- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 5)
THE UNITED STATES SHOE CORPORATION
(Name of Subject Company)
--------------
LUXOTTICA GROUP S.P.A.
LUXOTTICA ACQUISITION CORP.
(Bidders)
--------------
COMMON SHARES, WITHOUT PAR VALUE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
912605102
(CUSIP Number of Class of Securities)
CLAUDIO DEL VECCHIO
44 HARBOR PARK DRIVE
PORT WASHINGTON, NEW YORK 11050
(516) 484-3800
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
WITH A COPY TO:
JONATHAN GOLDSTEIN
WINSTON & STRAWN
175 WATER STREET
NEW YORK, NEW YORK 10038
(212) 269-2500
CALCULATION OF FILING FEE
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- --------------------------------------------------------------------------------
TRANSACTION VALUATION* $1,201,654,248 AMOUNT OF FILING FEE** $240,330.85
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* Pursuant to, and as provided by, Rule 0-11(d), this amount is based upon the
purchase of 50,068,927 Common Shares of the Subject Company and the
associated Rights at $24.00 cash per share, which is equal to the sum of (i)
the number of Shares outstanding as reported in the Quarterly Report on Form
10-Q of the Subject Company for the quarter ended October 29, 1994 and (ii)
the number of Shares subject to outstanding options as reported in the Annual
Report on Form 10-K of the Subject Company for the fiscal year ended January
29, 1994.
** 1/50 of 1% of Transaction Valuation.
X Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: $240,330.85
Form or Registration No.: Schedule 14D-1
Filing Party: Luxottica Group S.p.A.; Luxottica Acquisition Corp.
Date Filed: March 3, 1995
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Page 1 of Pages
The Exhibit Index is located on Page
<PAGE>
Luxottica Group S.p.A. and Luxottica Acquisition Corp. hereby amend and
supplement their Tender Offer Statement on Schedule 14D-1, filed on March 3,
1995 (as amended, the "Schedule 14D-1"), with respect to the offer to purchase
all of the outstanding Common Shares, without par value, of The United States
Shoe Corporation, including the associated preference share purchase rights, as
set forth in this Amendment No. 5. Unless otherwise indicated, all capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Schedule 14D-1.
ITEM 10. ADDITIONAL INFORMATION
Item 10 is hereby amended to add the following:
(e) On March 16, 1995 the United States District Court for the Southern
District of Ohio, Eastern Division, issued a preliminary injunction enjoining
the Company and the State of Ohio from applying to the Offer the provisions of
Section 1701.01(CC)(2) of the ORC which, by their terms, would have impaired
the voting rights of Disqualified Shares at the Section 831 Meeting.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended and supplemented by adding the following exhibits:
(a)(17) --Text of Press Release issued by Parent, dated March 17, 1995.
(g)(6) --Opinion and Order issued on March 16, 1995 by the United States
District Court for the Southern District of Ohio, Eastern Division,
in the action entitled Luxottica Group S.p.A., et al. v. The United
------------------------------ ----------
States Shoe Corporation, et al. (C-2-95-244).
-------------------------------
2
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
LUXOTTICA GROUP S.P.A.
Dated: March 17, 1995 By: /s/ Claudio Del Vecchio
..........................
Claudio Del Vecchio
Managing Director
LUXOTTICA ACQUISITION CORP.
Dated: March 17, 1995 By: /s/ Claudio Del Vecchio
..........................
Claudio Del Vecchio
President
3
<PAGE>
EXHIBIT INDEX
<TABLE><CAPTION>
EXHIBIT PAGE
- ------- ----
<S> <C> <C>
(a)(1) --Offer to Purchase, dated March 3, 1995.................................... *
(a)(2) --Letter of Transmittal..................................................... *
(a)(3) --Notice of Guaranteed Delivery............................................. *
(a)(4) --Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees........................................ *
(a)(5) --Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.............................................. *
(a)(6) --Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9....................................................... *
(a)(7) --Summary Advertisement as published in The Wall Street Journal on March 3,
1995...................................................................... *
(a)(8) --Text of Press Release issued by Parent, dated March 3, 1995............... *
(a)(9) --Preliminary Proxy Statement dated March 6, 1995 of Luxottica Group S.p.A.
and Luxottica Acquisition Corp. for the Special Meeting of Shareholders
under Section 1701.831 of the Ohio Revised Code of The United States Shoe
Corporation, together with the form of Proxy relating thereto, as filed
with the Securities and Exchange Commission on March 6, 1995 and
incorporated herein by reference.
(a)(10) --Preliminary Solicitation Statement dated March 7, 1995 of Luxottica Group
S.p.A. and Luxottica Acquisition Corp. to call a Special Meeting of
Shareholders of The United States Shoe Corporation, together with the form
of Appointment of Designated Agents relating thereto, as filed with the
Securities and Exchange Commission on March 7, 1995 and incorporated
herein by reference.
(a)(11) --Text of Press Release issued by Parent, dated March 9, 1995............... *
(a)(12) --Acquiring Person Statement of Parent and the Purchaser, dated March 3,
1995, pursuant to Section 1701.831 of the Ohio Revised Code, filed with
the Securities and Exchange Commission on March 10, 1995 as definitive
additional material pursuant to Section 14(a) of the Securities Exchange
Act of 1934, as amended, and incorporated herein by reference.
(a)(13) --Text of Press Release issued by Parent, dated March 10, 1995.............. *
(a)(14) --Text of Press Release issued by Parent, dated March 10, 1995.............. *
(a)(15) --Text of Press Release issued by Parent, dated March 14, 1995.............. *
(a)(16) --Text of Press Release issued by Parent, dated March 16, 1995.............. *
(a)(17) --Text of Press Release issued by Parent, dated March 17, 1995..............
(b)(1) --Commitment Letter, dated March 2, 1995, from Credit Suisse................ *
(g)(1) --Complaint Seeking Declaratory and Injunctive Relief filed in the United
States District Court for the Southern District of Ohio, Eastern Division,
on March 3, 1995, relating to the Ohio Take-Over Act, the Preference Share
Purchase Rights and the impairment of the voting rights of certain Shares
under Sections 1701.01(CC)(2) and 1701.831 of the Ohio Revised Code....... *
(g)(2) --First Amended Verified Complaint seeking Declaratory and Injunctive Relief
filed by Luxottica Group S.p.A., Luxottica Acquisition Corp. and
Avant-Garde Optics, Inc. in the United States District Court for the
Southern District of Ohio, Eastern Division, on March 6, 1995, relating to
the Ohio Take-Over Act, the Preference Share Purchase Rights and the
impairment of the voting rights of certain Shares under Sections
1701.01(CC)(2) and 1701.831 of the Ohio Revised Code...................... *
(g)(3) --Motion for Leave to File a Second Amended Complaint filed on
March 10, 1995 by Luxottica Group S.p.A., Luxottica Acquisition
Corp. and Avant-Garde Optics, Inc. in the United States District
Court for the Southern District of Ohio, Eastern Division, in the
action entitled Luxottica Group S.p.A., et al. v. The United States
------------------------------ -----------------
Shoe Corporation, et. al. (C-2-95-244).................................... *
-------------------------
</TABLE>
- ------------
* Previously filed.
4
<PAGE>
<TABLE><CAPTION>
EXHIBIT PAGE
- ------- ----
<S> <C> <C>
(g)(4) --Second Amended Verified Complaint seeking Declaratory and Injunctive Relief
filed by Luxottica Group S.p.A., Luxottica Acquisition Corp. and
Avant-Garde Optics, Inc. in the United States District Court for the
Southern District of Ohio, Eastern Division, on March 10, 1995, relating to
the Ohio Take-Over Act, the Preference Share Purchase Rights and the
impairment of the voting rights of certain Shares under Sections
1701.01(CC)(2) and 1701.831 of the Ohio Revised Code...................... *
(g)(5) --Motion of Plaintiff Avant-Garde Optics, Inc. for a Hearing and Order
to Show Cause filed on March 10, 1995 by Avant-Garde Optics, Inc. in
the United States District Court for the Southern District of Ohio,
Eastern Division, in the action entitled Luxottica Group S.p.A., et
-------------------------
al. v. The United States Shoe Corporation, et. al. (C-2-95-244)........... *
--- -------------------------------------------
(g)(6) --Opinion and Order issued on March 16, 1995 by the United States
District Court for the Southern District of Ohio, Eastern Division,
in the action entitled Luxottica Group S.p.A., et al. v. The United
------------------------------ ----------
States Shoe Corporation, et al. (C-2-95-244)..............................
-------------------------------
</TABLE>
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* Previously filed.
5
[LUXOTTICA--LOGO]
FOR IMMEDIATE RELEASE
For more information, contact
Mark Harnett (MacKenzie Partners, Inc. Information Agent) at 212-929-5877 or
Felicia Vonella (Dewe Rogerson Inc.) at 212-688-6840
LUXOTTICA GROUP ANNOUNCES THAT FEDERAL COURT
--------------------------------------------
ENJOINS U.S. SHOE FROM APPLYING OHIO LAW
----------------------------------------
THAT LIMITS VOTING RIGHTS OF U.S. SHOE SHAREHOLDERS
---------------------------------------------------
(New York, USA and Milan Italy, March 17, 1995)--Luxottica Group S.p.A.
(NYSE:LUX) today announced that United States District Court Judge James Graham
of the Southern District of Ohio issued an Opinion and Order yesterday, March
16, 1995, that enjoins The United States Shoe Corporation and the State of Ohio
from applying certain provisions of Ohio law that would have prevented certain
US Shoe shares from being voted at the Control Share Acquisition ("831") special
meeting of US Shoe shareholders scheduled for April 21, 1995.
The Ohio law would have prevented shares from being voted that were
purchased after the commencement on March 3, 1995 of Luxottica's tender offer
and up to the date of the 831 meeting by any person or group for more than
$250,000 in the aggregate or that constituted more than one-half of one percent
of the total outstanding. Judge Graham held that these provisions as applied to
Luxottica's tender offer were preempted by the Williams Act.
Luxottica stated that it is pleased that Judge Graham's injunction will now
permit all U.S. Shoe shareholders (other than Luxottica and its affiliates and
certain US Shoe insiders) to vote at the 831 meeting on April 21 to authorize
Luxottica to purchase shares of U.S. Shoe pursuant to its offer. Luxottica
stated that this will also permit a prompt and fair consideration by all US Shoe
shareholders of Luxottica's offer and facilitate its successful consummation.
Luxottica Group S.p.A., based in Italy, is a world leader in the design,
manufacture and marketing of high quality eyeglass frames and sunglasses in the
mid and premium price categories. Luxottica's products, which are designed and
manufactured in four facilities located in Italy and include over 1,700 styles
available in a wide array of colors and sizes, are sold through wholly-owned
subsidiaries in the USA, Canada, Italy, France, Spain, Portugal, Sweden,
Germany, United Kingdom, Brazil, Switzerland and Mexico, through 51%-owned
distributors in Belgium, Netherlands, and Finland, through a 50% joint venture
in Japan, through a 75% controlled company in Austria and through a 75.5%
controlled company in Greece. Luxottica Group's total sales for 1994 were
US$504.3 million and net income was US$77.5 million. Luxottica's US operations
in fiscal year 1994, accounted for 39.5% of Luxottica's total consolidated
sales.
Luxottica Group S.p.A. listed its American Depositary Shares on the New York
Stock Exchange in January 1990. The Company's shares are traded only in the U.S.
on the NYSE.
EXHIBIT (g)(6)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Luxottica Group S.p.A., et al.,
Plaintiffs,
vs. Case No. C2-95-244
JUDGE GRAHAM
The United States Shoe
Corporation, et al.,
Defendants.
OPINION AND ORDER
This matter is before the Court on plaintiffs' motion for an
order preliminarily and permanently enjoining defendants from
applying Ohio Revised Code Sec. 1701.01(CC)(2) to a shareholders'
meeting of shareholders of defendant United States Shoe
Corporation ("U.S. Shoe") scheduled to be held on April 21, 1995.
In December of 1994, plaintiffs Luxottica Group, S.p.A.,
Luxottica Acquisition Corporation and Avant-Garde Optics, Inc.
("Luxottica") initiated negotiations with the management of U.S.
Shoe to acquire all the outstanding shares of the corporation
through a cash tender offer. Negotiations collapsed when
plaintiffs and U.S. Shoe were unable to reach agreement on the
terms of a standstill. On March 3, 1995, plaintiffs commenced a
$1.2 billion nationwide cash tender offer directly to U.S. Shoe's
shareholders at a price of $24 per share. U.S. Shoe is
incorporated in the state of Ohio and maintains its principal
executive offices in Cincinnati, Ohio. Its stock is registered
with the Securities and Exchange Commission and is traded on the
New York and Pacific Stock Exchanges.
<PAGE>
In determining whether a motion for preliminary injunction
should be granted, a court must consider and balance four
factors: (1) the likelihood that the party seeking the
preliminary injunction will succeed on the merits of the claim;
(2) whether the party seeking the injunction will suffer
irreparable harm without the grant of the extraordinary relief;
(3) the probability that granting the injunction will cause
substantial harm to others; and (4) whether the public interest
is advanced by the issuance of the injunction. Washington v.
--------------
Reno, 35 F.3d 1093, 1099 (6th Cir. 1994) ; International
---- -------------
Longshoremen's Assoc. v. Norfolk S. Corp., 927 F.2d 900, 903 (6th
-----------------------------------------
Cir. 1991).
Ohio Revised Code Sec.Sec.1701.831, part of Ohio's General
Corporation Law, regulates "control share acquisitions." 1
Plaintiffs' tender offer proposes a control share acquisition
within the meaning of the Ohio Act. The Act provides that any
control share acquisition "shall be made only with the prior
authorization of the shareholders of such corporation in
accordance with this section." Sec.1701.831 (A). Any person who
proposes to make a control share acquisition is required to
deliver an acquiring person statement to the corporation
containing certain specified information. Sec.1701.831(B). Within
ten days after the receipt of an acquiring person statement, the
directors of the corporation must call a special meeting of
shareholders (the "831 meeting") to vote on the proposed control
--------------------
1 This term is defined in Ohio Revised Code Sec.1701.01(Z)
(1) as the acquisition of sufficient shares of a corporation so
as to position the acquirer to exercise voting power in the
election of directors within one of three ranges: one-fifth or
more but less than one-third; one-third or more but less than a
majority; and a majority of such voting power.
<PAGE>
share acquisition. Sec.1701.831(C). Unless the acquiring person
agrees to another date, the 831 meeting must be held within
fifty days after receipt of the acquiring person statement. Id.
--
The proposed acquisition can be consummated only if the
shareholders who hold shares entitling them to vote in the
election of directors authorize the acquisition at the 831
meeting by an affirmative vote of a majority of the voting power
of the corporation in the election of directors represented at
the meeting in person or by proxy and by a majority of the
portion of such voting power excluding the voting power of
"interested shares" as defined in Ohio Revised Code Sec.1701.01
(CC). A quorum must be present at the 831 meeting and will be
deemed present if a majority of the voting power of the
corporation in the election of directors and a majority of such
voting power excluding "interested shares," are represented at
the meeting in person or by proxy. Sec.1701.831(E)(1). According
to Ohio Revised Code Sec.1701.832, these procedures are
intended to provide " ... even handed protection of offerors and
shareholders from fraudulent and manipulative transactions
arising in connection with control acquisitions."
In 1990, the Ohio General Assembly amended Sec.1701.01(CC)
to create a new class of interested shares. It did so by enacting
Sec. 1701.01(CC)(2) which disqualifies any shares acquired during
the period beginning with the date of the first public disclosure
of the proposed acquisition and ending on the date of the 831
meeting if the aggregate consideration paid for such shares
exceeds $250,000 or the number of shares acquired exceeds
one-half of one percent of the outstanding shares of the
<PAGE>
corporation entitled to vote in the election of directors. This
provision was apparently intended to include shares purchased by
arbitrageurs within the definition of interested shares because
it was felt that they would usually align themselves with the
offeror in voting on the approval of an acquisition. It is this
provision and only this provision of the Ohio Control Share
Acquisition Act which plaintiffs challenge in the instant motion.
District court decisions in both the Northern District and the
Southern District of Ohio hold that other provisions of the Ohio
Act would likely withstand challenge under the supremacy clause
and the commerce clause. See Veere Inc. v. Firestone Fire &
-------------------------------------
Rubber Co., 685 F. Supp. 1027 (N.D. Ohio 1988) and Ceic Holding
---------- ------------
Co v. Cincinnati Equitable Ins. Co., No. C-1-84-1587 (S.D. Ohio,
------------------------------------
November 8, 1984) (LEXIS, Genfed Library, Dist. file).
Plaintiffs do not challenge the concept of including arbitrageurs
in the definition of interested shares, their challenge is based
on how the statute impacts their ability to consummate a tender
offer.
Plaintiffs assert that Sec.1701.01(CC)(2) is preempted by
federal law. A state statute is void to the extent that it
actually conflicts with a valid federal statute in the sense that
compliance with both federal and state regulations is a physical
impossibility or the state law stands as an obstacle to the
accomplishment and execution of the full purposes and objectives
of Congress. Edgar v. MITE Corp., 457 U.S. 624, 631 (1982).
--------------------
The Williams Act, 15 U.S.C. Sec.Sec.78m(d)-(e), 78n(d)-(f)
prescribes rules for tender offers. The Williams Act, backed by
regulations of the SEC, imposes requirements in two basic areas.
<PAGE>
First, it requires the offeror to file a statement disclosing
information about the offer. Second, the Act, and the
regulations that accompany it, establish procedural rules which
govern tender offers. For example, stockholders who tender their
shares may withdraw them while the offer remains open and, if
the offeror has not purchased their shares, anytime after 60
days from commencement of the offer. The offer must remain open
for at least twenty business days. One of the purposes of the
Williams Act is to avoid undue delay in the consummation of
tender offers. Edgar v. MITE Corp., 457 U.S. 624, 637 (1982).
-------------------
As Justice White noted in MITE, Congress reemphasized this
----
purpose when it enacted the Hart-Scott-Rodino Anti-Trust
Improvements Act of 1976, 15 U.S.C. Sec. 12 et seq. and to
-------
demonstrate this point, he quoted from the legislative history of
that Act:
This ten day waiting period thus underscores the basic
purpose of the Williams Act -- to maintain a neutral
policy towards cash tender offers, by avoiding lengthy
delays that might discourage their chances for success.
Id. at 638.
--
In CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69
-----------------------------------------
(1987), five years after,the decision in MITE, Justice
----
Powell, writing for the majority of the court said:
Nothing in MITE suggested that any delay imposed by
---- ---
state regulation, however short, would create a
conflict with the Williams Act. The plurality argued
only that the offeror should 'be free to go forward
without unreasonable delay'. 457 U.S. at 639 (emphasis
------------
added).
<PAGE>
Although the court in CTS Corp. emphasized the purpose of the
--------
Williams Act identified in Piper v. Chris-Craft Industries, 430
--------------------------------
U.S. 1, 30 (1976) " ... plac[ing] investors on an equal footing
with the takeover bidder" it did not disavow that the
accomplishment of that purpose would include the avoidance of
unreasonable delays in the consummation of a tender offer. In
CTS Corp., the court upheld an Indiana statute which did impose
---------
an additional delay in the consummation of a tender offer but
the court was careful to note that the period was still within
the sixty day period established by Congress for the
reinstitution of withdrawal rights under the Williams Act. This
court concludes that unlike the Indiana statute under
consideration in CTS Corp., Sec.1701.01(CC)(2) of the Ohio Act
----------
imposes an unreasonable delay beyond the sixty day period
established for the reinstitution of withdrawal rights under the
Williams Act and that accordingly this provision of the Ohio law
is preempted by the Williams Act.
The Court reaches this conclusion because it believes there
are two significant flaws in Sec.1701.01(CC)(2) which result in
unreasonable delay. The first flaw is the definition of
disqualification in terms of shares as opposed to persons. The
second flaw is the provision ending the period for determining
disqualification on the date of the 831 meeting instead of the
record date for that meeting.
Section 1701.01(CC)(2) provides as follows:
(2) "Interested shares" also means any shares of
an issuing public corporation acquired, directly or
indirectly, by any person from the holder of holders
thereof for a valuable consideration during the period
beginning with the date of the first public disclosure
<PAGE>
of a proposed control share acquisition of the issuing
public corporation or any proposed merger,
consolidation, or other transaction which would result
in a change in control of the corporation or all or
substantially all of its assets, and ending on the date
of any special meeting of the corporation's
shareholders held thereafter pursuant to section
1701.831 (1701.83.1) of the Revised Code, for the
purpose of voting on a control share acquisition,
proposed by any acquiring person if either of the
following apply:
(a) The aggregate consideration paid or given by
the person who acquired the shares, and any other
persons acting in concert with him, for all such shares
exceeds two hundred fifty thousand dollars;
(b) The number of shares acquired by the person
who acquired the shares, and any other persons acting
in concert with him, exceeds one-half of one per cent
of the outstanding shares of the corporation entitled
to vote in the election of directors.
The disqualification for the purposes of determining a quorum of
non-interested shares and for voting at the 831 meeting applies
to shares not persons. This makes it impossible to determine at
the 831 meeting which shares are interested and which shares are
not and thus, impossible to determine whether a quorum of
non-interested shares is present and whether a majority of
non-interested shares have voted in favor of the acquisition. The
information needed to determine whether shares are interested
would not be available to the inspector of elections through any
accessible or verifiable public or private records. Well over
half of the shareholders of U.S. Shoe hold their shares in street
name, i.e., the owner of record is a bank or brokerage house.
Neither U.S. Shoe nor plaintiffs can compel record holders to
disclose the name, address or holdings of beneficial owners who
wish such information to remain confidential, neither can they
obtain information regarding the price they paid or the date on
which their shares were purchased.
<PAGE>
Nor could an inspector of elections rely on information
solicited from shareholders since under the definition of
interested shares there are circumstances in which shareholders,
regardless of their bona fides, would be unable to tell whether
their shares were disqualified. The Board of U.S. Shoe has set
April 21st as the date for the 831 meeting and has set a record
date of March 21st for that meeting. A shareholder who owns
stock on the record date is entitled to vote at the meeting. If
such a shareholder should sell any of his or her shares after the
record date but before the meeting, such shareholder would not
know whether the purchaser of the shares had purchased more than
$250,000 worth of shares since the announcement of the tender
offer. Thus, it would be impossible to reliably ascertain at the
831 meeting whether the required quorum was present or whether a
majority of non-interested shares had voted in favor of the
acquisition.
An even more basic problem which will unquestionably cause
delay in the consummation of a tender offer well beyond the
parameters set by the Williams Act arises from the provision of
Sec.1701.01(CC)(2) which states that the determination of
disqualification extends from the period of the first public
disclosure through the date of the 831 meeting. This provision
renders the record date set pursuant to Ohio Rev. Code Sec.1701.45
meaningless since share transactions which occur after the record
date are still counted for the purposes of disqualification. In
effect, the date of the 831 meeting becomes the record date for
<PAGE>
the purpose of determining whether shares are interested or not
under Sec.1701.01(CC)(2). It is undisputed that it would take at
least four weeks after that date to solicit the shareholders who
appeared at the 831 meeting in person or by proxy to obtain the
information necessary to determine their status under
Sec.1701.01(CC)(2). Even then, as noted above, in many instances
the information would be incapable of verification by the
inspector of elections.
This scheme is fraught with the potential for delays well
beyond the four week period needed to obtain information from
shareholders. Since the drafters of the statute apparently did
not appreciate that ending the period of disqualification on the
date of the 831 meeting instead of the record date would require
a second solicitation of shareholders to determine what shares
are interested shares under Sec.1701.01, they did not provide any
procedures or any time limits for accomplishing this. We know
that it will take at least four weeks from the date of the 831
meeting to attempt to obtain the information from shareholders
which is necessary to determine whether the shares are interested
or noninterested under Sec.1701.01(CC) (2). That means it would
take until May 19th to obtain the information. That is nearly
three weeks beyond the deadline for reinstituting withdrawal
rights under the Williams Act. Just how much longer it will take
to certify the results of that meeting is unknown because there
are no procedures or time limits prescribed for doing so.
The Court finds that it would be impossible to comply with
Sec.1701.01(CC)(2) within the sixty day period for reinstituting
<PAGE>
withdrawal rights under the Williams Act and that compliance with
this particular provision of the Ohio Control Share Acquisition
Act would frustrate the Congressional purpose of preventing undue
delay in the consummation of a tender offer.
Defendants argue that the Court should construe
Sec.1701.01(CC)(2) so that it would be possible to determine the
status of shares as interested or non-interested by the time of
the 831 meeting. They argue that the court can do so by
construing "interested shares" to mean "interested shareholders"
and by reading the phrase "ending on the date of any special
meeting" to mean "ending on the record date of any special
meeting." This would not be construing or interpreting the
statute, it would be rewriting the statute which is beyond the
Court's authority.
Turning to plaintiffs' contention that Sec.1701.01(CC)(2)
violates the Commerce Clause of the Federal Constitution, the
Court concludes that in light of Part III of the court's decision
in CTS Corp. that contention must be rejected. Plaintiffs argue
---------
further that Sec.1701.01(CC)(2) is invalid because it gives an
advantage to later offerors in a tender offer contest and that
the statute has a disparate impact on the first offeror. As
stated above, the statute provides that purchasers who accumulate
more than $250,000 or .5 percent of the outstanding shares of a
corporation after announcement of a tender offer are disqualified
from voting on that offer. Plaintiffs point out that those same
shares would not be disqualified from voting on a later offer.
Assuming that the statute could in some circumstances give an
advantage to later offerors, the Court is aware of no statutory
or constitutional provision which would require a state to treat
<PAGE>
competing offerors evenhandedly. Any impact on an original
offeror is an incidental effect of a statute which is otherwise
constitutional and this particular aspect of the statute does not
conflict with the provisions or purposes of the Williams Act or
any other federal law.
Finally, plaintiffs argue that Sec.1701.01(CC)(2) violates the
Contracts Clause and the Due Process Clause of the United States
Constitution. Plaintiff argues that this is so because the
statute overrides the provisions of U.S. Shoe's articles of
incorporation which state that "all shares of any particular
series shall rank equally and be identical in all respects" and
that each common share entitles its holder to "one vote on each
matter properly submitted to the shareholders for their vote."
The Court finds no merit in these arguments. In upholding an
Indiana statute that stripped "control shares" of voting rights
unless restored by a majority vote of non-interested
shareholders, the Supreme Court in CTS Corp. said:
--------
The primary purpose of the act is to protect the
shareholders of Indiana corporations. It does this by
affording shareholders, when a takeover offer is made,
an opportunity to decide collectively whether the
resulting change in voting control of the corporation,
as they perceive it, would be desirable. A change of
management may have important effects on the
shareholders' interests; it is well within the State's
role as overseer of corporate governance to offer this
opportunity.
481 U.S. 91. A person buying U. S. Shoe shares on or after March
3, 1995 took them subject to the rights they have under Ohio law,
including the provisions of Ohio's Control Share Acquisition Act.
Thus, Sec.1701.01(CC)(2) does not operate as a "substantial
<PAGE>
impairment of a contractual relationship," see Allied Structural
--- -----------------
Steel Corp. v. Spannaus, 438 U.S. 234, 244-45 (1978).
---------------------------
Furthermore, the statute accomplishes a significant and
legitimate public purpose. See Energy Reserves Group v. Kansas
-------------------------------------
Power & Light Co., 459 U.S. 400, 411-12 (1983). For the same
------------------
reasons, the Court finds plaintiffs' due process argument
unavailing.
Defendants argue that plaintiffs' challenge to
Sec.1701.01(CC)(2) is not ripe for judicial review because it may
be possible for U.S. Shoe to comply with its provisions without
incurring undue delay. This argument is based largely on the
premise that the statute can be construed to permit the
determination of the status of shares prior to the 831 meeting, a
premise the Court has rejected. The Court has concluded that
U.S. Shoe cannot comply with the requirements of Sec.170l.0l(CC)(2)
without unreasonably delaying plaintiffs' tender offer contrary
to the purpose of the Williams Act. Uncertainty about the ground
rules for the 831 meeting set for April 21st in itself is likely
to cause irreparable injury to plaintiffs in their attempts to
consummate their tender offer. The injury to plaintiffs is not
hypothetical but real and plaintiffs' challenge to
Sec.1701.01(CC)(2) is ripe for judgment review.
Having concluded that Sec.1701.01(CC) (2) is preempted by
the Williams Act, the Court concludes that plaintiffs are likely
to succeed on the merits. The Court further finds that the
application of Sec.1701.01(CC)(2) to plaintiffs' tender offer and
in particular, its application to the 831 meeting scheduled for
April 21, 1995 and the proxy solicitations for that meeting
<PAGE>
present plaintiffs with the risk of irreparable harm for which
they have no adequate remedy at law. The nature of the harm to a
tender offeror which results from any delay was described in
detail in MITE, see 457 U.S. at 637, 638 n 12, 13. In contrast
----- ---
neither U.S. Shoe or any other person will suffer any legally
cognizable harm if a preliminary injunction is granted barring
the application of Sec.1701.01(CC)(2). Finally the public interest
favors granting preliminary injunctive relief since the public
policy which controls in the case is the one set by Congress when
it enacted the Williams Act. Accordingly, plaintiffs are
entitled to a preliminary injunction barring the defendants from
applying the provisions of Sec.1701.01(CC)(2) to plaintiffs'
tender offer.
It is so ORDERED.
/s/ James L. Graham
_________________________
JAMES L. GRAHAM
United States District Judge
DATE: March 16, 1995
