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. )
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 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:
CONSENT SOLICITATION
OF
TRINITY I FUND, L.P.
WITH RESPECT TO
HARNISCHFEGER INDUSTRIES, INC.
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 require 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 provide 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 WHITE consent card. Trinity urges you to sign, date
and return today the enclosed WHITE consent card in the enclosed postage prepaid
envelope. TRINITY REQUESTS THAT THE ENCLOSED WHITE CONSENT CARD BE SIGNED,
DATED AND RETURNED TO IT BEFORE MAY 28, 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 WHITE consent card are first being mailed to
stockholders on or about May 4, 1999.
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 WHITE 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 WHITE consent card representing your shares to be
marked, dated, signed and mailed. Only that institution can execute a WHITE
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>
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 and by enhancing
management credibility and accountability.
(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.
Please note that in response to this solicitation, on April 23, 1999, the
Company adopted three bylaws that, according to the Company's press release
dated April 23, 1999, "reflect much of what is contained in the Trinity
proposals." Trinity, however, believes that the differences between its
proposals and the Company's new bylaws are significant. See "Background --
Discussions with the Company" below.
Proposal No. 1: Amend the Bylaws to require that the Board submit all
significant merger, restructuring, joint venture or similar
transactions to a vote of the stockholders.
"Resolved, that Article XIII of the Bylaws be amended and restated in its
entirety 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 provide 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, Section 16 of the Bylaws be amended and
restated in its entirety to read as follows:
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 WHITE 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. As of the Record Date, 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 WHITE 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, written consents by holders
representing a majority of the issued and outstanding Common Shares as of the
Record Date, that is approximately 23,970,000 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 White Consent Card
Trinity is soliciting FOR each of the Proposals. Shares represented by the
WHITE 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 WHITE 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
The following week, as the Company has previously disclosed, the Company
attempted to arrange a meeting between Mr. Taylor and two of the independent
directors (Stephen M. Peck and L. Donald LaTorre) instead of all the independent
directors as Mr. Taylor had requested. Accordingly, no meeting was held. On
April 23, 1999 the Company announced that its Board had nonetheless proceeded
to adopt three new bylaws that, in its view, "reflect much of what is contained
in the Trinity proposals." These amendments may be summarized as follows:
1. The Company's first bylaw amendment fixes the threshold for
required stockholder approval at 25% of the assets of the Company and its
subsidiaries, taken as a whole. Trinity's proposal would fix this
threshold at $100 million.
2. The Company's second bylaw amendment, rather than mandating the
separation of the positions of Chairman and Chief Executive Officer (as
would be required under Trinity's proposed bylaw), provides for an annual
review of the issue by the Company's Corporate Governance Committee. The
Board would then retain the flexibility to separate the two positions at
any time it determines that it is appropriate to do so.
3. The Company's third bylaw amendment adds certain procedural and
timing restrictions to Trinity's third proposed bylaw amendment. These
added restrictions include (i) permitting the Board to select the day,
time and place of the meeting and delay holding it for up to 45 days after
the request and (ii) not requiring any meeting within six months of any
other such meeting or within three months of any annual or special meeting
of stockholders.
Unlike the Company, Trinity therefore believes that the Company's amendments are
significantly watered-down versions of Trinity's proposals that give
shareholders, as summarized above, fewer rights.
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 47,941,690
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 WHITE 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 WHITE 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.
<PAGE>
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
WHITE 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 WHITE
CONSENT CARD TODAY!
<PAGE>
<PAGE>
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 requirement 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
(Continued And To Be Signed On the Other Side)
<PAGE>
CONSENT (Continued From Other Side)
3. BYLAW AMENDMENT: relating to 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. 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.
IMPORTANT: PLEASE ACT PROMPTLY. THIS CONSENT MUST BE SIGNED AND DATED TO BE
VALID.
Dated:
Signature:
Signature:
(if held jointly)
Title or Authority:
(if applicable)
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 a duly authorized officer. If a
partnership, please sign in partnership
name by authorized person. The consent
card votes all shares in all capacities.
PLEASE MARK, SIGN AND DATE THIS CONSENT BEFORE MAILING THE CONSENT IN THE
ENCLOSED ENVELOPE.
