SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant / /
Filed by a Party other than the Registrant /x/
Check the appropriate box:
/x/ Preliminary Proxy Statement / / Confidential,
For Use of the
Commission Only
(as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HARNISCHFEGER INDUSTRIES, INC.
(Name of Registrant as Specified in Its Charter)
PORTFOLIO FF INVESTORS, L.P., PORTFOLIO GENPAR, L.L.C., TRINITY I
FUND, L.P., TF INVESTORS, INC., TRINITY CAPITAL MANAGEMENT, INC.
AND THOMAS M. TAYLOR
(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:
PRELIMINARY COPY SUBJECT TO COMPLETION, DATED APRIL 27, 1999
----------------------
CONSENT SOLICITATION
OF
TRINITY I FUND, L.P.
201 Main Street, Suite 3200
Fort Worth, Texas 76102
----------------------
This Consent Statement (the "Consent Statement") and the
enclosed form of written consent are furnished by Portfolio FF Investors,
L.P., a Delaware limited partnership, the sole general partner of which
is Portfolio Genpar, L.L.C., which in turn is wholly-owned by Trinity I
Fund, L.P. The general partner of Trinity I Fund, L.P., is TF Investors,
L.P. and its general partner, in turn, is Trinity Capital Management
Inc., which is wholly-owned by Mr. Thomas M. Taylor of Fort Worth, Texas.
Mr. Taylor and each of the foregoing entities are participants in this
solicitation and are hereinafter referred to collectively as "Trinity."
Portfolio FF Investors, L.P. directly, and therefore Mr. Taylor and each
of the foregoing entities indirectly, beneficially owns 3,834,150 (or 8%
of the outstanding) shares of the common stock of Harnischfeger
Industries, Inc. (the "Company"). In addition, Clive D. Bode, Lilli
Gordon and John Marion, Jr. may also be deemed to be participants in this
solicitation.
Trinity is furnishing these materials to the holders of the
common stock (the "Common Shares") of the Company in connection with the
solicitation of written consents by and on behalf of Trinity to take
action without a stockholders' meeting, as permitted by Delaware law.
Trinity is asking the holders of the Common Shares to consent
to, and thus effect, the following proposed corporate actions
(collectively, the "Proposals"):
(1) Amend the bylaws of the Company (the "Bylaws") to add
a provision requiring that the Board of Directors (the "Board")
submit all significant merger, restructuring, joint venture or
similar transactions to a vote of the stockholders.
(2) Amend the Bylaws to separate the offices of Chairman of
the Board and Chief Executive Officer and provide that the
Chairman of the Board must be a non-management (i.e., not a
current or former employee of the Company) director.
(3) Amend the Bylaws to add a provision providing that a
meeting between all stockholders of the Company and the non-
management directors may be called by stockholders holding not
less than 25% of the corporation's voting stock.
Stockholders of the Company are being asked to express their
consent to the Proposals on the enclosed BLUE consent card. Trinity
urges you to sign, date and return today the enclosed BLUE consent card
in the enclosed postage prepaid envelope. TRINITY REQUESTS THAT THE
ENCLOSED BLUE CONSENT CARD BE SIGNED, DATED AND RETURNED TO IT BEFORE MAY
25, 1999 (THE "TARGET DATE"). Failure to return your consent will have
the same effect as voting against the Proposals. Regardless of how many
shares you own, your vote is very important.
The record date for the solicitation made hereby is April 30,
1999. To be effective, a written consent with respect to the Proposals
must be delivered to the Company within 60 days of the earliest dated
written consent. This Consent Statement and the enclosed BLUE consent
card are first being mailed to stockholders on or about April , 1999.
THESE ARE PRELIMINARY CONSENT MATERIALS AND, IN ACCORDANCE WITH
UNITED STATES SECURITIES LAWS, DO NOT INCLUDE A CONSENT CARD. ONCE OUR
CONSENT MATERIALS BECOME DEFINITIVE, YOU WILL RECEIVE ANOTHER COPY ALONG
WITH OUR BLUE CONSENT CARD WHICH YOU CAN USE TO VOTE YOUR
SHARES.
For assistance or further information, please call D.F. King &
Co., Inc. ("D.F. King"), which is assisting us in this matter, toll free
at 1-800-758-5378. If your shares are held in your name, please mark,
sign, date and mail the enclosed BLUE consent card to D.F. King in the
enclosed postage pre-paid envelope. If your shares are held in the name
of a brokerage firm, bank or other institution, you should contact the
person responsible for your account and give instructions for the BLUE
consent card representing your shares to be marked, dated, signed and
mailed. Only that institution can execute a BLUE consent card with
respect to your shares held in the name of such institution and only upon
receipt of specific instructions from you. Trinity urges you to confirm
in writing your instructions to the person responsible for your account
and to provide a copy of those instructions to Trinity in care of D.F.
King at the address set forth below so that Trinity will be aware of all
instructions given and can attempt to ensure that such instructions are
followed.
If you have any questions about executing your consent or require
assistance, please contact:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Toll Free: 1-800-758-5378
<PAGE>
<PAGE>
REASONS FOR THE SOLICITATION
Trinity has commenced this consent solicitation in order to
protect and enhance shareholder value, especially in light of the
Company's recent poor financial performance, coupled with the refusal of
all but two of the non-management directors to meet with Trinity. See
"Background--Discussions with the Company" below. Trinity, however, has
not made any analysis or commissioned any report that would indicate that
these specific proposals or similar proposals would have any effect on
stockholder value. There can be no assurance, therefore, that the
Company's performance will improve or that stockholder value will be
enhanced as a result of this solicitation or the proposals presented.
The three proposals set forth in this solicitation statement
are intended to create increased independence at the Board level and
greater input at the stockholder level:
(i) The first proposal will amend the Bylaws to require the
Board to submit all significant (generally transactions with a
value of over $100 million) merger, restructuring, joint venture
or similar transactions to a vote of stockholders for their prior
approval. Trinity believes that stockholders should be asked to
approve all transactions of significant magnitude.
(ii) The second proposal will amend the Bylaws to separate
the offices of Chairman and Chief Executive Officer and will
provide that the Chairman must be a non-management (i.e., not a
current or former employee of the Company) director. Trinity
believes that this change should strengthen the Board and improve
how it oversees the management of the Company by adding an
independent check on management.
(iii) The third proposal will amend the Bylaws to permit
stockholders holding not less than 25% of the Company's voting
stock to call a meeting between all stockholders of the Company
and the non-management directors. Trinity hopes that this change
will improve communication between the Board and stockholders.
Proposal No. 1: Amend the Bylaws to add a provision requiring that the
Board submit all significant merger, restructuring,
joint venture or similar transactions to a vote of the
stockholders.
"Resolved, that the Bylaws be amended by adding a new Article
XIII at the end thereof to read as follows:
ARTICLE XIII
SIGNIFICANT TRANSACTIONS
The affirmative vote or consent of the holders of a majority of
all shares of stock of the corporation unconditionally entitled to vote
in elections of directors, considered for the purpose of this Article
XIII as one class, shall be required for the adoption, approval or
authorization of any significant transaction (as hereinafter defined).
A proxy statement responsive to the requirements of the Securities
Exchange Act of 1934 shall be mailed to stockholders of the corporation
for purpose of soliciting stockholder approval of such significant
transaction and shall contain at the front thereof, in a prominent place,
any recommendation as to the advisability (or inadvisability) of the
significant transaction which the directors may choose to make and an
opinion of a reputable investment banking firm as to the fairness (or
not) of the terms of such significant transaction from the point of view
of the stockholders of the corporation (such investment banking firm to
be selected by a majority of the directors and to be paid a reasonable
fee for their services by the corporation upon receipt of such opinion).
As used in this Article XIII, the term "significant transaction" shall
include any sale, merger, restructuring, joint venture or similar
transaction of the corporation or any of its subsidiaries having a
transaction value (exclusive of any indebtedness assumed), as determined
in good faith by the Board, in excess of $100 million."
Trinity recommends that you consent to the proposed bylaw
amendment by consenting to Proposal No. 1.
Proposal No. 2: Amend the Company's Bylaws to separate the offices of
Chairman of the Board and Chief Executive Officer and
provide that the Chairman of the Board must be a non-
management (i.e., not a current or former employee of
the Company) director.
"Resolved, that Article IV, Section 1 of the Bylaws be amended
and restated in its entirety to read as follows:
SECTION 1. Number. The officers of the corporation shall be a
Chairman of the Board (who must be a member of the Board of Directors
other than a current or former employee of the Company), a Chief
Executive Officer, a President, one or more Vice Presidents (the number
thereof to be determined by the Board of Directors), a Secretary, a
Treasurer and a Controller, each of whom shall be elected by the Board of
Directors. The Board of Directors may also elect a Chief Operating
Officer and one or more Group Presidents and may designate one or more of
the Vice Presidents as Executive Vice Presidents or Senior Vice
Presidents. Such other officers and assistant officers and agents as may
be deemed necessary may be elected or appointed by the Board of
Directors. Any two or more offices may be held by the same person,
except the offices of Chairman of the Board and Chief Executive Officer
or any other office, the offices of President and Secretary, and the
offices of President and Vice President.
Trinity recommends that you consent to the proposed bylaw
amendment by consenting to Proposal No. 2.
Proposal No. 3: Amend the Bylaws to add a provision providing that
meetings between all stockholders of the Company and
the non-management directors may be called by
stockholders holding not less than 25% of the
corporation's voting stock.
"Resolved, that Article III of the Bylaws be amended by adding at
the end thereof the following:
Section 16. Special Meetings of Non-Management Directors.
Notwithstanding anything to the contrary contained in these Bylaws, a
special meeting between all stockholders of the Company and the non-
management members of the Board of Directors may be called at any time by
stockholders holding, of record or beneficially, not less than one-
quarter of all the shares unconditionally entitled to vote in elections
of directors by the written request or requests of such stockholders
delivered to the Secretary of the Company. Such stockholders shall have
the right, in person or by representative, to attend any such meeting.
Such stockholders may fix any place, either within or without the State
of Delaware, as the place for holding any such special meeting of the
non-management members of the Board of Directors. The directors at any
such meeting may, by resolution passed by a majority of such directors,
make recommendations to the entire Board of Directors. Such meeting
shall be held at the expense of the corporation within 30 days of the
request or requests therefor.
Trinity recommends that you consent to the proposed bylaw
amendment by consenting to Proposal No. 3.
GENERAL INFORMATION ABOUT SOLICITATION OF CONSENTS
Consent Procedure, Effectiveness and Record Date
Section 228 of the Delaware General Corporation Law (the "DGCL")
states that, unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special
meeting of stockholders, or any action that may be taken at any annual or
special meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing,
setting forth the action to be so taken, is signed by the holders of
outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted, and those
consents are delivered to the corporation by delivery to its registered
office in Delaware, its principal place of business or an officer or
agent of the corporation having custody of the books in which proceedings
of meetings of stockholders are recorded. The Company's Certificate of
Incorporation does not prohibit stockholder action by written
consent.
Section 213(b) of the DGCL provides that if no record date has
been fixed by the board of directors, the record date for determining the
stockholders entitled to consent to corporate action in writing without
a meeting, when no prior action by the board of directors is required,
shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation
by delivery to its registered office in Delaware, its principal place of
business or an officer or agent of the corporation having custody of the
books in which proceedings of meetings of stockholders are recorded.
Notwithstanding the foregoing, Section 13 of Article II of the Company's
Bylaws sets forth a process which stockholders must follow in order to
seek action by written consent without a meeting. Pursuant to Section
13(a) thereof, a stockholder seeking to have the stockholders of the
Company authorize or take action by written consent is required to
request, by written notice to the Secretary of the Company, that the
Board fix a record date. The Company's Board is required to promptly,
but in all events within ten days after the date on which the request is
received, adopt a resolution fixing the record date for the solicitation
(which may not be more than ten days after the date of the resolution).
The Proposals will become effective when properly completed,
unrevoked consents are signed by the holders of record as of the Record
Date of a majority of the Common Shares then outstanding and are
delivered to the Company and, pursuant to the Company's Bylaws,
nationally recognized independent inspectors of elections, hired by the
Company for the purpose of performing a ministerial review of the
validity of the consents and revocations, certify to the Company that the
consents delivered in accordance with Section 13(a) of Article II of the
Bylaws represent at least the minimum number of votes that would be
necessary to take the corporate action, provided that the requisite
consents are so delivered within 60 days of the date of the earliest
dated consent delivered to the Company. Trinity, however, is requesting
that the enclosed BLUE consent card be signed, dated and delivered to it
before the Target Date.
If the Proposals are adopted pursuant to the consent procedure,
prompt notice must be given by the Company pursuant to Section 228(d) of
the DCGL to stockholders who have not executed consents. The Company
will promptly announce when the action by written consent has been taken,
thus enabling the stockholders desiring to withdraw their consents to
learn whether the action has become effective.
The close of business on April 30, 1999 (the "Record Date")
has been established as the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting.
According to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended January 31, 1999, there were, to the best
knowledge of Trinity, 47,941,690 Common Shares issued and outstanding
and entitled to vote at March 15, 1999.
Only holders of record as of the close of business on the Record
Date will be entitled to consent in writing. If you are a stockholder of
record on the Record Date you will retain your voting rights even if you
sell your shares after the Record Date. Accordingly, it is important
that you execute a consent with respect to the Common Shares held by you
on the Record Date, even if you sell such Common Shares after the Record
Date.
If your Common Shares are held in the name of a brokerage firm,
bank, or other institution on the Record Date, only it can execute a
consent with respect to your shares and only after receiving your
specific instructions. Accordingly, you should contact the person
responsible for your account and give instructions for the BLUE consent
card to be signed representing your shares. Trinity urges you to confirm
in writing your instructions to the person responsible for your account
and provide a copy of these instructions to Trinity in care of D. F. King
at the address set forth above so that Trinity will be aware of all
instructions given and can attempt to ensure that such instructions are
followed.
Consents Required
Each outstanding Common Share entitles the Record Date holder
thereof to one vote on each of the Proposals. Accordingly, based on the
information in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended January 31, 1999, written consents by holders
representing a majority of the issued and outstanding Common Shares, that
is approximately 23,970,846 Common Shares (not including abstentions and
broker non-votes), will be required to adopt and approve each of the
Proposals. Each abstention and broker non-vote with respect to any of
the Proposals will have the same effect as a vote against such Proposal.
Effect of the Blue Consent Card
Trinity is soliciting FOR each of the Proposals. Shares
represented by the BLUE consent card will be voted in accordance with the
directions indicated thereon or, if no direction is indicated, in
accordance with the recommendations of Trinity contained in this Consent
Statement as to all Common Shares represented by that consent card.
Any stockholder executing and delivering Trinity's enclosed BLUE
consent card may revoke such action at any time before the time that the
action authorized by the executed consent becomes effective by duly
executing a later-dated consent or an instrument expressly revoking the
consent. A revocation may be delivered either to Trinity, in care of
D.F. King, or to the Company at P.O. Box 554, Milwaukee, Wisconsin 53201
or any other address provided by the Company. Although a revocation is
effective if delivered to the Company, Trinity requests that either the
original or photostatic copies of all revocations of consents be mailed
or delivered to Trinity as set forth above, so that Trinity will be aware
of all revocations and can more accurately determine if and when the
requisite consents to the actions described herein have been received.
BACKGROUND
Who is Trinity?
Trinity I Fund, L.P. is a Delaware limited partnership (the
"Trinity Fund") that makes active, block investments in public
corporations that, in its view, could benefit from the presence of a
large, patient investor. The Trinity Fund was formed in 1995 by its
general partner, TF Investors, L.P., a Delaware limited partnership which
is managed by its general partner, Trinity Capital Management, Inc.
Trinity Capital Management, Inc., in turn, is a Delaware corporation
wholly owned by Mr. Thomas M. Taylor of Fort Worth, Texas.
The Trinity Fund, through Portfolio Genpar, LLC (a Delaware
limited liability company which it wholly owns), generally forms a new
limited partnership for each of its investments. Portfolio FF Investors,
L.P. is the Delaware limited partnership formed to hold the Trinity
Fund's investment in the Company.
Discussions with the Company
Trinity has been a stockholder of the Company since April
1998. As referenced in the April 6, 1999 letter to Mr. Jeffery T. Grade,
Chairman of the Board and Chief Executive Officer of the Company,
reproduced below, Trinity recently requested a meeting with the non-
management directors to discuss the Company's present situation. On
April 12, Mr. Taylor received a letter from Mr. Grade, also reproduced
below, that rejected such a meeting, based upon the contention that the
Company's hiring of an outside financial advisor to help evaluate
alternatives to enhance shareholder value "addresses the issues discussed
in your letter of April 6, 1999."
Trinity believes, for the reasons given above under "Reasons
for the Solicitation," that the reform proposals discussed in this
solicitation will help to protect and enhance shareholder value. The
events that led to the filing of this Consent Statement thus began, most
immediately, with the following exchange of letters between Mr. Taylor
and Mr. Grade.
STATEMENTS CONTAINED IN THE CORRESPONDENCE EXCHANGED BETWEEN
MR. TAYLOR AND MR. GRADE REFLECT THE OPINIONS OF THE AUTHORS AND DO NOT
NECESSARILY REPRESENT STATEMENTS OF FACT.
April 6, 1999
Mr. Jeffery Grade
Harnischfeger Industries
3600 South Lake Dr.
St. Francis, WI 53235-3716
Dear Mr. Grade:
As you know, we have been shareholders of Harnischfeger for
almost one year and presently own over 8% of the Company. We are
not happy with the Company's performance and believe you should
be actively seeking ways to reverse the situation. A recently
published Business Week ranking of corporations in the S&P 500
underscores just how bad the Company's performance has been.
According to that ranking, the decline in Harnischfeger's stock
price in the recent past has earned the Company the distinction
of the worst performer in the S&P 500 in total shareholder
returns over the latest one-year and three-year periods (Business
Week, March 29, 1999). Furthermore, the Company received a
performance grade of "F" in all of the eight performance areas
evaluated in this survey.
We think that the role of the CEO and the board of directors
is considerably heightened in difficult times such as
Harnischfeger is experiencing, and that it is imperative in such
times that all tangible strategic options be thoroughly reviewed.
We are deeply concerned that you and the Harnischfeger Board may
be neglecting your fiduciary duty, particularly with respect to
the evaluation of a recent offer that the Company received from
another company in the industry.
Our investment style is to make sizeable, long-term
investments in public corporations, and to carefully monitor our
investments throughout their duration. In the course of our
involvement with Harnischfeger, we have had extensive dialogue
with management, other Harnischfeger shareholders and a number of
the Company's customers, competitors and suppliers. Recently,
when we approached one of the companies in a related business
field, we learned that this company had made numerous advances to
Harnischfeger regarding a strategic combination, and had extended
a premium offer to purchase the company, subject to due
diligence. We understand that the Company has not moved forward,
nor has taken any action, regarding this proposal. We also
understand that the Company presently is contemplating a
transaction that would make a merger or acquisition very
difficult or impossible to accomplish. This is very disturbing.
We do not understand on what basis you and the Harnischfeger
Board are evaluating the current proposal, and the potentially
significant synergies it could offer. Currently, we know that no
independent directors have yet met with any officials of the
offeror. You and members of the Harnischfeger Board, of course,
must realize the extent of your fiduciary duty in such
situations; yet the lack of responsiveness to date leaves me
questioning the standards to which the actions of you and the
Harnischfeger Board have been subjected. We would assume that
the Company or its advisors, if they have not already, intend to
undertake a complete examination of the value that could be
delivered to Harnischfeger shareholders through a combination of
the two companies, and compare that value to the value of
Harnischfeger's other alternatives. Any other approach, it would
seem, fails to address the underlying issues.
We would like to meet with all of the non-management members
of the Harnischfeger Board over the next few days. The purpose
of the meeting is to hear the Board's appraisal of the merger
proposal and to understand the time frame for the Board's
decision making. We also would like to hear of any other
opportunities that the Company is reviewing, including the
transaction referred to above. Finally, we would like to share
our own assessment of the potential value inherent in the
proposed strategic merger, which we believe to be consistent with
the views of many of Harnischfeger's large shareholders.
I will call you tomorrow to arrange a meeting.
Sincerely,
/s/ Thomas M. Taylor
Thomas M. Taylor
cc: The Harnischfeger Board of Directors
On April 12, 1999, Mr. Taylor received the following letter and
press release:
April 12, 1999
Mr. Thomas M. Taylor
Taylor & Co.
201 Main Street
Fort Worth, Texas 76102-3131
Dear Mr. Taylor:
Enclosed is a press release we issued today. We believe
this addresses the issues discussed in your letter of April 6,
1999 as well as our subsequent conversation of April 8. In
consideration of the foregoing, the Board sees no purpose at this
time for a meeting with you.
Sincerely,
/s/ Jeffrey T. Grade
Jeffrey T. Grade
JTG/jo
enc
HARNISCHFEGER GOAL TO ENHANCE SHAREHOLDER VALUE;
RETAINS CHASE SECURITIES AS INVESTMENT BANKER
MILWAUKEE -- April 12, 1999 -- Harnischfeger Industries, Inc.
(NYSE: HPH) today confirmed that its board of directors has
retained Chase Securities Inc. to help evaluate, in an orderly
process, alternatives for the company designed to enhance
shareholder value, including potential transaction opportunities.
The company indicated that, while there is no assurance that any
transaction will be achieved, it hopes to be able to reach
meaningful conclusions within the next month or two. Meanwhile,
the company continues to work with Chase Manhattan Bank to
achieve an appropriate refinancing of its operations. A
Harnischfeger spokesman said that the board is open to consider
credible opportunities to enhance shareholder value.
April 13, 1999
Mr. Jeffery Grade
Harnischfeger Industries
3600 South Lake Dr.
St. Francis, WI 53235-3716
Dear Mr. Grade:
We received your letter of April 12 rejecting our request to
meet with the non-management directors of the Company. While we
are relieved that the Company has finally decided to hire an
outside financial advisor to help evaluate alternatives to
enhance shareholder value, we strongly disagree with your
contention that the hiring of such an adviser "addresses the
issues discussed" in our letter of April 6, 1999, and are
disappointed that the non-management directors are unwilling to
meet with one of its major shareholders.
Given the performance history of the Company and the
credibility problem that this management team has with its
shareholders, we are initiating a written consent process to
solicit support for several reforms to the Company's governance
structure. We believe that if these reforms are adopted, they
will bolster the process currently being undertaken by the
Company, and increase shareholders' confidence that meaningful
steps will be taken to enhance shareholder value pursuant to this
process.
We are thereby soliciting support for the following three
corporate governance reforms through the written consent process
as provided for under Delaware law and the Company's Bylaws:
(i) The first proposal will amend the Bylaws to
require the Board to submit all significant (generally
transactions with a value of over $100 million) merger,
restructuring, joint venture, or similar transactions to a
vote of stockholders for their prior approval;
(ii) The second proposal will amend the Bylaws to
separate the offices of
Chairman and Chief Executive Officer and will provide that
the Chairman must be a non-management (i.e. not a current or
former employee) director;
(iii) The third proposal will amend the Bylaws to
permit stockholders holding not less than 25% of the
Company's voting stock to call a meeting between all
shareholders of the Company and the non-management
directors.
In the weeks ahead, we remain open to a meeting with the
non-management directors to discuss these reforms and the
Company's efforts with respect to the value enhancement process.
Sincerely,
/s/ Thomas M. Taylor
Thomas M. Taylor
Over the past months, Trinity representatives have had numerous
conversations with stockholders and investment analysts about the
Company. Representatives of Trinity and the Company arranged for two
meetings between Mr. Taylor and Mr. Grade held on May 22, 1998 and June
9, 1998. At these meetings, Mr. Taylor expressed his view that the
Company could benefit from possible corporate governance initiatives,
such as separating the office of Chairman and Chief Executive Officer and
establishing an independent committee of the Board to oversee and direct
the Company's on-going restructuring evaluation. Mr. Grade's response
was not encouraging.
On June 15, 1998, Mr. Taylor sent the following letter to each
of the non-management members of the Company's Board. References in the
letter to the "Asia Pulp and Paper Company contract," the "Indonesia
situation" and the $192 million write-off refer to the anticipated losses
on contracts (mostly Indonesian) at the Company's Beloit pulp and paper
machinery segment that were disclosed in the Company's Form 10-Q for the
quarterly period ended April 30, 1998.
June 15, 1998
[Name of Director]
[Address]
Dear Director:
On May 22nd and June 9th, I met with Harnischfeger's CEO,
Jeffery Grade, to discuss the Company's performance and the
concerns of myself and other shareholders in the aftermath of the
disclosures surrounding the Asia Pulp & Paper Company contract.
Although my organization only recently became a shareholder of
the Company, our investment style is to work constructively with
the managements and boards of directors of our portfolio
companies to address value and market credibility and perception
issues. It was in this vein that I met with Mr. Grade.
Members of my organization and myself have had discussions
with various shareholders and investment analysts who follow
Harnischfeger. It has become clear to us, based on these
discussions, that the Company is suffering from a severe
credibility problem. A major source of the problem is the
Indonesia situation and the $192 million write-off, but there are
other serious issues at the Company as well, as reflected in the
most recent quarterly earnings announcement. We find it
particularly disconcerting that the Company entered into a
contract in excess of $600 million without a process of Board
review and approval. This is totally unacceptable. Further, we
understand that apparently Mr. Grade himself was not even aware
of the structure of the contract until revelations came out
earlier this year.
We believe that the market's lukewarm reaction to the
Company's announcement that it was exploring various
restructuring alternatives is a direct manifestation of
shareholders' lack of confidence in Harnischfeger's senior
management. The purpose of my meeting with Mr. Grade, in large
part, was to discuss possible governance initiatives that would
act as a starting point for directly addressing shareholders'
concerns. These ideas, which borrow from several "best
practices" in corporate governance, were intended to create
increased independence at the Board level as the Company pursues
its restructuring efforts and concurrently, to improve
communication with shareholders. Specifically, we asked that Mr.
Grade consider actions that would separate the positions of CEO
and Chairman, assemble an independent committee of the Board to
oversee and direct the restructuring evaluation, develop
communication protocols for providing shareholders information
during this period and to consider the possible appointment to
the Harnischfeger Board of highly-regarded individual with no
ties to us or to current management. Several of the Company's
shareholders whom we spoke with expressed general support for
these types of governance practices.
I was shocked and dismayed by Mr. Grade's reaction to our
initiatives and, in particular, his comment to me that taking
such steps may cause the financial community to think there is a
problem at the Company when in fact there is not. Quite frankly,
it borders on the ludicrous to claim that no problems exist. At
the very least I would have thought that Mr. Grade would have
fulfilled his duties as Chairman and offered to bring our ideas
to the full Board.
I had hoped that my most recent meeting with Mr. Grade would
restore my confidence in senior management. Unfortunately, the
result was just the opposite. I believe that the Company is in
a very precarious situation and would like the opportunity to
meet with the non-management board members to discuss the
shareholders' concerns. I would also suggest that the Company's
other major shareholders be invited to participate in this
meeting so that board members are given a perspective that goes
beyond that of my organization. I believe that there is no time
to waste and urge you to schedule the meeting as soon as
possible.
I will be in touch in the next few days to discuss how to
proceed.
Sincerely yours,
/s/ Thomas M. Taylor
Thomas M. Taylor
cc: Jeffrey T. Grade
John N. Hanson
Francis M. Corby, Jr.
Mr. Grade then sent the following letter to Mr. Taylor on June
19, 1998:
June 19, 1998
Mr. Thomas M. Taylor
Taylor & Company
115 East Putnam Avenue
Greenwich, CT 06830
Dear Mr. Taylor:
I have reviewed with the Board of Directors of Harnischfeger
Industries our meetings with you on May 22 and June 9. The Board
has considered your letters to the directors dated June 15, 1998
and has asked me to respond to your letter.
The Board already has in place a committee consisting
entirely of independent directors, the Finance and Strategic
Planning Committee, that performs the functions you describe,
specifically, consideration of broad range strategic issues
affecting the Company and our efforts to increase shareholder
value. The current restructuring evaluation is being conducted
under the direct supervision of that committee. Larry Brady,
President of FMC Corporation, is chairman of that committee and
is willing to meet with your group at 3:30 p.m. on June 24, 1998
at The Drake Hotel, 140 E. Walton Place, Chicago, IL (The Huron
Room) to discuss your concerns. Since you also raised the
subject of the APP contracts, Robert Hoffman, Vice Chairman of
Monsanto, who is chairman of Harnischfeger's Audit Committee and
also a member of the Finance and Strategic Planning Committee,
will attend the meeting. Andrew R. Brownstein of Wachtell,
Lipton, Rosen & Katz, counsel to the company and the Board on
these matters, will also attend. The Board has requested that I
also be in attendance.
Please call my secretary to confirm your attendance and let
us know who will be attending the meeting on your behalf. In an
effort to facilitate a focused discussion, please limit your
group to three participants representing the Trinity I fund.
The Board has also asked me to let you know that it is
always willing to consider a qualified candidate who can make a
contribution to the Board and the Company and who is prepared to
devote the substantial time and energy required to serve as a
director of Harnischfeger. Any suggestions you may have for an
independent director candidate meeting these criteria should be
submitted to our corporate secretary who will direct them to the
Board's Corporate Governance Committee.
Our Board is independent, tough minded, hard-working and
devoted to the best interests of Harnischfeger and its
shareholders. In light of this, the Board sees no particular
benefit to Harnischfeger in separating the offices of Chairman
and Chief Executive.
On behalf of the Board of Directors.
Very truly yours,
/s/ Jeffery T. Grade
Jeffery T. Grade
On June 24, 1998, Mr. Taylor and two other representatives of
Trinity (Clive D. Bode and John Marion, Jr.) met with two non-management
members of the Company's Board, counsel for the Company and Mr. Grade.
After the meeting, Mr. Taylor sent the following letter to the two non-
management members of the Board:
June 30, 1998
[Name of Director]
[Address]
Dear Director:
Thank you for taking the time to meet with us last
Wednesday. We appreciate your cordiality as well as the
frankness you exhibited as a non-management member of the
Harnischfeger Board of Directors.
After meeting with you to discuss some of the critical
issues facing the Company, we came away confident that you are
truly an independent director of the Harnischfeger Board. You
can be assured that we will share this perspective with the other
shareholders who have expressed concern to us about the current
state of affairs at the Company.
Upon further reflection, I believe it would be helpful if I
clarified a few points that arose during our meeting. The first
is with respect to our request for a meeting with the Company's
non-management directors. I have attached a copy of both our
June 15 letter in which that request was made and the June 19
letter we received from Mr. Grade, stating that "the Board has
requested that I also be in attendance" at the meeting. While I
believe that an open dialogue between a company's CEO and major
shareholders can be very valuable, I also believe that there are
circumstances in which a meeting with non-management directors
and shareholders can be much more productive. Harnischfeger, I
believe, is a case in point. At this point in time, it is
important to provide the Company's shareholders the opportunity
to express their concerns in an environment that will encourage
maximum openness, without any rancor, defensiveness, or
unnecessary interruptions. Should other Harnischfeger
shareholders request a meeting, I would recommend that only the
non-management directors be present.
A second point that I wanted to clarify is what I meant by
appointing an outside board member as a "director ombudsman" to
communicate with shareholders during this challenging period in
the Company's history. My thinking has always been that such an
individual be chosen from the current roster of non-management
directors. This would be preferable to having a newly-appointed
non-management director who is less familiar with the Company's
operations and history play such a role.
Another issue I would like to address is the footnote in the
most recent 10-Q, discussing the Beloit situation in Indonesia.
We find the following language pertaining to the investigation
particularly ambiguous:
"the actual costs may vary significantly from
the estimates, up or down, based upon numerous
factors including the volatility of the
Indonesian political and economic situation
and delivery, performance, and other risks and
uncertainties inherent in executing these
large, complex projects. These factors cannot
be predicted with certainty and may affect
income on a quarter-to-quarter basis."
Such language creates continued uncertainties in our minds as to
whether other problems pertaining to this situation may still
surface in the future.
Finally, once again I want to express my appreciation for
your courteous audience as we expressed some of the concerns we
have as a major shareholder of the Company. In addition, I am
hopeful that you appreciate, as a result of our meeting and your
own first-hand observations, how Mr. Grade's attitude could play
a major part in contributing to the current credibility gap at
Harnischfeger that persists among many members of the investment
community.
We continue to reflect on our discussion with you and will
be in touch as we refine our thinking on how best to proceed.
Sincerely,
/s/ Thomas M. Taylor
Thomas M. Taylor
On September 4, 1998, Mr. Taylor sent the following letter to Mr.
Grade:
September 4, 1998
Mr. Jeffrey Grade
Harnischfeger Industries
3600 South Lake Drive
St. Francis, WI 53235
Dear Mr. Grade:
In my June 15 correspondence with you (see attached), I
expressed the view that Harnischfeger faced serious issues and,
that the Company's senior management suffered from a severe
credibility problem with its shareholders. I suggested several
corporate governance initiatives that if adopted could help to
restore shareholders' confidence in the Company's management. In
addition, I suggested that the Company convene a meeting of the
non-management directors, ourselves, and other major shareholders
to discuss our concerns. At the time, Harnischfeger's stock
price was at $28 , which was 40.6% below its peak stock price in
1997.
We did have the opportunity to meet with two of the non-
management directors, Messrs. Brady and Hoffman; however, the
meeting was also attended by Mr. Grade, which impeded our ability
to have a full and frank discussion of the issues and to exchange
our views with all of the Company's non-management directors. At
that meeting, we expressed our concern with management and its
missteps over the past two years. We indicated that these were
not isolated events, but rather part of a long-term pattern that
has resulted in a lack of confidence on the part of shareholders
and the financial community at large.
In the two months since these discussions took place matters
have gone from bad to worse. Harnischfeger's stock price has
declined an additional 44% to $16, and last week the Company
announced a staggering net income loss in the third quarter of
$38.6 MM, including a $65.4 MM operating loss at the Beloit
Division. Further, during the third quarter conference call,
shareholders were informed of a number of disturbing events,
including the following:
(i) A major Longwall project "had internal bid process
problems" due to "an estimate that was not realized."
(ii) In the second quarter, management had built up
Joy inventory "in anticipation of an increase in rates, with
a peak in the fourth quarter."
(iii) The Company had taken an $11 MM loss on a
receivable that was in dispute.
(iv) The Company remains unsure if and when the Asia
Pulp & Paper Company will attain the financing and pay the
Company for the third and fourth machines that they ordered
(Machine Nos. 811 & 812).
(v) Mr. Grade reversed a pledge made during the 1998
second quarter conference call in which he stated that,
following the implementation of the second restructuring at
Beloit (as detailed in February of 1998), the Beloit
Division would have the ability to bring in zero new OEM
machine business, and still not lose money. In this
conference call, he stated that the division would now break
even after the additional $35 MM in expense cuts are taken
out of Beloit's cost structure.
(vi) Finally, despite the Company's perilous balance
sheet situation, Mr. Grade concluded the call by actually
ruminating over the possibility of whether Harnischfeger
should purchase five mining competitors.
These events underscore the concerns we expressed to the
Company two months ago. In our view, the management team has lost
whatever remaining credibility it had. This certainly would be
unsettling even in good times. But during these extremely
challenging times in the industry, we believe that we have a
situation of near crisis proportions.
We believe that these circumstances demand a tough stance by
the Harnischfeger Board and answers to some immediate questions.
For example, is management, as they previously stated to us in
May, really doing everything possible on the cost side? How does
an extended downturn in the mining industry affect management's
actions, given that there is no sign at this point of the
recovery that they anticipated would take place this summer? Is
the management team still too optimistic regarding the potential
demand for the upcoming year? Is the management actually
contemplating additional acquisitions when the Company's debt-to-
capitalization has ballooned to over 58%, and there has yet to be
any resolution of the Asia Pulp & Paper Company Ltd. receivable
and the Potlach Corp. litigation? These and other questions must
be addressed without delay.
We would like to request, once again, a meeting between non-
management directors, ourselves, and the major shareholders to
discuss these issues. As we mentioned in our most recent
securities filing, among the alternatives that we are considering
is a consent solicitation, as currently provided for in the
Company's bylaws, to canvass shareholder support for initiatives
to address the current situation. Before making a decision to
pursue such a course, we think it is important to have an open
exchange to express the shareholders' concerns directly with the
non-management directors and to listen to whatever feedback you
can provide at this time.
I will call you in a couple of days to see how best to
proceed.
Sincerely yours,
/s/ Thomas M. Taylor
Thomas M. Taylor
Mr. Grade then sent the following letter to Mr. Taylor on
September 24, 1998:
September 24, 1998
Mr. Thomas M. Taylor
Taylor & Co.
201 Main Street
Fort Worth, Texas 76102-3131
Dear Tom:
The Harnischfeger Board has reviewed your letter of
September 4, 1998.
Based on the report of Messrs. Brady and Hoffman, the Board
is surprised that you would assert that my presence impeded a
full and fair exchange of views at our last meeting although we
did note that you offered no substantive suggestions for dealing
with the issues facing our Company. Nonetheless, taking your
assertion at face value, and in the event that you might have a
constructive, substantive suggestion, at the Board's direction,
Larry Brady, Bob Hoffman and I will meet again with you and your
colleagues at 12:00 Noon, on Monday, October 19 at The Mid-
America Club, 200 E. Randolph Drive, Chicago, Illinois. Mr.
Brownstein will also attend.
The Board believes that management provides a level of
operating detail useful to a meeting with significant
shareholders and has directed me to attend. You should
understand that neither the Board nor I wish my presence to
inhibit you from expressing your views in any way, and you should
not feel constrained. Messrs. Brady and Hoffman will not be.
Harnischfeger's management and directors have been actively
meeting with the Company's major shareholders and our meetings
with you are being held in that context. Accordingly, we will
discuss your concerns and any suggestions you may have, and the
Board sees no reason to involve other shareholders in a meeting
between us and you.
Please call my office at (414) 486-6860 to confirm that
these arrangements are acceptable. We look forward to seeing
you.
Very truly yours,
/s/ Jeff Grade
Jeffrey T. Grade
Mr. Taylor met with Mr. Grade on October 15, 1998. At this
meeting, Mr. Taylor suggested the consideration of adding an additional
independent director to the Board. Following the meeting, Trinity
learned that the Company was considering appointing Stephen M. Peck as an
independent member of the Board and requested a meeting with Mr. Peck.
The Company, however, declined such request. On December 7, 1998, the
Company announced the appointment of Mr. Peck to the Board. (Mr. Peck,
however, was not suggested or nominated by Trinity or any of its
representatives.)
VOTING SECURITIES OUTSTANDING
The following table provides information as to the beneficial
ownership of the Common Shares by each current director and officer, all
current officers and directors as a group, and each other person who
beneficially owns 5% or more of the Shares. The information for current
directors, current officers and for all current officers and directors as
a group has been taken from the Company's most recent filings with the
Securities and Exchange Commission. The information for beneficial
holders (other than Trinity) of 5% or more of the Common Shares has been
taken from each such holder's most recent filing on Schedule 13D or
Schedule 13G with the Securities and Exchange Commission. Although
Trinity has no reason to believe that any such information is inaccurate
or incomplete, Trinity has undertaken no independent investigation of
such information and does not assume any responsibility for its accuracy
or completeness.
Name and Address
of Beneficial Owner Shares Owned Percent of Class(1)
Trinity 3,834,150(2) 8.0%
201 Main Street, Suite 3200
Fort Worth, Texas 76102
Trimark Financial Corporation 5,000,300(3) 10.4%
One First Canadian Place
Suite 5600, P. O. Box 487
Toronto, Ontario
Canada M5X 1E5
Brinson Partners, Inc. 4,135,040(4) 8.6%
209 South LaSalle
Chicago, Illinois 60604-1295
Morgan Stanley, Dean Witter, 3,590,010(5) 7.5%
Discover & Co.
1585 Broadway
New York, New York 10036
ICM Asset Management, Inc. 2,629,750 5.5%
601 West Main Avenue
Suite 600
Spokane, Washington 99201
Jeffrey T. Grade 1,119,611(7) 2.2%
John N. Hanson 229,858(8) *
Francis M. Corby, Jr. 486,266(9) *
Mark E. Readinger 24,74410) *
James A. Chokey 68,130(11) *
Larry D. Brady 7,212(12) *
Robert M. Gerrity 3,747(13) *
John D. Correnti 5,745(14) *
Robert B. Hoffman 5,261(15) *
Jean-Pierre Labruyere 8,145(14) *
L. Donald LaTorre 5,304(16) *
Leonard Redon 4,456(14) *
Donna M. Alvarado 6,388(17) *
Harry L. Davis 15,200(14) *
Stephen M. Peck 12,000(18) *
All executive officers and directors 2,098,910(19) 4.2%
as a group (19 persons)
- --------------------
* Less than 1%.
(1) With the exception of Trinity and each other person who
beneficially owns 5% or more of the shares, the percent of class is based
on 47,949,640 shares of Common Stock outstanding and 1,582,066 shares
which are subject to options currently exercisable or which will become
exercisable within 60 days of April 20, 1999.
(2) Shares are held by Portfolio FF Investors, L.P., the sole general
partner of which is Portfolio Genpar, LLC, which is wholly owned by
Trinity I Fund, L.P. Trinity I Fund, L.P.'s sole general partner is TF
Investors, L.P., whose sole general partner, in turn, is Trinity Capital
Management, Inc., all of whose stock is owned by Thomas M. Taylor.
(3) Based on information contained in a Schedule 13G, Amendment No. 4,
filed with the Securities Exchange Commission on February 1, 1999 by
Trimark Financial Corporation.
(4) Based on information contained in a Schedule 13G, Amendment No. 1,
filed with the Securities Exchange Commission on February 3, 1999 by
Brinson Partners, Inc. ("Brinson"). Brinson, an investment adviser
registered under Section 203 of the Investment Advisors Act of 1940,
reported shared voting power and shared dispositive power as to these
shares. The report was also filed on behalf of Brinson Holdings, Inc.,
SBC Holding (USA), Inc. and Swiss Bank Corporation.
(5) Based on information contained in a Schedule 13G, Amendment No. 1,
filed with the Securities Exchange Commission on February 5, 1999 by
Morgan Stanley, Dean Witter, Discover & Co. and its wholly-owned
subsidiary, Miller, Anderson & Sherrerd, LLP, investment advisers
registered under Section 203 of the Investment Advisors Act of 1940.
Morgan Stanley, Dean Witter, Discover & Co. reported shared voting power
as to 3,136,150 shares and shared dispositive power as to 3,590,010
shares. Miller, Anderson & Sherrerd, LLP reported shared voting power as
to 2,539,300 shares and shared dispositive power as to 2,931,860 shares.
(6) Based on information contained in a Schedule 13G filed with the
Securities Exchange Commission on February 10, 1999 by ICM Asset
Management, Inc. ICM reported sole voting power as to 1,871,900 shares
and sole dispositive power as to 2,629,750 shares.
(7) Includes 347,113 shares Mr. Grade has a right to acquire upon
exercise of stock options, 934 shares beneficially owned under the Profit
Sharing Plan, 405,974 shares held under the Supplemental Retirement and
Stock Funding Plan and 105,205 shares Mr. Grade has agreed not to sell as
long as he remains employed by the Company.
(8) Includes 68,057 shares Mr. Hanson has a right to acquire upon
exercise of stock options and 21,964 shares held under the Supplemental
Retirement and Stock Funding Plan.
(9) Includes 209,660 shares Mr. Corby has a right to acquire upon
exercise of stock options, 934 shares beneficially owned under the Profit
Sharing Plan, 45 shares beneficially owned under the 401(k) Plan, 115,330
shares held under the Supplemental Retirement and Stock Funding Plan and
52,550 shares Mr. Corby has agreed not to sell so long as he remains
employed by the Company. Also includes 10,200 shares owned by Mr.
Corby's three sons.
(10) Shares Mr. Readinger has a right to acquire upon exercise of stock
options.
(11) Includes 10,879 shares Mr. Chokey has a right to acquire upon
exercise of stock options and 49,333 shares held under the Supplemental
Retirement and Stock Funding Plan.
(12) Includes 500 shares held jointly with his wife and 6,712 shares
beneficially owned under the Directors Stock Compensation Plan.
(13) Includes 2,747 shares beneficially owned under the Directors Stock
Compensation Plan.
(14) Shares beneficially owned under the Directors Stock Compensation
Plan.
(15) Includes 4,261 shares beneficially owned under the Directors
Stock Compensation Plan.
(16) Includes 4,304 shares beneficially owned under the Directors
Stock Compensation Plan.
(17) Includes 5,888 shares beneficially owned under the Directors
Stock Compensation Plan.
(18) Includes 5,000 shares held by his wife.
(19) Includes the following shares held by executive officers who are
not named in the table: 95,394 shares which four executive officers have
a right to acquire upon exercise of stock options, 2,446 shares
beneficially owned by three executive officers under the Profit Sharing
Plan, 108 shares beneficially owned by one executive officer under the
401(k) Plan and 400 shares held by the wife of an executive officer as
custodian for their minor children.
CERTAIN ADDITIONAL INFORMATION
The rules of the SEC require Trinity to make available to
stockholders certain additional information with respect to those persons
and entities who may be deemed to be participants in Trinity's
solicitation (each, including all the entities specified in the following
paragraph, a "Participant").
Portfolio FF Investors, L.P., a Delaware limited partnership,
holds the number of shares of the Company specified above under "Voting
Securities Outstanding." The sole general partner of Portfolio FF
Investors, L.P., is Portfolio Genpar, LLC, which in turn is wholly-owned
by Trinity I Fund, L.P. The general partner of Trinity I Fund, L.P., is
TF Investors, L.P. and its general partner, in turn, is Trinity Capital
Management Inc., which is wholly owned by Mr. Taylor. Additionally, the
following persons may also be deemed to be Participants in the
solicitation: Clive D. Bode, Lilli Gordon and John Marion, Jr.
Except as set forth in this Consent Statement, no Participant or
any associate of any Participant has any substantial direct or indirect
interest in any of the matters to be acted upon with respect to this
solicitation.
THE SOLICITATION
The entire cost of the solicitation of consents by Trinity will
be borne by Trinity. Trinity does not intend to seek reimbursement from
the Company for these expenses. Trinity estimates that total
expenditures relating to such solicitation will be approximately $100,000
of which approximately $35,000 has been expended to date. Consents will
be solicited by mail, advertisement, telephone, and in person. Trinity
and the other persons identified as Participants herein may, without
additional compensation, make solicitations through personal contact or
by telephone, and arrangements may be made with brokerage houses or other
custodians, nominees and fiduciaries to send consent material to their
principals. Trinity will reimburse any such persons for their reasonable
expenses. In addition, Trinity has retained D.F. King to assist in the
solicitation of consents on behalf of Trinity for a fee of $15,000 and
reimbursement for its direct and indirect expenses. Trinity anticipates
fewer than ten persons will be used by D.F. King in its solicitation
efforts. Trinity also expects to agree to indemnify D.F. King against
certain liabilities and expenses, including liabilities and expenses
under the federal securities laws.
Special Instructions
If you were a record holder as of the close of business on the
Record Date, you may elect to consent to, withhold consent to or abstain
with respect to each Proposal by marking the "CONSENTS," "DOES NOT
CONSENT" or "ABSTAINS" box, as applicable, underneath each such Proposal
on the accompanying BLUE consent card and signing, dating and returning
it promptly in the enclosed postage-paid envelope.
IF THE STOCKHOLDER WHO HAS EXECUTED AND RETURNED THE CONSENT CARD
HAS FAILED TO CHECK A BOX MARKED "CONSENTS," "DOES NOT CONSENT" OR
"ABSTAINS" FOR ANY OF THE PROPOSALS, SUCH STOCKHOLDER WILL BE DEEMED TO
HAVE CONSENTED TO SUCH PROPOSAL OR PROPOSALS.
TRINITY RECOMMENDS THAT YOU CONSENT TO EACH OF THE PROPOSALS.
YOUR CONSENT IS IMPORTANT, PLEASE MARK, SIGN AND DATE THE ENCLOSED BLUE
CONSENT CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
PROMPTLY. FAILURE TO RETURN YOUR CONSENT WILL HAVE THE SAME EFFECT AS
VOTING AGAINST THE PROPOSALS.
IMPORTANT
If your shares are registered in the name of a brokerage firm,
bank, or other institution, only it can execute a consent with respect to
your shares and only after receiving your specific instructions.
Accordingly, you should contact the person responsible for your account
and give instructions for the BLUE consent card to be signed representing
your shares. If you have any questions or need assistance in executing
your consent, contact:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
CALL TOLL-FREE 1-800-758-5378
PLEASE ACT PROMPTLY -- SIGN, DATE AND MAIL THE BLUE
CONSENT CARD TODAY!
<PAGE>
<PAGE>
PRELIMINARY COPY--FOR THE INFORMATION OF
THE SECURITIES AND EXCHANGE COMMISSION ONLY
HARNISCHFEGER INDUSTRIES, INC.
THIS CONSENT IS SOLICITED ON BEHALF OF PORTFOLIO FF INVESTORS, L.P.,
PORTFOLIO GENPAR, L.L.C., TRINITY I FUND, L.P., TF INVESTORS, L.P., TRINITY
CAPITAL MANAGEMENT, INC. AND THOMAS M. TAYLOR (COLLECTIVELY, "TRINITY") IN
CONNECTION WITH THE SOLICITATION OF WRITTEN CONSENTS BY AND ON BEHALF OF TRINITY
TO TAKE ACTION WITHOUT A STOCKHOLDERS' MEETING.
THE UNDERSIGNED, the record holder of shares of Common Stock, par value
$1.00 per share (the "Common Shares"), of Harnischfeger Industries, Inc. (the
"Company"), hereby consents pursuant to Section 228 of the Delaware General
Corporation Law to each of the following actions without prior notice and
without a vote as more fully described in Trinity's consent statement, receipt
of which is hereby acknowledged. Unless otherwise indicated below, the action
taken on the following proposals relates to all Common Shares held by the
undersigned.
INSTRUCTION: TO TAKE ACTION WITH REGARD TO THE FOLLOWING
PROPOSALS, CHECK THE APPROPRIATE BOX. IF NO BOX IS MARKED BELOW WITH RESPECT
TO A PROPOSAL, THE UNDERSIGNED WILL BE DEEMED TO CONSENT TO SUCH PROPOSAL.
TRINITY RECOMMENDS THAT YOU CONSENT TO EACH OF THE FOLLOWING PROPOSALS.
- ------------------------------------------------------------------------------
1. BYLAW AMENDMENT: relating to the addition of a provision requiring that
the board of directors submit all significant merger, restructuring, joint
venture or similar transactions to a vote of the stockholders.
[ ] CONSENTS [ ] DOES NOT CONSENT [ ] ABSTAINS
- ------------------------------------------------------------------------------
2. BYLAW AMENDMENT: relating to the separation of the offices of Chairman
of the Board and Chief Executive Officer and providing that the Chairman of the
Board must be a non-management (i.e., not a current or former employee of the
Company) director.
[ ] CONSENTS [ ] DOES NOT CONSENT [ ] ABSTAINS
- ------------------------------------------------------------------------------
3. BYLAW AMENDMENT: relating to the addition of a provision providing that
a meeting between all stockholders of the Company and the non-management
directors may be called by stockholders holding not less than 25% of the
corporation's outstanding voting stock.
[ ] CONSENTS [ ] DOES NOT CONSENT [ ] ABSTAINS
- ------------------------------------------------------------------------------
Please see the Solicitation Statement for additional information
regarding the above Proposals.
(Continued And To Be Signed On the Other Side)<PAGE>
<PAGE>
CONSENT (Continued From Other Side)
To consent, withhold consent or abstain from consenting to the
Proposals set forth above, check the appropriate boxes above. Trinity will
follow the undersigned stockholder's specifications on this consent card. IF
NO BOX IS MARKED ABOVE WITH RESPECT TO ANY PROPOSAL, THE UNDERSIGNED WILL BE
DEEMED TO CONSENT TO SUCH PROPOSAL. THIS CONSENT MUST BE SIGNED AND DATED TO
BE VALID.
Dated:------------------------------------
------------------------------------------
(Signature)
------------------------------------------
(Title or authority, if applicable)
-----------------------------------------
(Signature, if held jointly)
Please sign exactly as your name appears
hereon. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee,
guardian, corporate officer or partner,
please give full title as such. If a
corporation, please sign in corporate name
by authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Please sign, date and return
this Consent promptly using the
enclosed postage prepaid envelope.
