollars). (Il Mondo, January 23, 1995.)
COUNT I
VIOLATION OF SECTION 14 OF THE EXCHANGE ACT - PURPOSE OF TENDER OFFER
157. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
158. Schedule 14D-1, Item 5, requires Luxottica and Luxottica
Acquisition to disclose the purpose of the Tender Offer.
159. As stated above, Mr. Del Vecchio, who is a controlling person
of Luxottica and Luxottica Acquisition, has stated to the foreign press
purposes for the Tender Offer that are not disclosed in the Offer or the
14D-1.
160. The 14D-1 is materially misleading regarding the purpose of
the Tender Offer, because it does not disclose the true purposes for the Tender
Offer.
161. The 14D-1 violates Sections 14 (d) and (e) of the
Exchange Act, 15 U. S. C. Section 78 n, and the rules and regulations
promulgated thereunder.
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<PAGE> 23
COUNT II
VIOLATION OF SECTION 14 OF THE EXCHANGE ACT - TENDER OFFER STRUCTURE
162. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
163. Schedule 14D-1 requires identification of the "Bidder" on
whose behalf a tender offer is made.
164. Schedule 14D-1 defines "Bidder" as "any person or entity on
whose behalf a tender offer is made."
165. In view of Luxottica's complicated corporate structure, the
reference in the Offer to Luxottica Acquisition as an "indirect" wholly-owned
subsidiary of Luxottica is inadequate disclosure of the identity of the Bidder,
because it fails to identify any other persons or entities in the chain of
ownership and/or control of Luxottica and Luxottica Acquisition.
166. The Offer fails to provide adequate disclosure of the identity
of the acquiring persons or entities in the Tender Offer, and therefore fails to
disclose adequately the identity of the Bidder. The Offer describes Luxottica
Acquisition as ". . . an indirect wholly- owned subsidiary of Luxottica Group,
S.p.A." According to the Commitment Letter, however, "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 . . . . [of U. S. Shoe]." Neither the identity nor the existence
of "Newco 1" is disclosed in the Offer.
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167. The Commitment Letter indicates that Avant-Garde is to acquire
the Shares purchased pursuant to the Tender Offer by Luxottica Acquisition. The
Offer fails to disclose this material fact.
168. The Offer violates Sections 14 (d) and (e) of the
Exchange Act, 15 U. S. C. Section 78 n, and the rules and regulations
promulgated thereunder.
COUNT III
VIOLATION OF SECTION 14 OF THE EXCHANGE ACT - CONTROL OF BIDDER
169. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
170. Schedule 14D-1, Item 10(f), requires Luxottica and Luxottica
Acquisition to disclose "[s]uch additional information, if any, [as] may be
necessary to make the required statements, in the light of the circumstances
under which they were made, not materially misleading."
171. Schedule 14D-1, General Instruction C, requires Luxottica and
Luxottica Acquisition to provide information regarding "each person controlling
such corporation." Luxottica has failed to disclose the identity of Mr. Del
Vecchio (and perhaps other persons), and material information about him, as a
controlling person of Luxottica in violation of Schedule 14D-1.
172. The 14D-1 violates Sections 14 (d) and (e) of the
Exchange Act, 15 U. S. C. Section 78 n, and the rules and regulations
promulgated thereunder.
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COUNT IV
VIOLATION OF SECTION 14 OF THE EXCHANGE ACT - DESCRIPTION OF FINANCING
173. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
174. Schedule 14D-1, Item 5, requires Luxottica to describe the
financing of the Tender Offer.
175. The 14D-1 fails to meet the requirements of Schedule 14D-1 and
is misleading, because it fails to disclose material facts pertaining to the
financing of the Tender Offer in, among others, the following respects:
(a) The convoluted financial and other relationships
among the undisclosed Borrower, Avant-Garde, Luxottica and Luxottica
Acquisition, as described above, are not disclosed in the Offer
itself. Upon information and belief, such relationships have no
purpose other than to mask the fact that the Credit Facility is being
extended for the purpose of purchasing "margin stock" in violation of
the Board Regulations.
(b) The identity of the actual Borrower of the Credit
Suisse financing is never identified in the Offer, in violation of
Item 4(b)(1) of Schedule 14D-1. The Offer is misleading, because it
implies that the Borrower is actually Luxottica Acquisition Corp.,
rather than "Newco 1" or some other Luxottica subsidiary.
(c) The Offer states that the ". . . Offer is conditioned
upon the Purchaser being satisfied . . . that the Purchaser [Luxottica
Acquisition] has obtained sufficient financing to enable it to
consummate the Offer . . . .", and directs the reader to Section 9 for
a description of the financing. The Offer is again conditioned at
Sections 9 and 14 upon sufficient financing being obtained by
Luxottica Acquisition.
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<PAGE> 26
(d) The Commitment Letter contradicts the Offer, as
described above.
(e) The Terms and Conditions in "Condition Precedent to
the Closing Date,"Section A (xiv), states that all loans under the
Credit Facility must be in full compliance with all requirements of
the Board Regulations before the financing may be completed, but such
limitation is not explicitly stated in the Offer, which fails to
disclose adequately the risk that the financing may be challenged for
noncompliance with the Board Regulations, as described below.
(f) The Offer fails to disclose how much of the Revolving
Credit Facility may be used to purchase the Shares.
(g) The Commitment Letter indicates that the financing is
subject to Credit Suisse's approval of key loan documentation in its
sole discretion. The Offer does not adequately disclose that the
financing is subject to the sole discretion of Credit Suisse.
(j) The Fourth Amendment falsely states that "Credit
Suisse is prepared to fund their commitment on the expiration date of
our offer....", whereas the commitment of Credit Suisse is subject to
terms and conditions that could not possibly be satisfied as of March
16, 1995.
176. The 14D-1 violates Sections 14 (d) and (e) of the
Exchange Act, 15 U. S. C. Section 78 n, and the rules and regulations
promulgated thereunder.
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COUNT V
VIOLATION SECTION 14 OF EXCHANGE ACT - MISSTATEMENT ABOUT U.S. SHOE'S AGREEMENT
177. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
178. The Fourth Amendment falsely states that U. S. Shoe's
agreement with Nine West "appears to be conditioned on financing....", whereas
in truth and in fact, it is not conditioned on financing.
179. The 14D-1 violates Sections 14 (d) and (e) of the
Exchange Act, 15 U. S. C. Section 78 n, and the rules and regulations
promulgated thereunder.
COUNT VI
VIOLATION OF SECTION 14 OF EXCHANGE ACT - REGULATION U
180. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
181. The 14D-1 and the Offer contain untrue statements of material
fact and omit to state material facts necessary to make statements made, in
light of the circumstances in which they were made, not misleading, in
violation of Section 14(d) of the Exchange Act as follows:
(a) The Offer fails to disclose a violation of the Board
Regulations, which prohibit any bank from extending any "purpose
credit" to Luxottica Acquisition for the purchase of U. S. Shoe
Shares, on the terms described in the Commitment Letter.
(b) The Offer fails to disclose that the financing
institution providing purpose credit as defined by the Board
Regulations is a branch of a foreign bank located within the United
States.
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<PAGE> 28
(c) The Offer fails to disclose that the Credit Facility
to be used to purchase the Shares is credit for the "purpose, whether
immediate, incidental or ultimate, of buying or carrying margin stock"
and therefore subject to the requirements of the Board Regulations.
(d) The Offer fails to disclose that all credit extended
by a bank for the purpose of purchasing "any equity security
registered or having unlisted trading privileges on a national
securities exchange," which includes the Shares, must conform to the
requirements of the Board Regulations limiting the amount of credit
available for the purchase of such "margin stock."
(e) The Offer fails to disclose that, as a loan subject
to the Board Regulations, the Credit Facility must meet certain
collateralization requirements, including but not limited to the
requirement that Credit Suisse may not make the Credit Facility
available to the Borrower for the purpose of acquiring the Shares in
reliance upon more than fifty percent (50%) of the value of the Shares
as collateral for the loan.
(f) The Offer fails to disclose that there appears to be
insufficient value in the nonstock collateral securing the $1.450
billion loan for Credit Suisse to make available to the Borrower all
or a portion of the Credit Facility without violating the Board
Regulations.
(g) The Offer fails to disclose the possible effect of
future changes in value of the Italian lira on valuation of
Luxottica's nonstock assets and the Borrower's ability to comply with
the Board Regulations.
182. The 14D-1 violates Sections 14 (d) and (e) of the Exchange
Act, 15 U. S. C. Section 78 n, and the rules and regulations promulgated
thereunder.
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COUNT VII
183. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
184. On or about March 10, 1995, Luxottica issued a press release
announcing that it and certain shareholders of U.S. Shoe had set March 17, 1995
as the record date for a special meeting of U.S. Shoe shareholders under Ohio's
Control Share Acquisition Act and the record date for the call by certain U.S.
Shoe shareholders of a special meeting to remove all of the incumbent U.S. Shoe
directors.
185. On or about March 14, 1995, Luxottica announced that it had
rescinded the record dates set for March 17, 1995, and was setting record dates
for both meetings as of March 21, 1995. Luxottica further announced that March
21 would be the record date for determining U.S. Shoe shareholders entitled to
execute "Agent Designations" for the call of the second special meeting to oust
the board of directors.
186. The right to set record dates is reserved to the Board of
Directors of U.S. Shoe under the Ohio Revised Code, and Plaintiffs have no
power to set any record date for any special meeting of U.S. Shoe.
187. The Ohio Revised Code does not provide for the setting of any
record date for the execution of "Agent Designations" for the purpose of
calling special meetings of U.S. Shoe shareholders.
188. Luxottica's public announcements that it has established
record dates for special meetings of U.S. Shoe shareholders and for the
execution of "Agent Designations" are false and misleading statements of
material fact, intended to mislead and confuse shareholders of U.S. Shoe.
These public announcements violate Ohio Rev. Code Section 1707.042 and Section
14 (e) of the
- 29 -
<PAGE> 30
Exchange Act, 15 U.S.C. Section 78n, and the rules and regulations promulgated
thereunder. U.S. Shoe and its shareholders will suffer irreparable harm as a
result of such false and misleading statements absent an injunction.
COUNT VIII
VIOLATIONS OF OHIO REV. CODE SECTION 1707.041
189. U. S. Shoe incorporates by reference each allegation
contained above as if restated in full herein.
190. Ohio Rev. Code Section 1707.041 in substance requires that
Luxottica and Luxottica Acquisition send or deliver to all offerees in Ohio a
statement of any plans or proposals they may have to liquidate U. S. Shoe, sell
its assets, effect a merger or consolidation of it, establish, terminate,
convert, or amend employee benefit plans, close any plant or facility of U. S.
Shoe or any of its subsidiaries or affiliates, change or reduce the work force
of U. S. Shoe or any of its subsidiaries or affiliates, or make any other major
changes to its business structure, management or personnel, or policies of
employment.
191. Ohio Rev. Code Section 1707.041 also requires that Luxottica
and Luxottica Acquisition send or deliver to all offerees in Ohio complete
information on the organization and operations of Luxottica and Luxottica
Acquisition, including a description of each class of their stock and of their
long term debt, financial statements for the current period and for the three
most recent annual accounting periods, a brief description of the location and
general character of the principal physical properties of Luxottica and
Luxottica Acquisition and their subsidiaries, a description of pending legal
proceedings other than routine litigation to which Luxottica or Luxottica
Acquisition are parties or of which any of their property is the subject, a
brief description of the business done and projected by Luxottica and Luxottica
and their subsidiaries
- 30 -
<PAGE> 31
and the general development of such business over the last three years, the
names of all directors and executive officers together with biographical
summaries of each for the preceding three years to date, and the approximate
amount of any material interest, direct or indirect, of any of the directors or
officers in any material transactions during the past three years, or in any
proposed transactions, to which Luxottica or Luxottica Acquisition or any of
their subsidiaries are parties.
192. Luxottica and Luxottica have violated the provisions of Ohio
Rev. Code Section 1707.041 described above, and have not mailed or delivered
the required information to shareholders of U. S. Shoe in Ohio.
WHEREFORE, Defendants demand judgment that the Complaint be dismissed,
at Plaintiffs' costs, and for all other relief, legal and equitable, to which
they are entitled.
On its Counterclaim, U. S. Shoe demands judgment:
I That the acquisition of the Shares by Luxottica
and/or Luxottica Acquisition be judged to be in
violation of Section 14(d) - (e) of the Securities
Exchange Act of 1934, as amended, Regulation 14D of
the Securities and Exchange Commission under Section
Sections 14(d) - (e), and Ohio Rev. Code Section
1707.041;
II That Plaintiffs and all other persons acting for or
on their behalf be preliminarily and permanently
enjoined from consummating the Tender Offer or any
other transaction to gain control of U. S. Shoe
and/or the effect of which would be to merge,
consolidate or in any other way combine the business
of U. S. Shoe with those of Plaintiffs, until such
time as Plaintiffs have complied with Sections
14(d) and (e) of the Exchange
- 31 -
<PAGE> 32
Act, 15 U.S.C. Section 78n, and the rules and
regulations promulgated thereunder;
III That Plaintiffs and all other persons acting for or
on their behalf be ordered to cease and desist from
violating the Exchange Act and Ohio Rev. Code Section
1701.041 and to withdraw the false and misleading
Offer, Form 14D-1 and Form 041; and
IV For all other relief, legal and equitable, to which
it is entitled.
/s/ Joseph J. Dehner
----------------------------------------
Joseph J. Dehner (0011321)
Trial Attorney for U. S. Shoe Defendants
2500 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 651-6800
OF COUNSEL:
Michael Yarbrough
Curtis A. Hansen
FROST & JACOBS
One Columbus
10 West Broad Street
Columbus, Ohio 43215-3467
(614) 464-1211
Frederick J. McGavran
Grant S. Cowan
D. Scott Gurney
Adam P. Hall
FROST & JACOBS
2500 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 651-6800
- 32 -
<PAGE> 33
CERTIFICATE OF SERVICE
This is to certify that a copy of the foregoing has been sent by hand
delivery to Thomas B. Ridgley, Esq., Vorys, Sater, Seymour and Pease, 52 East
Gay Street, Columbus, Ohio 43216-1008 and Daniel A. Malkoff, Assistant
Attorney General, 26th Floor, 30 East Broad Street, Columbus, Ohio 43266-0410
on this 22nd day of March, 1995.
/s/ Curtis A. Hansen
---------------------------------------------
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<PAGE> 1
Exhibit 19
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Luxottica Group S.p.A., et al.,
Plaintiffs,
Case No. C2-95-244
vs. JUDGE GRAHAM
The United States Shoe
Corporation, et al.,
Defendants.
ORDER
This matter came before the Court on March 23, 1995 for a
hearing on Defendant The United States Shoe Corporation's Motion for a
Preliminary and Permanent Injunction Enjoining Plaintiffs from Distributing
False and Misleading Information Regarding Plaintiffs' Ability to Set Record
Dates for Meetings of U.S. Shoe Shareholders and "Agent Designations" for
Calling Meetings. Upon consideration of the filings of Plaintiffs and
Defendants, and the arguments presented by counsel at the hearing, and for the
reasons stated upon the record of said hearing, the Court hereby finds that
U.S. Shoe's Motion is well taken and should be granted.
Accordingly, Plaintiffs are hereby permanently enjoined from
making any public statement, any direct statement to U.S. Shoe shareholders,
and/or any statement in any proxy or tender offer materials to be delivered to
U.S. Shoe shareholders which represents that Plaintiffs have the ability to set
or have set,
<PAGE> 2
either 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 U.S. Shoe and/or any record date for soliciting consents and/or
"Agent Designations" for the purpose of calling any special meeting of U.S.
Shoe shareholders.
It is so ORDERED.
/s/ James L. Graham
--------------------
---------- JAMES L. GRAHAM
United States District Judge
DATE: March 23, 1995
2
<PAGE> 1
Exhibit 20
NEWS RELEASE
Contact: Robert M. Burton
Director of Corporate Communications
(513) 517-7471
FOR IMMEDIATE RELEASE
FEDERAL COURT ENJOINS LUXOTTICA GROUP FROM SETTING RECORD DATE FOR U.S. SHOE
SHAREHOLDERS
CINCINNATI, OHIO March 23, 1995 - The United States Shoe
Corporation (NYSE: USE) announced that the United States District Court for the
Southern District of Ohio, Eastern Division, issued an order today prohibiting
Luxottica Group from distributing proxy materials or making any public
statement suggesting that it has the ability to set the record date for any
meeting of U.S. Shoe shareholders.
The judge granted U.S. Shoe's motion, which sought to prohibit Luxottica from
distributing false and misleading information in proxy materials relating to an
agent designation for a special meeting of U.S. Shoe shareholders.
The order reverses Luxottica's attempt to set record dates for shareholders of
U.S. Shoe entitled to vote at the control share acquisition (831) special
meeting and for shareholders entitled to execute agent designations for the
call of a separate, additional meeting to vote on Luxottica's nominees to the
U.S. Shoe Board of Directors.
The order states that "Plaintiffs [Luxottica] are hereby permanently enjoined
from making any public statement, any direct statement to U.S. Shoe
shareholders, and/or any statement in any proxy or tender offer materials to be
delivered to U.S. Shoe shareholders which represents that Plaintiffs have the
ability to set or have set...any record date in connection with any meeting of
the shareholders of U.S. Shoe."
The Board of Directors of U.S. Shoe has previously stated its determination
that Luxottica's $24-a-share tender offer for all outstanding common shares of
U.S. Shoe is inadequate and that it recommends to shareholders that they not
tender their shares to Luxottica.
U.S. Shoe is a specialty retailer of women's apparel, optical products and
footwear, operating 2,349 retail outlets and leased departments in the United
States and abroad.
