UNITED STATES SHOE CORP, SC 14D9/A, 1995-04-24

UNITED STATES SHOE CORP
SC 14D9/A, 1995-04-24
WOMEN'S CLOTHING STORES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9

SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 9)

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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)

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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. 9 (this "Amendment No. 9") 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 (the "Common Shares"), including associated preference share purchase
rights (the "Rights"), upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated March 3, 1995, as amended and supplemented, and in
the related Letter of Transmittal, as amended and supplemented, as set forth in
this Amendment No. 9. All capitalized terms not otherwise defined herein shall
have the meanings assigned thereto in the Schedule 14D-9.

ITEM 1. SECURITY AND SUBJECT COMPANY.

By a Third Amendment to the Rights Agreement, dated as of March 29, 1995
(the "Third Amendment to Rights Agreement"), State Street Bank and Trust Company
was substituted as Rights Agent (the Rights Agreement, as so amended is herein
referred to as the "Rights Agreement").

ITEM 2. TENDER OFFER OF THE BIDDER.

This Amendment No. 9 relates to the tender offer by Luxottica Acquisition
Corp., a Delaware corporation ("LAC") and an indirect wholly owned subsidiary of
Luxottica Group S.p.A., a corporation organized under the laws of the Republic
of Italy ("Luxottica Group"), disclosed in a Tender Offer Statement on Schedule
14D-1 (the "Schedule 14D-1"), dated March 3, 1995 as amended and supplemented
through the date hereof, to purchase all outstanding Common Shares, including
the associated Rights, at a price of $28 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, as amended and supplemented
through the date hereof (as so amended and supplemented, the "Offer to
Purchase"), and in the related Letter of Transmittal, as amended and
supplemented through the date hereof (which together constitute the "Luxottica
Offer").

The Luxottica Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of April 21, 1995 (the "Merger Agreement"), by and among
Avant-Garde Optics, Inc., a New York corporation ("Avant-Garde"), LAC and the
Company. The Merger Agreement provides that, subject to the terms and conditions
of the Merger Agreement, as soon as practicable following the expiration of the
Luxottica Offer, LAC will be merged with and into the Company (the "Merger") and
each then-outstanding Common Share not owned by Luxottica Group, Avant-Garde,
LAC or any other direct or indirect subsidiary of Avant-Garde (other than those
Common Shares held in the treasury of the Company or held by any subsidiary of
the Company and the Dissenting Shares (as defined in the Merger Agreement)),
including the associated Rights, will be cancelled and retired and be converted
into a right to receive in cash an amount per Common Share equal to the highest
price per Common Share paid for a Common Share by LAC pursuant to the Luxottica
Offer. A copy of the Merger Agreement is filed as Exhibit 35 hereto and is
incorporated herein by reference.

Pursuant to a Guaranty (the "Guaranty"), dated as of April 21, 1995, the
payment and performance obligations of Avant-Garde and LAC under the Merger
Agreement and under the Offer Documents (as herein defined) to the Company and
each other person, if any, to whom a payment or performance obligation is due
under the Merger Agreement or the Offer Documents and each Indemnified Party (as
herein defined), and the permitted successors and assigns of any of the
foregoing, have been irrevocably, absolutely and unconditionally guaranteed by
Luxottica Group, as primary obligor and not merely as a surety. A copy of the
Guaranty is filed as Exhibit 36 hereto and is incorporated herein by reference.

ITEM 3. IDENTITY AND BACKGROUND.

Item 3(b)(1) of the Schedule 14D-9 is hereby amended and supplemented by
adding at the end thereof the following:

CERTAIN INFORMATION WITH RESPECT TO CERTAIN CONTRACTS, AGREEMENTS OR
UNDERSTANDINGS BETWEEN THE COMPANY AND CERTAIN OF ITS DIRECTORS, EXECUTIVE
OFFICERS AND AFFILIATES. On April 21, 1995, the Board of Directors adopted
a restatement of the Total Return to Shareholders Plan (the "TRS Plan")
that

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clarified certain of its terms and provisions by the addition of various
details and explanatory material. In particular, the restatement includes a
description of the Compensation Committee's authority to administer and
modify the plan, to select participants and to establish target awards;
definitions of certain key terms used in the plan; a list of the 21
companies included in the Company's peer group (which is the same list used
for purposes of its annual proxy statement); procedures by participants for
the designation of beneficiaries; a designation of dates on which values
are to be determined; an explanation of the consequences of termination of
employment under various circumstances, including normal retirement,
disability and death; automatic adjustment of the number of restricted
Common Shares subject to an award in the case of stock splits,
reorganizations and other fundamental changes in the structure of the
Company; and reservation of the Company's right to register and/or qualify
the Common Shares under federal or state securities laws if such
registration and/or qualification is deemed necessary. The restatement also
makes it clear that the "change in control" definition used in the TRS Plan
is similar to those used in the Company's Severance Agreements and in the
Company's Economic Bridge Program; that in the event of a change in control
as to any participant, such participant will be entitled to a prorated
number of Common Shares or cash earned under performance periods that have
not been completed at the time such change in control occurs; and that
Common Shares previously awarded to that participant will be unrestricted.
In addition, the restatement clarifies that the performance period in each
case will be 39 months instead of three years. Finally, the restatement
indicates that the prorated awards to be made in the transition plan will
be based on 39-month periods ending at the close of the first calendar
quarters in 1995 and 1996. A copy of the TRS Plan is filed as Exhibit 37
hereto and is incorporated herein by reference. The foregoing description
of the TRS Plan is qualified in its entirety by reference to the text of
the TRS Plan.

On April 21, 1995, the Board of Directors adopted amendments to the
United States Shoe Corporation Supplemental Executive Salaried Employees
Benefit Plan (the "Salaried Benefit Plan") to provide, in the case of
active or retired Corporate Group employees, for a lump sum payout of the
present value of each such employee's accrued benefit under the Salaried
Benefit Plan immediately prior to the consummation of the Merger. A copy of
the Salaried Benefit Plan, as amended, is filed as Exhibit 38 hereto and is
incorporated herein by reference. The foregoing description of the Salaried
Benefit Plan is qualified in its entirety by reference to the text of the
Salaried Benefit Plan.

On April 21, 1995, the Board of Directors (including by the unanimous
vote of the Directors who are not eligible to participate in The United
States Shoe Corporation Retirement Plan For Outside Directors (the "Outside
Directors' Retirement Plan")) approved amendments to the Outside Directors'
Retirement Plan. Under the Outside Directors' Retirement Plan, a member of
the Board of Directors of the Company who is not an employee of the
Company, and who retires with five or more years of service as a director,
will be entitled to receive a quarterly retirement benefit equal to
one-fourth of the annual directors' fee in effect on the date such director
ceased to be a member of the Board. The amendments provide for the
termination of the Outside Directors' Retirement Plan immediately prior to
the Merger and the payment of a lump sum to each participant in the Outside
Directors' Retirement Plan which is the actuarial equivalent of such
participant's accrued benefit under the Outside Directors' Retirement Plan.
A copy of the Outside Directors' Retirement Plan is filed as Exhibit 39
hereto and is incorporated herein by reference. The foregoing description
of the Outside Directors' Retirement Plan is qualified in its entirety by
reference to the text of the Outside Directors' Retirement Plan.

On April 21, 1995, the Board of Directors took action to terminate The
United States Shoe Corporation Deferred Compensation Plan for
Non-Management Directors (the "Directors' Deferred Compensation Plan"),
effective upon the effective time of the Merger. Pursuant to the terms of
the Directors' Deferred Compensation Plan, a director may elect to defer
payment of his or her director's fees. In the event of such an election by
a director, upon such director's termination of service, he or she would
receive from the Company a distribution of the deferred compensation to
which he or she was entitled in cash in a lump sum or, at such director's
election, in quarterly installments, with the amount payable to be based on
sums available from assumed investments in Common Shares, other securities
or cash. Upon termination of the Directors' Deferred Compensation Plan, the
Company will, pursuant to the

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terms of the Directors' Deferred Compensation Plan, distribute the deferred
compensation account balances to Mr. Anderer and Mr. Kellar, the two
directors on behalf of whom such accounts are currently maintained. The
foregoing description of the Directors' Deferred Compensation Plan is
qualified in its entirety by reference to the text of the Directors'
Deferred Compensation Plan.

Mr. Mechem, the Chairman of the Board of the Company, is not eligible
to participate in the Outside Directors' Retirement Plan or in the 1991
Outside Directors' Stock Option Plan because of his part-time employee
status with the Company, however, as a part-time employee, Mr. Mechem was
granted options (i) on April 23, 1993 under The United States Shoe
Corporation 1983 Key Personnel Stock Option Plan to purchase 10,000 Common
Shares at an exercise price of $10.56 per Common Share, (ii) on May 26,
1994 under The United States Shoe Corporation 1988 Employee Incentive Plan
(the "1988 Incentive Plan") to purchase 10,000 Common Shares at an exercise
price of $19.06 per Common Share, and (iii) on March 31, 1995 under the
1988 Incentive Plan to purchase 10,000 Common Shares at an exercise price
of $26.25 per Common Share.

CERTAIN INFORMATION WITH RESPECT TO CERTAIN CONTRACTS, AGREEMENTS OR
UNDERSTANDINGS BETWEEN THE COMPANY AND LUXOTTICA GROUP AND ITS AFFILIATES.
The Merger Agreement. The following is a summary of the Merger Agreement.
Such summary is qualified in its entirety by reference to the Merger
Agreement, which is incorporated herein by reference.

The Luxottica Offer. In the Merger Agreement, LAC has agreed subject
to certain conditions, among other things, to amend the Luxottica Offer (i)
to reflect the increase in the purchase price offered to $28 per Common
Share (and associated Right) net to the seller in cash, (ii) to extend the
Luxottica Offer until the later of (A) midnight on the tenth business day
following the date LAC so amends the Luxottica Offer or (B) the earlier of
(1) the satisfaction of the Control Share Condition (as herein defined) in
the event the Control Share Condition is satisfied by LAC determining that
Section 1701.831 of the ORC ("Section 831") is invalid or inapplicable to
the acquisition of Common Shares pursuant to the Luxottica Offer, and (2)
midnight on the second business day next succeeding the date of the 831
Meeting (as herein defined), and (iii) to modify the conditions of the
Luxottica Offer to conform to the conditions to the Luxottica Offer as set
forth in the Merger Agreement. The obligation of LAC to accept for payment
and pay for Common Shares (including the associated Rights) tendered
pursuant to the Luxottica Offer will be subject only to the conditions to
the Luxottica Offer, any of which conditions other than the Minimum Share
Condition (as defined herein) and the Control Share Condition may be waived
by LAC in its sole discretion. Without the prior written consent of the
Company, LAC will not (i) reduce the number of Common Shares to be
purchased in the Luxottica Offer, (ii) reduce the purchase price offered
pursuant to the Luxottica Offer, (iii) impose conditions to the Luxottica
Offer in addition to the conditions to the Luxottica Offer set forth in the
Merger Agreement, (iv) change the form of consideration payable in the
Luxottica Offer, (v) otherwise amend the Luxottica Offer (other than
amendments which are not adverse to the Company or its shareholders) or
(vi) extend the time of the expiration of the Luxottica Offer if all
conditions to the Luxottica Offer set forth in the Merger Agreement are
then, as provided in the Luxottica Offer, satisfied or waived.

Pursuant to the Merger Agreement, the Company has consented to the
Luxottica Offer and represented and warranted that the Board of Directors
has (at a meeting duly called and held on April 21, 1995), by the unanimous
vote of all directors (i) approved the transactions contemplated by the
Merger Agreement in a manner satisfying the requirements of the fair price
provision contained in paragraph 2(A) of Article Seventh of the Articles of
Incorporation of the Company, (ii) determined that the Luxottica Offer and
the Merger are fair to and in the best interests of the Company and its
shareholders, (iii) approved the Luxottica Offer, the Merger Agreement and
the Merger, (iv) recommended that the holders of Common Shares authorize
the purchase of Common Shares by LAC for purposes of Section 831, (v)
recommended acceptance of the Luxottica Offer, the tender of Common Shares
pursuant to the Luxottica Offer and approval and adoption of the Merger
Agreement and the Merger by the holders of Common Shares, (vi) taken all
actions which are necessary on the part of its Board of Directors as
contemplated by Section 1704.02(A) of the ORC in order to make Chapter 1704
of the ORC inapplicable to the Merger, and (vii) determined that the
Luxottica Offer is a Permitted Offer (as

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defined in the Rights Agreement) for purposes of the Rights Agreement (the
foregoing actions of the Board of Directors being collectively referred to
as the "Recommendation"); provided that the Recommendation, in whole or in
part (other than the parts referred to in clauses (i), (vi) and (vii)
above, which were effected by irrevocable action), may be withdrawn,
modified or amended if and to the extent legally required for the discharge
by the Company's directors of their fiduciary duties as advised by
independent legal counsel, who may be the Company's regularly engaged
independent legal counsel (a "Director Duty"). Pursuant to the Merger
Agreement, the Company will furnish to Avant-Garde and LAC, upon request, a
copy of the resolutions adopting the Recommendation certified by an
appropriate officer of the Company.

The 831 Meeting. In the Merger Agreement, Avant-Garde, LAC and the
Company acknowledged that a special meeting of the holders of Common Shares
for the purpose of voting to authorize the control share acquisition of
Common Shares by LAC pursuant to Section 831 was called for April 21, 1995
(the "Original 831 Meeting") and adjourned to May 5, 1995 (the "Rescheduled
831 Meeting"), and agreed that in the event that Luxottica Group's and
LAC's proxy statement for the Rescheduled 831 Meeting had not been
circulated for a sufficient period of days by the date of the Rescheduled
831 Meeting, Avant-Garde, LAC and the Company (without affecting the
Company's right to withdraw its Recommendation pursuant to a Director Duty)
will use their respective best efforts to adjourn the Rescheduled 831
Meeting to such other date as the Company and LAC may mutually determine
from time to time in accordance with the Ohio General Corporation Law (the
"GCL") (the adjourned meeting at which the Control Share Acquisition is
submitted for a vote to the holders of Common Shares is herein referred to
as the "831 Meeting").

The Merger. The Merger Agreement provides that, at the effective time
of the Merger (the "Effective Time"), LAC will be merged with and into the
Company, and, subject to the Merger Agreement, the Company will be the
surviving corporation in the Merger (the "Surviving Corporation"). By
virtue of the Merger, at the Effective Time, (i) each then-outstanding
Common Share (including the associated Rights) not owned by Luxottica
Group, Avant-Garde, LAC or any other subsidiary of Avant-Garde (other than
those Common Shares held in the treasury of the Company or held by any
subsidiary of the Company and Common Shares held by dissenting shareholders
will be cancelled and converted into a right to receive in cash an amount
per Common Share equal to the highest price per Common Share paid by LAC
pursuant to the Luxottica Offer, (ii) each then-outstanding Common Share
(including the associated Rights) owned by Luxottica Group, Avant-Garde,
LAC or any other subsidiary of Avant-Garde will be cancelled, and no
payment will be made with respect thereto, (iii) each Common Share issued
and held in the Company's treasury or held by any subsidiary of the Company
will be cancelled and retired, and no payment will be made with respect
thereto, and (iv) each common share of LAC will be converted into and
become 500,000 common shares of the Surviving Corporation, which thereafter
will constitute all of the issued and outstanding common shares of the
Surviving Corporation.

Covenants of the Company, Avant-Garde and LAC. In the Merger
Agreement, the Company has agreed that during the period from the date of
the Merger Agreement to the time that the designees of Avant-Garde have
been elected to, and constitute at least two-thirds of, the Board of
Directors pursuant to the Merger Agreement (the "Interim Period"), except
as specifically contemplated by the Merger Agreement, or in connection with
the Nine West Agreement, or as otherwise approved by Avant-Garde, the
Company will, and will cause each of its subsidiaries to, conduct their
respective businesses only in, and not take any action except in, the
ordinary and usual course of business or in accordance with a Director Duty
in certain circumstances and the Company will use reasonable efforts to
preserve substantially intact the business organization of the Company and
each of its subsidiaries, to keep substantially available the services of
its and their present officers and key employees, and to preserve
substantially the goodwill of those having business relationships with it
or its subsidiaries. The Merger Agreement provides that neither the Company
nor any of its subsidiaries will (i) make or propose any change or
amendment to any of their respective articles of incorporation or codes of
regulations (or comparable governing instruments); (ii) issue or sell any
shares of capital stock or any other securities of the Company or any of
its subsidiaries or issue any securities convertible into or exchangeable
for, or

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options, warrants to purchase, scrip, rights to subscribe for, calls or
commitments of any character whatsoever relating to, or enter into any
contract, understanding or arrangement with respect to the issuance of, any
shares of capital stock or any other securities of the Company or any of
its subsidiaries or enter into any arrangement or contract with respect to
the purchase or voting of shares of their capital stock, or adjust, split,
combine, reclassify, redeem, purchase or otherwise acquire, directly or
indirectly, any of their capital stock or other securities, or make any
other changes in their capital structures; provided, however, that the
Company may issue Common Shares as required by any Company Benefit Plan (as
defined in the Merger Agreement) with an employee stock fund or employee
stock ownership plan feature, consistent with applicable securities laws or
the exercise of options outstanding as of the date of the Merger Agreement
and in accordance with the terms thereof; (iii) declare, set aside, pay or
make any dividend or other distribution or payment (whether in cash, stock
or property) with respect to, or purchase or redeem, any shares of the
capital stock of the Company or any of its subsidiaries other than (A)
regular quarterly cash dividends of $0.08 per Common Share and (B)
dividends paid by its subsidiaries to the Company with respect to their
capital stock; (iv) except as provided in the Merger Agreement or as
disclosed on a schedule thereto, and except for normal increases in the
ordinary course of business consistent with past practice and that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company or pursuant to collective bargaining agreements as
presently in effect, adopt or amend any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of
any director, officer or employee that increase in any manner the
compensation, retirement, welfare or fringe benefits of any director,
officer or employee or pay any benefit not required by any existing plan or
arrangement (including without limitation the granting of stock options or
stock appreciation rights) or take any action or grant any benefit not
expressly required under the terms of any existing agreements, trusts,
plans, funds or other such arrangements or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing; provided,
however, that, as soon as reasonably practicable, the Company will, subject
to the prior approval of Avant-Garde, take all necessary actions to assure
that all of the Company tax-qualified retirement plans which invest in or
hold Common Shares permit the participants in such plans to direct the
trustees of such plans in a timely and confidential manner whether to
tender the Common Shares allocated to their accounts in such plans; (v)
except in the ordinary course of business, (A) make any loans, advances or
capital contributions to, or investments (other than intercompany accounts
and short-term investments pursuant to customary cash management systems of
the Company in the ordinary course of business and consistent with past
practice) in, any other person other than such of the foregoing as are made
by the Company to or in a wholly owned subsidiary of the Company, or (B)
incur or assume any indebtedness for borrowed money; provided that the
Company and its subsidiaries may not incur or assume any indebtedness for
borrowed money which would increase materially the aggregate principal
amount of indebtedness of the Company and its subsidiaries for borrowed
money except to the extent required for working capital needs and, in any
event, the Company and its subsidiaries may, with the prior written consent
of Avant-Garde and LAC, which shall not be unreasonably withheld, refinance
any existing indebtedness for borrowed money; (vi) change the number of
persons constituting the Board of Directors of the Company; (vii) except
with respect to the Ohio Litigation (as defined herein), settle or
compromise any material claims or litigation or, except in the ordinary
course of business, modify, amend or terminate any of its material
contracts or waive, release or assign any material rights or claims, or
make any payment, direct or indirect, of any liability of the Company or
any subsidiary before the same becomes due and payable in accordance with
its terms; (viii) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice with
respect to accounting policies or procedures (including tax accounting
policies and procedures); (ix) make any tax election or permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Avant-Garde and LAC, except in
the ordinary course of business; (x) make any acquisition of, or investment
in, assets (in the nature of the acquisition of a business in its entirety)
or stock of any other person or entity, merge or consolidate with any other
person or sell, lease, encumber, or otherwise dispose of or transfer any
assets constituting a line of business or material portion thereof; (xi)
amend the Rights Agreement, except as expressly contemplated by the Merger
Agreement

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or in accordance with a Director Duty; provided that no such amendment
shall adversely affect the benefit to be afforded to the Luxottica Offer as
a Permitted Offer (as defined in the Rights Agreement); (xii) amend, waive
any rights or grant any consent under, terminate or otherwise modify the
Nine West Agreement (as in effect on the date of the Merger Agreement or as
modified pursuant thereto), provided that the Company will use all
commercially reasonable efforts necessary to permit the transactions
contemplated by the Nine West Agreement to be consummated for the purchase
price specified in the Nine West Agreement and that in the event that the
closing under the Nine West Agreement occurs prior to the expiration of
this covenant, the Company will not make any distribution to its
shareholders of any of the purchase price received by the Company in
accordance with such agreement; or (xiii) replace the advertising services
provided pursuant to certain agreements or renew any of such agreements.

The Merger Agreement provides that, if required by applicable law, the
Company will take all action necessary in accordance with applicable law
and its Articles of Incorporation and Code of Regulations to convene a
meeting of the holders of Common Shares promptly after the purchase of
Common Shares pursuant to the Luxottica Offer to consider and vote upon the
approval of the Merger. At any such meeting, Avant-Garde and LAC will vote
all of the Common Shares then beneficially owned by them in favor of the
Merger. The Merger Agreement provides that the Board of Directors will
recommend that the holders of Common Shares approve the Merger if such
approval is required pursuant to the GCL or otherwise; provided that any
such recommendation may be withdrawn, modified or amended in accordance
with a Director Duty. In the event that, prior to any such meeting,
Avant-Garde and LAC acquire beneficial ownership of at least 90% of the
outstanding Common Shares, the parties have agreed to take all action
necessary to cause the Merger to become effective as soon as practicable
after such acquisition, without a meeting of holders of Common Shares, in
accordance with Section 1701.801 of the ORC and Section 253 of the Delaware
General Corporation Law.

Pursuant to the Merger Agreement, if requested by Avant-Garde, the
Company will, promptly following the acceptance for payment of the Common
Shares to be purchased pursuant to the Luxottica Offer, and from time to
time thereafter, take all action necessary to cause at least two-thirds of
the number of directors, rounded up to the next whole number, of the
Company to be persons designated by Avant-Garde (whether, at the request of
Avant-Garde, by increasing the size of the number of directors of the
Company or by seeking the resignation of directors and causing
Avant-Garde's designees to be elected to fill the vacancies so created) as
will give Avant-Garde representation on the Board of Directors of the
Company equal to the product of the number of directors of the Company and
the percentage that such number of Common Shares so purchased bears to the
number of Common Shares outstanding. At such time, the Company has agreed
that it also will take all action permitted by law to cause persons
designated by Avant-Garde to constitute at least the same percentage as is
on the Company's Board of Directors of (i) each committee of the Company's
Board of Directors, (ii) the board of directors of each subsidiary of the
Company, and (iii) each committee, if any, of each such board of directors.
The Merger Agreement provides that, notwithstanding the foregoing, until
the Effective Time, the Company will use its best efforts to assure that
the Company's Board of Directors has at least three directors who are
directors on the date of the Merger Agreement (the "Continuing Directors");
provided further, that, in such event, if the number of Continuing
Directors is reduced below three for any reason whatsoever, any remaining
Continuing Directors (or Continuing Director, if there is only one
remaining) will be entitled to designate three persons to fill such
vacancies who will be deemed to be Continuing Directors for purposes of the
Merger Agreement or, if no Continuing Director then remains, the other
directors will designate three persons to fill such vacancies who are not
shareholders, affiliates or associates of Avant-Garde or LAC and such
persons will be deemed to be Continuing Directors for purposes of the
Merger Agreement. The Merger Agreement provides that the Company will use
its best efforts to cause the person(s) so designated by the Continuing
Directors to be elected to the Board of Directors of the Company.

The Merger Agreement provides that the Company's obligation to cause
designees of Avant-Garde to be so elected or appointed as directors of the
Company will be subject to Section 14(f) of the Exchange Act and Rule
14(f)-1 promulgated thereunder. The Merger Agreement provides that

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Avant-Garde will supply to the Company in writing and will be solely
responsible for any information with respect to it and its designees,
officers, directors and affiliates required by Section 14(f) and Rule
14(f)-1, and the Company will include in the Schedule 14D-9 such
information as is required under Section 14(f) and Rule 14(f)-1. Annex I
attached hereto sets forth information with respect to the possible
designation by Avant-Garde, pursuant to the Merger Agreement, of persons to
be elected to the Board of Directors of the Company. The information
contained in Annex I concerning Luxottica Group, Avant-Garde and LAC has
been furnished to the Company by Avant-Garde, and the Company assumes no
responsibility for the accuracy, completeness or fairness of such
information.

Following the appointment of Avant-Garde's designees as described
above and prior to the Effective Time, any action to waive or amend any
provision of the Merger Agreement or any termination of the Merger
Agreement by the Company will require the concurrence of a majority of the
Continuing Directors. Pursuant to the Merger Agreement, unless otherwise
required in accordance with a Director Duty, from and after the date of the
Merger Agreement, the Company will (and will cause each of its subsidiaries
to) afford to Avant-Garde and its subsidiaries' officers, directors,
employees, agents, advisors and other representatives (including
professional advisors retained by Avant-Garde) such access during normal
business hours throughout the period prior to the Effective Time to the
Company's and its subsidiaries' books, records (including tax returns and
work papers of the Company's independent auditors), properties, personnel
and to such other information, will deliver written materials, and make
copies of such written materials, in any case as Avant-Garde reasonably
requests, upon reasonable notice and in such a manner as will not
unreasonably interfere with the conduct of the business of the Company or
any of its subsidiaries.

Under the Merger Agreement, except as set forth below, neither the
Company nor any of its subsidiaries will, and the Company will direct and
use all reasonable efforts to cause the respective officers, directors,
employees, agents, advisors and other representatives of the Company or its
subsidiaries not to, directly or indirectly, (i) encourage, solicit,
participate in or initiate any proposals or offers from any person relating
to any Competing Transaction (as defined herein) or (ii) furnish to any
other person any information or access to such information with respect to,
or otherwise concerning, any Competing Transaction. The Company has agreed
to cease and cause to be terminated immediately any existing activities,
discussions or negotiations with any third parties conducted prior to the
execution and delivery of the Merger Agreement with respect to any proposed
Competing Transaction. The Company has agreed promptly to notify
Avant-Garde and LAC in the event that any such inquiry, proposal or offer
is received by, any such information is requested from or any such
negotiation or discussion is sought to be initiated with the Company and,
with respect to any such proposal or offer, setting forth in reasonable
detail the principal terms and conditions thereof. The Company has also
agreed to promptly make available a copy of any acquiring person statement,
as defined in Section 831, delivered to the Company by any person (other
than Avant-Garde, LAC or any affiliate of either thereof).

Notwithstanding the above or anything contained in any other provision
of the Merger Agreement, the Merger Agreement provides that the Company
will not be prohibited by the Merger Agreement from (i) furnishing
information to, or entering into discussions or negotiations with, any
person or entity that makes an unsolicited proposal to acquire the Company
pursuant to a merger, consolidation, share exchange, business combination,
sale of all or substantially all the assets, tender or exchange offer or
other similar transaction, if, and only to the extent (A) a Director Duty
requires it to do so, and (B) that, prior to furnishing such information
to, or entering into discussions or negotiations with, such person or
entity, the Company receives from such person or entity an executed
confidentiality agreement on terms not more favorable to such person or
entity than the terms contained in the Confidentiality Agreement; (ii)
complying with Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act
with regard to a tender or exchange offer; (iii) making any disclosure to
the Company's shareholders if and to the extent of a Director Duty; or (iv)
failing to make, modifying or amending its Recommendation or the
recommendations, consents or approvals regarding the appointment of
Avant-Garde's designees to the Board of Directors of the Company or the
approval by shareholders of the Merger in accordance with a

8
<PAGE> 9

Director Duty. The Company has agreed to deliver, as promptly as
practicable after the receipt of any executed confidentiality agreement
referred to above, a copy thereof to Avant-Garde and LAC.

The Merger Agreement provides that, subject to the terms and
conditions therein provided and except in accordance with a Director Duty
in certain circumstances, each of the parties thereto agrees to use its
reasonable best efforts to take promptly, or cause to be taken, all actions
and to do promptly, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Merger Agreement, including
using its reasonable best efforts to obtain all necessary actions or
non-actions, extensions, waivers, consents and approvals from all
applicable Governmental Entities (as defined in the Merger Agreement),
effecting all necessary registrations and filings and obtaining any
required contractual consents, subject, however, to any required vote of
the holders of Common Shares.

The Company Stock Options and Restricted Shares. The Merger Agreement
provides that, prior to the Effective Time, the Board of Directors will (i)
adopt such resolutions and approve such amendments, if any, as are
necessary to provide for the cancellation of all stock options (the
"Options") to purchase Common Shares granted pursuant to the Company's 1978
Key Personnel Stock Option Plan, 1983 Key Personnel Stock Option Plan, 1985
Outside Directors Stock Option Plan, 1991 Outside Directors Stock Option
Plan and 1988 Employee Incentive Plan (all such plans collectively referred
to as the "Stock Plans"), effective as of immediately prior to the
Effective Time and (ii) promptly furnish Avant-Garde and LAC a copy of such
resolutions certified by an appropriate officer of the Company. If
necessary or appropriate, the Company has agreed, upon the request of LAC,
(A) to use its best efforts to obtain the written acknowledgment of each
holder of an Option that the payment of the amount of cash referred to
below will satisfy the Company's obligation to such holder pursuant to such
Option and (B) to take such other action as is necessary or appropriate to
effect the provisions described in this paragraph. The Merger Agreement
provides that, immediately prior to the Effective Time, each Option which
is not then exercisable or vested will become fully exercisable and vested,
and each such Option and all other Options will be cancelled, effective as
of immediately prior to the Effective Time, in exchange for a payment by
the Company or the Surviving Corporation of an amount, payable within three
business days after the Effective Time, equal to the product of (x) the
total number of Common Shares subject to such Option and (y) the excess, if
any, of the Merger Price over the exercise price per Common Share subject
to such Option, subject to any required withholding of taxes. The Merger
Agreement provides that such payments represent and will be characterized
and reported by the Surviving Corporation as additional compensation
expense.

Pursuant to the Merger Agreement, prior to the Effective Time, the
Board of Directors will adopt appropriate resolutions to provide for the
termination of all restrictions on the Common Shares, if any, which have
been distributed to employees pursuant to the 1988 Employee Incentive Plan
and will promptly furnish Avant-Garde and LAC a copy of such resolutions
certified by an appropriate officer of the Company.

Certain Employee Benefits Matters. The Merger Agreement provides
that, for a period of two years following the Effective Time, Avant-Garde
will cause the Surviving Corporation to continue the (i) employee benefit
plans (including without limitation all employee benefit plans within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended), practices and policies which provide employee benefits
to officers, directors or employees of the Company or any of its
subsidiaries, and (ii) subject to the Merger Agreement, compensation
arrangements, programs and plans providing employee or executive officer
compensation or benefits, to employees of the Company or any of its
subsidiaries; provided, however, that (A) the Surviving Corporation may
replace the Company's Economic Bridge Program with any other plan or plans
providing, in the aggregate, for comparable compensation or benefits,
recognizing all prior service for eligibility and vesting purposes of the
officers, directors or employees with the Company and any of its
subsidiaries as service under such Plan; (B) the Surviving Corporation may
replace any plan or plans with another plan or plans providing, in the
aggregate, for comparable compensation or benefits, as the case may be and
recognizing all prior service of the officers, directors or employees with
the Company and any of its subsidiaries as service for purposes

9
<PAGE> 10

of eligibility and vesting, but not for benefit accrual purposes, under any
such plans; (C) it is understood that neither Avant-Garde nor the Surviving
Corporation will have any obligation to continue or provide comparable
benefits for (1) any stock option or other plan involving the issuance of
securities of the Company or any other company, and (2) the Company's
non-qualified deferred compensation plans (except to the extent of amounts
deferred pursuant to such plan prior to the Effective Time, which amounts
will be administered in accordance with the terms of said plan); and (D)
the expiration of the two year period following the Effective Time will not
affect any rights or obligations under any such plan, practice policy,
arrangement or program.

Pursuant to the Merger Agreement, Avant-Garde has also agreed that the
Company will honor and, on and after the Effective Time, will cause the
Surviving Corporation to honor, without offset, deduction, counterclaims,
interruptions or deferment (other than withholdings under applicable law),
all employment, severance, termination, consulting and retirement
agreements or arrangements (including the Company's Economic Bridge
Program) to which the Company or any of its subsidiaries is presently a
party, all of which are disclosed on a schedule to the Merger Agreement. In
the Merger Agreement, Avant-Garde represents that it currently intends to
cause the Surviving Corporation to offer employment immediately following
the Effective Time to all employees of the Company and its subsidiaries on
terms and conditions comparable to those presently in effect at the Company
or its subsidiaries. The Merger Agreement provides that it is understood
and agreed that the foregoing shall not constitute any commitment,
contract, understanding or guarantee (express or implied) on the part of
Avant-Garde or Surviving Corporation of a post-Effective Time employment
relationship of any term or duration or on any terms other than those
Avant-Garde or the Surviving Corporation may establish, and that accepted
employment with the Surviving Corporation is "at will" and may be
terminated by the Surviving Corporation at any time for any reason (subject
to any legally binding agreement or an applicable collective bargaining
agreement or any arrangement or commitment identified on a schedule to the
Merger Agreement).

Indemnification and Directors' and Officers' Insurance. The Merger
Agreement provides that, for six years after the Effective Time,
Avant-Garde will cause the Surviving Corporation to indemnify, defend and
hold harmless the present and former officers, directors, employees and
agents of the Company and its subsidiaries (each, an "Indemnified Party")
after the Effective Time against all losses, claims, damages or liabilities
(whether or not arising from any third party claims) arising out of actions
or omissions occurring on, prior to or after the Effective Time
(individually and collectively, "Losses") to the full extent provided under
Ohio law and the Company's Regulations in effect at the date of the Merger
Agreement, including without limitation provisions relating to advances of
expenses incurred in the defense of any action or suit (including without
limitation attorneys' fees of counsel selected by the Indemnified Party
reasonably satisfactory to the Surviving Corporation); provided that any
determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under Ohio law and
the Company's Regulations will be made by independent counsel selected by
the Indemnified Party and reasonably satisfactory to the Surviving
Corporation; and provided further that in the event of any claim that is
asserted or made within such six-year period, all rights to indemnification
in respect of such claim will continue until final disposition thereof.

The Merger Agreement provides that, on or before the business day
which is no later than five business days before the expiration date of the
Luxottica Offer, Avant-Garde will cause there to be in full force and
effect from and after the time LAC first accepts for payment Common Shares
pursuant to the Luxottica Offer for the Company and the Surviving
Corporation a policy or policies of directors' and officers' liability
insurance (the "New Coverage") covering those persons (the "Insured
Persons") who are currently covered on the date of the Merger Agreement by
the Company's directors' and officers' liability insurance coverage (the
"Current Coverage"), which New Coverage will (i) be in the same form and
provide at least the same coverage and limits, containing terms which are
no less advantageous to the Insured Persons than those provided in the
Current Coverage, (ii) be effective so that there will not result any gaps
or lapses in coverage with respect to matters occurring prior to the
Effective Time, and (iii) with respect to the first $20,000,000 of
coverage, be issued by an insurance carrier or carriers which are at least

10
<PAGE> 11

as highly rated by A.M. Best & Co. as Federal Insurance Company. From and
after the date of the Merger Agreement, and so long as Avant-Garde is in
compliance with this paragraph, Avant-Garde shall have the sole right to
seek the New Coverage and the Company shall not engage in such activity.
Pursuant to the Merger Agreement, the Company and/or the Surviving
Corporation shall, regardless of whether or not the Merger is consummated,
and for six years after the Effective Time, maintain in effect the New
Coverage; provided, however, that (A) the Surviving Corporation may
substitute for the New Coverage such policy or policies providing at least
the same coverage and containing terms which are no less advantageous to
the Insured Persons if such substitution is effective so that there does
not result any gaps or lapses in coverage with respect to matters occurring
prior to the Effective Time, and (B) the insurance carrier or carriers
issuing such policy or policies with respect to the first $20,000,000 of
coverage are at least as highly rated by A.M. Best & Co. as Federal
Insurance Company. Notwithstanding the foregoing, if by the date which is
five business days prior to the expiration date of the Luxottica Offer
Avant-Garde has failed to cause the New Coverage to be in full force and
effect as required above, without waiving any other rights which it may
have pursuant to the Merger Agreement, the Company shall have the right to
cause the New Coverage to be in full force and effect as provided above.
The Merger Agreement provides that, in the event the Surviving Corporation
or any of its successors or assigns (x) reorganizes or consolidates with,
or merges into any other person or entity and will not be the continuing or
surviving corporation or entity of such consolidation or merger or (y)
transfers or conveys all or substantially all of its properties and assets
to any person or entity, then, and in each such case, proper provision will
be made so that the successors and assigns of the Surviving Corporation
assume the indemnification and insurance obligations set forth above.

Disposition of Ohio Litigation. Pursuant to the Merger Agreement,
each of Avant-Garde, LAC and the Company agree, promptly, and in no event
later than two business days after the amendment to the Luxottica Offer
contemplated thereby (unless the Merger Agreement has been earlier
terminated), to use its best efforts to obtain a dismissal without
prejudice of Luxottica Group S.p.A., et al. v. The United States Shoe
Corporation, et al., Civil Action No. C-2-95-244 (the "Ohio Litigation")
with each party bearing its own costs and attorneys' fees therefor.

Proxy Contests. The Merger Agreement provides that Avant-Garde and
LAC agree to withdraw and rescind on behalf of themselves and their
affiliates and shall promptly cause to be withdrawn and rescinded all
notices and the Schedule 14A filed with the Commission, in each case,
relating to the calling of a special meeting for the removal of the
directors of the Company.

State Takeover Statutes. Pursuant to the Merger Agreement, unless the
Merger Agreement is earlier terminated in accordance with its terms, the
Company will, upon the request of LAC, take all reasonable steps to (i)
exempt the Company, the Luxottica Offer and the Merger from the
requirements of the GCL, by action of the Company's Board of Directors or
otherwise and (ii) assist LAC in complying with, or in challenging the
validity or applicability of, any state takeover law to the Luxottica Offer
or the Merger.

Postponement of Annual Meeting. The Merger Agreement provides that,
during the Interim Period, except as otherwise approved by Avant-Garde, the
Company will not take any action unless compelled by legal process to call
its annual meeting of shareholders or to call a special meeting of
shareholders of the Company except in accordance with the Merger Agreement,
unless and until the Merger Agreement has been terminated in accordance
with its terms, or otherwise if required to do so by a Director Duty.

Representations and Warranties. The Merger Agreement contains
customary representations and warranties with respect to the Company,
including (i) that the Board of Directors has taken all necessary action
under the Rights Agreement so that none of the execution or delivery of the
Merger Agreement, the purchase of Common Shares pursuant to the Luxottica
Offer or the Merger will cause the Distribution Date (as defined in the
Rights Agreement) to occur or the Rights to become exercisable; (ii) with
respect to the accuracy of the Company's documents and reports filed with
the Commission; (iii) with respect to the Company's financial statements
and financial condition, the absence of certain

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<PAGE> 12

changes or events which have resulted in a material adverse effect on the
business, operations, properties, assets, liabilities or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a
whole, except for changes arising out of industry-wide conditions or
resulting from the Luxottica Offer, the Merger Agreement or the
transactions contemplated thereby; (iv) the absence of certain litigation;
(v) with respect to the vote of shareholders necessary to approve the
Merger; (vi) with respect to the accuracy and completeness of the
information supplied by the Company to be included in the proxy statement
for the 831 Meeting and any amendments or supplements thereto; (vii) with
respect to the Company's employee benefit plans, tax matters, compliance
with laws; and (viii) with respect to the accuracy and completeness of the
Company's notice of the 831 Meeting, the Company's statement contemplated
by Section 831(D)(2), the Schedule 14D-9 and the information supplied by
the Company for inclusion in the amendment to the Schedule 14D-1 with
respect to the Luxottica Offer, which will contain or incorporate by
reference an amendment and supplement to the offer to purchase and forms of
the related letter of transmittal and any related summary advertisement
(the Schedule 14D-1 and such other documents, together with any supplements
or amendments thereto, the "Offer Documents"), and all amendments and
supplements thereto.

In the Merger Agreement, Avant-Garde and LAC have made customary
representations and warranties, including (i) that Avant-Garde has
delivered to the Company a commitment letter, dated April 19, 1995 from
Credit Suisse, on the terms and subject to the conditions of which Credit
Suisse has committed to lend funds which, together with other cash funds
presently available to LAC, are sufficient to consummate the Luxottica
Offer and the Merger, to perform all the obligations of Avant-Garde and LAC
under the Merger Agreement and to pay all related fees and expenses, and
that such commitment letter is in full force and effect; (ii) with respect
to the solvency of the Surviving Corporation; (iii) with respect to the
accuracy and completeness of Avant-Garde and Luxottica Group's proxy
statement for the 831 Meeting, the Schedule 14D-1, the Offer Documents and
the information supplied by Avant-Garde or LAC for inclusion in the
Company's proxy statement for the meeting of shareholders to approve the
Merger if any, or in the Schedule 14D-9, and all amendments and supplements
thereto; and (iv) the validity, accuracy and completeness of Luxottica
Group's and LAC's acquiring person statement pursuant to Section 831.

Conditions to the Merger. The obligations of Avant-Garde, LAC and the
Company to consummate the Merger are subject to the satisfaction, at or
before the Effective Time, of each of the following conditions, as
applicable thereto: (i) the holders of Common Shares will have duly
approved the Merger and adopted the Merger Agreement, if and as required by
applicable law; (ii) LAC will have accepted for payment and purchased all
Common Shares validly tendered and not withdrawn pursuant to the Luxottica
Offer, provided that this condition will be deemed to have been satisfied
if LAC fails to accept for payment or pay for Common Shares pursuant to the
Luxottica Offer in breach of the terms of the Merger Agreement or thereof;
and (iii) the consummation of the Merger will not be prohibited by any
order, injunction, decree or ruling of a court of competent jurisdiction or
any Governmental Entity (each party agreeing to use its best efforts to
rectify any such occurrence), and there will not have been any action taken
or any statute, rule or regulation enacted, promulgated or deemed
applicable to the Merger by any Governmental Entity which would prevent the
consummation of the Merger.

Termination. The Merger Agreement may be terminated and the Merger
contemplated thereby may be abandoned, notwithstanding any prior approval
thereof or of the Merger by the holders of the Common Shares, (i) by the
mutual consent of the Boards of Directors of Avant-Garde, LAC and (by the
affirmative vote of a majority of the Continuing Directors) the Company;
(ii) by Avant-Garde and LAC, on the one hand, or the Company, on the other
hand, if the Luxottica Offer expires or is terminated or withdrawn without
any Common Shares being purchased thereunder; provided, however, that the
right to terminate the Merger Agreement under this clause (ii) will not be
available to any party who is (or would, by virtue of such termination, be)
in breach of the Merger Agreement; (iii) by the Company, if Avant-Garde or
LAC breaches any of the covenants contained in the Merger Agreement, except
where any such breaches (A) would not, individually or in the aggregate,
materially impair or delay the ability of LAC to consummate the Luxottica
Offer or Avant-Garde, LAC or the Company to effect the Merger,

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<PAGE> 13

or (B) have been caused by or result from a breach by the Company of any
covenant in the Merger Agreement; (iv) by either Avant-Garde and LAC, on
the one hand, or the Company (by the affirmative vote of a majority of the
Continuing Directors), on the other hand, if the Merger is not consummated
prior to the sixtieth calendar day following the expiration date of the
Luxottica Offer; provided, however, that the right to terminate the Merger
Agreement under this clause (iv) will not be available to any party whose
failure to fulfill any obligation under the Merger Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before such date; (v) by either Avant-Garde and LAC, on the one hand, or
the Company, on the other hand, if either one (or any permitted assignee
thereunder) is precluded by an order or injunction (other than an order or
injunction issued on a preliminary basis) of a court of competent
jurisdiction from consummating the Merger and all means of appeal and all
appeals from such order or injunction have been finally exhausted; and (vi)
by either Avant-Garde and LAC, on the one hand, or the Company, on the
other hand, if the Board of Directors (A) shall have withdrawn its
recommendation, consent to or approval of the Luxottica Offer, the Merger
or the Merger Agreement, or (B) determined to recommend to holders of the
Common Shares or approve a Competing Transaction in the exercise of its
Director Duty; provided, however, that the Company shall notify Avant-Garde
and LAC promptly of any determination by its Board of Directors to
recommend such Competing Transaction to the holders of the Common Shares or
to approve such Competing Transaction, which notice shall in any such event
be given (1) not less than 24 hours prior to the Company's termination of
the Merger Agreement under this clause (B) and (2) not later than
substantially simultaneously with the first public announcement of such
recommendation or approval.

For purposes of the Merger Agreement, the term "Competing Transaction"
means any of the following involving the Company or any of it subsidiaries:
(i) any merger, consolidation, share exchange, business combination or
other similar transaction; (ii) any sale, lease, exchange, transfer or
other disposition of all or a material portion of the assets of the Company
and its subsidiaries, taken as a whole, in a single transaction or series
of transactions (except in respect of the sale of the Company's Footwear
Group to Footwear Acquisition Corp. pursuant to the Nine West Agreement);
or (iii) any tender offer or exchange offer for 50% or more of the shares
of capital stock of the Company or the filing of a registration statement
under the Securities Act of 1933, as amended, in connection with any such
exchange offer.

In the event of any such termination and abandonment, no party to the
Merger Agreement (or any of its directors or officers) will have any
liability or further obligation to any other party to the Merger Agreement,
except for (i) obligations pursuant to the Confidentiality Agreement, (ii)
the obligation of each party to pay its own fees and expenses, and (iii)
any liability for any breach of the Merger Agreement.

Fees and Expenses. The Merger Agreement provides that, whether or not
the Merger is consummated, all costs and expenses incurred in connection
with the Luxottica Offer, the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such expense.

Waiver and Amendment. The Merger Agreement provides that, subject to
the applicable provisions of the GCL, any provision of the Merger Agreement
may be waived at any time by the party which is, or whose shareholders are,
entitled to the benefits thereof, and the Merger Agreement may be amended
or supplemented at any time, provided that no amendment will be made after
any shareholder approval of the Merger which reduces the Merger Price
without further shareholder approval, and provided further that any action
by the Company to waive or amend any provision of the Merger Agreement will
require the approval of a majority of the Continuing Directors.

Conditions of the Luxottica Offer. Notwithstanding any other
provision of the Luxottica Offer, LAC shall not be required to accept for
payment, purchase or pay for any Common Shares tendered, and (subject to
the terms of the Merger Agreement) may postpone the acceptance for payment,
the purchase of, and/or the payment for, Common Shares, and/or may amend or
terminate the Luxottica Offer if (i) the number of Common Shares validly
tendered and not withdrawn prior to the expiration date for the Luxottica
Offer, when added to the Common Shares beneficially owned by LAC and its
affiliates, constitutes less than two-thirds of the Common Shares
outstanding on a fully diluted basis (the

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<PAGE> 14

"Minimum Share Condition"); (ii) the acquisition of Common Shares pursuant
to the Luxottica Offer by LAC shall not have been authorized by the
shareholders of the Company pursuant to Section 831 at a special meeting of
the holders of the Common Shares duly and validly called and held in
accordance with Section 831 or LAC is not satisfied, in its sole
discretion, that Section 831 is invalid or inapplicable to the acquisition
of Common Shares pursuant to the Luxottica Offer (the "Control Share
Condition"); or (iii) at any time before acceptance for payment for any
such Common Shares (whether or not any Common Shares have theretofore been
accepted for payment or paid for pursuant to the Luxottica Offer), any of
the following shall occur:

(A) there shall have been instituted or be pending any action or
proceeding before any court or governmental, regulatory or
administrative agency, authority or commission, domestic or foreign, in
each case that has a reasonable likelihood of success, which (1)
challenges or seeks to make illegal, materially delay or otherwise
directly or indirectly restrain or prohibit the Luxottica Offer or the
Merger or the acquisition by LAC of any Common Shares, or seeks to
obtain any material damages with respect to the transactions
contemplated by the Merger Agreement; (2) seeks to prohibit or
materially limit the ownership or operation by Luxottica Group, LAC or
their affiliates of any material portion of the business or assets of
the Company and its subsidiaries, taken as a whole, or to compel
Luxottica Group or LAC or any of their affiliates to dispose of or hold
separate all or any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, as a result of the
transactions contemplated by the Merger Agreement; (3) seeks to impose
material limitations on the ability of Luxottica Group or LAC or any of
their affiliates to exercise full rights of ownership of the Common
Shares, including without limitation the right to vote any Common Shares
purchased by them on all matters properly presented to the shareholders
of the Company; or (4) seeks to prevent Luxottica Group or LAC or any of
their affiliates from acquiring, or to require divestiture by Luxottica
Group or LAC or any of their affiliates of, any Common Shares; or

(B) there shall have been any action taken, or any statute, rule,
regulation, judgment, administrative interpretation, order or injunction
enacted, promulgated, entered, enforced or deemed applicable to the
Company or any affiliate of the Company, or to the Luxottica Offer or
the Merger, which is reasonably expected to result in any of the
consequences referred to in clauses (1) through (4) of paragraph (A)
above; or

(C) there shall have occurred and be continuing (1) any general
suspension of, or limitation on prices for, trading in securities on any
national securities exchange or in the over-the-counter market in the
United States, (2) the declaration of any banking moratorium or any
suspension of payments in respect of banks or any limitation (whether or
not mandatory) on the extension of credit by lending institutions in the
United States, (3) the commencement of a war, material armed hostilities
or any other material international or national calamity involving the
United States, or (4) in the case of any of the foregoing existing at
the time of the commencement of the Luxottica Offer, a material
acceleration or worsening thereof; or

(D) any Person, entity or "group" (as such term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) other than Luxottica Group or any of its affiliates
shall have become the beneficial owner (as that term is used in Rule
13d-3 under the Exchange Act) of more than 20% of the outstanding Common
Shares; or

(E) either (1) the Company shall have breached or failed to comply
in any material respect with any of its obligations under the Merger
Agreement; or (2) any representation or warranty of the Company
contained in the Merger Agreement, which is qualified as to materiality,
shall not be true and correct, or any such representation or warranty
that is not so qualified, shall not be true and correct in any respect
which is reasonably likely to have a material adverse effect on the
business, operations, properties, assets, liabilities or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a
whole, in each case either as of when made or as of such expiration or
proposed termination of the Luxottica Offer except as to any
representation or warranty which

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<PAGE> 15

speaks as to a specific date, which must be untrue or incorrect in the
foregoing respects as of such specific date; or

(F) the Merger Agreement shall have been terminated pursuant to its
terms; or

(G) the Board of Directors shall have amended, modified or
withdrawn the Recommendation or shall have failed to publicly reconfirm
such Recommendation upon the request of Luxottica Group or LAC, which is
reasonable in the circumstances, or shall have approved or recommended
any Competing Transaction;

which, in the good faith sole judgment of Luxottica Group or LAC, in any
such case and regardless of the circumstances giving rise to any such
condition, makes it inadvisable to proceed with the Luxottica Offer or such
acceptance for payment or purchase of or payment for any of the Shares.

The foregoing conditions are for the sole benefit of Luxottica Group
and LAC. The foregoing conditions, other than the Minimum Share Condition
and the Control Share Condition, may be waived by LAC in whole or in part
at any time and from time to time in its sole judgment. The failure of
Luxottica Group or LAC at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to
time.

The Guaranty. The following is a summary of the Guaranty. Such
summary is qualified in its entirety by reference to the Guaranty, which is
incorporated herein by reference.

Pursuant to the Guaranty, the payment and performance obligations of
Avant-Garde and LAC under the Merger Agreement and the Offer Documents to
the Company and to each other person, if any, to whom a payment or
performance is due under the Merger Agreement or the Offer Documents and
each Indemnified Party and the permitted successors and assigns of any of
the foregoing (each, a "Beneficiary", and collectively, the
"Beneficiaries") have been irrevocably, absolutely and unconditionally
guaranteed by Luxottica Group, as primary obligor and not merely as a
surety.

The Guaranty provides that it and all covenants and agreements of
Luxottica Group contained therein shall continue in full force and effect
and shall not be discharged until such time as (i) the due and punctual
payment by Avant-Garde and LAC of any and all amounts (without duplication)
that are or may become due and payable by Avant-Garde or LAC to any
Beneficiary under the Merger Agreement or any Offer Document to which
Avant-Garde or LAC is or is to be a party, and any other agreement or
instrument entered into or delivered in connection with the transactions
contemplated by the Merger Agreement or any Offer Document whether such
obligations now exist or arise hereafter, as and when the same shall become
due and payable in accordance with the terms thereof, including money
damage claims and collection costs, and (ii) the due, prompt and full
performance of, and compliance with, all other obligations, covenants,
terms, conditions, agreements and undertakings of each of Avant-Garde and
LAC to any Beneficiary contained in the Merger Agreement or the Offer
Documents to which Avant-Garde or LAC is or is to be a party, and any other
agreement or instrument entered into or delivered in connection with the
transactions contemplated by the Merger Agreement or the Offer Documents as
and when performance is required in accordance with the terms thereof (such
obligations referred to in clauses (i) and (ii) above, the "Obligations")
shall be paid and performed in full and all the agreements of Luxottica
Group thereunder shall have been duly performed. Pursuant to the Guaranty,
Luxottica Group guarantees that the Obligations will be paid and performed
strictly in accordance with the terms of the Merger Agreement and the Offer
Documents, regardless of any law, regulation or order now or after the date
of the Guaranty in effect in any jurisdiction affecting any of such terms
or the rights of the Beneficiaries with respect thereto. The Guaranty
provides that the liability of Luxottica Group under the Guaranty shall not
be subject to any counterclaim, setoff, deduction, release, recoupment or
defense and shall remain in full force and effect and shall be irrevocable,
absolute and unconditional, irrespective of any substitution, release or
exchange of any other guarantee of or security for any of the Obligations,
and, to the fullest extent permitted by applicable law, irrespective of any
other

15
<PAGE> 16

circumstances whatsoever that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor.

Covenants of Luxottica Group. Pursuant to the Guaranty, Luxottica
Group has agreed (i) at its own expense promptly and duly to execute and
deliver to each Beneficiary such further documents and assurances and to
take such further action as any Beneficiary may from time to time
reasonably request in order to more effectively carry out the intent and
purpose of the Guaranty and to establish and protect the rights and
remedies created or intended to be created in favor of the Beneficiaries
thereunder; (ii) that the Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment or discharge of
any of the Obligations is rescinded or must otherwise be returned by the
Beneficiaries upon the insolvency, bankruptcy or reorganization of
Avant-Garde, LAC or Luxottica Group or otherwise, as though such payment or
discharge had not been made; (iii) that Luxottica Group shall pay all
expenses incurred by the Beneficiaries in enforcing the Guaranty and the
Obligations (including reasonable legal fees and expenses); (iv) that
Luxottica Group assumes the responsibility for being and keeping informed
of the financial condition of Avant-Garde and LAC and of all other
circumstances bearing upon the risk of nonpayment of the Obligations which
diligent inquiry would reveal, and agrees that no Beneficiary shall have
the duty to advise Luxottica Group of information known to it regarding
such condition or any such circumstances; and (v) without the prior written
consent of the Company, Luxottica Group will not (A) reduce the number of
Common Shares to be purchased in the Luxottica Offer, (B) reduce the
purchase price offered pursuant to the Luxottica Offer, (C) impose
conditions to the Luxottica Offer in addition to those set forth on Annex A
to the Merger Agreement, (D) change the form of consideration payable in
the Luxottica Offer, (E) otherwise amend the Luxottica Offer (other than
amendments which are not adverse to the Company or its shareholders) or (F)
extend the time of the expiration of the Luxottica Offer if all conditions
to the Luxottica Offer are then, as provided in the Luxottica Offer,
satisfied or waived.

Representations and Warranties of Luxottica Group. The Guaranty
contains customary representations and warranties with respect to Luxottica
Group.

Jurisdiction and Service. Pursuant to the Guaranty, Luxottica Group
submits to the non-exclusive jurisdiction of the courts of the State of
Ohio located in the County of Hamilton, and the federal courts of the
United States of America located in such State and County in respect to the
interpretation and enforcement of the provisions thereof and of the
documents referred to therein, and waives, and agrees not to assert, as a
defense in any action, suit or proceeding for the interpretation or
enforcement thereof or of any such document, that it is not subject thereto
or that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the Guaranty or any of such documents
may not be enforced in or by said courts or that its property is exempt or
immune from execution, that the suit, action or proceeding is brought in an
inconvenient forum, or that the venue of the suit, action or proceeding is
improper. Luxottica Group agrees that service of process may be made upon
it by service upon Avant-Garde at 44 Harbor Park Drive, Port Washington,
New York 11050 in any action, suit or proceeding against Luxottica Group
with respect to the Guaranty or any of the documents referred to therein,
and irrevocably designates and appoints Avant-Garde and LAC as its agents
upon which process may be served in any action, suit or proceeding, it
being understood that such appointment and designation shall become
effective without any further action on the part of Luxottica Group,
Avant-Garde or LAC. The Guaranty provides that final judgment against
Luxottica Group in any action, suit or proceeding shall be conclusive
evidence of the fact and amount of indebtedness arising from such judgment
a certified copy of which shall be conclusive evidence of the fact and
amount of indebtedness arising from such judgment.

Arbitration; Governing Law. The Guaranty provides that any dispute,
controversy or claim between Luxottica Group and any Beneficiary arising
out of or relating to the Guaranty or the execution, interpretation,
validity, performance, breach or termination thereof which is not finally
resolved by Luxottica Group and such Beneficiary will be conclusively
settled by arbitration pursuant to the rules of the American Arbitration
Association (the "AAA") and subject to the authority of the Cincinnati,
Ohio office of the AAA. The Guaranty provides that it shall be governed by,
and construed in accordance with, the laws of the State of New York.

16
<PAGE> 17

ITEM 4. THE SOLICITATION OR RECOMMENDATION.

Item 4(a) of the Schedule 14D-9 is hereby amended and supplemented by
adding at the end thereof the following:

At meetings of the Board of Directors held on April 17, 1995 and on
April 21, 1995 (the latter meeting, the "April 21 Meeting"), the Board of
Directors met with its financial and legal advisers to reconsider the
Luxottica Offer as amended and proposed to be amended pursuant to the terms
of drafts of the Merger Agreement and Guaranty presented to the Board of
Directors on April 21, 1995, including the increase from $24 to $28 in the
price offered per Common Share and the elimination of certain conditions,
including the financing condition, and the amendment and restatement of
other conditions to the Luxottica Offer. Based on the proposed terms of the
draft Merger Agreement and Guaranty and after receiving advice from the
Company's financial adviser, James D. Wolfensohn Incorporated
("Wolfensohn") and from the Company's legal advisers, the Board of
Directors unanimously determined that the Luxottica Offer and the Merger
Agreement are fair to, and in the best interests of, the Company and its
shareholders and recommended acceptance of the Luxottica Offer, the tender
of Common Shares pursuant to the Offer and approval and adoption of the
Merger Agreement by the holders of Common Shares.

A copy of a letter to shareholders communicating the Board of
Director's recommendations and a form of press release announcing the
execution of the Merger Agreement are filed as Exhibits 40 and 41,
respectively, and are incorporated herein by reference.

Item 4(b) of the Schedule 14D-9 is hereby amended and supplemented by
adding at the end thereof the following:

In reaching its determination and recommendations at its meetings on
April 17 and April 21, the Board of Directors reviewed in detail the terms
of the revised Luxottica Offer and the proposed Merger Agreement and
deliberated extensively with its financial and legal advisers with respect
to the foregoing and the various alternative transactions potentially
available to the Company. At the end of the April 21 Meeting, by unanimous
vote the Board of Directors (i) approved the transactions contemplated by
the Merger Agreement in a manner satisfying the fair price requirements
contained in paragraph 2(A) of Article Seventh of the Articles of
Incorporation of the Company, (ii) determined that the Luxottica Offer and
the Merger are fair to and in the best interests of the Company and its
shareholders, (iii) approved the Luxottica Offer, the Merger Agreement and
the Merger, (iv) recommended that the holders of Common Shares authorize
the purchase of Common Shares by the Purchaser for purposes of Section 831,
(v) recommended acceptance of the Luxottica Offer, the tender of Common
Shares pursuant to the Luxottica Offer and approval and adoption of the
Merger Agreement and the Merger by the holders of Common Shares, (vi) took
all actions which are necessary on the part of its Board of Directors as
contemplated by Section 1704.02(A) of the ORC in order to make Chapter 1704
of the ORC inapplicable to the Merger, and (vii) determined that the
Luxottica Offer is a Permitted Offer (as defined in the Rights Agreement)
for purposes of the Rights Agreement (the foregoing actions of the Board of
Directors being collectively referred to as the "Recommendation"); provided
that the Recommendation, in whole or in part (other than the parts referred
to in clauses (i), (vi) and (vii) above, which were effected by irrevocable
action), may be withdrawn, modified or amended if and to the extent legally
required for the discharge by the Company's directors of their fiduciary
duties as advised by independent legal counsel, who may be the Company's
regularly engaged independent legal counsel (a "Director Duty"). In
addition, the Board of Directors resolved that, for purposes of the Rights
Agreement, none of (A) the execution or delivery of the Rights Agreement,
(B) the purchase of Common Shares pursuant to the Offer or (C) the Merger
will cause the Distribution Date to occur. In taking such actions, the
Board of Directors took into account numerous factors, including but not
limited to:

(A) Prior discussions and analyses and updated analyses of the
business, financial condition and prospects of the Company and of its
Women's Specialty Retailing Group and Optical Group and comparisons of the
$28 per Common Share price to the sum of (1) the after-tax consideration to
be

17
<PAGE> 18

received upon the closing of the sale of the Footwear Group to Nine West,
and (2) public market trading prices and prices paid for acquisitions of
companies considered to be relevant, and to historical trading prices of
the Common Shares.

(B) The terms and conditions of the Luxottica Offer, the Merger
Agreement and the Guaranty, including, without limitation, the elimination
of the financing condition from the Luxottica Offer.

(C) The presentation by Wolfensohn and its written opinion (a copy of
which is filed as Exhibit 42 hereto and is incorporated by reference
herein), to the effect that, based upon and subject to the information
contained therein, as of April 21, 1995, the consideration to be received
by the holders of Common Shares pursuant to the Luxottica Offer and the
Merger is fair to such holders from a financial point of view.

(D) An update on the status of discussions with third parties
exploring potential alternative transactions involving the purchase of
parts or all of the Company or its businesses.

(E) The facts that, although at the time of the April 21 Meeting other
parties were continuing to explore with the Company potential alternative
transactions and, pursuant to the terms of the Merger Agreement, following
execution of the Merger Agreement the Company would be required to
terminate such discussions; including discussions regarding the sale of the
Women's Specialty Retailing Group, (1) none of such parties had, prior to
the time of the April 21 Meeting, made a firm proposal and there could be
no assurance that any would or, if any firm proposal were made, whether the
terms and conditions thereof would provide superior value to the Company's
shareholders than the value provided to the shareholders by the revised
Luxottica Offer, and (2) the Merger Agreement (x) permits the Company to
furnish information to, or enter into discussions or negotiations with, any
person or entity that makes an unsolicited proposal to acquire the Company
pursuant to a merger, consolidation, share exchange, business combination,
sale of all or substantially all the assets, tender or exchange offer or
other similar transaction if a Director Duty requires it to do so (subject
to obtaining an executed confidentiality agreement on terms not more
favorable to such person or entity than the terms contained in the
Confidentiality Agreement); (y) permits the Company to terminate the Merger
Agreement if the Board of Directors shall have (I) withdrawn its
Recommendation or (II) determined to recommend to holders of the Common
Shares or approve a Competing Transaction, in either such case in the
exercise of its Director Duty (subject in the latter case to the obligation
of the Company to notify Avant-Garde and LAC promptly of any determination
by its Board of Directors to recommend such Competing Transaction to the
holders of the Common Shares or to approve such Competing Transaction,
which notice must in any such event be given not less than 24 hours prior
to the Company's termination of the Merger Agreement); and (z) does not
require the Company to make any payment to Luxottica Group or any of its
affiliates in the event the Merger Agreement is terminated for any reason.

ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.

Item 6(a) of the Schedule 14D-9 is hereby amended and restated in its
entirety as follows:

There have been no transactions in the Common Shares or associated
Rights during the last 60 days by the Company or, to the best of the
Company's knowledge, by any executive officer, director, affiliate or
subsidiary of the Company, except for the exercise on March 13, 1995 by
Joseph H. Anderer, a director of the Company, of options expiring on May
22, 1995 to purchase 6,000 Common Shares at an exercise price of $18.344
per Common Share and the trade-in of 4,402 Common Shares by Mr. Anderer to
cover the costs of the exercise of such options, the sale on March 27, 1995
by Mr. Hudson of 5,257 Common Shares at a price of $26.25 to cover taxes
resulting from the vesting of restricted Common Shares and the sale on
March 27, 1995 by David M. Browne of 1,647 Common Shares at a price of
$26.25 to cover taxes resulting from the vesting of restricted Common
Shares.

18
<PAGE> 19

Item 6(b) of the Schedule 14D-9 is hereby amended and supplemented by
adding at the end thereof the following:

To the best of the Company's knowledge, all of the executive officers,
directors, affiliates or subsidiaries of the Company currently intend to
tender, pursuant to the Luxottica Offer as amended and supplemented on
April 24, 1995, all Common Shares (including the associated Rights)
beneficially owned by them, except for those Common Shares held by such
persons which, if tendered, would cause such persons to incur liabilities
under the provisions of Section 16(b) of the Exchange Act. The foregoing
does not include any Common Shares or associated Rights over which, or with
respect to which, any such executive officer, director or affiliate acts in
a fiduciary or representative capacity or is subject to the instructions of
a third party with respect to such tender.

ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.

Item 7(a) of the Schedule 14D-9 is hereby amended and supplemented by
adding at the end thereof the following:

On the terms and subject to the conditions of the Merger Agreement,
the Company has terminated all existing activities, discussions or
negotiations with third parties with respect to any proposed Competing
Transaction.

Except as set forth in this Item 7(a) and in Item 3(b) herein, the
Company is not engaged in any negotiation in response to the Luxottica
Offer which relates to or would result in (i) an extraordinary transaction,
such as a merger or reorganization, involving the Company or any of its
subsidiaries, (ii) a purchase, sale or transfer of a material amount of
assets by the Company or any of its subsidiaries, (iii) a tender offer for
or other acquisition of securities by or of the Company, or (iv) any
material change in the present capitalization or dividend policy of the
Company.

Item 7(b) of the Schedule 14D-9 is hereby amended and supplemented by
adding at the end thereof the following:

Except as set forth in Items 3(b), 4(a), 4(b) and 7(a) herein, there
are no transactions, board resolutions, agreements in principle or signed
contracts in response to the Luxottica Offer which relate to or would
result in any of the matters referred to in paragraph (a) of this Item 7.

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 RIGHTS AGREEMENT. The Company and State Street Bank and Trust
Company entered into Third Amendment to Rights Agreement to substitute
State Street Bank and Trust Company as Rights Agent. The Third Amendment to
Rights Agreement is filed as Exhibit 43 hereto and is incorporated herein
by reference. The foregoing description of the Third Amendment to Rights
Agreement is qualified in its entirety by reference to the text of the
Third Amendment to Rights Agreement. For a description of actions taken by
the Board of Directors relating to the Rights Agreement and the Rights with
respect to the Luxottica Offer and the Merger, see Items 3(b) and 4(b)
herein.

LITIGATION. The Luxottica Action. On April 17, 1995, the Company
filed a Third Amended Counterclaim (the "Third Amended Counterclaim"), a
copy of which is filed as Exhibit 44 hereto and is incorporated herein by
reference. On April 20, 1995, the District Court entered an Agreed Order
(the "April 20 Agreed Order"), pursuant to which the parties agreed that
they were not seeking prompt consideration by the Court of any pending
motion and further agreed that no briefs were required to be filed in
response to any outstanding motions; provided that, by giving written
notice to all other parties and the District Court, any party could
reactivate consideration of the pending motions, in which event, briefs
would be due from the responding parties on the second business day after
the day on which such

19
<PAGE> 20

notice were received. The foregoing description of the April 20 Agreed
Order is qualified in its entirety by reference to the April 20 Agreed
Order.

Pursuant to the Merger Agreement, the parties have agreed, promptly,
and in any event not later than April 26, 1995 (unless the Merger Agreement
has been earlier terminated), to use their respective best efforts to
obtain a dismissal without prejudice of the Luxottica action (Luxottica
Group S.p.A., et al. v. The United States Shoe Corporation, et al., Civil
Action No. C-2-95-244), with each party bearing its own costs and
attorneys' fees therefor. The foregoing description of the Merger Agreement
is qualified in its entirety by reference to the Merger Agreement, which is
incorporated herein by reference.

ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.

The following Exhibits are filed herewith:

<TABLE>
<S> <C>
Exhibit 35 -- The Merger Agreement.
Exhibit 36 -- The Guaranty.
Exhibit 37 -- The TRS Plan.
Exhibit 38 -- The Salaried Benefit Plan.
Exhibit 39 -- The Outside Directors' Retirement Plan.
Exhibit 40 -- Form of Letter to Shareholders of the Company, dated April 24, 1995.*
Exhibit 41 -- Form of Press Release, dated April 21, 1995, issued jointly by the Company and
Luxottica Group.
Exhibit 42 -- Opinion of James D. Wolfensohn Incorporated, dated April 21, 1995.
Exhibit 43 -- The Third Amendment to Rights Agreement.
Exhibit 44 -- The Third Amended Counterclaim (filed as Exhibit (g)(17) to the Schedule
14D-1, and incorporated herein by this reference).
Exhibit 45 -- The April 20 Agreed Order (filed as Exhibit (g)(16) to the Schedule 14D-1, and
incorporated herein by this reference).
</TABLE>

- ---------------
* Included in copies mailed to shareholders.

20
<PAGE> 21

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 24, 1995

THE UNITED STATES SHOE CORPORATION

By: /s/ Bannus B. Hudson

------------------------------------
Name: Bannus B. Hudson
Title: President and Chief
Executive Officer

21
<PAGE> 22

ANNEX I

AVANT-GARDE DESIGNEES TO THE BOARD OF DIRECTORS

The following table sets forth the name, age, citizenship and principal
occupation or employment at the present time and during the past five years of
each person Avant-Garde Optics, Inc. intends to designate to be elected or
appointed as directors of the Company pursuant to the Merger Agreement. Unless
otherwise noted, each such person is a citizen of the Republic of Italy.
Luxottica S.p.A. is a wholly owned subsidiary of Luxottica Group S.p.A.

<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT, MATERIAL OCCUPATIONS,
OFFICES OR EMPLOYMENTS HELD
NAME DURING PAST FIVE YEARS AND AGE
- ------------------------------------- ------------------------------------------------------
<S> <C>
Leonardo Del Vecchio................. Mr. Del Vecchio founded Luxottica Group S.p.A.'s
operations in 1961, has been Chairman of the Board
since 1981 and Chief Executive Officer of Luxottica
Group S.p.A. and its predecessors since 1961. Mr. Del
Vecchio is 60 years old.
Luigi Francavilla.................... Mr. Francavilla has been a Managing Director and Chief
Operating Officer of Luxottica Group S.p.A. since 1981
and a Managing Director of Luxottica S.p.A. since
1977. He also serves as a Director of several
subsidiaries of Luxottica Group S.p.A. Mr. Francavilla
is 58 years old.

Claudio Del Vecchio.................. Mr. Del Vecchio has been a Director of Luxottica Group
S.p.A. since 1981 and in 1994 was appointed as a
Managing Director. Since 1982, he has been the
Executive Vice President of Avant-Garde Optics, Inc.,
Luxottica Group S.p.A.'s United States distributor.
During 1990, he was the Executive Vice President of
Luxottica Group S.p.A. He also serves as a Director of
other subsidiaries of Luxottica Group S.p.A. Claudio
Del Vecchio is the son of Leonardo Del Vecchio. Mr.
Del Vecchio is 38 years old.

Roberto Chemello..................... Mr. Chemello has been a Managing Director of Luxottica
Group S.p.A. since 1985 and serves as Chairman or as a
Director of several of its subsidiaries. He is also
the Chief Financial Officer of Luxottica Group S.p.A.
Mr. Chemello is 41 years old.

Susi Belli........................... Ms. Belli has been Marketing Manager of Luxottica
Group S.p.A. since March 1993. Since 1990 she has been
Manager of Investor Relations and Public Relations of
Luxottica Group S.p.A. Ms. Belli is 33 years old.

Michael A. Boxer..................... Mr. Boxer has been General Counsel and Director of
Business Affairs of Avant-Garde Optics, Inc. since
August 1993. Before joining Avant-Garde Optics, Inc.
Mr. Boxer was an attorney with the law firm of Winston
& Strawn since 1986. Mr. Boxer is a citizen of the
United States of America. Mr. Boxer is 33 years old.

Giuseppe Vignato..................... Mr. Vignato has been Administrative General Manager of
Luxottica Group S.p.A. since 1987. Mr. Vignato is 43
years old.

Vito Giannola........................ Mr. Giannola has been Controller of Avant-Garde
Optics, Inc. since January 1990 and was Assistant
Controller of Avant-Garde Optics, Inc. since 1986. Mr.
Giannola is 31 years old.
</TABLE>

22
<PAGE> 23

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGES
- -------------- ----------------------------------------------------------------- ------------
<S> <C> <C>
Exhibit 35 -- The Merger Agreement. ...........................................
Exhibit 36 -- The Guaranty. ...................................................
Exhibit 37 -- The TRS Plan. ...................................................
Exhibit 38 -- The Salaried Benefit Plan. ......................................
Exhibit 39 -- The Outside Directors' Retirement Plan. .........................
Exhibit 40 -- Form of Letter to Shareholders of the Company, dated April 24,
1995.*...........................................................
Exhibit 41 -- Form of Press Release, dated April 21, 1995, issued jointly by
the Company and Luxottica Group..................................
Exhibit 42 -- Opinion of James D. Wolfensohn Incorporated, dated April 21,
1995.............................................................
Exhibit 43 -- The Third Amendment to Rights Agreement..........................
Exhibit 44 -- The Third Amended Counterclaim (filed as Exhibit (g)(17) to the
Schedule 14D-1, and incorporated herein by this reference). .....
Exhibit 45 -- The April 20 Agreed Order (filed as Exhibit (g)(16) to the
Schedule 14D-1, and incorporated herein by this reference). .....
</TABLE>

- ---------------
* Included in copies mailed to shareholders.

<PAGE> 1
Exhibit 35
================================================================================

AGREEMENT AND PLAN OF MERGER

by and among

AVANT-GARDE OPTICS, INC.

LUXOTTICA ACQUISITION CORP.

and

THE UNITED STATES SHOE CORPORATION

Dated as of April 21, 1995

================================================================================

<PAGE> 2

TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page
----
<S> <C>
ARTICLE I

THE TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 831 Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Board of Directors of the Company . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE II

THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1.3 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1.4 Conversion of Common Shares . . . . . . . . . . . . . . . . . . . . . 6
2.2 Meeting of Holders of Common Shares . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Payment for Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Closing of the Company's Transfer Books . . . . . . . . . . . . . . . . . . . . . . 9
2.6 The Company Stock Options and Related Matters . . . . . . . . . . . . . . . . . . . 9
2.7 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER . . . . . . . . . . . . . . . . . . 11
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 Offer Documents; Schedule 14D-9; Proxy Statement . . . . . . . . . . . . . . . . . . 12
3.7 Acquiring Person Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.8 831 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.9 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . 14
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Commission Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.6 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>

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<PAGE> 3

<TABLE>
<S> <C>
4.9 Proxy Statement; Schedule 14D-9; Offer Documents . . . . . . . . . . . . . . . . . 22
4.10 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.11 831 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.12 Company Notice and Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.13 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.15 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.16 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE V

COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 No Solicitation and Other Actions . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2 Interim Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.2.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . 25
5.2.2 Articles and Code of Regulations . . . . . . . . . . . . . . . . . . 25
5.2.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.2.4 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2.5 Employee Plans; Compensation . . . . . . . . . . . . . . . . . . . . 26
5.2.6 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . 27
5.2.7 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.2.8 Litigation; Settlement of Claims . . . . . . . . . . . . . . . . . . 27
5.2.9 Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . 27
5.2.10 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2.11 Business Combination . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2.12 No Amendment to Rights Agreement . . . . . . . . . . . . . . . . . . 28
5.2.13 Shareholder Meetings . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2.14 No Amendment to Nine West Agreement . . . . . . . . . . . . . . . . 28
5.2.15 Advertising Agreements . . . . . . . . . . . . . . . . . . . . . . . 29
5.3 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.4 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.5 State Takeover Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.6 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.7 Solicitation of Proxies for 831 Meeting . . . . . . . . . . . . . . . . . . . . . 30
5.8 Indemnification, Insurance and Certain Other Employee-Related Matters. . . . . . . 31
5.9 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.10 Compliance with Antitrust Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.11 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.12 Disposition of Litigation . . . . . . . . . . . . . . . . . . . . . . 35
5.13 Proxy Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

ARTICLE VI

CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.1 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

6.1.1 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . 35
6.1.2 Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.1.3 Injunctions; Illegality . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>

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<PAGE> 4

<TABLE>
<S> <C>
ARTICLE VII

MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.2 Non-Survival of Representations, Warranties and Agreements . . . . . . . . . . . 37
7.3 Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.5 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.6 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.11 Obligation of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.12 Enforcement of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.13 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>

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<PAGE> 5

ANNEXES

Annex A - Conditions of the Offer

<PAGE> 6

LIST OF SCHEDULES

Schedule 4.3 Required Consents and Approvals

Schedule 4.7 Employee Benefit Plans

Schedule 4.8 Certain Tax Matters

Schedule 5.2.15 Advertising Agreements

Schedule 5.8(d) Economic Bridge Program

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<PAGE> 7

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of April 21, 1995 (this
"Agreement"), by and among AVANT-GARDE OPTICS, INC., a New York corporation
("Parent"), LUXOTTICA ACQUISITION CORP., a Delaware corporation and a wholly
owned subsidiary of Parent ("Purchaser"), and THE UNITED STATES SHOE
CORPORATION, an Ohio corporation (the "Company").

Parent, Purchaser and the Company hereby agree as follows:

ARTICLE I

THE TENDER OFFER

1.1 The Offer. (a) Purchaser will, and Parent will
cause Purchaser to, amend and supplement its outstanding tender offer for any
and all outstanding common shares, without par value (the "Common Shares")
(including the associated preference share purchase rights (the "Rights"),
issued pursuant to the Rights Agreement, dated as of March 31, 1986, as amended
by the First Amendment to the Rights Agreement, dated as of March 23, 1988, each
between the Company and Morgan Shareholder Services Trust Company (as successor
to Morgan Guaranty Trust Company of New York), as Rights Agent and by a Second
Amendment to the Rights Agreement, dated as of June 1, 1993, between the Company
and The Bank of New York, as Rights Agent, and by a Third Amendment to the
Rights Agreement, dated as of March 29, 1995, between the Company and State
Street Bank and Trust Company, as Rights Agent (as so amended, the "Rights
Agreement")), of the Company (the "Offer") in accordance with, and to the extent
required by, the provisions of this Agreement as promptly as reasonably
practicable after the date hereof, but in no event later than five business days
after the date hereof to provide that (i) the purchase price offered pursuant to
the Offer will be $28.00 per Common Share (including the associated Rights), net
to the seller in cash, (ii) the obligation of Purchaser to accept for payment
and pay for Common Shares (including the associated Rights) tendered pursuant to
the Offer will be subject only to the conditions (A) that the control share
acquisition, as such phrase is used in Section 1701.831 of the Ohio General
Corporation Law (the "GCL") by Purchaser (the "Control Share Acquisition") will
be authorized by the holders of Common Shares pursuant to Section 1701.831 at a
special meeting of the holders of Common Shares duly and validly called and held
in accordance with Section 1701.831 or Purchaser is satisfied, in its sole
discretion, that Section 1701.831 is invalid or inapplicable to the acquisition
of Common Shares pursuant to the Offer (the

<PAGE> 8

"Control Share Condition"), (B) that the number of Common Shares being validly
tendered and not withdrawn prior to the expiration date provided in the Offer,
when added to the Common Shares beneficially owned by Purchaser and its
affiliates, will constitute not less than two-thirds of the Common Shares
outstanding on a fully diluted basis (the "Minimum Share Condition"), and (C)
that are set forth in Annex A hereto, and (iii) the expiration date of the Offer
will be extended until the later of (A) midnight on the tenth business day
following the date of such amendment referred to above or (B) the earlier of (x)
the satisfaction of the Control Share Condition in the event the Control Share
Condition is satisfied by Purchaser determining that Section 1701.831 is invalid
or inapplicable to the acquisition of Common Shares pursuant to the Offer, and
(y) midnight on the second business day next succeeding the date of the 831
Meeting (as hereinafter defined). Any such condition other than the Minimum
Share Condition and the Control Share Condition may be waived by Purchaser in
its sole discretion. Purchaser will accept for payment all Common Shares
(including the associated Rights) validly tendered pursuant to the Offer and not
withdrawn prior to the expiration date of the Offer as soon as legally
permissible, and pay for all such Common Shares (including the associated
Rights) as promptly as practicable thereafter, in each case subject only to the
conditions referred to above in this Section 1.1(a). Without the prior written
consent of the Company, Purchaser will not (u) reduce the number of Common
Shares to be purchased in the Offer, (v) reduce the purchase price offered
pursuant to the Offer, (w) impose conditions to the Offer in addition to those
set forth on Annex A, (x) change the form of consideration payable in the Offer,
(y) otherwise amend the Offer (other than amendments which are not adverse to
the Company or its shareholders) or (z) extend the time of the expiration of the
Offer if all conditions to the Offer are then, as provided in the Offer,
satisfied or waived.

(b) As soon as practicable on the date of the amendment of the
Offer, Luxottica Group S.p.A., a corporation organized under the laws of the
Republic of Italy ("Luxottica Group") and Purchaser will file with the
Securities and Exchange Commission (the "Commission") an amendment to their
Tender Offer Statement on Schedule 14D-1 (together with any amendments or
supplements thereto, the "Schedule 14D-1") with respect to the Offer, which will
contain or incorporate by reference an amendment and supplement to the offer to
purchase and forms of the related letter of transmittal and any related summary
advertisement (such Schedule 14D-1 and such other documents, together with any
supplements or amendments thereto, the "Offer Documents"). The Company and its
counsel will be given a reasonable opportunity to review the Offer Documents and
all amendments and supplements thereto prior to their filing with the Commission
or dissemination to holders of Common Shares. If required, immediately prior to
the amendment of the Offer,

<PAGE> 9

Luxottica Group and Purchaser will file with the Ohio Division of Securities the
information required under Section 1707.041(A)(2) of the Ohio Revised Code, and
will use their best efforts to prevent or cause to be lifted any suspension of
the Offer imposed by the Ohio Division of Securities in connection with such
filing.

1.2 Company Action. The Company hereby consents to the
Offer, as amended pursuant to Section 1.1. Promptly after the date hereof, the
Company will file with the Commission and mail to the holders of Common Shares
an amendment to its Solicitation/Recommendation Statement on Schedule 14D-9
pursuant to the Exchange Act with respect to the Offer (together with any
amendments or supplements thereto, the "Schedule 14D-9"). The Schedule 14D-9
will set forth, and the Company hereby represents and warrants, that the Board
of Directors of the Company has at a meeting duly called and held and at which a
quorum was present and acting throughout, by the unanimous vote of all directors
present (a) approved the transactions contemplated hereby in a manner satisfying
the requirements of paragraph 2(A) of Article Seventh of the Articles of
Incorporation of the Company, (b) determined that the Offer and the related
business combination transaction pursuant to which Purchaser will merge with and
into the Company (the "Merger") are fair to and in the best interests of the
Company and its shareholders, (c) approved the Offer, this Agreement and the
Merger, (d) recommended that the holders of Common Shares authorize the purchase
of Common Shares by the Purchaser for purposes of Section 1701.831 of the GCL,
(e) recommended acceptance of the Offer, the tender of Common Shares pursuant to
the Offer and approval and adoption of this Agreement and the Merger by the
holders of Common Shares, (f) taken all actions which are necessary on the part
of its Board of Directors as contemplated by Section 1704.02(A) of the Ohio
Revised Code in order to make Chapter 1704 of the Ohio Revised Code inapplicable
to the Merger, and (g) determined that the Offer is a Permitted Offer (as
defined in the Rights Agreement) for purposes of the Rights Agreement (the
"Recommendation"); provided that the Recommendation, in whole or in part (other
than the parts referred to in clauses (a), (f) and (g) above, which were
effected by irrevocable action), may be withdrawn, modified or amended if and to
the extent legally required for the discharge by the Company's directors of
their fiduciary duties as advised by independent legal counsel, who may be the
Company's regularly engaged independent legal counsel (a "Director Duty").
Parent, Purchaser and their counsel will be given a reasonable opportunity to
review the Schedule 14D-9 and all amendments and supplements thereto prior to
their filing with the Commission or dissemination to the holders of Common
Shares. The Company will furnish to Parent and Purchaser, upon request, a copy
of the resolutions adopting the Recommendation certified by an appropriate
officer of the Company.

<PAGE> 10

1.3 831 Meeting. The parties acknowledge that a special
meeting of the holders of Common Shares for the purpose of voting to authorize
the Control Share Acquisition of Common Shares by Purchaser pursuant to Section
1701.831 of the GCL was called for April 21, 1995 (the "Original 831 Meeting")
and adjourned to May 5, 1995 (the "Rescheduled 831 Meeting"). In the event that
the 831 Proxy Statement has not been circulated for a sufficient period of days
by the date of the Rescheduled 831 Meeting, Parent, Purchaser and the Company
(without affecting the Company's right to withdraw its Recommendation referred
to in Section 1.2(d) pursuant to a Director Duty) will use their respective best
efforts to adjourn the Rescheduled 831 Meeting to such other date as the Company
and Purchaser may mutually determine from time to time in accordance with the
GCL (the adjourned meeting at which the Control Share Acquisition is submitted
for a vote to the holders of Common Shares is herein referred to as the "831
Meeting").

1.4 Board of Directors of the Company. If requested by
Parent, the Company will, promptly following the acceptance for payment of the
Common Shares to be purchased pursuant to the Offer, and from time to time
thereafter, take all action necessary to cause at least two-thirds of the number
of directors, rounded up to the next whole number, of the Company to be persons
designated by Parent (whether, at the request of Parent, by increasing the size
of the number of directors of the Company or by seeking the resignation of
directors and causing Parent's designees to be elected to fill the vacancies so
created) as will give Parent representation on the Board of Directors of the
Company equal to the product of the number of directors of the Company and the
percentage that such number of Common Shares so purchased bears to the number of
Common Shares outstanding. At such time, the Company also will take all action
permitted by law to cause persons designated by Parent to constitute at least
the same percentage as is on the Company's Board of Directors of (a) each
committee of the Company's Board of Directors, (b) the board of directors of
each subsidiary of the Company, and (c) each committee, if any, of each such
board of directors. The Company's obligation to cause designees of Parent to be
so elected or appointed as directors of the Company will be subject to Section
14(f) of the Exchange Act and Rule 14(f)-1 promulgated thereunder. Parent will
supply to the Company in writing and will be solely responsible for any
information with respect to it and its designees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1, and the Company will
include in the Schedule 14D-9 such information as is required under Section
14(f) and Rule 14(f)-1. Notwithstanding the foregoing, until the Effective Time
(as hereinafter defined), the Company will use its best efforts to assure that
the Company's Board of Directors has at least three directors who are directors
on the date hereof (the "Continuing Directors"); provided further, that, in such
event, if the number

<PAGE> 11

of Continuing Directors is reduced below three for any reason whatsoever, any
remaining Continuing Directors (or Continuing Director, if there is only one
remaining) will be entitled to designate three persons to fill such vacancies
who will be deemed to be Continuing Directors for purposes of this Agreement or,
if no Continuing Director then remains, the other directors will designate three
persons to fill such vacancies who are not shareholders, affiliates or
associates of Parent or Purchaser and such persons will be deemed to be
Continuing Directors for purposes of this Agreement. The Company will use its
best efforts to cause the person(s) so designated by the Continuing Directors to
be elected to the Board of Directors of the Company.

ARTICLE II

THE MERGER

2.1 Merger.

2.1.1 Merger. Subject to the terms and conditions
hereof, (a) Purchaser will be merged with and into the Company and the separate
corporate existence of Purchaser will thereupon cease in accordance with the
applicable provisions of the GCL and the Delaware General Corporation Law (the
"DGCL") and (b) each of the Company, Purchaser and Parent will use its best
efforts to cause the Merger to be consummated as soon as practicable following
the expiration of the Offer.

2.1.2 Effective Time. As soon as practicable following
fulfillment or waiver of the conditions specified in Article VI hereof, and
provided that this Agreement has not been terminated or abandoned pursuant to
Section 7.1 hereof, the Company and Purchaser (the "Constituent Corporations")
will cause a duly executed certificate of merger (the "Certificate of Merger")
to be filed with the Secretary of State of Ohio as provided in Section 1701.81
of the GCL and with the Secretary of State of Delaware as provided in Section
252 of the DGCL (or, if permitted, Section 253 of the DGCL). The Merger will
become effective (the "Effective Time") on the date on which the later of the
following actions will have been completed: (a) the Certificate of Merger has
been duly filed with the Secretary of State of Ohio and (b) the Certificate of
Merger has been duly filed with the Secretary of State of Delaware.

2.1.3 Effect of Merger. The Company will be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and will continue to be governed by the laws of the
State of Ohio, and the separate corporate existence of Purchaser will cease. The
Merger will have the effects specified in the GCL and the DGCL. The Articles of
Incorporation (the "Articles") and the Code of Regulations

5
<PAGE> 12

(the "Code of Regulations") of the Company in effect at the Effective Time will
be the Articles of Incorporation and Code of Regulations of the Surviving
Corporation, until duly amended in accordance with their terms and the GCL. The
directors of Purchaser immediately prior to the Effective Time will be the
initial directors of the Surviving Corporation, and the officers of the Company
at the Effective Time will be the initial officers of the Surviving Corporation,
to serve in accordance with the Code of Regulations, from and after the
Effective Time, until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the terms of the Surviving Corporation's Articles of Incorporation and Code
of Regulations and the GCL.

2.1.4 Conversion of Common Shares. At the Effective
Time, by virtue of the Merger and without any action on the part of the Company,
Purchaser, Parent or the holders of any of the following securities, (a) each
then-outstanding Common Share not owned by Luxottica Group, Parent, Purchaser or
any other direct or indirect subsidiary of Parent (other than those Common
Shares held in the treasury of the Company or held by any subsidiary of the
Company and the Dissenting Shares (as hereinafter defined)) (including the
associated Rights) will be cancelled and retired and be converted into a right
to receive in cash an amount per Common Share equal to the highest price per
Common Share paid for a Common Share by Purchaser pursuant to the Offer (the
"Merger Price"), (b) each then-outstanding Common Share (including the
associated Rights) owned by Luxottica Group, Parent, Purchaser or any other
direct or indirect subsidiary of Parent will be cancelled and retired, and no
payment will be made with respect thereto, (c) each Common Share issued and held
in the Company's treasury or held by any subsidiary of the Company will be
cancelled and retired, and no payment will be made with respect thereto, and (d)
each common share of Purchaser will be converted into and become 500,000 common
shares of the Surviving Corporation, which thereafter will constitute all of the
issued and outstanding common shares of the Surviving Corporation.
Notwithstanding the foregoing provisions of this Section to the contrary, Parent
may elect, at any time prior to the fifth business day immediately preceding the
date on which the Proxy Statement (as provided for in Section 5.6) is initially
to be mailed to the Company's shareholders (or, if the Merger is to be effected
without a meeting of holders of Common Shares, in accordance with Section
1701.801 of the GCL and Section 253 of the DGCL, at any time prior thereto),
that, instead of merging Purchaser into the Company, the Company merge with and
into Purchaser or another direct or indirect wholly owned subsidiary of
Luxottica Group. In such event, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect the foregoing, and to provide
that Purchaser or such other subsidiary will be the Surviving Corporation and
will continue under the name "The United States Shoe Corporation"; provided,

6
<PAGE> 13

however, that if such amendment would otherwise cause any representation or
warranty of the Company hereunder no longer to be true or correct in any respect
or would otherwise cause the Company to be in breach or to have failed to comply
in any respect with any of its obligations hereunder, no such failure of any
representation or warranty to be true or correct or breach or failure to comply
shall give either Parent, Purchaser or Luxottica Group any rights under this
Agreement or under the Offer.

2.2 Meeting of Holders of Common Shares. The Company
will take all action necessary in accordance with applicable law and its
Articles and Code of Regulations to convene a meeting of the holders of Common
Shares promptly after the purchase of Common Shares pursuant to the Offer to
consider and vote upon the approval of the Merger, if such approval is required
by applicable law. At any such meeting, Parent and Purchaser will vote all of
the Common Shares then beneficially owned by them in favor of the Merger. The
Board of Directors of the Company will recommend that the holders of Common
Shares approve the Merger if such approval is required pursuant to the GCL or
otherwise; provided that any such recommendation may be withdrawn, modified or
amended in accordance with a Director Duty. Prior to any such meeting, in the
event that Parent and Purchaser acquire beneficial ownership of at least 90% of
the outstanding Common Shares, the parties will take all action necessary to
cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of holders of Common Shares, in accordance with
Section 1701.801 of the GCL and Section 253 of the DGCL.

2.3 Consummation of the Merger. The closing of the
Merger (the "Closing") will take place (a) at the offices of Winston & Strawn,
175 Water Street, New York, New York as promptly as practicable after the later
of (i) the day of (and immediately following) the receipt of approval of the
Merger by the holders of the Common Shares if such approval is required, or as
soon as practicable after completion of the Offer if such approval by the
holders of the Common Shares is not required, and (ii) the day on which the last
of the conditions set forth in Article VI hereof is satisfied or duly waived, or
(b) at such other time and place and on such other date as Purchaser and the
Company may agree in writing executed by both parties.

2.4 Payment for Common Shares. Purchaser will authorize
the depositary for the Offer (or one or more commercial banks organized under
the laws of the United States or any state thereof with capital, surplus and
undivided profits of at least $100,000,000) to act as Paying Agent hereunder
with respect to the Merger (the "Paying Agent"). Each holder (other than
Luxottica Group, Parent, Purchaser or any subsidiary of Parent, the Company or
any subsidiary of the Company) of a certificate or

7
<PAGE> 14

certificates which immediately prior to the Effective Time represented Common
Shares (the "Certificates") will be entitled to receive, upon surrender to the
Paying Agent of such Certificates for cancellation and subject to any required
withholding of taxes, the aggregate amount of cash into which the Common Shares
previously represented by such Certificates will have been converted in the
Merger. On or before the Effective Time, Purchaser will make available to the
Paying Agent sufficient funds to make all payments pursuant to the preceding
sentence. Pending payment of such funds to the holders of Common Shares, such
funds will be held and invested by the Paying Agent as Parent directs. Any net
profit resulting from, or interest or income produced by, such investments will
be payable to the Surviving Corporation or Parent, as Parent directs. Parent
will promptly replace any monies lost through any investment made pursuant to
this Section 2.4. Until surrendered to the Paying Agent, each Certificate which
immediately prior to the Effective Time represented Common Shares (other than
Common Shares owned by Luxottica Group, Parent, Purchaser or any other direct or
indirect subsidiary of Parent, or treasury shares held by the Company or Common
Shares held by any subsidiary of the Company and Dissenting Shares) will be
deemed for all corporate purposes to evidence only the right to receive upon
such surrender the aggregate amount of cash into which the Common Shares
represented thereby will have been converted, subject to any required
withholding of taxes. No interest will be paid on the cash payable upon the
surrender of the Certificates. Any cash delivered or made available to the
Paying Agent pursuant to this Section 2.4 and not exchanged for Certificates
within six months after the Effective Time will be returned by the Paying Agent
to the Surviving Corporation, which thereafter will act as Paying Agent, subject
to the rights of holders of non-surrendered Certificates under this Article II
and any former shareholders of the Company who have not theretofore complied
with the instructions for exchanging their Certificates representing Common
Shares, who will thereafter look only to the Surviving Corporation for payment
of their claim for the consideration set forth in Section 2.1, without any
interest thereon, but will have no greater rights against the Surviving
Corporation (or either Constituent Corporation) than may be accorded to general
unsecured creditors thereof under applicable law. Notwithstanding the foregoing,
neither the Paying Agent nor any party hereto will be liable to a holder of
Common Shares for any cash or interest thereon delivered to a public official
pursuant to applicable abandoned property laws. Promptly after the Effective
Time, the Paying Agent will mail to each record holder of Common Shares
immediately prior to the Effective Time a form of letter of transmittal (the
"Transmittal Letter") and instructions for use thereof in surrendering the
Certificates previously representing such Common Shares which will specify that
delivery will be effected, and risk of loss and title to the Certificates will
pass, only upon proper delivery of the

8
<PAGE> 15

Certificates to the Paying Agent in accordance with the terms of delivery
specified in the Transmittal Letter and instructions for use thereof in
surrendering such Certificates and receiving the Merger Price for each Common
Share previously represented thereby.

2.5 Closing of the Company's Transfer Books. At the
Effective Time, the stock transfer books of the Company will be closed and no
transfer of Common Shares will thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they will be cancelled,
retired and exchanged for cash as provided in Section 2.4 hereof, subject to
applicable law in the case of Dissenting Shares.

2.6 The Company Stock Options and Related Matters. (a)
Prior to the Effective Time, the Board of Directors of the Company will (i)
adopt such resolutions and approve such amendments, if any, as are necessary to
provide for the cancellation of all stock options (the "Options") to purchase
Common Shares granted pursuant to the Company's 1978 Key Personnel Stock Option
Plan, 1983 Key Personnel Stock Option Plan, 1985 Outside Directors Stock Option
Plan, 1991 Outside Directors Stock Option Plan and 1988 Employee Incentive Plan
(all such plans collectively referred to as the "Stock Plans"), effective as of
immediately prior to the Effective Time and (ii) promptly furnish Parent and
Purchaser a copy of such resolutions certified by an appropriate officer of the
Company. If necessary or appropriate, the Company will, upon the request of
Purchaser, (x) use its best efforts to obtain the written acknowledgment of each
holder of an Option that the payment of the amount of cash referred to below
will satisfy the Company's obligation to such holder pursuant to such Option and
(y) take such other action as is necessary or appropriate to effect the
provisions of this Section 2.6(a). Immediately prior to the Effective Time, each
Option which is not then exercisable or vested will become fully exercisable and
vested, and each such Option and all other Options will be cancelled, effective
as of immediately prior to the Effective Time, in exchange for a payment by the
Company or the Surviving Corporation of an amount, payable within three business
days after the Effective Time, equal to the product of (A) the total number of
Common Shares subject to such Option and (B) the excess, if any, of the Merger
Price over the exercise price per Common Share subject to such Option, subject
to any required withholding of taxes. Payments made pursuant to this Section
2.6(a) represent and will be characterized and reported by the Surviving
Corporation as additional compensation expense.

(b) Prior to the Effective Time, the Board of Directors of the
Company will adopt appropriate resolutions to provide for the termination of all
restrictions on the Common Shares ("Restricted Shares"), if any, which have been
distributed to employees pursuant to the 1988 Employee Incentive Plan and

9
<PAGE> 16

will promptly furnish Parent and Purchaser a copy of such resolutions certified
by an appropriate officer of the Company.

(c) Subject to the payment by the Company or the Surviving
Corporation of all amounts required to be paid by them pursuant to Section
2.6(a), at and after the Effective Date, no option, convertible security,
warrant, subscription or other claim, right to-acquire or commitment of any sort
previously existing in respect of one or more whole and/or fractional shares of
any class of securities of the Company shall represent an option, convertible
security, warrant, subscription or other claim, right-to-acquire or commitment
of any sort in respect of whole and/or fractional shares of any class of
securities of the Surviving Corporation.

2.7 Dissenters' Rights. Notwithstanding anything in
this Agreement to the contrary, any Common Shares which are issued and
outstanding immediately prior to the Effective Time and which are held by
holders of Common Shares who shall not have voted such Common Shares in favor of
the adoption of the Merger and who shall have timely delivered a written demand
for the payment of the fair cash value of such Common Shares in the manner
provided in Section 1701.85 of the GCL ("Dissenting Shares") shall not be
converted as described in Section 2.1.4 hereof but shall become the right to
receive payment of the fair cash value of such Common Shares in accordance with
the provisions of Section 1701.85 of the GCL; provided, however, that (i) if any
holder of Dissenting Shares shall subsequently withdraw such holder's demand for
payment of the fair cash value of such Common Shares (with the consent of the
Surviving Corporation by its directors), (ii) if any holder fails to comply with
such Section 1701.85 (unless the Surviving Corporation by its directors waives
such failure), (iii) if the Purchaser abandons or is finally enjoined or
prevented from carrying out, or the holders of Common Shares rescind their
adoption of, the Merger or (iv) if the Surviving Corporation and any holder of
Dissenting Shares will not have come to an agreement as to the fair cash value
of such holder's Dissenting Shares, and neither such holder of Dissenting Shares
nor the Surviving Corporation has filed or joined in a petition demanding a
determination of the value of all Dissenting Shares within the period provided
in Section 1701.85 of the GCL, the right and obligation of such holder or
holders (as the case may be) to receive such fair cash value and to sell such
Common Shares shall terminate, and such Common Shares shall thereupon be deemed
to have been extinguished and to have been converted, as of the Effective Time
of the Merger, into the right to receive the Merger Price, without interest.
Persons who have perfected statutory rights with respect to Dissenting Shares as
aforesaid shall not be paid by the Surviving Corporation as provided in this
Agreement and shall have only such rights as are provided by Section 1701.85 of
the GCL with respect to such Common Shares.

<PAGE> 17

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER

Parent and Purchaser hereby jointly and severally represent and
warrant to the Company that:

3.1 Corporate Organization. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its respective
properties and assets and to carry on its respective businesses as they are now
being conducted. Parent beneficially owns all of the outstanding capital stock
of Purchaser.

3.2 Authority. Each of Parent and Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly approved by the respective Boards of Directors of Parent
and Purchaser and by Parent and one or more of its direct and/or indirect wholly
owned subsidiaries as the sole shareholders of Purchaser and no other corporate
proceedings on the part of Parent or Purchaser are necessary to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by each of Parent and Purchaser and constitutes a valid and binding
obligation of each of Parent and Purchaser, enforceable against each of Parent
and Purchaser in accordance with its terms.

3.3 Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by Parent and Purchaser nor the
consummation by Parent and Purchaser of the transactions contemplated hereby
will (a) conflict with or result in any breach of any provision of their
respective articles of incorporation or bylaws (or comparable governing
instruments), (b) violate, conflict with, constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in the creation of any lien or other encumbrance (except as contemplated
by the financing transaction provided for in the Commitment Letter (as
hereinafter defined)) upon any of the properties or assets of Parent or any of
its subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease agreement or other
instrument or obligation to which Parent or any such subsidiary is a party or to
which they or any of their respective properties or assets are subject, except
for such violations, conflicts, breaches,

11
<PAGE> 18

defaults, terminations, accelerations or creations of liens or other
encumbrances, which would not reasonably be expected to have, individually or in
the aggregate, the effect of preventing or materially delaying Parent and
Purchaser from performing their respective obligations under this Agreement, or
(c) require any consent, approval, authorization or permit of or from, or filing
with or notification to, any court, governmental authority or other regulatory
or administrative agency or commission, domestic or foreign ("Governmental
Entity"), except (i) pursuant to the Exchange Act, (ii) the filing of
certificates of merger pursuant to the GCL, the DGCL and the laws of any other
state, (iii) filings required under the securities or blue sky laws of the
various states, or (iv) consents, approvals, authorizations, permits, filings or
notifications which if not obtained or made would not reasonably be expected to
have, individually or in the aggregate, the effect of preventing or materially
delaying Parent and Purchaser from performing their respective obligations under
this Agreement. Neither Parent, Purchaser nor any of their respective affiliates
is, or at any time in the three years prior to the date hereof has been, an
"interested shareholder" as defined in Section 1704.01 of the GCL.

3.4 Financing. Purchaser has delivered to the Company
with its Amendment No. 18 to its Schedule 14D-1 a commitment letter, dated April
19, 1995 (the "Commitment Letter") from Credit Suisse (the "Bank"), on the terms
and subject to the conditions of which the Bank has committed to lend funds
which, together with other cash funds presently available to Purchaser, are
sufficient to consummate the Offer and the Merger, to perform all the
obligations of Parent and Purchaser under this Agreement and to pay all
related fees and expenses. The Commitment Letter is in full force and effect.

3.5 Solvency. The Surviving Corporation will not be
immediately after the Effective Time (and after giving effect to the financing
for the Offer and the Merger and the use of the proceeds therefrom) unable to
pay its obligations as they become due in the usual course of its affairs.

3.6 Offer Documents; Schedule 14D-9; Proxy Statement.
Neither the Offer Documents nor any of the information supplied by Parent or
Purchaser in writing specifically for inclusion in the Schedule 14D-9 will, at
the respective times the Offer Documents and the Schedule 14D-9 are filed with
the Commission and first published, sent or given to the Company's shareholders,
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein made, in light of the circumstances under which they are made, not
misleading. None of the information to be supplied by Parent or Purchaser in
writing specifically for inclusion in a proxy or information statement of the
Company required to be mailed to the Company's shareholders

<PAGE> 19

in connection with the Merger (the "Proxy Statement"), or in any amendments or
supplements thereto will, at the date the Proxy Statement is first mailed to the
Company's shareholders and at the time of the shareholders' meeting in
connection with the Merger, contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein made, in light of the circumstances under
which they are made, not misleading. The Offer Documents complied and the Offer
Documents and the Proxy Statement, if any, will comply as to form in all
material respects with the applicable requirements of the Exchange Act and the
rules and regulations thereunder. Parent and Purchaser will promptly correct any
information provided by them in writing specifically for inclusion in the
Schedule 14D-9 and the Proxy Statement if and to the extent that such
information will have become false or misleading in any material respect. Parent
and Purchaser will promptly correct any statements in the Offer Documents that
have become false or misleading in any material respect and take all steps
necessary to cause such Offer Documents as so corrected to be filed with the
Commission and disseminated to holders of Common Shares, in each case as and to
the extent required by applicable law.

3.7 Acquiring Person Statement. The acquiring person
statement delivered to the Company on March 3, 1995 by Luxottica Group and
Purchaser relating to the purchase of Common Shares by the Purchaser (the
"Acquiring Person Statement") is a valid acquiring person statement under
Section 1701.831 of the GCL with respect to the purchase of Common Shares by the
Purchaser pursuant to the Offer as amended in accordance herewith and the
Merger. The Acquiring Person Statement complied as to form in all material
respects with the applicable requirements of the GCL and did not, at the time of
first mailing thereof, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein made, in light of the circumstances under which
they were made, not misleading.

3.8 831 Proxy Statement. The proxy statement filed by
Purchaser and Luxottica Group relating to the Original 831 Meeting, as such
meeting may be adjourned (together with any amendments or supplements thereto,
the "831 Proxy Statement") complied and will comply as to form in all material
respects with the applicable requirements of the Exchange Act and the rules and
regulations thereunder and did not and will not, at the time of the first
mailing thereof and at the time of the 831 Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein made, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by Parent or Purchaser with

<PAGE> 20

respect to information supplied by the Company in writing specifically for
inclusion in the 831 Proxy Statement.

3.9 Fees. Except for the fees payable to CS First
Boston Corporation, neither Parent nor Purchaser nor any of Parent's other
subsidiaries has paid or become obligated to pay any fee or commission to any
investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to each of Parent
and Purchaser that:

4.1 Corporate Organization. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective country or state of incorporation and
is in good standing as a foreign corporation in each jurisdiction where failure
to so qualify or be in good standing is reasonably likely to have a material
adverse effect on the business, operations, properties, assets, liabilities or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole (a "Material Adverse Effect"). The Company and each of its subsidiaries
has the requisite corporate power to own, lease and operate its respective
properties and assets and to carry on its respective businesses as they are now
being conducted. The Company has furnished Parent true and correct copies of its
Articles and Code of Regulations, as amended to the date hereof. The Company's
Articles and Code of Regulations as so delivered are in full force and effect.
The Company has made available to Parent true and correct copies of the articles
of incorporation and code of regulations (or comparable governing instruments)
of each of its subsidiaries, each of which, as so made available, is in full
force and effect.

4.2 Authority. The Company has the requisite corporate
power and authority to execute and deliver this Agreement and, except for any
required approval of the holders of Common Shares, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
approved by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated, subject only to approval, if
necessary, by the holders of the Common Shares. This Agreement has been duly
executed and delivered by, and constitutes a valid

14
<PAGE> 21

and binding obligation of, the Company, enforceable against the Company in
accordance with its terms.

4.3 Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby will (a) conflict with or
result in any breach of, any provision of its Articles or Code of Regulations,
or (b) violate, conflict with, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in the
creation of any lien or other encumbrance upon any of the properties or assets
of the Company or any of its subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license, lease
agreement or other instrument or obligation to which the Company or any such
subsidiary is a party or to which they or any of their respective properties or
assets are subject, except for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens or other encumbrances as may
arise in the absence of an appropriate consent or waiver under the agreements or
obligations set forth on Schedule 4.3 or which, individually or in the
aggregate, will not reasonably be expected to have a Material Adverse Effect, or
(c) require any consent, approval, authorization or permit of or from, or filing
with or notification to, any Governmental Entity, except (i) pursuant to the
Exchange Act, (ii) the filing of Certificates of Merger pursuant to the GCL, the
DGCL and the laws of any other state, (iii) filings required under the
securities or blue sky laws of the various states, (iv) filings under laws and
regulations of any foreign jurisdictions or regulatory authorities to which
Parent or Purchaser may be subject, or (v) consents, approvals, authorizations,
permits, filings or notifications which, if not obtained or made will not,
individually or in the aggregate, have a Material Adverse Effect.

4.4 Capitalization. (a) As of the date hereof, the
authorized capital stock of the Company consists of (i) 60,000,000 Common Shares
(ii) 750,000 voting preferred shares, without par value, and (iii) 750,000
non-voting preferred shares, without par value. As of the date hereof, there are
8,656 Common Shares held in the Company's treasury and no Common Shares held by
any subsidiary of the Company. The Company has issued the Rights pursuant to the
Rights Agreement. As of the date hereof, none of the Rights is presently
exercisable and each Right is presently evidenced only by certificates for
Common Shares and not by any separate certificate representing a Right.

(b) As of the close of business on the business day immediately
prior to the date hereof, 46,958,375 Common Shares were validly issued and
outstanding, fully paid and nonassessable and not subject to preemptive rights.
Upon request by Purchaser

15
<PAGE> 22

given to the Company at least 24 hours prior to the consummation of the Offer,
the Company will furnish to Parent and Purchaser immediately prior to the
consummation of the Offer a statement of the number of issued and outstanding
Common Shares certified by an appropriate officer of the Company.

(c) As of the close of business on the business day immediately
prior to the date hereof, (i) the 1978 Key Personnel Stock Option Plan provides
for the issuance to officers and employees of the Company or its subsidiaries of
Options to purchase up to 1,800,000 Common Shares, the 1983 Key Personnel Stock
Option Plan provides for the issuance to officers and employees of the Company
or its subsidiaries of Options to purchase up to 2,600,000 Common Shares, the
1985 Outside Directors Stock Option Plan provides for the issuance to directors
of the Company of Options to purchase up to 300,000 Common Shares, the 1988
Employee Incentive Plan provides for the issuance to officers and employees of
the Company or its subsidiaries of up to 4,450,000 Common Shares as Restricted
Shares or pursuant to Options and the 1991 Outside Directors Stock Option Plan
provides for the issuance to directors of the Company of Options to purchase up
to 300,000 Common Shares. Pursuant to such Plans as of the close of business on
the business day immediately prior to the date hereof (i) Options for the
purchase of 3,603,900 Common Shares, in an exercise price range of $9.00 to
$31.562 per share, and at a weighted average exercise price of $19.54 per share,
were outstanding, and (ii) 90,107 Restricted Shares were outstanding. The
Company's Associates Discounted Stock Purchase Plan provides for the issuance of
up to 5,700 Common Shares in respect of payroll deductions made on or prior to
April 28, 1995.

(d) Except as set forth in this Section 4.4, there are no
shares of capital stock of the Company authorized, issued or outstanding and
there are no outstanding subscriptions, options, warrants, rights (other than
the Rights), convertible securities or any other agreements or commitments of
any character relating to the issued or unissued capital stock or other
securities of the Company obligating the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock of the
Company or obligating the Company to grant, extend or enter into any
subscription, option, warrant, right, convertible security or other similar
agreement or commitment. There are no voting trusts or other agreements or
understandings to which the Company is a party with respect to the voting of the
capital stock of the Company.

(e) The Company is, directly or indirectly, the record and
beneficial owner of all the outstanding shares of capital stock of each of its
subsidiaries, free and clear of any lien, mortgage, pledge, charge, security
interests or encumbrance of any kind, and there are no irrevocable proxies with
respect to

16
<PAGE> 23

any such shares (other than any liens, mortgages, pledges, charges, security
interests, encumbrances or irrevocable proxies provided for in the Revolving
Credit Agreement dated as of February 19, 1992 among the Company, LensCrafters
Inc., the banks listed therein and Wells Fargo Bank, National Association, as
Loan Agent, as amended). There are outstanding (i) no securities of the Company
or any subsidiary convertible into or exchangeable for shares of capital stock
or other voting securities of, or other ownership interests, in any subsidiary
of the Company, and (ii) no options, warrants, rights or other agreements or
commitments to acquire from the Company or any of its subsidiaries to issue, any
capital stock or voting securities of, or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock or voting
securities of, or other ownership interests in, any of such subsidiaries, and no
other obligation of the Company or any of such subsidiaries to grant, extend or
enter into any subscription, warrant, right, convertible or exchangeable
security or other similar agreement or commitment (the items in clauses (i) and
(ii) being referred to collectively as "Subsidiary Securities"). There are no
outstanding obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any outstanding Subsidiary Securities.

4.5 Commission Filings. The Company has heretofore
filed all reports with the Commission required to be filed pursuant to the
Exchange Act and the rules and regulations thereunder since January 1, 1994 and
has made available to Parent true and correct copies of all such reports,
including without limitation each registration statement, Current Report on Form
8-K, proxy or information statement, Annual Report on Form 10-K and Quarterly
Report on Form 10-Q filed during such period (in the case of each such report,
including all exhibits thereto) (the "SEC Documents"). Each SEC Document
complied as of its respective filing date in all material respects with all
applicable requirements of the Exchange Act and the rules and regulations
thereunder. The SEC Documents did not (as of their respective filing dates)
contain any untrue statement of a material fact required to be stated therein or
necessary in order to make the statements made therein made, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of the Company included in the SEC Documents (including the
notes and schedules thereto, "Company's Financial Statements") comply as to form
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) and fairly present in all
material respects (subject, in the case of the unaudited

17
<PAGE> 24

statements, to normal audit adjustments) the consolidated financial position of
the Company and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.

4.6 Absence of Certain Changes. Except as disclosed in
the SEC Documents or as disclosed to Parent by the Company or as otherwise
publicly disclosed by the Company, in each case, prior to the execution of this
Agreement, since October 31, 1994 there has not been (a) any change in the
business, operations, properties, assets, liabilities or condition (financial or
otherwise) of the Company and its subsidiaries, taken as a whole, which has
resulted in a Material Adverse Effect except for changes arising out of
industry-wide conditions or resulting from the Offer, this Agreement or the
transactions contemplated hereby, (b) in the case of the Company, any
declaration, setting aside or, payment of any dividend or other distribution
with respect to its capital stock, other than the regular quarterly cash
dividends on Common Shares in the amount of $0.08 per Common Share, (c) any
material change by the Company in accounting principles or practices, (d) any
entry into any agreement, commitment or transaction by the Company which is
material to the Company and its subsidiaries, taken as a whole, other than in
the ordinary course of business, or (e) any entry into any employment agreement
with, or any increase in the rate or terms of compensation payable by the
Company or any of its subsidiaries to their respective directors, officers or
employees, other than increases made in the ordinary course of business.

4.7 Employee Benefit Plans. (a) Schedule 4.7 contains a
complete and accurate list of all existing bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option, severance, welfare
and fringe benefit plans, employment or severance agreements and all similar
arrangements in which any employee or former employee or director or former
director of the Company or any of its subsidiaries (the "Employees")
participates or to which any such Employees are a party or which are applicable
to any of them (the "Plans"). The SEC Documents and/or Schedule 4.7 identifies
each such Plan containing a "change of control" provision. Except as set forth
in the SEC Documents and/or on Schedule 4.7, neither the Company nor any of its
subsidiaries has any formal commitment, whether legally binding or not, to
create any additional Plan or to modify or change in any material respect any
existing Plan that would affect any Employee.

(b) Except as set forth on Schedule 4.7, each Plan has been
operated and administered in accordance with its terms and with applicable law,
including, but not limited to, the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and the Internal Revenue Code of 1986, as amended
(the "Code"). Each

18
<PAGE> 25

Plan which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA (a "Pension Plan") and which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter for
"TRA" (as defined in Rev. Proc. 93-39) from the Internal Revenue Service (the
"IRS") or has filed for such a determination letter within the remedial
amendment period. There is no material pending or, to the best knowledge of the
Company, threatened legal action, suit or claim relating to the Plans. Neither
the Company nor any of its subsidiaries nor any plan trustee employed by the
Company or its subsidiaries has engaged in a transaction with respect to any
Plan that, assuming the taxable period of such transaction expired as of the
date hereof, could subject the Company or any of its subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in
an amount which would be material.

(c) No liability under Title IV of ERISA has been or is
expected to be incurred by the Company or any subsidiary with respect to any
ongoing, frozen or terminated "single-employer plan", within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or any single-employer plan of any entity (an "ERISA Affiliate") which is
considered one employer with the Company under Section 4001 of ERISA or Section
414 of the Code (an "ERISA Affiliate Plan"). The Company and its subsidiaries
have not incurred and do not expect to incur any withdrawal liability with
respect to a "multiemployer plan" (within the meaning of Section 3(37) of ERISA)
under Title IV of ERISA (regardless of whether based on contributions of an
ERISA Affiliate) or any material liability in connection with the
reorganization, insolvency or termination of any multiemployer plan. No notice
of a "reportable event," within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to be
filed for any Pension Plan or by any ERISA Affiliate Plan within the 12-month
period ending on the date hereof. The Pension Benefit Guaranty Corporation (the
"PBGC") has not instituted proceedings to terminate any Pension Plan or ERISA
Affiliate Plan and no condition exists that presents a material risk that such
proceedings will be instituted.

(d) All contributions required to be made under the terms of
any Plan or ERISA Affiliate Plan have been timely made or adequate reserves in
respect thereof have been established on the books of the Company. Neither any
Pension Plan nor any ERISA Affiliate Plan has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA and all required payments to the PBGC with respect
to each Pension Plan or ERISA Affiliate Plan have been made on or before their
due dates. Neither the Company nor its subsidiaries has provided, or is required
to provide, security to

19
<PAGE> 26

any Pension Plan or to any ERISA Affiliate Plan pursuant to Section 401(a)(29)
of the Code.

(e) With respect to each Pension Plan which is a
single-employer plan covered under Title IV of ERISA and each ERISA Affiliate
Plan, as of the last day of the most recent plan year ended prior to the date
hereof, the actuarily determined present value of all benefit liabilities (as
determined on the basis of the actuarial assumptions contained in the plans'
most recent actuarial valuation) did not exceed the then current value of the
assets of such Plan, and (i) there has not been an adverse change in the
financial condition of such Plan(s) which would have caused a material change in
the funded status of such Plan(s) and (ii) there have not been amendments to
such Plans that materially increase the present value of such benefit
liabilities under such Plans. The withdrawal liability of the Company and the
subsidiaries under each Plan which is a multiemployer plan to which the Company,
any of its subsidiaries or an ERISA Affiliate has contributed during the
preceding 12 months, determined as if a "complete withdrawal" (within the
meaning of Section 4203 of ERISA) has occurred as of the date hereof would not
be material.

(f) Except as set forth on Schedule 4.7, neither the Company
nor any of its subsidiaries has any obligations to provide retiree health and
life benefits under any Plan, other than benefits mandated by Section 4980B of
the Code. Schedule 4.7 also sets forth the amount of accrued post-retirement
benefits as of the most recent valuation, and there have not been amendments or
other changes that materially increase the amount of such accrued benefits since
the date of such valuation.

(g) To the knowledge of the Company, all Plans covering foreign
Employees comply in all material respects with applicable local law. The Company
and its subsidiaries have no material unfunded liabilities with respect to any
Pension Plan which covers foreign Employees.

(h) With respect to each Plan, the Company has provided or made
available to Purchaser, if applicable, true and complete copies of: (s) all Plan
documents and all amendments thereto; (t) all trust instruments and insurance
contracts; (u) the last two Forms 5500 filed with the IRS; (v) the most recent
actuarial report and financial statement; (w) the most recent summary plan
description; (x) any and all forms filed with the PBGC; (y) the most recent
determination letter issued by the IRS; and (z) any Forms 5310 or 5330 filed
with the IRS.

(i) Except as set forth on Schedule 4.7 or in the SEC
Documents, the consummation of the transactions contemplated by this Agreement
will not directly (or indirectly upon a termination of employment): (i) entitle
any Employee to

20
<PAGE> 27

severance pay, unemployment compensation or any other payment or (ii) accelerate
the timing of any payment or the vesting of any rights or increase the amount of
any compensation due any Employee.

(j) The aggregate amount that will be payable upon and as a
result solely of the consummation of the Offer to all officers, directors,
employees and agents of the Company and of its subsidiaries solely by virtue of
the change in control provisions of the Nonqualified Retirement Plans (as such
term is defined in Schedule 4.7(a)) will not exceed the amount set forth on
Schedule 4.7(j).

4.8 Taxes. The Company and its subsidiaries have timely
filed all material federal, state, local and foreign tax returns and reports
required to be filed by them through the date hereof and will timely file all
material returns and reports required on or before the Effective Time. Such
reports and returns are and will be true, correct and complete. The Company and
its subsidiaries have paid and discharged all federal, state, local and material
foreign taxes due from them, other than such taxes that are being contested in
good faith by appropriate proceedings and are adequately reserved as shown in
the audited consolidated balance sheet of the Company dated January 29, 1994 in
the SEC Documents (the "Company Balance Sheet") and its most recent quarterly
financial statements. Except as set forth in Schedule 4.8, neither the IRS nor
any other taxing authority or agency, domestic or foreign, is now asserting or,
to the best knowledge of the Company, threatening to assert against the Company
or any of its subsidiaries any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith. The accruals and reserves
for taxes (including interest and penalties, if any, thereon) reflected in the
Company Balance Sheet and the most recent quarterly financial statements are
adequate in accordance with generally accepted accounting principles. The
Company and its subsidiaries have withheld or collected and paid over to the
appropriate governmental authorities or are properly holding for such payment
all material taxes required by law to be withheld or collected. There are no
liens for taxes upon the assets of the Company or any of its subsidiaries other
than liens for current taxes not yet due and payable and liens for taxes that
are being contested in good faith by appropriate proceedings. Neither the
Company nor any of its subsidiaries has agreed to or is required to make any
adjustment under Section 481(a) of the Code. Neither the Company nor any of its
subsidiaries has made an election under Section 341(f) of the Code. Except for
agreements relating to acquisitions or dispositions of businesses or equity
securities thereof, there is no contract, agreement or intercompany account
system in existence under which the Company or any of its subsidiaries has, or
to the knowledge of the Company, may have in the future, an obligation to
contribute to the payment of any

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<PAGE> 28

portion of a tax (or pay any amount calculated with reference to any portion of
a tax) of any group of corporations of which the Company or its subsidiaries is
or was a part. Except as set forth on Schedule 4.8, there are no agreements in
effect to extend the period of limitations for the assessment or collection of
any tax for which the Company or any of its subsidiaries may be liable.

4.9 Proxy Statement; Schedule 14D-9; Offer Documents.
Neither the Schedule 14D-9 nor any of the information supplied by the Company or
its subsidiaries in writing specifically for inclusion in the Offer Documents
will, at the respective times the Schedule 14D-9 and the Offer Documents are
filed with the Commission and first published, sent or given to the holders of
Common Shares, contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein made, in light of the circumstances under which they are
made, not misleading. The Proxy Statement will not, at the date the Proxy
Statement is first mailed to the holders of Common Shares and at the time of the
meeting, if any, of the holders of Common Shares held in connection with the
Merger, contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein made, in light of the circumstances under which they are
made, not misleading or necessary to correct any statements in any earlier
communication with respect to the shareholders' meeting or the solicitation of
proxies therefor which has become false or misleading. The Schedule 14D-9
complied and the Schedule 14D-9 and the Proxy Statement, if any, will comply as
to form in all material respects with the applicable requirements of the
Exchange Act and the rules and regulations thereunder. The Company will promptly
correct any information provided by it in writing specifically for inclusion in
the Offer Documents if and to the extent that such information will have become
false or misleading in any material respect. The Company will promptly correct
any statements in the Schedule 14D- 9 and the Proxy Statement that have become
false or misleading and take all steps necessary to cause such Schedule 14D-9
and Proxy Statement as so corrected to be filed with the Commission and
disseminated to holders of Common Shares, in each case as and to the extent
required by applicable law. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
Purchaser or any of their respective affiliates or representatives in writing
specifically for inclusion in the Schedule 14D-9 or the Proxy Statement.

4.10 Vote Required. The affirmative vote of the holders
of two-thirds of the Common Shares is the only vote of the holders of any class
or series of the Company capital stock necessary to approve the Merger.

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<PAGE> 29

4.11 831 Proxy Statement. None of the information to be
supplied by the Company for inclusion in the 831 Proxy Statement or in any
amendments or supplements thereto which the Company states in writing is
provided expressly for such inclusion will, at the time of the first mailing
thereof or the 831 Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein made, in light of the circumstances under
which they were made, not misleading.

4.12 Company Notice and Statement. The Company's notice
of the 831 Meeting and the Company's statement contemplated by Section
1701.831(D)(2) of the GCL, and all amendments and supplements thereto, complied
as to form in all material respects with the applicable requirements, if any, of
the Exchange Act and the rules and regulations thereunder and did not, at the
date such notice and statement were first mailed to the Company's shareholders
and at the time of the 831 Meeting, contain any untrue statement of a material
fact, except that no representation is made by the Company with respect to
information supplied by Parent or Purchaser specifically for inclusion in such
notice or statement which Parent or Purchaser stated in writing was provided
expressly for such inclusion.

4.13 Fees. Except for the fees payable to James D.
Wolfensohn Incorporated neither the Company nor any of its subsidiaries has paid
or become obligated to pay any fee or commission to any investment banker,
broker, finder or intermediary in connection with the transactions contemplated
hereby.

4.14 Litigation. Except as disclosed in the SEC
Documents prior to the date hereof, there are no civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the management of the Company, threatened
against the Company or any of its subsidiaries that, alone or in the aggregate,
are reasonably likely to have a Material Adverse Effect.

4.15 Compliance with Laws. Except as disclosed in the
SEC Documents prior to the date hereof, the Company and each of its subsidiaries
is in compliance with all applicable statutes, regulations, orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property (including applicable statutes, regulations, orders and restrictions
relating to environmental standards and controls), except where the failure to
so comply could not reasonably be expected to have a Material Adverse Effect.

4.16 Rights Agreement. The Board of Directors of the Company
has taken all necessary action under the Rights Agreement

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<PAGE> 30

so that none of the execution or delivery of this Agreement, the purchase of
Common Shares pursuant to the Offer or the Merger will cause the Distribution
Date (as defined in the Rights Agreement) to occur or the Rights to become
exercisable.

ARTICLE V

COVENANTS

5.1 No Solicitation and Other Actions. (a) Except as
set forth in subsection (b) of this Section 5.1, neither the Company nor any of
its subsidiaries will, and the Company will direct and use all reasonable
efforts to cause the respective officers, directors, employees, agents, advisors
and other representatives of the Company or its subsidiaries not to, directly or
indirectly, (i) encourage, solicit, participate in or initiate any proposals or
offers from any person relating to any Competing Transaction (as hereinafter
defined) or (ii) furnish to any other person any information or access to such
information with respect to, or otherwise concerning, any Competing Transaction.
The Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any third parties conducted
heretofore with respect to any proposed Competing Transaction. The Company will
promptly notify Parent and Purchaser in the event that any such inquiry,
proposal or offer is received by, any such information is requested from or any
such negotiation or discussion is sought to be initiated with the Company, and,
with respect to any such proposal or offer, setting forth in reasonable detail
the principal terms and conditions thereof. The Company will also promptly make
available a copy of any acquiring person statement, as defined in Section
1701.831 of the GCL, delivered to the Company by any person (other than Parent,
Purchaser or any affiliate of either thereof).

(b) Notwithstanding anything contained in this Section 5.1 or
any other provision of this Agreement, the Company will not be prohibited by
this Agreement from (i) furnishing information to, or entering into discussions
or negotiations with, any person or entity that makes an unsolicited proposal to
acquire the Company pursuant to a merger, consolidation, share exchange,
business combination, sale of all or substantially all the assets, tender or
exchange offer or other similar transaction, if, and only to the extent (A) a
Director Duty requires it to do so, and (B) that, prior to furnishing such
information to, or entering into discussions or negotiations with, such person
or entity, the Company receives from such person or entity an executed
confidentiality agreement on terms not more favorable to such person or entity
than the terms contained in the Confidentiality Agreement dated March 31, 1995
among the Company, Purchaser and Luxottica Group (the

<PAGE> 31

"Confidentiality Agreement"); (ii) complying with Rule 14d-9 or Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer;
(iii) making any disclosure to the Company's shareholders if and to the extent
of a Director Duty; or (iv) failing to make, modifying or amending its
recommendations, consents or approvals referred to in Sections 1.2, 1.4 or 2.2
hereof in accordance with a Director Duty. As promptly as practicable after the
receipt of any executed confidentiality agreement referred to in clause (i)(B)
above, the Company will deliver a copy thereof to Parent and the Purchaser.

5.2 Interim Operations. During the period from the date
of this Agreement to the time that the designees of Parent have been elected to,
and constitute at least two-thirds of, the Board of Directors of the Company
pursuant to Section 1.4 hereof (the "Interim Period"), except (i) as
specifically contemplated by this Agreement, (ii) in connection with the Asset
Purchase Agreement dated as of March 15, 1995 by and among Nine West Group Inc.,
Footwear Acquisition Corp. and the Company (the "Nine West Agreement"), or (iii)
as otherwise approved by Parent in a writing which makes express reference to
this Section 5.2:

5.2.1 Conduct of Business. The Company will,
and will cause each of its subsidiaries to, conduct their
respective businesses only in, and not take any action except
in, the ordinary and usual course of business or in accordance
with a Director Duty in the event of a circumstance covered by
Section 5.1(b). The Company will use reasonable efforts to
preserve substantially intact the business organization of the
Company and each of its subsidiaries, to keep substantially
available the services of its and their present officers and
key employees, and to preserve substantially the goodwill of
those having business relationships with it or its
subsidiaries.

5.2.2 Articles and Code of Regulations. The
Company will not, and will not permit any of its subsidiaries
to, make or propose any change or amendment to any of their
respective articles of incorporation or codes of regulations
(or comparable governing instruments).

5.2.3 Capital Stock. The Company will not, and
will not permit any of its subsidiaries to, issue or sell any
shares of capital stock or any other securities of the Company
or any of its subsidiaries or issue any securities convertible
into or exchangeable for, or options, warrants to purchase,
scrip, rights to subscribe for, calls or commitments of any
character whatsoever relating to, or enter into any contract,
understanding or arrangement with respect to the

25
<PAGE> 32

issuance of, any shares of capital stock or any other
securities of the Company or any of its subsidiaries or enter
into any arrangement or contract with respect to the purchase
or voting of shares of their capital stock, or adjust, split,
combine, reclassify, redeem, purchase or otherwise acquire,
directly or indirectly, any of their capital stock or other
securities, or make any other changes in their capital
structures; provided, however, that the Company may issue
Common Shares as required by any Company Benefit Plan with an
employee stock fund or employee stock ownership plan feature,
consistent with applicable securities laws or the exercise of
options outstanding as of the date of this Agreement and in
accordance with the terms thereof.

5.2.4 Dividends. The Company will not, and will not
permit any of its subsidiaries to, declare, set aside, pay or
make any dividend or other distribution or payment (whether in
cash, stock or property) with respect to, or purchase or
redeem, any shares of the capital stock of the Company or any
of its subsidiaries other than (a) regular quarterly cash
dividends of $0.08 per Common Share and (b) dividends paid by
its subsidiaries to the Company with respect to their capital
stock.

5.2.5 Employee Plans; Compensation. Except as provided
in Section 2.6 or 5.8 hereof or this Section 5.2.5 or as set
forth on Schedule 4.7, and except for normal increases in the
ordinary course of business consistent with past practice and
that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company or pursuant to
collective bargaining agreements as presently in effect, the
Company will not, and will not permit any of its subsidiaries
to, adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement,
deferred compensation, employment or other employee benefit
agreements, trusts, plans, funds or other arrangements for the
benefit or welfare of any director, officer or employee that
increase in any manner the compensation, retirement, welfare or
fringe benefits of any director, officer or employee or pay any
benefit not required by any existing plan or arrangement
(including without limitation the granting of stock options or
stock appreciation rights) or take any action or grant any
benefit not expressly required under the terms of any existing
agreements, trusts, plans, funds or other such arrangements or
enter into any contract, agreement, commitment or arrangement
to

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<PAGE> 33

do any of the foregoing; provided, however, that, as soon as
reasonably practicable, the Company will, subject to the prior
approval of Parent, take all necessary actions to assure that
all of the Company tax-qualified retirement plans which invest
in or hold Common Shares permit the participants in such plans
to direct the trustees of such plans in a timely and
confidential manner whether to tender the Common Shares
allocated to their accounts in such plans.

5.2.6 Loans and Investments. The Company and its
subsidiaries will not, except in the ordinary course of
business, (a) make any loans, advances or capital contributions
to, or investments (other than intercompany accounts and
short-term investments pursuant to customary cash management
systems of the Company in the ordinary course of business and
consistent with past practice) in, any other person other than
such of the foregoing as are made by the Company to or in a
wholly owned subsidiary of the Company, or (b) incur or assume
any indebtedness for borrowed money; provided that the Company
and its subsidiaries will not incur or assume any indebtedness
for borrowed money which would increase materially the
aggregate principal amount of indebtedness of the Company and
its subsidiaries for borrowed money except to the extent
required for working capital needs and, in any event, the
Company and its subsidiaries may, with the prior written
consent of Parent and Purchaser, which shall not be
unreasonably withheld, refinance any existing indebtedness for
borrowed money.

5.2.7 Board of Directors. The Company will not change
the number of persons constituting the Board of Directors of
the Company.

5.2.8 Litigation; Settlement of Claims. Except with
respect to the Ohio Litigation (as hereinafter defined),
neither the Company nor any of its subsidiaries will settle or
compromise any material claims or litigation or, except in the
ordinary course of business, modify, amend or terminate any of
its material contracts or waive, release or assign any material
rights or claims, or make any payment, direct or indirect, of
any liability of the Company or any subsidiary before the same
becomes due and payable in accordance with its terms.

5.2.9 Accounting Policies. Neither the Company nor any
of its subsidiaries will take any action, other than reasonable
and usual actions in the ordinary course of business and
consistent with past practice

27
<PAGE> 34

with respect to accounting policies or procedures (including
tax accounting policies and procedures).

5.2.10 Tax Elections. Neither the Company nor
any of its subsidiaries will make any tax election or permit
any insurance policy naming it as a beneficiary or a loss
payable payee to be cancelled or terminated without notice to
Parent and Purchaser, except in the ordinary course of
business.

5.2.11 Business Combination. Neither the
Company nor any of its subsidiaries will (i) make any
acquisition of, or investment in, assets (in the nature of the
acquisition of a business in its entirety) or stock of any
other person or entity, (ii) merge or consolidate with any
other person or (iii) sell, lease, encumber, or otherwise
dispose of or transfer any assets constituting a line of
business or material portion thereof.

5.2.12 No Amendment to Rights Agreement. The
Company will not amend the Rights Agreement, except as
expressly contemplated by this Agreement or in accordance with
a Director Duty; provided that no such amendment shall
adversely affect the benefit to be afforded to the Offer as a
Permitted Offer (as defined in the Rights Agreement).

5.2.13 Shareholder Meetings. The Company will
take no action unless compelled by legal process to call its
annual meeting of shareholders or to call a special meeting of
shareholders of the Company except in accordance with this
Agreement unless and until this Agreement has been terminated
in accordance with its terms or otherwise if required to do so
by a Director Duty.

5.2.14 No Amendment to Nine West Agreement.
The Company will not amend, waive any rights or grant any
consent under, terminate or otherwise modify the Nine West
Agreement (as in effect on the date hereof or as modified
pursuant hereto). The Company will use all commercially
reasonable efforts necessary to permit the transactions
contemplated by the Nine West Agreement to be consummated for
the purchase price specified in the Nine West Purchase
Agreement. In the event that the closing under the Nine West
Agreement occurs prior to the expiration of this covenant, the
Company will not make any distribution to its shareholders of
any of the purchase price received by the Company in accordance
with such agreement.

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<PAGE> 35

5.2.15 Advertising Agreements. The Company
will not replace the advertising services provided pursuant to
the agreements set forth on Schedule 5.2.15 and will not renew
any of such agreements.

5.3 Access and Information. Unless otherwise required
in accordance with a Director Duty, from and after the date of this Agreement,
the Company will (and will cause each of its subsidiaries to) afford to Parent
and its subsidiaries' officers, directors, employees, agents, advisors and other
representatives (including counsel, accountants and other professionals retained
by Parent) such access during normal business hours throughout the period prior
to the Effective Time to the Company's and its subsidiaries' books, records
(including tax returns and work papers of the Company's independent auditors),
properties, personnel and to such other information, will deliver written
materials, and make copies of such written materials, in any case as Parent
reasonably requests, upon reasonable notice and in such a manner as will not
unreasonably interfere with the conduct of the business of the Company or any of
its subsidiaries. Without limiting the generality of the foregoing, the
information to which Parent and its subsidiaries' officers, directors,
employees, agents, advisors and other representatives may have access in
accordance with the preceding sentence include (a) copies of the portions
applicable to each of the Company and its subsidiaries of all income and
franchise tax returns and any amendments thereto filed by or on behalf of the
Company or any of its subsidiaries or any members of a group of corporations
including the Company or (to the extent available to the Company) any of its
subsidiaries for the taxable years ending between 1988 and 1994, (b) the
engagement letter between the Company and James D. Wolfensohn Incorporated
pursuant to which fees may be payable in connection with the transactions
contemplated hereby, and (c) the schedules to the Nine West Agreement. Subject
to the requirements of law, Parent will hold such non-public information it may
acquire in its investigation, whether so obtained before or after the execution
hereof, in accordance with the Confidentiality Agreement.

5.4 Additional Agreements. Subject to the terms and
conditions herein provided and except in accordance with a Director Duty in the
event of a circumstance covered by Section 5.1(b), each of the parties hereto
agrees to use its reasonable best efforts to take promptly, or cause to be
taken, all actions and to do promptly, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using its reasonable best efforts to obtain all necessary actions or
non-actions, extensions, waivers, consents and approvals from all applicable
Governmental Entities, effecting all necessary registrations and filings and
obtaining any required contractual consents, subject, however, to any

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<PAGE> 36

required vote of the holders of Common Shares. If, at any time after the
Effective Time, the Surviving Corporation considers or is advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Constituent Corporations acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out the purposes of this Agreement, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of each of the Constituent
Corporations or otherwise, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of the
Constituent Corporations or otherwise, all such other actions and things as may
be necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out the purposes of this Agreement.

5.5 State Takeover Statutes. Unless this Agreement is
earlier terminated in accordance with its terms, the Company will, upon the
request of Purchaser, take all reasonable steps to (a) exempt the Company, the
Offer and the Merger from the requirements of the GCL, by action of the
Company's Board of Directors or otherwise and (b) assist Purchaser in complying
with, or in challenging the validity or applicability of, any state takeover law
to the Offer or the Merger.

5.6 Proxy Statement. As soon as practicable after the
consummation of the Offer, the Company will, if required by applicable law in
order to consummate the Merger, prepare the Proxy Statement, file it with the
Commission, and cause it to be mailed to all holders of record of Common Shares.
Parent, Purchaser and the Company will cooperate with each other in the
preparation of the Proxy Statement; without limiting the generality of the
foregoing, Parent and Purchaser will furnish to the Company the information
relating to Parent and Purchaser required by the Exchange Act to be set forth in
the Proxy Statement.

5.7 Solicitation of Proxies for 831 Meeting. Parent and
Purchaser will use their best efforts to prepare and file with the Commission a
revised 831 Proxy Statement as contemplated by Section 1.3 as promptly as
practicable but in no event later than five business days after the date hereof,
respond to comments from the Commission, as appropriate, and cause it to be
mailed to all holders of record of Common Shares. Parent, Purchaser and, subject
to any Director Duty, the Company will cooperate with each other in the
preparation of the 831 Proxy Statement; without limiting the generality of the
foregoing, the

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<PAGE> 37

Company will furnish to Parent and Purchaser the information relating to the
Company required by the Exchange Act to be set forth in the 831 Proxy Statement.

5.8 Indemnification, Insurance and Certain Other
Employee-Related Matters. (a) For six years after the Effective Time, Parent
will cause the Surviving Corporation to indemnify, defend and hold harmless the
present and former officers, directors, employees and agents of the Company and
its subsidiaries (each, an "Indemnified Party") after the Effective Time against
all losses, claims, damages or liabilities (whether or not arising from any
third party claims) (including and collectively, "Losses") arising out of
actions or omissions occurring on, prior to or after the Effective Time
(individually and collectively, "Losses") to the full extent provided under Ohio
law and the Company's Code of Regulations in effect at the date hereof,
including without limitation provisions relating to advances of expenses
incurred in the defense of any action or suit (including without limitation
attorneys' fees of counsel selected by the Indemnified Party reasonably
satisfactory to the Surviving Corporation); provided that any determination
required to be made with respect to whether an Indemnified Party's conduct
complies with the standards set forth under Ohio law and the Company's Code of
Regulations will be made by independent counsel selected by the Indemnified
Party and reasonably satisfactory to the Surviving Corporation; and provided
further that in the event of any claim that is asserted or made within such
six-year period, all rights to indemnification in respect of such claim will
continue until final disposition thereof. Any Indemnified Party wishing to claim
indemnification under this Section 5.7(a), upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Parent thereof.
In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) Parent or the
Surviving Corporation shall have the right from and after the purchase of Common
Shares pursuant to the Offer, to assume the defense thereof and neither Parent
nor the Surviving Corporation shall be liable to such Indemnified Party for any
legal expenses of separate counsel or any other expenses subsequently incurred
by such Indemnified Party in connection with the defense thereof, except that
such Indemnified Party shall have the right to employ and be reimbursed by
Parent or the Surviving Corporation for the legal expenses of separate counsel
if, under applicable standards of professional conduct (as advised by counsel to
such Indemnified Party) a conflict of interest on any issue between such
Indemnified Party and Parent or the Surviving Corporation, (ii) the Indemnified
Parties will cooperate in the defense of any such matter and (iii) neither
Parent nor the Surviving Corporation shall be liable for any settlement effected
without Parent's prior written consent; and provided further that, except with
respect to the advancement to an Indemnified Party of expenses incurred in the
defense of any

31
<PAGE> 38

action or suit in accordance with the terms of this Section (subject to
reimbursement by such Indemnified Party in the event of a final determination by
a court of competent jurisdiction that such advances were unlawful and must be
reimbursed to Parent or the Surviving Corporation), neither Parent nor the
Surviving Corporation shall have any obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.

(b) On or before the business day which is no later than five
business days before the expiration date of the Offer, Parent will cause there
to be in full force and effect from and after the time Purchaser first accepts
for payment Common Shares pursuant to the Offer for the Company and the
Surviving Corporation a policy or policies of directors' and officers' liability
insurance (the "New Coverage") covering those persons (the "Insured Persons")
who are currently covered on the date of this Agreement by the Company's
directors' and officers' liability insurance coverage (the "Current Coverage"),
which New Coverage will (i) be in the same form and provide at least the same
coverage and limits, containing terms which are no less advantageous to the
Insured Persons than those provided in the Current Coverage, (ii) be effective
so that there will not result any gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time, and (iii) with respect to the
first $20,000,000 of coverage, be issued by an insurance carrier or carriers
which are at least as highly rated by A.M. Best & Co. as Federal Insurance
Company. From and after the date of this Agreement, and so long as Parent is in
compliance with this clause (b), Parent shall have the sole right to seek the
New Coverage and the Company shall not engage in such activity. The Company
and/or the Surviving Corporation shall, regardless of whether or not the Merger
is consummated, and for six years after the Effective Time maintain in effect
the New Coverage; provided, however, that (A) the Surviving Corporation may
substitute for the New Coverage such policy or policies providing at least the
same coverage and containing terms which are no less advantageous to the Insured
Persons if such substitution is effective so that there does not result any gaps
or lapses in coverage with respect to matters occurring prior to the Effective
Time, and (B) the insurance carrier or carriers issuing such policy or policies
with respect to the first $20,000,000 of coverage are at least as highly rated
by A.M. Best & Co. as Federal Insurance Company. Notwithstanding the foregoing,
if by the date which is five business days prior to the expiration date of the
Offer Parent has failed to cause the New Coverage to be in full force and effect
as required in the first sentence of this clause (b), without waiving any other
rights which it may have pursuant to this Agreement, the Company shall have the
right to cause the New

32
<PAGE> 39

Coverage to be in full force and effect as provided in the first sentence of
this clause (b).

(c) In the event the Surviving Corporation or any of its
successors or assigns (i) reorganizes or, consolidates with or merges into any
other person or entity and will not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person or entity, then,
and in each such case, proper provision will be made so that the successors and
assigns of the Surviving Corporation assume the obligations set forth in this
Section 5.8.

(d) For a period of two years following the Effective Time,
Parent will cause the Surviving Corporation to continue the (i) employee benefit
plans (including without limitation all employee benefit plans within the
meaning of Section 3(3) of ERISA), practices and policies which provide employee
benefits to officers, directors or employees of the Company or any of its
subsidiaries, and (ii) subject to Section 4.7 hereof, compensation arrangements,
programs and plans providing employee or executive officer compensation or
benefits, to employees of the Company or any of its subsidiaries; provided,
however, that (A) the Surviving Corporation may replace the Company's Economic
Bridge Program (as such term is defined in Schedule 5.8(d)) with any other plan
or plans providing, in the aggregate, for comparable compensation or benefits,
recognizing all prior service for eligibility and vesting purposes of the
officers, directors or employees with the Company and any of its subsidiaries as
service under such Plan, (B) the Surviving Corporation may replace any plan or
plans with another plan or plans providing, in the aggregate, for comparable
compensation or benefits, as the case may be and recognizing all prior service
of the officers, directors or employees with the Company and any of its
subsidiaries as service for purposes of eligibility and vesting, but not for
benefit accrual purposes, under any such plans; (C) it is understood that
neither Parent nor the Surviving Corporation will have any obligation to
continue or provide comparable benefits for (x) any stock option or other plan
involving the issuance of securities of the Company or any other company, and
(y) the Company's non-qualified deferred compensation plans (except to the
extent of amounts deferred pursuant to such plan prior to the Effective Time,
which amounts will be administered in accordance with the terms of said plan);
and (D) the expiration of the two year period following the Effective Time will
not affect any rights or obligations under any such plan, practice policy,
arrangement or program.

(e) Parent agrees that the Company will honor and, on and after
the Effective Time, Parent will cause the Surviving Corporation to honor,
without offset, deduction, counterclaims, interruptions or deferment (other than
withholdings under

33
<PAGE> 40

applicable law), all employment, severance, termination, consulting and
retirement agreements or arrangements (including the Company's Economic Bridge
Plan) to which the Company or any of its subsidiaries is presently a party, all
of which are disclosed on Schedule 4.7.

(f) Parent currently intends to cause the Surviving Corporation
to offer employment immediately following the Effective Time to all employees of
the Company and its subsidiaries on terms and conditions comparable to those
presently in effect at the Company or its subsidiaries. It is understood and
agreed that the foregoing shall not constitute any commitment, contract,
understanding or guarantee (express or implied) on the part of the Parent or
Surviving Corporation of a post-Effective Time employment relationship of any
term or duration or on any terms other than those the Parent or the Surviving
Corporation may establish; accepted employment with the Surviving Corporation is
"at will" and may be terminated by the Surviving Corporation at any time for any
reason (subject to any legally binding agreement or an applicable collective
bargaining agreement or any arrangement or commitment identified on Schedule
4.7).

5.9 Notification of Certain Matters. The Company will
give prompt notice to Parent and Purchaser, and Parent and Purchaser will give
prompt notice to the Company of (a) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which would be likely to cause (i)
any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect or (ii) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied in any material
respect, and (b) any failure of the Company or Parent and Purchaser, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.9 will not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.

5.10 Compliance with Antitrust Laws. Each of Parent and
the Company will use its best efforts to resolve such objections, if any, which
may be asserted with respect to the Offer or the Merger under the antitrust
laws. In the event a suit is instituted challenging the Offer or the Merger as
violative of the antitrust laws, each of Parent and the Company will use their
best efforts to resist or resolve such suit. Parent and the Company will use
their best efforts to take such action as may be required (a) by the Antitrust
Division of the Department of Justice, the Federal Trade Commission, or any
foreign government or agency thereof, in order to resolve such objections as any
of them may have to the Offer or the Merger under applicable antitrust laws, or
(b) by any federal or state

34
<PAGE> 41

court of the United States or any comparable court of Canada or any province
thereof, in any suit brought by a private party or Governmental Entity
challenging the Offer or the Merger as violative of the antitrust laws, in order
to avoid the entry of, or to effect the dissolution of, any injunction,
temporary restraining order or other order which has the effect of preventing
the consummation of the Offer or the Merger.

5.11 Publicity. The initial press release announcing
this Agreement will be a joint press release, to be issued only with the prior
consent of each party, and thereafter the Company and Parent will consult with
each other prior to issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and in making
any filings with any Governmental Entity or with any national securities
exchange with respect thereto.

5.12 Disposition of Litigation. Each of Parent,
Purchaser and the Company agree, promptly, and in no event later than two
business days after the amendment to the Offer contemplated hereby (unless this
Agreement has been earlier terminated), to use its best efforts to obtain a
dismissal without prejudice of Luxottica Group S.p.A., et al. v. The United
States Shoe Corporation, et al., Civil Action No. C-2-95-244 (the "Ohio
Litigation") with each party bearing its own costs and attorneys' fees therefor.

5.13 Proxy Contests. Parent and Purchaser hereby agree
to withdraw and rescind on behalf of themselves and their affiliates and shall
promptly cause to be withdrawn and rescinded all notices and the Schedule 14A
filed with the Commission, in each case, relating to the calling of a special
meeting for the removal of the directors of the Company.

ARTICLE VI

CONDITIONS

6.1 Conditions. The obligations of Parent, Purchaser
and the Company to consummate the Merger are subject to the satisfaction, at or
before the Effective Time, of each of the following conditions, as applicable
thereto:

6.1.1 Shareholder Approval. The holders of Common
Shares will have duly approved the Merger and adopted this
Agreement, if and as required by applicable law.

6.1.2 Purchase of Shares. Purchaser will have accepted
for payment and purchased all Common Shares validly tendered
and not withdrawn pursuant to the

35
<PAGE> 42

Offer; provided that this condition will be deemed to have been
satisfied if Purchaser fails to accept for payment or pay for
Common Shares pursuant to the Offer in breach of the terms
hereof or thereof.

6.1.3 Injunctions; Illegality. The consummation of the
Merger will not be prohibited by any order, injunction, decree
or ruling of a court of competent jurisdiction or any
Governmental Entity (each party agreeing to use its best
efforts to rectify any such occurrence), and there will not
have been any action taken or any statute, rule or regulation
enacted, promulgated or deemed applicable to the Merger by any
Governmental Entity which would prevent the consummation of the
Merger.

ARTICLE VII

MISCELLANEOUS

7.1 Termination. This Agreement may be terminated and
the Merger contemplated hereby may be abandoned, notwithstanding any prior
approval hereof or of the Merger by the holders of the Common Shares, (a) by the
mutual consent of the Boards of Directors of Parent, Purchaser and (by the
affirmative vote of a majority of the Continuing Directors) the Company; (b) by
Parent and Purchaser, on the one hand, or the Company, on the other hand, if the
Offer expires or is terminated or withdrawn without any Common Shares being
purchased thereunder; provided, however, that the right to terminate this
Agreement pursuant to this Section 7.1(b) will not be available to any party who
is (or would, by virtue of such termination, be) in breach of this Agreement;
(c) by the Company, if Parent or Purchaser breaches any of the covenants
contained in this Agreement, except where any such breaches (i) would not,
individually or in the aggregate, materially impair or delay the ability of
Purchaser to consummate the Offer or Parent, Purchaser or the Company to effect
the Merger, or (ii) have been caused by or result from a breach by the Company
of any covenant in this Agreement; (d) by either Parent and Purchaser, on the
one hand, or the Company (by the affirmative vote of a majority of the
Continuing Directors), on the other hand, if the Merger is not consummated prior
to the sixtieth calendar day following the expiration date of the Offer;
provided, however, that the right to terminate this Agreement under this Section
7.1(d) will not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date; (e) by either
Parent and Purchaser, on the one hand, or the Company, on the other hand, if
either one (or any permitted assignee hereunder) is precluded by an order or
injunction (other than an order or injunction issued

36
<PAGE> 43

on a preliminary basis) of a court of competent jurisdiction from consummating
the Merger and all means of appeal and all appeals from such order or injunction
have been finally exhausted; and (f) by either Parent and Purchaser, on the one
hand, or the Company, on the other hand, if the Board of Directors of the
Company (i) shall have withdrawn its recommendation, consent to or approval of
the Offer, the Merger or this Agreement, or (ii) determined to recommend to
holders of the Common Shares or approve a Competing Transaction in the exercise
of its Director Duty; provided, however, that the Company shall notify Parent
and Purchaser promptly of any determination by its Board of Directors to
recommend such Competing Transaction to the holders of the Common Shares or to
approve such Competing Transaction, which notice shall in any such event be
given: (A) not less than 24 hours prior to the Company's termination of this
Agreement under this clause (ii); and (B) not later than substantially
simultaneously with the first public announcement of such recommendation or
approval. In the event of any termination and abandonment pursuant to this
Section 7.1, no party hereto (or any of its directors or officers) will have any
liability or further obligation to any other party to this Agreement, except for
obligations under Section 7.10 and pursuant to the Confidentiality Agreement and
except that nothing herein will relieve any party from liability for any breach
of this Agreement.

7.2 Non-Survival of Representations, Warranties and Agreements.
The representations and warranties or agreements in this Agreement will
terminate at the Effective Time or the earlier termination of this Agreement
pursuant to Section 7.1, as the case may be; provided, however, that if the
Merger is consummated, Sections 2.4, 2.6 and 5.8 hereof will survive the
Effective Time to the extent contemplated by such Sections; and provided
further, that Sections 1.2(a), (f) and (g), 4.16, 5.2.12 and 7.10 will in all
events survive any termination of this Agreement.

7.3 Waiver and Amendment. Subject to the applicable
provisions of the GCL, any provision of this Agreement may be waived at any time
by the party which is, or whose shareholders are, entitled to the benefits
thereof, and this Agreement may be amended or supplemented at any time, provided
that no amendment will be made after any shareholder approval of the Merger
which reduces the Merger Price without further shareholder approval, and
provided further that any action by the Company to waive or amend any provision
of this Agreement will require the approval of a majority of the Continuing
Directors. No such waiver, amendment or supplement will be effective unless in a
writing which makes express reference to this Section 7.3 and is signed by the
party or parties sought to be bound thereby.

7.4 Entire Agreement. This Agreement, including all Schedules
and Exhibits hereto, contains the entire agreement

37
<PAGE> 44

among Parent, Purchaser and the Company with respect to the Offer, the Merger
and the other transactions contemplated hereby and thereby, and supersedes all
prior agreements among Parent, Purchaser, and the Company with respect to such
matters, except the Confidentiality Agreement, which will remain in full force
and effect throughout the Interim Period except for paragraph 5 thereof which is
superseded hereby.

7.5 Applicable Law. This Agreement will be governed by
and construed in accordance with the laws of the State of Ohio applicable to
contracts made and to be performed in that State.

7.6 Interpretation. The descriptive headings contained herein
are for convenience and reference only and will not affect in any way the
meaning or interpretation of this Agreement.

7.7 Notices. All notices and other communications
hereunder will be in writing and will be given (and will be deemed to have been
duly given upon receipt) by delivery in person, by telecopy, cable, telegram,
telex or other standard form of telecommunications, or by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:

If to the Company to:
The United States Shoe Corporation
One Eastwood Drive
Cincinnati, Ohio 45227-1197
Attention: James J. Crowe, Esq.
Telecopier: (513) 527-7880

With copies to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: William F. Henze II
Telecopier: (212) 755-7306

If to Parent or Purchaser to:
Avant-Garde Optics, Inc.
44 Harbor Park Drive
Port Washington, New York 11050
Attention: Michael A. Boxer, Esq.
Telecopier: (516) 484-9010

With a copy to:
Winston & Strawn
175 Water Street
New York, New York 10038
Attention: Jonathan Goldstein, Esq.
Telecopier: (212) 858-4700

38
<PAGE> 45

or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.

7.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed to be an original but all
of which together will constitute but one agreement.

7.9 Assignment. Purchaser will have the right (a) to
assign to Parent or any other direct or indirect wholly owned subsidiary of
Luxottica Group any and all rights and obligations of Purchaser under this
Agreement, including without limitation the right to substitute in its place
Parent or such a subsidiary as one of the constituent corporations in the Merger
(such subsidiary assuming all of the obligations of Purchaser in connection with
the Merger), provided that any such assignment will not relieve Parent or
Purchaser from any of its obligations hereunder, and (b) to transfer to Parent
or to any other direct or indirect wholly owned subsidiary of Luxottica Group
the right to purchase Common Shares tendered pursuant to the Offer, provided
that any such transfer will not relieve Purchaser from any of its obligations
hereunder.

7.10 Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Offer, this
Agreement and the transactions contemplated hereby and thereby shall be paid by
the party incurring such expense.

7.11 Obligation of Parent. Whenever this Agreement
requires Purchaser or the Surviving Corporation to take any action, such
requirement will be deemed to include an undertaking on the part of Parent to
cause Purchaser or the Surviving Corporation to take such action.

7.12 Enforcement of the Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties hereto will be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in the United States District Court for the Southern District of Ohio,
this being in addition to any other remedy to which they are entitled at law or
in equity.

7.13 Certain Definitions. For purposes of this Agreement, the
term:

(a) "affiliate" means a person that, directly or
indirectly, through one or more intermediaries,

39
<PAGE> 46

controls, is controlled by, or is under common control with,
the first mentioned person;

(b) "beneficial owner" with respect to any of the
Common Shares means, unless otherwise defined herein, a person
who will be deemed to be the beneficial owner of such shares
(i) which such person or any of its affiliates or associates
(as such term is defined in Rule 12b-2 promulgated under the
Exchange Act) beneficially owns, directly or indirectly, (ii)
which such person or any of its affiliates or associates has,
directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to the passage
of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise or (B) the
right to vote pursuant to any agreement, arrangement or
understanding or (iii) which are beneficially owned, directly
or indirectly, by any other persons with whom such person or
any of its affiliates or associates, or any person with whom
such person or any of its affiliates or associates has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares;

(c) "Competing Transaction" means any of the following
involving the Company or any of it subsidiaries: (i) any
merger, consolidation, share exchange, business combination or
other similar transaction; (ii) any sale, lease, exchange,
transfer or other disposition of all or a material portion of
the assets of the Company and its subsidiaries, taken as a
whole, in a single transaction or series of transactions
(except in respect of the sale of the Company's Footwear Group
to Footwear Acquisition Corp., pursuant to the Nine West
Agreement); (iii) any tender offer or exchange offer for 50% or
more of the shares of capital stock of the Company or the
filing of a registration statement under the Securities Act of
1933 in connection with any such exchange offer;

(d) "control" (including the terms "controlled",
"controlled by" and "under common control with") means the
possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the management
or policies of a person, whether through the ownership of stock
or as trustee or executor, by contract or credit arrangement or
otherwise; and

40
<PAGE> 47

(e) "subsidiary" or "subsidiaries" of the Company,
Parent or Purchaser, the Surviving Corporation or any other
person means any corporation, partnership, joint venture or
other legal entity of which the Company, Parent, Purchaser,
Surviving Corporation or such other person, as the case may be
(either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the
stock or other equity interests, the holders of which are
generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other
legal entity.

7.14 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party hereto. Upon any such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
will negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated by this Agreement are consummated to
the extent possible.

41
<PAGE> 48

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.

AVANT-GARDE OPTICS, INC.

By: /s/ Claudio Del Vecchio
------------------------------
Name: Claudio Del Vecchio

LUXOTTICA ACQUISITION CORP.

By: /s/ Claudio Del Vecchio
------------------------------
Name: Claudio Del Vecchio

THE UNITED STATES SHOE
CORPORATION

By: /s/ K. Brent Somers
------------------------------
Name: K. Brent Somers

<PAGE> 49

Annex A

CONDITIONS OF THE OFFER. Notwithstanding any other provision of the
Offer, the Purchaser shall not be required to accept for payment, purchase or
pay for any Common Shares tendered, and (subject to the terms of the Merger
Agreement) may postpone the acceptance for payment, the purchase of, and/or the
payment for, Common Shares, and/or may amend or terminate the Offer if (i) the
number of Common Shares validly tendered and not withdrawn prior to the
expiration date for the Offer, when added to the Common Shares beneficially
owned by the Purchaser and its affiliates, constitutes less than two-thirds of
the Common Shares outstanding on a fully diluted basis (the "Minimum Share
Condition"); (ii) the acquisition of Common Shares pursuant to the Offer by the
Purchaser shall not have been authorized by the shareholders of the Company
pursuant to Section 1701.831 of the Ohio Revised Code ("Section 831") at a
special meeting of the holders of the Common Shares duly and validly called and
held in accordance with Section 831 or the Purchaser is not satisfied, in its
sole discretion, that Section 831 is invalid or inapplicable to the acquisition
of Common Shares pursuant to the Offer (the "Control Share Condition"); or (iii)
at any time before acceptance for payment for any such Common Shares (whether or
not any Common Shares have theretofor been accepted for payment or paid for
pursuant to the Offer), any of the following shall occur:

(a) there shall have been instituted or be pending any action
or proceeding before any court or governmental, regulatory or
administrative agency, authority or commission, domestic or foreign, in
each case that has a reasonable likelihood of success, which (i)
challenges or seeks to make illegal, materially delay or otherwise
directly or indirectly restrain or prohibit the Offer or the Merger or
the acquisition by the Purchaser of any Common Shares, or seeks to
obtain any material damages with respect to the transactions
contemplated by the Merger Agreement; (ii) seeks to prohibit or
materially limit the ownership or operation by Luxottica Group, the
Purchaser or their affiliates of any material portion of the business
or assets of the Company and its subsidiaries, taken as a whole, or to
compel Luxottica Group or the Purchaser or any of their affiliates to
dispose of or hold separate all or any material portion of the business
or assets of the Company and its subsidiaries, taken as a whole, as a
result of the transactions contemplated by the Merger Agreement; (iii)
seeks to impose material limitations on the ability of Luxottica Group
or the Purchaser or any of their affiliates to exercise full rights of
ownership of the Common Shares, including without limitation the right
to vote any Common Shares purchased by them on all matters properly
presented

A-1
<PAGE> 50

to the shareholders of the Company; or (iv) seeks to prevent Luxottica
Group or the Purchaser or any of their affiliates from acquiring, or to
require divestiture by Luxottica Group or the Purchaser or any of their
affiliates of, any Common Shares; or

(b) there shall have been any action taken, or any statute,
rule, regulation, judgment, administrative interpretation, order or
injunction enacted, promulgated, entered, enforced or deemed applicable
to the Company or any affiliate of the Company, or to the Offer or the
Merger, which is reasonably expected to result in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a)
above; or

(c) there shall have occurred and be continuing (i) any general
suspension of, or limitation on prices for, trading in securities on
any national securities exchange or in the over-the-counter market in
the United States, (ii) the declaration of any banking moratorium or
any suspension of payments in respect of banks or any limitation
(whether or not mandatory) on the extension of credit by lending
institutions in the United States, (iii) the commencement of a war,
material armed hostilities or any other material international or
national calamity involving the United States, or (iv) in the case of
any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof; or

(d) any Person, entity or "group" (as such term is used in
Section 13(d)(3) of the Exchange Act) other than Luxottica Group or any
of its affiliates shall have become the beneficial owner (as that term
is used in Rule 13d-3 under the Exchange Act) of more than 20% of the
outstanding Common Shares; or

(e) either (i) the Company shall have breached or failed to
comply in any material respect with any of its obligations under the
Merger Agreement; or (ii) any representation or warranty of the Company
contained in the Merger Agreement, which is qualified as to
materiality, shall not be true and correct, or any such representation
or warranty that is not so qualified, shall not be true and correct in
any respect which is reasonably likely to have a material adverse
effect on the business, operations, properties, assets, liabilities or
condition (financial or otherwise) of the Company and its subsidiaries,
taken as a whole, in each case either as of when made or as of such
expiration or proposed termination of the Offer except as to any
representation or warranty which speaks as to a specific date, which
must be untrue or incorrect in the foregoing respects as of such
specific date; or

A-2
<PAGE> 51

(f) the Merger Agreement shall have been terminated pursuant
to its terms; or

(g) the Board of Directors of the Company shall have amended,
modified or withdrawn its (i) approval of the transactions contemplated
by the Merger Agreement in a manner satisfying the requirements of
paragraph 2(A) of Article Seventh of the Articles of Incorporation of
the Company, (ii) determination that the Offer and the Merger are fair
to and in the best interests of the Company and its shareholders, (iii)
approval of the Offer, the Merger Agreement and the Merger, (iv)
recommendation that the holders of Common Shares authorize the purchase
of Common Shares by the Purchaser for purposes of Section 831, (v)
recommendation of acceptance of the Offer, the tender of Common Shares
pursuant to the Offer and approval and adoption of this Agreement and
the Merger by the holders of Common Shares, (vi) actions taken as
contemplated by Section 1704.02(A) of the Ohio Revised Code in order to
make Chapter 1704 of the Ohio Revised Code inapplicable to the Merger,
or (vii) determination that the Offer is a Permitted Offer (as defined
in the Rights Agreement) for purposes of the Rights Agreement (the
"Recommendation") or shall have failed to publicly reconfirm such
Recommendation upon the request of Luxottica Group or the Purchaser,
which is reasonable in the circumstances, or shall have approved or
recommended any of the following involving the Company or any of it
subsidiaries: (A) any merger, consolidation, share exchange, business
combination or other similar transaction; (B) any sale, lease,
exchange, transfer or other disposition of all or substantially all of
the assets of the Company and its subsidiaries, taken as a whole, in a
single transaction or series of transactions (except in respect of the
sale of the Company's Footwear Group to Footwear Acquisition Corp.,
pursuant to the Asset Purchase Agreement, dated as of March 15, 1995,
among the Company, Nine West Group Inc. and Footwear Acquisition
Corp.); or (C) any tender offer or exchange offer for 50% or more of
the shares of capital stock of the Company or the filing of a
registration statement under the Securities Act of 1933 in connection
with any such exchange offer; or shall have resolved to do any of the
foregoing;

which, in the good faith sole judgment of Luxottica Group or the Purchaser, in
any such case and regardless of the circumstances giving rise to any such
condition, makes it inadvisable to proceed with the Offer or such acceptance for
payment or purchase of or payment for any of the Shares.

The foregoing conditions are for the sole benefit of Luxottica Group
and the Purchaser. The foregoing conditions, other than the Minimum Share
Condition and the Control Share

A-3
<PAGE> 52

Condition, may be waived by the Purchaser in whole or in part at any time and
from time to time in its sole judgment. The failure of Luxottica Group or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.

A-4

<PAGE> 1
Exhibit 36

GUARANTY

GUARANTY, dated as of April 21, 1995, by Luxottica Group
S.p.A., an Italian corporation (the "Guarantor").

W I T N E S S E T H :

WHEREAS, 100% of the outstanding shares of common stock of
each of Avant-Garde Optics, Inc., a New York corporation, and Luxottica
Acquisition Corp., a Delaware corporation (each a "Guaranteed Party" and
together the "Guaranteed Parties") is directly or indirectly owned by the
Guarantor, and the Guaranteed Parties are entering into the Agreement and Plan
of Merger dated as of the date hereof (the "Agreement," and, together with the
Offer Documents (as defined in the Agreement), the "Operative Documents") with
The United States Shoe Corporation (the "Company," and, together with each
other person, if any, to whom a payment or performance obligation is due under
any of the Operative Documents and each Indemnified Party (as defined in the
Agreement) and the permitted successors and assigns of any or all of the
foregoing, a "Beneficiary" and, collectively, the "Beneficiaries");

WHEREAS, the Guarantor will receive substantial direct and
indirect benefits from the transactions contemplated by the Operative Documents
(which benefits are hereby acknowledged).

NOW, THEREFORE, in consideration of good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Guarantor hereby agrees as follows:

1. Definitions. All capitalized terms used herein which
are not otherwise defined shall have the meanings attributed thereto in the
Agreement.

2. Guaranty of Obligations. The Guarantor hereby
irrevocably, absolutely and unconditionally guarantees, as primary obligor and
not merely as a surety, to the Beneficiaries, as their respective interests may
appear, (a) the due and punctual payment by each Guaranteed Party, of any and
all amounts (without duplication) that are or may become due and payable by
such Guaranteed Party to any Beneficiary under any Operative Document to which
such Guaranteed Party is or is to be a party, and any other agreement or
instrument entered into or delivered in connection with the transactions
contemplated by the Operative Documents whether such obligations now exist or
arise hereafter, as and when the same shall become due and payable in
accordance with the terms thereof, including money damage claims and collection
costs, and (b) the due, prompt and full performance of, and compliance with,
all other obligations, covenants, terms, conditions, agreements and
undertakings of each Guaranteed Party

<PAGE> 2
to any Beneficiary contained in the Operative Documents to which such
Guaranteed Party is or is to be a party, and any other agreement or instrument
entered into or delivered in connection with the transactions contemplated by
the Operative Documents as and when performance is required in accordance with
the terms thereof (such obligations referred to in clauses (a) and (b) above,
the "Obligations"). The Guarantor hereby further agrees that if a Guaranteed
Party shall fail to pay or perform when due any of the Obligations, the
Guarantor will promptly pay or perform the same. All payments by the Guarantor
hereunder shall be made in U.S. Dollars, in the same funds as are required to
be paid by the Guaranteed Party and at the same place as such payments are
required to be made by the Guaranteed Party. This is a guaranty of payment and
performance, not collection.

This Guaranty and all covenants and agreements of the
Guarantor contained herein shall continue in full force and effect and shall
not be discharged until such time as all the Obligations shall be paid and
performed in full and all the agreements of the Guarantor hereunder shall have
been duly performed. The obligations of the Guarantor under Section 2 hereof
shall be automatically reinstated if and to the extent that for any reason any
payment to any Beneficiary by or on behalf of a Guaranteed Party, in respect of
the Obligations is rescinded or must otherwise be returned by such Beneficiary,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and the Guarantor agrees that it will indemnify each Beneficiary on
demand for all reasonable costs and expenses (including reasonable fees and
out-of-pocket expenses of counsel) incurred by such Beneficiary in connection
with its compliance with or reasonable resistance (if requested by the
Guarantor) to any such rescission or restoration. Notwithstanding the
generality of the foregoing, if any Operative Document shall be terminated as a
result of the rejection or disaffirmance thereof by any trustee, receiver,
liquidator, agent or other representative of a Guaranteed Party or any of its
respective properties in any assignment for the benefit of creditors or in any
bankruptcy, insolvency, dissolution or similar proceeding, or the exercise of
any of the rights or remedies under such Operative Document stayed, enjoined or
prohibited in any such assignment or proceeding, the obligations of the
Guarantor hereunder shall continue to the same extent as if such Operative
Document had not been so rejected or disaffirmed and as if such exercise had
not been so stayed, enjoined and prohibited. The Guarantor shall and does
hereby waive all rights and benefits that might accrue to it by reason of any
such assignment or proceeding, and the Guarantor agrees that it shall be liable
for the full amount of the Obligations, irrespective of and without regard to
any modification, limitation or discharge of liability of a Guaranteed Party
that may result from or in connection with any such assignment or proceeding.

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<PAGE> 3
3. Nature of the Guarantor's Obligations. The Guarantor
guarantees that the Obligations will be paid and performed strictly in
accordance with the terms of the Operative Documents, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Beneficiaries with respect thereto. The
liability of the Guarantor under this Guaranty shall not be subject to any
counterclaim, setoff, deduction, release, recoupment or defense and shall remain
in full force and effect and shall be irrevocable, absolute and unconditional,
irrespective of any substitution, release or exchange of any other guarantee of
or security for any of the Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstances whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor. Without limiting the generality of the foregoing, it is agreed that
the occurrence or existence of any one or more of the following shall not, to
the fullest extent permitted by applicable law, affect the liability of the
Guarantor hereunder:

(i) at any time or from time to time, without
notice to the Guarantor, the time, manner or place for any performance of or
compliance with any of the Obligations shall be extended, or such performance or
compliance shall be waived;

(ii) any of the acts mentioned in any of the
provisions of any Operative Document shall be done or omitted;

(iii) the maturity of any of the Obligations shall
be accelerated, or any of the Obligations shall be modified, supplemented,
amended, compromised or refinanced in any respect, or any right under any
Operative Document shall be waived or any other guarantee of any of the
Obligations or any security therefor shall be modified, released or exchanged in
whole or in part or otherwise dealt with;

(iv) the partial payment or performance of the
Obligations (whether as a result of the exercise of any right, remedy, power
or privilege or otherwise, and including the exercise of rights or remedies
under the Operative Documents, shall be accepted or received (except to the
extent of such partial payment or performance);

(v) any Person shall be released from any
personal liability with respect to all or any part of the Obligations;

(vi) all or any part of the Obligations or any
collateral on or guarantee of all or any part of the Obligations shall be
settled, compromised, released, liquidated or enforced upon such terms and in
such manner as any Beneficiary may determine or as applicable law may dictate;

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<PAGE> 4
(vii) any lien granted to, or in favor of, any
Beneficiary as security for any of the Obligations shall be transferred,
abandoned, allowed to lapse or expire, subordinated or foreclosed or shall fail
to be perfected;

(viii) any foreclosure or sale of, or other election
of remedies with respect to, any collateral serving as security for all or part
of the Obligations, even though such foreclosure, sale or election of remedies
may impair the subrogation rights of the Guarantor or may preclude from
obtaining reimbursement, contribution, indemnification or other recovery from or
any other guarantor of any Obligation or any other Person;

(ix) any modification, renewal or amendment of
any of the Operative Documents or any agreement, security document, guarantee,
approval, consent or other instrument with respect to any Obligation in any
respect;

(x) any merger or consolidation of, sale of
substantial assets by or other restructuring or termination of the corporate
existence of the Guaranteed Party into or with any other Person, or any
consent thereto;

(xi) any change in the ownership of any of the
partnership interests in the Guaranteed Party;

(xii) any regulatory change or other governmental
action;

(xiii) any legal disability, incapacity or other
similar defense of the Guaranteed Party with respect to the Obligations (other
than payment and performance) or any other guarantor of any Obligation;

(xiv) the cessation, for any cause whatsoever, of
the liability of a Guaranteed Party (other than, subject to Section 2 hereof,
by reason of the full and final payment and performance of all Obligations);

(xv) a Guaranteed Party's entering into any of the
Operative Documents being invalid or in excess of the powers of a Guaranteed
Party or of any Person purporting to act on the Guaranteed Party's behalf;

(xvi) any transfer or assignment of the rights of a
Guaranteed Party pursuant to any of the Operative Documents or any other
agreements, documents or instruments relating to the transactions contemplated
thereby;

(xvii) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar proceeding with
respect to a Guaranteed Party or any of their respective properties, or any
action taken

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by any trustee or receiver or by any court in any such proceeding;

(xviii) any exchange, release or non-perfection of
any collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations; or

(xix) any pursuit of or failure by the
Beneficiaries to pursue remedies against a Guaranteed Party or any other
guarantor or any collateral for the Obligations;

4. Waiver. The Guarantor hereby waives expressly and
unconditionally (a) acceptance of this Guaranty and proof of reliance by any
Beneficiary hereon, (b) notice of any of the matters referred to above, (c) all
notices that may be required by statute, rule of law or otherwise, now or
hereinafter in effect, to preserve intact any right against the Guarantor,
including, without limitation, any demand for payment or performance, diligence,
presentment, protest and dishonor, proof of notice of nonpayment under any
Operative Document, and notice of default or notice of any failure on the part
of the Guaranteed Party to perform and comply with any covenant, agreement, term
or condition of any Operative Document, (d) any requirement of any Beneficiary
to take any action whatsoever to exhaust any remedies under any Operative
Document and (e) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge, release or defense of a guarantor or
surety, or that might otherwise limit recourse against the Guarantor.

5. Waiver of Subrogation. The Guarantor irrevocably
waives, disclaims and relinquishes all claims against the Guaranteed Party or
any other guarantor which the Guarantor has or would have by virtue of having
executed this Guaranty or otherwise, whether at law or in equity, and,
specifically including but not limited to all rights of indemnity,
reimbursement, contribution or exoneration.

6. Rights to Setoff. In addition to all rights to setoff
against the moneys, securities or other property of the Guarantor given to
Beneficiaries by law, each Beneficiary and each Affiliate thereof shall have a
right of setoff on account of amounts due by the Guarantor to such Beneficiary
against all moneys, securities and other property of the Guarantor now or
hereafter in the possession of or on deposit with such Beneficiary or Affiliate,
whether held in a general or special account or deposit, or for safekeeping or
otherwise; and every such right of setoff may be exercised without demand upon
or notice to the Guarantor, except that any Beneficiary exercising such right of
setoff shall promptly after the exercise thereof give notice thereof to the
Guarantor. No right of setoff shall be deemed to have been waived by any act or
conduct on the part of any Beneficiary or by any neglect to exercise such right
of setoff, or by any delay in so doing; and every right of setoff

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<PAGE> 6
shall continue in full force and effect until specifically waived or released
by an instrument in writing executed by each Beneficiary.

7. Covenants. The Guarantor hereby agrees and covenants
as follows:

(i) at its own expense promptly and duly to
execute and deliver to each Beneficiary such further documents and assurances
and to take such further action as any Beneficiary may from time to time
reasonably request in order to more effectively carry out the intent and purpose
of this Guaranty and to establish and protect the rights and remedies created or
intended to be created in favor of the Beneficiaries hereunder;

(ii) this Guaranty shall continue to be effective
or be reinstated, as the case may be, if at any time any payment or discharge
of any of the Obligations is rescinded or must otherwise be returned by the
Beneficiaries upon the insolvency, bankruptcy or reorganization of the
Guaranteed Party or the Guarantor or otherwise, as though such payment or
discharge had not been made;

(iii) the Guarantor shall pay all expenses incurred
by the Beneficiaries in enforcing this Guaranty and the Obligations (including
reasonable legal fees and expenses);

(iv) the Guarantor assumes the responsibility for
being and keeping informed of the financial condition of Guaranteed Party and
of all other circumstances bearing upon the risk of nonpayment of the
Obligations which diligent inquiry would reveal, and agrees that no Beneficiary
shall have the duty to advise the Guarantor of information known to it
regarding such condition or any such circumstances; and

(v) without the prior written consent of the
Company, the Guarantor will not (u) reduce the number of Common Shares to be
purchased in the Offer, (v) reduce the purchase price offered pursuant to the
Offer, (w) impose conditions to the Offer in addition to those set forth on
Annex A to the Agreement, (x) change the form of consideration payable in the
Offer, (y) otherwise amend the Offer (other than amendments which are not
adverse to the Company or its shareholders) or (z) extend the time of the
expiration of the Offer if all conditions to the Offer are then, as provided
in the Offer, satisfied or waived.

8. Representations. The Guarantor hereby represents and
warrants to each Beneficiary as follows:

(i) The Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
Republic of Italy and has all requisite corporate power and authority to own,
lease and operate its properties and assets and to carry on its businesses as
they are now being conducted.

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(ii) The Guarantor has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
approved by the Board of Directors of the Guarantor and its stockholders, if
necessary, and no other corporate proceedings on the part of the Guarantor are
necessary to consummate the transactions so contemplated. This Agreement has
been duly executed and delivered by the Guarantor and constitutes a valid and
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms.

(iii) Neither the execution and delivery of this
Guaranty by the Guarantor nor the consummation by the Guarantor of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of its articles of incorporation or bylaws (or comparable
governing instruments), (b) violate, conflict with, constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required
by, or result in the creation of any lien or other encumbrance (except as
contemplated by the financing transaction provided for in the Commitment Letter
referred to in Section 3.4 of the Agreement) upon any of the properties or
assets of the Guarantor or any of its subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease agreement or other instrument or obligation to which the
Guarantor or any such subsidiary is a party or to which they or any of their
respective properties or assets are subject, except for such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens or other encumbrances, which would not reasonably be expected to have,
individually or in the aggregate, the effect of preventing or materially
delaying the Guarantor from performing its obligations under this Agreement, or
(c) require any consent, approval, authorization or permit of or from, or
filing with or notification to, any court, governmental authority or other
regulatory or administrative agency or commission, domestic or foreign
("Governmental Entity"), except consents, approvals, authorizations, permits,
filings or notifications which if not obtained or made would not reasonably be
expected to have, individually or in the aggregate, the effect of preventing or
materially delaying the Guarantor from performing its obligations under this
Guaranty.

9. Assignment. This Guaranty shall be binding upon the
Guarantor and its permitted successors and assigns and shall inure to the
benefit of Beneficiaries and their respective permitted successors and assigns.
Each Beneficiary and its permitted successors and assigns may assign this
Guaranty or any of its rights and powers hereunder, and in such event the
assignee shall have the same rights and remedies as if originally named herein
in place of such Beneficiary. The Guarantor may not

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assign this Guaranty or any of the rights or powers hereunder without the prior
written consent of the Beneficiaries.

10. Rights to Deal with Guaranteed Party. At any time
and from time to time, without terminating, affecting or impairing the validity
of this Guaranty or the obligations of the Guarantor hereunder, any Beneficiary
may deal with a Guaranteed Party in the same manner and as fully as if this
Guaranty did not exist and shall be entitled, among other things, to grant such
Guaranteed Party such extension or extensions of time to perform, or to waive
any obligation of such Guaranteed Party to perform, any act or acts as may to
such Beneficiary be deemed advisable, and no such waiver or extension shall in
any way limit or otherwise affect any of the Guarantor's obligations hereunder.

11. Currency of Payment. The Guarantor acknowledges and
agrees that this is an international transaction in which the specification of
the lawful currency of the United States of America is of the essence and that
the lawful currency of the United States of America shall be the currency of
account in any and all events and guarantees that the Obligations will be paid
in lawful and available funds strictly in accordance with the terms and
provisions of the Operative Documents, regardless of any law, regulation or
decree now or hereafter in effect that might in any manner affect the
Obligations or the rights of any Beneficiary with respect thereto as against a
Guaranteed Party, or cause or permit to be invoked any alteration in the time,
amount or manner of payment by a Guaranteed Party of any or all of the
Obligations. The obligation of the Guarantor hereunder to make payment in the
lawful currency of the United States of America to any Beneficiary shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment or
otherwise expressed in or converted into any other currency except to the extent
that such tender or recovery results in the effective receipt by such
Beneficiary of the full amount in the lawful currency of the United States of
America payable to it under this Guaranty, and the Guarantor shall indemnify
each Beneficiary for any difference between such full amount and the amount
effectively received by it pursuant to any such tender or recovery which occurs
as a result of costs of converting such tender or recovery into United States
Dollars and differing exchange rates and costs and reasonable expenses incident
thereto, and such Beneficiary shall have an additional claim against the
Guarantor for the additional amount necessary to yield the amount of the lawful
currency of the United States of America due and owing to such Beneficiary,
which difference the Guarantor shall promptly pay to such Beneficiary.

12. Addresses for Notices. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Guaranty must be in writing and will be deemed to have been given when
delivered personally or sent by telecopy or four Business Days after being
mailed by certified or registered mail, return receipt requested and postage
prepaid, to

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the recipient at the address specified in the Agreement, or, as to the Guarantor
at c/o Avant-Garde Optics, Inc., 44 Harbor Park Drive, Port Washington, New York
11050 Attention: Michael Boxer, Esq., telecopy: (516) 484-9010 or as to any
party, at such other address as shall be designated by such party in a written
notice to the other party.

13. No Waiver; Remedies; No Inquiry. No failure on the
part of any of the Beneficiaries to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law, and the rights of each of the Beneficiaries herein are supplemental to, and
not in lieu of, any rights of each of the Beneficiaries under the Operative
Document. It is not and shall not be necessary for any of the Beneficiaries to
inquire into the powers of a Guaranteed Party or the officers or agents acting
or purporting to act on a Guaranteed Party's behalf and any Obligations made or
created in reliance upon the professed exercise of such powers shall be governed
hereunder.

14. Continuing Guaranty. This Guaranty is a continuing
guaranty and shall remain in full force and effect until payment and performance
in full of the Obligations.

15. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by the Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by each and all of the Beneficiaries, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.

16. Governing Law. This Guaranty shall be governed by,
and construed in accordance with, the laws of the State of New York (without
giving effect to any principles of conflicts of law).

17. Headings. Headings of the articles and sections of
this Guaranty are inserted for convenience only and shall not be deemed to
constitute a part hereof.

18. Jurisdiction; Service; Etc. The Guarantor hereby
submits to the non-exclusive jurisdiction of the courts of the State of Ohio
located in the County of Hamilton, the federal courts of the United States of
America located in such State and County in respect to the interpretation and
enforcement of the provisions hereof and of the documents referred to herein,
and hereby waives, and agrees not to assert, as a defense in any action, suit
or proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not

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maintainable in said courts or that this Guaranty or any of such documents may
not be enforced in or by said courts or that its property is exempt or immune
from execution, that the suit, action or proceeding is brought in an
inconvenient forum, or that the venue of the suit, action or proceeding is
improper. The Guarantor agrees that service of process may be made upon it by
service upon Avant-Garde Optics, Inc. at 44 Harbor Park Drive, Port Washington,
New York 11050 in any action, suit or proceeding against the Guarantor with
respect to this Guaranty or any of the documents referred to herein, and hereby
irrevocably designates and appoints the Guaranteed Party as its agent upon which
process may be served in any action, suit or proceeding, it being understood
that such appointment and designation shall become effective without any further
action on the part of the Guarantor or the Guaranteed Party. Final judgment
against the Guarantor in any action, suit or proceeding shall be conclusive
evidence of the fact and amount of indebtedness arising from such judgment a
certified copy of which shall be conclusive evidence of the fact and amount of
indebtedness arising from such judgment.

19. Severability. Any provision of this Guaranty which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the Guarantor hereby waives any provision of law
which renders any provision of this Guaranty prohibited or unenforceable in any
respect.

20. Entire Agreement. This Guaranty supersedes any prior
agreements and understandings between the Guarantor and the Beneficiaries with
respect to the subject matter hereof and is the complete agreement of the
Guarantor and the Beneficiaries with respect to the subject matter hereof.

21. Payments Free and Clear of Taxes. All payments
required to be made by the Guarantor hereunder shall be made free and clear of,
and without deduction for, any and all present and future taxes, withholdings,
levies, duties, and other governmental charges.

22. Commercial Obligations and Sovereign Immunity. The
Guarantor represents and warrants that it is subject to civil and commercial
law with respect to its obligations under this Guaranty that the making and
performance of this Guaranty by the Guarantor constitute private and commercial
acts rather than governmental or public acts and that neither the Guarantor nor
any of its revenues or assets have any right of immunity in Italy from suit,
court jurisdiction, attachment prior to judgment, attachment in aid of
execution of a judgment, set-off, execution of a judgment or any other legal
process with respect to its obligations under this Guaranty. To the extent
that the

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Guarantor may hereafter be entitled, in any jurisdiction in which judicial
proceedings may at any time be commenced with respect to this Guaranty (or any
judgment entered by any court in respect thereof), to claim for itself or its
revenues or assets any such immunity, and to the extent that in any such
jurisdiction there may be attributed to the Guarantor such an immunity (whether
or not claimed), the Guarantor hereby waives such immunity and hereby consents
to such proceedings.

23. Arbitration. Any dispute, controversy or claim
between the Guarantor and any Beneficiary arising out of or relating to this
Guaranty or the execution, interpretation, validity, performance, breach or
termination hereof which is not finally resolved by the Guarantor and such
Beneficiary will be conclusively settled by arbitration. The Guarantor or such
Beneficiary may initiate arbitration proceedings by filing a demand for
arbitration with the other party and the Cincinnati, Ohio office of the
American Arbitration Association ("AAA"). All arbitration proceedings will be
conducted by a panel of three arbitrators. The parties to such dispute each
will select an arbitrator and the two arbitrators so chosen will select the
third arbitrator. The third arbitrator will be a member of a nationally
recognized firm of U.S. independent certified public accountants other than a
firm that is then engaged by either of such parties. The arbitration
proceedings will be conducted in accordance with the rules of the AAA. All
arbitration proceedings will be held in Cincinnati, Ohio. Within a reasonable
period of time following the conclusion of such proceedings, the arbitration
panel will render a written decision. Decisions of the arbitration panel will
be made by a majority of the panel members. The decision rendered by the
arbitration panel will be final and binding and be enforceable by appropriate
action brought in any state or federal court of competent jurisdiction.

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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be duly executed and delivered by its officers thereunto duly authorized as of
the date first above written.

LUXOTTICA GROUP S.p.A.

By: /s/ Claudio Del Vecchio
--------------------------------
Name: Claudio Del Vecchio

<PAGE> 1
EXHIBIT 37

THE UNITED STATES SHOE CORPORATION
TOTAL RETURN TO SHAREHOLDERS PLAN

1. PURPOSE.

The purpose of The United States Shoe Corporation Total Return to
Shareholders Plan (the "Plan") is to further the long-term growth of The United
States Shoe Corporation (the "Company") by offering competitive incentive
compensation related to long-term performance goals to those key officers and
employees of the Company and its subsidiaries who will be responsible for
planning and directing such growth. The Plan is also intended as a means of
reinforcing the commonality of interest between the Company's shareowners and
the key officers and employees who are participating in the Plan, and as an aid
in attracting and retaining key officers and employees of outstanding abilities
and specialized skills.

2. ADMINISTRATION.

2.1 The Plan shall be administered by the Compensation Committee of the
Company's Board of Directors (the "Committee"), none of the members of which may
be an employee of the Company or of any subsidiary of the Company.

2.2 Subject to the limitations of the Plan, the Committee shall have the
sole and complete authority (a) to select from the salaried employees of the
Company and its subsidiaries those employees who shall participate in the Plan
("Participants"), (b) to impose such limitations, restrictions and conditions
upon awards as it shall deem appropriate, (c) to interpret the Plan and to
adopt, amend and rescind administrative guidelines and other rules and
regulations relating to the Plan, and (d) to make all other determinations and
to take all other actions necessary or advisable for the proper administration
of the Plan. Determinations of value under the Plan shall be made in accordance
with the methods and procedures established by the Committee. The Committee's
determinations on matters within its authority shall be final, conclusive and
binding on the Company and on all other parties.

3. TARGET AWARDS.

Before the beginning of each Performance Period, the Committee shall select
those employees who will participate in the Plan for that Performance Period and
shall establish a Target Award for each such Participant, which shall be a
dollar amount equal to the applicable percentage of the salary midpoint for the
grade level to which the Participant is assigned. As used herein (a) Performance
Period means a 39-month period beginning on January 1 and ending on the fourth
succeeding March 31, with the first Performance Period beginning on January 1,
1992 and a new Performance Period beginning on January 1 of each succeeding
year, (b) "grade level" means the numerical level of the position to which an
employee of the Company is assigned by the Company for the purpose, among
others, of determining the employee's compensation, (c) "salary midpoint" means
the dollar amount fixed by the Company for each grade level for the purpose of
determining the range of compensation to be paid to employees at that grade
level, and (d) "applicable percentage" means the percentage determined by the

<PAGE> 2

Committee that is applied to the salary midpoint for each grade level for the
purpose of determining the dollar amount of the Target Award. If a Participant's
grade level changes during a Performance Period, the Participant's Target Award
will be adjusted based on the number of months the Participant was assigned to
each grade level.

4. Total Shareholder Return; Target Award Maximum Distributable Amount.

4.1 After the end of each Performance Period, for the purpose of
determining the maximum amount of the Target Award that can be distributed to
each Participant (the "Target Award Maximum Distributable Amount"), the
Committee shall determine the Total Shareholder Return of the Company and of
each of the twenty-one companies (subject to the changes contemplated by Section
6.2) listed on Schedule A (the "Peer Companies") for that Performance Period and
shall determine the percentile ranking of the Company among the Peer Companies
by (a) dividing the number of Peer Companies having a Total Shareholder Return
less than that of the Company for that Performance Period by (b) the total
number of Peer Companies (excluding the Company). Total Shareholder Return with
respect to the Company or with respect to a Peer Company shall be determined by
comparing the value of an investment in 100 common shares of the Company and
each Peer Company made at the beginning of each Performance Period, measured by
the average of the daily closing prices on the New York Stock Exchange of a
common share of the Company, or on the New York Stock Exchange, other national
stock exchange or national securities price quotation system, of a common share
of the Peer Company with respect to which Total Shareholder Return is being
determined for each trading day between January 1 and March 31 of the first year
of the Performance Period, with the value of that investment at the end of the
Performance Period, measured by the average of the daily closing prices of the
shares being valued on the New York Stock Exchange, other national securities
exchange or national securities price quotation system for each trading day
between January 1 and March 31 at the end of the Performance Period, assuming
for this purpose that all dividends and cash distributions paid with respect
to such investment were reinvested, on the last day of the month in which such
dividend was paid or distribution made, in additional shares of the corporation
paying such dividend or making such distribution at the closing price on such
last day of such shares on the New York Stock Exchange, other national
securities exchange or national securities price quotation system.

4.2 The Target Award Maximum Distributable Amount shall be determined by
the Committee in the following manner:
<TABLE>
<CAPTION>

The maximum percentage of the
If the percentile ranking of Participant's Target Award that
the Company is: can be distributed is:
---------------------------- -------------------------------
<S> <C>
90th Percentile and Above 200%
80th Percentile 175%
70th Percentile 150%
60th Percentile 125%
50th Percentile 100%
40th Percentile 50%
Below 40th Percentile 0%
</TABLE>

- 2 -

<PAGE> 3

If the percentile ranking of the Company (the "Actual Percentile") is
between two of the percentiles listed in the above table (the "Higher
Percentile" and the "Lower Percentile", respectively) the maximum percentage
that can be distributed shall be (a) that percentage listed opposite the Lower
Percentile increased by (b) that additional percentage determined by (i)
multiplying the difference between the Actual Percentile and the Lower
Percentile by 10, and (ii) multiplying the resulting percentage by the
difference between (A) the percentage to be distributed set forth opposite the
Higher Percentile and (B) the percentage to be distributed set forth opposite
the Lower Percentile.

4.3 With respect to the Performance Period beginning on January 1, 1992 a
Participant's Final Award cannot exceed one-third of the Target Award Maximum
Distributable Amount determined under Section 4.2, and with respect to the
Performance Period beginning on January 1, 1993 a Participant's Final Award
cannot exceed two-thirds of the Target Award Maximum Distributable Amount
determined under Section 4.2. However, each Participant will also be eligible to
receive an award pursuant to the 1992 and 1993 performance plans established
under the Company's Key Executive Long Term Incentive Plan (the "SVI Plan").

4.4 After determining the Target Award Maximum Distributable Amount, the
Committee shall then determine the amount to be distributed to each Participant,
which for any Participant may be his or her Target Award Maximum Distributable
Amount or such lesser amount as the Committee, in its sole discretion, deems
appropriate for that Participant. The amount so determined by the Committee to
be distributed to a Participant is hereinafter referred to as the "Final Award".

4.5 If prior to the end of any Performance Period a Participant's
employment with the Company or any of its subsidiaries terminates by reason of
the Participant's death, disability or retirement at age 65 under the terms of a
qualified retirement plan of the Company, the Participant shall be eligible to
receive a Final Award for that Performance Period. In such event, however, the
Target Award Maximum Distributable Amount shall be reduced to that amount which
bears the same ratio to the Target Award Maximum Distributable Amount determined
under Section 4.2 as the number of months the Participant was employed during
such Performance Period (including the month in which such employment
terminated) bears to 39. If prior to the end of any Performance Period a
Participant's employment with the Company or any of its subsidiaries terminates
for any reason other than as set forth in the first sentence of this Section
4.5, the Participant shall not be eligible to receive a Final Award for that
Performance Period.

4.6 If the employment of a Participant by the Company or any of its
subsidiaries commences after the beginning of a Performance Period or the
Participant's eligibility to participate in the Plan changes during a
Performance Period, the Participant shall be eligible to receive a Final Award
for that Performance Period. In such event, however, the Target Award Maximum
Distributable Amount shall be reduced, with respect to any Performance Period
that begins on or after January 1, 1995, to that amount which bears the same
ratio to the Target Award Maximum Distributable Amount determined under Section
4.2 as the number of months

- 3 -
<PAGE> 4

the Participant was employed or was eligible to participate in the Plan during
such Performance Period (including the month in which the Participant's
employment began or the change in eligibility occurred) bears to 39.

4.7 In the event of a Change in Control of the Company as to any
Participant (as defined in Section 9) prior to the end of any Performance
Period, the Participant shall be entitled to receive a Final Award for that
Performance Period equal to that amount which bears the same ratio to the Target
Award Maximum Distributable Amount determined under Section 4.2 as the number of
months in such Performance Period prior to the date of the Change in Control
(including the month in which the Change in Control occurs) bears to 39, and the
Participant thereupon shall cease to be a Participant in the Plan. For the
purpose of this Section 4.6 any such Performance Period shall end on the date of
the Change in Control.

5. FINAL AWARD; RESTRICTED SHARES.

A Participant's Final Award shall be distributed to the Participant in the
form of either cash or common shares of the Company (the "Restricted Shares"),
as the Committee may determine. The number of Restricted Shares to be
distributed shall be determined by dividing the dollar amount of the
Participant's Final Award by the average of the high and the low prices on the
New York Stock Exchange of a common share of the Company on the trading day
preceding the day on which the Committee determines the amount of the
Participant's Final Award. The Restricted Shares shall be subject to the
following terms and conditions in the hands of the Participant:

(a) A certificate or certificates for the Restricted Shares shall
be issued in the Participant's name, and the Participant thereupon shall be a
shareholder of all of the shares represented by such certificate or
certificates. As such, except as otherwise provided herein, the Participant
shall have all the rights of a shareholder with respect to such shares,
including the right to vote them and to receive all dividends and other
distributions paid with respect to them.

(b) The term "Restriction Period" with respect to any Restricted
Shares (after which the restrictions set forth in this Section 5 shall lapse)
means the three-year period beginning on April 1 next following the close of the
Performance Period with respect to which those Restricted Shares are distributed
to the Participant.

(c) Restricted Shares may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of during the Restriction Period
attributable to such Restricted Shares. All restrictions with respect to
Restricted Shares will lapse at the end of the Restriction Period attributable
to such Restricted Shares.

(d) If prior to the end of any Restriction Period the
Participant's employment with the Company or any of its subsidiaries terminates
by reason of the Participant's death, disability or retirement at age 65 under
the terms of a qualified retirement

- 4 -
<PAGE> 5

plan of the Company, or if there is a Change in Control of the Company as to the
Participant (as defined in Section 9), the restrictions set forth in this
Section 5 with respect to the Restricted Shares will thereupon lapse
immediately. If prior to the end of any Restriction Period the Participant's
employment with the Company or any of its Subsidiaries terminates for any reason
other than as set forth in the preceding sentence, the Restricted Shares shall
be forfeited by the Participant. In any such case, the Participant shall no
longer have the rights of a shareholder with respect to such shares, which shall
be deemed cancelled, and the share certificates representing such Restricted
Shares shall be returned forthwith to the Company.

(e) Except as provided in Section 9 with respect to a Change in
Control, in the event of any change in the outstanding common shares of the
Company by reason of any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization, combination or exchange of shares or other
similar event, or in the event the Participant receives any shares or other
securities of the Company or of any other corporation in respect of the
Restricted Shares (including, but not limited to, by way of a dividend or other
distribution on such Restricted Shares), any such shares or other securities
received by the Participant in respect of the Restricted Shares awarded to the
Participant shall be subject to the same terms, conditions and restrictions
specified herein to the extent that, and in such manner as, the Committee shall
determine, and any such determination by the Committee shall be final,
conclusive and binding on all parties concerned.

(f) If the Company, in its sole discretion, determines that the
Company or any subsidiary or other person has incurred or will incur any
liability to withhold any federal, state or local income or other taxes by
reason of the distribution of the Restricted Shares to the Participant or the
lapse or release of the restrictions on such Restricted Shares, the Participant
will, promptly upon demand therefor by the Company, pay to the Company any
amount reasonably requested by it for the purpose of satisfying such liability.
If the amount so requested is not paid, the Restricted Shares shall remain
subject to the restrictions set forth in this Section 5, and the Company may
refuse to permit the issuance and delivery to the Participant of the share
certificates representing such Restricted Shares or the transfer of such shares
by the Participant, as the case may be, until such liability has been satisfied.

(g) If the Committee, in its sole discretion, determines that the
listing upon any securities exchange or registration or qualification under any
federal, state or local law of any Restricted Shares to be distributed to the
Participant is necessary or desirable, issuance and/or delivery to the
Participant of the share certificates representing such Restricted Shares shall
not be made until such listing, registration or qualification shall have been
completed or until the Participant shall have agreed that the shares may be
issued, transferred or delivered to the Participant subject to any restrictions
or other limitations that will make it unnecessary to effect or obtain such
listing, registration and/or qualification.

- 5 -
<PAGE> 6
6. ADJUSTMENTS.

6.1 If an extraordinary change occurs during any Performance
Period which significantly alters the basis upon which the performance levels
and/or Target Awards were established under Section 3, the Committee may make
adjustments (whether before or after the end of that Performance Period) in
such performance levels and/or Target Awards to reflect such change, in order
to avoid distortion in the operation of the Plan and to preserve the incentive
features of the Plan, to the extent it deems appropriate, in its sole
discretion, which determination shall be final, conclusive and binding upon all
parties concerned.

6.2 In the event of a merger, consolidation, reorganization or
other material corporate event involving a Peer Company, or in the event of a
material change in the business of a Peer Company, the Committee may take such
action as it deems appropriate to avoid distortion in the operation of the
Plan, including, but not limited to, eliminating such Peer Company and/or
substituting another company for such Peer Company for all or part of the
Performance Period, whereupon Schedule A and all relevant computations under
Section 4.1 shall be adjusted accordingly.

7. OTHER CONDITIONS.

7.1 Awards may not be assigned or alienated.

7.2 Neither the Plan nor any action taken hereunder shall be
construed as giving any employee the right to be retained in the employ of the
Company.

8. DESIGNATION OF BENEFICIARIES.

A Participant may designate a beneficiary or beneficiaries to receive
all or part of the Final Award to be distributed under the Plan in case of the
Participant's death. A designation of beneficiary may be replaced by a new
designation or may be revoked by the Participant at any time. Such designation
or revocation shall be on a form to be provided by the Company for that purpose
and shall be signed by the Participant and delivered to the Company by the
Participant prior to his or her death. The amount to be distributed to any
Participant under the terms and conditions of the Plan with respect to which a
designation of beneficiary has been made (to the extent it is valid and
enforceable under applicable law) shall be distributed, subject to such terms
and conditions, to the designated beneficiary or beneficiaries. The amount
distributable to a Participant upon death that is not subject to such a
designation shall be distributed to the Participant's estate. If there shall
be any question as to the legal right of any beneficiary to receive a
distribution, the amount in question may be paid to the Participant's estate,
in which event the Company shall have no further liability to anyone with
respect to such amount.

- 6 -
<PAGE> 7

9. CHANGE IN CONTROL.

A Change in Control of the Company as to any Participant shall be
deemed to have occurred if:

(a) there shall be consummated any consolidation or
merger of the Company and, as a result of such consolidation or merger (i) less
than 50% of the outstanding common shares and 50% of the voting shares of the
surviving or resulting corporation are owned, immediately after such
consolidation or merger, by the owners of the Company's common shares
immediately prior to such consolidation or merger, or (ii) any person (as such
term is used in Section 13(d) and 14(d) (2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) shall become the beneficial owner
(within the meaning of Rule 13d- 3 under the Exchange Act) of 25% or more of
the surviving or resulting corporation's outstanding common shares; or

(b) there shall be consummated any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company; or

(i) any sale, lease, exchange or other
transfer (other than a transfer to a Subsidiary of the Company) of all, or
substantially all, of the assets of one or more of the Company's Women's
Apparel Retailing Group, the Footwear Group or the Optical Retailing Group
(collectively the "Company Groups"), or the complete, or substantially
complete, termination of the business of one or more of the Company Groups,
unless, in either event, immediately thereafter all, or substantially all, of
the assets of two of the Company Groups are owned by the Company and/or a
Subsidiary of the Company and the Participant is, and prior thereto had been,
assigned to one of such Company Groups or to the Corporate Center Group (as
used in this Section 2(c) the term "Subsidiary of the Company" means any
corporation at least 51% of the outstanding common shares and 51% of the voting
shares of which are owned by the Company, and all references to a
"distribution" of any of such shares by the Company to its shareholders
includes distributions that are pro rata or in exchange for shares of the
Company); or

(ii) any consolidation or merger of a
Subsidiary of the Company owning all, or substantially all, of the assets of
one or more of the Company Groups, or any sale, exchange or other transfer of
the shares of any such Subsidiary (other than a distribution of such shares by
the Company to its shareholders) if, as a result thereof, such Subsidiary
ceases to be a Subsidiary of the Company, unless immediately thereafter all, or
substantially all, of the assets of two of the Company Groups are owned by the
Company and/or a Subsidiary of the Company and the Participant is, and prior
thereto had been, assigned to one of such Company Groups or to the Corporate
Center Group; or

- 7 -
<PAGE> 8

(iii) any distribution by the Company to its
shareholders of some or all of the shares of a Subsidiary of the Company owning
all, or substantially all, of the assets of one of the Company Groups if, as a
result of such distribution, such Subsidiary ceases to be a Subsidiary of the
Company, unless immediately thereafter all, or substantially all, of the assets
of two of the Company Groups are owned by the Company and/or a Subsidiary of
the Company and the Participant is, and prior thereto had been, assigned to one
of such Company Groups or to the Corporate Center Group; or

(iv) Any distribution by the Company to its
shareholders of some or all of the shares of a Subsidiary of the Company owning
all, or substantially all, of the assets of two of the Company Groups if, as a
result of such distribution, such Subsidiary ceases to be a Subsidiary of the
Company, unless immediately thereafter the Participant is, and prior thereto
had been, assigned to one of such Company Groups or to the Corporate Center
Group; or

(d) the shareholders of the Company shall approve
any plan or proposal for the liquidation or dissolution of Company; or

(e) any person (as such term is used in Sections
13(d) and 14(d) (2) of the Exchange Act) shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 25% or more of the
Company's outstanding common shares; or

(f) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire Board of
Directors of the Company shall cease for any reason to constitute a majority
thereof unless the election or the nomination for election by the Company's
shareholders of each new director was approved by a vote of at least two-
thirds of the directors then still in office who were directors at the
beginning of the period.

10. MODIFICATION OR TERMINATION OF PLAN.

Notwithstanding any other provision herein to the contrary, the
Committee may amend, suspend or terminate the Plan in whole or in part at any
time if it determines, in its sole discretion, that such action is necessary or
advisable under the circumstances.

IN WITNESS WHEREOF, the United States Shoe Corporation has hereunto
caused its name to be subscribed this 24th day of April, 1995.

THE UNITED STATES SHOE CORPORATION

By: /s/ K. Brent Somers
-------------------------------

- 8 -

<PAGE> 9
Schedule A

TOTAL RETURN TO SHAREHOLDERS PLAN

PEER COMPANIES

Ann Taylor Stores
Baker (J.) Inc.
Brown Group, Inc.
Burlington Coat Factory Warehouse Corp.
Charming Shoppes, Inc.
Clothestime, Inc.
Dayton Hudson Corp.
Dress Barn, Inc.
Edison Brothers Stores, Inc.
Gantos, Inc.
Gap, Inc.
Genesco, Inc.
The Limited, Inc.
May Department Stores Co.
Melville Corp.
Merry-Go-Round Enterprises, Inc.
Nordstrom, Inc.
Petrie Stores Corporation
Stride Rite Corp.
TJX Companies, Inc.
Woolworth Corporation

- 9 -

<PAGE> 1

EXHIBIT 38
THE UNITED STATES SHOE CORPORATION

SUPPLEMENTAL EXECUTIVE SALARIED EMPLOYEES BENEFIT PLAN

(AS AMENDED EFFECTIVE APRIL 21, 1995)

1. This plan shall be known as The United States Shoe Corporation
Supplemental Executive Salaried Employees Benefit Plan (the "Supplemental
Plan"). The purpose of the Supplemental Plan is to provide unfunded
supplemental retirement and death benefits to certain Participants in The
United States Shoe Corporation Pension Plan (the "Pension Plan") and their
beneficiaries.

2. If the amount of any benefit otherwise payable to any
Participant or beneficiary under the terms of the Pension Plan is limited by
reason of the limitations contained in section 401(a)(17) or section 415 of the
Internal Revenue Code of 1986, or by reason of the Participant's participation
in The United States Shoe Corporation Supplemental Deferred Compensation Plan
or The United States Shoe Corporation Corporate Deferred Compensation Plan or
if the amount of such benefit is less than it would have been if the Pension
Plan benefit formula in effect on December 31, 1988 had continued in effect,
the Participant or his beneficiary (as the case may be) shall be entitled to
receive from the Supplemental Plan an amount equal to the difference between
the benefit payable to the Participant or his beneficiary under the Pension
Plan and the amount which would have been payable to the Participant or his
beneficiary under the Pension Plan if the Pension Plan had not been subject to
the limitations contained in sections 401(a)(17) and 415 of the Internal
Revenue Code, and if the Participant had not participated in The United States
Shoe Corporation Supplemental Deferred Compensation Plan or The United States
Shoe Corporation Corporate Deferred Compensation Plan and if the Pension Plan
benefit formula in effect on December 31, 1988 had continued in effect.

3. Notwithstanding any other provision herein, the benefits payable
under the Supplemental Plan shall be paid out of the general assets of The
United States Shoe Corporation (the "Company") and shall not be funded in any
manner. No person shall have any interest in any specific assets or assets of
the Company by reason of the Supplemental Plan.

4. The Supplemental Plan shall be administered by the Retirement
Committee of the Board of Directors of the Company. The Retirement Committee
shall determine the amount and manner of payment of the benefits due to any
person from the Supplemental Plan and shall cause them to be paid by the
Company. The decisions made by and the actions taken by the Retirement
Committee in the administration of the Supplemental Plan shall be final and
conclusive on all persons.

5. While the Company intends to maintain the Supplemental Plan as
long as it maintains the Pension Plan, the Company reserves the right to amend
and/or terminate the Supplemental Plan at any time for whatever reasons it may
deem appropriate.

<PAGE> 2

6. Nothing contained in the Supplemental Plan shall be construed
as a contract of employment between the Company and any employee, or as a right
to any employee to be continued in the employment of the Company or as a
limitation on the right of the Company to discharge any of its employees, with
or without cause.

7. The benefits payable under the Supplemental Plan may not be
assigned or alienated.

8. The Supplemental Plan shall be governed by the laws of the
State of Ohio.

9. Notwithstanding the foregoing, in the case of a Participant
who is an active or retired Corporate Center Group employee, the present value
of the Participant's accrued benefit under this Supplemental Plan (determined
immediately prior to the Merger Date) shall be paid out to the Participant in
one lump sum immediately prior to the Merger Date. For purposes hereof,
"Merger Date" means the date of the merger of Luxottica Acquisition Corp. into
The United States Shoe Corporation.

IN WITNESS WHEREOF, The United States Shoe Corporation has hereunto
caused its named to be subscribed this 20th day of April, 1995.

THE UNITED STATES SHOE CORPORATION

By /s/ Robert J. Petrik
-------------------------------

<PAGE> 1

EXHIBIT 39
THE UNITED STATES SHOE CORPORATION

RETIREMENT PLAN FOR OUTSIDE DIRECTORS

1. PURPOSE

The purpose of The United States Shoe Corporation Retirement Plan for
Outside Directors is to provide retirement benefits for non-employee members of
the Board of Directors of The United States Shoe Corporation and to aid The
United States Shoe Corporation in continuing to attract and retain highly
qualified directors.

2. DEFINITIONS

2.1 "Board" shall mean the Board of Directors of the Company.

2.2 "Company" shall mean The United States Shoe Corporation.

2.3 "Credited Service" shall mean active service as an Outside
Director, including service as an Outside Director prior to the Effective Date.
One year of Credited Service shall be given for each twelve full months of
Credited Service, whether or not consecutive. A fraction of a year of Credited
Service shall be rounded up or down to the nearest whole year.

2.4 Effective Date" shall mean February 2, 1995.

2.5 "Outside Director" shall mean any member of the Board who is
not an employee of the Company or any subsidiary of the Company.

2.6 "Plan" shall mean The United States Shoe Corporation
Retirement Plan for Outside Directors, as set forth in this document, as
amended from time to time.

2.7 "Retainer" shall mean the annual fee established by the Board
for non-employee members of the Board, but shall exclude meeting fees, fees for
serving as chair of a committee of the Board and expense reimbursements.

2.8 "Retainer Payment Date" shall mean the last business day of
each February, May, August and November after the Effective Date.

3. RETIREMENT BENEFITS

3.1 Except as otherwise provided herein, if an Outside Director
who has at least five years of Credited Service ceases to be a member of the
Board on or after the Effective Date for any reason other than his or her
death, he or she shall be entitled to receive a quarterly retirement benefit
equal to the one-fourth of the annual Retainer in effect on the date he or she
ceased to be a member of the Board.

<PAGE> 2

3.2 Each installment of an Outside Director's retirement benefit
shall be payable on a Retainer Payment Date, beginning with the Retainer
Payment Date next following the date on which he or she ceases to be a member
of the Board (or, if later, the Retainer Payment Date coinciding with or next
following the date on which he or she attains age 72) and continuing for his or
her life.

3.3 No retirement benefit shall be payable under the Plan to an
Outside Director who dies while a member of the Board or after ceasing to be a
member of the Board but prior to attaining age 72. In the event of the death
of an Outside Director who is receiving a retirement benefit under the Plan,
such retirement benefit shall thereupon terminate.

4. PLAN ADMINISTRATION

The Board shall have full power and authority to administer the Plan,
including, but not limited to, the power to adopt rules and regulations for
carrying out the Plan, the power to settle any disputes as to rights or
benefits arising under the Plan, the power to interpret, construe and implement
the provisions of the Plan, and the power to make such decisions or take such
actions as the Board, in its sole discretion, deems necessary or advisable to
aid in the proper administration of the Plan.

5. NONALIENATION OF BENEFITS

No benefit payable under the Plan may be accelerated, assigned,
borrowed, pledged, mortgaged, or hypothecated and, to the extent permitted by
law, no such benefit shall be subject to legal process or attachment for the
payment of any claims against any person entitled to receive Plan benefits.

6. AMENDMENTS

This Plan may be amended, modified or terminated by the Board at any
time. No amendment, modification or termination shall reduce or adversely
affect the accrued benefit payable under the Plan to any Outside Director or
former Outside Director without his or her consent.

7. WITHHOLDING

Payments made by the Company under the Plan shall be subject to
withholding at the time of such payment, as shall be required under any
applicable income tax or other law, whether federal, state or local.

8. FUNDING

No benefit under the Plan shall be secured by any specific assets of
the Company, nor shall any assets of the Company be segregated or designated as
attributable to or allocated to the

-2-

<PAGE> 3

satisfaction of such benefits. Benefit payments shall be made solely from the
Company's general assets, and the persons entitled to receive Plan benefits
shall have the status of general unsecured creditors of the Company with
respect to such payments.

9. GOVERNING LAW

The Plan shall be interpreted, construed and enforced in accordance
with the laws of the State of Ohio.

10. TERMINATION ON MERGER

Notwithstanding the foregoing, immediately prior to the merger of
Luxottica Acquisition Corp. into the Company (the "Merger Date") the Plan shall
terminate and each Outside Director shall receive a lump sum payment which is
the actuarial equivalent of his accrued benefit under the Plan immediately
prior to the Merger Date. For purposes of the Plan, actuarial equivalence
shall be based upon: 1983 Group Annuity Mortality Table with a 50/50
male/female weighting and an interest rate of 7-1/2% per annum

IN WITNESS WHEREOF, The United States Shoe Corporation has hereunto
caused its name to be subscribed on the 21 day of April, 1995.

THE UNITED STATES SHOE CORPORATION

By /s/ K. Brent Somers
--------------------------------

-3-

<PAGE> 1

EXHIBIT 40

April 24, 1995

Dear Shareholder:

I am very pleased to inform you that U.S. Shoe has entered into a merger
agreement under which Luxottica Acquisition Corp., an indirect wholly owned
subsidiary of Luxottica Group S.p.A, will purchase all outstanding Common Shares
of U.S. Shoe at $28 per share in cash.

The transaction will be completed through an amendment of Luxottica's
outstanding tender offer, which will be followed by a second-step merger in
which any shares not acquired in the tender offer will be exchanged for the same
cash price paid in the tender offer. The tender offer is subject to certain
conditions, including that a number of shares be tendered which, when added to
the shares beneficially owned by Luxottica, will represent not less than
two-thirds of the outstanding shares on a fully diluted basis and that the
shareholders of U.S. Shoe authorize the purchase of the shares by Luxottica
pursuant to the Ohio Control Share Acquisition Act. As part of our agreement
with Luxottica, the tender offer is no longer subject to any financing
condition.

We believe that the increase in the offer from $24 to $28 per share, the
elimination of the financing condition and the modification or elimination of
certain other conditions provide substantial improvements over the original
offer made by Luxottica. As a result, and as more fully described in the
attached amendment to the Company's Schedule 14D-9, the revised Luxottica tender
offer and the merger were approved by the unanimous vote of U.S. Shoe's Board of
Directors on April 21, 1995. We urge you to consider carefully the enclosed
Schedule 14D-9, along with the enclosed supplement to Luxottica's Offer to
Purchase and its supplement to the related Letter of Transmittal. These
documents set forth the terms and conditions of Luxottica's tender offer and
provide specifics as to how to tender your shares.

We believe that the revised Luxottica tender offer and the merger agreement
make good our Board's commitment to enhance value in the near term for our
shareholders. We were successful in improving the performance of our optical and
footwear operations in the past year, and we made progress in positioning our
apparel business for a turnaround. The success of our efforts is evidenced by
our earlier agreement to sell our Footwear Division to Nine West for $600
million in cash and warrants and in the Luxottica transaction, which recognizes
and allows us to proceed with the Nine West transaction.

I personally, along with the rest of the Board of Directors, thank you for
the support you have shown us during this process. The Board of Directors
believes that the revised Luxottica transaction is in the best interests of the
Company and its shareholders and recommends that shareholders tender their
Common Shares pursuant to the Luxottica tender offer.

Sincerely,

Bannus B. Hudson
President and Chief Executive Offer

<PAGE> 1
Exhibit 41

Contacts: Robert M. Burton Felicia Vonella
Director of Corporate Communications Dewe Rogerson Inc.
The United States Shoe Corporation (212) 688-6840
(513) 527-7471

Dan Burch
MacKenzie Partners, Inc.
Information Agent
(212) 929-5748

FOR IMMEDIATE RELEASE

U.S. SHOE CORPORATION AND LUXOTTICA ANNOUNCE DEFINITIVE MERGER AGREEMENT

CINCINNATI, Ohio and MILAN, Italy April 21, 1995 -- The United States Shoe
Corporation (NYSE: USR) and Luxottica Group S.p.A. (NYSE: LUX) today announced
they have signed a definitive merger agreement under which Luxottica Acquisition
Corp., an indirect wholly owned subsidiary of Luxottica Group, will purchase all
outstanding common shares of U.S. Shoe for $28 per share in cash. The Boards of
Directors of both companies have unanimously approved the agreement.

The transaction, valued at approximately $1.4 billion, will be effected
through an amendment of Luxottica's outstanding tender offer and is subject to
certain conditions, including the receipt of at least two-thirds of the fully
diluted common shares of U.S. Shoe, and the acquisition being authorized by U.S.
Shoe shareholders at the "831" meeting required under Ohio law. Such meeting is
scheduled for May 5, 1995, but may be adjourned to permit dissemination of
revised proxy materials to U.S. Shoe shareholders. Unless otherwise extended,
the tender is expected to close at midnight on May 5, 1995. U.S. Shoe's
previously announced agreement to sell its footwear business to Nine West for
approximately $600 million in cash and warrants will not be affected by this
merger agreement.

"I am extremely pleased that we have reached a definitive agreement with
Luxottica, making good on our commitment to enhance value in the near term for
our shareholders," said Bannus B. Hudson, President and Chief Executive Officer
of U.S. Shoe. "We were successful in improving the performance of our optical
and footwear operations in the past year, and made progress in positioning our
apparel business for a turnaround. The success of our effort is evident in this
agreement. Two months ago, our Board of Directors embarked on a strategy of
enhancing value in the near term, and this transaction with Luxottica
accomplishes just that for our shareholders."

"We are delighted that an agreement has been executed today between
Luxottica and U.S. Shoe for the combination of the two companies. The
partnership between Luxottica and LensCrafters can now begin in earnest to build
value for our shareholders, independent customers and all consumers who
appreciate quality eyewear products. The future of these combined businesses,
which are both industry leaders in their own rights, is exceptionally
promising," said Claudio Del Vecchio, Managing Director of Luxottica.
<PAGE> 2

U.S. Shoe also announced that the Distribution Date under its Rights
Agreement has been further extended until midnight, New York City time, on
Friday, May 5, 1995, or such later date as the Board of Directors may determine.

The United States Shoe Corporation is a specialty retailer of women's
apparel, optical products and footwear, operating approximately 2,400 retail
outlets and leased departments with such familiar names as Easy Spirit, Casual
Corner, Petite Sophisticate, August Max Woman, and Capezio. The LensCrafters
optical retailing business is the world's leading optical retailer with 604
retail stores.

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.

<PAGE> 1
Exhibit 42

April 21, 1995

Board of Directors
The United States Shoe Corporation
One Eastwood Drive
Cincinnati, Ohio 45227

Members of the Board:

The United States Shoe Corporation ("U.S. Shoe"), Luxottica Acquisition Corp.
("Acquisition Corp.") and Avant-Garde Optics, Inc. ("Avant-Garde") intend to
enter into an Agreement and Plan of Merger (the "Merger Agreement") to be dated
as of April 21, 1995 and to be guaranteed by Luxottica Group S.p.A.
("Luxottica" and, together with Acquisition Corp. and Avant-Garde, the
"Buyers") by a Guaranty to be dated as of April 21, 1995 (the "Guaranty"),
which Merger Agreement provides, among other things, for (i) the tender offer
by Acquisition Corp. (the "Tender Offer") for all issued and outstanding common
shares, without par value (the "Common Shares"), of U.S. Shoe at a price equal
to $28.00 per share net to the shareholders of U.S. Shoe in cash (the "Share
Purchase Price"), followed by (ii) the merger of Acquisition Corp. with and
into U.S. Shoe (the "Merger"), all on the terms and conditions set forth in the
Merger Agreement and the Guaranty. Pursuant to the Merger, U.S. Shoe will
become a wholly owned subsidiary of Avant-Garde and a wholly owned indirect
subsidiary of Luxottica and each outstanding Common Share, other than Common
Shares held in treasury or held by the Buyers or their affiliates or as to
which dissenters' rights will have been perfected, will be converted into the
right to receive $28.00 per share in cash. The proposed Tender Offer and
Merger pursuant to the Merger Agreement, and the Guaranty, are collectively
referred to herein as the "Transaction."

You have requested our opinion, as investment bankers, as to the fairness, from
a financial point of view, of the Share Purchase Price to be paid to the
shareholders of U.S. Shoe pursuant to the Merger Agreement. We have acted as
financial advisor to U.S. Shoe in connection with the proposed Transaction. In
connection therewith and for purposes of the opinion set forth herein, we have:

(i) reviewed the forms of the Merger Agreement, the Guaranty and
the related Tender Offer documents;

(ii) reviewed certain business, financial and other information
regarding U.S. Shoe, which was publicly available;

(iii) reviewed certain internal information prepared by U.S. Shoe
and primarily financial in nature (including projections,
forecasts, estimates and analyses) concerning the business
operations, financial condition and results and prospects of
U.S. Shoe;
<PAGE> 2

Board of Directors
The United States Shoe Corporation
April 21, 1995
Page 2

(iv) conducted discussions with various members of senior
management of U.S. Shoe concerning U.S. Shoe's current
business operations, financial condition and results and
prospects;

(v) reviewed the current and historical trading prices and
activities of the Common Shares of U.S. Shoe and the common
stock of certain other companies we believe to be relevant;

(vi) reviewed public information with respect to certain other
companies whose businesses we believe to be relevant to an
assessment of the businesses of U.S. Shoe;

(vii) compared the terms of the Transaction to the terms of
acquisition transactions involving certain other companies
we believe to be relevant;

(viii) participated in discussions among financial and legal
advisors to U.S. Shoe and the Buyers;

(ix) participated in discussions with representatives of certain
other parties interested in an acquisition of U.S. Shoe or
one or more of its businesses; and

(x) conducted such other financial studies, analyses and
investigations as we deemed appropriate and feasible.

We have not assumed responsibility for independent verification of any
information concerning U.S. Shoe or otherwise, whether publicly available or
furnished to us, including, without limitation, any financial information,
forecasts or projections, considered in connection with the rendering of our
opinion. Accordingly, for purposes of our opinion, we have assumed and relied
upon the accuracy and completeness of all such information and have not
conducted a physical inspection of any of the properties or assets, and have
not prepared or obtained any independent evaluation or appraisal of any of the
assets or liabilities, of U.S. Shoe. With respect to the financial forecasts
and projections made available to us and used in our analysis, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of U.S. Shoe as to the
matters covered thereby, and in rendering our opinion we express no view as to
the reasonableness of such forecasts and projections or the assumptions on
which they are based. Our opinion is necessarily based on economic, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. In rendering our opinion, we have assumed that the
Transaction will be consummated on the terms and conditions described in the
Merger Agreement without any waiver of terms and conditions by U.S. Shoe. Our
opinion does not constitute a recommendation as to whether any shareholders
should tender their shares.
<PAGE> 3

Board of Directors
The United States Shoe Corporation
April 21, 1995
Page 3

We have acted as financial advisor to U.S. Shoe in connection with the
Transaction and will be paid a fee for our services as financial advisor,
including fees that are contingent on the sale of all or of certain segments of
U.S. Shoe. Our firm provides additional financial advisory services to U.S.
Shoe and receives fees for the rendering of these services.

It is understood that our engagement and this letter are solely for the benefit
and information of the Board of Directors of U.S. Shoe in connection with its
consideration of the Transaction and are not on behalf of, and are not intended
to confer any rights or remedies on, any holder of any security of U.S. Shoe,
or any other person or entity. In addition, this letter may not be used for
any purpose other than for the sole benefit and information of the Board of
Directors of U.S. Shoe without our prior written consent.

Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of the date hereof, the Share Purchase Price to be paid to the
shareholders of U.S. Shoe pursuant to the Merger Agreement is fair from a
financial point of view to the shareholders of U.S. Shoe.

Very truly yours,

/s/ James D. Wolfensohn Incorporated

JAMES D. WOLFENSOHN INCORPORATED

<PAGE> 1
Exhibit 43

THIRD AMENDMENT TO RIGHTS AGREEMENT

This Amendment, dated as of March 29, 1995, is made between The
United States Shoe Corporation, an Ohio corporation (the "Company"), and State
Street Bank and Trust Company, a Massachusetts Trust Company (the "Successor
Rights Agent"), and amends the Rights Agreement, dated as of March 31, 1986, as
subsequently amended March 23, 1988 and June 1, 1993, (the "Rights Agreement"),
between the Company and the prior Rights Agent.

RECITALS

A. The Company has terminated the duties of the prior
Rights Agent under the Rights Agreement by letter dated March 28, 1995.

B. The Company intends to appoint the Successor Rights
Agent to succeed as Rights Agent; the Successor Rights Agent wishes to accept
appointment as Successor Rights Agent; and the parties hereto wish to make
certain changes to the Rights Agreement to facilitate this succession.

NOW THEREFORE, the parties agree as follows:

1. Appointment of Successor Rights Agent

The Company hereby appoints the Successor Rights
Agent under the Rights Agreement, effective as of 12:01 a.m., New York time,
March 29, 1995, and the Successor Rights Agent hereby accepts such appointment,
subject to all the terms and conditions of the Rights Agreement as amended
hereby.

2. Amendments to Rights Agreement

The Company and the Successor Rights Agent agree that
the Rights Agreement shall be amended as provided below, effective as of the
date of this Amendment except as may otherwise be provided below:

(a) From and after the time that the appointment of the
Successor Rights Agent as Successor Rights Agent is effective, all references
in the Rights Agreement (including all exhibits thereto) to the prior Rights
Agent as Rights Agent shall be deemed to refer to the Successor Rights Agent as
Successor Rights Agent. From and after the effective date of this Amendment,
all references in the Rights Agreement to the Rights Agreement shall be deemed
to refer to the Rights Agreement as amended by this Amendment.

(b) Section 3(c) of the Rights Agreement is amended as of
the time of appointment of the Successor Rights Agent as Successor Rights Agent
by adding the following immediately after the legend appearing therein:

<PAGE> 2

On March 29, 1995, State Street Bank and Trust
Company succeeded The Bank of New York as Rights
Agent.

The following legend may, in the alternative, be affixed:

This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement between the Company and State Street
Bank and Trust Company (as Successor Rights Agent),
dated as of March 31, 1986, and as subsequently
amended, (the "Rights Agreement") the terms of which
are hereby incorporated herein by reference and a
copy of which is on file at the principal executive
offices of the Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will
no longer be evidenced by this certificate. The
Company or State Street Bank and Trust Company will
mail to the holder to this certificate a copy of the
Rights Agreement without charge after receipt of a
written request therefore. Under certain
circumstances, as set forth in the Rights Agreement,
Rights issued to any person who becomes an acquiring
person (as defined in the Rights Agreement) may
become null and void.

(c) Section 25 of the Rights Agreement is amended by
deleting the name and address of the prior Rights Agent and substituting
therefore the following:

STATE STREET BANK AND TRUST COMPANY
2 Heritage Drive
Corporate Stock Transfer Dept.
North Quincy, Massachusetts 02171

Attn: Margaret Prentice

(d) Section 31 of the Rights Agreement is amended by
adding the following words at the end thereof: "provided, however, that the
rights and obligations of the Rights Agent shall be governed by and construed
in accordance with the laws of the State of Massachusetts."

3. Miscellaneous

(a) Except as otherwise expressly provided, or unless the
context otherwise requires, all terms used herein have the meanings assigned to
them in the Rights Agreement.

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<PAGE> 3
(b) Each party hereto waives any requirement under the
Rights Agreement that any additional notice be provided to it pertaining to the
matters covered by this Amendment.

(c) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
counterparts shall together constitute but one and the same document.

IN WITNESS WHEREOF, the parties have called this Amendment to
be duly executed and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first written above.

THE UNITED STATES SHOE CORPORATION

[SEAL]

ATTEST:

By: /s/ Thomas Buehler By: /s/ Robert Petrik
----------------------- --------------------------
Its Assistant Secretary Its Vice President

STATE STREET BANK AND TRUST COMPANY
AS SUCCESSOR RIGHTS AGENT

[SEAL]

ATTEST:

By: /s/ Michael Jones By: /s/ Charles Rossi
----------------------- --------------------------
Its Vice President Its Vice President

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