<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
USG Corporation
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Hakatak Enterpises, Inc.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials:
/ / 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:
<PAGE> 2
LET'S MAKE THE SHAREHOLDERS A PRIORITY AT USG!
YOUR VOTE CAN HELP DECIDE THE FUTURE OF YOUR INVESTMENT.
SIGN AND RETURN THE GREEN PROXY TODAY!
------------------------
HAKATAK ENTERPRISES, INC.
100 WILSHIRE BOULEVARD, SUITE 1700
SANTA MONICA, CALIFORNIA 90401
(310) 260-6007 OR (800) 358-8660
------------------------
April 24, 2000
Dear Fellow Shareholders:
I am the beneficial owner of over one million shares (including those I
hold as trustee) of USG Corporation (the "Company") and have been a patient and
committed investor since 1991. During the last several years, I have become
increasingly concerned about whether the interests of the Board of Directors and
management are directly aligned with those of the shareholders.
I have often wondered how a well-positioned company like ours trades at
such low price earnings and cash flow multiples. This depressed valuation was
recently underscored when our Company was mentioned in an April 17, 2000 Forbes
magazine article as a top "LBO" candidate. The Company's market
capitalization(1) dropped by over $900 million, or approximately 30% from
1/31/99 to 1/31/00, while the S&P 500 increased by approximately 9% in the same
period.
My core belief is that we very much need a Board of Directors and
management team whose interests and actions are directly aligned with
shareholders. This core belief has prompted me to take a more vigorous and
active role in maximizing shareholder value through two important steps: (1) I
HAVE SUBMITTED A PROPOSAL AT THIS YEAR'S ANNUAL MEETING TO RESCIND THE COMPANY'S
CURRENT "POISON PILL" AND REQUIRE SHAREHOLDER APPROVAL BEFORE ANY OTHER
SO-CALLED SHAREHOLDERS RIGHTS PLAN BECOMES EFFECTIVE; AND, (2) I AM NOMINATING
THREE PERSONS FOR ELECTION AS DIRECTORS OF THE COMPANY. THEIR NAMES ARE JAY
BUCHBINDER, KEITH OGATA AND HERBERT DENTON. AS A MATTER OF FACT, JAY BUCHBINDER
AND TRUSTS FOR HIS BENEFIT OWN MORE SHARES THAN THE ENTIRE BOARD AND MANAGEMENT
COMBINED.
You should be aware that two of the three incumbent directors we are
opposing and more than half of the current directors were officers or directors
of the Company when the Company filed for bankruptcy in 1993. Collectively,
these three incumbent directors own 9,090 shares (as of the most recent proxy
statement) demonstrating their lackluster commitment to the financial success of
USG's shareholders. We are not, however, opposing the fourth incumbent nominated
by the Company, who was designated independently after the Company's bankruptcy
filing in 1993, and who has an apparent alignment with the success of the
Company's shareholders through ownership of 138,800 shares of common stock. I
have come to believe that the current Board requires new directors who will take
aggressive steps to maximize shareholder value, as well as to influence policy
decisions in corporate governance and management compensation.
- ---------------
(1) Value of shares held by non-affiliates as reported on the Company's 1998 and
1999 Form 10-K.
1
<PAGE> 3
WHY THIS PROXY CONTEST IS NECESSARY
I believe that the Company is competitively well-positioned in the
marketplace and is a tremendous generator of earnings and cash, but has been
seriously undervalued by the market, in part because the Board and management
are entrenched and insulated and have not pursued an aggressive policy to
enhance shareholder value. My deep concern is that if the Company continues to
allocate an excessive amount of its free cash flow to capital expenditure
programs we shareholders may never see the enhancement of share value that
management claims to be seeking.
As a regular participant in analyst conference calls over the years, I have
noticed that analysts and investors regularly question management about its
policies towards capital expenditure programs, as well as specific steps to
increase shareholder value such as share repurchase programs and cash dividend
distributions. In the past, management's response had been that it would turn
its attention to "shareholder initiatives" once an "investment grade" rating was
achieved for the Company's debt. While this objective was first reached in
December 1997, the following graph will clearly demonstrate the market's poor
reaction to management's approach.
<TABLE>
<CAPTION>
DATE USG CORPORATION S&P500
- -------- --------------- ------
<S> <C> <C>
12/12/97 100 100
02/06/98 110 105
03/04/98 115 120
05/29/98 110 120
07/24/98 110 120
09/18/98 95 105
11/13/98 100 120
01/08/99 105 135
03/05/99 100 135
04/30/99 120 140
06/25/99 110 140
08/20/99 105 140
10/15/99 90 135
12/10/99 95 150
02/04/00 75 145
04/07/00 80 160
</TABLE>
(Comparing the % change between 12/12/97 and 4/20/00 of USG common stock and the
S&P 500 when both are set to a par value of 100 on 12/12/97.) From this base,
USG's stock price has declined approximately 20% while the S&P 500 index has
increased by approximately 40%. Source: Bloomberg
2
<PAGE> 4
Several analysts have suggested that the Company's expansion program, when
combined with the industry wide expansion in wallboard capacity, has actually
dampened the stock's performance and may continue to affect its future
performance prospects. I agree with the analysts' views. As a matter of fact, in
1998 and 1999 I personally met with the Company's senior officers and expressed
my concerns with the Company's devoting a disproportionate amount of its cash
flow to increase plant capacity in a potentially risky part of the economic
cycle. The Company's focus on growing its business has clearly not grown its
stock price.
I felt it was necessary to make certain that the Board and management did
not feel too insulated from accountability to the shareholders for the Company's
poor stock price performance. Therefore, in 1999, I submitted a shareholder
proposal to remove the "poison pill" hoping that management and the Board would
be motivated to recognize the poor grade they are getting on two important
report cards -- the stock's price and P/E Ratio. The Board's paternalistic
response to my shareholder proposal has forced me to nominate Jay Buchbinder,
Keith Ogata and Herbert Denton as candidates for the Company's Board at the next
annual meeting.
WHY YOU SHOULD VOTE FOR THE HAKATAK NOMINEES
Two of the Company's nominees began to serve on the Board in 1987 and 1988.
They served on the Board that, in an effort to fend off a take-over, implemented
a re-capitalization plan -- which was a contributing factor to the Company's
eventual bankruptcy filing in 1993. Two of the Company's nominees also currently
serve on the Compensation Committee, which has generously rewarded management
without regard for the poor stock performance. Three of the Company's four
nominees serve on the Executive Committee which failed even to meet in 1998 and
1999. REMEMBER: THESE THREE INCUMBENT DIRECTORS OWN ONLY 9,090 SHARES (AS OF THE
MOST RECENT PROXY STATEMENT).
I wish to be very clear -- this is not a takeover attempt. The election of
these three directors (out of thirteen), all of whom will bring a vigorous focus
on maximizing shareholder value, is not a change in control of the Board. Their
election, however, would provide an enormous influence and bring a fresh
perspective to the Board, especially on utilization of free cash flow, corporate
governance and management compensation issues. I strongly believe that it is now
time to elect these three new Directors who will focus on aggressively
increasing shareholder value.
IF ELECTED, MY NOMINEES WOULD SEEK TO PRESS THE INCUMBENT DIRECTORS AND
MANAGEMENT TO TAKE THE FOLLOWING STEPS:
REALLOCATE FREE CASH FLOW TO BENEFIT STOCKHOLDERS. For the three years
ending December 31, 2000 (including management's projections for this year), the
Company will spend over $1 billion on capital expenditures. While we recognize
the
3
<PAGE> 5
importance of the plant modernizations over the past several years to improving
our competitive position in the marketplace, the Company is now at a point in
the economic cycle where it should allocate a much higher percentage of cash
flow to stock buybacks and cash dividends. Should the Company's operating
performance stay on course in coming years, I believe this reallocation of cash
flow could allow the company to acquire significantly more shares in the open
market than it is prepared to purchase right now, as well as increase the
dividend by a multiple of its present amount -- all to the benefit of the
shareholders and the value of our stock. We realize that the Company has
recently announced an additional five million share buyback program. However, in
their press release, they were decidedly non-committal as to the time frame in
which this buyback will occur.
SEEK TO INSTITUTE A PRO SHAREHOLDER CORPORATE GOVERNANCE POLICY. At the
Annual Meeting I am also submitting a shareholder proposal to rescind the
Company's current "poison pill" and require shareholder approval before any
other so-called Shareholder Rights Plan becomes effective. The Board, as
expected, is opposing my initiative. The directors have taken the position that
even if the requisite 80% vote is achieved for adoption of this proposal, they
may decide to ignore the wishes of the shareholders by seeking to invalidate the
proposal on legal grounds. THIS PRO-ENTRENCHMENT POSTURE COMPLETELY UNDERSCORES
THE NEED FOR NEW DIRECTORS WHO ARE MORE ALIGNED WITH SHAREHOLDER INTERESTS.
In addition to the "poison pill," management has other protective devices
such as a staggered board and supermajority voting requirement in the Charter.
All the senior managers have "golden parachutes" -- which provide certain
lucrative benefits in the event of their termination after a "change in
control." IN MY OPINION, A CORPORATE GOVERNANCE REVIEW IS URGENTLY NEEDED TO
MAKE CERTAIN THAT THE BOARD AND MANAGEMENT DO NOT FEEL TOO INSULATED FROM
ACCOUNTABILITY TO THE SHAREOWNERS FOR THE COMPANY'S POOR STOCK PRICE
PERFORMANCE.
REVIEW EXECUTIVE COMPENSATION POLICY. In 1999, the five most highly
compensated managers of the Company received $2,255,500 in salary (raises
totaling more than $151,000), bonuses of $2,051,257 ($537,798 more than the 1998
bonuses) and restricted stock awards of more than $4,418,250 (an increase of
$1,645,000 over 1998). In addition, the value of their options could reach more
than $4,378,860, according to their own proxy statement.
The restricted stock award portion of their compensation allows vesting of
100% of the grants if the stock price performance is at least in the 70th
percentile of the building materials group (which has woefully underperformed
the S&P 500 Index) and allows managers to keep at least part of their awards
unless performance falls below the 50th percentile. THESE DO NOT SEEM TO BE
CHALLENGING THRESHOLDS TO ACHIEVE. IF YOU REWARD MEDIOCRE STOCK PERFORMANCE, YOU
ARE LIKELY TO GET IT. The current stock option program allows for full vesting
in just two years. I question whether this executive
4
<PAGE> 6
compensation policy is truly designed to provide incentives to management to
MAXIMIZE long-term shareholder value. I believe a thorough review by an
independent committee, which includes new directors with no long-term ties to
management, is warranted.
EXPLORE ALTERNATIVES FOR ENHANCING STOCKHOLDER VALUE. We believe an
independent investment-banking firm, and if appropriate, other experts, should
be retained specifically to perform a study on various ways to maximize value.
We believe that the findings of any such report to the board should be made
available for shareholder review.
AN IMPORTANT OPPORTUNITY FOR SHAREHOLDERS
It is a rare occurrence when individual investors take up the burden of
time, effort and expense to wage a proxy contest against a sizable company to
seek a commitment to enhance shareholder value. We do not guarantee that we will
attempt any additional initiatives should this one fail. Therefore we urge you
to give careful consideration to the issues raised and take full advantage of
this opportunity to make a significant impact on the future of your investment.
In my opinion, this is what corporate democracy is all about.
SHAREHOLDER PRESSURE CAN WORK!
In September 1998, management announced a plan to buy back up to five
million shares of Common Stock. This announcement followed by about five weeks
my own request to management that they consider such a plan, along with similar
requests made by other shareholders.
On March 24, 2000, management announced another buyback program, also for
five million shares of Common Stock. This announcement followed by little more
than a week my notification to the Company that I intended to nominate
independent directors to the Board. It is interesting to note that the Company
announced the second buyback plan even though they had completed only about 75%
of the original buyback plan in approximately a year-and-a-half.
I do not take full credit for the announcement of either plan. HOWEVER, I
DO BELIEVE THAT SHAREHOLDER PRESSURE CAN FORCE A BOARD AND MANAGEMENT TO FOCUS
ON VALUE ENHANCING MEASURES. I BELIEVE IT CAN WORK FOR US IN THE PROXY CONTEST.
5
<PAGE> 7
I urge you to join my nominees and me in bringing new direction to USG.
YOUR VOTE COULD BE THE CATALYST IN MAKING SHAREHOLDER VALUE A PARAMOUNT CONCERN
IN OUR COMPANY. Please sign and return the GREEN proxy today. Thank you for your
support.
Very truly yours,
Hakatak Enterprises, Inc.
Tom Hacker, President
6
<PAGE> 8
If your shares are registered in your own name, please mark, sign and date
the enclosed GREEN proxy card and return it to Hakatak, in the enclosed envelope
in time to be voted at the Annual Meeting. If any of your shares are held in the
name of a brokerage firm, bank, bank nominee or other institution on the record
date, only it can vote such Company shares and only upon receipt of your
specific instructions. Sign and return the GREEN proxy card in the envelope
provided by your broker or bank. To be certain your vote is received in time,
please contact the person responsible for your account and instruct that person
to execute on your behalf the GREEN proxy card. I urge you to confirm your
instructions in writing to the person responsible for your account and to
provide a copy of such instructions to Hakatak at the address indicated below:
HAKATAK ENTERPRISES, INC.
100 Wilshire Boulevard, Suite 1700
Santa Monica, California 90401
(800) 358-8660 OR (310) 260-6007
[email protected]
If you need assistance in voting your GREEN proxy, please call my proxy
solicitor, at:
BEACON HILL PARTNERS, INC.
Toll Free: (800) 475-9320
Collect: (212) 843-8500
IMPORTANT
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN. I
URGE YOU TO MARK, SIGN, DATE AND RETURN THE ENCLOSED GREEN PROXY CARD TO VOTE
FOR ELECTION OF MY NOMINEES.
A VOTE FOR MY NOMINEES WILL ENABLE YOU -- AS OWNERS OF THE COMPANY -- TO
ELECT NON-INSIDER DIRECTORS WHO OWN SIGNIFICANT SHARES IN THE COMPANY AND WHO
WILL WORK TO INCREASE SHAREHOLDER VALUE.
I URGE YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY THE COMPANY. If you
have already done so, you may revoke your proxy by delivering a later dated
proxy for the Annual Meeting or a written notice of revocation to Hakatak, or to
the Secretary of USG Corporation or by voting in person at the Annual Meeting.
ONLY YOUR LATEST DATED PROXY WILL COUNT AT THE ANNUAL MEETING.
7
<PAGE> 9
PROXY STATEMENT OF
HAKATAK ENTERPRISES, INC.,
IN OPPOSITION TO
THE BOARD OF DIRECTORS OF
USG CORPORATION
------------------------
ANNUAL MEETING OF SHAREHOLDERS
OF USG CORPORATION
TO BE HELD MAY 10, 2000
This Proxy Statement, dated April 24, 2000 ("Proxy Statement") and the
accompanying GREEN proxy card are being furnished in connection with the
solicitation of proxies by Hakatak Enterprises, Inc. ("Hakatak") to be voted at
the annual meeting of the Company to be held at 9:15 a.m. on Wednesday, May 10,
2000, and at any adjournments, postponements, or reschedulings thereof (the
"Annual Meeting"). At the Annual Meeting, four directors of the Company will
each be elected for a three year term or until the election and qualification of
each of their successors. I am soliciting your proxy in support of the election
of my three nominees, Jay Buchbinder, Keith Ogata and Herbert Denton (each
individually a "Hakatak Nominee," and collectively, the "Hakatak Nominees") as
directors of the Company. I am also soliciting your proxy in support of a Bylaw
amendment requiring majority shareholder approval of any Shareholder Rights Plan
or other form of "poison pill" (the "Shareholder Value Amendment").
The proxy statement and GREEN proxy card are first being mailed to the
stockholders of the Company on or about April 24, 2000.
I. ELECTION OF DIRECTORS
GENERAL
The Board of Directors currently is composed of 13 directors, divided into
three classes, two of which currently have four members each, the other having
five members. Each class is elected for a three-year term. One class of four
directors will be elected at the Annual Meeting. The remaining classes will be
elected in 2001 and 2002, respectively.
The three Hakatak Nominees -- Jay Buchbinder, Keith Ogata and Herbert
Denton -- are described in more detail below. None of the Hakatak Nominees are
8
<PAGE> 10
members of the present board, and each Hakatak Nominee is a citizen of the
United States.
Each Hakatak Nominee has consented in writing to being named as a nominee
for election as a director in the proxy materials to be used in connection with
the Annual Meeting and, if elected, has consented to serving as a director.
Hakatak is unaware of any reason why any Hakatak Nominee, if elected, should be
unable to serve as a director. If for any reason any Hakatak Nominee is unable
or declines to serve, the GREEN proxy cards solicited by Hakatak Enterprises,
Inc. will be voted for any substitute nominee who shall be designated by Tom
Hacker to fill the vacancy.
Each Hakatak Nominee has furnished Hakatak with information concerning his
principal occupation for the proceeding five-year period, business addresses and
other matters. Except as disclosed herein, (a) no Hakatak Nominee has ever
served as an officer, director or employee of the Company; (b) there are no
arrangements or understandings between any Hakatak Nominee and any other person
pursuant to which that Hakatak Nominee was selected as a nominee to serve as a
director of the Company or with respect to any future employment by the Company
or any future transactions to which the Company or any of its affiliates will or
may be a party; and (c) no Hakatak Nominee shall receive any form of
compensation for serving in the capacity as a director of the Company, other
than any compensation currently paid by the Company to its directors in their
capacity as directors.
THE HAKATAK NOMINEES
JAY BUCHBINDER, 67, CEO of JBI, Inc., a private vertically integrated
manufacturing corporation. He is also the CEO of Emeco Industries Inc., Decor
Products Inc. and Playground Concepts. Mr. Buchbinder's address is 2650 El
Presidio, Long Beach, California 90810.
KEITH OGATA, 45, President of 3K Financial Corp., a private investment
company. He is a director of Career Education Corp. (NASDAQ:CECO), a vocational
education company. Until its recent sale to Harcourt General (NYSE:H) in 1997,
Mr. Ogata served as the CFO of National Education Corporation (NYSE:NEC). Mr.
Ogata also served as President of National Education Centers and Chairman of the
Board of Spartan Aviation. Mr. Ogata's address is 1056 Ikena Circle, Honolulu,
HI 96821.
HERBERT DENTON, 52, President of Providence Capital, Inc., a private
broker-dealer corporation. He is a director of Chic by H.I.S., Inc., a garment
company, Mesa Air Group, Inc. (NASDAQ:MESA), an airline, Baldwin Piano & Organ,
Inc. (NasdaqNM:BPAO), a musical instrument company, and U.S. Value Investment
Co., PLC, an investment company. Mr. Denton's address is 730 Fifth Ave., Suite
2102, New York, NY 10019.
9
<PAGE> 11
COMMON STOCK OWNERSHIP OF THE HAKATAK NOMINEES
The following table sets forth the beneficial ownership, as of the Record
Date, of the Common Stock by each of the Hakatak Nominees and the other shares
in which they have an economic interest. Except as otherwise indicated below,
all shares indicated are held with sole voting and disposition rights.
<TABLE>
<CAPTION>
NUMBER OF SHARES TOTAL AS PERCENT
BENEFICIALLY OTHER TOTAL OF OUTSTANDING
NAME OWNED SHARES SHARES SHARES
---- ---------------- ------- --------- ----------------
<S> <C> <C> <C> <C>
Jay Buchbinder............. 609,644(2) 474,653(3) 1,084,304(3) 2.267%
Keith Ogata................ 8,000(4) -- 8,000(4) 0.017%
Herbert Denton............. 10,000(5) -- 10,000(5) 0.021%
------- ------- --------- -----
AGGREGATE:................. 637,644(2)(4)(5) 474,653 1,102,304(3)(4)(5) 2.305%
======= ======= ========= =====
</TABLE>
For information with respect to all securities purchased or sold by the
Hakatak Nominees in the past two years, please see Exhibit A attached hereto.
ADDITIONAL INFORMATION REGARDING THE HAKATAK NOMINEES
No Hakatak Nominee has any family relationships with any executive officer
or director of the Company or each other, or has been involved in any legal
proceedings of the type required to be disclosed by the rules governing this
solicitation. No Hakatak Nominee is currently, or has been, involved in any
business relationship with the Company or any of its affiliates. No Hakatak
Nominee has been indebted to the Company or any of its affiliates.
When you return the Hakatak GREEN proxy card you are voting for the Hakatak
Nominees. However, since Hakatak is only nominating three candidates for the
four available Board seats, if the three Hakatak Nominees are elected, one of
the Company nominees who receives the highest number of shares will also be
elected. Hakatak intends to use this proxy to vote for one person who has been
nominated by the Company to serve as a director, other than James C. Cotting and
John B. Schwemm -- the two Company nominees who have the longest tenure -- and
W. Douglas Ford, who does not have a significant equity position in the Company.
There is no assurance that any of
- ---------------
(2) Includes 20,000 shares of Common Stock owned by the Terry Trust, to which
Mr. Hacker and Mr. Buchbinder serve as trustees, to which Mr. Buchbinder has
share voting and disposition rights.
(3) Includes the 474,653 shares of Common Stock owned by the Armin Trust, for
which Mr. Hacker serves as trustee, to which Mr. Buchbinder has no voting or
disposition rights. Mr. Buchbinder is the beneficiary of this trust.
(4) Mr. Ogata has agreed to purchase 50,000 shares of Common Stock within 3
months of election to the Board.
(5) Includes 3000 shares of Common Stock owned of record by Providence
Investors, LLC, to which Mr. Denton shares voting and disposition rights.
10
<PAGE> 12
the Company's nominees will serve as directors if the Hakatak Nominees are
elected to the Board.
WE STRONGLY RECOMMEND A VOTE FOR THE HAKATAK NOMINEES, JAY BUCHBINDER,
KEITH OGATA AND HERBERT DENTON.
II. AMENDING THE BYLAWS
THE PROPOSAL
So-called "poison pills" are a tool used by incumbent management and boards
of directors to deter proposals by competing interests. As such, they limit
shareholder options and are designed to discourage offers from third parties.
This is not in the best interests of shareholders and it is impossible to tell
what types of offers might have been made for the Company, except for the
presence of a "poison pill." The statements made by the Company when it adopted
its existing Shareholders Rights Plan are self-serving and fail to point out
that the Board of Directors can use its power to approve or disapprove a
proposal (by redeeming or not redeeming the pill) to discourage and avoid offers
from persons not favored by the board, such as acquirers that might make
management changes.
This type of anti-takeover mechanism prevents all of us as shareholders
from evaluating all proposals on their merits, and restricts the market for our
common stock. The shareholders should adopt this bylaw to prevent the Board of
Directors from implementing poison pill tactics that are not approved by the
shareholders.
Accordingly, we submit the following proposal for shareholder approval at
the Annual Meeting:
PROPOSAL
RESOLVED THAT the Shareholders exercise their power under Delaware General
Corporation Law Section 109 to approve the following bylaw:
1. "No Shareholder Rights Plan or other form of "poison pill" (meaning any
plan which confers additional rights on the holders of the Corporation's common
stock upon the acquisition of a large block of securities by a party not
approved by the Board of Directors or upon the making of a takeover or merger
proposal by a party not approved by the Board of Directors) shall become
effective, unless, after its approval by the Board of Directors, such plan has
been submitted to the stockholders of the Corporation for a vote and has been
approved by a majority of the shares voted at the meeting called for such
purpose. Any such plan in effect on the date this bylaw becomes effective upon
approval by the shareholders shall be redeemed or canceled."
11
<PAGE> 13
2. This by-law shall be effective immediately upon approval by the holders
of shares at an annual meeting of the Corporation or at a special meeting of the
shareholders and may not be amended, altered, deleted or modified without
shareholder approval.
REBUTTAL TO BOARD RECOMMENDATION
The Board has opposed our proposal. In considering the Board's response to
our proposal, the following points should be kept in mind by shareholders:
THE BOARD WILL DO WHATEVER IT TAKES TO PROTECT ITS OWN INTERESTS -- EVEN IF IT
MEANS THEY HAVE TO TAKE COMPLETELY INCONSISTENT POSITIONS OVER A SHORT PERIOD OF
TIME.
For example, the Board has taken the position that our Shareholder Value
Amendment may violate Delaware law because it is a "mandatory" proposal and not
a "recommendation." However, one of the Hakatak Nominees, Mr. Jay Buchbinder,
also submitted a shareholder proposal to the Company, and Mr. Buchbinder's
proposal was only a "recommendation" that the "poison pill" be removed -- not a
"mandatory" proposal. Ironically, the Company's Board of Directors refused to
include Mr. Buchbinder's proposal on the grounds that it was "duplicative" of
the current "mandatory" proposal. We think this inconsistency is indicative of
the Board's entrenchment, as it shows that this board is quite willing to ignore
a policy that receives overwhelming shareholder approval in order to maintain
the status quo and protect its own narrow interests.
POISON PILLS ARE DETRIMENTAL TO SHAREHOLDER VALUE.
The Board continues to adhere to an archaic, paternalistic notion that
they, and they alone, are in a position to determine whether an offer is fair
and in the best interest of all shareholders. However, as the true owners of the
Company, shareholders are the ones who must decide whether or not an offer
should be accepted -- not the Board.
The Board's claim that it has a greater ability than an "individual
stockholder" to negotiate a higher price is simply irrelevant. In any offer,
solicited or unsolicited, the majority of the Company's shareholders would have
to tender their shares to the offeror for the acquisition to be completed.
Surely the Board cannot have such little regard for those whom it
serves -- the shareholders -- that it believes that we would sell our shares in
the face of a financially inadequate proposal. In fact, if shareholders
representing more than a majority of the outstanding shares accept an offer,
that is confirmation that the offer is indeed adequate.
12
<PAGE> 14
In the absence of a "poison pill," the Company may be in a superior
negotiating position since more potential bidders may come forward. Though the
Board claims that a "poison pill" is essential to control the negotiation of a
proposed transaction, it fails to tell you that potential purchasers may be
discouraged from approaching the Company with a proposal because of the costs
and time involved with removing a "poison pill" or acquiring a Company with a
"poison pill" provision. Ultimately, 'poison pills' have a chilling effect on
potential bidders who may never surface.
"POISON PILLS" PROTECT MANAGEMENT -- NOT SHAREHOLDERS.
Though the Board claims to recognize its fiduciary duties to the Company's
shareholders, it fails to note that 'poison pills' can be used by management to
protect its own interests -- interests which may be at odds with those of its
stockholders. In the face of an offer in which their jobs might be eliminated,
management may find it easy to hide behind a "poison pill," while claiming it is
for the shareholders' benefit. The inherent conflict that management faces
between its personal interests and its fiduciary duties to shareholders makes
"poison pills" a dangerous road block that can be used for the advancement of
personal goals at the expense of shareholders.
WE STRONGLY RECOMMEND A VOTE FOR THE SHAREHOLDER VALUE AMENDMENT.
III. OTHER MATTERS
We take no position on how you should vote on the proposals of the Board of
Directors to (1) approve the amendment to the Omnibus Management Incentive Plan,
and (2) ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants. ALTHOUGH WE ARE NOT OPPOSED TO SEEING SHARES
AVAILABLE UNDER THE OMNIBUS MANAGEMENT INCENTIVE PLAN, WE THINK THE SHAREHOLDERS
NEED TO ELECT DIRECTORS WHO WILL BE CERTAIN THAT THE STANDARDS SET FOR THE AWARD
AND VESTING OF SHARES ARE CONSISTENT WITH SHAREHOLDER INTERESTS. On these
matters, we will vote your shares as you instruct on the GREEN proxy card.
We do not know of any other matters that will be brought before the Annual
Meeting. However, if any other matter properly comes before the Annual Meeting,
it is intended that the person named in and acting under the enclosed form of
GREEN proxy card, or his substitutes, will vote on such matters in accordance
with the best judgment.
IV. ADDITIONAL INFORMATION
Portions of this Proxy Statement have been prepared based on publicly
available information on the Company and we assume no responsibility for the
accuracy or completeness of any such information contained herein. In reliance
upon Rule 14a-5(c) of the Securities Exchange Act of 1934, reference is made to
the Company's proxy
13
<PAGE> 15
statement dated April 6, 2000, which was sent to you by the Company, for a full
description of management's director nominees as well as information with
respect to the amendment to the Omnibus Management Incentive Plan, the
ratification of the Company's independent public accountants, the number of
shares eligible to vote at the meeting, the date, the quorum, the securities
ownership of the Company, and information about the Company's officers and
directors, including compensation information. Also included in the Company's
proxy statement is the date by which shareholder proposals intended to be
submitted at the Annual Meeting must be received by the Company for inclusion in
the Company's proxy statement and form of proxy.
VOTING
The Company's Board of Directors has fixed the close of business on March
15, 2000, as the record date for the determination of shareholders entitled to
notice of and to vote at, the Annual Meeting or any adjournment thereof (the
"Record Date"). According to the Company, as of the Record Date the Company had
outstanding 47,831,313 shares of common stock, par value $0.10 per share (the
"Common Stock").
Each share of Common Stock is entitled to one vote on each proposal. In the
election of directors, each shareholder has the right to vote the number of
shares owned by such shareholder for as many persons as there are directors to
be elected. The affirmative vote of the holders of a majority of the Common
Stock entitled to vote and present in person or represented by proxy is required
for election of directors. The affirmative vote of not less than 80% of the
voting power of the Company's outstanding stock is required for approval of the
Shareholder Value Amendment.
The proxy holder identified in the GREEN proxy card accompanying this Proxy
Statement will vote all GREEN proxy cards in accordance with the instructions
contained in the GREEN proxy card and, if no choice is specified, shares
represented by the enclosed GREEN proxy card will be voted FOR the election of
the Hakatak Nominees as directors of the Company and FOR the Shareholder Value
Amendment. Broker non-votes with respect to the election of directors or a
particular matter, as the case may be, are not considered part of the "voting
power present" with respect to such matter and will not affect the outcome of
the vote on such matter.
Abstentions are not treated as votes cast for or against the election of
directors or a particular matter, as the case may be, but they are treated as
part of the "voting power present" with respect to such matter and therefore
have the same legal effect as a vote against such matter.
Broker non-votes and abstentions DO affect the outcome of the vote on the
Shareholder Value Amendment because it requires the affirmative vote of 80% of
all shares of Common Stock, not just those shares voting at the meeting.
14
<PAGE> 16
REMEMBER, YOUR LATEST DATED PROXY IS THE ONLY ONE WHICH COUNTS, so return
the GREEN proxy card accompanying this Proxy Statement even if you delivered a
prior proxy to the Company. We urge you not to vote any proxy card sent to you
by the company with respect to either the Company's slate of nominees to the
Board of Directors or against the Shareholder Value Amendment.
REVOCABILITY OF PROXIES
Any person giving a GREEN proxy card in the form accompanying this Proxy
Statement has the power to revoke it at any time before its exercise. It may be
revoked by filing with Hakatak Enterprises, Inc. or Beacon Hill Partners, Inc.
("Beacon Hill"), an instrument of revocation or a duly executed proxy bearing a
later date. It also may be revoked by furnishing the Company a later-dated proxy
or by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not itself revoke a proxy.
SOLICITATION
These proxies are being solicited by Tom Hacker, president of Hakatak
Enterprises, Inc. ("Hakatak") on behalf of Hakatak. Hakatak is a private company
through which Mr. Hacker holds his investments. Mr. Hacker is the beneficial
owner of 1,002,637 shares of Common Stock.(6) Mr. Hacker is also a licensed
stockbroker through Equibond, a private corporation. Mr. Hacker's address is 100
Wilshire Boulevard, Suite 1700, Santa Monica, California 90401.
Copies of solicitation material will be furnished without charge to banks
brokerage houses, fiduciaries and custodians holding in their name shares of
Common Stock beneficially owned by others to forward to such beneficial owners.
The solicitation of proxies will be made by the use of the mails and through
direct communication with certain shareholders or their representatives by Tom
Hacker and Hakatak, who will receive no additional compensation therefor. In
addition, Hakatak has decided to engage Beacon Hill to solicit proxies, and
Hakatak will pay a fee for these services, which is estimated to be up to
$100,000. Approximately 25 persons will be used by Beacon Hill in its
solicitation efforts.
Hakatak and Jay Buchbinder will bear the entire cost of this solicitation.
Although no precise estimate can be made at the present time, we currently
estimate that the total expenditures relating to the proxy solicitation incurred
by Hakatak will be approximately $750,000. No determination has been made by
Hakatak at this time as to whether it will seek reimbursement from the Company
for the costs incurred in connection with the solicitation of shareholders or
whether the question of such reimbursement will be submitted to a vote of
shareholders. The Hakatak Nominees may
- ---------------
(6) Includes 474,650 shares of Common Stock owned of record by the Armin Trust,
for which Mr. Hacker serves as trustee, and 20,000 shares of Common Stock
owned by the Terry Trust, for which Mr. Hacker and Mr. Jay Buchbinder serve
as trustees.
15
<PAGE> 17
incur incidental expenses if they meet in person or by telephone with
shareholders, which Hakatak may or may not be asked to reimburse.
If you have any questions about the issues raised in this proxy contest
please contact:
Tom Hacker, President
HAKATAK ENTERPRISES, INC.
100 Wilshire Boulevard, Suite 1700
Santa Monica, California 90401
(800) 358-8660 or (310) 260-6007
[email protected]
If you need assistance in voting your GREEN proxy card, please call:
BEACON HILL PARTNERS, INC.
Toll Free: (800) 475-9320
Collect: (212) 843-8500
PLEASE INDICATE YOUR SUPPORT FOR MAXIMIZING SHAREHOLDER VALUE BY
COMPLETING, SIGNING AND DATING THE ENCLOSED GREEN PROXY CARD AND RETURNING IT
PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS NECESSARY IF THE ENVELOPE IS
MAILED IN THE UNITED STATES.
16
<PAGE> 18
EXHIBIT A
LIST OF ALL SECURITIES PURCHASED OR SOLD BY THE HAKATAK NOMINEES
AND TOM HACKER IN THE LAST TWO YEARS
JAY BUCHBINDER
<TABLE>
<CAPTION>
NAME DATE ACTIVITY QUANTITY PRICE
---- -------- -------- -------- -------
<S> <C> <C> <C> <C>
Armin Trust(1) 01/22/99 Bought 31100 51.6722
01/25/99 Bought 51900 50.4977
01/26/99 Bought 4400 51 1/4
01/28/99 Bought 12000 54.9531
07/06/99 Sold 1750 57.45
07/07/99 Sold 2500 57 1/2
08/06/99 Bought 4000 49.1875
10/15/99 Bought 40100 44.3055
10/27/99 Bought 5000 47 1/16
10/27/99 Sold 3100 47.1875
11/08/99 Bought 3100 48.1042
11/09/99 Bought 5000 48.0638
11/10/99 Bought 10000 48.2263
11/11/99 Bought 5000 48.0
11/22/99 Sold 1900 52.0
11/22/99 Sold 10000 47.5
12/29/99 Bought 5700 46.4035
01/05/00 Bought 3000 45.00
01/11/00 Bought 6000 45.25
01/13/00 Bought 7000 42.8425
Terry Trust(2) 12/16/98 Bought 10000 42 3/4
12/16/98 Bought 10000 42 3/4
JBI Inc. 01/16/98 Bought 25000 53 1/4
01/22/98 Sold 4000 53.86
02/19/98 Sold 1500 53 3/4
09/08/98 Bought 5000 44 5/8
10/07/98 Bought 5000 39 1/2
10/08/98 Bought 15000 37.0
10/12/98 Bought 6000 37.125
11/13/98 Sold 200 45.0
11/23/98 Sold 12000 45.0
02/25/99 Bought 10000 51.3472
03/24/99 Bought 25000 47.7638
04/13/99 Bought 2500 53 3/4
04/14/99 Sold 2500 55 1/2
04/19/99 Sold 12500 62.5665
05/26/99 Bought 5000 55.7188
05/28/99 Sold 1950 57.3992
06/01/99 Bought 2500 55 1/2
06/08/99 Sold 4000 56.8281
06/11/99 Bought 2500 54.2813
06/16/99 Bought 2500 55 1/16
06/18/99 Bought 2500 53.6188
06/24/99 Bought 900 53 1/4
06/30/99 Sold 1250 56.0025
07/08/99 Sold 2500 58.5
07/14/99 Bought 2500 58.0
07/19/99 Bought 5000 59.5938
07/20/99 Bought 2500 58.0
</TABLE>
<TABLE>
<CAPTION>
NAME DATE ACTIVITY QUANTITY PRICE
---- -------- -------- -------- -------
<S> <C> <C> <C> <C>
07/21/99 Bought 2500 57 15/16
07/26/99 Bought 2500 54 3/4
09/17/99 Bought 5000 52.3625
09/21/99 Bought 9000 51 3/4
09/27/99 Bought 3000 50 1/16
09/28/99 Bought 9300 47.9798
09/28/99 Sold 4300 48.1265
09/29/99 Bought 12500 47.275
10/08/99 Bought 5000 48.9763
10/12/99 Bought 1500 47.375
10/13/99 Bought 7000 45.6696
10/18/99 Bought 22000 46.3651
11/19/99 Bought 2500 50.0
11/19/99 Sold 600 51 1/2
11/22/99 Sold 10000 47.5
01/20/00 Bought 7500 39.2083
01/21/00 Bought 7900 38.0
01/24/00 Bought 2100 37.128
01/26/00 Bought 1550 35.6512
01/27/00 Bought 22000 38.5301
01/28/00 Bought 5000 39 5/8
01/31/00 Bought 10000 39.3088
02/18/00 Bought 10000 33 3/4
02/22/00 Bought 15000 33.565
02/25/00 Bought 16900 30 3/4
02/29/00 Bought 10000 32.5
Jay Buchbinder 01/12/98 Bought 5000 47 3/4
01/14/98 Sold 5000 50.0625
01/15/98 Bought 5000 51.9375
01/16/98 Bought 1000 52 7/8
01/20/98 Sold 5000 50.0
01/21/98 Bought 2600 53 3/8
02/23/98 Sold 2500 50.0
02/23/98 Sold 7700 55.0
03/10/98 Bought 10000 52.0
04/23/98 Bought 2500 54 1/2
04/27/98 Bought 1500 52 1/4
04/29/98 Bought 3350 50.7106
04/30/98 Bought 3850 51.7281
05/08/98 Bought 1500 54 1/4
05/18/98 Sold 5000 50.0
06/04/98 Bought 5000 52 1/2
06/05/98 Bought 2000 52 1/2
06/09/98 Sold 1250 53 1/2
06/22/98 Sold 5000 53.9375
06/25/98 Bought 2500 53.2188
07/16/98 Bought 2500 57.0
07/20/98 Sold 2500 55.0
07/28/98 Bought 2500 53 11/16
07/29/98 Bought 5000 53.625
08/03/98 Bought 14750 51.8581
</TABLE>
-1-
<PAGE> 19
<TABLE>
<CAPTION>
NAME DATE ACTIVITY QUANTITY PRICE
---- -------- -------- -------- -------
<S> <C> <C> <C> <C>
08/04/98 Bought 2500 50 9/16
08/05/98 Bought 6900 49.4846
08/07/98 Bought 2500 49.375
08/12/98 Bought 900 47.4896
08/17/98 Sold 17000 55.0
08/17/98 Sold 17000 55.0
08/18/98 Bought 5000 49.0
08/19/98 Bought 5000 49.1875
08/28/98 Bought 6000 46.125
09/18/98 Sold 5000 47.125
09/21/98 Bought 10000 47.5
09/21/98 Sold 1000 45.0
09/25/98 Sold 3000 46.875
10/21/98 Sold 5000 45 1/4
11/05/98 Sold 10000 48.8422
11/13/98 Sold 13000 45.0
11/23/98 Sold 2000 45.0
11/23/98 Sold 10000 42.5
11/23/98 Sold 16500 47.5
11/24/98 Sold 200000 49 5/8
01/22/99 Bought 26350 51.9288
02/02/99 Bought 2500 55 1/2
02/03/99 Bought 3800 55.2895
02/04/99 Bought 2900 56.0
02/09/99 Bought 5900 54.5646
02/10/00 Bought 2500 54.9888
02/12/99 Sold 20100 53.0
02/12/99 Sold 29600 53.0
02/19/99 Bought 15000 50.0
02/22/99 Bought 1850 52 3/8
02/26/99 Bought 10000 50.3122
03/02/99 Bought 5000 49 9/16
03/04/99 Bought 12500 47.9625
03/05/99 Bought 5000 49 1/4
03/09/99 Bought 300 45 1/4
03/18/99 Bought 5000 47 7/8
03/22/99 Sold 2500 47 1/2
03/24/99 Sold 12500 49 1/4
03/25/99 Sold 12500 51 1/4
04/15/99 Sold 5000 58.25
04/19/99 Sold 2500 55.0
04/19/99 Sold 5500 50.0
04/19/99 Sold 11550 62.5665
04/20/99 Sold 12950 63.584
04/21/99 Sold 13000 64.3409
04/30/99 Bought 5000 58.575
05/03/99 Bought 7500 58.0
05/05/99 Sold 2500 58 15/16
05/06/99 Sold 5000 59.465
05/24/99 Sold 2500 55.0
06/17/99 Bought 5000 55.0
06/22/99 Sold 2500 54.76
06/29/99 Sold 1250 55 7/8
07/23/99 Bought 7500 56.7083
07/27/99 Bought 5000 56 1/4
08/10/99 Bought 3850 49.6299
</TABLE>
<TABLE>
<CAPTION>
NAME DATE ACTIVITY QUANTITY PRICE
---- -------- -------- -------- -------
<S> <C> <C> <C> <C>
08/11/99 Bought 5000 49.25
08/13/99 Bought 7500 50.3583
08/17/99 Bought 5000 51.2094
08/18/99 Bought 5000 50.1625
08/25/99 Bought 7500 49.3333
08/26/99 Sold 4750 50.0493
09/01/99 Bought 4000 48.4531
09/02/99 Sold 4000 49.0938
09/03/99 Bought 1250 51.0
09/07/99 Bought 1000 50 3/8
09/20/99 Sold 2500 50.00
10/28/99 Sold 6900 48.0833
11/22/99 Sold 5000 47.5
11/30/99 Bought 50000 49 1/2
12/09/99 Bought 2000 44 3/4
12/20/99 Bought 10000 45.375
12/20/99 Sold 3300 46.1818
12/22/99 Sold 2700 46.75
12/23/99 Bought 4000 47.0
12/23/99 Sold 700 47 1/2
01/14/00 Bought 30000 41.6167
01/19/00 Bought 2500 39.65
Decore Products 10/19/99 Bought 24000 46.520
10/20/99 Bought 19000 45.0987
10/26/99 Bought 4000 45.4
11/23/99 Bought 11900 50.2101
11/24/99 Bought 6400 48.3906
</TABLE>
KEITH OGATA
<TABLE>
<CAPTION>
NAME DATE ACTIVITY QUANTITY PRICE
---- -------- ------------- -------- -------
<S> <C> <C> <C> <C>
Keith Ogata 05/01/98 Bought 10000 50.8325
05/01/98 Sold Warrants 10000 34.6513
05/05/98 Sold Warrants 5000 36.3364
10/21/98 Sold 2000 46.6034
10/27/98 Sold 2000 49.2184
06/10/98 Sold 3000 52.6032
12/14/98 Sold 3000 44.1293
10/21/99 Bought 2000 42.025
01/12/00 Bought 2000 44.5063
01/13/00 Bought 2000 44
01/27/00 Bought 2000 37.15
</TABLE>
HERBERT DENTON
<TABLE>
<CAPTION>
NAME DATE ACTIVITY QUANTITY PRICE
---- -------- -------- -------- -----
<S> <C> <C> <C> <C>
Providence Investors 03/09/00 Bought 3000 32.25
US Value 03/09/00 Bought 7000 32.25
</TABLE>
TOM HACKER(3)
<TABLE>
<CAPTION>
NAME DATE ACTIVITY QUANTITY PRICE
---- -------- -------- -------- -------
<S> <C> <C> <C> <C>
Account #1 06/24/98 Sold 560 54.1638
06/24/98 Sold 1940 54.1638
06/24/98 Sold 3850 54.1638
06/24/98 Sold 5000 54.1638
06/24/98 Sold 6710 54.1638
</TABLE>
-2-
<PAGE> 20
<TABLE>
<CAPTION>
NAME DATE ACTIVITY QUANTITY PRICE
---- -------- -------- -------- -------
<S> <C> <C> <C> <C>
06/24/98 Sold 6940 54.1638
09/18/98 Bought 10000 46.4875
09/18/98 Sold 10000 47.125
11/05/98 Sold 10000 49.0
11/10/98 Sold 1000 49 3/8
11/10/98 Sold 2600 49 1/4
11/24/98 Bought 100000 49 5/8
12/29/98 Bought 7462 49.5536
01/22/99 Bought 26350 51.9288
01/22/99 Sold 1100 52 1/2
02/12/99 Bought 49700 53.0
03/04/99 Bought 12500 47.9625
03/05/99 Bought 5000 49 1/4
03/24/99 Bought 25000 47.7638
04/15/99 Sold 5000 58.25
04/19/99 Sold 24050 62.5665
04/20/99 Sold 12950 63.584
04/21/99 Sold 13000 64.3409
07/23/99 Bought 7500 56.7083
08/10/99 Bought 3850 49.6299
08/11/99 Bought 5000 49.25
08/13/99 Bought 7500 50.3583
08/17/99 Bought 5000 51.2094
08/18/99 Bought 5000 50.1625
08/25/99 Bought 7500 49.3333
08/26/99 Sold 4750 50.0493
08/27/99 Sold 200 50.3438
09/17/99 Bought 5000 52.3625
09/21/99 Bought 9000 51 3/4
10/13/99 Bought 20000 45 1/2
Account #2 01/15/98 Bought 5000 51.9375
01/16/98 Bought 25000 53 1/4
01/21/98 Bought 2600 53 3/8
02/18/98 Sold 1000 54.0
02/19/98 Sold 1500 53 3/4
03/10/98 Bought 10000 52.0
04/27/98 Bought 1500 52 1/4
04/29/98 Bought 3350 50.7106
05/08/98 Bought 1500 54 1/4
06/04/98 Bought 5000 52 1/2
06/05/98 Bought 2000 52 1/2
06/09/98 Sold 1250 53 1/2
06/22/98 Sold 5000 53.9375
06/25/98 Bought 2500 53.2188
07/16/98 Bought 2500 57.0
07/28/98 Bought 2500 53 11/16
07/29/98 Bought 5000 53.625
08/03/98 Bought 14750 51.8581
08/04/98 Bought 2500 50 9/16
08/05/98 Bought 6900 49.4846
08/07/98 Bought 2500 49.375
08/12/98 Bought 900 47.4896
08/18/98 Bought 5000 49.0
08/19/98 Bought 5000 49.1875
08/26/98 Sold 1900 49 7/8
08/27/98 Sold 6000 47.5833
</TABLE>
<TABLE>
<CAPTION>
NAME DATE ACTIVITY QUANTITY PRICE
---- -------- -------- -------- -------
<S> <C> <C> <C> <C>
08/31/98 Sold 100000 45 3/8
09/01/98 Sold 100000 42 1/8
09/25/98 Sold 3000 46.875
10/12/98 Sold 900 36.7822
11/05/98 Sold 6400 48.8422
11/06/98 Sold 13700 49.6788
11/24/98 Bought 100000 49 5/8
01/12/99 Bought 175 50 5/16
01/29/99 Bought 5000 56.625
01/29/99 Sold 13500 56.9583
02/02/99 Bought 2500 55 1/2
02/03/99 Bought 3800 55.2895
02/04/99 Bought 2900 56.0
02/08/99 Bought 500 54 1/2
02/09/99 Bought 5900 54.5646
02/10/99 Bought 2500 54.9888
02/22/99 Bought 1850 52 3/8
02/25/99 Bought 10000 51.3475
02/26/99 Bought 10000 50.3122
03/02/99 Bought 5000 49 9/16
03/18/99 Bought 5000 47 7/8
03/24/99 Sold 12500 49 1/4
03/25/99 Sold 12500 51 1/4
04/01/99 Sold 5000 52 5/8
04/13/99 Bought 2500 53 3/4
04/14/99 Sold 2500 55 1/2
04/30/99 Bought 5000 58.575
05/03/99 Bought 7500 58.0
05/05/99 Sold 2500 58 15/16
05/06/99 Sold 5000 59.465
05/26/99 Bought 5000 55.7188
05/28/99 Sold 1950 57.3992
06/01/99 Bought 2500 55 1/2
06/04/99 Bought 3000 55.0
06/07/99 Sold 3000 56.0
06/08/99 Sold 4000 56.8281
06/11/99 Bought 2500 54.2813
06/16/99 Bought 2500 55 1/16
06/17/99 Bought 5000 55.0
06/18/99 Bought 2500 53.6188
06/22/99 Sold 2500 54.76
06/24/99 Bought 900 53 1/4
06/29/99 Sold 1250 55 7/8
06/30/99 Sold 1250 56.0025
07/06/99 Sold 1750 57.45
07/07/99 Sold 2500 57 1/2
07/08/99 Sold 2500 58.5
07/14/99 Bought 2500 58.0
07/19/99 Bought 5000 59.5938
07/20/99 Bought 2500 58.0
07/21/99 Bought 2500 57 15/16
07/26/99 Bought 2500 54 3/4
07/27/99 Bought 5000 56/14
08/31/99 Bought 2000 48.8
08/31/99 Sold 3000 49.0
09/01/99 Bought 4000 48.4531
</TABLE>
-3-
<PAGE> 21
<TABLE>
<CAPTION>
NAME DATE ACTIVITY QUANTITY PRICE
---- -------- -------- -------- -------
<S> <C> <C> <C> <C>
09/02/99 Sold 4000 49.0938
09/03/99 Bought 1250 51.0
09/07/99 Bought 1000 50 3/8
10/05/99 Sold 5000 48.0
</TABLE>
<TABLE>
<CAPTION>
NAME DATE ACTIVITY QUANTITY PRICE
---- -------- -------- -------- -------
<S> <C> <C> <C> <C>
10/13/99 Sold 20000 45 1/2
11/19/99 Sold 600 51 1/2
11/22/99 Sold 1900 52.0
</TABLE>
- ---------------
(1) Mr. Hacker serves as a trustee of the Armin Trust. Mr. Buchbinder has no
voting or disposition rights over the shares, but is the beneficiary of the
Trust.
(2) Mr. Buchbinder and Mr. Hacker serve as trustees to the Terry Trust. Mr.
Buchbinder has share voting and disposition rights.
(3) Mr. Hacker also owns beneficially certain shares listed for Mr. Buchbinder
in Mr. Hacker's capacity as trustee of the Armin and of the Terry Trust.
Transactions by the Trusts are not repeated here.
-4-
<PAGE> 22
LET'S MAKE THE SHAREHOLDERS A PRIORITY AT USG!
SUPPORT OUR EFFORTS TO ENHANCE SHAREHOLDER VALUE.
VOTE THE GREEN PROXY CARD TODAY!
If you have any questions about the issues raised in this proxy contest
please contact:
Tom Hacker, President
HAKATAK ENTERPRISES, INC.
(800) 358-8660 or (310) 260-6007
For immediate assistance in voting your shares, please call:
BEACON HILL PARTNERS, INC.
Toll free: (800) 475-9320
Collect: (212) 843-8500
The USG Corporation Annual Meeting is May 10, 2000. To support the Hakatak
Nominees, you must sign, date and return the enclosed GREEN proxy card in the
envelope provided.
Even if you have already returned a proxy card to management, you have
every right to revoke your earlier vote by signing, dating and mailing a GREEN
proxy card today.
ONLY YOUR LATEST-DATED PROXY COUNTS!
REMEMBER . . . ONLY YOUR LATEST DATED PROXY COUNTS AND YOU CAN VOTE FOR THE
HAKATAK NOMINEES ONLY ON THE GREEN PROXY CARD
<PAGE> 23
PROXY
THIS PROXY IS SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS
OF USG CORPORATION BY HAKATAK ENTERPRISES, INC. ("HAKATAK")
ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Tom Hacker and Keith Ogata, and each or any
of them with full power of substitution, as Proxy for the undersigned to vote
all shares of common stock, par value $0.10 per share of USG Corporation (the
"Company"), which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held on May 10, 2000, at 9:15 a.m. (local time) or any
adjournment(s) or postponement(s) thereof (the "Annual Meeting"), as follows:
Hakatak Recommends a Vote "FOR" Proposal 1.
1. ELECTION OF DIRECTORS
HAKATAK NOMINEES THE HAKATAK NOMINEES ARE: JAY BUCHBINDER, KEITH OGATA,
HERBERT DENTON FOR [ ] WITHHOLD AUTHORITY FOR ALL [ ]
(Authority to vote for any individual nominee(s) may be withheld by lining
through or otherwise striking out the name(s) of such nominee(s).)
COMPANY NOMINEES
Hakatak intends to use this proxy to vote for persons who have been nominated
by the Company to serve as directors, other than James C. Cotting, W. Douglas
Ford and John B. Schwemm, three of the four Company nominees. You may withhold
authority to vote for one or more additional Company nominees, by writing the
name of the nominee(s) below. You should refer to the proxy statement and form
of proxy distributed by the Company for the names, background, qualifications,
and other information concerning the Company's nominees.
- -------------------------------
There is no assurance that any of the Company's nominees will serve as
directors if the Hakatak Nominees are elected to the board.
Hakatak takes no position on how you should vote on Proposals 2 & 3.
<TABLE>
<S> <C>
2. APPROVAL OF AMENDMENT TO THE CORPORATION'S OMNIBUS FOR [ ] AGAINST [ ] ABSTAIN [ ]
MANAGEMENT INCENTIVE PLAN
3. RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS FOR [ ] AGAINST [ ] ABSTAIN [ ]
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR ENDING
DECEMBER 31, 2000
Hakatak Recommends a Vote "FOR" Proposal 4.
4. THE RATIFICATION OF THE HAKATAK AMENDMENT TO THE FOR [ ] AGAINST [ ] ABSTAIN [ ]
COMPANY'S BYLAWS REQUIRING SHAREHOLDER APPROVAL OF
SHAREHOLDER RIGHTS PLANS
5. IN THEIR DISCRETION ON ANY OTHER MATTER THAT MAY COME
BEFORE THE MEETING
</TABLE>
IMPORTANT: PLEASE SIGN AND DATE ON THE REVERSE SIDE.
<PAGE> 24
The undersigned hereby revokes any other proxy or proxies heretofore given
to vote or act with respect to the shares of common stock of the Company held by
the undersigned.
If properly executed, this proxy will be voted as directed above. If no
direction is given, this proxy will be voted FOR the election of all Hakatak
Nominees, FOR one of the Company nominees other than James C. Cotting, W.
Douglas Ford and John B. Schwemm, ABSTAIN on Proposals 2 and 3, and FOR Proposal
4.
Dated: , 2000
----------------------------------
Signature
Name:
Title:
----------------------------------
Signature
Name:
Title:
THE SIGNATURE(S) ABOVE SHOULD AGREE WITH THE NAME(S) SHOWN ON THIS PROXY. WHERE
STOCK IS OWNED BY MORE THAN ONE PERSON, ALL OWNERS SHOULD SIGN THE PROXY.
