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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE UNITED STATES SHOE CORPORATION
(Name of Registrant as Specified in Its Charter)
LUXOTTICA GROUP S.P.A.
LUXOTTICA ACQUISITION CORP.
(Name of Person(s) Filing Proxy Statement)
-------------------
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
[X] Fee previously paid
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE>
Supplement to the Offer to Purchase Dated March 3, 1995
LUXOTTICA ACQUISITION CORP.
an indirect wholly owned subsidiary of
LUXOTTICA GROUP S.P.A.
Has Amended Its Offer to Increase
the Cash Purchase Price for
All Outstanding Common Shares
(Including the Associated Preference Share Purchase Rights)
of
THE UNITED STATES SHOE CORPORATION
to
$28.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MAY 5, 1995,
UNLESS THE OFFER IS EXTENDED.
--------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY LUXOTTICA
ACQUISITION CORP. (THE "PURCHASER") AND ITS AFFILIATES, CONSTITUTES AT LEAST
TWO-THIRDS OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF
PURCHASE AND (2) THE ACQUISITION OF SHARES PURSUANT TO THE OFFER BEING
AUTHORIZED BY THE SHAREHOLDERS OF THE UNITED STATES SHOE CORPORATION (THE
"COMPANY") PURSUANT TO THE OHIO CONTROL SHARE ACQUISITION LAW, SECTION 1701.831
OF THE OHIO REVISED CODE ("SECTION 831"), OR THE PURCHASER BEING SATISFIED, IN
ITS SOLE DISCRETION, THAT SECTION 831 IS INVALID OR INAPPLICABLE TO THE
ACQUISITION OF SHARES PURSUANT TO THE OFFER. THE OFFER IS ALSO SUBJECT TO OTHER
TERMS AND CONDITIONS CONTAINED IN THIS SUPPLEMENT. SEE SECTION 8 OF THIS
SUPPLEMENT.
--------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER
AND THE MERGER DESCRIBED HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
SHAREHOLDERS OF THE COMPANY, HAS APPROVED THE OFFER AND THE MERGER
AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
--------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares (and the associated Rights) should either (a) complete and sign one of
the Letters of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letters of Transmittal and mail or deliver it together with
the certificate(s) representing tendered Shares and, if separate, the
certificate(s) representing the associated Rights, and any other required
documents, to the Depositary or tender such Shares (and Rights, if applicable)
pursuant to the procedure for book-entry transfer set forth in Section 3 of the
Offer to Purchase or (b) request such shareholder's broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for such
shareholder. A shareholder whose Shares and, if applicable, Rights are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such shareholder desires to tender such Shares and, if
applicable, Rights.
A shareholder who desires to tender such shareholder's Shares and associated
Rights and whose certificates representing such Shares (or Rights, if
applicable) are not immediately available or who cannot comply with the
procedures for book-entry transfer on a timely basis may tender such Shares (and
Rights, if applicable) by following the procedures for guaranteed delivery set
forth in Section 3 of the Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of the Offer to Purchase or this Supplement.
Additional copies of the Offer to Purchase, this Supplement, the revised Letter
of Transmittal, the revised Notice of Guaranteed Delivery and other related
materials may be obtained from the Information Agent or from brokers, dealers,
commercial banks and trust companies.
--------------
The Dealer Manager for the Offer is:
CS FIRST BOSTON
April 24, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION............................................................................ 3
THE TENDER OFFER........................................................................ 6
1. Amended Terms of the Offer........................................................ 6
2. Procedures for Accepting the Offer and Tendering Shares and Rights................ 7
3. Price Range of the Shares; Dividends.............................................. 7
4. Certain Information Concerning the Company........................................ 7
5. Source and Amount of Funds........................................................ 10
6. Background of the Offer and Contacts with the Company since March 3, 1995......... 11
7. Merger Agreement.................................................................. 14
8. Certain Conditions of the Offer................................................... 25
9. Certain Legal Matters; Required Regulatory Approvals.............................. 27
10. Miscellaneous..................................................................... 33
</TABLE>
2
<PAGE>
To All Holders of Common Shares
(Including the Associated Preference Share
Purchase Rights) of The United States Shoe Corporation:
INTRODUCTION
The following information amends and supplements the Offer to Purchase,
dated March 3, 1995 (the "Offer to Purchase"), of Luxottica Acquisition Corp., a
Delaware corporation (the "Purchaser") and an indirect wholly owned subsidiary
of Luxottica Group S.p.A., a corporation organized under the laws of the
Republic of Italy ("Parent"), pursuant to which the Purchaser is offering to
purchase all outstanding Common Shares, without par value (the "Shares"), of The
United States Shoe Corporation, an Ohio corporation (the "Company"), and 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 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), and by the Second Amendment to Rights
Agreement, dated as of June 1, 1993, between the Company and The Bank of New
York and by the Third Amendment to Rights Agreement, dated as of March 29, 1995
(as so amended, the "Rights Agreement"), between the Company and State Street
Bank and Trust Company, as Rights Agent. The Purchaser has increased the price
to be paid in the Offer to $28.00 per Share (and associated Right), net to the
seller in cash without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase, this Supplement
and in the revised Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer"). Unless the context requires otherwise, all
references to Shares herein and in the Offer to Purchase shall include the
Rights, and all references to the Rights shall include all benefits that may
inure to the holders of the Rights pursuant to the Rights Agreement.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE SHAREHOLDERS OF THE COMPANY, HAS APPROVED THE OFFER AND THE MERGER AND
RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
TO THE OFFER.
Avant-Garde Optics, Inc., a wholly owned subsidiary of Parent
("Avant-Garde"), the Purchaser and the Company have entered into an Agreement
and Plan of Merger, dated as of April 21, 1995 (the "Merger Agreement"), which
provides for, among other things, (i) an increase in the price per Share to be
paid pursuant to the Offer from $24.00 per Share to $28.00 per Share, net to the
seller in cash without interest thereon, (ii) the elimination of certain
conditions to the Offer, (iii) the amendment and restatement of certain other
conditions to the Offer as set forth in their entirety in Section 8 of this
Supplement, (iv) the extension of the Offer to 12:00 Midnight on Friday, May 5,
1995 or such later date as is required pursuant to the Merger Agreement based on
the satisfaction of the Control Share Condition (as herein defined) or the
occurrence of the Section 831 Meeting (as herein defined) and (v) the merger of
the Purchaser or another direct or indirect wholly owned subsidiary of Parent
with the Company (the "Merger") following the consummation of the Offer. In the
Merger, each Share not owned by Parent, Avant-Garde, the Purchaser or any other
direct or indirect subsidiary of Avant-Garde (other than Shares held in the
treasury of the Company) and Dissenting Shares (as such term is defined in the
Merger Agreement) shall be cancelled, extinguished and converted into the right
to receive $28.00 net per Share in cash without interest thereon. Parent has
entered into a Guaranty, dated as of April 21, 1995 (the "Guaranty"), pursuant
to which Parent has guaranteed the obligations of Avant-Garde and the Purchaser
under the Merger Agreement and certain other documents relating to the Offer.
See Section 7 of this Supplement.
THE OFFER IS NOW CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF
3
<PAGE>
THE OFFER A NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED
BY THE PURCHASER AND ITS AFFILIATES, CONSTITUTES AT LEAST TWO-THIRDS OF THE
SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION") AND (2) THE ACQUISITION OF SHARES PURSUANT TO THE OFFER
BEING AUTHORIZED BY THE SHAREHOLDERS OF THE COMPANY PURSUANT TO SECTION 831 OR
THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT SECTION 831 IS
INVALID OR INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER (THE
"CONTROL SHARE CONDITION").
Minimum Condition. Consummation of the Offer is conditioned upon there being
validly tendered and not withdrawn prior to the expiration of the Offer a number
of Shares which, when added to the Shares beneficially owned by the Purchaser
and its affiliates, constitutes at least two-thirds of the Shares outstanding on
a fully diluted basis on the date of purchase. For purposes of this Offer, "on a
fully diluted basis" means, as of any date, the number of Shares outstanding,
together with Shares that the Company is then required to issue pursuant to
obligations outstanding at that date under employee stock option or other
benefit plans or otherwise (assuming all such options are presently
exercisable).
Based on the representations and warranties of the Company contained in the
Merger Agreement, as of April 20, 1995 there were 46,958,375 Shares outstanding,
3,603,900 Shares reserved for issuance pursuant to options granted under the
Company's various stock option plans and 5,700 Shares issuable under one of the
Company's stock purchase plans. Based on this information, the Minimum Condition
will be satisfied if at least 33,711,984 Shares are validly tendered and not
properly withdrawn on or prior to the Expiration Date (as defined in Section 1
of this Supplement). If the Minimum Condition is satisfied, the Purchaser will
be able to approve the Merger without the affirmative vote of the holders of any
other Shares.
Control Share Condition. Consummation of the Offer is conditioned upon the
acquisition of Shares pursuant to the Offer by the Purchaser being authorized by
the shareholders of the Company pursuant to Section 831 at a special meeting of
shareholders of the Company (the "Section 831 Meeting") duly and validly called
and held in accordance with Section 831, or the Purchaser being satisfied, in
its sole discretion, that Section 831 is invalid or inapplicable to the
acquisition of Shares pursuant to the Offer.
Under Section 831, unless a corporation's articles or regulations otherwise
provide, any "control share acquisition" of an "issuing public corporation"
(such as the Company) may be made only with the prior authorization of its
shareholders in accordance with Section 831. Neither the Company's Articles nor
its Regulations currently contain a provision by which the Company "opts out" of
Section 831. On March 29, 1995, Parent and the Purchaser commenced distribution
of definitive proxy materials soliciting agent designations from the Company's
shareholders for the call of a special meeting of the Company's shareholders
(the "Special Meeting") at which, among other things, Parent and the Purchaser
planned to propose that, if the Control Share Condition had not theretofore been
satisfied, the Regulations of the Company be amended to provide that Section 831
does not apply to the purchase of the Shares pursuant to the Offer. Pursuant to
the Merger Agreement, Parent and the Purchaser have agreed to withdraw and
rescind such solicitation materials.
Section 831 requires shareholder approval of any proposed "control share
acquisition" of the Company. A "control share acquisition" is the acquisition,
directly or indirectly, by any person of control in respect of shares that
entitles such person to exercise or direct the exercise of twenty percent (20%)
or more of the voting power in the election of directors. A control share
acquisition must be approved in advance (i) by the holders of at least a
majority of the voting power of the corporation in the election of directors
represented at a Section 831 Meeting at which a quorum is present and (ii) by
the holders of a majority of such voting power excluding the voting shares owned
by the acquiring shareholder and certain other "Interested Shares" (as defined
in Section 15 of the Offer to Purchase).
4
<PAGE>
Section 831 provides that a quorum shall be deemed to be present at the Section
831 Meeting if at least a majority of the Shares, and a majority of the Shares
excluding those that are "Interested Shares," are represented at such meeting in
person or by proxy.
Under Section 831, the Company must call the Section 831 Meeting to consider
the authorization of an acquisition of Shares covered by Section 831 no later
than ten (10) days, and it must be held no later than fifty (50) days, following
its receipt of an "acquiring person statement" from the acquiring person.
However, the acquiring person may request, at the time of delivery of the
acquiring person statement, that the Section 831 Meeting not be held sooner than
thirty (30) days after receipt by the Company of such statement.
Without waiving their right to challenge the validity of all or any part of
Section 831 or to seek an amendment to the Company's Regulations opting out of
Section 831, and reserving their right to take actions inconsistent with the
applicability of Section 831, Parent and the Purchaser delivered to the Company
on March 3, 1995 an acquiring person statement relating to the Offer. On March
10, 1995, the Company issued a press release announcing that its Board of
Directors had called the Section 831 Meeting for April 21, 1995.
In addition, Parent and the Purchaser brought an action for declaratory and
other relief against the Company on March 3, 1995 in the United States District
Court for the Southern District of Ohio, Eastern Division (the "District
Court"), seeking, among other things, an order declaring that the provisions of
Section 831 and Section 1701.01(CC)(2) of the ORC that impair the voting rights
of the Disqualified Shares (as defined in Section 15 of the Offer to Purchase)
at the Section 831 Meeting are unconstitutional or otherwise invalid as such
provisions may be applied to the Offer. On March 16, 1995, the District Court
issued a preliminary injunction enjoining the Company and the State of Ohio from
applying to the Offer the provisions of Section 1701.01(CC)(2) of the ORC which,
by their terms, would have impaired the voting rights of Disqualified Shares at
the Section 831 Meeting. See Section 9 of this Supplement and Section 15 of the
Offer to Purchase.
On April 21, 1995, the Section 831 Meeting was convened and adjourned to May
5, 1995. On April 24, 1995, Parent and the Purchaser filed revised preliminary
proxy materials relating to the Section 831 Meeting with the Commission, and
upon completion of the review of such materials by the staff of the Commission,
Parent and the Purchaser will commence distribution of revised definitive proxy
materials to the Company's shareholders. The Section 831 Meeting may be
adjourned to a later date to permit dissemination of such proxy materials in
accordance with applicable rules of the Commission.
THIS SUPPLEMENT DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR THE
SECTION 831 MEETING. PARENT AND THE PURCHASER INTEND TO DISTRIBUTE REVISED
DEFINITIVE MATERIALS SOLICITING PROXIES FROM THE COMPANY'S SHAREHOLDERS TO
APPROVE THE CONTROL SHARE ACQUISITION PURSUANT TO THE OFFER. SUCH SOLICITATION
BY PARENT AND THE PURCHASER WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY
MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT
AND THE RULES AND REGULATIONS THEREUNDER. HOWEVER, THIS SUPPLEMENT IS BEING, AND
THE OFFER TO PURCHASE HAS BEEN, PROVIDED TO HOLDERS OF SHARES IN CONNECTION WITH
SUCH SOLICITATION.
The Offer is no longer subject to the Rights Condition or the Business
Combination Condition (each as defined in the Offer to Purchase) because the
Board of Directors of the Company has approved the Offer and the Merger and
taken other actions to render the Rights and the Ohio Business Combination Law
inapplicable to the Offer and the Merger. The Offer is no longer subject to the
Financing Condition (as defined in the Offer to Purchase).
Certain other conditions to the Offer are described in Section 8 of this
Supplement. The Purchaser expressly reserves the right in its sole judgment to
waive any one or more of the conditions to the Offer other than the Minimum
Condition and the Control Share Condition. See Sections 7 and 8 of this
Supplement.
5
<PAGE>
Procedures for tendering Shares are set forth in Section 3 of the Offer to
Purchase and Section 2 of this Supplement. Tendering shareholders should use the
revised GREEN Letter of Transmittal and the revised YELLOW Notice of Guaranteed
Delivery circulated with this Supplement. However, to the extent the revised
GREEN Letter of Transmittal or the revised YELLOW Notice of Guaranteed Delivery
is not obtainable, tendering shareholders may continue to use the BLUE Letter of
Transmittal and the GREY Notice of Guaranteed Delivery that were provided with
the Offer to Purchase. Although such BLUE Letter of Transmittal refers only to
the Offer to Purchase, shareholders using such document to tender their Shares
will nevertheless receive $28.00 net per Share in cash for each Share validly
tendered and not properly withdrawn and accepted for payment pursuant to the
Offer, subject to the conditions of the Offer. A tender of Shares will also
constitute a tender of Rights.
SHAREHOLDERS WHO HAVE PREVIOUSLY VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN
THEIR SHARES PURSUANT TO THE OFFER ARE NOT REQUIRED TO TAKE ANY FURTHER ACTION,
EXCEPT AS MAY BE REQUIRED BY THE GUARANTEED DELIVERY PROCEDURE IF SUCH PROCEDURE
WAS UTILIZED. IF SHARES ARE ACCEPTED FOR PAYMENT AND PAID FOR BY THE PURCHASER
PURSUANT TO THE OFFER, SUCH SHAREHOLDERS WILL RECEIVE, SUBJECT TO THE CONDITIONS
OF THE OFFER, THE INCREASED CASH PURCHASE PRICE OF $28.00 NET PER SHARE IN CASH.
SEE SECTION 4 OF THE OFFER TO PURCHASE FOR THE PROCEDURES FOR WITHDRAWING SHARES
TENDERED PURSUANT TO THE OFFER.
Except as otherwise set forth in this Supplement, the terms and conditions
previously set forth in the Offer to Purchase remain applicable in all respects
to the Offer. The information set forth herein should be read in conjunction
with the Offer to Purchase and, unless the context otherwise requires, terms not
defined herein which are defined in the Offer to Purchase have the meanings
ascribed to them in the Offer to Purchase.
THE OFFER TO PURCHASE, THIS SUPPLEMENT AND THE REVISED LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. AMENDED TERMS OF THE OFFER. Section 1 of the Offer to Purchase is amended
and supplemented by this Section 1 of this Supplement.
In connection with the Merger Agreement, the price per Share to be paid
pursuant to the Offer has been increased from $24.00 per Share to $28.00 per
Share, net to the seller in cash without interest thereon. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is further
extended or amended, the terms and conditions of any extension or amendment),
the Purchaser will accept for payment and pay the increased price for all of the
Shares validly tendered prior to the Expiration Date (as herein defined) and not
withdrawn in accordance with Section 4 of the Offer to Purchase (including
Shares tendered prior to the date of this Supplement). The term "Expiration
Date" means 12:00 Midnight, New York City time, on Friday, May 5, 1995 unless
and until the Purchaser, subject to the terms of the Merger Agreement, shall
have extended the period of time during which the Offer is open, in which event
the term "Expiration Date" shall mean the latest time and date at which the
Offer, as so extended by the Purchaser, shall expire. See Section 7 of this
Supplement for a description of the provisions of the Merger Agreement regarding
extensions of the Offer by the Purchaser.
6
<PAGE>
This Supplement, the revised GREEN Letter of Transmittal and other relevant
materials will be mailed by the Company to record holders of Shares whose names
appear on the Company's shareholder list and the list of holders of Rights, if
any, and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list and list of holders of Rights or, if applicable,
who are listed as participants in a clearing agency's security position listing
for subsequent transmittal to beneficial owners of Shares and Rights.
2. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES AND
RIGHTS. Section 3 of the Offer to Purchase is amended and supplemented by this
Section 2 of this Supplement.
Tendering shareholders should use the revised GREEN Letter of Transmittal
and the revised YELLOW Notice of Guaranteed Delivery included with this
Supplement. However, to the extent the revised GREEN Letter of Transmittal or
the revised YELLOW Notice of Guaranteed Delivery is not obtainable, tendering
shareholders may continue to use the BLUE Letter of Transmittal and the GREY
Notice of Guaranteed Delivery that were provided with the Offer to Purchase.
Although such BLUE Letter of Transmittal refers only to the Offer to Purchase
and indicates that the Offer will expire at 12:00 Midnight, New York City time,
on Thursday, March 30, 1995, shareholders using such document to tender their
shares will nevertheless receive $28.00 net per Share in cash for each Share
validly tendered and not properly withdrawn and accepted for payment pursuant to
the Offer, subject to the conditions of the Offer, and will be able to tender
their Shares pursuant to the Offer until 12:00 Midnight, New York City time, on
Friday, May 5, 1995 (or such later date to which the Offer may be extended).
SHAREHOLDERS WHO HAVE PREVIOUSLY VALIDLY TENDERED SHARES PURSUANT TO THE OFFER
USING THE BLUE LETTER OF TRANSMITTAL OR THE GREY NOTICE OF GUARANTEED DELIVERY
AND WHO HAVE NOT PROPERLY WITHDRAWN SUCH SHARES HAVE VALIDLY TENDERED SUCH
SHARES FOR THE PURPOSES OF THE OFFER, AS AMENDED, AND NEED NOT TAKE ANY FURTHER
ACTION, EXCEPT AS MAY BE REQUIRED BY THE GUARANTEE DELIVERY PROCEDURE IF SUCH
PROCEDURE WAS UTILIZED..
3. PRICE RANGE OF THE SHARES; DIVIDENDS. Section 6 of the Offer to Purchase
is amended and supplemented by this Section 3 of this Supplement.
According to publicly available information, on March 2, 1995 the Company
declared a dividend of $0.08 per Share payable on March 28, 1995 to holders of
record on March 13, 1995. The reported high and low closing sale prices per
Share on the NYSE Composite Tape for the current fiscal quarter through April
21, 1995 were $27 5/8 and $18 5/8, respectively. On April 13, 1995, the last
full trading day prior to the issuance of a joint press release by Parent and
the Company announcing an agreement in principle relating to the acquisition of
the Company by Parent for $28.00 per Share in cash, the reported closing price
on the NYSE Composite Tape was $26 1/2 per Share.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
4. CERTAIN INFORMATION CONCERNING THE COMPANY. Section 7 of the Offer to
Purchase is amended and supplemented by this Section 4 of this Supplement.
Except as otherwise set forth in this Supplement, the information concerning
the Company contained in this Supplement and the Offer to Purchase has been
taken from or based upon publicly available documents and records on file with
the Commission and other public sources. Neither Parent, the Purchaser nor the
Dealer Manager assumes any responsibility for the accuracy or completeness of
the information concerning the Company contained in such documents and records
or for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to Parent, the Purchaser or the Dealer Manager.
On March 16, 1995, the Company issued a press release announcing a
definitive agreement (the "Nine West Purchase Agreement") with Nine West Group,
Inc. ("Nine West") for the acquisition of the Company's Footwear Group for total
consideration of approximately $600 million, comprised of
7
<PAGE>
$560 million cash, plus warrants to purchase approximately 3.7 million shares of
Nine West stock at a price of $35.50 per share at any time during the next eight
and one-half years.
On April 6, 1995, the Company issued a press release providing the following
information. Comparable store sales at the Company's retailing operations for
the five weeks ended April 1, 1995 decreased 6.1% from the same period in the
prior fiscal year. Total retail sales of the Company's women's specialty,
optical and footwear retailing operations were approximately $203.9 million
compared with approximately $206.7 million in the same period a year ago, a
decrease of 1.3%. The total number of stores open was 2,374 versus 2,259 last
year, an increase of 5.1% over the prior year. Comparable store sales at the
Company's retailing operations for the two month period ended April 1, 1995
decreased 4.6% from the comparable period in 1994. Total retail sales for this
period were approximately $346.0 million compared to approximately $346.1
million in the same period a year ago. Comparable store sales of the Women's
Apparel Retailing Group decreased 11.9% in March 1995 compared to March 1994 and
11.1% for the two months ended April 1, 1995 compared with the same period in
1994. Total sales of these operations were approximately $95.2 million for March
1995 (a decrease of 6.3% from March 1994) and approximately $159.7 million for
the two months ended April 1, 1995 (a decrease of 6.0% from the same period in
1994). There were 1,365 women's apparel retailing stores at the end of March
1995 compared to 1,312 at the same time in 1994. The Optical Retailing Group's
comparable domestic store sales increased 3.5% from March 1994 to March 1995 and
5.3% for the two months ended April 1, 1995. Total domestic sales of these
operations were approximately $79.5 million for March 1995 (an increase of 7.8%
from March 1994) and approximately $137.7 million for the two months ended April
1, 1995 (an increase of 9.5% from the same period in 1994). At the end of March
1995, the Optical Retailing Group operated 535 domestic stores and leased
departments and 59 stores in Canada compared to 498 domestic stores and leased
departments and 60 stores in Canada at the end of March 1994. Comparable store
sales of the Footwear Retailing Group decreased 12.6% in March 1995 from March
1994 and 9.8% for the two months ended April 1, 1995 from the comparable period
in 1994. Total sales of these operations were approximately $23.3 million for
March 1995 (a decrease of 8.0% from March 1994) and approximately $38.2 million
for the two months ended April 1, 1995 (a decrease of 4.8% from the same period
in 1994). At the end of March 1995, the Footwear Retailing Group had 415 stores
and leased departments compared to 389 at the same time in 1994.
In the April 6, 1995 press release, the Company also announced that on April
3, 1995 LensCrafters completed its acquisition of the Opti-World chain of 59
optical superstores ("Opti-World").
Certain Company Projections. During the course of discussions among the
Company, Parent and the Purchaser and their respective financial advisors that
led to the execution of the Merger Agreement (see Section 6 of this Supplement),
Parent and the Purchaser were provided with certain non-public business and
financial information by the Company and its financial advisor. This information
included (i) projections of the future operating performance of the Company's
Optical Retailing and Women's Specialty Retailing Groups, dated April 7, 1995
and March 29, 1995, respectively (the "Projections"), (ii) certain balance sheet
information relating to the Company, (iii) the Company's estimate of the tax
basis of each of its Footwear and Women's Specialty Retailing Groups of
approximately $278.0 million and $105.0 million, respectively, as of January 28,
1995 (the "Tax Basis Estimates"), and (iv) information as to amounts that may be
required to be funded or paid pursuant to employee benefit and severance
compensation agreementsif the acquisition of the Company by the Purchaser is
effected of approximately $50.0 million (the "Employee Benefits Estimates" and
together with the Tax Basis Estimates, the "Estimates"). The Employee Benefits
Estimates have been derived by Parent and the Purchaser from information
provided by the Company. The Employee Benefits Estimates are pre-tax and do
not give effect to either the consummation of the Nine West Purchase Agreement
or amounts payable pursuant to the Company's Economic Bridge Program.
The following information has been excerpted or derived from the materials
presented to Parent and the Purchaser. The Projections have been prepared
utilizing numerous assumptions, including
8
<PAGE>
those relating to sales growth and the achievability of specific store opening,
restructuring and capital expenditure programs and do not reflect certain
corporate adjustments. The Projections do not give effect to the Offer or the
Merger.
The Optical Retailing Group Projections include the following assumptions,
among others, (i) the financial effects of Opti-World following its acquisition
by the Company in April 1995, and (ii) in 1997, an additional analysis ("1997P")
which includes the financial effects of new stores as if they had been open for
an entire fiscal year as opposed to the assumption, used in 1995, 1996 and 1997,
that new stores are open for one-half of a fiscal year and that the financial
results for such fiscal year include the contribution of these new stores on
such basis. In addition, the Company provided to Parent and the Purchaser
projections that reflect the financial effects of a theoretical acquisition in
1996 (the "Acquisition"). The Acquisition is assumed to add 50 stores,
approximately an incremental $60.0 million in net sales and an incremental
$8.0 million in operating income on a full fiscal year basis. The Projections
below do not reflect such Acquisition. The Optical Retailing Group reported
the following financial results for 1992 and 1993, respectively: net sales of
$660.1 million and $698.7 million, including increases in comparable store
sales from the prior year of 1.4% and 2.9%; operating income of $40.4 million
and $43.6 million and 502 and 543 stores and leased departments in operation
at the end of the year (including operations subsequently divested).
The Women's Specialty Retailing Group Projections assume, among other
things, (i) a reduction of 297 stores through sale or closure as if such sale or
closure (which did not occur) had occurred on January 30, 1995, which on a
proforma basis reduces net sales by $190.0 million and losses from operations
by $18.7 million ("1995 Revised"), without giving effect to the cost of any
possible store closures, (ii) a significant improvement in comparable store
sales growth and gross profit margins during the second half of 1995, and
(iii) the continuation, through the Projection period, of current terms with
the Company's vendors. The Women's Specialty Retailing Group reported the
following financial results for 1992 and 1993, respectively: net sales of
$1,262.2 million and $1,217.1 million, including declines in comparable store
sales from the prior year of 3.0% and 0.5%; operating income (loss) of $12.1
million and ($41.7) million and 1,523 and 1,306 stores in operation at the end
of the year (including operations subsequently divested).
OPTICAL RETAILING GROUP PROJECTIONS
(Dollars in millions)
<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------------------------------------
1994 1995 1996 1997 1997P(1)
----------- ------ -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................ $ 766.7 $905.4 $1,003.2 $1,106.4 $1,151.0
Operating income......................... 72.4 96.0 114.2 126.0 131.7
CASH FLOW DATA:
Depreciation and amortization............ $ 38.1 $ 42.0 $ 47.8 $ 52.2 $ 54.1
Capital expenditures..................... (38.8) (64.7) (65.0) (78.0) (78.0)
OTHER DATA:
Year end store count..................... 591 675 740 832 832
Increase in comparable store sales(2).... 11.4% 5.6% 4.2% 4.2% 4.2%
</TABLE>
- ------------
(1) Assumes new stores are open for full fiscal year as opposed to one-half of a
fiscal year as included in 1995, 1996 and 1997.
(2) Excludes additional sales from new products and initiatives.
9
<PAGE>
WOMEN'S SPECIALTY RETAILING GROUP PROJECTIONS
(Dollars in millions)
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------------------------------------
1995 1995
1994 PLAN PROFORMA(1) 1996(1) 1997(1)
----------- -------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.............................. $ 1,125.5 $1,254.8 $ 1,064.8 $1,212.2 $1,380.4
Operating income (loss)................ (54.2) 18.0(2) 42.3 69.6 100.1
CASH FLOW DATA:
Depreciation and amortization.......... $ 31.7 $ 34.8 $ 29.0 $ 32.6 $ 39.6
Capital expenditures................... (24.2) (29.8) (29.8) (66.0) (58.6)
OTHER DATA:
Year end store count................... 1,350 1,436 1,139 1,247 1,326
Increase (decrease) in comparable store
sales.................................... (5.0%) 3.5% 4.1% 5.3% 6.9%
Capitalized operating leases........... $ 306.1 $ 349.1 $ 306.7 $ 328.7 $ 342.6
</TABLE>
- ------------
(1) Assumes a variety of pro forma adjustments relating to the sale or closure
of 297 stores as if such sale or closure (which did not occur) had occurred
at the beginning of the 1995 fiscal year.
(2) Excludes management profit reserve of $5.6 million.
TO THE KNOWLEDGE OF PARENT AND THE PURCHASER, THE COMPANY DOES NOT AS A
MATTER OF COURSE PUBLICLY DISCLOSE PROJECTIONS OR ESTIMATES AS TO FUTURE
REVENUES, EARNINGS, FINANCIAL CONDITION OR OPERATING PERFORMANCE. THE
PROJECTIONS AND THE ESTIMATES ARE INCLUDED IN THIS SUPPLEMENT ONLY BECAUSE SUCH
INFORMATION WAS FURNISHED TO PARENT AND THE PURCHASER BY THE COMPANY WITHOUT
INDEPENDENT VERIFICATION. THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO
COMPLIANCE WITH THE GUIDELINES ESTABLISHED BY THE COMMISSION OR THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS.
THE PROJECTIONS AND ESTIMATES REFLECT NUMEROUS ASSUMPTIONS, ALL MADE BY COMPANY
MANAGEMENT, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS, ECONOMIC,
MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS, ALL OF WHICH ARE DIFFICULT
TO PREDICT AND MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF WHICH
WERE SUBJECT TO APPROVAL BY THE PURCHASER OR PARENT. ACCORDINGLY, THERE CAN BE
NO ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS OR
ESTIMATES WILL BE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY GREATER OR
LESS THAN THOSE CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THE PROJECTIONS
AND ESTIMATES HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT ANY OF THE
COMPANY, PARENT, THE PURCHASER OR THEIR RESPECTIVE FINANCIAL ADVISORS
CONSIDERED OR CONSIDER THE PROJECTIONS TO BE A RELIABLE PREDICTION OF FUTURE
EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED ON AS SUCH. NONE OF THE
COMPANY, PARENT, THE PURCHASER OR THEIR RESPECTIVE FINANCIAL ADVISORS ASSUME
ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR
COMPLETENESS OF EITHER THE PROJECTIONS OR THE ESTIMATES. NEITHER THE COMPANY,
PARENT, THE PURCHASER NOR ANY OF THEIR FINANCIAL ADVISORS HAS MADE, OR MAKES,
ANY REPRESENTATION TO ANY PERSON REGARDING THE INFORMATION CONTAINED IN EITHER
THE PROJECTIONS OR THE ESTIMATES AND NONE OF THEM INTENDS TO UPDATE OR OTHERWISE
REVISE THE PROJECTIONS OR THE ESTIMATES TO REFLECT CIRCUMSTANCES EXISTING AFTER
THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE
EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING EITHER THE PROJECTIONS OR
THE ESTIMATES ARE SHOWN TO BE IN ERROR.
5. SOURCE AND AMOUNT OF FUNDS. Section 9 of the Offer to Purchase is amended
and supplemented by this Section 5 of this Supplement.
As a result of the increase in price per Share to be paid pursuant to the
Offer, the Purchaser estimates that approximately $1.4 billion will be required
to acquire all of the Shares pursuant to the Offer and the Merger. The Purchaser
expects to obtain these funds from capital contributions and/or loans from
affiliates of Parent. Such funds, in turn, are expected to be obtained from
borrowings under a credit facility to be established with a syndicate of
financial institutions consisting of a $1.0 billion
10
<PAGE>
term loan facility (the "Term Loan Facility") and a $550 million revolving
credit facility (the "Revolving Credit Facility" and collectively with the Term
Loan Facility, the "Facility"). Parent has entered into a commitment letter
dated April 19, 1995 (the "April 19 Commitment Letter") committing Credit Suisse
to provide the Facility. The April 19 Commitment Letter generally restates the
Commitment Letter dated March 2, 1995 between Parent and Credit Suisse except
that it (i) increases the Revolving Credit Facility to $550 million and (ii)
contemplates that the price paid per Share pursuant to the Offer and the Merger
will be $28.00 net per Share in cash. Luxottica U.S. Holdings Corp., an indirect
wholly owned subsidiary of Parent, is the Borrower under the April 19 Commitment
Letter and is referred to therein as "Newco 1". The Purchaser is referred to as
"Bidco" in the April 19 Commitment Letter. Luxottica U.S. Holdings Corp. will
invest as capital in Avant-Garde the proceeds of the Facility necessary to fund
the Purchaser's acquisition of the Shares pursuant to the Offer and the Merger.
Avant-Garde will invest as capital in the Purchaser an amount equal to the
entire proceeds received by it from Luxottica U.S. Holdings Corp. Upon
consummation of the Merger, the surviving corporation will be a wholly owned
subsidiary of Avant-Garde. See Section 9 of the Offer to Purchase and Section 7
of this Supplement. The foregoing description of the April 19 Commitment Letter
is qualified in its entirety by reference to the text of the April 19 Commitment
Letter filed as an exhibit to the Schedule 14D-1, a copy of which may be
obtained from the offices of the Commission in the manner set forth in Section 7
of the Offer to Purchase (except that such information will not be available at
the regional offices of the Commission).
The Offer is not conditioned upon Parent or the Purchaser obtaining
financing. See Section 8 of this Supplement.
6. BACKGROUND OF THE OFFER AND CONTACTS WITH THE COMPANY SINCE MARCH 3,
1995. Section 10 of the Offer to Purchase is amended and Supplemented by this
Section 6 of this Supplement.
In response to the commencement of the Offer on March 3, 1995, the Company,
on March 16, 1995, filed with the Commission its Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any amendments thereto, the "Company
14D-9") disclosing that the Board of Directors of the Company had recommended
that the Company's shareholders reject the Offer of $24 net per Share in cash
and not tender their Shares pursuant to the Offer.
By letter dated March 16, 1995 Mr. Claudio Del Vecchio, a Managing Director
of Parent and the Executive Vice President of Avant-Garde, advised Mr. Bannus B.
Hudson, the President and Chief Executive Officer of the Company, of, among
other things, his disappointment at the rejection of the Offer of $24 by the
Company's Board of Directors and his interest in discussing the terms of such
Offer directly with the Company. In a letter dated March 23, 1995, Mr. Hudson
indicated to Mr. Claudio Del Vecchio that the Company would be interested in
pursuing a transaction with Parent in which the value received by the Company's
shareholders would be enhanced, and that the Company would be prepared to share
with Parent certain non-public information concerning the Company on the
condition that Parent enter into an appropriate confidentiality agreement.
11
<PAGE>
On March 24, 1995 the Company's counsel delivered to Parent's counsel a form
of confidentiality agreement, and negotiations regarding the proposed form of
such agreement continued through March 31, 1995. On March 31, 1995, Parent, the
Purchaser and the Company executed a confidentiality agreement pursuant to which
the Company agreed to provide Parent with certain information concerning the
Company (the "Confidentiality Agreement"). Parent and the Purchaser have
received certain non-public information from the Company pursuant to the terms
of the Confidentiality Agreement. See Section 4 of this Supplement. The text of
the Confidentiality Agreement has been filed as an exhibit to the Schedule
14D-1, a copy of which may be obtained from the offices of the Commission in the
manner set forth in Section 7 of the Offer to Purchase (except that such
information will not be available at the regional offices of the Commission).
Commencing on the evening of April 13, 1995 and continuing through April 16,
1995, the financial advisor to each of Parent and the Company met to review
their respective valuations of the Company and to discuss the possibility of
modifying the Offer on terms, including an increased price per Share, which the
Company's management and financial advisor would be willing to recommend to the
Company's Board of Directors and pursuant to which the Company would consider
entering into a merger agreement.
On Sunday, April 16, 1995, an agreement in principle was reached that,
subject to the approval of the Board of Directors of each of Parent of the
Company and the execution and delivery of a definitive merger agreement on
mutually satisfactory terms, Parent would acquire the Company at a price of
$28.00 per Share in cash. It was further agreed that the revised Offer would not
be subject to a financing condition. Based on this agreement in principle,
Parent and the Company issued the following joint press release on April 16,
1995:
(New York, New York, Milan, Italy, Cincinnati, Ohio, April 16,
1995) - Luxottica Group S.p.A. (NYSE:LUX) and The United States
Shoe Corporation (NYSE:USR) today announced that they had reached
an agreement in principle for the acquisition by Luxottica of U.S.
Shoe for $28.00 per share in cash. The transaction would be
subject to the approval of the Board of Directors of each company
and the execution and delivery of definitive merger documentation
on terms and conditions mutually satisfactory to each party. The
acquisition, however, would not be subject to a financing
condition.
Commencing on the evening of April 16, 1995 and continuing through April 21,
1995, representatives and advisors of Parent and the Company conducted
negotiations regarding the other terms of the Merger Agreement. On April 18,
1995 the Board of Directors of Parent approved the then current drafts of the
Merger Agreement and the Guaranty and authorized two of its Managing Directors
to approve the final form of the Merger Agreement and the Guaranty. On April 21,
1995, an agreement was reached between the representatives of Parent and the
Company on all of the terms of the Merger Agreement and the Guaranty.
On April 21, 1995, the authorized Managing Directors of Parent approved the
final form of the Merger Agreement and the Guaranty, the Boards of Directors of
Avant-Garde and the Purchaser approved the Merger Agreement, and the Company's
Board of Directors approved the Merger Agreement and took other actions to,
among other things, render the Rights and the Ohio Business Combination Law
inapplicable to the Offer and the Merger. Later that day, the Merger Agreement
and the Guaranty were executed and Parent and the Company issued the following
joint press release:
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
12
<PAGE>
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.
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.
7. MERGER AGREEMENT. Section 11 of the Offer to Purchase is amended and
supplemented by this Section 7 of this Supplement.
13
<PAGE>
Merger Agreement. The following description of the Merger Agreement is
qualified in its entirety by reference to the text of the Merger Agreement filed
as an exhibit to the Schedule 14D-1, a copy of which may be obtained from the
offices of the Commission in the manner set forth in Section 7 of the Offer to
Purchase (except that such information will not be available at the regional
offices of the Commission).
The Offer. In the Merger Agreement, the Purchaser has agreed subject to
certain conditions, among other things, to amend the Offer (i) to reflect the
increase in the purchase price offered to $28.00 per Share (and associated
Right), net to the seller in cash, (ii) to extend the Offer until the later of
(A) midnight on the tenth business day following the date the Purchaser so
amends the Offer or (B) the earlier of (1) the satisfaction of the Control Share
Condition in the event the Control Share Condition is satisfied by the Purchaser
determining that Section 831 is invalid or inapplicable to the acquisition of
Shares pursuant to the Offer, and (2) midnight on the second business day next
succeeding the date of the Section 831 Meeting, and (iii) to modify the
conditions of the Offer to conform to the conditions to the Offer as set forth
in the Merger Agreement. The obligation of the Purchaser to accept for payment
and pay for Shares (including the associated Rights) tendered pursuant to the
Offer will be subject only to the conditions to the Offer, any of which
conditions other than the Minimum Condition and the Control Share Condition may
be waived by the Purchaser in its sole discretion. Without the prior written
consent of the Company, the Purchaser will not (i) reduce the number of Shares
to be purchased in the Offer, (ii) reduce the purchase price offered pursuant to
the Offer, (iii) impose conditions to the Offer in addition to the conditions to
the Offer set forth in the Merger Agreement, (iv) change the form of
consideration payable in the Offer, (v) otherwise amend the Offer (other than
amendments which are not adverse to the Company or its shareholders) or (vi)
extend the time of the expiration of the Offer if all conditions to the Offer
set forth in the Merger Agreement are then, as provided in the Offer, satisfied
or waived.
Pursuant to the Merger Agreement, the Company has consented to the 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
present (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 Company's Articles, (ii) determined
that the Offer and the Merger are fair to and in the best interests of the
Company and its shareholders, (iii) approved the Offer, the Merger Agreement and
the Merger, (iv) recommended that the holders of Shares authorize the purchase
of Shares by the Purchaser for purposes of Section 831, (v) recommended
acceptance of the Offer, the tender of Shares pursuant to the Offer and approval
and adoption of the Merger Agreement and the Merger by the holders of Shares,
(vi) taken all actions which are necessary on the part of its Board of Directors
as contemplated by the Ohio Business Combination Law in order to make the Ohio
Business Combination Law inapplicable to the Merger, and (vii) 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
(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 the Purchaser, upon request, a copy
of the resolutions adopting the Recommendation certified by an appropriate
officer of the Company.
The Section 831 Meeting. In the Merger Agreement, Avant-Garde, the Purchaser
and the Company acknowledged that a special meeting of the holders of Shares for
the purpose of voting to authorize the control share acquisition of Shares by
the Purchaser 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 Parent's and the Purchaser's proxy
statement for the
14
<PAGE>
Rescheduled 831 Meeting had not been circulated for a sufficient period of days
by the date of the Rescheduled 831 Meeting, Avant-Garde, the Purchaser 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 the Purchaser
may mutually determine from time to time in accordance with the ORC.
The Merger. The Merger Agreement provides that, at the effective time of the
Merger (the "Effective Time"), the Purchaser (or another direct or indirect
wholly owned subsidiary of Parent) 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 Share not owned by Parent,
Avant-Garde, the Purchaser or any other subsidiary of Avant-Garde (other than
those Shares held in the treasury of the Company or held by any subsidiary of
the Company) and Shares held by dissenting shareholders (including the
associated Rights) will be cancelled and retired and converted into a right to
receive in cash an amount per Share equal to the highest price per Share paid
for a Share by the Purchaser pursuant to the Offer (the "Merger Price"), (ii)
each then-outstanding Share (including the associated Rights) owned by Parent,
Avant-Garde, the Purchaser or any other subsidiary of Avant-Garde will be
cancelled and retired, and no payment will be made with respect thereto, (iii)
each 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 the 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.
Covenants of the Company, Avant-Garde and the Purchaser. 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 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 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 Share and (B) dividends paid by its
subsidiaries to the Company with respect to their capital stock; (iv) except as
provided in the
15
<PAGE>
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 Shares permit the participants in such plans to direct the
trustees of such plans in a timely and confidential manner whether to tender the
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 the Purchaser, 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 the
Purchaser, 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 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); (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.
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The Merger Agreement provides that, if required by applicable law, the
Company will take all action necessary in accordance with applicable law and the
Company's Articles and Regulations to convene a meeting of the holders of Shares
promptly after the purchase of Shares pursuant to the Offer to consider and vote
upon the approval of the Merger. At any such meeting, Avant-Garde and the
Purchaser will vote all of the 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 Shares approve the Merger if such approval is
required pursuant to the ORC 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 the Purchaser acquire
beneficial ownership of at least 90% of the outstanding 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
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 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
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 Shares so purchased bears to the
number of 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 the Purchaser 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 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 14f-1, and the Company will include in the Company 14D-9 such
information as is required under Section 14(f) and Rule 14f-1. Annex I to the
Company 14D-9 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.
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
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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 to promptly notify Avant-Garde and the
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 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, the Purchaser 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 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 the Purchaser.
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 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")
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<PAGE>
to purchase 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 the Purchaser 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 the Purchaser, (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
Shares subject to such Option and (y) the excess, if any, of the Merger Price
over the exercise price per 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 Shares, if any, which have been distributed to employees
pursuant to the 1988 Employee Incentive Plan and will promptly furnish
Avant-Garde and the Purchaser 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 (as defined in the Merger
Agreement) 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 (as defined
in the Merger Agreement); (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 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.
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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 Offer,
Avant-Garde will cause there to be in full force and effect from and after the
time the Purchaser first accepts for payment 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 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 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
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<PAGE>
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 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, the Purchaser and the Company agree, promptly, and in no event
later than two business days after the amendment to the 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 the
Purchaser 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 the Special Meeting.
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 the Purchaser, take all reasonable steps to (i) exempt the
Company, the Offer and the Merger from the requirements of the ORC, by action of
the Company's Board of Directors or otherwise and (ii) assist the Purchaser in
complying with, or in challenging the validity or applicability of, any state
takeover law to the 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 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; (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; (iv) the absence of certain changes or
events; (v) the absence of certain litigation; (vi) with respect to the vote of
shareholders necessary to approve the Merger; (vii) with respect to the accuracy
and completeness of the information supplied by the Company to be included in
the proxy statement for the Section 831 Meeting and any amendments or
supplements thereto; (viii) with respect to the Company's employee benefit
plans, tax matters, and compliance with laws; and (ix) with respect to the
accuracy and completeness of the Company's notice of the Section 831 Meeting,
the Company's statement contemplated by Section 831(D)(2) of the ORC, the
Company 14D-9 and the information supplied by the Company for inclusion in the
amendment to
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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 (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 the Purchaser 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 the
Purchaser, are sufficient to consummate the Offer and the Merger, to perform all
the obligations of Avant-Garde and the Purchaser 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 Parent's proxy statement for the Section 831 Meeting, the Schedule 14D-1,
the Offer Documents and the information supplied by Avant-Garde or the Purchaser
for inclusion in the Company's proxy statement for the meeting of shareholders
to approve the Merger, if any, or in the Company 14D-9, and all amendments and
supplements thereto; and (iv) the validity, accuracy and completeness of
Parent's and the Purchaser's acquiring person statement pursuant to Section 831.
Conditions to the Merger. The obligations of Avant-Garde, the 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: (i) the holders of Shares will have duly approved the Merger and
adopted the Merger Agreement, if and as required by applicable law; (ii) the
Purchaser will have accepted for payment and purchased all Shares validly
tendered and not withdrawn pursuant to the Offer, provided that this condition
will be deemed to have been satisfied if the Purchaser fails to accept for
payment or pay for Shares pursuant to the 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 Shares, (i) by the mutual consent
of the Boards of Directors of Avant-Garde, the Purchaser and (by the affirmative
vote of a majority of the Continuing Directors) the Company; (ii) by Avant-Garde
and the Purchaser, on the one hand, or the Company, on the other hand, if the
Offer expires or is terminated or withdrawn without any 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 the Purchaser 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 the
Purchaser to consummate the Offer or Avant-Garde, the Purchaser or the Company
to effect the Merger, 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
the 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 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;
and (v) by either Avant-Garde and the Purchaser, 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
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<PAGE>
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.
In addition, either Avant-Garde and the Purchaser, on the one hand, or the
Company, on the other hand, may terminate the Merger Agreement if the Board of
Directors of the Company (A) shall have withdrawn its recommendation, consent to
or approval of the Offer, the Merger or the Merger Agreement, or (B) determined
to recommend to holders of the Shares or approve a Competing Transaction in the
exercise of its Director Duty. In such event, the Company is required by the
Merger Agreement to notify Avant-Garde and the Purchaser promptly of any
determination by its Board of Directors to recommend such Competing Transaction
to the holders of the 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
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 ORC, 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.
The Guaranty. The following description of the Guaranty is qualified in its
entirety by reference to the Guaranty filed as an exhibit to the Schedule 14D-1,
a copy of which may be obtained from the offices of the Commission in the manner
set forth in Section 7 of the Offer to Purchase (except that such information
will not be available at the regional offices of the Commission).
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Pursuant to the Guaranty, the payment and performance obligations of
Avant-Garde and the Purchaser 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 (as defined in the Merger Agreement) 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 Parent, as primary obligor and not merely as a
surety.
The Guaranty provides that it and all covenants and agreements of Parent
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 the Purchaser of any and all amounts (without duplication) that are or may
become due and payable by Avant-Garde or the Purchaser to any Beneficiary under
the Merger Agreement or any Offer Document to which Avant-Garde or the Purchaser
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 the Purchaser to any Beneficiary contained in the Merger
Agreement or the Offer Documents to which Avant-Garde or the Purchaser 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
Parent thereunder shall have been duly performed. Pursuant to the Guaranty,
Parent 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
Parent 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 circumstances whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Covenants of Parent. Pursuant to the Guaranty, Parent 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, the Purchaser or Parent or otherwise, as though such payment or
discharge had not been made; (iii) that Parent shall pay all expenses incurred
by the Beneficiaries in enforcing the Guaranty and the Obligations (including
reasonable legal fees and expenses); (iv) that Parent assumes the responsibility
for being and keeping informed of the financial condition of Avant-Garde and the
Purchaser 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 Parent of information known to it
regarding such condition or any such circumstances; and (v) without the prior
written consent of the Company, Parent will not (A) reduce the number of Shares
to be purchased in the Offer, (B) reduce the purchase price offered pursuant to
the Offer, (C) impose conditions to the Offer in addition to those set forth on
Annex A to the Merger Agreement, (D) change the form of consideration payable in
the Offer, (E) otherwise
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amend the Offer (other than amendments which are not adverse to the Company or
its shareholders) or (F) 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.
Representations and Warranties of Parent. The Guaranty contains customary
representations and warranties with respect to Parent, including with respect to
its authority to execute and deliver the Guaranty.
Jurisdiction and Governing Law. Pursuant to the Guaranty, Parent 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. The Guaranty provides that it shall be governed by, and
construed in accordance with, the laws of the State of New York.
8. CERTAIN CONDITIONS OF THE OFFER. Section 14 of the Offer to Purchase is
hereby amended and restated in its entirety by this Section 8 of this
Supplement.
Notwithstanding any other provision of the Offer, the Purchaser shall not be
required to accept for payment, purchase or pay for any 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 any Shares tendered, and/or may
amend or terminate the Offer if (i) at or before the Expiration Date either the
Minimum Condition or the Control Share Condition shall not have been satisfied,
or (ii) at any time before acceptance for payment for any such Shares (whether
or not any 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
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 Parent, 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 Parent 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 Parent or the Purchaser or any of their affiliates to exercise
full rights of ownership of the Shares, including without limitation the
right to vote any Shares purchased by them on all matters properly presented
to the shareholders of the Company; or (iv) seeks to prevent Parent or the
Purchaser or any of their affiliates from acquiring, or to require
divestiture by Parent or the Purchaser or any of their affiliates of, any
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
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(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 Parent 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 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
(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
Shares authorize the purchase of Shares by the Purchaser for purposes of
Section 831, (v) recommendation of acceptance of the Offer, the tender of
Shares pursuant to the Offer and approval and adoption of the Merger
Agreement and the Merger by the holders of Shares, (vi) actions taken as
contemplated by the Ohio Business Combination Law in order to make the Ohio
Business Combination Law 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 Parent 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 its
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 pursuant to the Nine West Purchase Agreement); 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, as amended, 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 Parent 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 Parent and the Purchaser. The foregoing conditions, other
than the Minimum Condition and the Control Share Condition, may be waived by the
Purchaser in whole or in part at any
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time and from time to time in its sole judgment. The failure of Parent 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.
9. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS. Section 15 of the
Offer to Purchase is amended and supplemented by this Section 9 of this
Supplement.
Certain Litigation. On March 6, 1995, the action brought by the Purchaser
and Parent on March 3, 1995 in the District Court was amended to, among other
things, add Avant-Garde as a plaintiff (Avante-Garde, Parent and the Purchaser
are collectively referred to herein as the "Luxottica Plaintiffs").
On March 10, 1995, the Luxottica Plaintiffs filed the Second Amended
Verified Complaint Seeking Declaratory and Injunctive Relief (the "Second
Amended Complaint") in the District Court relating to the Sections 1701.41,
1701.42, 1707.23 and 1707.26 of the ORC (the "Ohio Take-Over Act"), the Rights
and the impairment of the voting rights of Disqualified Shares under Sections
1701.01(CC)(2) and 1701.831 of the ORC.
On March 16, 1995, the District Court issued a preliminary injunction (the
"March 16 Order") enjoining the Company and the State of Ohio from applying to
the Offer the provisions of Section 1701.01(CC)(2) of the ORC which, by their
terms, would have impaired the voting rights of Disqualified Shares at the
Section 831 Meeting.
On March 22, 1995, the Company and the other defendants in the litigation
pending in the District Court (collectively, the "Company Defendants") filed
with the District Court an Answer and Counterclaim (the "Answer and
Counterclaim") for preliminary and permanent injunction denying the material
allegations in the Second Amended Complaint. The allegations in the Answer and
Counterclaim have been amended and, as amended, are described below in the
description of the Answer and Amended Counterclaim (as defined below) filed by
the Company Defendants on March 29, 1995.
On March 22, 1995, the District Court issued an order (the "March 22 Order")
denying the motion of the Luxottica Plaintiffs to require the Company to obtain
and produce a list (the "NOBO list") of beneficial owners of Shares who do not
object to the disclosure of their name and address by the registered owner of
such Shares to the Company for the limited purpose of soliciting direct
communication on corporate matters. The order further provides, however, that in
the event the Company obtains a NOBO list it will so notify the Luxottica
Plaintiffs and allow such parties to inspect and copy such list.
On March 23, 1995, the District Court issued an order (the "First March 23
Order") permanently enjoining the Luxottica Plaintiffs from making any public
statement, including any direct statement to shareholders of the Company,
representing that such parties have the ability to set either alone, separately
or in conjunction with one another and Claudio and Debra Del Vecchio, any record
date in connection with any meeting of the shareholders of the Company or any
record date for soliciting consents or agent designations for the purpose of
calling any special meeting of the Company's shareholders.
On March 23, 1995, the District Court issued an order (the "Second March 23
Order") denying the Company's motion to enjoin the Luxottica Plaintiffs from
using the list of shareholders of the Company previously provided to Avant-Garde
in connection with the proxy solicitations relating to the Section 831 Meeting
and the Special Meeting.
On March 24, 1995, the Luxottica Plaintiffs filed a motion with the District
Court for leave to file a Third Amended Complaint (the "Third Amended
Complaint") and filed the Third Amended Complaint which renews the allegations
made in the Second Amended Complaint and further seeks an order declaring that
(i) the incumbent directors of the Company have breached their fiduciary duties
by failing to negotiate with Parent and the Purchaser and taking certain actions
with respect to the
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Company's compensation and retirement plans and arrangements designed to
entrench existing management and increase the cost of acquiring the Shares, (ii)
the incumbent directors of the Company have violated Section 1701.76 of the ORC
by failing to hold a shareholder vote with respect to the proposed sale of the
Company's footwear operations to Nine West and the Company's announced intention
to sell or otherwise dispose of substantially all of its remaining assets, (iii)
the proposed sale of the Company's footwear operations to Nine West may not be
consummated without a vote of the shareholders adopting an amendment to the
Company's Articles and (iv) certain disclosures made by the Company following
the commencement of the Offer, including disclosures in the Company 14D-9,
contain false and misleading statements that violate the Exchange Act in certain
respects, including, among others, the failure of the Company 14D-9 to describe
the estimated after-tax proceeds of the proposed sale to Nine West and the
manner in which such proceeds will be used by the Company, the fact that certain
schedules to the Company's agreement with Nine West are omitted from the Company
14D-9 and the failure of the Company 14D-9 to adequately disclose the Company's
plans to auction off the Company's businesses. The motion for leave to file the
Third Amended Complaint was granted by the District Court on March 27, 1995.
On March 29, 1995, the Company Defendants filed with the District Court an
Answer and Amended Counterclaim (the "Answer and Amended Counterclaim") denying
the material allegations in the Third Amended Complaint and alleging, among
other things, that the Schedule 14D-1, the Offer to Purchase, and the definitive
Proxy Statement dated March 21, 1995 of Parent and the Purchaser for the Section
831 Meeting (the "831 Proxy Statement") contain false and misleading statements
and fail to make required disclosures in violation of the Exchange Act and the
Ohio Take-Over Act, which violations purportedly require preliminary and
permanent injunctive relief restraining consummation of the Offer or any other
transaction to gain control of the Company.
Count I of the Answer and Amended Counterclaim alleges that the Schedule
14D-1 and the Offer to Purchase fail to disclose as alleged purposes of the
Offer, Parent's intention to cause Lenscrafters, Inc., a wholly owned subsidiary
of the Company, to shift its sourcing of merchandise from the Far East to
European suppliers (including Parent), and an attempt on Parent's part to
prevent Lenscrafters, Inc. from obtaining a certain market share in North
America. The Company apparently makes these assertions on the basis of
statements attributed by the press to Leonardo Del Vecchio, the Chairman of the
Board and Chief Executive Officer of Parent. The Luxottica Plaintiffs deny that
the Schedule 14D-1 and Offer to Purchase are false or misleading, and believe
that the purpose of the Tender Offer, as well as their plans and proposals, are
fully and adequately set forth in those documents. As the Schedule 14D-1 and
Offer to Purchase disclose, once the Tender Offer is consummated and the
Proposed Merger between the Company and another direct or indirect wholly owned
subsidiary of Parent occurs, Parent will control the entire equity interest in
the Company, and it and the Purchaser will conduct a detailed review of the
Company's assets and business operations to determine what, if any, changes
would be desirable in light of the circumstances which then exist. Parent is
pursuing the Offer for strategic business reasons. Although it has not adopted
any firm plans, subject to its completion of a detailed review of the Company's
operations, Parent presently intends to sell or otherwise dispose of the
Company's footwear and women's apparel divisions and to retain the optical
division.
Count II of the Answer and Amended Counterclaim alleges that the Schedule
14D-1 and the Offer to Purchase fail to adequately disclose the corporate
organization of Parent and its subsidiaries, including the Purchaser, and that
Avant-Garde may acquire certain Shares purchased by the Purchaser pursuant to
the Offer. The Luxottica Plaintiffs deny that the Schedule 14D-1 and the Offer
fail to disclose any material facts regarding the structure of the Offer.
Luxottica U.S. Holdings Corp., an indirect wholly owned subsidiary of Parent, is
the Borrower under the commitment letter dated March 2, 1995 (the "Commitment
Letter") with Credit Suisse for the Facility, which refers to it as "Newco 1".
The Purchaser is referred to as "Bidco" in the Commitment Letter. Luxottica U.S.
Holdings Corp. will invest as capital in Avant-Garde the proceeds of the
Facility necessary to fund the Purchaser's acquisition of the Shares pursuant to
the Offer and the Proposed Merger. Avant-Garde will
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invest as capital in the Purchaser an amount equal to the entire proceeds
received by it from Luxottica U.S. Holdings Corp. Upon consummation of the
Proposed Merger, the surviving corporation will be a wholly owned subsidiary of
Avante-Garde.
Count III of the Answer and Amended Counterclaim alleges that the Schedule
14D-1 fails to disclose the identity of Mr. Leonardo Del Vecchio, the Chairman
of the Board and Chief Executive Officer of Parent, as a "controlling person" of
Parent within the meaning of the Exchange Act. The Luxottica Plaintiffs deny
that the Schedule 14D-1 and the Offer to Purchase fail to disclose any material
information regarding Mr. Del Vecchio, who together with other members of the
Del Vecchio family, owns approximately 71.5% of Parent's stock. Mr. Del Vecchio
founded Parent in 1961, and has served as its Chief Executive Officer since that
time. He has served as Chairman of its Board of Directors since 1981. All of the
information concerning "controlling persons" which is required to be disclosed
by the Exchange Act is in fact disclosed in the Schedule 14D-1 with respect to
Mr. Del Vecchio, as well as the other Directors and Officers identified in
Schedule I to the Offer to Purchase.
Count IV of the Answer and Amended Counterclaim alleges, among other things,
that the Schedule 14D-1 and the Offer to Purchase fail to disclose material
facts pertaining to the proposed financing of the Offer, including the identity
of the actual borrower under the Facility, the risk that the financing
contemplated by the Facility may be challenged for noncompliance with the margin
regulations promulgated by the Board of Governors of the Federal Reserve System
(the "Board of Governors"), the amount of funds that may be borrowed under the
Revolving Credit Facility to purchase Shares, and the fact that the
documentation evidencing the Facility is subject to the approval of Credit
Suisse. The Luxottica Plaintiffs intend to deny that the Schedule 14D-1 and the
Offer to Purchase fail to disclose any material facts pertaining to the
financing of the Tender Offer. As noted above, Luxottica U.S. Holdings Corp., a
newly formed Delaware corporation, will be the Borrower under the Facility. The
Luxottica Plaintiffs believe the Facility is and will be in full compliance with
the margin regulations promulgated by the Board of Governors, and thus, there is
no "risk" of non-compliance. The Borrower will borrow under the Facility
sufficient funds to finance the Offer, as set forth in the Offer to Purchase.
The fact that the Commitment Letter contains customary conditions, including the
negotiation, execution and delivery of definitive documentation, clearly
requiring the execution, and thus the approval, thereof by Credit Suisse, is
also fully disclosed in the Schedule 14D-1 and the Offer to Purchase.
Count IV also alleges that the Fourth Amendment to the Schedule 14D-1 filed
on March 16, 1995 (the "Fourth Amendment") falsely states that "Credit Suisse is
prepared to fund their commitment on the expiration date of our offer . . . ."
The Luxottica Plaintiffs deny that the Fourth Amendment was false or misleading
with respect to the Credit Suisse Commitment. The quoted statement was contained
in a letter dated March 16, 1995 from Claudio Del Vecchio, Managing Director of
Parent, to Bannus Hudson, President and Chief Executive Officer of the Company,
in response to the Company's press release rejecting the Offer. That press
release described the Offer as being subject to "significant conditions". The
Company's Count IV quotes Mr. Del Vecchio's statement out of context. The full
text of Section 1 of Mr. Del Vecchio's letter is as follows:
"1. Your characterization of our offer as conditional is ironic and
misleading. One of the conditions you refer to in your press release is the
financing condition. As you must know by reviewing the Credit Suisse
commitment letter which has been publicly filed, our offer is fully
underwritten by Credit Suisse. Credit Suisse is prepared to fund their
commitment on the expiration date of our offer. Credit Suisse is prepared to
meet with you and explain the nature of its commitment if you desire. We
also note with interest that, although you have rejected our fully
underwritten offer, you have entered into an agreement with Nine West which
appears to be conditioned on financing.
The only other conditions we have in our offer which you might find
objectionable are solely within the control of your Board to satisfy. All
you have to do is enter into negotiations with us
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and approve a transaction containing mutually agreeable terms, and our offer
would no longer be subject to the conditions you find objectionable."
The March 16, 1995 letter points out that Credit Suisse has agreed to underwrite
100% of the Facility and that its commitment is therefore not conditioned on the
participation of other lenders. The letter also refers specifically to the
Commitment Letter, which contains specified conditions, and which was filed as
an Exhibit to the Schedule 14D-1, and offers, in addition, to have Credit Suisse
meet with Mr. Hudson to "explain the nature of its commitment".
Count V of the Answer and Amended Counterclaim alleges that Amendment No. 4
to the Schedule 14D-1 erroneously indicates that the Company's agreement with
Nine West regarding the disposition of the Company's footwear division "appears
to be conditioned on financing". The Luxottica Plaintiffs deny that they have
made any material misstatements regarding the Company's agreement with Nine
West. The quoted statement that financing "appears" to be a condition to the
agreement's consummation, was based on press reports that "[f]inancing for the
transaction has been committed to by Citibank and Merrill Lynch", and that
"[t]he [purchase] agreement is subject to customary closing conditions", as well
as a review of Nine West's current financial statements, which do not reflect
sufficient cash to consummate the purchase absent financing by a third party.
Confirming the reliance by the Luxottica Plaintiff's on such press reports and
review, an additional press report was issued on April 4, 1995, quoting Richard
White, the Chief Financial Officer of Nine West, who was discussing Nine West's
financing for the acquisition of the Company's footwear division, as follows:
"We already have the bank commitments with Citibank and Merrill Lynch Credit
Corp." "We're working with the banks to finish up the syndication, and we hope
to close by June 1st but not before." Since the filing of Amendment No. 4 to the
Schedule 14D-1, the Luxottica Plaintiffs have had an opportunity to review the
written agreement between the Company and Nine West for the sale of the footwear
division, a copy of which was filed as an exhibit to the Company 14D-9. That
agreement does not contain as a condition precedent to Nine West's obligation to
close its receipt of sufficient financing to consummate the purchase; nor does
it contain any representation by Nine West that it has financing to consummate
the purchase. Nevertheless, as confirmed by the April 4, 1995 press report
referred to above, it is apparent that Nine West will require financing or some
other infusion of cash in order to consummate the purchase of the Company's
footwear division.
Count VI of the Answer and Amended Counterclaim alleges that the Schedule
14D-1 and the Offer to Purchase fail to disclose that the Facility is subject
to, and does not satisfy, the requirements of Regulation U of the Board of
Governors that limit the amount of credit allowable for the purchaser of "margin
stock", and that future changes in value of the Italian lire may profoundly
affect the valuation of Parent's non-stock assets and the Borrower's ability to
comply with the regulations of the Board of Governors. The Luxottica Plaintiffs
deny that the Facility is in any way violative of Regulation U, and believe that
any borrowings thereunder will comply fully with the applicable margin
requirements. It is a condition precedent to the Facility that all loans
thereunder be in full compliance with Regulation U. The Commission and the
United States Justice Department possess enforcement power with respect to
Regulation U, and if the Facility did violate its terms, the federal government
could, among other remedies, seek to restrain the consummation of the Offer and
Facility. The Schedule 14D-1 and the Offer to Purchase do not contain any
material false or misleading statements or non-disclosures with respect to
Regulation U. Further, the Luxottica Plaintiffs do not believe that fluctuations
in the Italian lire will have any material impact upon the valuation of the
collateral under the Commitment Letter for purposes of Regulation U, and to
suggest otherwise could be false and misleading.
Count VII of the Answer and Amended Counterclaim alleges that Schedule III
to the 831 Proxy Statement ("Schedule III"), contains a false and misleading
description of the Shares owned by Mellon Bank Corporation ("Mellon") and its
subsidiaries. In particular, the Company alleges that the manner by which the
Luxottica Plaintiffs described the ownership of these Shares could lead an
investor to reasonably conclude that Mellon and its subsidiaries own 16,158,000
(34.85%), rather than 4,678,000
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(10.09%), of the Shares, which the Company asserted in its definitive proxy
statement for the Section 831 Meeting were the correct number of Shares and
percentages.
The Luxottica Plaintiffs deny that Schedule III is false and misleading. The
designation "c/o Mellon Bank" specifically appears after the three Mellon
subsidiaries mentioned in Schedule III. Moreover, to the extent that Schedule
III could be read to suggest that Mellon and its subsidiaries own more than
10.09% of the Shares, the Luxottica Plaintiffs relied in good faith on a
description of the ownership of Shares set forth in Amendment No. 3 to a
schedule 13G Statement ("Schedule 13G") filed by Mellon on March 8, 1995. The
Schedule 13G is a publicly filed document and was the sole source of the
Luxottica Plaintiffs' information, which, as stated in Schedule III, was derived
from the Schedule 13G.
Count VIII of the Answer and Amended Counterclaim alleges that the Luxottica
Plaintiffs improperly established record dates for special meetings of the
Company's shareholders and for the execution of "Agent Designations." On March
23, 1995, the District Court issued the First March 23 Order permanently
enjoining the Luxottica Plaintiffs from making any public statement, including
any direct statement to shareholders of the Company, representing that such
parties have the ability to set either alone, separately or in conjunction with
one another and Claudio and Debra Del Vecchio, any record date in connection
with any meeting of the shareholders of the Company or any record date for
soliciting consents or agent designations for the purpose of calling any special
meeting of the Company's shareholders. Parent and Purchaser have distributed the
831 Proxy Statement and a Solicitation Statement (the "Solicitation Statement")
to call the Special Meeting, neither of which violate the First March 23 Order.
Count IX of the Answer and Amended Counterclaim alleges that Parent and the
Purchaser have failed to mail or deliver to the Company's shareholders certain
information required to be disclosed pursuant to the Ohio Take-Over Act. The
Company dismissed this count, without prejudice, on April 10, 1995.
On April 6, 1995, the Company Defendants filed with the District Court an
Amended Answer and Amended Counterclaim (the "Second Answer and Amended
Counterclaim") denying the material allegations of the Third Amended Complaint,
restating Counts I through IX of the Answer and Amended Counterclaim, which are
described above, and adding five additional counts to their counter-
claim.
Count X of the Second Answer and Amended Counterclaim alleges that the
Luxottica Plaintiffs made false and misleading statements in two letters to the
Company's shareholders, one of which accompanied the 831 Proxy Statement and one
of which accompanied the Solicitation Statement. In these letters to
shareholders, the Luxottica Plaintiffs urged shareholders of the Company to
"keep the pressure on" the Company's Board of Directors to negotiate in good
faith and to encourage the Board to negotiate in good faith. The Company alleges
that these statements were false and misleading because at the time they were
made, as noted in the Solicitation Statement, counsel to the Luxottica
Plaintiffs and counsel to the Company were discussing a form of confidentiality
agreement. The Luxottica Plaintiffs deny the allegations that the statements in
the shareholder letters were false and misleading. At the time the statements
were made the Luxottica Plaintiffs' efforts to obtain confidential information,
which had already been given to other parties, were being frustrated by the
inability of the parties to agree on a confidentiality agreement, principally
due to the Company's insistence that the confidentiality agreement contain a
two-year standstill provision applicable to Parent and its affiliates. There
were no negotiations between the Luxottica Plaintiffs and the Company taking
place on any transaction with the Company. Therefore, it was not in any way
false or misleading for the Luxottica Plaintiffs to urge the Company's
shareholders to encourage the Company's Board of Directors to negotiate in good
faith with the Luxottica Plaintiffs.
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Count XI of the Second Answer and Amended Counterclaim alleges that the
Solicitation Statement is false and misleading because it provides information
on the price of the Shares prior to the commencement of the Offer but does not
state that the Shares traded at $24 per Share as recently as the Company's
fiscal quarter ended October 29, 1994 and have traded at prices more than $2 in
excess of the $24 per share Offer price since the commencement of the Offer. The
Luxottica Plaintiffs deny the allegations that their statements about the price
of the Shares were false and misleading. The statements were true, and the
Company Defendants do not deny this fact. Moreover, the $24 per Share trading
price in the quarter ended October 29, 1994 was disclosed in the Offer to
Purchase of Parent and the Purchaser previously delivered to the Company's
shareholders. Further, such $24 per Share price was reached shortly after the
public announcement of a proposal by Nine West for a transaction with the
Company, and the price declined shortly thereafter when the Company's Board of
Directors rejected the proposal. The other information about the price of the
Company's Shares is publicly available to holders of Shares, and the Luxottica
Plaintiffs were not required to include it in the Solicitation Statement.
Count XII of the Second Answer and Amended Counterclaim relates to the
Solicitation Statement and is similar to Count VII which relates to the 831
Proxy Statement. Count XII alleges that Schedule III to the Solicitation
Statement (the "Solicitation Schedule III") contains a false and misleading
description of the Company's Shares owned by Mellon and its subsidiaries. In
particular, the Company alleges that the manner in which the Luxottica
Plaintiffs described the ownership of these Shares could lead an investor to
reasonably conclude that Mellon and its subsidiaries own 16,158,000 (34.85%),
rather than 4,678,000 (10.09%), of the Shares, which the Company asserts are the
correct number of Shares and percentages. The Luxottica Plaintiffs deny that the
Solicitation Schedule III is false and misleading. The designation "c/o Mellon
Bank" specifically appears after the three Mellon subsidiaries mentioned in the
Solicitation Schedule III. Moreover, to the extent that the Solicitation
Schedule III could be read to suggest that Mellon and its subsidiaries own more
than 10.09% of the Shares, the Luxottica Plaintiffs relied in good faith on a
description of the ownership of the Shares set forth in Amendment No. 3 to the
Schedule 13G filed by Mellon on March 8, 1995. The Schedule 13G is a publicly
filed document and was the sole source of the Luxottica Plaintiffs' information,
which as stated in the Solicitation Schedule III, was derived from the Schedule
13G.
Count XIII of the Second Answer and Amended Counterclaim alleges that the
form of agent designation for the Solicitation Statement is misleading because
while the Solicitation Statement states that the Luxottica Plaintiffs may elect
to make additional proposals at the Special Meeting, the form of agent
designation does not clearly state that additional proposals may be made. The
Luxottica Plaintiffs deny that the form of agent designation is misleading since
it clearly contemplates that other matters may come before the Special Meeting.
Any other matter proposed by the Luxottica Plaintiffs would be identified in the
proxy material for the Special Meeting and the Company's shareholders would have
the right to vote on it. As the Solicitation Statement clearly states on its
cover, the agent designations will not confer any rights to vote on matters
brought before the Special Meeting and, if the Special Meeting is called,
separate proxy materials will be sent with respect to such matters.
Count XIV of the Second Answer and Amended Counterclaim alleges that the
Solicitation Statement is false and misleading because it states (i) that the
date for determining shareholders of the Company entitled to call the Special
Meeting is the date that the meeting is called (the "Call Date") rather than a
record date determined by the Company's Board of Directors after the Company
"determines preliminary" that at least 50% of the Company's shareholders have
attempted to call the Special Meeting and (ii) that revocations of agent
designations will not affect actions taken prior to such revocation. The
Luxottica Plaintiffs deny that the date for determining Company shareholders
entitled to call the Special Meeting is any date other than the Call Date
because Ohio law and the Company's regulations clearly and unambiguously afford
to the holders of 50% of its Shares the right to call the Special Meeting,
without reference to any requirement that the calling shareholders continue to
hold their Shares after the Call Date. The Luxottica Plaintiffs also deny that
revocations of agent designations
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would affect actions taken prior to such revocation because the revocation of
the authority of an agent does not retroactively invalidate actions previously
taken by the agent within the scope of his authority.
On April 11, 1995, the Luxottica Plaintiffs filed a Reply to Second Amended
Counterclaim (the "Reply") denying the allegations set forth in the Second
Answer and Amended Counterclaim as described above.
On April 17, 1995, the Company Defendants filed with the District Court a
Third Amended Counterclaim (the "Third Amended Counterclaim") which added an
additional count to the Second Answer and Amended Counterclaim. Count XV set
forth in the Third Amended Counterclaim alleges that the following statement
made in the proxy materials of Parent and the Purchaser relating to the Section
831 Meeting was false and misleading: "Unfortunately, under Ohio law, unless the
owners of a majority of the shares present at this important meeting vote "FOR"
the approval of our purchase of shares, Luxottica may not be able to acquire
U.S. Shoe at any price under our tender offer." The Third Amended Counterclaim
alleges that this statement falsely and misleadingly asserts that Ohio law would
preclude Parent from changing the $24.00 per Share price if a "Yes" vote is not
obtained at the Section 831 Meeting. The Luxottica Plaintiffs deny that the
statement is false and misleading because Parent may not, in fact, be able to
consummate the Offer at any price if authorization is not obtained at the
Section 831 Meeting.
The foregoing descriptions of the Second Amended Complaint, the March 16
Order, the Answer and Counterclaim, the March 22 Order, the First March 23
Order, the Second March 23 Order, the Third Amended Complaint, the Answer and
Amended Counterclaim, the Second Answer and Amended Counterclaim Amendment, the
Reply and the Third Amendment Counterclaim are qualified in their entirety by
reference to the text of such documents, each of which has been filed as an
exhibit to the Schedule 14D-1, copies of which may be obtained from the offices
of the Commission in the manner set forth in Section 7 of the Offer to Purchase
(except that such information will not be available at the regional offices of
the Commission).
Pursuant to the Merger Agreement, each of Parent, the Purchaser and the
Company agreed, promptly, and in no event later than two business days after the
date hereof, to use its best efforts to obtain a dismissal without prejudice of
all claims and counterclaims arising in connection with the litigation described
above, with each party bearing its own costs and attorneys' fees. See Section 7
of this Supplement.
Ohio Take-Over Act. As described in the Offer to Purchase, Parent and the
Purchaser submitted certain information relating to the Offer to the Ohio
Division of Securities on March 3, 1995 pursuant to the Ohio Take-Over Act.
Under such Act, the Ohio Division of Securities is vested with authority to take
action within three calendar days of such submission to summarily suspend the
continuation of the Offer. The Ohio Division of Securities did not issue any
order to suspend the continuation of the Offer prior to the expiration of such
three day period.
Antitrust. The waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, which is applicable to the Offer expired
at 11:59 p.m., New York City time, on March 18, 1995 without the Purchaser or
Parent receiving a request for additional information or documentary material
from the Antitrust Division or the Federal Trade Commission prior thereto.
10. MISCELLANEOUS
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS
SUPPLEMENT, THE OFFER TO PURCHASE OR THE REVISED LETTER OF TRANSMITTAL AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS SUPPLEMENT OR THE OFFER TO
PURCHASE NOR ANY PURCHASE PURSUANT TO THE OFFER, SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
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IN THE AFFAIRS OF PARENT, THE PURCHASER OR THE COMPANY SINCE THE DATE AS OF
WHICH INFORMATION IS FURNISHED OR THE DATE OF THIS SUPPLEMENT.
Parent and the Purchaser have filed with the Commission the Schedule 14D-1
including amendments thereto, together with exhibits, pursuant to Rule 14d-3 of
the General Rules and Regulations under the Exchange Act, furnishing certain
additional information with respect to the Offer, and may file additional
amendments thereto. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 of the Offer to Purchase
(except that they will not be available at the regional offices of the
Commission).
EXCEPT AS OTHERWISE SET FORTH IN THIS SUPPLEMENT, THE TERMS AND CONDITIONS
PREVIOUSLY SET FORTH IN THE OFFER TO PURCHASE REMAIN APPLICABLE IN ALL RESPECTS
TO THE OFFER, AND THIS SUPPLEMENT SHOULD BE READ IN CONJUNCTION WITH THE OFFER
TO PURCHASE.
LUXOTTICA ACQUISITION CORP.
April 24, 1995
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Facsimile copies of the revised Letter of Transmittal, properly completed
and duly signed, will be accepted. The revised Letter of Transmittal,
certificates for the Shares and any other required documents should be sent by
each shareholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary as follows:
The Depositary for the Offer is:
CHEMICAL BANK
<TABLE><CAPTION>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Chemical Bank (For Eligible Institutions Only) Chemical Bank
Reorganization Department (212) 629-8015 55 Water Street
P.O. Box 3085 or Second Floor-Room 234
G.P.O. Station (212) 629-8016 New York, New York 10041
New York, New York 10116-3085 Confirm by Telephone: Attention:
(212) 946-7137 Reorganization Department
</TABLE>
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Any questions or requests for assistance or additional copies of the Offer
to Purchase, this Supplement, the revised Letter of Transmittal and the revised
Notice of Guaranteed Delivery may be directed to the Information Agent or the
Dealer Manager at their respective telephone numbers and locations listed below.
You may also contact your broker, dealer, commercial bank or trust company or
other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
CS First Boston
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
(212) 909-2000 (Call Collect)
<PAGE>
TO VOTE BY TELEPHONE
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We have provided you with the opportunity to vote by telephone free of
charge up until the time of the shareholder meeting. To vote by telephone,
please follow the instructions below:
1. Call Toll-Free (800) - , Anytime.
2. Tell the operator you wish to send a collect proxygram to I.D.
No. , U.S. Shoe.
3. State your name, address, telephone number, and social security
number.
4. Tell the operator how you wish to vote. The operator will have the
exact text of the PINK proxy card to be completed by you.
5. For confirmation, the operator will promptly telephone you at the
number you provided.
If you have any questions or require assistance with voting, please call
MacKenzie Partners Toll-Free at (800) 322-2885 or collect at (212) 929-5500.
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