<PAGE> 1
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. 5)
--------------
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) 527-7000
(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. 5 amends and supplements the Solicitation/
Recommendation Statement on Schedule 14D-9 filed on March 16, 1995, as
previously amended (the "Schedule 14D-9"), 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. 5. All
capitalized terms not otherwise defined herein shall have the meanings assigned
thereto in the Schedule 14D-9.
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. On March 29, 1995, the Company and
all the Company's Directors filed an Answer denying all material
allegations in the Third Amended Complaint filed by the Luxottica
Plaintiffs (the "Luxottica Third Amended Complaint"), and the Company
filed an Amended Counterclaim against the Luxottica Plaintiffs (the
Answer and the Amended Counterclaim together, the "Amended Company
Answer and Counterclaim"). A copy of the Amended Company Answer and
Counterclaim is filed as Exhibit 26 hereto and is incorporated herein
by reference. The foregoing description of the Amended Company Answer
and Counterclaim is qualified in its entirety by reference to the text
of the Amended Company Answer and Counterclaim.
On March 31, 1995, the Company filed a motion for a preliminary
and permanent injunction (the "March 31 Injunction Motion") enjoining
the Luxottica Plaintiffs from distributing false and misleading
information in their proxy solicitation materials in connection with
the solicitation of Appointments of Designated Agents ("Agent
Designations") to call a special meeting of shareholders. In addition,
the Company filed a motion seeking to dismiss certain counts (the
"March 31 Motion to Dismiss") of the Luxottica Third Amended
Complaint. A copy of the March 31 Injunction Motion and a copy of the
March 31 Motion to Dismiss are filed as Exhibits 27 and 28 hereto,
respectively, and are incorporated herein by reference. The foregoing
descriptions of the March 31 Injunction Motion and the March 31 Motion
to Dismiss are qualified in their entirety by reference to each motion.
On April 7, 1995, the Company and all the Company's Directors
filed with the District Court an Amended Answer, which continues to
deny all material allegations of the Luxottica Third Amended
Complaint, and the Company filed a second Amended Counterclaim (the
Amended Answer and the second Amended Counterclaim, together, the
"Second Amended Company Answer and Counterclaim"). The second Amended
Counterclaim reiterates all counterclaims set forth in the Company's
Amended Counterclaim, filed on March 29, 1995, and adds certain
counts alleging, among other things, violations of Section 14 of the
Securities Exchange Act of 1934 by Luxottica in connection with
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Luxottica's solicitation materials for Agent Designations to call a
special meeting of shareholders. A copy of the Second Amended Company
Answer and Counterclaim is filed as Exhibit 29 hereto and is
incorporated herein by reference. The foregoing description of the
Second Amended Company Answer and Counterclaim is qualified in its
entirety by reference to the text of the Second Amended Company Answer
and Counterclaim.
On April 7, 1995, Judge James L. Graham, United States District
Judge for the Southern District of Ohio, entered an Agreed Pre-Hearing
Order (the "April 7 District Court Order") which outlines certain
claims and counterclaims that will be considered at a hearing
scheduled for April 13-14, 1995. A copy of the April 7 District Court
Order is filed as Exhibit 30 hereto and is incorporated herein by
reference. The foregoing description of the April 7 District Court
Order is qualified in its entirety by reference to the text of the
April 7 District Court Order.
Agent Designation Revocation Proxy Materials. On April 7, 1995,
the Company filed with the Commission, effective April 10, 1995,
definitive proxy materials relating to the solicitation by Luxottica of
Agent Designations to call a special meeting of the shareholders of the
Company, including a letter to shareholders from Bannus B. Hudson,
President and Chief Executive Officer of the Company, dated April 7,
1995, recommending that the Company's shareholders not execute but
rather revoke the Agent Designations (the "Agent Designation Revocation
Proxy Materials"). The Company intends to commence distribution of the
Agent Designation Revocation Proxy Materials on or about April 10,
1995.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
Exhibit 26 - Amended Company Answer and Counterclaim.
Exhibit 27 - March 31 Injunction Motion.
Exhibit 28 - March 31 Motion to Dismiss.
Exhibit 29 - Second Amended Company Answer and Counterclaim.
Exhibit 30 - April 7 District Court Order.
Exhibit 31 - Agent Designation Revocation Proxy Materials.
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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: April 10, 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
------- ------------
26 Amended Company Answer and Counterclaim.
27 March 31 Injunction Motion.
28 March 31 Motion to Dismiss.
29 Second Amended Company Answer and Counterclaim.
30 April 7 District Court Order.
31 Agent Designation Revocation Proxy Materials.
<PAGE> 1
Exhibit 26
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
: TO THIRD AMENDED COMPLAINT
: AND AMENDED COUNTERCLAIM
: OF DEFENDANT THE UNITED
: STATES SHOE CORPORATION
: AGAINST PLAINTIFFS FOR
: PRELIMINARY AND PERMANENT
: INJUNCTION FOR MISSTATEMENTS
: AND OMISSIONS IN SEC FILINGS
AND TENDER OFFER MATERIALS
- --------------------------------------------------------------------------------
FIRST DEFENSE
1. The following is an Answer to the Third 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
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Amended Counterclaims by U. S. Shoe against Plaintiffs for violations of
the federal securities laws applicable to tender offers. The Counterclaim
begins on page seventeen.
2. The U. S. Shoe Defendants admit so much of paragraph one of
the Third 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.
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7. The U. S. Shoe Defendants admit the averments of paragraph six
of the Complaint.
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.
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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
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
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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.
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.
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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.
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.
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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.
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.
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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.
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.
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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.
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.
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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.
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.
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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.
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.
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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.
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.
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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.
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.
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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.
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.
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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.
111. The U. S. Shoe Defendants deny the averments of paragraph 110
of the Complaint.
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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 incorporate their Answer and
Defenses to the averments of paragraph 123 of the Complaint.
125. The U. S. Shoe Defendants admit so much of the first sentence
of paragraph 124 as may aver that in December, 1994 and January, 1995,
Luxottica and its financial advisors gave certain indications to U. S. Shoe and
its financial advisor that Luxottica Group was interested in conducting certain
discussions of Luxottica's interest to purchase U. S. Shoe and in particular
the Optical Group, and deny all other averments of the first sentence of
paragraph 124. The U. S. Shoe Defendants admit the averments of the second
sentence of paragraph 124 of the Complaint.
126. The U. S. Shoe Defendants are without knowledge or information
sufficient to form a belief as to the averments of the first clause of the
first sentence of paragraph 125, and admit the averments of the second clause.
The U. S. Shoe Defendants deny the averments of the second sentence of
paragraph 125 of the Complaint and incorporate in response the material
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set forth in U.S. Shoe's Schedule 14D-9, filed with the Securities and Exchange
Commission, as amended by the First and Second Amendments thereto, copies of
which are attached as Exhibits A, B and C (herein collectively referred to as
the "14D-9.")
127. The U. S. Shoe Defendants admit so much of paragraph 126 as
may aver that U. S. Shoe issued certain press releases, say that the press
releases speak for themselves, incorporate the 14D-9, and deny all other
averments of paragraph 126 of the Complaint.
128. The U. S. Shoe Defendants admit so much of the first sentence
of paragraph 127 as may aver that U. S. Shoe issued certain press releases, say
said press releases speak for themselves, incorporate the 14D-9, and deny all
other averments of the first sentence of paragraph 127. The U. S. Shoe
Defendants deny the averments of the second sentence of paragraph 127 of the
Complaint.
129. The U. S. Shoe Defendants deny the averments of paragraph 128
of the Complaint.
130. In answer to paragraph 129, the U. S. Shoe Defendants say that
Ohio Rev. Code Section 1701.59 speaks for itself, and deny all other averments
of paragraph 129 of the Complaint.
131. The U. S. Shoe Defendants admit the averments of paragraph 130
of the Complaint.
132. The U. S. Shoe Defendants admit the averments of paragraph 131
of the Complaint.
133. The U. S. Shoe Defendants admit the averments of paragraph 132
of the Complaint.
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<PAGE> 19
134. The U. S. Shoe Defendants admit the averments of paragraph 133
of the Complaint.
135. The U. S. Shoe Defendants admit the averments of paragraph 134
of the Complaint.
136. The U. S. Shoe Defendants deny the averments of paragraph 135
of the Complaint.
137. The U. S. Shoe Defendants deny the averments of paragraph 136
of the Complaint.
138. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph 137 of the Complaint.
139. In answer to paragraph 138, the U. S. Shoe Defendants say Ohio
R. C. Section 1701.76 speaks for itself, and deny all other averments of
paragraph 138 of the Complaint.
140. The U. S. Shoe Defendants deny the averments of paragraph 139
of the Complaint.
141. The U. S. Shoe Defendants deny the averments of paragraph 140
of the Complaint.
142. The U. S. Shoe Defendants admit the averments of paragraph 141
of the Complaint, except that certain "corporate proceedings" may be necessary
to close the transaction.
143. The U. S. Shoe Defendants deny the averments of paragraph 142
of the Complaint.
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<PAGE> 20
144. The U. S. Shoe Defendants deny the averments of paragraph 143
of the Complaint.
145. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph 144 of the Complaint.
146. The U. S. Shoe Defendants admit that the quoted section of the
averments of paragraph 145 of the Complaint correctly recite a portion of the
Article Third of U.S. Shoe's Articles of Incorporation, and incorporate the
entire Article Third as a full and correct recitation of what it contains.
147. In answer to paragraph 146, the U. S. Shoe Defendants say Ohio
Rev. Code Sections 1701.69(B)(3) and 1701.71(B)(7) speak for themselves, and
deny all other averments of paragraph 146 of the Complaint.
148. The U. S.Shoe Defendants deny the averments of paragraph 147
of the Complaint.
149. The U. S. Shoe Defendants admit the averments of paragraph 148
of the Complaint, except that certain "corporate proceedings" may be necessary
to close the transaction.
150. The U. S.Shoe Defendants deny the averments of paragraph 149
of the Complaint.
151. The U. S.Shoe Defendants deny the averments of paragraph 150
of the Complaint.
152. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph 151 of the Complaint.
153. The U. S. Shoe Defendants admit the averments of the first
sentence of paragraph 152, say that the Williams Act and the rules and
regulations promulgated thereunder speak for
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themselves, incorporate the 14D-9, and deny all other averments of paragraph
152 of the Complaint.
154. In answer to paragraph 153, the U. S.Shoe Defendants say that
the Williams Act and the rules and regulations promulgated thereunder speak for
themselves, and deny all other averments of paragraph 153 of the Complaint.
155. In answer to paragraph 154, the U. S.Shoe Defendants say that
the Williams Act and the rules and regulations promulgated thereunder speak for
themselves, and deny all other averments of paragraph 154 of the Complaint.
156. The U. S. Shoe Defendants incorporate in response the 14D-9
and deny all other or inconsistent averments of paragraph 155 of the Complaint.
157. The U. S. Shoe Defendants deny the averments of paragraph 156
of the Complaint.
158. The U. S. Shoe Defendants deny the averments of paragraph 157
of the Complaint.
159. The U. S. Shoe Defendants deny the averments of paragraph 158
of the Complaint.
160. The U. S. Shoe Defendants deny the averments of paragraph 159
of the Complaint.
161. The U. S.Shoe Defendants deny the averments of paragraph 160
of the Complaint.
162. The U. S. Shoe Defendants deny all other averments not
specifically admitted herein.
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<PAGE> 22
SECOND DEFENSE
163. 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
164. Plaintiffs, or one or more of them, may lack standing to
assert claims.
FOURTH DEFENSE
165. The Complaint fails to state a claim, in whole or in part,
upon which relief may be granted.
COUNTERCLAIMS OF U. S. SHOE
JURISDICTION
166. 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 and the Ohio Take-Over Act.
167. 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.
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168. This Court has subject matter jurisdiction over Counts VIII
and IX of U. S. Shoe's Counterclaim for violations of Ohio Rev. Code Section
1707.041 pursuant to the principles of pendant jurisdiction.
169. 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.
170. The acts of Plaintiffs alleged herein occurred in and have a
substantial effect on interstate commerce.
FACTS COMMON TO ALL COUNTERCLAIMS
171. 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, 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.
172. The Shares are a class of equity securities registered on the
New York and Pacific Stock Exchanges.
173. 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.
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<PAGE> 24
174. 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.
175. 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").
176. 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.
177. 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").
178. 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.
179. 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
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<PAGE> 25
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.
180. 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."
181. 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)."
182. 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.
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<PAGE> 26
183. 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").
184. 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.
185. 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."
186. U. S. Shoe's agreement with Nine West is not conditioned on
financing.
187. 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.
188. 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.
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<PAGE> 27
189. 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 .
190. 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.
191. 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 LensCrafters purchasing toward
European suppliers, including Luxottica. (Financial Times, March 10, 1995).
192. 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).
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<PAGE> 28
193. 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
194. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
195. Schedule 14D-1, Item 5, requires Luxottica and Luxottica
Acquisition to disclose the purpose of the Tender Offer.
196. 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.
197. 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.
198. 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.
199. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
200. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
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COUNT II
VIOLATION OF SECTION 14 OF THE EXCHANGE ACT - TENDER OFFER STRUCTURE
201. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
202. Schedule 14D-1 requires identification of the "Bidder" on
whose behalf a tender offer is made.
203. Schedule 14D-1 defines "Bidder" as "any person or entity on
whose behalf a tender offer is made."
204. 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.
205. 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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206. 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.
207. 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.
208. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
209. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT III
VIOLATION OF SECTION 14 OF THE EXCHANGE ACT - CONTROL OF BIDDER
210. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
211. 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."
212. 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.
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213. 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.
214. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
215. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT IV
VIOLATION OF SECTION 14 OF THE EXCHANGE ACT - DESCRIPTION OF FINANCING
216. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
217. Schedule 14D-1, Item 5, requires Luxottica to describe the
financing of the Tender Offer.
218. 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
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<PAGE> 32
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.
(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
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of Credit Suisse is subject to terms and conditions that could not
possibly be satisfied as of March 16, 1995.
219. 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.
220. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
221. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT V
VIOLATION SECTION 14 OF EXCHANGE ACT - MISSTATEMENT
ABOUT U. S. SHOE'S AGREEMENT
222. U. S. Shoe incorporates by reference each allegation
contained above as if restated in full herein.
223. 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.
224. 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.
225. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
226. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
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COUNT VI
VIOLATION OF Section 14 OF EXCHANGE ACT - REGULATION U
227. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
228. 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.
(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."
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<PAGE> 35
(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.
229. 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.
230. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined. 231. U. S. Shoe does not have a
adequate remedy at law for Plaintiffs' violations described above.
COUNT VII
232. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
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<PAGE> 36
233. On or about March 21, 1995, Luxottica and Luxottica Acquisition
filed proxy materials including a definitive a Proxy Statement with the
Securities and Exchange commission pursuant to Section 14(A)of the Exchange Act
(the "Proxy Statement").
234. In Schedule III of the Proxy Statement, Luxottica and Luxottica
Acquistion state that Mellon Bank Corporation is the owner of 4,678,000 common
shares of U. S. Shoe, representing 10.09% of all the outstanding common shares,
that Boston Group Holdings, c/o Mellon Bank Corporation, is the owner of
4,307,000 common shares, representing 9.29% of all the outstanding common
shares, that The Boston Company, Inc., c/o Mellon Bank Corporation, is the owner
of 4,307,000 common shares, representing 9.29% of all the outstanding common
shares, and that The Boston Company Asset Management, Inc., c/o Mellon Bank
Corporation, is the owner of 2,866,000 common shares, representing 6.18% of all
the outstanding common shares.
235. From the statement described above, a reasonable investor could
reasonably conclude that Mellon Bank Corporation and its subsidiaries own
16,158,000 common shares, representing 34.85% of the common shares, and that
Mellon Bank Corporation and its subsidiaries therefore have the power to control
the acceptance or rejection of the Tender Offer.
236. The common share ownership of Mellon Bank Corporation and its
subsidiaries is a material fact.
237. In the Proxy Statement, Luxottica and Luxottica Acquisition
attribute the information about the share ownership of Mellon Bank Corporation
and its subsidiaries reported in the Proxy Statement to Amendment No. 3 to a
Form 13G filed by Mellon Bank Corporation on March 8, 1995 (the "Schedule 13G").
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<PAGE> 37
238. The 13G reports that the total common shares owned by Mellon
Bank Corporation and its subsidiaries is 4,676,000, representing 10.09% of all
the outstanding common shares.
239. In Item 4 "Ownership" of the Schedule 13G, it is stated:
The amount beneficially owned includes, where appropriate
securities not outstanding which are subject to options,
warrants, rights or conversion privileges that are exercisable
within 60 days. The filing of this Schedule 13G shall not be
construed as an admission that Mellon Bank Corporation, or its
direct or indirect subsidiaries, including Mellon Bank, N.A.,
are for the purposes of Section 13 (d) or 13 (g) of the Act,
the beneficial owners of any securities covered by this
Schedule 13G.
240. In Item 6 of the 13G, it is stated:
All of the securities are beneficially owned by Mellon Bank or
its direct and indirect subsidiaries in their various fiduciary
capacities. As a result, another entity in every instance is
entitled to dividends or proceeds of sale. The number of
individual accounts holding an interest of 5% or more is 0.
241. The description of the common share ownership of Mellon Bank
Corporation and its subsidiaries in the Proxy Statement is false and misleading,
in violation of Section 14(e) of the Exchange Act, and the rules and regulations
promulgated thereunder.
242. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
243. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT VIII
244. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
- 37 -
<PAGE> 38
245. 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.
246. 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.
247. 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.
248. 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.
249. 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
Exchange Act, 15 U.S.C. Section 78n, and the rules and regulations promulgated
thereunder.
- 38 -
<PAGE> 39
250. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
251. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT IX
VIOLATIONS OF OHIO REV. CODE Section 1707.041
252. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
253. 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.
254. 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
- 39 -
<PAGE> 40
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 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.
255. Luxottica and Luxottica Acquisition 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.
256. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
257. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
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
- 40 -
<PAGE> 41
Exchange Commission under Sections 14(d) - (e),
and Ohio Rev. Code Sections 1707.041 and
1707.042;
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 Act, 15 U.S.C. Section 78n, and the rules
and regulations promulgated thereunder and Ohio Rev.
Code Sections 1701.041 and 1707.042;
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 Sections
1701.041 and 1707.042 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/by CAH
Joseph J. Dehner (0011321)
Trial Attorney for U. S. Shoe Defendants
2500 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 651-6800
- 41 -
<PAGE> 42
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
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
29th day of March, 1995.
/s/ Curtis G. Hansen
- 42 -
<PAGE> 1
Exhibit 27
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
LUXOTTICA GROUP, S.p.A., et al., : Civil Action No. C-2-95-244
:
Plaintiffs, : Judge Graham
:
vs. :
:
THE UNITED STATES SHOE :
CORPORATION, et al., :
:
Defendants. :
DEFENDANT THE UNITED STATES SHOE CORPORATION'S MOTION FOR A
PRELIMINARY AND PERMANENT INJUNCTION ENJOINING PLAINTIFFS
FROM DISTRIBUTING FALSE AND MISLEADING INFORMATION IN THEIR
PROXY SOLICITATIONS IN CONNECTION WITH "AGENT DESIGNATIONS"
FOR CALLING A SPECIAL MEETING OF U.S. SHOE SHAREHOLDERS
- -------------------------------------------------------------------------------
Pursuant to Rule 65 of the Federal Rules of Civil Procedure, Defendant
The United States Shoe Corporation ("U.S. Shoe") hereby moves the Court for a
preliminary and permanent injunction enjoining Plaintiffs from distributing
false and misleading information in Plaintiffs' proxy solicitation materials in
connection with the solicitation of "Agent Designations" for calling a special
meeting of U.S. Shoe shareholders. This Motion is supported by the
accompanying Memorandum.
Respectfully submitted,
/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
<PAGE> 2
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
- 2 -
<PAGE> 3
MEMORANDUM
On March 29, 1995, Luxottica Group S.p.A. and Luxottica Acquisition
Corp. (together, "Luxottica") filed certain definitive proxy materials and
definitive additional materials with the Securities and Exchange Commission
("SEC") in connection with Luxottica's solicitation of "Agent Designations" for
the purpose of calling a special meeting of the shareholders of The United
States Shoe Corporation ("U.S. Shoe"). The definitive materials filed on March
29 contained numerous false and misleading statements which must be enjoined in
order to prevent irreparable harm to U.S. Shoe, its shareholders, and the
investing public.
I. LUXOTTICA'S DEFINITIVE PROXY MATERIALS SOLICITING "AGENT DESIGNATIONS"
CONTAIN FALSE AND MISLEADING STATEMENTS IN VIOLATION OF THE FEDERAL
PROXY RULES
The federal proxy rules provide, in part, as follows:
No solicitation subject to this regulation shall be made by
means of any proxy statement, form of proxy, notice of meeting
or other communication, written or oral, containing any
statement which, at the time and in the light of the
circumstances under which it is made, is false or misleading
with respect to any material fact, or which omits to state any
material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the
solicitation of a proxy for the same meeting or subject matter
which has become false or misleading.
17 C.F.R. Section 240.14a-9(a).
The definitive proxy materials filed by Luxottica with the SEC on
March 29, 1994 violate this provision of the federal proxy rules in several
respects. First, Luxottica's materials contain false, misleading,
contradictory, and inflammatory statements accusing U.S. Shoe of failure to
negotiate with Luxottica in good faith. Second, Luxottica selectively
<PAGE> 4
provides certain recent market information regarding the value of U.S. Shoe
shares while omitting other recent market information necessary in order to make
the information provided not false or misleading. Third, Luxottica's materials
contain false and misleading statements which would lead a reasonable person to
believe that Mellon Bank Corporation controls more than a third of U.S. Shoe's
outstanding shares, thereby creating a false impression as to the importance of
Mellon Bank's decisions in connection with Luxottica's proxy solicitations and
tender offer. Finally, Luxottica describes its ability to add undisclosed
purposes to its demand for a special meeting of shareholders in a misleading and
contradictory manner which will confuse U.S. Shoe shareholders as to what action
they are authorizing Luxottica to take on their behalf when executing the Agent
Designations.
A. LUXOTTICA'S DEFINITIVE PROXY MATERIALS CONTAIN FALSE AND
MISLEADING STATEMENTS REGARDING LUXOTTICA'S NEGOTIATIONS WITH
U.S. SHOE
In two letters from Claudio Del Vecchio, Managing Director of
Luxottica, to U.S. Shoe shareholders, Mr. Del Vecchio makes misleading
statements about the willingness of the U.S. Shoe Board of Directors and
management to negotiate in good faith with Luxottica. In a letter from Mr. Del
Vecchio to U.S. Shoe shareholders dated March 28, 1995, which is to accompany
Luxottica's proxy materials regarding the meeting under Ohio Rev. Code Section
1701.831 (the "831 Letter"), Mr. Del Vecchio makes the following false and
misleading statements:
KEEP THE PRESSURE ON THE U.S. SHOE BOARD
TO NEGOTIATE IN GOOD FAITH WITH LUXOTTICA!
. . . .
- 2 -
<PAGE> 5
IF YOU WANT U.S. SHOE TO NEGOTIATE
WITH LUXOTTICA IN GOOD FAITH
VOTE TODAY FOR THE "831 PROPOSAL"
ON THE BLUE CARD.
SEND A CLEAR MESSAGE TO U.S. SHOE MANAGEMENT
TO STOP STALLING AND NEGOTIATE THE BEST DEAL
FOR SHAREHOLDERS RATHER THAN GOLDEN
PARACHUTES FOR THEMSELVES.
In a second letter to U.S. Shoe shareholders dated March 28, 1995,
which is to accompany Luxottica's solicitation of Agent Designations for the
call of a special meeting of U.S. Shoe shareholders (the "Agent Designation
Solicitation Letter"), Mr. Del Vecchio makes the following misleading
statements:
KEEP THE PRESSURE ON THE U.S. SHOE BOARD TO
NEGOTIATE IN GOOD FAITH WITH LUXOTTICA. SIGN
AND RETURN THE GOLD CARD.
The 831 Letter and the Agent Designation Solicitation Letter filed with the SEC
are attached hereto as Exhibit A.
These statements are misleading in the context in which they are made,
because they imply that the U.S. Shoe Board and management are not negotiating
in good faith with Luxottica, and that U.S. Shoe management is stalling and
failing to negotiate the best deal for shareholders. These statements
contradict an accurate statement of the facts surrounding the negotiations
between Luxottica and U.S. Shoe, which appears at page eight of Luxottica's
Solicitation Statement as follows:
On March 23, 1995, Bannus B. Hudson of U.S. Shoe sent a letter
to Claudio Del Vecchio of Luxottica 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
- 3 -
<PAGE> 6
certain non-public information on the condition that Luxottica
executes and delivers an appropriate confidentiality
agreement." On March 24, 1995, U.S. Shoe's counsel delivered
to Luxottica's counsel a revised form of confidentiality
agreement. As of the date hereof, U.S. Shoe's counsel and
Luxottica's counsel are discussing this form of
confidentiality agreement.
The Solicitation Statement filed with the SEC is attached hereto as Exhibit B.
The accurate description of the status of Luxottica's negotiations
with U. S. Shoe is flatly contradicted by the statements in Mr. Del Vecchio's
831 Letter and Agent Designation Solicitation Letter, which clearly imply that
U.S. Shoe's Board and management are stalling and negotiating in bad faith.
This implication is severely damaging to U.S. Shoe, because shareholders expect
U.S. Shoe's Board and management to maximize shareholder value. In fact, U.S.
Shoe's Board and management are seeking to maximize shareholder value by
negotiating with Luxottica under a confidentiality agreement which is being
negotiated. Luxottica's statements to the contrary in Mr. Del Vecchio's 831
Letter and Agent Designation Solicitation Letter are misleading in light of the
circumstances under which they were made.
B. LUXOTTICA'S PROXY MATERIALS ARE MISLEADING BECAUSE THEY FAIL
TO DISCLOSE THE RECENT MARKET PRICE FOR U.S. SHOE SHARES
In the definitive proxy statement filed with the SEC on March 29,
1995, Luxottica provides an incomplete description of recent market prices for
U.S. Shoe shares while urging shareholders to return Agent Designations if they
are in favor of receiving the opportunity to sell their shares to Luxottica for
$24 in cash. Luxottica states that "[o]ver the past twelve months the Shares
have traded as low as $13.50 per Share. The Offer represents more than a 75%
premium over that price and a 28% premium over the reported closing price for
the
- 4 -
<PAGE> 7
Shares on the NYSE composite tape on March 2, 1995, the day before the Offer
was first publicly disclosed." See Solicitation Statement, at p.2 (attached
hereto as Exh. B). However, Luxottica fails to disclose that U.S. Shoe shares
traded at $24 per share as recently as the third quarter of the fiscal year
ending January 28, 1995, and have traded more recently at prices more than $2
per share in excess of Luxottica's $24 per share offer. In the absence of this
information, Luxottica's statements regarding recent market prices for U.S.
Shoe stock are materially misleading.
C. LUXOTTICA'S PROXY MATERIALS CONTAIN FALSE AND MISLEADING
STATEMENTS REGARDING THE NUMBER OF SHARES OWNED BY MELLON BANK
CORPORATION
In Schedule III to its Solicitation Statement (attached hereto as Exh.
B), Luxottica misleadingly reports shares owned by Mellon Bank Corporation
("Mellon Bank") and three of its affiliates or subsidiaries separately, whereas
the shares owned by Mellon Bank's subsidiaries are included in the report of
shares owned by Mellon Bank itself. As a result of this misstatement, it
appears to the reader of Luxottica's Solicitation Statement that Mellon Bank
and its subsidiaries are beneficial owners of 16,158,000 common shares of U.S.
Shoe, representing 34.85% of the outstanding common shares, and that Mellon
Bank and its subsidiaries therefore may have significant power to control the
acceptance or rejection of the 831 Solicitation, and, indeed, the Tender Offer
itself.
Schedule III of Luxottica's Solicitation Statement, entitled
"Principal Shareholders of U.S. Shoe and Shareholdings of U.S. Shoe's
Management," reports that Mellon Bank is the owner of 4,678,000 common shares,
representing 10.09% of all the outstanding common shares, that Boston Group
Holdings, c/o Mellon Bank Corporation, is the owner of 4,307,000 common shares,
representing 9.29% of all the outstanding common shares, that
- 5 -
<PAGE> 8
The Boston Company, Inc., c/o Mellon Bank, is the owner of 4,307,000 common
shares, representing 9.29% of all the outstanding common shares, and that The
Boston Company Asset Management, Inc. c/o Mellon Bank Corporation, is the owner
of 2,866,000 common shares, representing 6.18% of all the outstanding common
shares. Luxottica's error arises from misinterpreting Amendment No. 3 to
Mellon Bank's Form 13G (the "13G"), filed March 8, 1995, attached hereto as
Exhibit C. The 13G first reports the holdings of Mellon Bank, including the
holdings of its subsidiaries Boston Group Holdings, Inc., The Boston Company,
Inc., and The Boston Company Asset Management, Inc. In subsequent pages of the
13G, however, Mellon Bank reports the holdings of its three subsidiaries
separately. Luxottica mistakenly reported the shareholdings of Mellon Bank and
its subsidiaries separately, thereby triple counting shares held by Mellon Bank
and its subsidiaries, and mistakenly showing that Mellon Bank and its
subsidiaries were beneficial owners of over one third of U.S. Shoe's
outstanding common shares.
This mistake is very misleading to investors. If in fact, Mellon Bank
and its subsidiaries were beneficial owners of over one third of U.S. Shoe's
shares, Mellon Bank would be regarded as having the power to substantially
effect the outcome of any vote of U.S. Shoe shares. Indeed, a report of how
Mellon Bank voted its shares could create a stampede by other shareholders, to
follow Mellon Bank's lead. In fact, however, Mellon Bank and its subsidiaries
together own 10.09% of the outstanding common shares. Therefore, Mellon Bank's
actions would not have as great an effect upon other shareholders.
- 6 -
<PAGE> 9
D. LUXOTTICA'S AGENT DESIGNATION FORM IS MISLEADING AS TO THE
PURPOSES OF THE SPECIAL MEETING WHICH LUXOTTICA INTENDS TO
CALL THROUGH USE OF THE AGENT DESIGNATIONS
Luxottica's Agent Designation Form states that the Agent Designations
are being solicited for the purpose of calling a special meeting of U.S. Shoe
shareholders at which the shareholders will consider and vote upon (1) a
proposal to remove all incumbent directors of U.S. Shoe and elect new
directors, (2) a proposal to amend the Regulations of U.S. Shoe to provide that
Ohio Rev. Code Section 1701.831 does not apply to control share acquisitions
unless the shareholders approve the control share acquisition by Luxottica or
Luxottica is otherwise satisfied that the statute is invalid or does not apply
to Luxottica's Tender Offer, and (3) "any other matter that properly comes
before the Special Meeting." See Agent Designation Form (contained in final
two pages of the Solicitation Statement attached hereto as Exh. B). This third
purpose is common in proxy solicitations, and it is intended to cover the
ability to vote on various procedural matters which may arise at the meeting
such as adjournments. Therefore, this innocent phrase is unlikely to create
any concern in a shareholder who wishes to consent to the call of a special
meeting for the purpose of considering and voting on the disclosed subject
matter for the meeting, so long as the shareholder agrees with the two
substantive subjects disclosed by Luxottica.
However, Luxottica describes its ability to add other purposes to the
call for a special meeting quite differently earlier in those same proxy
materials. On page six of the Solicitation Statement, Luxottica states that it
"may elect to cause additional Special Meeting Proposals to be identified in
the notice of, and in the proxy materials for, the Special Meeting." In
effect, this language buried in a section entitled "ADJOURNMENT OF
- 7 -
<PAGE> 10
MEETING AND OTHER MATTERS" purports to give Luxottica broad discretion to
choose additional purposes for the special meeting which were unknown to the
shareholders executing the Agent Designations, and unanticipated by them from
reading the language of the Agent Designation Form and the remainder of the
proxy materials.
Luxottica may attempt to harmonize these very different statements in
order to create an argument that Luxottica is entitled to add new substantive
matters to the special meeting notice without the consent of the shareholders
who executed the Agent Designations. U.S. Shoe believes any such argument
would be without merit, and that U.S. Shoe would not be required to include any
matters which Luxottica unilaterally adds to its call for a special meeting to
the meeting notice. However, allowing Luxottica to create such an argument out
of misleading statements in the proxy materials which would thwart the intent
of the shareholders executing the Agent Designations is itself improper and
misleading and should be enjoined.
II. CONCLUSION
For the foregoing reasons, Luxottica should be enjoined from
distributing its false and misleading proxy solicitation materials.
Respectfully submitted,
/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
- 8 -
<PAGE> 11
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
- 9 -
<PAGE> 12
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 31 day of March, 1995.
/s/ Michael Yarbrough
_______________________________________
- 10 -
<PAGE> 1
Exhibit 28
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
:
LUXOTTICA GROUP S.p.A., et al., : Civil Action C-2-95-244
:
Plaintiffs, : Judge Graham
:
vs. : MOTION AND MEMORANDUM IN
: SUPPORT OF THE UNITED STATES
THE UNITED STATES SHOE : SHOE CORPORATION AND ITS
CORPORATION, et al., : DIRECTORS TO DISMISS COUNTS SIX
: THROUGH EIGHT AND ELEVEN
Defendants. : THROUGH THIRTEEN OF
: PLAINTIFFS' THIRD AMENDED
: COMPLAINT
:
- -------------------------------------------------------------------------------
Pursuant to Rule 12(b)(1) and (6) of the Federal Rules of Civil
Procedure, Defendants The United States Shoe Corporation and its Directors move
to dismiss Counts Six through Eight and Eleven through Thirteen of Plaintiffs'
Third Amended Complaint. The grounds for the Motion are that the claims have
not been brought derivatively on behalf of all shareholders of the Company as
required by Rule 23.1 of the Federal Rules of Civil Procedure, that Plaintiffs
cannot fairly and adequately represent the interests of the shareholders, that
diversity of citizenship does not exist to support subject-matter jurisdiction
under 28 U.S.C. Section 1332, and that the Court should decline to exercise
supplemental jurisdiction over the novel and complex state law claims, most of
which are already pending in shareholder suits filed in Ohio state courts.
<PAGE> 2
The Motion is supported by the following Memorandum In Support and by the
Affidavits of Albert M. Kronick and D. Scott Gurney attached hereto.
Respectfully submitted,
/s/ Joseph J. Dehner
----------------------------------------
Joseph J. Dehner (0011321)
Trial Attorney for Defendants The United
States Shoe Corporation and its Directors
2500 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 651-6800
OF COUNSEL
Michael Yarbrough
FROST & JACOBS
One Columbus
10 West Broad Street
Columbus, Ohio 43215
(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
- 2 -
<PAGE> 3
MEMORANDUM IN SUPPORT
I. INTRODUCTION
On the same day that Plaintiffs commenced a cash tender offer for all
of the outstanding shares of Defendant The United States Shoe Corporation ("the
Company" or "U.S. Shoe"), Plaintiffs commenced this action. There can be no
doubt that the sole purpose in pursuing the action is to further Plaintiffs'
desire to obtain the shares of the Company at the cheapest possible price.
That desire is directly antagonistic to the best interests of the other
shareholders.
In their Third Amended Complaint ("the Complaint"), Plaintiffs assert
fourteen claims against the Company and its Directors ("the Directors").
Counts Six through Eight and Eleven through Thirteen of Plaintiffs' Third
Amended Complaint should be dismissed for the following reasons:
1. The claims are state law claims that must be brought
derivatively, on behalf of all shareholders of the Company, because the only
shareholder Plaintiff in this action, Avant-Garde Optics, Inc. ("Avant-Garde"),
has not alleged and cannot claim any injuries separate and distinct from the
other shareholders. Furthermore, Plaintiffs cannot fairly and adequately
represent the interests of the shareholders.
2. Counts Eleven through Thirteen are claims that must be brought
by a shareholder, derivatively, but none of them are brought by a shareholder.
Complaint, Paragraph 4 ("Avant-Garde is a Plaintiff as to Counts Six through
Ten.")
3. There is no diversity jurisdiction to support the state laws
claims and such claims are not appropriate for the Court's exercise of
supplemental jurisdiction.
- 3 -
<PAGE> 4
II. STATEMENT OF ALLEGED FACTS
On March 3, 1995, Plaintiffs Luxottica Group S.p.A. and Luxottica
Acquisition Corp. (collectively referred to as "Luxottica") commenced a cash
tender offer for all outstanding shares of the Company. Complaint, Paragraph
16. According to the Complaint, Avant-Garde is a wholly-owned subsidiary of
Luxottica Group S.p.A. and has been a shareholder of the Company since November
7, 1994. Complaint, Paragraph 4.
The Court has already ruled on Counts Three, Four and Five relating to
the constitutionality of the Ohio Control Share Acquisition Act. The Court has
also ruled on Count Nine, which sought to permit Avant-Garde to examine and copy
the shareholder records of the Company and to obtain information sought by a
certain demand letter sent by Avant-Garde to the Company, and Count Ten, which
sought a declaration by the Court that the close of business, March 17, 1995, is
the valid and effective record date for a certain special meeting (the "831
Special Meeting"). Counts One and Two, which are not brought by Avant-Garde
(Complaint, Paragraph 4), seek to have portions of the Ohio Take-Over Act
declared unconstitutional. Count Fourteen seeks judgment declaring that the
Schedule 14D-9 filed by the Company violates the Williams Act, 15 U.S.C. Section
78n(e).
The remaining Counts, Counts Six through Eight and Counts Eleven
through Thirteen, are state law claims alleging that the Directors of the
Company have breached their fiduciary duties to the Company's shareholders and
that the proposed sale of the Company's Footwear Group to Nine West Group Inc.
cannot be consummated without shareholder authorization and shareholder
approval. Complaint, Paragraph 2. These claims are the subject of this Motion.
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<PAGE> 5
Count Six alleges generally that the Company's "Poison Pill"(1) Plan
violates Ohio Rev. Code Chapter 1701. Complaint, Paragraphs 94-97.
Specifically, Count Six alleges:
The amount of dividend U.S. Shoe would be required to pay
under the Poison Pill Plan would create an unlawful
disposition of all of U.S. Shoe's assets in violation of Ohio
Rev. Code Section 1701.76 or a voluntary dissolution of U.S.
Shoe without requisite shareholder approval in violation of
Ohio Rev. Code Section 1701.86.
Count Seven alleges generally that the failure of the Directors to
redeem the Rights issued pursuant to the Company's "Poison Pill" violates the
fiduciary duties of the Directors. Complaint, Paragraphs 100-103. Specifically,
Count Seven alleges:
U.S. Shoe's refusal to redeem the Rights denies U.S. Shoe's
shareholders the right freely to consider the Tender Offer on
its merits and to accept the Tender Offer if they choose to do
so. Complaint, Paragraph 103 (emphasis added)
Count Eight alleges generally that the failure of the Directors who
are not officers of the Company to approve the Tender Offer violates their
fiduciary duties. Complaint, Paragraphs 106-109. Specifically, Count Eight
alleges:
The failure of the members of U.S. Shoe's Directors who are
not officers of the Corporation to approve the Tender Offer
and thus render the Poison Pill Plan inapplicable denies U.S.
Shoe's shareholders the right freely to consider the Tender
Offer on its merits and to accept the Tender Offer if they
choose to do so. Complaint, Paragraph 109 (emphasis added)
Count Eleven alleges generally that the Directors' actions in
responding to Plaintiffs' "acquisition proposals" constitute a violation of the
Directors' fiduciary duties. Complaint, Paragraphs 124-135. Specifically,
Count Eleven alleges:
- ---------------------------
(1) The Complaint at paragraphs 45 through 67 provides a detailed
description of the "Poison Pill Plan," more accurately referred to as "the
Rights Agreement."
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<PAGE> 6
The refusal of U.S. Shoe's directors to negotiate with
Luxottica Group and Luxottica Acquisition constitutes a
violation of the duties imposed upon directors pursuant to
Ohio R.C. Section 1701.59...U.S. Shoe's directors have acted
unreasonably and in violation of the duties of care, loyalty
and candor owed by them to U.S. Shoe shareholders. Complaint,
Paragraph 129 (emphasis added)
Count Eleven further alleges that certain actions undertaken by the
Directors (e.g., the adoption of certain amendments to its Pension Plan, the
approval of certain bonuses, the adoption of a new retirement plan for its
outside directors, and the adoption of the Economic Bridge Program providing
benefits to a broad-base group of its full-time employees in the event of
termination)--all of which were took place before Luxottica launched its tender
offer--violate the Directors' fiduciary duties. Complaint, Paragraphs 130-134.
Specifically, Count Eleven alleges:
The foregoing actions, each of which had the effect of
providing or increasing benefits for U.S. Shoe's directors,
management, and employees, were adopted by U.S. Shoe and its
directors in response to the acquisition proposal made by
Luxottica Group. Such actions were taken for the purpose of
entrenching management and increasing the cost of acquiring
all of U.S. Shoe's outstanding shares in an all cash, fully
funded, non-coercive Tender Offer, and operate to the
detriment of U.S. Shoe's shareholders. Such actions of U.S.
Shoe's directors violated the directors' fiduciary duties to
U.S. Shoe shareholders. Complaint, Paragraph 135 (emphasis
added)
Count Twelve alleges generally that the Directors violated O.R.C.
Section 1701.76 by failing to secure shareholder approval of the sale of the
Company's Footwear Group to Nine West Group, Inc. Complaint, Paragraphs 138-142.
Specifically, Count Twelve alleges:
U.S. Shoe's agreement and proposed transaction with Nine West
would substantially affect the existence and purpose of U.S.
Shoe as a corporate entity and would fundamentally change the
nature of the shareholders' investment in U.S. Shoe.
Therefore, the agreement and proposed transaction with Nine
West must be approved by U.S. Shoe's shareholders. Complaint,
Paragraph 139 (emphasis added)
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<PAGE> 7
Count Thirteen alleges generally that the proposed sale of the
Company's Footwear operations violates its Articles of Incorporation and cannot
be consummated without an amendment to the Articles which in turn can only be
adopted by a shareholder vote. Complaint, Paragraphs 145-149. Specifically,
Count Thirteen alleges:
U.S. Shoe's agreement and proposed transaction with Nine West
is contrary to the purpose set forth in its Articles of
Incorporation, since it would result in U.S. Shoe no longer
being engaged in the manufacture, sale and distribution of
footwear. Completion of the Nine West transaction would
substantially affect the purpose of U.S. Shoe as a corporate
entity. Accordingly, the Nine West transaction requires that
the shareholders amend the Articles of Incorporation to change
the statement of corporate purpose. Complaint, Paragraph 147
(emphasis added).
III. ARGUMENT
A. Counts Six through Eight and Eleven through Thirteen Must Be
Dismissed Because They Are Not Brought As Derivative Actions
by a Representative Shareholder
1. These Counts Must be Filed as Derivative Claims
Shareholder derivative actions are governed by Fed. R. Civ. P. 23.1,
and federal courts apply the law of the state in which the company is
incorporated. Brown v. Ferro Corp., 763 F. 2d 798, 802-803 (6th Cir. 1985).
Because the Company is incorporated in Ohio, Ohio law governs the disposition
of whether Plaintiffs' claims are derivative in nature.
Under Ohio law, in analyzing whether a complaint states a derivative
claim or a direct claim, the court is required to look to the nature of the
alleged wrong. Grand Council of Ohio v. Owens (1993), 86 Ohio App. 3d 215,
220, 620 N.E. 2d 234. The Ohio Supreme Court has held that "a court must
preliminarily determine if the pleadings state injury to the plaintiff upon an
individual claim as distinguished from an injury which indirectly affects the
shareholders or
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<PAGE> 8
affects them as a whole." Adair v. Wozniak (1986), 23 Ohio St. 3d 174, 176,
492 N.E. 2d 426. As a general proposition, actions for breach of fiduciary
duties are to be brought in derivative suits. Owens, supra at 220.
The claims asserted by Plaintiffs in Counts Six through Eight and
Eleven through Thirteen are not individual claims. They are claims which
directly affect the shareholders as a whole. In each of the Counts, Plaintiffs
have not asserted an individual claim but rather a claim that the U.S. Shoe
shareholders have been injured. Such claims are therefore derivative and must
be brought pursuant to Fed. R. Civ. P. 23.1. As held by the Ohio Supreme
Court:
Where the defendant's wrongdoing has caused direct damage to
corporate worth, the cause of action accrues to the
corporation, not to the shareholders, even though in an
economic sense real harm may well be sustained by the
shareholders as a result of reduced earnings, diminution in
the value of ownership, or accumulation of personal debt and
liabilities from the company's financial decline. The
personal loss and liability sustained by the shareholder is
both duplicative and indirect to the corporation's right of
action.
Adair v. Wozniak (1986), 23 Ohio St. 3d 174, 178 (A plaintiff-shareholder does
not have an independent cause of action where there is no showing that he has
been injured in any capacity other than in common with all other shareholders
as a consequence of the wrongful actions of a third party directed towards the
corporation); see also Grand Council of Ohio v. Owens (1993), 86 Ohio App. 3d
215, 221 ("The allegations contained in each of the claims of plaintiffs'
complaint, i.e., corporate mismanagement, waste, negligence, and a breach of
fiduciary duty to all members, are based upon rights of action which belong to
the corporation itself. Inasmuch as the wrongs alleged by plaintiffs'
complaint affect all shareholders equally, plaintiffs' action is derivative in
nature.")
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<PAGE> 9
In Drage v. Ameritrust Corp., Cuyahoga App. No. 55772 (Sept. 29,
1988), LEXIS 3972 (copy attached as Exhibit C), several shareholders filed suit
in their individual capacity, alleging breach of fiduciary duties and other
claims. The claims centered around the Ameritrust board's decision to purchase
back the shares of the suitor, Clevebaco, in responding to a possible hostile
takeover. In analyzing Delaware law to determine whether the claims were
derivative or individual, the court held:
In the instant case, the appellants alleged in their third
amended complaint that the purchase of Clevebaco's shares
would constitute a waste of corporate assets, that the board
breached the fiduciary duties owed to the stockholders, that
the agreement was entered into to perpetuate the control of
the corporate officers and directors, and that agreement [sic]
would require Ameritrust to perform acts prohibited by its
corporate charter and Delaware law. In none of these claims
do the appellants allege injuries distinct from those suffered
by the other shareholders of Ameritrust, nor do the
appellants' allegations involve their contractual rights as
shareholders. Therefore, under the standards of Lipton,
supra,(2) the appellants' causes of action were not individual
claims, but were shareholders' derivative claims.
2. Plaintiffs Have Not Brought Their Claims as a
Derivative Action
Fed. R. Civ. P. 23.1 provides that derivative actions must be verified
and must allege (1) that the plaintiff was a shareholder at the time of the
transaction of which the plaintiff complains and (2) that the action is not a
collusive one to confer jurisdiction on a court of the United States which it
would not otherwise have. Additionally, the complaint must also allege with
particularity the efforts, if any, made by the plaintiff to obtain the action
the plaintiff
- ----------------------
(2) Delaware law on the issue of whether claims are derivative or
individual is similar to Ohio law. In Lipton v. News
Intern., PLC (Del. Supr. 1986), 514 A. 2d 1075, 1078, the court held: "To
determine whether a complaint states a derivative or an individual cause of
action, we must look to the nature of the wrongs alleged in the body of the
complaint, not to the plaintiff's designation or stated intention."
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<PAGE> 10
desires from the directors or comparable authority and, if necessary, from the
shareholders, and the reasons for the plaintiff's failure to obtain the action
or for not making the effort. Plaintiffs' Complaint fails to state these
necessary allegations.
3. Plaintiffs Cannot Fairly And Adequately Represent the
Interests of the Shareholders
Fed. R. Civ. P. 23.1 further provides in part:
The derivative action may not be maintained if it appears that
the plaintiff does not fairly and adequately represent the
interests of the shareholders or members similarly situated in
enforcing the right of the corporation or association.
The interests of the Company's shareholders cannot be fairly and
adequately represented by Avant-Garde, a wholly-owned subsidiary of Luxottica,
the tender offeror. Luxottica's interest (and thus Avant-Garde's interest) is
to acquire the shares of the Company for the lowest possible price. The
interests of the Company's non-tender offeror shareholders may vary as to some
issues, but their unanimous interest is not to have 100% of the Company's
shares sold at the lowest possible price, as Luxottica has offered.
In Cohen v. Beneficial Loan Corp., 337 U.S. 541, 549-550, 69 S. Ct.
1221, 1227, 93 L. Ed. 1528 (1949), the Supreme Court stated:
...a stockholder who brings suit on a cause of action derived
from the corporation assumes a position, not technically as a
trustee perhaps, but one of fiduciary character. He sues, not
for himself alone, but as representative of a class comprising
all who are similarly situated. The interests of all in the
redress of the wrongs are taken into his hands, dependent upon
his diligence, wisdom, and integrity. And while the
stockholders have chosen the corporate director or manager,
they have no such election as to a plaintiff who steps forward
to represent them. He is a self-chosen representative and a
volunteer champion.
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<PAGE> 11
The Sixth Circuit, following Beneficial Loan, held that a court "may
and should take into consideration 'outside entanglements making it likely that
the interests of the other stockholders will be disregarded in the management of
the suit.'" Davis v. Comed, Inc., 619 F. 2d 588, 593 (6th Cir. 1980)(citation
omitted). The Davis court further held:
Should any 'ulterior' motives of plaintiffs which are inimical
to their ability to adequately represent the other
shareholders become manifest, the Court is free to make
appropriate adjustments.
Id.
The interests of a tender offeror shareholder are different from the
interests of other shareholders of the target corporation. In a case
involving a tender offeror's action for damages under the Williams Act, the
Supreme Court held:
It is clear...that Chris-Craft [the tender offeror] has not
asserted standing under Section 14(e) as a Piper [target]
shareholder. The reason is not hard to divine. As a tender
offeror actively engaged in competing for Piper stock,
Chris-Craft was not in the posture of a target shareholder
confronted with the decision of whether to tender or retain
its stock.
Piper v. Chris-Craft, Inc., 430 U.S. 1, 97 S. Ct. 926, 51 L.Ed. 2d 124 (1977)
(emphasis added). Similarly, in a tender offer battle pitting Mobil
Corporation [tender offeror shareholder] against Marathon Oil Company [target],
the Sixth Circuit emphasized the difference between the interests of a tender
offeror shareholder and a target shareholder:
...Mobil is not trying to sell its Marathon stock. It has no
interest, as an ordinary shareholder would, in trying to raise
the price of Marathon stock. Thus, Mobil cannot assert that
it was injured as a shareholder by the [actions of Marathon].
Mobil Corp. v. Marathon Oil Co., 669 F. 2d 366, 371 (6th Cir. 1981). Likewise,
in Nolen v. Shaw-Walker Company, 449 F.2d 506, 509 (6th Cir. 1971), the Sixth
Circuit held that a
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<PAGE> 12
shareholder who was maintaining a derivative action to force the company to
merge with another company was not an adequate shareholder representative.
Avant-Garde is a shareholder for one purpose: to facilitate the
tender offer of its parent, Luxottica. Avant-Garde's interest is diametrically
opposed to the interests of the Company's other shareholders. Avant-Garde
wants to force the Company and its shareholders to sell at the lowest possible
price to Luxottica. It cannot be considered a fair and adequate representative
of the Company's shareholders.
B. Counts Eleven through Thirteen Are Not Brought by a Shareholder
The Complaint asserts that "Avant-Garde is a Plaintiff as to Counts
Six through Ten." Complaint, Paragraph 4 (emphasis added). Thus, no
shareholder is a Plaintiff as to Counts Eleven through Thirteen and, therefore,
those Counts should be dismissed because Luxottica lacks standing to assert
those claims against the Company and the Directors.
C. The Court Should Exercise its Discretion and Dismiss the
Supplemental State Law Claims Asserted by Plaintiffs
The claims that U.S. Shoe moves to dismiss in this Motion arise solely
under Ohio law. Contrary to the allegations in Paragraph 11 of the Complaint,
this Court does not have diversity jurisdiction in this matter because one of
the U.S. Shoe director defendants, Albert M. Kronick, is a citizen and resident
of New York, as is Plaintiff Avant-Garde. Kronick Affidavit, attached as
Exhibit A; Complaint, Paragraph 4. Thus, the Court has subject-matter
jurisdiction over the state law claims pursuant only to the supplemental
jurisdiction provided in 28 U.S.C. Section 1367.
The Court may decline to exercise supplemental jurisdiction over the
Ohio state law claims. 28 U.S.C. Section 1367 provides in pertinent part as
follows:
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<PAGE> 13
(c) The district courts may decline to exercise
supplemental jurisdiction over a claim under subsection (a) if
--
(1) the claim raises a novel or complex issue of
State law,
(2) the claim substantially predominates over the
claim or claims over which the district court
has original jurisdiction,
(3) the district court has dismissed all claims
over which it has original jurisdiction, or
(4) in exceptional circumstances, there are other
compelling reasons for declining
jurisdiction.
The Sixth Circuit has stated that the issue of whether to exercise supplemental
jurisdiction turns on whether the federal claim is substantial, whether the
federal and state claims derive from a common nucleous of operative fact,
whether the claims would normally be expected to be tried together, and whether
the exercise of jurisdiction would promote judicial economy, fairness, and
convenience. Volunteer Med. Clinic, Inc. v. Operation Rescue, 948 F.2d 218
(6th Cir. 1991).
Here, Luxottica's state law claims raise "novel" and "complex" issues
relating to provisions of the Ohio Revised Code and Ohio common law. Luxottica
alleges in Counts Twelve and Thirteen that U.S. Shoe's $600 million sale of the
Footwear Division violates O.R.C. Section Section 1701.69, 1701.71 and 1701.76
and should therefore be enjoined. Although Luxottica's claims are factually
baseless, there are no Ohio cases interpreting those sections of the Revised
Code in this context. Those issues should therefore be decided by an Ohio
state court. 28 U.S.C. Section 1367(c)(1).
Luxottica's claims in Counts Seven, Eight and Eleven that the
Directors have breached their fiduciary duties also raise complex questions of
Ohio law regarding corporate governance and the duties and authorities of
directors. Moreover, virtually identical claims are already pending in three
shareholder suits filed in the Hamilton County Court of Common Pleas. Copies
- 13 -
<PAGE> 14
of the Complaints in the shareholder actions are attached to the Affidavit of D.
Scott Gurney, Exhibit B. The shareholder plaintiffs allege that the U.S. Shoe
directors have violated their fiduciary duties by failing to "redeem the Rights
to allow Luxottica's Tender Offer to proceed." Case No. A9501172, Paragraph 42.
Luxottica alleges this same claim in Count Seven of the Complaint. The
shareholder plaintiffs also allege that U.S. Shoe has refused to "negotiate with
Luxottica in good faith regarding a potential acquisition," Case No. A9501170,
Paragraph 29 and that the directors have breached their fiduciary duties by
"failing to give adequate consideration to the offer for U.S. Shoe submitted by
Luxottica." Case No. A9501170, Paragraph 34. Similarly, Luxottica alleges in
Count Eight that the directors have breached their fiduciary duties by not
approving Luxottica's Tender Offer. The shareholder plaintiffs also allege that
U.S. Shoe and its directors breached their fiduciary duties by "considering
and/or adopting extreme measures to prevent the sale of the Company." Case No.
A9501170, Paragraph 32. Similarly, Luxottica alleges in Count Eleven that
certain actions taken by the Directors (e.g. the adoption of certain amendments
to its Pension Plan, the approval of certain bonuses, and the adoption of a new
retirement plan for its outside directors) violate the Directors' fiduciary
duties. Complaint, Paragraphs 130 - 135.
Luxottica's state law claims and remaining federal law claims do not
derive from the same common nucleous of operative facts, and the state law
claims predominate over the federal law claims. The Court has already ruled on
Counts Three, Four and Five relating to the constitutionality of the Control
Share Acquisition Act. The only remaining federal law claims are Counts One
and Two, which challenge the constitutionality of the Ohio Take-Over Act, and
Count Fourteen, which alleges that U.S. Shoe's disclosures following the Tender
Offer violate the Williams Act. These claims merely relate to whether the
parties would be required to
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<PAGE> 15
disclose additional information regarding the Tender Offer. By contrast,
Luxottica's state law claims seek to enjoin a $600 million transaction with
Nine West and to hold the directors personally liable for breaches of their
fiduciary duties based on novel and complex issues of Ohio law. Thus, the
state law claims are wholly independent of, and predominate over, the remaining
federal law claims and should be dismissed. 28 U.S.C. Section 1367(c)(2).
District courts in other tender offer cases involving Williams Act
claims have declined to exercise supplemental jurisdiction over state law
fiduciary duty claims. Circo, Inc. v. Gold, 816 F. Supp. 253 (D. Del. 1993);
Kahn v. Virginia Retirement Sys., 783 F. Supp. 266 (E.D. Vir., Richmond Div.
1992), aff'd., Kahn v. Virginia Retirement Sys., 13 F.3d 110 (4th Cir. 1993),
cert. denied, Kahn v. Virginia Retirement Sys., 128 L. Ed. 2d 462, 114 S. Ct.
1834, 1994 U.S. LEXIS 3549 91994).
- 15 -
<PAGE> 16
IV. CONCLUSION
For the foregoing reasons, Counts Six, Seven, Eight, Eleven, Twelve,
and Thirteen of the Complaint should be dismissed.
Respectfully submitted,
/s/ Joseph J. Dehner
----------------------------------------
Joseph J. Dehner (0011321)
Trial Attorney for Defendants The United
States Shoe Corporation and its Directors
2500 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
(513) 651-6800
OF COUNSEL
Michael Yarbrough
FROST & JACOBS
One Columbus
10 West Broad Street
Columbus, Ohio 43215
(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
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<PAGE> 17
CERTIFICATE OF SERVICE
This is to certify that a copy of the foregoing Motion to Dismiss,
Memorandum in Support and Affidavits of Albert M. Kronick and D. Scott Gurney
have 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 31st day of March, 1995.
/s/ Michael Yarbrough
----------------------------------------
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<PAGE> 1
Exhibit 29
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
:
: AMENDED ANSWER OF
vs. : DEFENDANTS THE UNITED STATES
: SHOE CORPORATION, JOSEPH H.
The United States Shoe Corporation, : ANDERER, PHILIP E. BEEKMAN,
et al., : GILBERT HAHN, JR., ROGER L.
: HOWE, BANNUS B. HUDSON,
Defendants, : LORRENCE KELLAR, ALBERT M.
: KRONICK, THOMAS LACO,
: CHARLES S. MECHEM, JR., JOHN
: L. ROY AND PHYLLIS S. SEWELL
: TO THIRD AMENDED COMPLAINT
: AND AMENDED COUNTERCLAIM
: OF DEFENDANT THE UNITED
: STATES SHOE CORPORATION
: AGAINST PLAINTIFFS FOR
: PRELIMINARY AND PERMANENT
: INJUNCTION FOR MISSTATEMENTS
: AND OMISSIONS IN SEC FILINGS
: AND TENDER OFFER MATERIALS
- --------------------------------------------------------------------------------
FIRST DEFENSE
1. The following is an Answer to the Third 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
<PAGE> 2
Amended Counterclaims by U. S. Shoe against Plaintiffs for violations of the
federal securities laws applicable to tender offers. The Counterclaim begins
on page seventeen.
2. The U. S. Shoe Defendants admit so much of paragraph one of
the Third 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.
- 2 -
<PAGE> 3
7. The U. S. Shoe Defendants admit the averments of paragraph six
of the Complaint.
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.
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<PAGE> 4
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
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
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<PAGE> 5
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.
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.
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<PAGE> 6
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.
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.
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<PAGE> 7
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.
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.
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<PAGE> 8
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.
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.
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<PAGE> 9
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.
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.
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<PAGE> 10
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.
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.
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<PAGE> 11
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.
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.
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<PAGE> 12
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.
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.
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<PAGE> 13
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.
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.
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<PAGE> 14
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.
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.
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<PAGE> 15
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.
111. The U. S. Shoe Defendants deny the averments of paragraph 110
of the Complaint.
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<PAGE> 16
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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<PAGE> 17
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 incorporate their Answer and
Defenses to the averments of paragraph 123 of the Complaint.
125. The U. S. Shoe Defendants admit so much of the first sentence
of paragraph 124 as may aver that in December, 1994 and January, 1995,
Luxottica and its financial advisors gave certain indications to U. S. Shoe and
its financial advisor that Luxottica Group was interested in conducting certain
discussions of Luxottica's interest to purchase U. S. Shoe and in particular
the Optical Group, and deny all other averments of the first sentence of
paragraph 124. The U. S. Shoe Defendants admit the averments of the second
sentence of paragraph 124 of the Complaint.
126. The U. S. Shoe Defendants are without knowledge or information
sufficient to form a belief as to the averments of the first clause of the
first sentence of paragraph 125, and admit the averments of the second clause.
The U. S. Shoe Defendants deny the averments of the second sentence of
paragraph 125 of the Complaint and incorporate in response the material
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<PAGE> 18
set forth in U.S. Shoe's Schedule 14D-9, filed with the Securities and Exchange
Commission, as amended by the First and Second Amendments thereto, copies of
which are attached as Exhibits A, B and C (herein collectively referred to as
the "14D-9.")
127. The U. S. Shoe Defendants admit so much of paragraph 126 as
may aver that U. S. Shoe issued certain press releases, say that the press
releases speak for themselves, incorporate the 14D-9, and deny all other
averments of paragraph 126 of the Complaint.
128. The U. S. Shoe Defendants admit so much of the first sentence
of paragraph 127 as may aver that U. S. Shoe issued certain press releases, say
said press releases speak for themselves, incorporate the 14D-9, and deny all
other averments of the first sentence of paragraph 127. The U. S. Shoe
Defendants deny the averments of the second sentence of paragraph 127 of the
Complaint.
129. The U. S. Shoe Defendants deny the averments of paragraph 128
of the Complaint.
130. In answer to paragraph 129, the U. S. Shoe Defendants say that
Ohio Rev. Code Section 1701.59 speaks for itself, and deny all other averments
of paragraph 129 of the Complaint.
131. The U. S. Shoe Defendants admit the averments of paragraph 130
of the Complaint.
132. The U. S. Shoe Defendants admit the averments of paragraph 131
of the Complaint.
133. The U. S. Shoe Defendants admit the averments of paragraph 132
of the Complaint.
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<PAGE> 19
134. The U. S. Shoe Defendants admit the averments of paragraph 133
of the Complaint.
135. The U. S. Shoe Defendants admit the averments of paragraph 134
of the Complaint.
136. The U. S. Shoe Defendants deny the averments of paragraph 135
of the Complaint.
137. The U. S. Shoe Defendants deny the averments of paragraph 136
of the Complaint.
138. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph 137 of the Complaint.
139. In answer to paragraph 138, the U. S. Shoe Defendants say Ohio
R. C. Section 1701.76 speaks for itself, and deny all other averments of
paragraph 138 of the Complaint.
140. The U. S. Shoe Defendants deny the averments of paragraph 139
of the Complaint.
141. The U. S. Shoe Defendants deny the averments of paragraph 140
of the Complaint.
142. The U. S. Shoe Defendants admit the averments of paragraph 141
of the Complaint, and refer to paragraph 3.2 of the Nine West Agreement for the
context of "corporating proceedings" for the purpose of these averments.
143. The U. S. Shoe Defendants deny the averments of paragraph 142
of the Complaint.
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<PAGE> 20
144. The U. S. Shoe Defendants deny the averments of paragraph 143
of the Complaint.
145. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph 144 of the Complaint.
146. The U. S. Shoe Defendants admit that the quoted section of the
averments of paragraph 145 of the Complaint correctly recite a portion of the
Article Third of U.S. Shoe's Articles of Incorporation, and incorporate the
entire Article Third as a full and correct recitation of what it contains.
147. In answer to paragraph 146, the U. S. Shoe Defendants say Ohio
Rev. Code Sections 1701.69(B)(3) and 1701.71(B)(7) speak for themselves, and
deny all other averments of paragraph 146 of the Complaint.
148. The U. S.Shoe Defendants deny the averments of paragraph 147
of the Complaint.
149. The U. S. Shoe Defendants admit the averments of paragraph 148
of the Complaint, except that certain "corporate proceedings" may be necessary
to close the transaction.
150. The U. S.Shoe Defendants deny the averments of paragraph 149
of the Complaint.
151. The U. S.Shoe Defendants deny the averments of paragraph 150
of the Complaint.
152. The U. S. Shoe Defendants incorporate their Answer and
Defenses to the averments of paragraph 151 of the Complaint.
153. The U. S. Shoe Defendants admit the averments of the first
sentence of paragraph 152, say that the Williams Act and the rules and
regulations promulgated thereunder speak for
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<PAGE> 21
themselves, incorporate the 14D-9, and deny all other averments of paragraph
152 of the Complaint.
154. In answer to paragraph 153, the U. S.Shoe Defendants say that
the Williams Act and the rules and regulations promulgated thereunder speak for
themselves, and deny all other averments of paragraph 153 of the Complaint.
155. In answer to paragraph 154, the U. S.Shoe Defendants say that
the Williams Act and the rules and regulations promulgated thereunder speak for
themselves, and deny all other averments of paragraph 154 of the Complaint.
156. The U. S. Shoe Defendants incorporate in response the 14D-9
and deny all other or inconsistent averments of paragraph 155 of the Complaint.
157. The U. S. Shoe Defendants deny the averments of paragraph 156
of the Complaint.
158. The U. S. Shoe Defendants deny the averments of paragraph 157
of the Complaint.
159. The U. S. Shoe Defendants deny the averments of paragraph 158
of the Complaint.
160. The U. S. Shoe Defendants deny the averments of paragraph 159
of the Complaint.
161. The U. S.Shoe Defendants deny the averments of paragraph 160
of the Complaint.
162. The U. S. Shoe Defendants deny all other averments not
specifically admitted herein.
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<PAGE> 22
SECOND DEFENSE
163. 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
164. Plaintiffs, or one or more of them, lack standing to assert
the claims alleged in Counts Six through Eight and Eleven through Thirteen of
the Third Amended Complaint, and may lack standing to assert other claims
alleged.
FOURTH DEFENSE
165. The Complaint fails to state a claim, in whole or in part,
upon which relief may be granted.
COUNTERCLAIMS OF U. S. SHOE
JURISDICTION
166. 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 and their
solicitation of "Agent Designations" until full and fair disclosure is made to
the investing public, as required by the federal securities laws and the Ohio
Take-Over Act.
167. This Court has subject matter jurisdiction over Counts I through
VII and X through XIV 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
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<PAGE> 23
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.
168. This Court has subject matter jurisdiction over Counts VIII
and IX of U. S. Shoe's Counterclaim for violations of Ohio Rev. Code Sections
1707.041 pursuant to the principles of diversity and pendant
jurisdiction.
169. 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.
170. The acts of Plaintiffs alleged herein occurred in and have a
substantial effect on interstate commerce.
FACTS COMMON TO ALL COUNTERCLAIMS
171. 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, 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. Some shares have been
tendered and, by its terms, the Tender Offer will expire at 12:00 midnight,
EST, April 13, 1995.
172. The Shares are a class of equity securities registered on the
New York and Pacific Stock Exchanges.
173. 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
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<PAGE> 24
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.
174. 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.
175. 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").
176. 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.
177. 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").
178. 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.
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<PAGE> 25
179. 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.
180. 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."
181. 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)."
182. 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
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<PAGE> 26
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.
183. 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").
184. 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.
185. 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."
186. U. S. Shoe's agreement with Nine West is not conditioned on
financing.
187. 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.
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188. 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.
189. 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 .
190. 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.
191. 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 LensCrafters purchasing toward
European suppliers, including Luxottica. (Financial Times, March 10, 1995).
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192. 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).
193. 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
194. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
195. Schedule 14D-1, Item 5, requires Luxottica and Luxottica
Acquisition to disclose the purpose of the Tender Offer.
196. 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.
197. 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.
198. 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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199. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
200. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT II
VIOLATION OF SECTION 14 OF THE EXCHANGE ACT - TENDER OFFER STRUCTURE
201. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
202. Schedule 14D-1 requires identification of the "Bidder" on
whose behalf a tender offer is made.
203. Schedule 14D-1 defines "Bidder" as "any person or entity on
whose behalf a tender offer is made."
204. 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.
205. 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
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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.
206. 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.
207. 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.
208. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
209. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT III
VIOLATION OF SECTION 14 OF THE EXCHANGE ACT - CONTROL OF BIDDER
210. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
211. 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."
212. Schedule 14D-1, General Instruction C, requires Luxottica and
Luxottica Acquisition to provide information regarding "each person controlling
such corporation."
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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.
213. 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.
214. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
215. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT IV
VIOLATION OF SECTION 14 OF THE EXCHANGE ACT - DESCRIPTION OF FINANCING
216. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
217. Schedule 14D-1, Item 5, requires Luxottica to describe the
financing of the Tender Offer.
218. 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
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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.
(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.
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<PAGE> 33
(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.
219. 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.
220. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
221. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT V
VIOLATION SECTION 14 OF EXCHANGE ACT - MISSTATEMENT ABOUT U. S. SHOE'S
AGREEMENT
222. U. S. Shoe incorporates by reference each allegation
contained above as if restated in full herein.
223. 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.
224. 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> 34
225. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
226. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT VI
VIOLATION OF SECTION 14 OF EXCHANGE ACT - REGULATION U
227. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
228. 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.
(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.
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<PAGE> 35
(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.
229. 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.
230. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
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<PAGE> 36
231. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT VII
232. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
233. On or about March 21, 1995, Luxottica and Luxottica
Acquisition filed proxy materials including a definitive a Proxy Statement with
the Securities and Exchange commission pursuant to Section 14(A)of the Exchange
Act (the"Proxy Statement").
234. In Schedule III of the Proxy Statement, Luxottica and
Luxottica Acquisition state that Mellon Bank Corporation is the owner of
4,678,000 common shares of U. S. Shoe, representing 10.09% of all the
outstanding common shares, that Boston Group Holdings, c/o Mellon Bank
Corporation, is the owner of 4,307,000 common shares, representing 9.29% of
all the outstanding common shares, that The Boston Company, Inc., c/o Mellon
Bank Corporation, is the owner of 4,307,000 common shares, representing 9.29%
of all the outstanding common shares, and that The Boston Company Asset
Management, Inc., c/o Mellon Bank Corporation, is the owner of 2,866,000 common
shares, representing 6.18% of all the outstanding common shares.
235. From the statement described above, a reasonable investor
could reasonably conclude that Mellon Bank Corporation and its subsidiaries own
16,158,000 common shares, representing 34.85% of the common shares, and that
Mellon Bank Corporation and its subsidiaries therefore have the power to
control the acceptance or rejection of the Tender Offer.
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<PAGE> 37
236. The common share ownership of Mellon Bank Corporation and its
subsidiaries is a material fact.
237. In the Proxy Statement, Luxottica and Luxottica Acquisition
attribute the information about the share ownership of Mellon Bank Corporation
and its subsidiaries reported in the Proxy Statement to Amendment No. 3 to a
Form 13G filed by Mellon Bank Corporation on March 8, 1995 (the"Schedule 13G").
238. The 13G reports that the total common shares owned by Mellon
Bank Corporation and its subsidiaries is 4,676,000, representing 10.09% of all
the outstanding common shares.
239. In Item 4 "Ownership" of the Schedule 13G, it is stated:
The amount beneficially owned includes, where appropriate
securities not outstanding which are subject to options,
warrants, rights or conversion privileges that are exercisable
within 60 days. The filing of this Schedule 13G shall not be
construed as an admission that Mellon Bank Corporation, or its
direct or indirect subsidiaries, including Mellon Bank, N.A.,
are for the purposes of Section 13 (d) or 13 (g) of the Act,
the beneficial owners of any securities covered by this
Schedule 13G.
240. In Item 6 of the 13G, it is stated:
All of the securities are beneficially owned by Mellon Bank or
its direct and indirect subsidiaries in their various
fiduciary capacities. As a result, another entity in every
instance is entitled to dividends or proceeds of sale. The
number of individual accounts holding an interest of 5% or
more is 0.
241. The description of the common share ownership of Mellon Bank
Corporation and its subsidiaries in the Proxy Statement is false and
misleading, in violation of Section 14(e) of the Exchange Act, and the rules
and regulations promulgated thereunder.
242. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
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243. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT VIII
244. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
245. 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.
246. 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.
247. 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.
248. 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.
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249. 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 Exchange Act, 15 U.S.C. Section 78n, and the rules and
regulations promulgated thereunder.
250. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
251. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT IX
VIOLATIONS OF OHIO REV. CODE SECTION 1707.041
252. U. S. Shoe incorporates by reference each allegation
contained above as if restated in full herein.
253. 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.
254. 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
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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 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.
255. Luxottica and Luxottica Acquisition 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.
256. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
257. U. S. Shoe does not have a adequate remedy at law for
Plaintiffs' violations described above.
COUNT X
VIOLATION OF SECTION 14 OF EXCHANGE ACT - FALSE AND MISLEADING STATEMENTS
IN PROXY MATERIALS REGARDING LUXOTTICA'S NEGOTIATIONS WITH U. S. SHOE
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258. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
259. The federal proxy rules provide, in part, as follows:
"No solicitation subject to this regulation shall be
made by means of any proxy statement, form of proxy, notice of
meeting or other communication, written or oral, containing
any statement which, at the time and in the light of the
circumstances under which it is made, is false or misleading
with respect to any material fact, or which omits to state any
material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the
solicitation of a proxy for the same meeting or subject matter
which has become false or misleading."
17 C.F.R. Section 240.14a-9(a).
260. In two letters from Claudio Del Vecchio, to U. S. Shoe
shareholders, Mr. Del Vecchio made misleading statements about the willingness
of the U.S. Shoe Board of Directors and management to negotiate in good faith
with Luxottica. In a letter from Mr. Del Vecchio to U. S. Shoe shareholders
dated March 28, 1995, which accompanies Luxottica's proxy materials regarding
the meeting under Ohio Rev. Code Section 1701.831 (the "831 Letter"), Mr. Del
Vecchio made the following false and misleading statements:
KEEP THE PRESSURE ON THE U.S. SHOE BOARD TO NEGOTIATE IN GOOD
FAITH WITH LUXOTTICA!
. . . .
IF YOU WANT U.S. SHOE TO NEGOTIATE WITH LUXOTTICA IN GOOD
FAITH VOTE TODAY FOR THE "831 PROPOSAL" ON THE BLUE CARD.
SEND A CLEAR MESSAGE TO U.S. SHOE MANAGEMENT TO STOP STALLING
AND NEGOTIATE THE BEST DEAL FOR SHAREHOLDERS RATHER THAN
GOLDEN PARACHUTES FOR THEMSELVES.
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261. In a second letter to U.S. Shoe shareholders dated March 28,
1995, which is to accompany Luxottica's solicitation of Agent Designations for
the call of a special meeting of U.S. Shoe shareholders (the "Agent Designation
Solicitation Letter"), Mr. Del Vecchio makes the following misleading
statements:
KEEP THE PRESSURE ON THE U.S. SHOE BOARD TO NEGOTIATE IN GOOD
FAITH WITH LUXOTTICA. SIGN AND RETURN THE GOLD CARD.
262. These statements are misleading in the context in which they
are made, because they imply that the U.S. Shoe Board and management are not
negotiating in good faith with Luxottica, and that U.S. Shoe management is
stalling and failing to negotiate the best deal for shareholders. These
statements contradict an accurate statement of the facts surrounding the
negotiations between Luxottica and U.S. Shoe, which appears at page eight of
Luxottica's Solicitation Statement as follows:
On March 23, 1995, Bannus B. Hudson of U.S. Shoe sent a letter
to Claudio Del Vecchio of Luxottica 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 24, 1995, U.S. Shoe's counsel delivered
to Luxottica's counsel a revised form of confidentiality
agreement. As of the date hereof, U.S. Shoe's counsel and
Luxottica's counsel are discussing this form of
confidentiality agreement.
263. Mr. Del Vecchio's letters to U. S. Shoe shareholders violate
Section 14(a) of the Exchange Act, 15 U.S.C. Section 78n, and the rules and
regulations promulgated thereunder.
264. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
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265. U. S. Shoe does not have an adequate remedy at law for
Plaintiffs' violations described above.
COUNT XI
VIOLATION OF SECTION 14 OF EXCHANGE ACT - FAILURE TO DISCLOSE RECENT MARKET
PRICE FOR U. S. SHOE SHARES IN PROXY MATERIALS
266. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
267. In the definitive proxy statement filed with the SEC on March
29, 1995, Luxottica provides an incomplete description of recent market prices
for U. S. Shoe shares while urging shareholders to return Agent Designations if
they are in favor of receiving the opportunity to sell their shares to
Luxottica for $24 in cash. Luxottica states that "[o]ver the past twelve
months the Shares have traded as low as $13.50 per Share. The Offer represents
more than a 75% premium over that price and a 28% premium over the reported
closing price for the shares on the NYSE composite tape on March 2, 1995, the
day before the Offer was first publicly disclosed." Solicitation Statement at
p. 2.
268. In its definitive proxy statement, Luxottica fails to disclose
that U. S. Shoe shares traded at $24 per share as recently as the third quarter
of the fiscal year ending January 28, 1995, and have traded more recently at
prices more than $2 per share in excess of Luxottica's $24 per share offer. In
the absence of this information, Luxottica's statements regarding recent market
prices for U. S. Shoe stock are materially misleading and in violation of
Section 14(e) of the Exchange Act, and the rules and regulations promulgated
thereunder.
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269. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined
270. U. S. Shoe does not have an adequate remedy at law for
Plaintiffs' violations described above.
COUNT XII
VIOLATION OF SECTION 14 OF EXCHANGE ACT - FALSE AND MISLEADING STATEMENTS IN
PROXY MATERIALS REGARDING THE NUMBER OF SHARES OWNED BY MELLON BANK CORPORATION
271. U.S. Shoe incorporates by reference each allegation contained
above as though rewritten.
272. In Schedule III to its Solicitation Statement, Luxottica
reports that Mellon Bank Corporation is the owner of 4,678,000 common shares,
representing 10.09% of all outstanding common shares, that Boston Group
Holdings, c/o Mellon Bank Corporation, is the owner of 4,307,000 common shares,
representing 9.29% of all the outstanding common shares, that The Boston
Company, Inc., c/o Mellon Bank, is the owner of 4,307,000 common shares,
representing 9.29% of all the outstanding common shares, and that The Boston
Company Asset Management, Inc., c/o Mellon Bank Corporation, is the owner of
2,866,000 common shares, representing 6.18% of all the outstanding common
shares.
273. As the result of this statement, it appears to the reader of
Luxottica's Solicitation Statement that Mellon Bank and its subsidiaries are
beneficial owners of 16,185,000 common shares of U. S. Shoe, representing
34.85% of the outstanding common shares, and that Mellon Bank and its
subsidiaries therefore may have significant power to control the acceptance or
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rejection of the 831 Solicitation and the Tender Offer itself. In fact, Mellon
Bank and its subsidiaries together own 10.09% of the outstanding common shares.
274. The Schedule III to the Solicitation Statement violates
Section 14(a) of the Exchange Act, 15 U.S.C. Section 78, and the rules and
regulations promulgated thereunder.
275. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
276. U. S. Shoe does not have an adequate remedy at law for
Plaintiffs' violations described above.
COUNT XIII
VIOLATION OF SECTION 14 OF EXCHANGE ACT - MISLEADING STATEMENTS IN AGENT
DESIGNATION FORM AS TO THE PURPOSES OF THE SPECIAL MEETING
277. U. S. Shoe incorporates by reference each allegation contained
above as if restated in full herein.
278. Luxottica's Agent Designation Form states that the Agent
Designations are being solicited for the purpose of calling a special meeting
of U. S. Shoe shareholders at which the shareholders will consider and vote
upon (1) a proposal to remove all incumbent directors of U. S. Shoe and elect
new directors, (2) a proposal to amend the Regulations of U. S. Shoe to provide
that Ohio Rev. Code Section 1701.831 does not apply to control share
acquisitions unless the shareholders approve the control share acquisition by
Luxottica or Luxottica is otherwise satisfied that the statute is invalid or
does not apply to Luxottica's Tender Offer, and (3) "any other matter that
properly comes before the Special Meeting" (emphasis added).
279. On page six of the Solicitation Statement, Luxottica states
that it "may elect to cause additional Special Meeting Proposals to be
identified in the notice of, and in the proxy
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<PAGE> 46
materials for, the Special Meeting." In effect, this language purports to give
Luxottica broad discretion to choose additional purposes for the special
meeting which were unknown to the shareholders executing the Agent
Designations, and unanticipated by them from reading the language of the Agent
Designation Form and the remainder of the proxy materials.
280. The statements in the Agent Designation Form are misleading in
violation of Section 14(a) of the Exchange Act, 15 U.S.C. Section 78n, and the
rules and regulations promulgated thereunder.
281. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
282. U. S. Shoe does not have an adequate remedy at law for
Plaintiffs' violations described above.
COUNT XIV
VIOLATION OF SECTION 14 OF EXCHANGE ACT - MISLEADING STATEMENT IN AGENT
DESIGNATION MATERIALS CONCERNING WHO CAN CALL AND VOTE AT A SPECIAL MEETING.
283. U. S. Shoe incorporates each allegation stated above as if
restated in full herein.
284. Luxottica's Solicitation Statement for Agent Designations at
page 4 states in part:
Luxottica and Purchaser are soliciting Agent Designations pursuant to
this Solicitation Statement without a Record Date, and the Designated
Agents will call the Special Meeting pursuant to Agent Designations
executed by persons who remain shareholders of record on the date of
such call.
285. The statement that persons who are shareholders of record
"on the date of such call" will constitute those shareholders who are entitled
to make such call is incorrect as a matter of law.
286. Section 1701.40(A)(3) of the Ohio Revised Code provides that
meetings of shareholders may be called by "persons who hold twenty-five percent
of all shares outstanding and entitled
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<PAGE> 47
to vote thereat, unless the articles or the regulations specify for such
purposes a smaller or larger proportion but not in excess of fifty percent...."
287. Pursuant to the authority contained in Section 1701.40(A)(3),
Ohio Revised Code, U. S. Shoe's Regulations specify a larger proportion, namely
fifty percent of the outstanding voting power of the corporation.
288. Whether a person holding shares outstanding is "entitled to
vote thereat" and thereby entitled to participate in the call of a meeting is
determined as of the record date to be set for such a meeting, pursuant to
Section 1701.45, Ohio Revised Code.
289. The proper procedure to be followed in the event that a call
for a meeting is received by the Company, is for it to determine preliminarily
whether as of the date the call is received by the Company, those persons making
such call constitute fifty per cent of the common shares outstanding.
290. If this is determined in the affirmative, then the Directors
may set a record date pursuant to Section 1701.45(A), and the President or
Secretary would set a meeting date pursuant to Section 1701.41(B), Ohio Revised
Code.
291. When the identity of the shareholders as of the record date
established for the meeting is determined, the Company then determines whether
those persons making the call constitute fifty per cent of the shareholders as
of such record date. If so, notice of the meeting would be sent to all
shareholders of record as of the record date. If not, the call would not be
valid and no meeting would be held.
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<PAGE> 48
292. In connection with the solicitation of Agent Designations, it
is false and misleading to state that "call date" shareholders rather than
"record date" shareholders determine who is entitled to vote at a special
meeting or to make a valid call of a meeting.
293. Luxottica's Solicitation Statement for Agent Designations at
page 3 states in part:
Any revocation of an Agent Designation will not effect (sic)
any action taken by the Designated Agents pursuant to the
Agent Designation prior to such revocation.
294. The statement "any revocation of an Agent Designation will not
effect (sic) any action taken by the Designated Agents pursuant to the Agent
Designation prior to such revocation" is incorrect as a matter of law.
295. The Agent Designation is governed by Section 1701.48, Ohio
Revised Code, which deals with appointments of proxies. In providing that
persons appointing a proxy may revoke a revocable appointment by a later
revocation received by the corporation, Division (D) excludes from the operative
effect of the revocation only "any vote previously taken." Division (D) does
not exclude from the operative effect of the revocation any action taken by the
proxy with regard to the call of a meeting.
296. In connection with the solicitation of Agent Designations, it
is false and misleading to state that any revocation of an Agent Designation
will not affect (sic) any action taken by the Designated Agents pursuant to the
Agent Designation prior to such revocation.
297. U. S. Shoe will suffer irreparable injury unless Plaintiffs'
violations described above are enjoined.
298. U. S. Shoe does not have an adequate remedy at law for the
violations described above.
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<PAGE> 49
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
Sections 14(d) - (e), and Ohio Rev. Code Sections
1707.041 and 1707.042;
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 Act, 15 U.S.C. Section 78n,
and the rules and regulations promulgated thereunder
and Ohio Rev. Code Sections 1701.041 and 1707.042;
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
Sections 1701.041 and 1707.042 and to withdraw the
false and misleading Offer, Form 14D-1 and Form 041;
IV That Plaintiffs and all other persons acting for or
on their behalf be ordered to cease and desist from
violating the Exchange Act, be
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<PAGE> 50
ordered to withdraw their false and misleading
Solicitation of Agent Designations, be ordered to
issue corrective statements in the event that they
choose to attempt a new Solicitation of Agent
Designations and be ordered to cancel and withdraw
any Agent Designations which have been obtained
pursuant to the Solicitation of Agent Designations;
and
V 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
- 50 -
<PAGE> 51
CERTIFICATE OF SERVICE
This is to certify that a copy of the foregoing has been sent by Fax
and express 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 6th day of April, 1995.
/s/ Joseph J. Dehner
---------------------------------------
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<PAGE> 1
Exhibit 30
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
LUXOTTICA GROUP, S.p.A., :
et al., :
:
Plaintiffs, :
:
:
v. : Civil Action No. C-2-95-244
: Judge Graham
THE UNITED STATES SHOE :
CORPORATION, et al., :
:
Defendants. :
AGREED PRE-HEARING ORDER
This statement of the claims and defenses asserted by Plaintiffs and
Defendants is submitted in accordance with the Court's request. It should be
noted, however, that because of the expedited nature of these proceedings,
discovery has not yet been concluded and depositions have not yet been
completed. Accordingly, while this statement of claims and defenses sets forth
the issues to be presented at the hearing which are known at this time, the
parties request the right to supplement, modify or otherwise alter their
positions set forth herein.
Plaintiffs Luxottica Group S.p.A., Luxottica Acquisition Corp., and
Avant-Garde Optics, Inc. (collectively "Plaintiffs"), and Defendant The United
States Shoe Corporation, hereby agree as follows:
I. U.S. Shoe's motion to dismiss Counts Eleven, Twelve and
Thirteen of Plaintiffs' Third Amended Complaint may be presented to the Court at
the hearing to occur on April 13 and 14, 1995, and Plaintiffs shall file their
memorandum in opposition to such motion with the Court by 5:00 p.m. on April 11,
1995.
<PAGE> 2
II. U.S. Shoe's motion to dismiss Counts Six, Seven and Eight of
Plaintiffs' Third Amended Complaint will not be presented to the Court at the
hearing to occur on April 13 and 14, 1995, and Plaintiffs shall file their
memorandum in opposition to that portion of the motion with the Court no later
than by 5:00 p.m. on April 21, 1995 (the time within which such memorandum is
due under the local rules).
III. U.S. Shoe's motion for a preliminary and permanent injunction
enjoining Plaintiffs from distributing certain information in their proxy
solicitation in connection with "agent designations" for calling a special
meeting of U.S. Shoe shareholders, filed March 31, 1995 shall be presented to
the Court at the hearing scheduled for April 13 and 14, 1995. U.S. Shoe shall
amend its counterclaim to assert those claims and possibly one additional claim
(the substance of which has been disclosed orally to Plaintiffs' attorneys) by
5:00 p.m. on April 6, 1995.
IV. Plaintiffs and Defendant-counterclaimant U.S. Shoe will submit
to the Court for determination Counts I through VII and IX through XIV of U.S.
Shoe's Second Amended Counterclaim and Count XIV of Plaintiffs' Third Amended
Complaint at the hearing scheduled for April 13 and 14, 1995. Plaintiffs and the
U.S. Shoe Defendants shall file by 5:00 p.m. on April 11, 1995 their prehearing
briefs on the issues to be presented at the April 13-14 hearing. State
Defendants' pre-hearing brief in response to Plaintiffs constitutional challenge
to R.C. 1707.041 shall be filed by 5:00 p.m. April 12, 1995.
V. U.S. SHOE'S CLAIMS AND PLAINTIFFS' DEFENSES
1. U.S. SHOE CLAIM. The Schedule 14D-1, the Offer and the
proxy materials of Luxottica Group S.p.A. and Luxottica Acquisition Corp.
(collectively, "Luxottica")
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<PAGE> 3
violate 15 U.S.C. Section 78n(d) and (e) because they fail to disclose the
purpose of Luxottica's Tender Offer. Statements of purpose by Luxottica's Chief
Executive Officer Leonardo Del Vecchio indicate purposes that are not disclosed
in Luxottica's proxy materials and Offer.
PLAINTIFFS' DEFENSE. The Tender Offer Statement on
Schedule 14D-1 (the Statement) responds fully to Item 5 of the Schedule 14D-1 by
disclosing the purpose of the Tender Offer as the acquisition of all of the
outstanding shares of U.S. Shoe (including associated Rights) and the subsequent
merger of the company with a subsidiary of Plaintiffs. In addition, Item 5
discloses information about the corporate entity effecting the Tender Offer and
its parent company, the source and amount of the funds to be used for the
acquisition and Plaintiffs' plans for U.S. Shoe should the Tender Offer be
successful. There is no requirement that Plaintiffs disclose the business
reasons for making the offer. Plaintiffs have no undisclosed purpose for making
the Tender Offer nor any undisclosed plans for U.S. Shoe.
2. U.S. SHOE CLAIM. Luxottica's Offer, proxy materials
and Schedule 14D-1 violate 15 U.S.C. Section 78(n)(d) and (e) because they (1)
fail to disclose adequately the identity of the bidder, (2) fail to disclose
adequately the identity of the acquiring persons in the Tender Offer; and (3)
fail to state that Avant-Garde is to acquire the shares purchased pursuant to
the Tender Offer.
PLAINTIFFS' DEFENSE. The Statement responds fully to
Item 2 of Schedule 14D-1 by disclosing the identity of the entity on whose
behalf the offer is made as well as the identity of its ultimate corporate
parent, Luxottica Group S.p.A. Similarly, the Statement identifies the entity
borrowing the funds to make the offer as well as its relationship to the same
corporate parent.
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<PAGE> 4
That the borrowing entity is described in the
Commitment Letter as "Newco" rather than by its full corporation name of
Luxottica U.S. Holding Corp. is not material since, as the Statement discloses,
Luxottica U.S. Holding Corp. is newly formed, has minimal assets and no
financial history. The bidder, although described in the Commitment Letter
as"Bidco" is prominently identified as one of the bidders throughout the
Statement.
Equally immaterial is the fact that, after the
successful consummation of the offer, the share of U.S. Shoe will be held by
another corporate subsidiary, whose name is not mentioned in the Statement.
3. U.S. SHOE CLAIM. Luxottica's Offer, proxy materials
and Schedule 14D-1 violates 15 U.S.C. Section 78n(d) and (e) because they fail
to identify adequately Leonardo Del Vecchio as a controlling person of the
bidder and of Luxottica.
PLAINTIFFS' DEFENSE. Instruction C to the Schedule
14D-1 requires that the information in Items of 2-7 be provided with respect to
officers, directors and controlling persons of a corporation filing a Statement.
All such information has been provided for Mr. Del Vecchio including that he has
been the Chief Executive Officer of the Company since 1961, its Chairman since
1981 and its founder. Those disclosures clearly identify Mr. Del Vecchio as a
controlling person by virtue of his positions. Items 2 through 7 do not require
that, in addition to the foregoing disclosures, Mr. Del Vecchio be designated a
"controlling person" or that his stock ownership (which is reported in other
Luxottica filings with the SEC) be set forth.
4. U.S. SHOE CLAIM. Luxottica's Offer, proxy materials
and Schedule 14D-1 violate 15 U.S.C. Section 78n(d) and (e) in that they fail to
disclose adequately : (i) the
- 4 -
<PAGE> 5
convoluted financial and other relationships among Luxottica related entities
and persons; (ii) the identity of the borrower; (iii) that the Offer is
conditioned upon Luxottica's satisfaction that it has obtained suitable
financing; (iv) that the financing set forth in a commitment letter from Credit
Suisse contains substantial risks that the financing would ever be extended; (v)
the amount of the revolving credit portion of the loan that may be used to
purchase the shares of U.S. Shoe; and (vi) that the financing is subject to the
sole discretion of Credit Suisse. Luxottica has falsely and misleadingly stated
and communicated in its proxy materials and fourth amendment to the Schedule
14D-1 that "Credit Suisse is prepared to fund their commitment on the expiration
date of our offer," which when made was March 31, 1995. Luxottica has falsely
and misleadingly claimed that its financing is finalized and has implied
therefore that there is no financial risk that the Tender Offer could be
consummated, whereas in fact there are substantial risks and contingencies
involved with Luxottica's stated financing plans.
PLAINTIFFS' DEFENSE. There is no material element
of the loan transaction that is not set forth in detail either in the Statement
or in the Commitment Letter and Term Sheet, which are filed as Exhibit (b)(1)
to, and incorporated by reference in the Statement. Those documents make clear
that the offer is conditioned upon, among other things, (i) sufficient
financing, (ii) the absence of material adverse changes in the business of
Plaintiffs, (iii) the negotiation, execution and delivery of definitive
documentation of the loan, and (iv) the loan being in full compliance with the
requirements of the Federal Reserve Board.
5. U.S. SHOE CLAIM. Luxottica's Offer, proxy materials
and Schedule 14D-1 violate 15 U.S..C. Section 78n(d) and (e) because they
state that U.S. Shoe's agreement with Nine West Group, Inc. "appears to be
conditioned on financing." In fact, the Nine West agreement
- 5 -
<PAGE> 6
is not conditioned on financing and does not appear to be conditioned on
financing from a fair reading of published descriptions of the Nine West
agreement.
PLAINTIFFS' DEFENSE. The statement complained of is
accurate since, according to its publicly-available financial statements, Nine
West Group, Inc. does not have sufficient unencumbered assets or cash with which
to purchase that footwear division of U.S. Shoe, and unless it obtains financing
for the same it will be unable to complete the acquisition. Further, press
releases of U.S. Shoe and Nine West imply the financing is subject to usual and
customary conditions.
6. U.S. SHOE CLAIM. Luxottica's Offer, proxy materials
and Schedule 14D-1 violate 15 U.S.C. Section 78n(d) and (e) because they provide
inadequate disclosure of Regulation U of the Federal Reserve Board and its
effect on the proposed Luxottica financing and transaction.
PLAINTIFF'S DEFENSE. Regulation U provides in
relevant part that no bank may extend credit secured by margin stock in an
amount that exceeds the "maximum loan value" of the collateral securing the
credit. The collateral securing Plaintiffs' borrowings will be all of the shares
of U.S. Shoe purchased in the Tender Offer; a security interest in all of the
assets of Plaintiffs' United States subsidiaries and a negative pledge on
substantially all of Plaintiffs' assets, including the capital stock of its
non-U.S. subsidiaries. The staff of the Federal Reserve Board has consistently
concluded that assets subject to a negative pledge constitute "collateral
securing the credit" for the purposes of Regulation U.
The maximum loan value of collateral, other than the
margin stock, is defined as "good faith loan value" or an amount which a bank
exercising sound banking
- 6 -
<PAGE> 7
judgment would lend to a borrower. The good faith loan value of the collateral
supporting the Credit Suisse loan is far in excess of the required amount.
In addition, U.S. Shoe does not have standing to
maintain a private right of action for violation of the margin regulations.
Consequently, this Court need not decide the merits of any Regulation U
argument. Rather, the only question before the Court is one of adequate
disclosure under the Williams Act. Accordingly, if this Court finds that: (1)
there is a good faith dispute as to any violation of Regulation U, and (2) the
existence of that dispute has been disclosed to the shareholders, U.S. Shoe's
claim must be dismissed.
7. U.S. SHOE CLAIM. Luxottica's Offer, proxy materials,
Schedule 14D-1 and agent designation solicitation materials contain false
statements Mellon Bank Corporation owns 34.85% of U. S. Shoe. In fact, the
percentage ownership is 10.09%.
PLAINTIFFS' DEFENSE. The description of Mellon Bank
Corporation's ownership of U.S. Shoe shares in Plaintiffs' proxy material is
based upon and taken from a description set forth in Amendment No. 3 to the
Schedule 13 G filed by Mellon Bank Corporation on March 8, 1995. The Schedule
13G is a publicly available document and Plaintiffs were entitled to rely on it.
8. U.S. SHOE CLAIM. Luxottica failed to disclose, mail
or otherwise deliver substantial information and materials to all U.S. Shoe
shareholders who reside in Ohio, as required by the Ohio Take-Over Act, Section
1707.041, Ohio Revised Code.
PLAINTIFFS' DEFENSE. Luxottica's conduct, filings and
offeree materials pursuant to R.C. Section 1707.041 comply with the requirements
of Ohio law.
- 7 -
<PAGE> 8
U.S. Shoe lacks standing to assert any violation of
R.C. Section 1707.041 because the Act does not create a private right of action
on behalf of corporations which are targets of a Tender Offer.
The Ohio Division of Securities, which has reviewed
the filings and disclosures made by Luxottica and has declined to suspend the
Tender Offer or take any other enforcement action, has exclusive jurisdiction to
enforce the Ohio Take-Over Act.
To the extent that the Ohio Take-Over Act requires
the provision of extensive information and mailing of massive materials in
addition to those required by the Williams Act, the provisions of the Ohio
Take-Over Act which U.S. Shoe claims have been violated are unenforceable
because they violate the Commerce Clause and are preempted by the Williams Act.
STATE'S DEFENSE TO U.S. SHOE CLAIM AND LUXOTTICA'S
CONSTITUTIONAL CHALLENGE TO SECTION 1707.041, OHIO REVISED CODE.
a. U.S. Shoe lacks standing to assert a violation of R.C. 1707.041
because the statute does not create a private right of action.
Only the Ohio Division of Securities and the Ohio Department of
Commerce have the statutory authority to enforce the Ohio
Securities Act.
b. The issue of whether R.C. 1707.041 is constitutional is moot
since the Ohio Division of Securities did not suspend
Luxottica's tender offer pursuant to R.C. 1707.041(A)(3).
c Since only the Ohio Division of Securities and the Ohio
Department of Commerce have the statutory authority to enforce
the Ohio Securities Act, and since
- 8 -
<PAGE> 9
enforcement action has not been initiated, the issue of whether
R.C. 1707.041 is constitutional, is not ripe for review.
d. To the extent that U.S. Shoe is deemed to have the authority
to seek injunctive relief pursuant to R.C. 1707.041, and to
the extent that this Court determines that the
constitutionality of R.C. 1707.041 is ripe for review and is
not a moot issue, the Ohio Takeover Act is constitutional as
it is not violative of the Commerce Clause and is not
pre-empted by the Williams Act.
9. U.S. SHOE CLAIM. In violation of the federal proxy
rules, Luxottica's agent designation proxy materials contain false and
misleading statements regarding Luxottica's negotiations with U.S. Shoe,
including claims that U.S. Shoe has not negotiated with Luxottica in good faith
and that U.S. Shoe management is stalling and negotiating golden parachutes for
themselves instead of negotiating the best deal for shareholders.
PLAINTIFFS' DEFENSE. Until March 31, 1995 U.S. Shoe
refused to enter into a confidentiality agreement without unreasonable and
burdensome conditions. Although a more reasonable confidentiality agreement has
since been signed, U.S. Shoe has failed to provide Plaintiffs with the usual and
customary non-public financial information provided in a negotiated transaction.
On information and belief, Plaintiffs believe U.S. Shoe has provided such
information to other interested parties including Nine West.
10. U.S. SHOE CLAIM. Plaintiffs' agent designation proxy
materials are misleading because they fail to disclose the recent market price
for U.S. Shoe shares. Instead, Plaintiffs say that U.S. Shoe stock traded at
prices as low as $13.50 in 1994, but omit that the share traded at $24 in the
third quarter of 1994. Plaintiffs state that their $24 per share offer
- 9 -
<PAGE> 10
is a substantial premium over recent prices, without disclosing that this
represents no premium at all over a price within several months of the offer.
The materials further fail to disclose that the trading price at the time the
proxy materials were distributed was significant more than the $24 per share
offer.
PLAINTIFFS' DEFENSE. The proxy materials are not
misleading since they set forth that "Over the past twelve months, the Shares
have traded as low as $13.50 per share. The offer represents more than a 75%
premium over that price and a 28% premium over the reported closing price for
the shares on March 2, 1995, the day before the offer." The Statement fairly
describes the price range of the stock of U.S. Shoe for the last twelve months.
The $24 price in the third quarter occurred immediately after the announcement
by the company of the sale of the shoe division. The price of the stock declined
substantially when it was announced that that sale had been aborted.
11. U.S. SHOE CLAIM. Luxottica's agent designation form
is misleading as to the purposes of the Special Meeting which Luxottica intends
to call through the use of agent designations. Someone signing the form would
not understand that the person was giving unlimited discretion to Luxottica to
call a meeting for purposes not expressly stated in the agent designation proxy
materials.
PLAINTIFFS' DEFENSE. Both the agent designation
solicitation and the proxy card required to be completed by the shareholders are
unambiguous and grant to the agent the power to add other matters before the
Special Meeting. Plaintiffs' proxy materials accurately describe the authority
of agents designated by shareholders to call a special meeting under Ohio
- 10 -
<PAGE> 11
Law and specifically point out that such agents will have no authority to vote
on any matter at the Special Meeting.
12. U.S. SHOE CLAIM. Luxottica's agent designation solicitation
materials state that those persons who can call a special meeting of U.S. Shoe
are those record holders of at least fifty per cent of the common shares as of
the date of a call submitted to U.S. Shoe. Under the Ohio Revised Code, the
sufficiency of a call is determined by fifty per cent of those shareholders
"entitled to vote thereat" - meaning those entitled to vote at the special
meeting. Whether fifty per cent of the shareholders have properly called a
special meeting must be determined as of the record date set for such a meeting.
Luxottica's materials are in this respect false and misleading.
PLAINTIFFS' DEFENSE. U.S Shoe's claim incorrectly interprets
Section 1701.40 of the Ohio Revised Code and is contrary to the following
statement set forth in the March 10, 1995 letter from James J. Crowe, Esq.,
general counsel of U.S. Shoe, to Avant-Garde Optics, Inc.: "There is nothing in
the OGCL that expressly contemplates that a special meeting may be called by
persons who are at any time other than the time of the making of such call the
holders of Shares."
VI. PLAINTIFFS' GENERAL DEFENSE TO ALL CLAIMS
Plaintiffs' Schedule 14D-1 and amendments thereto, its Offer to
Purchase and its Proxy Materials do not contain any material misstatements of
fact or omissions in view of the total mix of information which has been made
available to shareholders of U.S. Shoe.
Plaintiffs object to the amendment of Counterclaims by U.S.
Shoe to include Plaintiffs' proxy materials.
- 11 -
<PAGE> 12
VII. PLAINTIFFS' CLAIMS AND U.S. SHOE'S DEFENSES
PLAINTIFFS' CLAIM. U.S. Shoe's Schedule 14D-9 violates U.S.C.
Section 78n(d) and (e), 17 C.F.R. Section 240.14d- 9, Schedule 14D-9 and the
instructions to Schedule 14D-9 because it fails:
a. To disclose material information concerning U.S.
Shoe's proposed sale of its footwear operations to Nine West
Group, Inc., including the Seller Disclosure Schedule, the
after-tax proceeds to be generated by the transaction and the
proposed use of such proceeds to maximize shareholder value in
the near term.
b. To state that a vote of shareholders is required under
Ohio law to approve the Nine West transaction and the sale of
other U.S. shoe businesses.
c. To disclose, except in conclusory statements that
violate Item 4 of Schedule 14D-9, the reasons relied upon by
U.S. Shoe's directors as a basis for recommending that
shareholders reject Luxottica's Offer and to disclose
information material to shareholders in evaluating the
directors' recommendation and the reasons therefor.
U.S. SHOE'S DEFENSE. U.S. Shoe's Schedule 14D-9 including all
amendments comply fully with the requirements of the SEC. It is not required
that U.S. Shoe attach all schedules of the Nine West Agreement, which itself is
a voluminous document and is provided as part of the 14D-9. It is not required
that there be premature disclosure of the after-tax proceeds of the Nine West
transaction, a figure that has not yet been accurately determined. It is not
required that U.S. Shoe announce prematurely what uses will be made of the
proceeds, which have not yet been obtained.
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<PAGE> 13
The Nine West transaction does not require shareholder approval. The
Footwear Division of U.S. Shoe is not even half of U.S. Shoe under any measure.
It represents about 25% of the revenues and about a third at most of the assets.
When the law firm currently representing Plaintiffs advised U.S. Shoe and its
Directors in 1989 concerning the validity of a transaction then the subject of
contract to sell the Footwear Division of U.S. Shoe to Merrill Lynch Capital
Partners, that law firm did not even raise as an issue that shareholder approval
might have been required as a condition of the transaction. If this were a
serious issue, it would have been raised then. Shareholder approval of the Nine
West transaction is not required. It would be false and misleading even to
suggest that this is so.
The statements of U.S. Shoe and its Board of Directors concerning the
rejection of the Luxottica $24 per share Offer and its recommendation to
shareholders that they not accept it are properly stated and are not false and
misleading in any respect. Including further information about what might occur
in the future would constitute premature speculative announcement of possible
other future actions or transactions and is not required by law.
VIII. MUTUAL DISCLAIMER
By signing this Order, neither the Plaintiffs nor the U.S. Shoe
Defendants agree to the characterizations of the claims and defenses of the
other parties.
IT IS SO ORDERED.
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<PAGE> 14
/s/ James L. Graham, D.J.
- ----------------------------------
James L. Graham, D.J.
Dated: April 7, 1995
/s/ Joseph J. Dehner /s/ Thomas B. Ridgley
- ---------------------------------- -------------------------------
Joseph J. Dehner (0011321) Thomas B. Ridgley (0000910)
Trial Attorney Trial Attorney
FROST & JACOBS VORYS, SATER, SEYMOUR AND PEASE
2500 PNC Center 52 East Gay Street
201 East Fifth Street P.O. Box 1008
Cincinnati, Ohio 45202 Columbus, Ohio 43216-1008
(513) 651-6800 (614) 464-6229
Attorneys for U.S. Shoe Defendants WINSTON & STRAWN
175 Water Street
New York, New York 10038
(212) 269-2500
Attorneys for Plaintiffs
ATTORNEY GENERAL OF OHIO
Betty D. Montgomery
/s/ Daniel A. Malkoff
- ----------------------------------
Daniel A.Malkoff (0029917)
30 East Broad Street, 26th Floor
Columbus, Ohio 43215-3428
(614) 466-2980
- 14 -
<PAGE> 1
Exhibit 31
[U.S. Shoe Letterhead]
April 7, 1995
DEAR SHAREHOLDER:
In its continuing attempt to buy U.S. Shoe for the cheapest possible
price, Luxottica Group S.p.A. has begun a solicitation campaign asking you to
approve "Agent Designations." Luxottica intends to use the Agent Designations to
call a Special Meeting of Shareholders at which it will seek to replace U.S.
Shoe's independent directors with directors hand-picked by Luxottica. Luxottica
admits that its candidates would be committed to consummation of Luxottica's $24
per share tender offer.
U.S. SHOE'S BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED LUXOTTICA'S $24
OFFER TO BE INADEQUATE. DON'T HELP LUXOTTICA PURCHASE YOUR COMPANY AT AN
INADEQUATE PRICE. IF LUXOTTICA GAINS CONTROL OF U.S. SHOE'S BOARD OF DIRECTORS,
IT WILL HAVE LESS INCENTIVE TO RAISE ITS OFFER. DO NOT SIGN ANY GOLD "AGENT
DESIGNATION" CARD SENT TO YOU BY LUXOTTICA. WHETHER OR NOT YOU HAVE RESPONDED TO
LUXOTTICA'S SOLICITATION OF "AGENT DESIGNATIONS," YOU ARE URGED TO SIGN, DATE
AND MAIL THE ENCLOSED GREEN REVOCATION CARD AS SOON AS POSSIBLE.
The Board is progressing toward its publicly-stated goal of enhancing
value in the near term for U.S. Shoe shareholders. The Board has directed the
Company's management and financial advisor, James D. Wolfensohn Incorporated, to
pursue opportunities to enhance the value of your investment in U.S. Shoe. To
that end:
- The Company has entered into a definitive agreement to sell U.S. Shoe's
footwear business to Nine West for a total consideration of
approximately $600 million in cash and warrants.
- The Board is continuing to explore strategic alternatives, which could
include the sale of the Company or one or more of its remaining
businesses.
- We have commenced the process of providing confidential business
information to Luxottica to point out why we believe their $24 per share
offer is inadequate.
The eleven members of the U.S. Shoe Board, including nine outside
directors who are not officers of the Company, strongly believe U.S. SHOE
SHAREHOLDERS ARE MORE LIKELY TO REALIZE GREATER VALUE THROUGH AN ORDERLY AND
IMPARTIAL PROCESS CONDUCTED BY THIS BOARD THAN BY RELINQUISHING CONTROL TO
LUXOTTICA'S HAND-PICKED REPRESENTATIVES, who are committed to furthering their
$24 per share offer.
<PAGE> 2
In seeking to further its interests instead of yours, Luxottica has:
- Sued U.S. Shoe in an attempt to block the sale of your Company's
footwear business to Nine West for approximately $600 million in cash
and warrants.
- Announced that it intends to pursue three costly, confusing and
disruptive solicitations of U.S. Shoe shareholders, all in furtherance
of its inadequate $24 per share offer.
- Ignored the fact that U.S. Shoe stock recently has traded around $26 --
well above what Luxottica has offered you for your shares.
Send a message to Luxottica that $24 per share is NOT ENOUGH. Reject
Luxottica's attempt to take control of the U.S. Shoe Board. DO NOT return any
gold "Agent Designation" form you may receive from Luxottica. Instead, please
support the U.S. Shoe Board's effort to enhance shareholder value by signing,
dating and mailing the enclosed GREEN revocation card today.
Thank you for your continuing support.
Sincerely,
/s/ BANNUS B. HUDSON
BANNUS B. HUDSON
President and Chief Executive
Officer
DO NOT SUPPORT LUXOTTICA'S EFFORTS TO BUY YOUR COMPANY AT A PRICE THE
BOARD HAS DETERMINED TO BE INADEQUATE.
PLEASE DISCARD LUXOTTICA'S GOLD AGENT DESIGNATION CARD.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED GREEN REVOCATION CARD.
If you have any questions or need assistance voting your U.S. Shoe shares,
please call our proxy solicitor:
D.F. King & Co., Inc.
1-800-628-8528 (Toll-Free)
<PAGE> 3
REVOCATION SOLICITATION STATEMENT
OF
THE UNITED STATES SHOE CORPORATION
in opposition to the solicitation by
Luxottica Group S.p.A. and Luxottica Acquisition Corp.
to call a special meeting of shareholders
This revocation solicitation, on behalf of the Board of Directors of The
United States Shoe Corporation (the "Corporation"), opposes the solicitation by
Luxottica Acquisition Corp., a Delaware corporation ("LAC"), and its parent
corporation, Luxottica Group S.p.A., a corporation organized under the laws of
the Republic of Italy ("Luxottica"), of Appointments of Designated Agents
("Agent Designations") to call a special meeting of shareholders of the
Corporation. This solicitation statement of the Corporation is being mailed to
shareholders on or about April 10, 1995.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU NOT SIGN ANY GOLD
AGENT DESIGNATION SENT TO YOU BY LUXOTTICA AND LAC. WHETHER OR NOT YOU HAVE
PREVIOUSLY EXECUTED A GOLD AGENT DESIGNATION, THE BOARD URGES YOU TO SIGN, DATE
AND RETURN THE ENCLOSED GREEN REVOCATION CARD (A "REVOCATION CARD") AS SOON AS
POSSIBLE.
BACKGROUND
On March 3, 1995, Luxottica and LAC, an indirect wholly-owned subsidiary of
Luxottica, commenced a tender offer to purchase all of the Corporation's
outstanding common shares without par value, and the associated preference share
purchase rights (collectively, the "Common Shares") for a purchase price of
$24.00 per Common Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated March 3, 1995 (the "Luxottica Offer"). As of March 30, 1995, the initial
expiration date of the Luxottica Offer, the Corporation's shareholders had
tendered approximately 1.9 million Common Shares (representing only 4.1% of the
outstanding Common Shares) to Luxottica and LAC. Luxottica and LAC have extended
the Luxottica Offer until April 13, 1995. THE CORPORATION'S BOARD OF DIRECTORS
HAS UNANIMOUSLY RECOMMENDED THAT THE SHAREHOLDERS REJECT THE LUXOTTICA OFFER AS
INADEQUATE AND NOT IN THE BEST INTERESTS OF THE CORPORATION AND ITS
SHAREHOLDERS.
In connection with the Luxottica Offer, Luxottica and LAC are providing the
Corporation's shareholders with a solicitation statement and an Agent
Designation. A shareholder's execution of an Agent Designation designates
specific persons as agents for the shareholder with authority to take all
actions necessary to convene a special meeting of shareholders of the
Corporation (the "Special Meeting"). The primary purpose of the Special Meeting
is to remove the Corporation's existing directors and fill the vacancies with
Luxottica's and LAC's nominees.
Signing and returning an Agent Designation furthers the interests of
Luxottica and LAC in pursuing the Luxottica Offer. Luxottica's and LAC's
nominees, if elected, are committed (subject to their fiduciary duties) to
ensuring that a future Board of Directors of the Corporation approves the
Luxottica Offer at a purchase price of $24.00 per Common Share, a purchase price
that the Corporation's present Board of Directors has unanimously determined is
inadequate and not in the best interests of the Corporation and its
shareholders. Unlike the Corporation's current Board of Directors, which
includes nine non-employee, independent directors among its eleven members,
following the Special Meeting the Board of Directors could be comprised only of
Luxottica's and LAC's hand-picked representatives. Neither Luxottica nor LAC has
any fiduciary obligation to protect your interests; their sole obligations are
to their own shareholders. Indeed, Luxottica and LAC have stated only one reason
for the election of their nominees: to give shareholders the opportunity to
accept their $24 offer. In contrast, the current Board of Directors has publicly
indicated that its goal is to enhance value for the Corporation's shareholders
in the near term by exploring all strategic alternatives, including the sale of
the
<PAGE> 4
Corporation, the sale of one or more of the Corporation's businesses and
negotiating with Luxottica and LAC under appropriate circumstances.
THE BOARD OF DIRECTORS THEREFORE RECOMMENDS THAT SHAREHOLDERS NOT RETURN
THE AGENT DESIGNATION REQUESTED BY LUXOTTICA AND LAC. TO STOP LUXOTTICA AND LAC
FROM USING YOUR COMMON SHARES TO FURTHER THEIR INTERESTS, THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU (1) DISCARD ANY GOLD AGENT DESIGNATION AND (2) IF YOU HAVE
ALREADY RETURNED A GOLD AGENT DESIGNATION, SIGN, DATE AND RETURN THE ENCLOSED
GREEN REVOCATION CARD AS SOON AS POSSIBLE.
No record date has been set for determining shareholders' eligibility to
call for the Special Meeting. In order to call the Special Meeting, Luxottica
and LAC must present to the Corporation's President or Secretary Agent
Designations representing at least 50% of the Corporation's Common Shares
entitled to vote thereat. Shareholders entitled to vote at the Special Meeting
will be the record holders of Common Shares on a record date that will be
established by the Corporation pursuant to applicable Ohio law. To the extent
that Common Shares are held of record by banks, brokers or other financial
intermediaries not entitled to vote such Common Shares, such Common Shares can
be represented by agents for purposes of calling the Special Meeting only upon
the direction of the person entitled to vote such Common Shares at the Special
Meeting.
LUXOTTICA'S AND LAC'S SOLICITATION OF AGENT DESIGNATIONS
Under the Ohio Revised Code and the Corporation's Regulations, shareholders
holding 50% or more of the outstanding Common Shares are entitled to call a
special meeting. Accordingly, to call and hold the Special Meeting, Luxottica
and LAC must obtain Agent Designations from shareholders holding at least 50% of
the Corporation's Common Shares. As of April 5, 1995, there were 46,787,900
Common Shares outstanding. In the event that the Corporation is presented with
such a valid written request of the holders of at least 50% of the Corporation's
Common Shares entitled to vote at the Special Meeting, the President or
Secretary of the Corporation will be obligated to cause a special meeting to be
held on a date not less than seven or more than sixty days after receipt of such
request. Luxottica and LAC have indicated that they intend to solicit Agent
Designations continuously through April 13, 1995 or any later date selected by
Luxottica and LAC.
Authorization of Call for Special Meeting
If a shareholder signs and returns an Agent Designation to Luxottica and
LAC, such shareholder authorizes Luxottica and LAC to call the Special Meeting.
The Agent Designations also provide that the agenda for the Special Meeting will
include: (1) a proposal to remove all of the incumbent directors of the
Corporation, and to elect Luxottica's and LAC's nominees to the Board of
Directors to fill the vacancies resulting from such removal; (2) a proposal to
amend the Corporation's Regulations to provide that Section 1701.831 of the Ohio
Revised Code ("Section 831"), which requires shareholder approval of a control
share acquisition, is not applicable to the Corporation, if the Corporation's
shareholders have not previously authorized the Luxottica Offer or if LAC is not
otherwise satisfied that Section 831 is inapplicable to the Luxottica Offer or
is invalid; and (3) any other matter properly coming before the Special Meeting.
Authorization of Conditional Actions
In addition, by executing an Agent Designation, a shareholder authorizes
Luxottica and LAC to set a date for the Special Meeting and to provide
shareholders with notice of the Special Meeting if the Corporation fails to fix
such date or to provide such notice. The Agent Designation also enables the
designated agents to fix the record date for any adjournment of the Special
Meeting if the designated agents have duly fixed the record date for the Special
Meeting, in accordance with the Ohio Revised Code, and to exercise any other
rights necessary for accomplishing the foregoing purposes (collectively, the
"Conditional Actions"). The designated agents, however, will not have authority
to vote the Common Shares at the Special Meeting.
2
<PAGE> 5
OPPOSITION PROCEDURE
To oppose Luxottica's and LAC's solicitation of Agent Designations and
their efforts to install their Board of Directors and thereby facilitate
acceptance of the Luxottica Offer at $24.00 per Common Share, which the current,
independent Board of Directors has unanimously determined to be inadequate, the
Board urges record holders of Common Shares who have already returned a GOLD
Agent Designation to sign and date the GREEN Revocation Card and return it in
the enclosed postage-paid envelope. Please discard any GOLD Agent Designation
you may receive from Luxottica and LAC. Even if you have already returned a GOLD
Agent Designation, you can vote to stop Luxottica and LAC from calling the
Special Meeting and furthering their own interests by signing, dating and
returning the GREEN Revocation Card. HOWEVER, YOU MUST ACT PROMPTLY TO BE
CERTAIN YOUR REVOCATION WILL BE EFFECTIVE. IF YOU DELAY RETURNING YOUR GREEN
REVOCATION CARD, YOUR EFFORT TO REVOKE MAY NOT BE SUCCESSFUL.
If a broker indicates on the form of proxy that it does not have
discretionary authority as to certain Common Shares to execute either a GREEN
Revocation Card or a GOLD Agent Designation, such an indication will have the
practical effect of a vote against the call for the Special Meeting with respect
to those Common Shares.
Each employee participating in The United States Shoe Corporation Tax
Incentive Savings Plan is entitled to instruct The Charles Schwab Trust Company,
as Trustee, whether to oppose or support the call for the Special Meeting with
respect to all Common Shares credited to the employee's accounts under such
plan. The Revocation Card will serve as instructions to the Trustee from such
participants. Common Shares held in the plan for which instructions are not
received by the Trustee from plan participants will be voted by the Trustee in
the same proportion as Common Shares for which the Trustee does receive
instructions.
Revocation Cards representing Common Shares held of record will include
Common Shares allocated to participants under the Dividend Reinvestment Plan for
shareholders of the Corporation and will serve as instructions to the Trustee,
as described above, if the registrations are the same. Separate mailings will be
made for different registrations.
Agent Designations on behalf of any Common Shares held in the names of a
brokerage firm, bank, bank nominee or other institution on the record date can
only be executed upon receipt of specific instructions by such brokerage firm,
bank, bank nominee or other institution. Because no action can be taken by the
persons responsible for your account unless you provide them with instructions
on whether to oppose or support the call for the Special Meeting with respect to
the Common Shares you own beneficially, we request that you not provide any
instructions to such persons.
Under the Corporation's confidential shareholder voting policy, proxies,
ballots and vote tabulations that identify the particular vote of a shareholder
are kept confidential except (i) to allow the independent inspector of election
to certify the results of the vote; (ii) as necessary to meet applicable legal
requirements, including the pursuit or defense of judicial actions; or (iii) in
the event of a proxy or consent solicitation in opposition to the Board of
Directors and management of the Corporation. Both the tabulator and the
inspector of election are independent of the Corporation, its directors,
officers and employees. Accordingly, since Luxottica and LAC are soliciting
Agent Designations in opposition to the Board of Directors and management of the
Corporation, the confidential shareholder voting policy will not apply.
REVOCATION
Either a GOLD Agent Designation or a GREEN Revocation Card may be revoked
by written notice of revocation to the Corporation. Such revocation may be in
any form, but must be signed and dated and must clearly express your intention
to revoke your previously executed Agent Designation or Revocation Card. THERE
WILL BE NO MEETING AT WHICH YOU CAN REVOKE AN AGENT DESIGNATION OR A REVOCATION
CARD. Your latest dated card will supersede any earlier-dated card, except that
a GREEN Revocation Card that would otherwise act as a revocation will be
inoperative and of no effect if delivered after the date, if any, as of which it
is determined that Luxottica and LAC have effectively called the Special
Meeting. A shareholder's revocation of
3
<PAGE> 6
a previously executed GOLD Agent Designation will have the effect of opposing
Luxottica's and LAC's call for the Special Meeting.
If you have any questions concerning Luxottica's and LAC's solicitation of
Agent Designations, or the Corporation's solicitation of Revocation Cards,
please contact D.F.King & Co., Inc. ("D.F. King") at 1-800-628-8528.
THE LUXOTTICA OFFER
On March 3, 1995, Luxottica and LAC commenced the Luxottica Offer. The
purpose of the Luxottica Offer is to acquire control of, and the entire equity
interest in, the Corporation. According to the Luxottica Offer, Luxottica and
LAC intend, following completion of the Luxottica Offer, to effect a merger or
similar business combination of the Corporation and LAC or another direct or
indirect wholly-owned subsidiary of Luxottica at the same price per Common Share
to be paid in the Luxottica Offer, subject to the terms and conditions described
in the Luxottica Offer. The Luxottica Offer is conditioned, among other things,
upon: shareholder approval of LAC's control share acquisition pursuant to
Section 831 or LAC's satisfaction that the provisions of Section 831 are invalid
or inapplicable to the Luxottica Offer; LAC's satisfaction that it has obtained
sufficient financing to enable it to consummate the Luxottica Offer; the
Corporation's preferred share purchase rights having been redeemed by the Board
of Directors, or LAC being satisfied that the rights have been invalidated or
are otherwise inapplicable to the Luxottica Offer and the proposed merger; and
LAC being satisfied, in its sole discretion, that after consummation of the
Luxottica Offer the restrictions contained in the Ohio Business Combination Law
will not apply to the proposed merger. Under the Ohio Business Combination Law,
if LAC were to acquire control of 10% or more of the total voting power of the
Corporation in the election of directors, and so become an "interested
shareholder", the Corporation could not engage in a "business combination"
(including the proposed merger) with LAC or any LAC affiliate for three years
after LAC became an interested shareholder. The Ohio Business Combination Law
also imposes restrictions on such transactions thereafter. The three-year
prohibition would not apply to the proposed merger if, among other things, the
Corporation's Board of Directors were to adopt a resolution approving the
proposed merger or exempting it from the Ohio Business Combination Law, by
resolution adopted before LAC becomes an interested shareholder.
RESPONSE OF THE BOARD OF DIRECTORS
At meetings of the Board of Directors held on March 8, 10, and 14-15, 1995,
the Board of Directors met with its financial and legal advisers and considered
the Luxottica Offer and various matters related thereto, including reports by
the Corporation's financial adviser, James D. Wolfensohn Incorporated
("Wolfensohn"), on the financial condition and performance and potential values
of the Corporation's three businesses; the terms and conditions of the Luxottica
Offer; progress toward the Board's objective of enhancing shareholder value,
including the after-tax consequences to the Corporation of certain transactional
alternatives, and other matters. At its March 14-15 meeting, the Board of
Directors unanimously determined that the Luxottica Offer is inadequate and not
in the best interests of the Corporation and its shareholders. ACCORDINGLY, THE
BOARD OF DIRECTORS HAS UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS REJECT THE
LUXOTTICA OFFER AND NOT TENDER THEIR COMMON SHARES PURSUANT TO THE LUXOTTICA
OFFER. The Board of Directors believes that the best means of providing value to
shareholders is to explore fully all alternatives, and has directed its
financial adviser and management to continue to do so.
In reaching its conclusions that the Luxottica Offer is inadequate and not
in the best interests of the Corporation and its shareholders, the Board of
Directors took into account numerous factors, including but not limited to:
(i) The Board's familiarity with the business, financial condition and
prospects of the Corporation and of its Women's Apparel Retailing Group,
Optical Retailing Group and Footwear Group and, as a result of the
strategic review of the Corporation's three business units and corporate
configuration which had been initiated in 1994, its previous analyses of
possible strategic alternatives to the Luxottica Offer;
4
<PAGE> 7
(ii) The written opinion of Wolfensohn to the effect that the
consideration offered pursuant to the Luxottica Offer is inadequate, from a
financial point of view, to the shareholders of the Corporation;
(iii) An analysis of the price offered in the Luxottica Offer as a
multiple of certain historical financial results of the Corporation and a
comparison of such price to prices paid for acquisitions of comparable
companies and to trading prices of the Common Shares;
(iv) The fact that the Luxottica Offer is subject to financing and to
numerous other conditions;
(v) The value to the Corporation and its shareholders of the
Corporation's definitive agreement, announced on March 16, 1995, to sell
the Footwear Group to Nine West Group Inc.; pursuant to the agreement, Nine
West has agreed to purchase the Footwear Group for $560 million in cash,
plus warrants to purchase 3.7 million shares of Nine West common stock at a
price of $35.50 per share at any time during the next 8.5 years; and
(vi) The interest expressed by other parties to explore potential
alternative transaction strategies.
The Corporation and Wolfensohn are continuing to explore strategic
alternatives, including the sale of the Corporation or one or more of its
remaining businesses. Wolfensohn has received inquiries from, and has initiated
discussions with, numerous parties, which are ongoing. In addition, the
Corporation's Board, as part of its ongoing exploration of alternatives to
enhance shareholder value in the near term, is providing certain non-public
information about the Corporation to Luxottica and LAC under a confidentiality
agreement.
The Corporation recognizes that the return of an Agent Designation
supporting the call of the Special Meeting is not the same as a decision to
tender your Common Shares, or to remove directors, elect directors or take other
action at the Special Meeting. The Directors recommend, however, that
shareholders not facilitate Luxottica's and LAC's current offer of $24.00 per
Common Share because the Directors are convinced that the Luxottica Offer is
inadequate, and believe that Directors who are NOT affiliated with Luxottica and
LAC are best equipped to enhance value for the Corporation's shareholders.
THE BOARD OF DIRECTORS THEREFORE RECOMMENDS THAT SHAREHOLDERS NOT RETURN
THE AGENT DESIGNATION REQUESTED BY LUXOTTICA AND LAC. TO STOP LUXOTTICA AND LAC
FROM USING YOUR COMMON SHARES TO FURTHER THEIR INTERESTS, THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU (1) DISCARD ANY GOLD AGENT DESIGNATION AND (2) IF YOU HAVE
ALREADY RETURNED A GOLD AGENT DESIGNATION, SIGN, DATE AND RETURN THE ENCLOSED
GREEN REVOCATION CARD AS SOON AS POSSIBLE.
THE RETURN OF A SIGNED REVOCATION CARD OR AGENT DESIGNATION BY A
SHAREHOLDER IS INDEPENDENT OF ANY DECISION BY SUCH SHAREHOLDER WHETHER OR NOT TO
TENDER COMMON SHARES PURSUANT TO THE LUXOTTICA OFFER. THE RETURN OF A SIGNED
REVOCATION CARD OR AGENT DESIGNATION BY A SHAREHOLDER IS ALSO INDEPENDENT OF ANY
PROXY PREVIOUSLY EXECUTED BY SUCH SHAREHOLDER IN CONNECTION WITH THE 831 SPECIAL
MEETING TO BE HELD PURSUANT TO THE OHIO CONTROL SHARE ACQUISITION ACT.
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers and regular
employees of the Corporation may solicit revocations in person, by telephone or
by telecopier, none of whom will receive additional compensation for such
solicitations. The Corporation also has retained D.F. King to assist it in
connection with the solicitation, at an estimated fee of $50,000, plus
reimbursement of out-of-pocket expenses. In addition, the Corporation has
retained Abernathy MacGregor Scanlon as public relations adviser to assist the
Corporation with its communications to shareholders in connection with this
solicitation, at an estimated fee of $75,000, plus reimbursement of
out-of-pocket expenses. The following officers or employees of Wolfensohn, the
Corporation's financial adviser (599 Lexington Avenue, New York, New York
10022), may also solicit Revocation Cards: Glen S. Lewy; H. Marshall Sonenshine;
and D. G. Kim. The costs of solicitation will be borne by the Corporation. As of
April 6, 1995, the Corporation has incurred approximately $115,000 in expenses
in connection with this solicitation. The Corporation estimates that it will
expend an additional $130,000 in connection with this solicitation.
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL SHAREHOLDERS
The following table sets forth information, as of March 3, 1995 (unless a
different date is specified in the notes to the table), with respect to (a) each
person known by the Board of Directors of the Corporation to be the beneficial
owner of more than 5% of the Corporation's outstanding Common Shares, (b) each
current director of the Corporation, (c) each of the Named Executive Officers
(as defined in Item 402(a)(3) of Regulation S-K) and (d) all directors and
executive officers of the Corporation as a group:
<TABLE>
<CAPTION>
AMOUNT AND SHARES SUBJECT
NATURE OF TO OPTIONS
BENEFICIAL EXERCISABLE PERCENT OF
SHAREHOLDER OWNERSHIP(A) WITHIN 60 DAYS CLASS(B)
- ------------------------------ --------------- --------------- ---------------
<S> <C> <C> <C>
Mellon Bank Corporation 4,678,000(c) 10.1%
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
The Prudential Insurance 3,168,100(d) 6.8%
Company of America
Prudential Plaza
Newark, New Jersey 07102
Sasco Capital, Incorporated 2,971,200(e) 6.4%
10 Sasco Hill Road
Fairfield, Connecticut 06430
Leon G. Cooperman 2,678,100(f) 5.8%
c/o Omega Capital Partners
88 Pine Street
New York, New York 10005
Joseph H. Anderer 40,711 17,999 *
Philip E. Beekman 7,000 1,999 *
David M. Browne 155,738(g)(h) 80,250 *
Gilbert Hahn, Jr. 31,000 23,999 *
Noel E. Hord 38,000(g) 12,500 *
Roger L. Howe 21,000 1,999 *
Bannus B. Hudson 320,699(g) 177,000 *
Lorrence T. Kellar 23,006 11,999 *
Albert M. Kronick 47,999(h) 20,000 *
Thomas Laco 50,800(h) 3,999 *
Charles S. Mechem, Jr. 36,500 13,333 *
John L. Roy 40,000 23,999 *
Michael M. Searles 131,000 50,000 *
Phyllis S. Sewell 14,000 3,999 *
K. Brent Somers 101,027(g)(h) 55,000 *
All directors and executive
officers as a group (22
persons) 1,362,753(g)(h) 695,520 2.93%
</TABLE>
*Percent of class is less than 1%
(a) The Securities and Exchange Commission has defined "beneficial owner"
of a security to include any person who has or shares voting power or investment
power with respect to any such security or who has the right to acquire
beneficial ownership of any such security within 60 days. Unless otherwise
indicated, (i) the amounts owned reflect direct beneficial ownership, and (ii)
the person indicated has sole voting and investment power. Amounts shown include
the number of Common Shares subject to outstanding options under the
Corporation's stock option plans that are exercisable within 60 days.
(b) The percentages shown are calculated on the basis that outstanding
shares include Common Shares subject to outstanding options under the
Corporation's stock option plans that are exercisable by directors and officers
within 60 days.
6
<PAGE> 9
(c) Mellon Bank Corporation, on behalf of itself and its direct or indirect
subsidiaries, Boston Safe Deposit and Trust Company, Mellon Bank, N.A., Mellon
Capital Management Corporation, The Boston Company Advisors, Inc., The Boston
Company Asset Management, Inc. and The Dreyfus Corporation, has reported (in
Amendment No. 3 to a Schedule 13G dated March 8, 1995 and filed with the
Securities and Exchange Commission) that as of that date it had sole voting
power with respect to 3,562,000 Common Shares, shared voting power with respect
to 20,000 Common Shares, sole dispositive power with respect to 3,919,000 Common
Shares and shared dispositive power with respect to 759,000 Common Shares.
(d) The Prudential Insurance Company of America has reported (in a Schedule
13G dated February 2, 1995 and filed with the Securities and Exchange
Commission) that as of December 31, 1994 it had sole voting power and sole
dispositive power with respect to 265,600 Common Shares and shared voting power
and shared dispositive power with respect to 2,902,400 Common Shares.
(e) Sasco Capital, Incorporated has reported (in a Schedule 13G dated
February 3, 1995 and filed with the Securities and Exchange Commission) that as
of that date it had sole voting power with respect to 1,519,300 Common Shares
and beneficial ownership to direct disposition with respect to 2,971,200 Common
Shares.
(f) Leon G. Cooperman of Omega Capital Partners, L.P., Omega Institutional
Partners, L.P., Omega Overseas Partners, Ltd., Omega Overseas Partners II, Ltd.,
and Omega Advisors, Inc., has reported (in a Schedule 13D dated March 6, 1995
and filed with the Securities and Exchange Commission) that as of that date he
had sole voting power and sole dispositive power with respect to 2,014,300
Common Shares and shared voting power and shared dispositive power with respect
to 663,800 Common Shares.
(g) Includes restricted Common Shares granted under The United States Shoe
Corporation 1988 Employee Incentive Plan, which total 25,000, 7,985, 20,000 and
5,000 for Messrs. Hudson, Browne, Hord and Somers, respectively, and 57,985 for
all directors and executive officers as a group.
(h) Includes Common Shares in which the reporting person disclaims
beneficial ownership. Messrs. Browne, Kronick and Somers disclaim beneficial
ownership of 33 Common Shares, 2,000 Common Shares and 200 Common Shares,
respectively; such Common Shares are owned by their spouses. Mr. Laco disclaims
beneficial ownership of 2,800 Common Shares; such Common Shares are held in
trust for family members. Directors and executive officers as a group disclaim
beneficial ownership of 5,033 Common Shares; such Common Shares are owned by
certain executive officers' spouses.
SHAREHOLDER PROPOSALS
Proposals of security holders to be presented at the 1995 Annual Meeting of
Shareholders of the Corporation must have been in proper form and received by
the Corporation by December 22, 1994.
By Order of the Board of Directors,
JAMES J. CROWE,
Secretary
Cincinnati, Ohio
April 7, 1995
7
<PAGE> 10
THE UNITED STATES SHOE CORPORATION
THIS REVOCATION CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
IN OPPOSITION TO THE SOLICITATION OF AGENT DESIGNATIONS BY
LUXOTTICA ACQUISITION CORP. AND LUXOTTICA GROUP S.P.A.
The undersigned shareholder, acting with regard to all common shares, without
par value (the "Common Shares"), of The United States Shoe Corporation, an Ohio
corporation, owned by such shareholder, hereby REVOKES any previously executed
Agent Designation requesting the call of a special meeting of shareholders (the
"Special Meeting") and granting authority to take the Conditional Actions (as
defined in "Authorization of Conditional Actions" in the Corporation's
Revocation Solicitation Statement) described in the Solicitation Statement of
Luxottica Acquisition Corp. and Luxottica Group S.p.A, dated March 28, 1995.
This Revocation Card also constitutes instructions to The Charles Schwab Trust
Company, as Trustee, to revoke Agent Designations with respect to all Common
Shares, if any, held by such Trustee which are credited to the undersigned under
The United States Shoe Corporation Tax Incentive Savings Plan.
THE BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT YOU REVOKE ANY PREVIOUSLY
EXECUTED AGENT DESIGNATION REQUESTING THE CALL OF THE SPECIAL MEETING AND
GRANTING AUTHORITY TO TAKE THE CONDITIONAL ACTIONS BY PROPERLY SIGNING, DATING
AND RETURNING THIS REVOCATION CARD.
PLEASE SIGN THIS REVOCATION CARD
EXACTLY AS YOUR NAME APPEARS HEREON.
IF SIGNING AS ATTORNEY,
ADMINISTRATOR, EXECUTOR, GUARDIAN OR
TRUSTEE, PLEASE GIVE TITLE AS SUCH.
IF A CORPORATION, THIS SIGNATURE
SHOULD BE THAT OF AN AUTHORIZED
OFFICER WHO SHOULD STATE HIS OR HER
TITLE. IF A PARTNERSHIP, SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
Date: , 1995
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Signature
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Signature if held jointly
