SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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 Sec. 240.14a-11(c) or Sec. 240.14a-12
TB Wood's Corporation
________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________
(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
__________________________________________________________________
2) Aggregate number of securities to which transaction applies:
__________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined:
__________________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________________
5) Total fee paid:
__________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________
3) Filing Party:
________________________________________________________________
4) Date Filed:
________________________________________________________________
<PAGE>
NOTICE OF ANNUAL MEETING OF THE
STOCKHOLDERS OF
TB WOOD'S CORPORATION
TO THE STOCKHOLDERS OF
TB WOOD'S CORPORATION:
The Annual Meeting of Stockholders of TB Wood's Corporation (the "Company")
will be held at Harbor Court Hotel, 550 Light Street, Baltimore, Maryland on
April 11, 1997, commencing at 10:00 a.m., at which meeting only holders of the
Company's Common Stock of record at the close of business on March 10, 1997,
will be entitled to vote, for the following purposes:
1. To elect one director of the second class;
2. To consider and act upon management's proposal to adopt the TB
Wood's Corporation Employee Stock Purchase Plan; and
3. To transact such other and further business, if any, as may be
lawfully brought before the meeting.
You are cordially invited to attend the meeting in person. Whether or not
you plan to attend the meeting, please execute the enclosed proxy and mail it
promptly. Should you attend the meeting, you may revoke your proxy and vote in
person. A return envelope which requires no postage if mailed in the United
States is enclosed for your convenience.
TB WOOD'S CORPORATION
By:
Emma K. Gross
Corporate Secretary
Chambersburg, Pennsylvania
March 25, 1997
<PAGE>
TB WOOD'S CORPORATION
440 North Fifth Avenue, Chambersburg, PA 17201
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 11, 1997
This proxy statement is furnished to the stockholders of TB Wood's
Corporation (the "Company"), in connection with the solicitation of proxies for
use at the Annual Meeting of Stockholders to be held on Friday, April 11, 1997,
at 10:00 a.m., at Harbor Court Hotel, 550 Light Street, Baltimore, Maryland, and
at any adjournment thereof (the "Annual Meeting"), for the purposes set forth in
the accompanying Notice of Annual Meeting. The Board of Directors (the "Board")
does not know of any business to be presented for consideration at the Annual
Meeting or any adjournment thereof other than as stated in the Notice of Annual
Meeting. This proxy statement and the enclosed form of proxy are first being
mailed to stockholders on or about March 25, 1997.
Whether or not you expect to be personally present at the Annual Meeting,
you are requested to fill in, sign, date and return the enclosed form of proxy.
Any person giving such proxy has the right to revoke it at any time before it is
voted by giving written notice to the Secretary of the Company. All shares of TB
Wood's Corporation common stock, par value $.01 per share (the "Common Stock")
represented by duly executed proxies in the accompanying form will be voted as
directed unless proxies are properly revoked prior to the voting thereof. If the
proxy is signed and returned without any direction given, shares will be voted
FOR the election of the nominee of the Board and FOR the adoption of the TB
Wood's Corporation Employee Stock Purchase Plan.
The close of business on March 10, 1997, has been fixed as the record date
for the determination of stockholders entitled to vote at the Annual Meeting
(the "Record Date"). As of the Record Date, there were outstanding and entitled
to be voted at the Annual Meeting 5,827,397 shares of Common Stock. The holders
of the Common Stock will be entitled to one vote for each share of Common Stock
held of record on the Record Date.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended January 3, 1997, accompanies this proxy statement.
The solicitation of this proxy is made by the Board. The solicitation will
be by mail and the expense thereof will be paid by the Company. Solicitation of
proxies may be made by telephone or telegram by directors, officers or other
employees of the Company.
ELECTION OF DIRECTOR
The Board is divided into three classes, with the terms of each class
ending in successive years. At the Annual Meeting, one director of the Company
is to be elected for a term ending at the 2000 Annual Meeting of Stockholders,
or until his successor has been elected and has qualified. Certain information
with respect to the nominee for election as director proposed by the
<PAGE>
Company and the other directors whose terms of office as directors will continue
after the Annual Meeting is set forth below. Should the nominee be unable or
unwilling to serve (which is not expected), the proxies (except proxies marked
to the contrary) will be voted for such other person or persons as the Board may
recommend.
Information Regarding the Nominee for Director to be Elected in 1997 for a
Term Ending in 2000.
Second Class
Michael L. Hurt - President and Director of the Company, Age 51, present
term expires 1997; Director and President of the Company since its formation in
1995; President and a Director of TB Wood's Incorporated, a wholly owned
subsidiary of the Company ("TBW") since January 1991; before joining the
Company, Mr. Hurt spent 23 years, serving most recently as Divisional General
Manager, at The Torrington Company, a subsidiary of Ingersoll-Rand Corp., a
worldwide manufacturer and marketer of bearings. Mr. Hurt is a Registered
Professional Engineer and holds an MBA from Clemson-Furman University and a BSME
from Clemson University.
Information Regarding the Directors Who Are Not Nominees for Election and
Whose Terms Continue Beyond 1997.
First Class
Thomas C. Foley - Chairman of the Board and Director of the Company; Age
45; Present term expires 1999; Director of the Company since its formation in
1995; served as Chairman of the Board of Directors of TBW since December 1986;
President and a director of The NTC Group, Inc. and a director of The Bibb
Company, as well as a director of several private companies; Mr. Foley was a
Vice President of Citicorp Venture Capital Ltd., an investment subsidiary of
Citibank, N.A., from November 1981 through May 1985 when he left Citicorp
Venture Capital Ltd. to form The NTC Group, Inc.; prior to joining Citicorp
Venture Capital, Ltd., Mr. Foley was a consultant with McKinsey & Co. from July
1979 to November 1981. Mr. Foley holds an AB from Harvard College and an MBA
from Harvard Business School. On July 3, 1996, The Bibb Company filed a
voluntary petition under Federal Bankruptcy laws as part of a "prepackaged"
restructuring. The Bibb Company's plan of reorganization was confirmed and
became effective during September of 1996.
Craig R. Stapleton - Director of the Company; Age 51, present term expires
1999; Director of the Company since 1996. Mr. Stapleton is President of Marsh &
McLennan, Real Estate Advisors, Inc. (real estate management). Mr. Stapleton is
also a director of Allegheny Properties, Inc. (real estate investments) and
Vacu-Dry Company. He holds an MBA from Harvard Business School and a BA from
Harvard College.
Third Class
Jean-Pierre L. Conte - Director of the Company; Age 33, present term
expires 1998; Director of the Company since its formation in 1995; Director of
TBW since 1990; served as a Vice President of The NTC Group, Inc. from July 1989
to March 1995; currently a principal of Genstar Capital LLC. Mr. Conte holds an
MBA from Harvard Business School and a BA from
2
<PAGE>
Colgate University.
BOARD OF DIRECTORS AND COMMITTEES
The Board currently consists of four members and is classified into three
classes. One class of directors is elected each year, and the members of such
class hold office for a three-year term or until their successors are duly
elected and qualified. There were four meetings of the Board during 1996.
The Company had no standing nominating committee during 1996. The Audit
Committee reports to the Board and provides assistance to the Board in
discharging its responsibilities in connection with the financial accounting
practices of the Company and the internal controls related thereto and
represents the Board in connection with the services rendered by the Company's
independent accountants. Messrs. Conte and Stapleton serve on the Audit
Committee. The Compensation Committee reports to the Board and is responsible
for the review of executive compensation. Messrs. Conte and Stapleton serve on
the Compensation Committee. The Audit Committee held one meeting in 1996. The
Compensation Committee had no meetings in 1996, but had a meeting to establish
compensation in January of 1997. Each director of the Company attended at least
75% of the aggregate meetings held by the Board and by the Committees on which
he served.
Director Nomination Procedures
Nominations for election of directors of the Company may be made by the
Board or by any stockholder entitled to vote in the election of directors. The
Company's Bylaws require that stockholders intending to nominate candidates for
election as directors deliver written notice thereof to the Secretary of the
Company no later than 60 days in advance of the meeting of stockholders;
provided, however, that in the event that the date of the meeting is not
publicly announced by the Company by inclusion in a report filed with the
Securities and Exchange Commission or furnished to stockholders, or by mail,
press release or otherwise more than 75 days prior to the meeting, notice by the
stockholder to be timely must be delivered to the Secretary of the Company no
later than the close of business on the tenth day following the day on which
such announcement of the date of the meeting was so communicated. The Company's
Bylaws further require that the notice by the stockholder set forth certain
information concerning such stockholder and the stockholder's nominees,
including their names and addresses, a representation that the stockholder is
entitled to vote at such meeting and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice, the class
and number of shares of the Company's stock owned or beneficially owned by such
stockholder, a description of all arrangements or understandings between the
stockholder and each nominee, such other information as would be required to be
included in a proxy statement soliciting proxies for the election of the
nominees of such stockholder and the consent of each nominee to serve as a
director of the Company if so elected. The presiding officer of the meeting may
refuse to acknowledge the nomination of any person not made in compliance with
these requirements.
3
<PAGE>
Compensation Of Directors
The Company paid an aggregate of $46,868 of directors' fees in 1996 for
directors who were not employees or officers of the Company. Mr. Foley is
compensated by the Company for his services as Chairman in an amount equal to
$250,000 per annum plus a cash bonus and other incentive compensation to be
determined by the Company. Directors who are employees of the Company do not
receive additional compensation for serving on the Board or Committees. Each
outside Director receives an annual fee of $30,000, a meeting attendance fee of
$1,000 and reimbursement of applicable travel and other expenses.
MANAGEMENT
Executive officers are appointed by, and serve at, the discretion of the
Board. There are no family relationships among any of the directors or executive
officers of the Company. The current executive officers of the Company, each of
whom is elected for a term of one year or until his successor is duly elected
and qualified, are:
Thomas C. Foley 45 Chairman and Director
Michael L. Hurt 51 President and Director
Michael H. Iversen 52 Executive Vice President - Sales and
Marketing
Carl R. Christenson 37 Vice President - Mechanical Products
Cedric A. Cleminson 61 President of Plant Engineering Consultants,
Inc. ("PEC")
Harold L. Coder, III 45 Vice President, Sales
David H. Halleen 57 Vice President of Finance, Chief Financial
Officer and Treasurer
William R. Juergens 47 Vice President of Quality/Human Resources
Willard C. Macfarland, Jr. 41 Vice President - International Operations and
President of TB Wood's Canada Ltd.
Lee J. McCullough 52 Vice President - Electronic Products
James E. Williams 50 Vice President, Marketing - Mechanical
Products
Mr. Iversen has been Executive Vice President of TBW since January 1992,
and is responsible for sales and marketing. Prior to joining the Company, Mr.
Iversen spent 25 years, serving most recently as Director of Sales to Original
Equipment Manufacturers, at The Torrington Company, a subsidiary of
Ingersoll-Rand Corp. Mr. Iversen holds a BIE from Georgia Institute of
Technology.
4
<PAGE>
Mr. Christenson has been Vice President of Mechanical Products of TBW since
October 1994. Mr. Christenson joined TBW in June 1991 as Director of Mechanical
Engineering and soon thereafter assumed the additional responsibility of Vice
President of Engineering - Mechanical Products. Prior to that he was a Product
Manager at The Torrington Company, from 1984 to 1991. Mr. Christenson holds an
MBA from Rensselaer Polytechnic Institute, and an MSME and BSME from The
University of Massachusetts.
Mr. Cleminson has been President of PEC, a wholly-owned subsidiary of TBW,
since January 1995. Mr. Cleminson joined TBW as Vice President Marketing -
Electronics Products in May 1994. Previously he was Vice President of Marketing
and Strategic Planning of the industrial electronic controls division at
Emerson/Control Techniques, Inc. from 1991 to May 1994. Mr. Cleminson holds an
Advanced Business Degree from Bowling Green University, and an EE from Faraday
House Electrical College of London, United Kingdom.
Mr. Coder has been Vice President, Sales of TBW since October 1991, Mr.
Coder joined TBW in June 1973, as a Field Sales Engineer Trainee, and
subsequently spent ten years in field sales. Since 1983, Mr. Coder has been in
sales management positions including Manager Distributor Sales and Manager Field
Sales. Mr. Coder holds a BS degree from Shippensburg University.
Mr. Halleen has been Vice President of Finance, Chief Financial Officer and
Treasurer of the Company since its formation. Mr. Halleen has been Vice
President of Finance, Chief Financial Officer and Treasurer of TBW since June
1992. From 1980 to 1991 he was Vice President of Finance and Chief Financial
Officer of Cissell Manufacturing Company. Mr. Halleen is a Certified Management
Accountant and holds a BSBA from Niagara University.
Mr. Juergens has been Vice President of Quality/Human Resources of TBW
since September 1994. Mr. Juergens joined TBW in October 1985 as Director of
Quality Assurance and has assumed the additional responsibility of Vice
President of Human Resources. Mr. Juergens holds an MBA from Frostburg State
University, and MS and BSIE degrees from Western Michigan University.
Mr. Macfarland has been Vice President - International Operations since May
1996 and President of TB Wood's Canada Ltd. since August 1994. From 1989 to
August 1994, Mr. Macfarland was Director - Marketing and Sales of Roller Bearing
Company of America. Mr. Macfarland holds an MBA from Case Western Reserve
University and a BSME degree from Worcester Polytechnic Institute.
Mr. McCullough has been Vice President - Electronic Products of TBW since
February 1994. Mr. McCullough joined TBW in December 1991 as Marketing Manager
of Electronic Products and assumed the responsibility of Vice President of the
Electronics Division in February 1994. Prior to joining the Company, Mr.
McCullough was Vice President of Electronic Drives at Ranco Controls, Inc., from
1988 to December 1991. Mr. McCullough holds an MBA from the University of
Wisconsin - Milwaukee and a BSEE from the University of Illinois.
Mr. Williams has been Vice President, Marketing - Mechanical Products of
TBW since December 1994. Mr. Williams joined TBW in September 1993 as Program
Manager and assumed responsibility for installation of the new Management
Information System. Prior to joining the
5
<PAGE>
Company, Mr. Williams spent 23 years in various management positions, including
Product Manager, Distribution Services Manager, and Purchasing Manager at a
division of Ingersoll-Rand Corp. Mr. Williams holds a BS degree from Indiana
University.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 14, 1997 regarding
all persons known to the Company to be the beneficial owners of more than five
percent of the Company's Common Stock. The table also includes security
ownership for each director of the Company, the Company's President, each of the
Company's four other most highly compensated executive officers for fiscal year
1995, and all executive officers and directors as a group. Except as noted
below, the persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
except for shares deemed to be beneficially owned by them. The address of each
person is c/o the Company, 440 North Fifth Avenue, Chambersburg, Pennsylvania
17201.
6
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
Number of Percent of
Name Shares (1) Of Class (2)
- -------------------------------------------------------------------------------
Wellington Management Company, LLP .............. 575,000(3) ........ 9.9%
75 State Street
Boston, MA 02109
State of Wisconsin Investment Board ............. 475,000(4) ........ 8.2%
P. O. Box 7842
Madison, WI 53707
Wellington Trust Company, NA .................... 385,000(5) ........ 6.6%
75 State Street
Boston, MA 02109
FMR Corp., Edward C. Johnson III
and Abigail P. Johnson .......................... 354,500(6) ........ 6.1%
c/o 82 Devonshire Street
Boston, MA 02109
Thomas C. Foley .................................2,768,758(7) ....... 47.5%
Director and Chairman
Michael L. Hurt ................................. 100,657 .......... 1.7%
Director and President
Jean-Pierre L. Conte ............................ 0 .......... *
Director
Craig R. Stapleton .............................. 15,000 .......... *
Director
Michael H. Iversen .............................. 16,100 .......... *
Executive Vice President - Sales and Marketing
Carl R. Christenson ............................. 9,281 .......... *
Vice President - Mechanical Products
David H. Halleen ................................ 7,750 .......... *
Vice President of Finance, Treasurer and
Chief Financial Officer
Willard C. Macfarland, Jr. ...................... 0 .......... *
Vice President - International Operations
and President TB Wood's Canada Ltd.
All executive officers and directors as a group
(13 persons) ....................................2,934,713 ..........50.4%
7
<PAGE>
1 Includes options exercisable within sixty days of March 14, 1997 in the
following amounts: Michael L. Hurt 41,447 Carl R. Christenson 4,219 Michael
H. Iversen 6,750 David H. Halleen 5,750 All executive officers and
directors as a group 68,916
2 * Indicates less than one percent of class.
3 Information concerning the shares beneficially owned by Wellington
Management Company, LLP ("Wellington") was obtained from a Schedule 13G
filed as of February 13, 1997. The filing indicates that in its capacity as
investment adviser, Wellington may be deemed to beneficially own 575,000
shares of the Company's Common Stock. Wellington reports that it has no
sole voting power with respect to any shares of the Company's Common Stock,
shared voting power with respect to 345,000 shares of the Company's Common
Stock and shared dispositive power with respect to 575,000 shares of the
Company's Common Stock.
4 Information concerning the shares beneficially owned by the State of
Wisconsin Investment Board was obtained from a Schedule 13G filed as of
February 3, 1997.
5 Information concerning the shares beneficially owned by Wellington Trust
Company ("WTC") was obtained from a Schedule 13G filed as of February 21,
1997. The filing indicates that in its capacity as investment adviser, WTC
may be deemed to beneficially own 385,000 shares of the Company's Common
Stock. WTC reports that it has no sole voting power with respect to any
shares of the Company's Common Stock, shared voting power with respect to
195,000 shares of the Company's Common Stock and shared dispositive power
with respect to 385,000 shares of the Company's Common Stock.
6 Information concerning the shares beneficially owned by FMR Corp., Edward
C. Johnson III and Abigail P. Johnson was obtained from a Schedule 13G
filed as of February 13, 1997. The filing indicates that in its capacity as
investment adviser, Fidelity Management and Research Company ("Fidelity"),
a wholly owned subsidiary of FMR Corp., is the beneficial owner of 354,500
shares of the Company's Common Stock. FMR Corp. reports that it has no sole
or shared voting power with respect to any shares of the Company's Common
Stock, and sole disposition power with respect to 354,500 shares of the
Company's Common Stock. Mr. Edward C. Johnson III is Chairman of FMR Corp.
and owns approximately 12% of the aggregate voting stock of FMR Corp.
Members of the Edward C. Johnson III family, and trusts for their benefit,
are the predominant owners of Class B shares of common stock of FMR Corp.
Abigail Johnson is a director of FMR Corp. and owns 24.5% of the aggregate
voting stock of FMR Corp. The Class B shareholders of FMR Corp. have
entered into a shareholders agreement. Accordingly, through their ownership
of voting common stock and execution of the shareholders agreement, members
of the Johnson family may be deemed, under the Investment Company Act of
1940, to form a controlling group with respect to FMR Corp.
7 Includes 72,922 shares of Common Stock over which Mr. Foley has granted
stock options to Mr. Conte and 6,000 shares of Common Stock over which Mr.
Foley has granted stock options to a former employee of NTC.
8
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain information
concerning the compensation paid or accrued by the Company for services rendered
during the fiscal year ended January 3, 1997 by the Company's Chairman,
President and each of the Company's next four most highly paid executive
officers (the "Named Officers") whose salary and bonus exceeded $100,000 for
fiscal year 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Fiscal All Other
Name and Principal Position ...................... Year Salary Bonus Compensation
- -------------------------------------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Thomas C. Foley .................................. 1996 $229,167 $250,000 $ 655(1)
Chairman ......................................... 1995 -- -- --
Michael L. Hurt .................................. 1996 228,750 305,000 28,736(2)
President ........................................ 1995 213,749 371,000 28,810
Carl R. Christenson .............................. 1996 96,750 75,000 10,073(3)
Vice President - Mechanical ...................... 1995 88,333 65,000 9,965
Products
Willard C. Macfarland, Jr ........................ 1996 102,198 50,000 29,570(4)
Vice President - International Oper .............. 1995 98,333 40,000 29,115
and President TB Wood's Canada Ltd. ..............
Michael H. Iversen ............................... 1996 120,000 40,000 12,814(6)
Executive Vice President - ....................... 1995 120,000 55,000 12,730
Sales & Marketing
David H. Halleen ................................. 1996 93,753 40,000 9,878(7)
Vice President of Finance, ....................... 1995 88,500 45,000 9,654
Treasurer and Chief Financial Officer
<FN>
1 Includes $655 in life insurance premium payments by the Company.
2 Includes $2,016 in life insurance premium payments by the Company, $4,500
in Company matching contributions to the Company's 401(k) plan, and $20,000
in split dollar life insurance premium payments by the Company.
3 Includes $203 in life insurance premium payments by the Company, $4,500 in
Company matching contributions to the Company's 401(k) plan, and $5,000 in
split dollar life insurance premium payments by the Company.
4 The Company has provided a $250,000 interest free secured loan to Mr.
Macfarland on May 31, 1996 to assist in his relocation to Chambersburg, PA.
Mr. Macfarland derived an estimated benefit in the amount of $10,208, based
on a market interest rate of 7%, as a result of such interest free loan.
9
<PAGE>
5 Includes $160 in life insurance premium payments by the Company, $3,695 in
Company matching contributions to the Company's 401(k) plan, $2,722 in
housing allowance, $14,380 in moving allowance, and $4,113 in auto
allowance, and $4,500 for tax preparation.
6 Includes $1,094 in life insurance premium payments by the Company, $4,500
in Company matching contributions to the Company's 401(k), and $5,000 in
split dollar life insurance premium payments by the Company.
7 Includes $1,260 in life insurance premium payments by the Company, $4,118
in Company matching contributions to the Company's 401(k) plan, and
benefits payable by the Company pursuant to an Annuity Funding/Deferred
Compensation Agreement (the "Funding Agreement"). Pursuant to the Funding
Agreement, the Company credits $4,500 to a deferred benefit account for
each year of Mr. Halleen's service and, during the initial ten years of the
Funding Agreement, any distributions from the deferred benefit account must
be applied to fund a retirement annuity of which Mr. Halleen is a
beneficiary.
</FN>
</TABLE>
The following information relates to compensation received or earned by the
Company's Chairman, President and each of the other four most highly compensated
executive officers of the Company for the fiscal year 1996.
10
<PAGE>
Stock Options
The following table provides information related to options previously
granted to Named Officers prior to fiscal year 1996.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values(1)(2)
Shares . Number of Securities
Acquired Underlying Unexercised Value of Unexercised In-the
on ..... Value Options at FY-end Money Options at FY-End (3)
Exercise Realized (Exercisable/Unexercisable) (Exercisable/Unexercisable)
Name (#) ($) (#) ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas C. Foley ............ 0 0 0 0
Michael L. Hurt ............ 59,210 349,339 41,447/57,236 381,831/527,286
Carl R. Christenson ........ 5,062 24,703 4,219/13,219 33,509/104,991
Willard C. Macfarland, Jr. . 0 0 0 0
Michael H. Iversen ......... 9,000 53,590 4,500/16,500 41,816/153,326
David H. Halleen ........... 2,000 6,930 5,750/14,750 38,252/98,124
<FN>
1 The Company has not granted any Stock Appreciation Rights.
2 All options are non-qualified options to purchase Common Stock. The options
vest in installments as follows: the options vest as to 30% of the shares
covered thereby on the second anniversary of the measuring date (as defined
in the related stock option agreement), the options vest as to an
additional 15% of the shares covered thereby on each of the third through
the sixth anniversary of the measuring date and the options vest as to the
remaining 10% of the shares covered thereby on the seventh anniversary of
the measuring date. In the event that the employment of an option holder is
terminated without cause by the Company during the vesting period, the
option holder forfeits all rights with respect to the unvested portion of
the option. In the event that the option holder voluntarily terminates his
employment or his employment is terminated for cause during the vesting
period, the option holder forfeits all rights with respect to all portions
of the option. Options are subject to accelerated vesting upon the sale or
merger of the Company. As of and after June 30, 1996, 50% of all
unexercised vested options became immediately exercisable as such options
became vested. The options are exercisable as to the remaining shares
covered thereby on or after the seventh anniversary of the measuring date
and until one year thereafter, at which time they expire. The options are
exercisable at an option price which equals an amount set forth in the
related option agreement plus an amount added thereto at the end of each
year equal to the product of the option price as last adjusted multiplied
by 6.0% in each of the years prior to the seventh anniversary of the
measuring date and 3.0% after the seventh anniversary of the measuring
date. The option price is adjusted annually. The exercise price set forth
herein gives effect to such adjustment as of the date such options are
exercisable.
11
<PAGE>
3 Value calculated as the difference between the fair market value of the
Common Stock on January 3, 1997 and the option exercise price.
</FN>
</TABLE>
PROPOSAL TO ADOPT THE TB WOOD'S EMPLOYEE STOCK PURCHASE PLAN.
The Board of Directors has adopted and recommends that the shareholders
approve the TB Wood's Corporation Employee Stock Purchase Plan (the "Plan"). The
purpose of the Plan is to assist the Company in attracting and retaining
employees by offering them a greater stake in the Company's success and a closer
identity with it, and to encourage ownership of the Company's stock by
employees. The Plan will accomplish these goals by allowing eligible employees
of the Company and its subsidiaries an ongoing opportunity to purchase the
Company's Common Stock through payroll deduction at a discounted price. The
total number of shares of the Company's Common Stock available for purchase
under the Plan is 500,000 subject to adjustments for stock splits, stock
dividends and the like.
Eligibility
Full-time and part-time employees of the Company and its subsidiaries who
have completed 12 consecutive months of employment are eligible to participate
in the Plan. There are approximately 700 employees eligible for the Plan.
Participation in the Plan automatically terminates upon an employee's ceasing to
be an employee of the Company or one of its subsidiaries.
Participant Contributions
An eligible employee participates in the Plan by electing to make after-tax
payroll contributions in an amount equal to not less than one percent and not
more than 15 percent of his or her base compensation. A participant's payroll
contributions to the Plan are allocated to a bookkeeping reserve account
("Account") and used to purchase Common Stock on a quarterly basis.
Because the number of shares of Common Stock purchased by an eligible
employee is dependent upon the amount such employee contributes to the Plan, it
is not possible at this time to determine the number of shares of Common Stock
that will be acquired under the Plan by any one employee or group of employees.
Purchase of Common Stock
The Plan permits participants to purchase Common Stock at a 10 percent
discount. The Plan operates on a quarterly basis ("Offering Periods").
Contributions allocated to a participant's Account during an Offering Period are
used to buy shares of Common Stock on the last day of such Offering Period. The
purchase price of a share of Common Stock under the Plan will be the lesser of:
12
<PAGE>
90 percent of the closing price of the Common Stock on the New York
Stock Exchange (the "Exchange") on the last day of the Offering
Period; or
90 percent of the closing price of the Common Stock on the Exchange
on the first day of the Offering Period.
Each participant is deemed to legally own all Common Stock allocated to his
or her Account and is entitled to exercise all of the rights and privileges
associated with ownership of the Common Stock, including voting, tendering and
receiving dividends on such Common Stock.
The Company may acquire Common Stock for use under the Plan from authorized
but unissued shares, treasury shares, in the open market or in privately
negotiated transactions. The Company will pay all commissions, fees and other
charges related to the Plan's acquisition of Common Stock.
Administration
The Stock Purchase Plan Committee, designated by the Board of Directors,
has the full and exclusive authority to administer the Plan. The Committee shall
interpret the provisions of the Plan and make all determinations necessary for
the administration of the Plan.
Amendment and Termination
The Board of Directors has authority to amend the Plan at any time.
However, certain amendments require the approval of a majority of the Company's
shareholders. Without shareholder approval, no amendment may be made: (i)
increasing the maximum number of shares available for purchase under the Plan;
(ii) modifying the Plan's eligibility requirements; or (iii), causing the Plan
to fail the requirements of Section 423 of the Internal Revenue Code.
The Board of Directors also has authority to terminate the Plan at any
time. In any event, if not earlier terminated by the Board of Directors, the
Plan will automatically terminate when the participants have purchased all of
the shares of Common Stock available under the Plan.
Federal Tax Treatment
The Plan is an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code. Therefore, a participant who purchases shares of Common
Stock under the Plan will not be subject to Federal income tax on the difference
between the fair market value of the shares and the price actually paid for such
shares at the time of purchase. The Company is not entitled to a deduction for
the difference between the fair market value of the shares and the price paid
for such shares.
If a participant disposes of Common Stock purchased under the Plan after
owning the shares for at least two years, the participant will be treated as
having ordinary compensation income equal to the lesser of (i) the excess of the
fair market value of the Common Stock on the date it was purchased over the
actual purchase price, or (ii) the excess of the fair market
13
<PAGE>
value of the Common Stock at the time of disposition over the actual purchase
price. The amount of the compensation income is then added to the participant's
basis in the Common Stock. The difference between the amount realized on the
sale of the Common Stock and the participant's adjusted basis will be treated as
a capital gain or loss.
If a participant disposes of Common Stock purchased under the Plan before
owning it for at least two years, the participant will be treated as having
ordinary compensation income equal to the excess of the fair market value of the
Common Stock on the date it was purchased over the actual purchase price. Any
additional appreciation in the Common Stock is treated as a capital gain. In
addition, if a participant disposes of Common Stock before owning it for at
least two years, the Company is entitled to a tax deduction equal to the amount
of income treated as compensation by the participant.
Requisite Vote
To be adopted, the Plan requires the affirmative vote of a majority of the
votes represented at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ADOPTION OF THE STOCK PURCHASE PLAN.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act") requires the Company's directors, officers and persons who own more than
10% of a registered class of the Company's Common Stock to file reports about
their beneficial ownership of the Company's Common Stock. All the directors and
officers of the Company filed reports as required by Section 16(a) of the
Exchange Act with respect to the fiscal year 1996 on a timely basis except
Messrs. Hurt and Cleminson each of whom failed to timely file one report with
respect to one transaction.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board established a separate Compensation Committee in March
1996 consisting of independent directors Messrs. Conte and Stapleton.
REPORT OF THE COMPENSATION COMMITTEE REGARDING COMPENSATION
During 1996, the Company appointed the Compensation Committee of the Board
of Directors consisting of Messrs. Stapleton and Conte.
Executive Compensation Program. The Company's executive compensation
program is designed to attract and retain highly-qualified executives and to
motivate them to contribute to the Company's goals and objectives and its
overall financial success. The Company's Board of Directors believes that
executives should have a greater portion of their
14
<PAGE>
compensation at risk than other employees, and that compensation should be tied
directly to the performance of the business. Compensation for the Company's
executives consists of both cash and equity-based compensation. In determining
executive compensation, the Compensation Committee reviews and evaluates
information supplied by management and bases decisions on management
recommendations as well as on the Company's performance and on the individual's
contribution and performance.
Salary. The Compensation Committee reviews the salary of each executive
officer in relation to previous salaries and with regard to industry
compensation levels and general economic conditions. The salaries are set at
levels intended to reward achievement of individual and company goals and to
motivate and retain highly qualified executives whom the Board of Directors
believes are important to the continued success of the Company. While the
Compensation Committee's decisions are in part subjective rather than solely
based on formulas, the Compensation Committee does consider various measures of
the financial performance of the Company in absolute terms and in relation to
internal performance goals.
Bonuses. The Company's annual incentive payments to executive officers are
intended to encourage and reward excellent individual performances by managers
who make significant contributions to the Company's financial success. During
1996, annual incentive opportunities were based upon achievement of both current
financial performance objectives and individual operating objectives related to
longer-term performance. For 1996, the Company significantly exceeded the
minimum return on investment performance goals set by the Company in the
beginning of 1996, and the minimum individual operating objectives were met or
exceeded by each of the Named Officers identified in the Summary Compensation
Table. Accordingly, Messrs. Foley, Hurt, Iversen, Christenson, Halleen and
Macfarland earned bonuses.
1996 Compensation of Chairman and President
Chairman
The Compensation Committee determined the 1996 compensation for Mr. Foley
in accordance with the guidelines described above. Mr. Foley's salary of
$229,167 (prorated for the period beginning after the Company's initial public
offering) was set at a base amount of $250,000 at the time of the Company's
initial public offering. Mr. Foley's bonus of $250,000 was based upon his
strategic expertise which contributed significantly to the successful completion
of the Company's initial public offering and several acquisitions during 1996.
President
The Compensation committee determined the 1996 compensation for Mr. Hurt in
accordance with the guidelines described above. Mr. Hurt's salary increased in
1996 from $213,749 to $228,750, based upon an evaluation of his performance and
the Company's financial performance as well as a cost of living increase. No
specific weighting was assigned to these factors in determining the base salary
increase. Mr. Hurt's bonus decreased in 1996 from $371,000 to $305,000 based
upon achievement of certain current return on investment performance objectives
and individual operating objectives related to longer-term performance. The
initiatives and programs put in place by Mr. Hurt since he joined the Company in
1991
15
<PAGE>
have contributed significantly to the Company's improved financial performance.
In addition, Mr. Hurt's annual incentive award for 1996 was based on his
successful management of several acquisitions during 1996.
Deductibility of Compensation. Section 162(m) of the Internal Revenue Code
of 1986, as amended, generally imposes a $1 million limit on the deductibility
of compensation paid to executive officers of public companies. The Compensation
Committee believes that all of the compensation awarded to the Company's
executive officers during 1996 is fully deductible in accordance with this
limit.
This report is respectfully submitted by the members of the Compensation
Committee of the Company.
COMPENSATION COMMITTEE
Craig R. Stapleton
Jean-Pierre L. Conte
16
<PAGE>
PERFORMANCE GRAPH
<TABLE>
Comparison of
Cumulative Total Returns Among
TB Wood's, Russell 2000, and Peer Group
The stock price information shown in the table below is not necessarily
indicative of future price performance.
<CAPTION>
Measurement Period TBW Russell 2000 Peer Group
------------------ --- ------------ ----------
<S> <C> <C> <C>
2/8/96 100 100 100
1/3/97 100 113 116
</TABLE>
No published industry index accurately mirrors the Company's business.
Accordingly, the Company has created a special peer group index ("Peer Group")
of companies operating in the power transmission or mechanical manufacturing
industries. The Peer Group includes the following: Baldor Electric Company;
Bridgeport Machines, Inc.; Franklin Electric Co., Inc.; MagneTek, Inc.;
Kollmorgen Corp.; and Regal-Beloit Corporation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions With The Bibb Company
On April 2, 1993, TBW completed a series of transactions to effect a
comprehensive refinancing of its debt (the "Refinancing"). In connection with
the Refinancing in 1993, TBW issued two junior subordinated promissory notes in
the aggregate principal amount of $15.2 million (the "Junior Subordinated
Notes") together with detachable warrants to purchase up to 375,000 shares of
Common Stock to The Bibb Company. The Junior Subordinated Notes consisted of a
$2.0 million non-interest-bearing promissory note (which was repaid in August
1994) and a $13.2 million promissory note due April 1, 2003. During July 1996,
the Company repurchased the $13.2 million note (plus paid-in-kind interest of
approximately $3.5 million) from The Bibb Company for approximately $10.7
million in cash. In February 1996, in connection with the Company's initial
public offering, The Bibb Company sold all 375,000 shares of Common Stock it
acquired under the warrants.
17
<PAGE>
Purchase of Minority Interest in Canadian Subsidiary
In February 1996, the Company acquired all of the outstanding shares of
capital stock of TBW's Canadian subsidiary not previously owned by TBW
(representing approximately 21% of such outstanding shares) for $1.6 million in
the aggregate from certain of the Company's stockholders, including Mr. Foley.
INDEPENDENT AUDITORS
Arthur Andersen LLP was the auditor for the 1996 fiscal year and has been
selected as the Company's auditor for the 1997 fiscal year. Representatives of
Arthur Andersen LLP will be present at the Annual Meeting with an opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions.
VOTING
The holders of a majority of the outstanding shares of Common Stock must be
present in person or by proxy to constitute a quorum. When a quorum is present
at the Annual Meeting, the affirmative vote of the holders of a plurality of the
shares represented at the Annual Meeting or any adjournment thereof which
actually vote is required to elect directors and the affirmative vote of the
holders of a majority of the shares represented at the Annual Meeting is
required to act on any other matters properly brought before the meeting. Shares
represented by proxies which are marked "withhold authority" with respect to the
election of any one or more nominees for election as directors, proxies which
are marked to deny discretionary authority on other matters and broker
non-votes, will be counted for the purpose of determining the number of shares
represented at the meeting but will not be counted as voting.
STOCKHOLDER PROPOSALS
Any stockholder proposals submitted for inclusion in the Company's Proxy
Statement and proxy for the 1998 Annual Meeting of Stockholders must be received
by the Secretary of the Company at the address appearing on the front page of
this proxy statement no later than November 25, 1997, and must comply in all
other respects with applicable rules and regulations of the Securities and
Exchange Commission relating to such inclusion. In addition, any stockholder
intending to present a proposal for consideration at the 1998 Annual Meeting of
Stockholders must comply with certain provisions of the Company's Certificate of
Incorporation and Bylaws.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED BY THIS PROXY STATEMENT, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS
AND SCHEDULES THERETO) AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR
ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO THE
SECRETARY OF THE COMPANY, AT THE ADDRESS OF THE COMPANY SET FORTH ON THE FIRST
PAGE OF THIS PROXY STATEMENT. Exhibit A
18
<PAGE>
EXHIBIT A
TB WOODS' CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
The TB Woods' Corporation Employee Stock Purchase Plan (the "Plan") is
intended to provide the eligible employees of TB Woods' Corporation (the
"Company") a convenient means of purchasing shares of the Company's Class A
common stock, par value $ .01 per share (the "Stock"). The Plan is intended to
qualify as an "employee stock purchase plan" under section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"), and shall be administered,
interpreted and construed in a manner consistent with the requirements of that
section of the Code.
ARTICLE I
DEFINITIONS
1.1. "Account" means the bookkeeping account established on behalf of each
Participant by the Committee to record payroll deduction contributions made by
such Participant and shares of Stock purchased on his behalf.
1.2. "Board" means the Board of Directors of the Company.
1.3. "Business Day" means each day on which the New York Stock Exchange is
open for business.
1.4. "Compensation" means all regular salary, wages or earnings but
excluding overtime, commissions, bonuses, amounts realized from the exercise of
a qualified or nonqualified stock option and other special incentive payments,
fees or allowances.
1.5. "Committee" means the committee appointed pursuant to Article VIII to
administer the Plan.
1.6. "Employee" means any person who is employed by the Company on a
full-time basis or a part-time basis and whose customary employment is more than
20 hours per week.
1.7. "Effective Date" means April 1, 1997, subject to the provisions of
Section 9.8 of the Plan.
1.8. "Entry Date" means January I of each Plan Year.
1.9. "Offering Commencement Date" means the first Business Day of each
Offering Period.
1.10. "Offering Period" means each calendar quarter.
1.11. "Offering Termination Date" means the last Business Day of each
Offering Period.
1.12. "Participant" means an Employee who has met the eligibility
requirements of Article 11 and who has elected to participate pursuant to an
election under Section 3. 1.
<PAGE>
1.13. "Plan Year" means the 12-month period ending December 3 1, except
that the initial Plan Year shall commence April 1, 1997 and end December 31,
1997.
1. 14. "Shares" means shares of Stock that have been allocated to a
Participant's Account.
1.15. "Year of Service" means a consecutive 12-month period during which an
individual was an Employee.
ARTICLE II
ELIGIBILITY
2.1. Eligibility. Except as provided in Section 2.2 and Section 3.6, an
Employee who has completed one Year of Service prior to April 1, 1997 and who
continues to be employed by the Company shall be eligible to participate in the
Plan as of April 1, 1997. All other Employees, except as provided in Section 2.2
and Section 3.6, shall be eligible to participate in the Plan as of the Entry
Date coinciding with or next following the completion of one Year of Service.
2.2. Eligibility Restrictions. A Participant who elects to terminate
participation in the Plan in accordance with Section 3.5 shall be prohibited
from participating in the Plan until the Entry Date next following the date of
such termination.
ARTICLE III
PARTICIPATION
3.1. Commencement of Participation. An eligible Employee may become a
Participant in the Plan on any Entry Date by completing an enrollment and
payroll deduction form and delivering it to the Company in accordance with
procedures established by the Committee.
3.2. Payroll Deduction. At the time a Participant files his enrollment and
payroll deduction form, he shall elect to have after-tax deductions made from
his Compensation at a rate of not less than one percent and not more than 15
percent.
3.3. Participants' Accounts. All payroll deductions made from a
Participant's Compensation shall be credited to his Account and used to purchase
shares of Stock in accordance with Article V. Contributions credited to a
Participant's Account shall not accrue interest or earnings during the period
prior to being used to purchase shares of Stock in accordance with Article V.
3.4. Changes in Payroll Deductions. The percentage designated by a
Participant as his rate of contribution under Section 3.2 shall automatically
apply to increases and decreases in his Compensation. Except as provided in
Section 3.5, a Participant may elect to change the rate of his contributions to
any other permissible rate effective as of the first day of the first payroll
period of any Offering Period provided the Participant files written notice with
the Committee of an election to change his contribution rate at least ten (10)
Business Days before the effective date of the election.
2
<PAGE>
3.5. Suspension and Resumption of Payroll Deductions. A Participant may
terminate contributions under the Plan as of the first day of any payroll period
by filing written notice thereof with the Committee at least ten (10) Business
Days before the effective date of the termination. A Participant who has
terminated his participation in the Plan in accordance with the preceding
provisions, shall be prohibited from resuming contributions under the Plan until
the following Entry Date. A Participant whose contributions have been terminated
in accordance with the preceding provisions, may resume contributions under the
Plan in accordance with Section 2.2.
3.6. Restrictions on Participation. Notwithstanding any provisions of the
Plan to the contrary, no Employee shall be granted an option to participate in
the Plan under the following conditions:
3.6.1. No Employee shall be granted an option if, immediately after
the grant, such Employee would own stock, and/or hold outstanding options
to purchase stock, possessing 5% or more of the total combined voting power
or value of all classes of stock of the Company (for purposes of this
paragraph, the rules of section 424(d) of the Code shall apply in
determining stock ownership of any Employee); or
3.6.2. No Employee shall be granted an option which permits his rights
to purchase Stock under the Plan and all other employee stock purchase
plans (as described in section 423 of the Code) of the Company to accrue at
a rate which exceeds $25,000 of fair market value of such Stock (determined
at the time such option is granted) for each calendar year in which such
option is outstanding at any time. For purposes of this Section 3.6.2:
3.6.2.1. the right to purchase stock under an option accrues when
the option (or any portion thereof) first becomes exercisable during
the calendar year;
3.6.2.2. the right to purchase stock under an option accrues at
the rate provided in the option, but in no case may such rate exceed
$25,000 of fair market value of such stock (determined at the time
such option is granted) for any one calendar year; and
3.6.2.3. a right to purchase stock which has accrued under one
option granted pursuant a plan may not be carried over to any other
option.
3
<PAGE>
ARTICLE IV
OFFERINGS
4.1. Quarterly Offerings. The Plan shall be implemented through quarterly
offerings of the Company's Stock. Each Offering Period shall begin on the
Offering Commencement Date and shall end on the Offering Termination Date.
4.2. Purchase Price. The "Purchase Price" per share of Stock with respect
to each Offering Period shall be the lesser of-
4.2.1. Ninety (90) percent of the official closing price of the Stock
on the Offering Termination Date on the New York Stock Exchange (or on such
other national securities exchange upon which the Stock may then be listed,
hereinafter referred to as the "Exchange") or if no sale of Stock occurred
on such date, the official closing price on the preceding Business Day- or
4.2.2. Ninety (90) percent of the official closing price of the Stock
on the Offering commencement date on the Exchange (or if no sale of Stock
occurred on such date, the closing price on the preceding business day.
4.3. Maximum Offering. The maximum number of shares of Stock which shall be
issued under the Plan, subject to adjustment upon changes in capitalization of
the Company as provided in Section 9.3, shall be 500,000 shares. If the total
number of shares which would be purchased during any Offering Period exceeds the
maximum number of available shares, the Committee shall make a pro rata
allocation of the available shares in a manner that it determines to be
equitable and the balance of payroll deductions credited to the Accounts of
Participants shall be returned to such Participants as soon as administratively
practicable.
ARTICLE V
PURCHASE OF STOCK
5.1. Automatic Exercise. On each Offering Termination Date, each
Participant shall automatically and without any act on his part be deemed to
have purchased Stock to the full extent of the payroll deductions credited to
his Account during the Offering Period ending on such Offering Termination Date.
5.2. Fractional Shares. Fractional shares of Stock may be purchased under
the Plan.
5.3. Acquisition of Stock. The Company may acquire Stock for use under the
Plan from authorized but unissued shares, treasury shares. in the open market or
in privately negotiated transactions.
5.4. Accounting for Purchased Stock. All shares of Stock purchased pursuant
to Section 5.1 shall be allocated as Shares to the appropriate Participant's
Account as of the Offering Termination Date on which such shares are purchased.
4
<PAGE>
ARTICLE VI
ACCOUNTING
6.1. General. The Committee shall establish procedures to account for
payroll deductions made by a Participant, the number of Shares of Stock
purchased on a Participant's behalf and the number of Shares allocated to a
Participant's Account.
6.2. Allocation of Stock. Shares of Stock allocated to a Participant's
Account shall be registered in the name of the Company or its nominee for the
benefit of the Participant on whose behalf such shares were purchased.
6.3. Accounting for Distributions. Shares of Stock distributed or sold from
a Participant's Account shall be debited from his Account on a first-in
first-out basis.
6.4. Account Statements. Each Participant shall receive at least semiannual
statements of all payroll deductions and shares of Stock allocated to his
Account together with all other transactions affecting his Account.
ARTICLE VII
WITHDRAWALS AND DISTRIBUTIONS
7.1. Withdrawal of Shares. A Participant may elect to withdraw any number
of Shares allocated to his Account by providing notification to the Company in
accordance with procedures established by the Committee. As soon as
administratively practicable following notification of a Participant's election
to withdraw Shares, the Committee shall cause a certificate representing the
number of Shares to be withdrawn to be delivered to the Participant.
7.2. Distribution Upon Termination. As soon as administratively practicable
after a Participant's termination of employment with the Company for any reason,
a certificate representing all of such Participant's Shares shall be distributed
to him (or his executor, in the event of his death).
7.3. Distribution of Payroll Deductions. In the event a Participant
terminates his employment with the Company or his participation in the Plan is
terminated pursuant to Section 3.5, any payroll deductions allocated to his
Account and not yet applied to purchase Stock in accordance with Section 5.1
shall be distributed to him in a cash lump sum as soon as administratively
practicable thereafter.
ARTICLE VIII
ADMINISTRATION
8.1. Appointment of Committee. The Board shall appoint a Committee to
administer the Plan, which shall consist of no fewer than three members. The
Board may from time to time appoint members to the Committee in substitution for
or in addition to members previously appointed and may fill vacancies, however
caused, in the Committee.
5
<PAGE>
8.2. Authority of Committee. The Committee shall have the exclusive power
and authority to administer the Plan, including without limitation the right and
power to interpret the provisions of the Plan and make all determinations deemed
necessary or advisable for the administration of the Plan. All such actions,
interpretations and determinations which are done or made by the Committee in
good faith shall be final, conclusive and binding on the Company, the
Participants and all other parties and shall not subject the Committee to any
liability.
8.3 Committee Procedures. The Committee may select one of its members as
its Chairman and shall hold its meetings at such times and places as it shall
deem advisable and may hold telephone meetings. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members of the Committee shall be as fully effective
as if it had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary and shall make such rules and regulations for
the conduct of its business as it shall deem advisable.
8.4. Expenses. The Company will pay all expenses incident to the operation
of the Plan, including the costs of recordkeeping, accounting fees, legal fees
and the costs of delivery of stock certificates to Participants.
ARTICLE IX
MISCELLANEOUS
9.1. Transferability. Neither payroll deductions credited to a
Participant's Account nor any rights with regard to the purchase of Stock under
the Plan may be assigned, transferred, pledged or otherwise disposed of in any
way by the Participant other than by will or the laws of descent and
distribution.
9.2. Status as Owner. Each Participant shall be deemed to legally own all
shares of Stock allocated to his Account and shall be entitled to exercise all
rights associated with ownership of the shares, including, without limitation,
the right to vote such shares in all matters for which Stock is entitled to
vote, receive dividends, if any, and tender such shares in response to a tender
offer.
9.3. Adjustment Upon Changes in Capitalization. In the event of a
reorganization, recapitalization, stock split, spin-off, split-off, split-up,
stock dividend, combination of shares, merger, consolidation or any other change
in the corporate structure of the Company, or a sale by the Company of all or
part of its assets, the Board may make appropriate adjustments in the number and
kind of shares which are subject to purchase under the Plan and in the exercise
price applicable to outstanding options.
9.4. Amendment and Termination. The Board shall have complete power and
authority to terminate or amend the Plan (including without limitation the power
and authority to make any amendment that may be deemed to affect the interests
of any Participant adversely); provided,
6
<PAGE>
however, that the Board shall not, without the approval of the shareholders of
the Company (i) increase the maximum number of shares which may be offered under
the Plan (except pursuant to Section 9.3)- (ii) modify the requirements as to
eligibility for participation in the Plan; or (iii) in any other way cause the
Plan to fail the requirements of section 423 of the Code.
The Plan and all rights of Employees hereunder shall terminate: (i) at any
time, at the discretion of the Board, in which case any cash balance in
Participants' Accounts shall be refunded to such Participants as soon as
administratively possible- or (ii) on the Offering Termination Date on which
Participants become entitled to purchase a number of shares of Stock that
exceeds the maximum number of shares available under the Plan.
9.5. No Employment Rights. The Plan does not, directly or indirectly,
create in any Employee any right with respect to continuation of employment by
the Company and it shall not be deemed to interfere in any way with the
Company's right to terminate, or otherwise modify, an Employee's terms of
employment at any time.
9.6. Withholding. To the extent any payments or distributions under this
Plan are subject to Federal, state or local taxes, the Company is authorized to
withhold all applicable taxes. The Company may satisfy its withholding
obligation by (i) withholding shares of Stock allocated to a Participant's
Account, (ii) deducting cash from a Participant's Account, or (iii) deducting
cash from a Participant's other compensation. A Participant's election to
participate in the Plan authorizes the Company to take any of the actions
described in the preceding sentence.
9.7. Use of Funds. All payroll deductions held by the Company under this
Plan may be used by the Company for any corporate purpose and the Company shall
not be obligated to hold such payroll deductions in trust or otherwise segregate
such amounts.
9.8. Shareholder Approval. Notwithstanding the provision of Section 1.7 of
the Plan, the Plan shall not take effect until approved by the shareholders of
the Company.
9.9. Choice of Law. Except to the extent superseded by Federal law, the
laws of the State of Delaware will govern all matters relating to the Plan.
* * * *
To record the adoption of the Plan, TB Woods' Corporation has caused its
authorized officers to affix its Corporate name and seal this 1st day of March,
1997.
[CORPORATE SEAL] TB Woods' Corporation
Attest: /s/ Emma K. Gross By: /s/ David H. Halleen
7
<PAGE>
EXHIBIT B
[Front of Card]
TB Wood's Corporation
This proxy is solicited by the Board of Directors of TB Wood's Corporation
for the Annual Meeting of Stockholders on April 11, 1997.
The undersigned Stockholder of TB Wood's Corporation (the "Corporation"),
hereby revoking any contrary proxy previously given, hereby appoints Thomas C.
Foley, Michael L. Hurt, and David H. Halleen or any one of them (with full power
to act alone and to designate substitutes and to make revocations) attorneys and
proxies of the undersigned, with authority to vote and act with respect to all
shares of common stock of the Corporation which the undersigned would be
entitled to vote, at the Annual Meeting of Stockholders to be held on April 11,
1997 at 10:00 a.m. at the Harbor Court Hotel, 550 Light Street, Baltimore,
Maryland 21202-6099, and any adjournments thereof, with all the powers the
undersigned would possess if personally present, upon matters noted on the
reverse and upon such other matters as may properly come before the meeting. The
shares represented by this proxy shall be voted as follows:
(To be signed on the reverse side)
<PAGE>
TB WOOD'S CORPORATION
[Back of Card]
A [X] Please mark your
votes as in this
example.
FOR the foregoing WITHHOLD AUTHORITY
nominee to vote for foregoing nominee
1. To elect [ ] [ ]
Michael L. Hurt
as Director of
the Second Class.
FOR AGAINST ABSTAIN
2. Resolution to adopt the TB Wood's [ ] [ ] [ ]
Employee Stock Purchase Plan for
eligible employees of the Corporation
This proxy confers authority to vote "FOR" the proposals
listed unless otherwise indicated. If any other business is
transacted at said meeting, this proxy shall be voted in accordance
with the judgment of the proxies. The Board of Directors
recommends a vote "FOR" the listed proposals.
This proxy is solicited on behalf of the Board of Directors of TB
Wood's Corporation and may be revoked prior to its exercise.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
______________________________________ Dated: _______________, 1997
SIGNATURE(S) OF STOCKHOLDER
______________________________________ Dated: ______________, 1997
SIGNATURE(S) OF STOCKHOLDER
NOTE:Signature(s) should follow exactly the name(s) on the stock certificate.
Executor, administrator, trustee or guardian should sign as such. If more
than one trustee, all should sign. ALL JOINT OWNERS MUST SIGN.
<PAGE>
LETTER SUBMITTED ON COMPANY LETTER HEAD
TB Wood's Corporation
440 North Fifth Avenue
Chambersburg, Pennsylvania 17201-1778
717.267.2900, ext.4403 tel 717.264.2869 fax
March 26, 1997
Securities and Exchange Commission
450 Fifth Street
Washington, DC 20549
Re: TB Wood's Corporation Definitive Proxy Statement
Ladies and Gentlemen:
We transmit for filing the Company's proxy statement and proxy for the 1997
Annual Meeting of Stockholders (the "Meeting").
At the Meeting, the Company's stockholders will vote on a proposal to
approve the TB Wood's Corporation Employee Stock Purchase Plan (the "Plan").
Pursuant to Schedule 14A, Item 10, Instruction 5, the Company hereby informs the
Securities and Exchange Commission, as supplemental information, that, if the
Plan is approved by the stockholders of the Company at the Meeting, the Company
currently plans to register on Form S-8 promulgated under the Securities Act of
1933, as amended, within a reasonable period of time after the Meeting, the
shares of the Company's Common Stock which may be sold pursuant to the Plan,
provided that such registration shall occur no later than the date on which
shares may first be purchased by Plan participants.
If the staff has any questions or requires any additional information,
please telephone the undersigned at (717) 267-2900, ext. 4403.
Sincerely,
/s/ Emma K. Gross
-----------------
Emma K. Gross
Corporate Secretary
