<PAGE>
As filed with the Securities and Exchange Commission on November 12, 1999.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------
Schedule 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
------------
TB WOOD'S CORPORATION
(Name of Issuer)
TB WOOD'S CORPORATION
(Name of Person(s) Filing Statement)
Common Stock, par Value $.01 Per Share
(Title of Class of Securities)
872226105
(CUSIP Number of Class of Securities)
------------
Thomas F. Tatarczuch
TB Wood's Corporation
440 North Fifth Avenue
Chambersburg, Pennsylvania 17201
(717) 264-7161
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
------------
Copy to:
David E. Schulman, Esq.
Dechert Price & Rhoads
1717 Arch Street
4000 Bell Atlantic Tower
Philadelphia, Pennsylvania 19103
(215) 994-4000
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November 12, 1999
(Date Tender Offer First Published, Sent or Given to Security Holders)
------------
CALCULATION OF REGISTRATION FEE
================================================================================
Transaction Valuation* Amount of Filing Fee**
- --------------------------------------------------------------------------------
$5,000,000 $1,000.00
================================================================================
* For the purpose of calculating the filing fee only, this amount is based on
the purchase of 400,000 shares of Common Stock, par value $.01 per share,
of TB Wood's Corporation at $12.50 per share.
** The amount of the filing fee equals 1/50th of one percent (1%) of the value
of the securities to be acquired.
------------
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: Not applicable. Filing party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
================================================================================
<PAGE>
This Issuer Tender Offer Statement on Schedule 13E-4 (this "Schedule
13E-4") relates to the offer by TB Wood's Corporation, a Delaware corporation
(the "Company" or the "Issuer"), to purchase up to 400,000 shares (or such
lesser number of shares as are properly tendered) of its common stock, par value
$.01 per share, at prices not in excess of $12.50 nor less than $9.00 per share,
net to the seller in cash, without interest thereon, as specified by
stockholders tendering their Shares (defined below), upon the terms and subject
to the conditions set forth in the Offer to Purchase dated November 12, 1999
(the "Offer to Purchase") and in the related letter of transmittal ("Letter of
Transmittal") (which, as amended or supplemented from time to time, together
constitute the "Offer"), and is intended to satisfy the reporting requirements
of Section 13(e) of the Securities and Exchange Act of 1934, as amended. Copies
of the Offer to Purchase and the related Letter of Transmittal are filed with
this Schedule 13E-4 as Exhibits (a)(1) and (a)(2) hereto, respectively.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is TB Wood's Corporation, a Delaware
corporation, and the address of its principal executive office is 440 North
Fifth Avenue, Chambersburg, Pennsylvania 17201.
(b) The title of the securities which are the subject of the Offer is the
Company's Common Stock, par value $.01 per share ("Common Stock"), and the Offer
is for up to 400,000 shares of Common Stock (the "Shares") (or such lesser
number of Shares as are properly tendered) at prices not in excess of $12.50 nor
less than $9.00 per Share, net to the seller in cash, without interest thereon,
as specified by stockholders tendering their Shares. The Offer is being made to
all holders of Common Stock, including officers, directors and affiliates of the
Company. The Company has been advised that certain of its directors and
executive officers may tender shares pursuant to the Offer. See Section 2 of the
Offer to Purchase. Thomas C. Foley, the Company's Chairman and controlling
stockholder has advised the Company that he does not intend to tender any Shares
into the Offer and that on November 9, 1999 he entered into an option agreement
(the "Option Agreement") with a third party (the "Option Holder"). Pursuant to
the Option Agreement, the Option Holder has the option to purchase up to 275,000
Shares from Mr. Foley at a purchase price that is $.05 per Share less than the
final per Share Purchase Price to be paid by the Company for Shares tendered
into and accepted for payment pursuant to the Offer. The Option Holder has
advised the Company that it currently intends to tender 275,000 Shares into the
Offer at a price of $9.00 per Share. As of November 11, 1999, Mr. Foley
beneficially owned 2,698,658 Shares representing approximately 44.6% of the
outstanding Shares (calculated on a fully diluted basis). The information set
forth in the "Introduction" to the Offer to Purchase and in Sections 1, 2 and 10
of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in the "Introduction" to the Offer to
Purchase and in Section 7 of the Offer to Purchase is incorporated herein by
reference.
(d) This statement is being filed by the Issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in the "Introduction" to the Offer to
Purchase and in Section 8 of the Offer to Purchase is incorporated herein by
reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The information set forth in the "Introduction" to the Offer to Purchase
and in Section 2 of the Offer to Purchase is incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERTAKINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
<PAGE>
ITEM 6 PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in Section 9 of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in Section 12 of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 11 of the Offer to Purchase is
incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the entire Offer to Purchase and the
related Letter of Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Letter to stockholders from Thomas C. Foley, Chairman of the
Board, and Michael L. Hurt, President of the Company, dated November 12, 1999.
(a)(7) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(8) Summary Advertisement dated November 12, 1999.
(a)(9) Press Release dated November 12, 1999.
(b) Revolving Credit Agreement by and among TB Wood's Incorporated, Plant
Engineering Consultants, Inc., Grupo Blaju, S.A., de C.V., T. B. Wood's Canada,
Ltd. and the Banks Party thereto and PNC Bank, National Association, as Agent,
dated October 10, 1996 (incorporated by reference to Form 10-K, for fiscal year
1996, Exhibit 10.44) as most recently amended on November 8, 1999.
(c) Stock Option Agreement by and between Thomas C. Foley and C. Sean Day
dated November 9, 1999.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: November 12, 1999 TB WOOD'S CORPORATION
By: /s/ MICHAEL L. HURT
------------------------------
Name: Michael L. Hurt
Title: President
3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(6) Letter to stockholders from Thomas C. Foley, Chairman of the Board, and Michael L. Hurt, President of
the Company, dated November 12, 1999.
(a)(7) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(a)(8) Summary Advertisement dated November 12, 1999.
(a)(9) Press Release dated November 12, 1999.
(b) Revolving Credit Agreement by and among TB Wood's Incorporated, Plant Engineering Consultants, Inc.,
Grupo Blaju, S.A., de C.V., T. B. Wood's Canada, Ltd. and the Banks Party thereto and PNC Bank,
National Association, as Agent, dated October 10, 1996 (incorporated by reference to Form 10-K, for
fiscal year 1996, Exhibit 10.44) as most recently amended on November 8, 1999.
(c) Stock Option Agreement by and between Thomas C. Foley and C. Sean Day dated November 9, 1999.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
<PAGE>
EXHIBIT (A) (1)
TB Wood's Corporation
Offer To Purchase For Cash Up To
400,000 Shares of Its Common Stock
At a Purchase Price Not In Excess of $12.50
Nor Less Than $9.00 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 10, 1999, UNLESS THE OFFER IS
EXTENDED.
TB Wood's Corporation, a Delaware corporation (the "Company"), hereby
invites its stockholders to tender shares (the "Shares") of its common stock,
par value $.01 per share (the "Common Stock"), to the Company at prices not in
excess of $12.50 nor less than $9.00 per share, net to the seller in cash,
without interest thereon, as specified by stockholders tendering their shares,
upon the terms and subject to the conditions set forth herein and in the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer"). The Company will, upon the terms and subject
to the conditions of the Offer, determine the single per Share price, not in
excess of $12.50 nor less than $9.00 per Share, net to the seller in cash,
without interest thereon (the "Purchase Price"), that it will pay for Shares
properly tendered pursuant to the Offer, taking into account the number of
Shares so tendered and the prices specified by tendering stockholders. The
Company will select the lowest Purchase Price that will allow it to buy 400,000
Shares (or such lesser number of Shares as are properly tendered at prices not
in excess of $12.50 nor less than $9.00 per Share). All Shares properly tendered
at prices at or below the Purchase Price and not properly withdrawn will be
purchased at the Purchase Price, upon the terms and subject to the conditions of
the Offer, including the proration provisions. All Shares acquired in the Offer
will be acquired at the Purchase Price. The Company reserves the right, in its
sole discretion, to purchase more than 400,000 Shares pursuant to the Offer.
Shares tendered at prices in excess of the Purchase Price and Shares not
purchased because of proration will be returned. See Section 14.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
The Shares are listed and traded on the New York Stock Exchange
("NYSE") under the symbol "TBW." On November 11, 1999, the last full trading day
on the NYSE prior to the announcement of the Offer, the closing per Share sales
price as reported on the NYSE composite tape was $9 1/16.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES. SEE SECTION 7. THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE
OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
THEIR SHARES. EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SUCH
STOCKHOLDER'S SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR
PRICES AT WHICH SUCH SHARES SHOULD BE TENDERED. THE COMPANY HAS BEEN ADVISED
THAT CERTAIN OF ITS DIRECTORS AND EXECUTIVE OFFICERS MAY TENDER SHARES PURSUANT
TO THE OFFER. SEE SECTION 2.
<PAGE>
IMPORTANT
Any stockholder wishing to tender all or any part of such stockholder's
Shares should either (a) complete and sign a Letter of Transmittal (or a
manually signed facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and mail or deliver such Letter of Transmittal, together
with any required signature guarantee, and any other required documents to
American Stock Transfer & Trust Company (the "Depositary"), and mail or deliver
the certificates for such Shares to the Depositary (together with any other
documents required by the Letter of Transmittal) or tender such Shares pursuant
to the procedure for book-entry transfer set forth in Section 3, or (b) request
a broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Holders of Shares registered in the name of a
broker, dealer, commercial bank, trust company or other nominee should contact
such person if they desire to tender their Shares. Any stockholder who desires
to tender Shares and whose certificates for such Shares are not immediately
available or cannot be delivered to the Depositary or who cannot comply with the
procedure for book-entry transfer or whose other required documents cannot be
delivered to the Depositary, in any case, by the expiration of the Offer must
tender such Shares pursuant to the guaranteed delivery procedure set forth in
Section 3.
TO PROPERLY TENDER SHARES, STOCKHOLDERS MUST VALIDLY COMPLETE THE LETTER OF
TRANSMITTAL INCLUDING THE SECTION RELATING TO THE PRICE AT WHICH THEY ARE
TENDERING SHARES.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the address and telephone
number set forth on the back cover of this Offer to Purchase.
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH
THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
The date of this Offer to Purchase is November 12, 1999.
2
<PAGE>
SUMMARY
This general summary is solely for the convenience of the Company's
stockholders and is qualified in its entirety by reference to the full text and
more specific details set forth in this Offer to Purchase.
<TABLE>
<CAPTION>
<S> <C>
Purchase Price.......................................... The Company will determine a single per Share net cash
price which will be not more than $12.50 nor less than
$9.00 per Share. All Shares purchased by the Company
will be purchased at the Purchase Price even if
tendered at or below the Purchase Price. Each
stockholder desiring to tender Shares must specify in
the Letter of Transmittal the minimum price (not more
than $12.50 nor less than $9.00 per Share) at which the
stockholder is willing to have such stockholder's
Shares purchased by the Company.
Number of Shares to be Purchased........................ 400,000 Shares (or such lesser number of Shares as are
properly tendered at prices not in excess of $12.50 nor
less than $9.00 per share).
How to Tender Shares.................................... See Section 3. Contact the Information Agent or consult
your broker for assistance.
Brokerage Commissions................................... None, for registered stockholders who tender their
Shares directly to the Depositary. Stockholders holding
Shares through brokers or banks should determine
whether transaction costs are applicable if
stockholders tender Shares through the brokers or banks
and not directly to the Depositary.
Stock Transfer Tax...................................... None, if payment is made to the registered holder of
Shares.
Expiration and Proration Dates.......................... Friday, December 10, 1999, at 12:00 Midnight, New York
City time, unless the Offer is extended by the Company.
Payment Date............................................ As soon as practicable after the termination of the
Offer.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Position of the Company and
its Board of Directors............................... Neither the Company nor its Board of Directors makes any
recommendation to stockholders as to whether to tender or
refrain from tendering their Shares. Each stockholder must
make the decision whether to tender Shares and, if so, how
many Shares to tender and the price or prices at which such
Shares should be tendered. The Company has been advised that
certain of its directors and executive officers may tender
Shares pursuant to the Offer. Thomas C. Foley, the Company's
Chairman and principal stockholder, has advised the Company
that he does not intend to tender Shares pursuant to the
Offer and that on November 9, 1999 he entered into an option
agreement with a third person granting such third person a
right to purchase 275,000 Shares of Common Stock from Mr.
Foley at a purchase price that is $.05 per Share less than
the final per Share purchase price to be paid by the Company
for Shares tendered into and accepted for payment pursuant to
the Offer. Such third person has advised the Company that it
currently intends to tender 275,000 Shares into the Offer at
a price of $9.00 per Share. See Section 10.
Withdrawal Rights....................................... Tendered Shares may be withdrawn at any time prior to
12:00 Midnight, New York City time, on Friday, December
10, 1999, unless the Offer is extended by the Company,
and, unless previously purchased, after 12:00 Midnight,
New York City time, on Tuesday, January 11, 2000. See
Section 4.
</TABLE>
4
<PAGE>
Table of Contents
SECTION PAGE
- ------- ----
INTRODUCTION..................................................6
THE OFFER.....................................................8
1. Number of Shares; Proration................................8
2. Purpose of the Offer; Certain Effects of the Offer.........9
3. Procedures for Tendering Shares............................10
4. Withdrawal Rights..........................................14
5. Purchase of Shares and Payment of Purchase Price...........15
6. Certain Conditions of the Offer............................16
7. Price Range of Shares; Dividends...........................17
8. Source and Amount of Funds.................................18
9. Certain Information Concerning the Company.................18
10. Interest of Directors and Officers and
Principal Stockholder; Transactions and
Arrangements Concerning Shares...........................22
11. Effects of the Offer on the Market for Shares;
Registration Under the Exchange Act......................23
12. Certain Legal Matters; Regulatory Approvals...............23
13. Certain United States Federal Income Tax
Consequences.............................................23
14. Extension of the Offer; Termination; Amendment............25
15. Fees and Expenses.........................................26
16. Miscellaneous.............................................26
CERTAIN SECTIONS OF THIS OFFER TO PURCHASE INCLUDING, BUT NOT LIMITED TO,
SECTION 2 ENTITLED "PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER" AND
SECTION 9 ENTITLED "CERTAIN INFORMATION CONCERNING THE COMPANY," CONTAIN CERTAIN
"FORWARD LOOKING STATEMENTS" AS SUCH TERM IS USED UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THE COMPANY'S PERFORMANCE MAY BE AFFECTED BY MANY
UNCERTAINTIES THAT EXIST IN THE COMPANY'S OPERATIONS AND BUSINESS ENVIRONMENT
THAT MAY CAUSE ACTUAL PERFORMANCE TO DIFFER MATERIALLY FROM PERFORMANCE
SUGGESTED BY ANY FORWARD LOOKING STATEMENTS.
5
<PAGE>
To the Holders of Common Stock
of TB Wood's Corporation:
INTRODUCTION
TB Wood's Corporation, a Delaware corporation (the "Company"), invites its
stockholders to tender shares (the "Shares") of its Common Stock, par value $.01
per share (the "Common Stock"), to the Company at prices not in excess of $12.50
nor less than $9.00 per Share, net to the seller in cash, without interest
thereon, as specified by stockholders tendering their Shares, upon the terms and
subject to the conditions set forth herein and in the related letter of
transmittal (the "Letter of Transmittal") (which, as amended or supplemented
from time to time, together constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the
Offer, determine the single per Share price, not in excess of $12.50 nor less
than $9.00 per Share, net to the seller in cash, without interest thereon (the
"Purchase Price"), that it will pay for Shares properly tendered pursuant to the
Offer, taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company will select the lowest Purchase
Price that will allow it to buy 400,000 Shares (or such lesser number of Shares
as are properly tendered at prices not in excess of $12.50 nor less than $9.00
per Share). All Shares properly tendered prior to the Expiration Date (as
defined in Section 1) at prices at or below the Purchase Price and not properly
withdrawn will be purchased at the Purchase Price, upon the terms and subject to
the conditions of the Offer, including the proration provisions. Shares tendered
at prices in excess of the Purchase Price and Shares not purchased because of
proration will be returned at the Company's expense to the stockholders who
tendered such Shares. The Company reserves the right, in its sole discretion, to
purchase more than 400,000 Shares pursuant to the Offer. See Section 14.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
The Board of Directors of the Company has approved the Offer. However,
neither the Company nor its Board of Directors makes any recommendation to
stockholders as to whether to tender or refrain from tendering their Shares.
Each stockholder must make the decision whether to tender Shares and, if so, how
many Shares to tender and the price or prices at which such Shares should be
tendered. The Company has been advised that certain of its directors and
executive officers intend to tender Shares pursuant to the Offer. Thomas C.
Foley, the Company's Chairman and controlling stockholder has advised the
Company that he does not intend to tender any Shares into the Offer and that on
November 9, 1999 he entered into an option agreement (the "Option Agreement")
with a third party (the "Option Holder"). Pursuant to the Option Agreement, the
Option Holder has the option to purchase up to 275,000 Shares from Mr. Foley at
a purchase price that is $ .05 per Share less than the final per Share Purchase
Price to be paid by the Company for Shares tendered into and accepted for
payment pursuant to the Offer. The Option Holder has advised the Company that it
currently intends to tender 275,000 Shares into the Offer at a price of $9.00
per Share. As of November 11, 1999, Mr. Foley beneficially owned 2,698,658
Shares representing approximately 44.6% of the outstanding Shares (calculated
on a fully diluted basis). See Section 10.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date more than 400,000 Shares (or such greater number of Shares as
the Company may elect to purchase) are properly tendered at or below the
Purchase Price and not properly withdrawn, the Company will buy Shares on a pro
rata basis from all stockholders who properly tender Shares at prices at or
below the Purchase Price (and do not properly withdraw them prior to the
expiration of the Offer). See Section 1.
The Purchase Price will be paid net to the tendering stockholder in cash,
without interest thereon, for all Shares purchased. Tendering stockholders who
hold Shares in their own name and who tender their Shares directly to the
Depositary will not be obligated to pay brokerage commissions, solicitation fees
or, subject to Instruction 2 of the Letter of Transmittal, stock transfer taxes
on the purchase of Shares by the Company pursuant to the Offer. Stockholders
holding Shares through brokers or banks are urged to consult the brokers or
banks to determine whether transaction costs are applicable if stockholders
tender Shares through the brokers or banks and not directly
6
<PAGE>
to the Depositary. However, any tendering stockholder or other payee who fails
to complete, sign and return to the Depositary the Substitute Form W-9 that is
included as part of the Letter of Transmittal may be subject to required United
States Federal Income Tax Backup Withholding of 31% of the gross proceeds
payable to the tendering stockholder or other payee pursuant to the Offer. See
Section 3. The Company will pay all fees and expenses of American Stock Transfer
& Trust Company (the "Depositary") and MacKenzie Partners, Inc. (the
"Information Agent") incurred in connection with the Offer. See Section 15.
The Board of Directors determined that an offer to repurchase Shares
directly from the Company's stockholders pursuant to this Offer would be in the
best interests of the Company and its stockholders. The Board of Directors
believes that the purchase of Shares at this time is consistent with the
Company's long term corporate goal of seeking to increase stockholder value. In
addition, the Offer will provide the Company's stockholders an opportunity to
sell a portion of their Shares which may not be available to stockholders based
upon the current market conditions applicable to trading in the Company's
Shares. See Section 2.
The Offer provides stockholders who are considering a sale of all or a
portion of their Shares with the opportunity to determine the price or prices
(not in excess of $12.50 nor less than $9.00 per Share) at which they are
willing to sell their Shares and, subject to the terms and conditions of the
Offer, to sell those Shares for cash without, where Shares are tendered by the
registered owner thereof directly to the Depositary, the usual transaction costs
associated with open market sales. In addition, the Offer may give stockholders
the opportunity to sell at prices greater than market prices prevailing prior to
the announcement of the Offer. The Offer also allows stockholders to sell only a
portion of their Shares while retaining a continuing equity interest in the
Company. Stockholders who determine not to accept the Offer will realize a
proportionate increase in their relative equity interest in the Company, and
thus the Company's future earnings and assets, subject to the Company's right to
issue additional Shares and other equity securities in the future. In
determining whether to tender Shares pursuant to the Offer, stockholders should
consider the possibility that they may be able to sell their Shares in the
future on the NYSE or otherwise, including in connection with a sale of the
Company, at a net price higher than the Purchase Price. See Section 2. The
Company can give no assurance, however, as to the price at which a stockholder
may be able to sell non-tendered Shares in the future or whether a sale of the
Company may occur in the future.
As of November 11, 1999, the Company had 5,862,228 issued and outstanding
Shares, 25,470 Shares held in treasury and had reserved 500,000 Shares for
issuance upon exercise of outstanding stock options ("Options") under the
Company's stock option plans and certain stock option agreements which the
Company has entered into with certain of its executive officers (collectively
the "Option Plans"). The 400,000 Shares that the Company is offering to purchase
pursuant to the Offer represent approximately 6.8% of the Company's Shares
outstanding on November 11, 1999 (approximately 6.6% assuming exercise of
outstanding exercisable Options). The Shares are listed and traded on the NYSE
under the symbol "TBW." On November 11, 1999, the last full trading day on the
NYSE prior to the announcement of the Offer, the closing per Share sales price
as reported on the NYSE Composite Tape was $9 1/16. Stockholders are urged to
obtain current market quotations for the Shares. See Section 7.
THE OFFER
1. Number of Shares; Proration.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase 400,000 Shares or such lesser number of Shares as are properly tendered
(and not properly withdrawn in accordance with Section 4) prior to the
Expiration Date (as defined below) at prices not in excess of $12.50 nor less
than $9.00 per Share, net to the seller in cash, without interest thereon.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, December 10, 1999 unless and until the Company, in its sole discretion,
shall have extended the period of time during which the Offer will remain open,
in which event the term "Expiration Date" shall refer to the latest time and
date at which the Offer, as so extended by the Company, shall expire. See
Section 14 for a description of the Company's right to extend, delay, terminate
or amend the Offer. The Company reserves the right to purchase more than 400,000
Shares pursuant to the Offer. In accordance with applicable regulations of the
Securities and Exchange Commission (the "Commission"), the Company may purchase
pursuant to the Offer an additional number of Shares, not to exceed 2% of the
outstanding Shares, without amending or extending the Offer. See Section 14. In
the event of an over-subscription of the Offer as described below, Shares
tendered at or below the Purchase Price prior to the Expiration Date will be
subject to proration. The proration period also expires on the Expiration Date.
If (i) (x) the Company increases the price to be paid for Shares above $12.50
per Share or decreases the price to be
7
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paid for Shares below $9.00 per Share, (y) the Company increases the number of
Shares being sought in the Offer and such increase in the number of Shares being
sought exceeds 2% of the outstanding Shares, or (z) the Company decreases the
number of Shares being sought, and (ii) the Offer is scheduled to expire at any
time earlier than the expiration of a period ending on the tenth business day
from, and including, the date that notice of such increase or decrease is first
published, sent or given in the manner specified in Section 14, the Offer will
be extended until the expiration of such period of ten business days.
The Offer is not conditioned on the tender of any minimum number of Shares,
but is subject to certain other conditions. See Section 6.
In accordance with Instruction 5 of the Letter of Transmittal, stockholders
desiring to tender Shares must specify the price, not in excess of $12.50 nor
less than $9.00 per Share, at which they are willing to sell their Shares to the
Company pursuant to the Offer. As promptly as practicable following the
Expiration Date, the Company will, in its sole discretion, upon the terms and
subject to the conditions of the Offer, determine a single Purchase Price that
it will pay for Shares properly tendered pursuant to the Offer and not properly
withdrawn, taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company intends to select the lowest
Purchase Price, not in excess of $12.50 nor less than $9.00 net per Share in
cash, that will enable it to purchase 400,000 Shares (or such lesser number of
Shares as are properly tendered) pursuant to the Offer. All Shares properly
tendered pursuant to the Offer at or below the Purchase Price and not properly
withdrawn will be purchased at the Purchase Price, upon the terms and subject to
the conditions of the Offer, including the proration provisions. All Shares
tendered and not purchased pursuant to the Offer, including Shares tendered at
prices in excess of the Purchase Price and Shares not purchased because of
proration, will be returned to the tendering stockholders at the Company's
expense as promptly as practicable following the Expiration Date.
If the number of Shares properly tendered at or below the Purchase Price
and not properly withdrawn prior to the Expiration Date is less than or equal to
400,000 Shares (or such greater number of Shares as the Company may elect to
purchase pursuant to the Offer), the Company will, upon the terms and subject to
the conditions of the Offer, purchase all Shares so tendered at the Purchase
Price.
Proration of Purchases. Upon the terms and subject to the conditions of the
Offer, if more than 400,000 Shares (or such greater number of Shares as the
Company may elect to purchase) have been properly tendered at prices at or below
the Purchase Price and not properly withdrawn prior to the Expiration Date, the
Company will purchase properly tendered Shares on a prorated basis (with
appropriate adjustments to avoid purchases of fractional shares) as described
below. In the event that proration of tendered Shares is required, the Company
will determine the proration factor as soon as practicable following the
Expiration Date. Proration for each stockholder tendering Shares shall be based
on the ratio of the number of Shares properly tendered and not properly
withdrawn by such stockholder to the total number of Shares properly tendered
and not properly withdrawn by all stockholders at or below the Purchase Price.
Because of the difficulty in determining the number of Shares properly tendered
(including Shares tendered by guaranteed delivery procedures, as described in
Section 3) and not properly withdrawn the Company does not expect that it will
be able to announce the final proration factor or commence payment for any
Shares purchased pursuant to the Offer until approximately five business days
after the Expiration Date. The preliminary results of any proration will be
announced by press release as promptly as practicable after the Expiration Date.
Stockholders may obtain preliminary proration information from the Information
Agent and may be able to obtain such information from their brokers.
As described in Section 13, the number of Shares that the Company will
purchase from a stockholder pursuant to the Offer may affect the United States
federal income tax consequences to the stockholder of the purchase and,
therefore, may be relevant to a stockholder's decision whether or not to tender
Shares. The Letter of Transmittal affords each tendering stockholder the
opportunity to designate the order of priority in which Shares tendered are to
be purchased in the event of proration.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to stockholders who were record holders of Shares as of November 11, 1999 and
will be furnished to brokers, banks and similar persons whose names, or the
names of whose nominees, appear on the Company's stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
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2. Purpose of the Offer; Certain Effects of the Offer.
On December 17, 1996, the Board of Directors authorized the repurchase of
up to 200,000 Shares from time to time at the discretion of the Board of
Directors on the open market, in privately negotiated transactions or otherwise.
Such authorization was based upon the determination of the Board of Directors
that Company repurchases of Shares would provide a liquidity opportunity for
those stockholders wishing to dispose of their Shares and enhance stockholder
value for the remaining stockholders, and that such repurchases would be in the
best interests of the Company and its stockholders. Due in part to the
relatively thin public trading market for the Common Stock, the Company has
repurchased only 162,432 Shares as of November 11, 1999 under this repurchase
program.
During the four most recently-completed quarters, the price of the
Company's Common Stock has traded within a range of $9.625 to $14.812 per Share.
On November 11, 1999, the last full trading day on the NYSE prior to the
announcement of the Offer, the closing per Share sales price as reported on the
NYSE Composite Tape was $9 1/16. The Company believes that the recent trading
price of its Shares at the lower end of this range is, in part, a result of the
relatively thin public trading market for its Common Stock. After considering
the results of the repurchase program and the Company's alternatives, the Board
of Directors determined that an offer to repurchase Shares directly from the
Company's stockholders pursuant to this Offer would be in the best interests of
the Company and its stockholders, and authorized the Offer. The Board of
Directors believes that the purchase of Shares at this time is consistent with
the Company's long term corporate goal of seeking to increase stockholder value.
In addition, the Offer will provide the Company's stockholders an opportunity to
sell a portion of their Shares which may not be available to stockholders based
upon the current market conditions applicable to trading in the Company's
Shares. Subsequent to the Offer, the Company intends to consider periodically
additional purchases of Shares pursuant to one or more open-market purchase
programs. As a result, the Company may in the future purchase additional Shares
on the open market, in private transactions, through tender offers or otherwise,
subject to the approval of the Board of Directors. Future purchases may be on
the same terms or on terms which are more or less favorable to stockholders than
the terms of the Offer. However, Rule 13e-4 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), prohibits the Company and its affiliates
from purchasing any Shares, other than pursuant to the Offer, until at least ten
business days after the Expiration Date. Any possible future purchases by the
Company will depend on many factors, including the market price of the Shares,
the results of the Offer, the Company's business and financial position and
general economic and market conditions.
The Company believes that after the Offer is completed the Company will
have sufficient cash flow and access to other sources of capital in order to
fund its working capital needs and provide for its current capital expenditure
requirements. The funds required to complete the Offer and pay related expenses
will be provided from borrowings incurred by the Company under its revolving
credit facility. See Section 8.
The Board of Directors of the Company has approved the Offer. However,
neither the Company nor its Board of Directors makes any recommendation to
stockholders as to whether to tender or refrain from tendering their Shares and
neither has authorized any person to make any such recommendation. Stockholders
are urged to evaluate carefully all information in the Offer, consult with their
own investment and tax advisors and make their own decisions whether to tender
Shares and, if so, how many Shares to tender and the price or prices at which
such Shares should be tendered. The Company has been advised that certain of its
directors and executive officers intend to tender Shares pursuant to the Offer.
See Section 10.
Shares the Company acquires pursuant to the Offer will be held in the
Company's treasury (unless and until the Company determines to retire any such
Shares) and will be available for the Company to issue without further
stockholder action (except as required by applicable law or the rules of the
NYSE or any other securities exchange on which the Shares may be listed) for
purposes including, but not limited to, the acquisition of other businesses, the
raising of additional capital for use in the Company's business and the
satisfaction of obligations under existing or future employee benefit plans. The
Company has no current plans for the issuance of Shares repurchased pursuant to
the Offer.
Except as disclosed in this Offer to Purchase, the Company currently has no
plans or proposals that relate to or would result in (a) the acquisition by any
person of additional securities of the Company or the disposition of securities
of the Company; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the Company or any of
its subsidiaries; (d) any change in the present Board of Directors or management
of the Company; (e) any material change in the present dividend rate or policy,
or indebtedness or capitalization of the Company; (f) any other material change
in the Company's corporate structure or business; (g) any change in the
Company's Certificate of Incorporation or By-Laws or other actions which may
impede the acquisition of control of
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the Company by any person; (h) a class of equity security of the Company being
delisted from a national securities exchange or ceasing to be authorized for
quotation in an inter-dealer quotation system of a registered national
securities association; (i) a class of equity security of the Company becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Exchange Act; or (j) the suspension of the Company's obligation to file reports
pursuant to Section 15(d) of the Exchange Act. See Section 9 regarding a recent
joint venture entered into by a subsidiary of the Company.
3. Procedures For Tendering Shares.
Proper Tender of Shares. For Shares to be tendered properly pursuant to the
Offer, (a) the certificates for such Shares (or confirmation of receipt of such
Shares pursuant to the procedure for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), including any required signature guarantees,
and any other documents required by the Letter of Transmittal, must be received
prior to 12:00 Midnight, New York City time, on the Expiration Date by the
Depositary at its address set forth on the back cover of this Offer to Purchase,
or (b) the tendering stockholder must comply with the guaranteed delivery
procedure set forth below. In accordance with Instruction 5 of the Letter of
Transmittal, stockholders desiring to tender Shares pursuant to the Offer must
properly indicate in the section captioned "Price (In Dollars) Per Share at
which Shares are being Tendered" on the Letter of Transmittal the price (in
multiples of $.125) at which Shares are being tendered. Stockholders who desire
to tender Shares at more than one price must complete a separate Letter of
Transmittal for each price at which Shares are tendered, provided that the same
Shares cannot be tendered (unless properly withdrawn previously in accordance
with the terms of the Offer) at more than one price. To properly tender Shares,
one and only one price box must be checked in the appropriate section on each
Letter of Transmittal.
Stockholders who hold Shares through brokers or banks are urged to consult
the brokers or banks to determine whether transaction costs are applicable if
stockholders tender Shares through the brokers or banks and not directly to the
Depositary.
Signature Guarantees and Method of Delivery. No signature guarantee is
required: (i) if the Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this Section 3, shall include any
participant in The Depository Trust Company (the "Book-Entry Transfer Facility")
whose name appears on a security position listing as the owner of the Shares)
tendered therewith and such holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal; or (ii) if Shares are tendered for
the account of a bank, broker, dealer, credit union, savings association or
other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended (each of the foregoing constituting an "Eligible Institution"). See
Instruction 1 of the Letter of Transmittal. If a certificate for Shares is
registered in the name of a person other than the person executing a Letter of
Transmittal, or if payment is to be made, or Shares not purchased or tendered
are to be issued, to a person other than the registered holder, then the
certificate must be endorsed or accompanied by an appropriate stock power, in
either case, signed exactly as the name of the registered holder appears on the
certificate, with the signature guaranteed by an Eligible Institution.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares (or a timely confirmation of the book-entry
transfer of the Shares into the Depositary's account at the Book-Entry Transfer
Facility as described above), a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal. The method of delivery of all documents,
including certificates for Shares, the Letter of Transmittal and any other
required documents, is at the election and risk of the tendering stockholder. If
delivery is by mail, then registered mail with return receipt requested,
properly insured, is recommended.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares for purposes of the Offer at the Book-Entry Transfer Facility
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Shares by causing the
Book-Entry Transfer Facility to transfer Shares into the Depositary's account in
accordance with the Book-Entry Transfer Facility's procedures for transfer.
Although delivery of Shares may be effected through a book-entry transfer into
the Depositary's account at the Book-Entry Transfer Facility, either (i) a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantees or an Agent's Message
or, in the case of a tender through the Book-Entry Transfer
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Facility's Automated Tender Offer Program ("ATOP"), the specific acknowledgement
in each case together with any other required documents must, in any case, be
transmitted to and received by the Depositary at its address set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or (ii) the
guaranteed delivery procedure described below must be followed. The confirmation
of a book-entry transfer of shares into the Depositary's account at the
Book-Entry Transfer Facility as described above is referred to herein as a "Book
Entry Confirmation." Delivery of the Letter of Transmittal and any other
required documents to the Book-Entry Transfer Facility does not constitute
delivery to the Depositary and will not constitute a valid tender.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation (as defined below), which states that the Book-Entry
Transfer Facility has received an express acknowledgment from the participant in
the Book-Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that Purchaser may enforce such agreement against the participant.
United States Federal Income Tax Backup Withholding. Under the United
States federal income tax backup withholding rules, unless an exemption applies
under the applicable law and regulations, 31% of the gross proceeds payable to a
stockholder or other payee pursuant to the Offer must be withheld and remitted
to the United States Internal Revenue Service ("IRS"), unless the stockholder or
other payee provides its taxpayer identification number (employer identification
number or social security number) to the Depositary (as payor), certifies under
penalties of perjury that such number is correct, and provides certain other
certifications regarding the inapplicability of backup withholding. Therefore,
each tendering stockholder should complete and sign the Substitute Form W-9
included as part of the Letter of Transmittal so as to provide the information
and certification necessary to avoid backup withholding. If the Depositary is
not provided with the correct taxpayer identification number, the United States
Holder (as defined in Section 13 herein) also may be subject to a penalty
imposed by the IRS. If withholding based on the presumption that the payment
will be characterized as a dividend for federal income tax purposes results in
an overpayment of taxes, a refund may be obtained. Certain "exempt recipients"
(including, among others, all corporations and certain Non-United States Holders
(as defined in Section 13 herein)) are not subject to these backup withholding
and information reporting requirements. In order for a Non-United States Holder
to qualify as an exempt recipient, that stockholder must submit an IRS Form W-8
or a Substitute Form W-8, signed under penalties of perjury, attesting to that
stockholder's exempt status. Such statements can be obtained from the
Depositary. See Instruction 14 of the Letter of Transmittal.
To prevent United States Federal Income Tax Backup Withholding equal to 31%
of the gross payments made to stockholders for Shares purchased pursuant to the
Offer, each stockholder who does not otherwise establish an exemption from such
backup withholding must provide the Depositary with the stockholder's correct
taxpayer identification number and provide certain other information by
completing the Substitute Form W-9 included as part of the Letter of
Transmittal.
Withholding For Non-United States Holders. Even if a Non-United States
Holder has provided the required certification to avoid backup withholding, the
Depositary will withhold United States federal income taxes equal to 30% of the
gross payments payable to a Non-United States Holder or his agent unless the
Depositary determines that a reduced rate of withholding is available pursuant
to a tax treaty or that an exemption from withholding is applicable because the
gross proceeds are effectively connected with the conduct of a trade or business
within the United States. In order to obtain a reduced rate of withholding
pursuant to a tax treaty, a Non-United States Holder must deliver to the
Depositary before the payment a properly completed and executed IRS Form 1001.
In order to obtain an exemption from withholding on the grounds that the gross
proceeds paid pursuant to the Offer are effectively connected with the conduct
of a trade or business within the United States, a Non-United States Holder must
deliver to the Depositary a properly completed and executed IRS Form 4224. The
Depositary will determine a stockholder's status as a Non-United States Holder
and eligibility for a reduced rate of, or exemption from, withholding based on
the presumption that the payment will be characterized as a dividend for federal
income tax purposes and by reference to any outstanding certificates or
statements concerning eligibility for a reduced rate of, or exemption from,
withholding (e.g., IRS Form 1001 or IRS Form 4224) unless facts and
circumstances indicate that such reliance is not warranted. A Non-United States
Holder may be eligible to obtain a refund of all or a portion of any tax
withheld if such Non-United States Holder meets those tests described in Section
13 that would characterize the exchange as a sale (as opposed to a dividend) or
is otherwise able to establish that no tax or a reduced amount of tax is due.
Non-United States holders are urged to consult their own tax advisors
regarding the application of United States Federal Income Tax Withholding,
including eligibility for a withholding tax reduction or exemption, and the
refund procedure.
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Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and the stockholder's Share certificates are not immediately available
or cannot be delivered to the Depositary prior to the Expiration Date (or the
procedure for book-entry transfer cannot be completed on a timely basis) or if
time will not permit all required documents to reach the Depositary prior to the
Expiration Date, the Shares may nevertheless be tendered, provided that all of
the following conditions are satisfied:
(a) the tender is made by or through an Eligible Institution;
(b) the Depositary receives by hand, mail, overnight courier,
telegram or facsimile transmission, on or prior to the Expiration Date, a
properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form the Company has provided with this Offer to
Purchase (specifying the price at which the Shares are being tendered),
including (where required) a signature guarantee by an Eligible Institution
in the form set forth in such Notice of Guaranteed Delivery; and
(c) the certificates for all tendered Shares, in proper form for
transfer (or confirmation of book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility), together with a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) and any required signature guarantees or other
documents required by the Letter of Transmittal, are received by the
Depositary within three NYSE trading days after the date of receipt by the
Depositary of the Notice of Guaranteed Delivery.
Return of Tendered Shares. If any tendered Shares are not purchased, or if
less than all Shares evidenced by a stockholder's certificates are tendered,
certificates for unpurchased Shares will be returned as promptly as practicable
after the expiration or termination of the Offer or, in the case of Shares
tendered by book-entry transfer at the Book-Entry Transfer Facility, the Shares
will be credited to the appropriate account maintained by the tendering
stockholder at the Book-Entry Transfer Facility, in each case without expense to
the stockholder.
Company Stock Option Plans. The Company is not offering, as part of the
Offer, to purchase any Options outstanding under any of the Company's Option
Plans and tenders of Options will not be accepted. Holders of Options who wish
to participate in the Offer may either (i) comply with the procedure for
guaranteed delivery set forth above without having to exercise their Options
until after the results of the Offer are known (provided, however, that an
Option holder will not be required to make the requisite tender through an
Eligible Institution and may personally execute and deliver the Notice of
Guaranteed Delivery) or (ii) exercise their Options and purchase Shares of the
Company's common stock and then tender the Shares pursuant to the Offer,
provided that, in the case of either (i) or (ii), any exercise of an Option and
tender of Shares is in accordance with the terms of the Option Plans and the
Options. In no event are any Options to be delivered to the Depositary in
connection with a tender of Shares hereunder. An exercise of an Option cannot be
revoked even if Shares received upon the exercise and tendered in the Offer are
not purchased in the Offer for any reason.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the price to be paid for Shares to be accepted and the validity,
form, eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by the Company, in its sole discretion, and
its determination shall be final and binding on all parties. The Company
reserves the absolute right to reject any or all tenders of any Shares that it
determines are not in proper form or the acceptance for payment of or payment
for which may, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the absolute right to waive any of the conditions of the Offer or
any defect or irregularity in any tender with respect to any particular Shares
or any particular stockholder and the Company's interpretation of the terms of
the Offer will be final and binding on all parties. No tender of Shares will be
deemed to have been properly made until all defects or irregularities have been
cured by the tendering stockholder or waived by the Company. None of the
Company, the Depositary, the Information Agent or any other person shall be
obligated to give notice of any defects or irregularities in tenders, nor shall
any of them incur any liability for failure to give any notice.
Tendering Stockholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering stockholder's acceptance of the
terms and conditions of the Offer, as well as the tendering stockholder's
representation and warranty to the Company that (a) the stockholder has a net
long position in the Shares or equivalent securities at least equal to the
Shares tendered within the meaning of Rule 14e-4 promulgated by the Commission
under the Exchange Act and (b) the tender of Shares complies with Rule 14e-4. It
is a violation of Rule 14e-4 for a person, directly or indirectly, to tender
Shares for that person's own account unless, at the time of tender and at the
end of
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the proration period or period during which Shares are accepted by lot
(including any extensions thereof), the person so tendering (i) has a net long
position equal to or greater than the amount of (x) Shares tendered or (y) other
securities convertible into or exchangeable or exercisable for the Shares
tendered and will acquire the Shares for tender by conversion, exchange or
exercise and (ii) will deliver or cause to be delivered the Shares in accordance
with the terms of the Offer. Rule 14e-4 provides a similar restriction
applicable to the tender or guarantee of a tender on behalf of another person.
The Company's acceptance for payment of Shares tendered pursuant to the
Offer will constitute a binding agreement between the tendering stockholder and
the Company upon and subject to the terms and conditions of the Offer.
Certificates for Shares, together with a properly completed Letter of
Transmittal and any other documents required by the Letter of Transmittal, must
be delivered to the Depositary and not to the Company. Any such documents
delivered to the Company will not be forwarded to the Depositary and therefore
will not be deemed to be properly tendered.
4. Withdrawal Rights.
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company pursuant to the Offer, may also be withdrawn
at any time after 12:00 Midnight, New York City time, on Tuesday, January 11,
2000.
For a withdrawal to be effective, a notice of withdrawal must be in
written, telegraphic, telex or facsimile transmission form and must be received
in a timely manner by the Depositary at its address set forth on the back cover
of this Offer to Purchase. Any such notice of withdrawal must specify the name
of the tendering stockholder, the number of Shares to be withdrawn and the name
of the registered holder of such Shares. If the certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the release of such certificates, the tendering stockholder must also
submit the serial numbers shown on the particular certificates for Shares to be
withdrawn and the signature(s) on the notice of withdrawal must be guaranteed by
an Eligible Institution (except in the case of Shares tendered for the account
of an Eligible Institution). If Shares have been tendered pursuant to the
procedure for book-entry transfer set forth in Section 3, the notice of
withdrawal also must specify the name and the number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and must
otherwise comply with such Book-Entry Transfer Facility's procedures. All
questions as to the form and validity (including the time of receipt) of any
notice of withdrawal will be determined by the Company, in its sole discretion,
which determination shall be final and binding. None of the Company, the
Depositary, the Information Agent or any other person shall be obligated to give
notice of any defects or irregularities in any notice of withdrawal nor shall
any of them incur liability for failure to give any notice.
Withdrawals may not be rescinded and any Shares properly withdrawn will
thereafter be deemed not properly tendered for purposes of the Offer unless the
withdrawn Shares are properly retendered prior to the Expiration Date by
following one of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain tendered Shares on behalf of the Company, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in this Section 4.
5. Purchase of Shares and Payment of Purchase Price.
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company (i) will determine the
Purchase Price it will pay for the Shares properly tendered and not properly
withdrawn prior to the Expiration Date, taking into account the number of Shares
so tendered and the prices specified by tendering stockholders, and (ii) will
accept for payment and pay for (and thereby purchase) Shares properly tendered
at prices at or below the Purchase Price and not properly withdrawn prior to the
Expiration Date. For purposes of the Offer, the Company will be deemed to have
accepted for payment (and therefore purchased) Shares that are properly tendered
at or below the Purchase Price and not properly withdrawn (subject to the
proration provisions of the Offer) only when, as and if it gives oral or written
notice to the Depositary of its acceptance of the Shares for payment pursuant to
the Offer.
Upon the terms and subject to the conditions of the Offer, promptly
following the Expiration Date the Company will accept for payment and pay a
single per Share Purchase Price for 400,000 Shares (subject to
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increase or decrease as provided in Section 14) properly tendered, or such
lesser number of Shares as are properly tendered, at prices not in excess of
$12.50 nor less than $9.00 per Share and not properly withdrawn as permitted in
Section 4.
The Company will pay for Shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering stockholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any proration and commence payment for Shares
purchased until approximately five business days after the Expiration Date.
Certificates for all Shares tendered and not purchased, including all Shares
tendered at prices in excess of the Purchase Price and Shares not purchased due
to proration, will be returned (or, in the case of Shares tendered by book-entry
transfer, will be credited to the account maintained with the Book-Entry
Transfer Facility by the participant therein who so delivered the Shares) to the
tendering stockholder at the Company's expense as promptly as practicable after
the Expiration Date or termination of the Offer without expense to the tendering
stockholders. Under no circumstances will interest on the Purchase Price be paid
by the Company by reason of any delay in making payment. In addition, if certain
events occur, the Company may not be obligated to purchase Shares pursuant to
the Offer. See Section 6.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if unpurchased Shares are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person signing the Letter of Transmittal,
the amount of all stock transfer taxes, if any (whether imposed on the
registered holder or the other person), payable on account of the transfer to
the person will be deducted from the Purchase Price unless satisfactory evidence
of the payment of the stock transfer taxes, or exemption therefrom, is
submitted. See Instruction 7 of the Letter of Transmittal.
Any tendering stockholder or other payee who fails to complete fully, sign
and return to the Depositary the Substitute Form W-9 included with the Letter of
Transmittal may be subject to required Federal Income Tax Backup Withholding of
31% of the gross proceeds paid to the stockholder or other payee pursuant to the
Offer. See Section 3. Also see Section 3 regarding United States Federal Income
Tax consequences for Non-United States holders.
6. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, the Company will not be
required to accept for payment, purchase or pay for any Shares tendered, and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for Shares tendered, subject to Rule 13e-4(f)
under the Exchange Act, if at any time on or after November 12, 1999 and prior
to the Expiration Date any of the following events shall have occurred (or shall
have been determined by the Company to have occurred) that, in the Company's
reasonable judgment and regardless of the circumstances giving rise thereto
(including any action or omission to act by the Company), makes it inadvisable
to proceed with the Offer or with acceptance for payment:
(a) there shall have been threatened, instituted or pending any
action or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, before any court, authority, agency or tribunal that directly
or indirectly (i) challenges the making of the Offer, the acquisition of
some or all of the Shares pursuant to the Offer or otherwise relates in any
manner to the Offer, or (ii) in the Company's reasonable judgment, could
materially and adversely affect the business, condition (financial or
other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Company or any of
its subsidiaries or materially impair the contemplated benefits of the
Offer to the Company;
(b) there shall have been any action threatened, pending or taken,
or approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any authority, agency or tribunal
that, in the Company's reasonable judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment for, some or
all of the Shares illegal or otherwise restrict or prohibit consummation of
the Offer, (ii) delay or restrict the ability of the Company, or render the
14
<PAGE>
Company unable, to accept for payment or pay for some or all of the Shares,
(iii) materially impair the contemplated benefits of the Offer to the
Company or (iv) materially and adversely affect the business, condition
(financial or other), income, operations or prospects of the Company and
its subsidiaries, taken as a whole, or otherwise materially impair in any
way the contemplated future conduct of the business of the Company or any
of its subsidiaries;
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market, (ii) the declaration
of a banking moratorium or any suspension of payments in respect of banks
in the United States, (iii) the commencement of a war, armed hostilities or
other international or national calamity directly or indirectly involving
the United States, (iv) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority on, or any
event that, in the Company's reasonable judgment, might affect, the
extension of credit by banks or other lending institutions in the United
States, (v) any significant decrease in the market price of the Shares or
any change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the reasonable
judgment of the Company, have a material adverse effect on the Company's
business, operations or prospects or the trading in the Shares, (vi) in the
case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof or (vii) any
decline in either the Dow Jones Industrial Average or the Standard and
Poor's Index of 500 Industrial Companies by an amount in excess of 10%
measured from the close of business on November 11, 1999;
(d) a tender or exchange offer for any or all of the Shares (other
than the Offer), or any merger, business combination or other similar
transaction with or involving the Company or any subsidiary, shall have
been proposed, announced or made by any person;
(e)(i) any entity, "group" (as that term is used in Section
13(d)(3) of the Exchange Act) or person shall have acquired or proposed to
acquire beneficial ownership of more than 5% of the outstanding Shares
(other than any such person, entity or group who has filed a Schedule 13D
or Schedule 13G with the Commission on or before November 11, 1999), (ii)
any such entity, group or person who has filed a Schedule 13D or Schedule
13G with the Commission on or before the Expiration Date shall have
acquired or proposed to acquire beneficial ownership of an additional 2% or
more of the outstanding Shares or (iii) any person, entity or group shall
have filed a Notification and Report Form under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, or made a public
announcement reflecting an intent to acquire the Company or any of its
subsidiaries or any of their respective assets or securities other than in
connection with a transaction authorized by the Board of Directors of the
Company;
(f) any change or changes shall have occurred in the business,
financial condition, assets, income, operations, prospects or stock
ownership of the Company or its subsidiaries that, in the Company's
reasonable judgment, is or may be material to the Company or its
subsidiaries; or
(g) the Company determines that the consummation of the offer and
the purchase of the Shares may cause the Shares to be delisted from the
NYSE or to be eligible for deregistration under the Exchange Act.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
omission by the Company) giving rise to any such condition, and may be waived by
the Company, in whole or in part, at any time and from time to time in its
reasonable discretion. The Company's failure at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Company concerning the events
described above will be final and binding.
15
<PAGE>
7. Price Range of Shares; Dividends.
The Shares are listed and traded on the NYSE. The following table sets
forth, for the fiscal quarters indicated, the high and low closing sales prices
per Share on the NYSE Composite Tape as compiled from published financial
sources and the cash dividends paid, or to be paid, per Share in each of such
fiscal quarters.
<TABLE>
<CAPTION>
------------------------------------------------------------------
High Low Dividends
--------------------- --------------------- ---------------------
Fiscal Year 1997
<S> <C> <C> <C>
4th quarter $21.38 $18.00 $.08
Fiscal Year 1998
1st quarter $23.13 $20.50 $.08
2nd quarter $24.50 $20.81 $.09
3rd quarter $21.06 $14.56 $.09
4th quarter $14.81 $11.75 $.09
Fiscal Year 1999
1st quarter $12.75 $10.88 $.09
2nd quarter $12.00 $10.63 $.09
3rd quarter $11.00 $9.63 $.09
</TABLE>
On November 11, 1999, the last full trading day on the NYSE before the
announcement of the Offer, the closing per Share sales price as reported on the
NYSE Composite Tape was $9 1/16. Stockholders are urged to obtain current
market quotations for the Shares.
8. Source and Amount of Funds.
Assuming the Company purchases 400,000 Shares pursuant to the Offer at a
purchase price of $12.50 per Share, the Company expects the maximum aggregate
cost, including all fees and expenses applicable to the Offer, to be
approximately $5,300,000. The Company expects to fund the purchase of Shares
pursuant to the Offer and the payment of related fees and expenses from
borrowings under the Company's existing revolving credit facility described
below.
The Company has a $52,500,000 unsecured revolving credit facility (the
"Credit Facility") arranged by PNC Bank, N.A. ("PNC") bearing a variable
interest rate that is currently at LIBOR plus 112.5 basis points and maturing
January 2003. The Credit Facility contains numerous restrictive financial
covenants which require the Company to comply with certain financial tests,
including, among other things, maintaining minimum tangible net worth, as
defined, and maintaining certain specified ratios. The Credit Facility also
contains other restrictive covenants that include, among other things,
restrictions on outside investments and restrictions on capital expenditures.
The Credit Facility was amended on November 8, 1999 to provide that the Company
may purchase Shares pursuant to the Offer for up to an aggregate Purchase Price
of $5,000,000. The Company believes that the Credit Facility, along with cash
generated from operations, will be sufficient to finance the Offer, the
Company's working capital needs as well as its capital expenditures and business
development needs. The Company currently has no plans or arrangements to
refinance or make early repayments of borrowings under the Credit Facility.
The preceding summary of the Credit Facility is qualified in its entirety
by reference to the text of the Credit Facility and the amendments thereto,
which have been incorporated by reference into the Issuer Tender Offer Statement
on Schedule 13E-4 (the "Schedule 13E-4") to which this Offer to Purchase is
attached as an exhibit. A copy of the Schedule 13E-4 may be obtained from the
Commission in the manner provided in Section 10.
9. Certain Information Concerning the Company.
General. The Company is an established designer, manufacturer and marketer
of electronic and mechanical industrial power transmission products. The Company
was incorporated in 1995 in the State of Delaware. The Company operates through
its subsidiaries, including TB Wood's Incorporated. The Company's products are
sold to North American and international manufacturers and users of industrial
equipment. Headquartered in Chambersburg, Pennsylvania, the Company operates ten
production facilities with over 1,100 employees in the United States, Canada,
Mexico, Germany and Italy. The Company has a network of more than 700 select
16
<PAGE>
independent distributors with over 1,900 locations in North America. TB Wood's
Incorporated was founded in 1857, and entered the power transmission industry at
the turn of the century.
The Company's principal executive office is located at 440 North Fifth
Avenue, Chambersburg, Pennsylvania 17201.
Recent Joint Venture. On July 3, 1999, the Company's subsidiary, TB Wood's
Incorporated ("Subsidiary"), entered into a joint venture with Electron
Corporation ("Electron") pursuant to which the parties will combine segments of
each of their belted drives businesses. Electron will supply raw castings to
Subsidiary and Subsidiary will manufacture castings, supply the finished product
to the joint venture, and be responsible for designing, marketing, selling and
distributing the products.
Selected Historical And Pro Forma Financial Information. Set forth below is
certain selected historical and pro forma consolidated financial information
with respect to the Company. Historical financial information for the year ended
January 1, 1999 was derived from the audited financial statements contained in
the Company's Annual Report on Form 10-K for the year ended January 1, 1999 (the
"Company's 1998 Annual Report") and historical financial information for the
quarter ended October 1, 1999 was derived from the unaudited financial
statements contained in the Company's Quarterly Report on Form 10-Q for the
quarter ended October 1, 1999 (the "Company's 1999 Third Quarter Report"), each
of which is hereby incorporated herein by reference, and other information and
data contained in the Company's 1998 Annual Report and the Company's 1999 Third
Quarter Report. More comprehensive financial information is included in such
reports and the historical information below is qualified in its entirety by
reference to such reports and all of the financial statements and related notes
contained therein, copies of which may be obtained as set forth below under the
caption "Additional Information."
The pro forma information on the results of operations for the year ended
January 1, 1999 and the thirty-nine week period ended October 1, 1999, assumes
that at the beginning of each period shown, the Company used available cash and
cash equivalents to purchase 400,000 Shares pursuant to the Offer at prices of
$9.00 and $12.50. The assumptions on which the pro forma financial information
is based are further described in the Notes to Selected Historical and Pro Forma
Information. Each period presented should be treated as a stand-alone period.
The pro forma information of the Company is unaudited and does not purport to be
indicative of the results that would actually have been attained had the
purchase of the Shares pursuant to the Offer been completed at the dates
indicated or the results that may be obtained in the future.
17
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
(in thousands except per share data and ratios)
Consolidated Statement of Operation Data:
<TABLE>
<CAPTION>
39 Weeks Ended Fiscal Year Ended
------------------------------------ -------------------------------------
October 1, October 2, January 1, January 2,
1999 1998 1999 1998
--------------- -------------- --------------- -------------------
(in thousands except per share data)
Statement of Earnings Data
<S> <C> <C> <C> <C>
Total Revenues 93,074 104,362 133,949 124,027
Operating Profit 8,908 12,334 15,566 16,951
Interest Expense 1,453 1,476 2,040 1,695
Minority Interest 412 0 0 0
Income before Taxes after
Minority Interest 6,488 10,675 13,146 14,483
Provision for Income Taxes 2,530 4,274 5,256 5,794
Net Earnings 3,958 6,401 7,890 8,689
Basic Earnings Per Share 0.67 1.09 1.34 1.49
Diluted Earnings Per Share 0.67 1.08 1.33 1.47
Average Common Shares Outstanding 5,905 5,870 5,874 5,833
Average Common Shares Outstanding
Assuming Dilution 5,920 5,931 5,932 5,921
Ratio of Earnings to
Fixed Charges 5.47 x 8.23 x 7.44 x 9.54 x
Consolidated Balance Sheet
Data:
39 Weeks Ended Fiscal Year Ended
------------------------------------ ------------------------------
October 1, October 2, January 1, January 2,
1999 1998 1999 1998
--------------- -------------- --------------- -------------------
(in thousands except per share data)
Cash and Cash Equivalents 3,072 1,777 2,521 2,552
Total Assets 102,608 95,994 96,025 89,617
Total Assets, less Goodwill 92,699 86,672 85,966 80,495
Working Capital 32,685 34,693 33,493 27,279
Total Debt 33,223 32,604 32,469 26,539
Stockholders' Equity 29,894 27,382 28,515 23,606
Book Value Per Share 5.05 4.62 4.81 3.99
</TABLE>
Selected Unaudited Pro Forma Financial Information. The following selected
unaudited pro forma financial information sets forth historical information as
adjusted to give effect to the purchase of 400,000 Shares pursuant to the Offer
at a Purchase Price of $9.00 per Share and at a Purchase Price of $12.50 per
Share, the minimum and maximum possible Purchase Prices. Expenses directly
related to the Offer are estimated to be $300,000 and are reflected in the pro
forma financial information set forth below. The pro forma adjustments assume
that the transaction occurred, for purposes of the statement of income, as of
the first day of the period presented, and for purposes of the balance sheet, as
of the balance sheet date. The pro forma information of the Company is unaudited
18
<PAGE>
and does not purport to be indicative of the results that would have been
attained had the purchase of the Shares pursuant to the Offer been completed at
the dates indicated or the results that may be obtained in the future.
Selected Unaudited Pro Forma Financial Information
(in thousands, except per share data and ratios)
<TABLE>
<CAPTION>
Consolidated Statement of Operation Data:
39 Weeks Ended Fiscal Year Ended
-------------------------------------------- ---------------------------------------------
Pro Forma(1)(2) Pro Forma (1)(2)
----------------------------- -----------------------------
October 1, $9.00 $12.50 January 1, $9.00 $12.50
1999 Per Share Per Share 1999 Per Share Per Share
------------- ------------- ------------- ------------- ------------ -------------
(in thousands except per share data)
<S> <C> <C> <C> <C> <C> <C>
Total Revenues 93,074 93,074 93,074 133,949 133,949 133,949
Operating Profit 8,908 8,908 8,908 15,566 15,566 15,566
Interest Expense 1,453 1,640 1,707 2,040 2,290 2,379
Minority Interest 412 412 412 0 0 0
Income before Taxes after
Minority Interest 6,488 6,301 6,234 13,146 12,896 12,807
Provision for Income Taxes 2,530 2,457 2,431 5,256 5,159 5,124
Net Earnings 3,958 3,844 3,803 7,890 7,737 7,683
Basic Earnings Per Share 0.67 0.70 0.69 1.34 1.41 1.40
Diluted Earnings Per Share 0.67 0.70 0.69 1.33 1.40 1.39
Average Common Shares Outstanding 5,905 5,505 5,505 5,874 5,474 5,474
Average Common Shares Outstanding
Assuming Dilution 5,920 5,520 5,520 5,932 5,532 5,532
Ratio of Earnings to
Fixed Charges (3) 5.47 x 4.84 x 4.65 x 7.44 x 6.63 x 6.38 x
Consolidated Balance Sheet Data:
39 Weeks Ended Fiscal Year Ended
-------------------------------------------- ---------------------------------------------
Pro Forma (1)(2) Pro Forma (1)(2)
----------------------------- -----------------------------
October 1, $9.00 $12.50 January 1, $9.00 $12.50
1999 Per Share Per Share 1999 Per Share Per Share
------------- ------------- ------------- ------------- ------------ -------------
(in thousands except per share data)
Cash and Cash Equivalents 3,072 2,958 2,917 2,521 2,368 2,314
Total Assets 102,608 102,494 102,453 96,025 95,872 95,818
Working Capital 32,685 32,685 32,685 33,493 33,493 33,493
Total Debt 33,223 37,123 38,523 32,469 36,369 37,769
Stockholders' Equity (4) 29,894 25,880 24,439 28,515 24,462 23,008
Book Value Per Share 5.05 4.69 4.43 4.81 4.42 4.16
</TABLE>
Notes to Selected Unaudited Pro Forma Financial Information
The following assumptions were used in determining the pro forma financial
information:
(1) The information assumes that cash proceeds from borrowing under the
Company's available lines of credit were used to purchase Shares pursuant
to the Offer. The pre-tax interest rate used for the borrowings in the pro
forma information was 6.4% for the 39 weeks ended October 1, 1999 and 6.3%
for the year ended January 1, 1999. See Section 8 for a description of the
Credit Facility.
19
<PAGE>
(2) The information assumes 400,000 Shares are purchased at $9.00 per Share and
at $12.50 per Share, which was assumed to have occurred at the beginning of
the periods presented for income statement purposes and as of the balance
sheet date for balance sheet purposes. There can be no assurance that the
Company will purchase 400,000 Shares in the Offer or the final price at
which such Shares will be purchased.
(3) The ratios of net earnings to fixed charges were computed by dividing net
earnings before fixed charges and income taxes by fixed charges. Fixed
charges consist of interest and debt expenses and one-third of rent
expense, which approximates the interest factor.
(4) Expenses directly related to the Offer were assumed to be $300,000 and are
included in the purchase price for the Shares.
Additional Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning the Company's directors and officers, their remuneration, options
granted to them, the principal holders of the Company's securities and any
material interest of such persons in transactions with the Company is required
to be disclosed in proxy statements distributed to the Company's stockholders
and filed with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 2120, Washington,
D.C. 20549; at its regional offices located at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, New York, New York
10048. Copies of such material may also be obtained by mail, upon payment of the
Commission's customary charges, from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission also maintains a web site on the Internet at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Such
reports, proxy statements and other information concerning the Company also can
be inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
10. Interest of Directors and Officers and Principal Stockholder; Transactions
and Arrangements Concerning Shares.
As of November 11, 1999, the Company had 5,862,228 issued and outstanding
Shares, 25,470 Shares held in treasury and had reserved 500,000 Shares for
issuance upon exercise of outstanding Options. The 400,000 Shares that the
Company is offering to purchase represents approximately 6.8% of the Shares
outstanding on November 11, 1999 (approximately 6.6% assuming exercise of
outstanding exercisable Options).
As of November 11, 1999, the Company's directors and executive officers as
a group (17 persons) beneficially owned an aggregate of 3,153,457 Shares
representing approximately 52.1% of the outstanding Shares, assuming the
exercise by such persons of their Options exercisable within 60 days of such
date. Certain of the Company's executive officers and directors have advised the
Company that he or she intends to tender Shares pursuant to the Offer. If the
Company purchases 400,000 Shares pursuant to the Offer, then after the purchase
of Shares pursuant to the Offer, assuming no Shares were tendered by the
executive officers and directors or holders of options granted by any of the
executive officers and directors the Company's executive officers and directors
as a group would own beneficially approximately 55.8% of the outstanding Shares
immediately after the Offer, assuming the exercise by such persons of their
Options exercisable within 60 days of such date. See paragraph immediately below
regarding option granted by the Company's Chairman.
Thomas C. Foley, the Company's Chairman and controlling stockholder has
advised the Company that he does not intend to tender any Shares into the Offer
and that on November 9, 1999 he entered into an option agreement (the "Option
Agreement") with a third party (the "Option Holder"). Pursuant to the Option
Agreement, the Option Holder has the option to purchase up to 275,000 Shares
from Mr. Foley at a purchase price that is $ .05 per Share less than the final
per Share Purchase Price to be paid by the Company for Shares tendered into and
accepted for payment pursuant to the Offer. The Option Holder has advised the
Company that it currently intends to tender 275,000 Shares into the Offer at a
price of $9.00 per Share. As of November 11, 1999, Mr. Foley beneficially owned
2,698,658 Shares representing approximately 44.6% of the outstanding Shares
(calculated on a fully-diluted basis).
20
<PAGE>
Based on the Company's records and on information provided to the Company
by its directors, executive officers and subsidiaries, neither the Company, nor
any associate or subsidiary of the Company nor, to the best of the Company's
knowledge, any of the directors or executive officers of the Company or any of
its subsidiaries, nor any associates or subsidiaries of any of the foregoing,
has effected any transactions involving the Shares during the 40 business days
prior to the date hereof.
Except as otherwise described herein, neither the Company nor, to the best
of the Company's knowledge, any of its affiliates, directors or executive
officers, is a party to any contract, arrangement, understanding or relationship
with any other person relating, directly or indirectly, to the Offer with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies, consents or authorizations.
11. Effects of the Offer On the Market for Shares; Registration Under the
Exchange Act.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise be traded publicly and may reduce the
number of stockholders. Nonetheless, the Company anticipates that there will be
a sufficient number of Shares outstanding and publicly traded following
consummation of the Offer to ensure a continued trading market for the Shares.
Based upon published guidelines of the NYSE, the Company does not believe that
its purchase of Shares pursuant to the Offer will cause the Company's remaining
Shares to be delisted from the NYSE.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using such Shares as collateral. The Company
believes that, following the purchase of Shares pursuant to the Offer, the
Shares will continue to be "margin securities" for purposes of the Federal
Reserve Board's margin regulations.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its stockholders
and the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's stockholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Shares becoming
eligible for deregistration under the Exchange Act.
12. Certain Legal Matters; Regulatory Approvals.
The Company is not aware of any license or regulatory permit that appears
to be material to the Company's business that might be adversely affected by the
Company's acquisition of Shares as contemplated herein or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Company as contemplated herein. Should
any such approval or other action be required, the Company presently
contemplates that such approval or other action will be sought. The Company is
unable to predict whether it will be required to delay the acceptance for
payment of or payment for Shares tendered pursuant to the Offering pending the
outcome of any such matter. There can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or that the failure to obtain any such approval or other
action might not result in adverse consequences to the Company's business. The
Company's obligations under the Offer to accept for payment and pay for Shares
is subject to certain conditions. See Section 6.
13. Certain United States Federal Income Tax Consequences.
The following summary describes the principal United States federal income
tax consequences to United States Holders (as defined below) of an exchange of
Shares pursuant to the Offer. Those Stockholders who do not participate in the
exchange should not incur any United States federal income tax liability from
the exchange. This summary is based upon the Internal Revenue Code of 1986, as
amended to the date hereof (the "Code"), existing United States Treasury
Regulations promulgated thereunder, published rulings, administrative
pronouncements and judicial decisions, changes to which could affect the tax
consequences described herein (possibly on a retroactive basis).
This summary addresses only Shares held as capital assets. It does not
address all of the tax consequences that may be relevant to particular
stockholders in light of their personal circumstances, or to certain types of
stockholders (such as certain financial institutions, dealers or traders in
securities or commodities, insurance companies, tax-exempt organizations or
persons who hold Shares as a position in a "straddle" or as part of a "hedging"
or "conversion" transaction or that have a functional currency other than the
United States dollar). This
21
<PAGE>
summary may not be applicable with respect to Shares acquired as compensation
(including Shares acquired upon the exercise of stock options or which were or
are subject to forfeiture restrictions). This summary also does not address the
state, local or foreign tax consequences of participating in the Offer. Each
holder of Shares should consult such holder's tax advisor as to the particular
consequences to such holder of participation in the Offer.
A "United States Holder" is a holder of Shares that for United States
federal income tax purposes is (i) a citizen or resident of the United States,
(ii) a corporation (or other entity taxable as a corporation) created or
organized in or under the laws of the United States or any State or division
thereof (including the District of Columbia), (iii) an estate the income of
which is subject to United States federal income taxation regardless of its
source or (iv) a trust (a) the administration over which a United States court
can exercise primary supervision and (b) all of the substantial decisions of
which one or more United States persons have the authority to control and
certain other trusts considered United States Holders for federal income tax
purposes. A "Non-United States Holder" is a holder of Shares other than a United
States Holder. In the case of a partnership, the tax treatment of the
disposition of Shares pursuant to the Offer described below will be determined
with reference to the partnership, while the applicability of foreign
withholding rules may depend upon the partner's status. Partners holding Shares
through a partnership are urged to consult their tax advisors.
A United States Holder participating in the exchange will be treated either
as having sold Shares or as having received a dividend distribution from the
Company. In that regard, under Section 302 of the Code, a United States Holder
whose Shares are exchanged pursuant to the Offer will be treated as having sold
Shares if the exchange (i) results in a "complete termination" of all of such
holder's equity interest in the Company, (ii) is a "substantially
disproportionate" redemption with respect to such holder or (iii) is "not
essentially equivalent to a dividend" with respect to such holder. In applying
each of the Section 302 tests, a United States Holder will be treated as owning
Shares actually or constructively owned by certain related individuals and
entities.
The receipt of cash by a stockholder will result in a "complete
termination" of the stockholder's interest if either (1) all of the stock of the
Company that is actually and constructively owned by the stockholder is
transferred pursuant to the Offer or (2) all of the stock of the Company
actually owned by the stockholder is sold pursuant to the Offer and the
stockholder is eligible to waive, and effectively waives, the attribution of
stock of the Company constructively owned by the stockholder in accordance with
the procedures described in the Code. An exchange of Shares will be
"substantially disproportionate" with respect to a United States Holder if the
percentage of the then outstanding Shares actually and constructively owned by
such holder immediately after the exchange of Shares (treating Shares exchanged
pursuant to the Offer as no longer outstanding) pursuant to the Offer is less
than 80% of the percentage of the Shares actually and constructively owned by
such holder immediately before the exchange (treating Shares exchanged pursuant
to the Offer as outstanding). A United States Holder will satisfy the "not
essentially equivalent to a dividend" test if the reduction in such holder's
proportionate interest in the Company constitutes a "meaningful reduction" given
such holder's particular facts and circumstances. The IRS has concluded in a
published ruling that even a minor reduction in the percentage interest of a
stockholder whose relative stock interest in a publicly held corporation is
minimal and who exercises no control over corporate affairs constitutes such a
"meaningful reduction."
If a United States Holder is treated as having sold Shares, such holder
will recognize capital gain or loss equal to the difference between the amount
of cash received and such holder's adjusted tax basis in the Shares sold to the
Company. In the case of an individual United States Holder, the maximum marginal
United States federal income tax rate applicable to net capital gain on Shares
held for more than one year is 20%.
If a United States Holder who participates in the Offer is not treated as
having sold Shares, such holder will be treated as receiving a dividend to the
extent of such holder's ratable share of the Company's earnings and profits.
Such a dividend will be includible in the United States Holder's gross income as
ordinary income without reduction for the adjusted tax basis of the Shares
exchanged. In such event, the United States Holder's adjusted tax basis in its
Shares exchanged in the Offer generally will be added to such holder's adjusted
tax basis in the remaining Shares. A dividend received by a corporate United
States Holder may be (i) eligible for a dividends-received deduction (subject to
applicable limitations) and (ii) subject to the "extraordinary dividend"
provisions of the Code. To the extent, if any, that the cash received by a
United States Holder exceeds the Company's earnings and profits, it will be
treated first as a tax-free return of such United States Holder's tax basis in
the Shares and thereafter as capital gain.
See Section 3 with respect to the application of United States federal
income tax withholding to payments made to Non-United States Holders and the
backup withholding tax requirements.
The tax discussion set forth above is included for general information
only. Each stockholder is urged to consult such holder's own tax advisor to
determine the particular tax consequences to such holder of the Offer, including
the applicability and effect of state, local and foreign tax laws.
22
<PAGE>
14. Extension of the Offer; Termination; Amendment.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 6 shall have occurred or shall be deemed by the Company to
have occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and payment for, any Shares by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. The Company also expressly reserves the right, in its sole
discretion, to terminate the Offer and not accept for payment or pay for any
Shares not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for Shares upon the occurrence of any of the
conditions specified in Section 6 hereof by giving oral or written notice of
such termination or postponement to the Depositary and making a public
announcement thereof. The Company's reservation of the right to delay payment
for Shares which it has accepted for payment is limited by Rule 13e-4(f)(5)
promulgated under the Exchange Act, which requires that the Company must pay the
consideration offered or return the Shares tendered promptly after termination
or withdrawal of a tender offer. Subject to compliance with applicable law, the
Company further reserves the right, in its sole discretion, and regardless of
whether any of the events set forth in Section 6 shall have occurred or shall be
deemed by the Company to have occurred, to amend the Offer in any respect
(including, without limitation, by decreasing or increasing the consideration
offered in the Offer to holders of Shares or by decreasing or increasing the
number of Shares being sought in the Offer). Amendments to the Offer may be made
at any time and from time to time effected by public announcement thereof, such
announcement, in the case of an extension, to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the last previously scheduled
or announced Expiration Date. Any public announcement made pursuant to the Offer
will be disseminated promptly to stockholders in a manner reasonably designed to
inform stockholders of such change. Without limiting the manner in which the
Company may choose to make a public announcement, except as required by
applicable law, the Company shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) promulgated under the Exchange Act. These rules provide that the
minimum period during which an offer must remain open following material changes
in the terms of the Offer or information concerning the Offer (other than a
change in price or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality of such terms or
information. If (i) the Company increases or decreases the price to be paid for
Shares, or increases or decreases the number of Shares being sought in the Offer
and, in the event of an increase in the number of Shares being sought, such
increase exceeds 2% of the outstanding Shares, and (ii) the Offer is scheduled
to expire at any time earlier than the expiration of a period ending on the
tenth business day from, and including, the date that such notice of an increase
or decrease is first published, sent or given in the manner specified in this
Section 14, the Offer will be extended until the expiration of such period of
ten business days. For the purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or Federal holiday and consists of the time period
from 12:01 am through 12:00 midnight, New York City time.
15. Fees and Expenses.
The Company has retained MacKenzie Partners, Inc. to act as Information
Agent and American Stock Transfer & Trust Company to act as Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telegraph and personal interviews and may request brokers,
dealers and other nominee stockholders to forward materials relating to the
Offer to beneficial owners. The Information Agent and the Depositary will each
receive reasonable and customary compensation for their respective services,
will be reimbursed by the Company for certain reasonable out-of-pocket expenses
and will be indemnified against certain liabilities in connection with the
Offer, including certain liabilities under the federal securities laws.
No fees or commissions will be payable by the Company to brokers, dealers
or other persons (other than fees to the Information Agent as described above)
for soliciting tenders of Shares pursuant to the Offer. Stockholders holding
Shares through brokers or banks are urged to consult the brokers or banks to
determine whether transaction costs are applicable if stockholders tender Shares
through such brokers or banks and not directly to the Depositary. The Company,
however, upon request, will reimburse brokers, dealers and commercial banks for
customary mailing and handling expenses incurred by them in forwarding the Offer
and related materials to the beneficial owners of Shares held by them as a
nominee or in a fiduciary capacity. No broker, dealer, commercial bank or trust
company has been authorized to act as the agent of the Company, the Information
Agent or the
23
<PAGE>
Depositary for purposes of the Offer. The Company will pay or cause to be paid
all stock transfer taxes, if any, on its purchase of Shares except as otherwise
provided in Instruction 7 in the Letter of Transmittal.
16. Miscellaneous.
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer or the acceptance of Shares pursuant
thereto is not in compliance with any valid applicable law, the Company will
make a good faith effort to comply with the applicable law. If, after such good
faith effort, the Company cannot comply with the applicable law, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) the holders
of Shares in such jurisdiction. In any jurisdiction the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on the Company's behalf by one or more
registered brokers or dealers licensed under the laws of the jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission the Schedule 13E-4 which
contains additional information with respect to the Offer. Such Schedule 13E-4,
including the exhibits and any amendments thereto, may be examined, and copies
may be obtained, at the same places and in the same manner as is set forth in
Section 9 with respect to information concerning the Company.
No person has been authorized to give any information or make any
representation on behalf of the Company in connection with the Offer other than
those contained in this Offer to Purchase or in the related Letter of
Transmittal, if given or made, such information or representation must not be
relied upon as having been authorized by the Company.
TB WOOD'S CORPORATION
November 12, 1999
24
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for Shares and any other
required documents should be sent or delivered by each stockholder or such
stockholder's broker, dealer, commercial bank, trust company or nominee to the
Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<CAPTION>
<S> <C> <C>
By Hand Delivery: By Overnight Delivery: By Mail:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor 46th Floor
New York, New York 10005 New York, New York 10005 New York, New York 10005
Facsimile Transmission:
(for Eligible Institutions only)
(718) 234-5001
</TABLE>
Confirm Receipt of Facsimile by Telephone:
(718) 921-8200
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent at the telephone number and address set
forth below. Stockholders may also contact their broker, dealer, commercial
bank, trust company or nominee for assistance concerning the Offer. To confirm
delivery of Shares, stockholders are directed to contact the Depositary.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
or call toll free 1-800-322-2885
25
<PAGE>
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
TB WOOD'S CORPORATION
Pursuant to the Offer to Purchase dated November 12, 1999
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, DECEMBER 10, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor 46th Floor
New York, New York 10005 New York, New York 10005 New York, New York 10005
</TABLE>
Facsimile Transmission:
(for Eligible Institutions only)
(718) 234-5001
Confirm Receipt of Facsimile by Telephone:
(718) 921-8200
THIS LETTER OF TRANSMITTAL, INCLUDING THE ACCOMPANYING INSTRUCTIONS, SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and Address(es) of
Registered Holder(s) (Please
fill in, if blank, exactly as Total Number of Shares
name(s) appear(s) on Share Evidenced by Share Number of Shares
certificate(s)) Certificate Number(s)* Certificate(s) Tendered**
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Shares
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
- --------------------------------------------------------------------------------
***Indicate in this box the order (by certificate number) in which Shares are to
be purchased in event of proration. Attach additional signed list if necessary.
See Instruction 10.
1st: ________ 2nd: ________ 3rd: ________ 4th: ________ 5th: ________
- --------------------------------------------------------------------------------
- -------------------
* DOES NOT need to be completed by stockholders tendering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each certificate delivered to the Depositary are being tendered hereby. See
Instruction 4.
*** If you do not designate an order, in the event less than all Shares tendered
are purchased due to proration, Shares will be selected for purchase by the
Depositary.
2
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE
COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT
CONSTITUTE VALID DELIVERY. DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL
NOT CONSTITUTE VALID DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal is to be completed only if (a) certificates
representing Shares (as defined below) are to be forwarded herewith, or (b) a
tender of Shares is to be made concurrently by book-entry transfer to the
account maintained by the Depositary at The Depository Trust Company
(hereinafter referred to as the "Book-Entry Transfer Facility") pursuant to
Section 3 of the Offer to Purchase (as defined below). Stockholders who desire
to tender Shares pursuant to the Offer (as defined below), but whose Share
certificates are not immediately available or who cannot deliver such
certificates and all other documents required by this Letter of Transmittal to
the Depositary on or prior to the Expiration Date (as defined in the Offer to
Purchase), or who cannot comply with the procedure for book-entry transfer on a
timely basis, may nevertheless tender their Shares pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2.
[ ] CHECK HERE IF ANY CERTIFICATE REPRESENTING SHARES TENDERED HEREBY HAS BEEN
LOST, STOLEN, DESTROYED OR MUTILATED. SEE INSTRUCTION 15.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Account Number:
Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution that Guaranteed Delivery:
Window Ticket Number (if any):
3
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
To American Stock Transfer & Trust Company:
The undersigned hereby tenders to TB Wood's Corporation, a Delaware
corporation (the "Company"), the above-described shares of the Company's Common
Stock, par value $.01 per share (the "Shares"), at the price per Share indicated
in this Letter of Transmittal, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated November 12, 1999 (the "Offer to Purchase"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered hereby in accordance with the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the undersigned hereby sells,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to all Shares tendered hereby and orders the registration of all
such Shares if tendered by book-entry transfer and hereby irrevocably
constitutes and appoints the Depositary as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (with full
knowledge that the Depositary also acts as the agent of the Company) with
respect to such Shares, with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to: (a)
deliver certificate(s) representing such Shares or transfer ownership of such
Shares on the account books maintained by the Book-Entry Transfer Facility,
together, in either such case, with all accompanying evidences of transfer and
authenticity, to or upon the order of the Company upon receipt by the
Depositary, as the undersigned's agent, of the Purchase Price (as defined below)
with respect to such Shares; (b) present certificates for such Shares for
cancellation and transfer on the Company's books; and (c) receive all benefits
and otherwise exercise all rights of beneficial ownership of such Shares,
subject to the next paragraph, all in accordance with the terms and subject to
the conditions of the Offer.
The undersigned hereby covenants, represents and warrants to the Company
that:
(a) the undersigned has full power and authority to tender, sell,
assign and transfer the Shares tendered hereby and that when and to the
extent the same are accepted for payment by the Company, the Company will
acquire good, marketable and unencumbered title thereto, free and clear of
all security interests, liens, restrictions, charges, encumbrances,
conditional sales agreements or other obligations relating to the sale or
transfer of such Shares, and not subject to any adverse claims;
(b) the undersigned understands that tenders of Shares pursuant to
any one of the procedures described in Section 3 of the Offer to Purchase
and in the instructions hereto will constitute the undersigned's acceptance
of the terms and conditions of the Offer, including the undersigned's
representation and warranty that (i) the undersigned has a net long
position in the Shares or equivalent securities at least equal to the
Shares tendered within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), and (ii) such tender of
Shares complies with Rule 14e-4;
(c) the undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby; and
(d) the undersigned has read, understands and agrees to all of the
terms of the Offer.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Offer. The
undersigned acknowledges that no interest will be paid on the Purchase Price for
tendered Shares regardless of any extension of the Offer or any delay in making
such payment.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and legal
representatives of the undersigned. Except as stated in the Offer to Purchase,
this tender is irrevocable.
The name(s) and address(es) of the registered holder(s) should be printed,
if they are not already printed above, exactly as they appear on the
certificates representing Shares tendered hereby. The certificate numbers, the
4
<PAGE>
number of Shares represented by such certificates and the number of Shares that
the undersigned wishes to tender, should be set forth in the appropriate boxes
above. The price at which such Shares are being tendered should be indicated in
the box below.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single per Share price (not
in excess of $12.50 nor less than $9.00 per Share) net to the seller in cash,
without interest thereon (the "Purchase Price"), that it will pay for Shares
properly tendered and not properly withdrawn prior to the Expiration Date
pursuant to the Offer, taking into account the number of Shares so tendered and
the prices (in multiples of $.125) specified by tendering stockholders. The
undersigned understands that the Company will select the lowest Purchase Price
that will allow it to buy 400,000 Shares (or such lesser number of Shares as are
properly tendered at prices not in excess of $12.50 nor less than $9.00 per
share) pursuant to the Offer. The undersigned understands that all Shares
properly tendered prior to the Expiration Date at prices at or below the
Purchase Price and not properly withdrawn will be purchased at the Purchase
Price, upon the terms and subject to the conditions of the Offer, including its
proration provisions, and that the Company will return all other Shares not
purchased pursuant to the Offer, including Shares tendered at prices greater
than the Purchase Price and not properly withdrawn prior to the Expiration Date
and Shares not purchased because of proration.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may accept for payment fewer than all of the Shares tendered hereby. In any such
event, the undersigned understands that certificate(s) for any Shares not
tendered or not purchased will be returned to the undersigned at the address
indicated above, unless otherwise indicated under the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" below.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
The check for the aggregate net Purchase Price for such of the Shares
tendered hereby as are purchased will be issued to the order of the undersigned
and mailed to the address indicated above, unless otherwise indicated under the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" below. The undersigned acknowledges that the Company has
no obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of its registered holder(s) thereof, or to order the
registration or transfer of any Shares tendered by book-entry transfer, if the
Company does not purchase any of such Shares.
5
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 9.)
To be completed ONLY if certificate(s) for Shares not tendered or not purchased
and/or any check for the Purchase Price are to be issued in the name of someone
other than the undersigned, or if Shares tendered hereby and delivered by
book-entry transfer which are not purchased are to be returned by credit to an
account at the Book-Entry Transfer Facility other than that designated above.
Issue: [ ] Check [ ] Share Certificate(s) to:
Name:
- --------------------------------------------------------------------------------
(Print Print)
Address:
- --------------------------------------------------------------------------------
(Zip Code)
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
(See Substitute Form W-9 on reverse side)
[ ] Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below:
Account Number:
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 10.)
To be completed ONLY if certificate(s) for Shares not tendered or not purchased
and/or any check for the Purchase Price are to be mailed or sent to someone
other than the undersigned, or to the undersigned at an address other than that
designated above.
Issue: [ ] Check [ ] Share Certificate(s) to:
Name:
- --------------------------------------------------------------------------------
(Print Print)
Address:
- --------------------------------------------------------------------------------
(Zip Code)
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
(See Substitute Form W-9 on reverse side)
6
<PAGE>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5.)
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
(Stockholders who desire to tender Shares at more than one price must complete a
separate Letter of Transmittal for each price at which Shares are tendered.)
[ ] $9.000 [ ] $10.000 [ ] $10.875 [ ] $11.750
[ ] $9.125 [ ] $10.125 [ ] $11.000 [ ] $11.875
[ ] $9.250 [ ] $10.250 [ ] $11.125 [ ] $12.000
[ ] $9.375 [ ] $10.375 [ ] $11.250 [ ] $12.125
[ ] $9.500 [ ] $10.500 [ ] $11.375 [ ] $12.250
[ ] $9.625 [ ] $10.625 [ ] $11.500 [ ] $12.375
[ ] $9.750 [ ] $10.750 [ ] $11.625 [ ] $12.500
[ ] $9.875
7
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT
STOCKHOLDERS SIGN HERE
(PLEASE COMPLETE AND RETURN THE ATTACHED SUBSTITUTE FORM W-9)
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
Name(s):
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
- --------------------------------------------------------------------------------
(Must be signed by the registered holder(s) exactly as such holder(s) name(s)
appear(s) on certificate(s) for Shares or on a security position listing or by
person(s) authorized to become the registered holder(s) thereof by certificates
and documents transmitted with this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or any other person acting in a fiduciary or representative
capacity, please set forth full title and see Instruction 6.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6.)
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
(Please Print)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered holder of the
Shares (which term, for purposes hereof, shall include any participant in the
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of such Shares) tendered hereby exactly as the name of such
registered holder appears on the certificate(s) for such Shares tendered with
this Letter of Transmittal and payment and delivery are to be made directly to
such owner unless such owner has completed either the box entitled "Special
Payment Instructions" or "Special Delivery Instructions" above; or
(b) such Shares are tendered for the account of a bank, broker, dealer,
credit union, savings association or other entity which is a member in good
standing of the Securities Transfer Agents Medallion Program or a bank, broker,
dealer, credit union, savings association or other entity which is an "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (each of the foregoing constituting
an "Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 6.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed only if certificates
for Shares are delivered with it to the Depositary (or such certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary) or if a tender for Shares is being made concurrently pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase provided however that if no Letter of Transmittal is delivered a
confirmation of such delivery of Shares is received by the Depositary, including
an Agents Message or pursuant to the Book Entry Facility's Automated Tender
Offer Program ("ATOP"). Certificates for all physically tendered Shares or
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of Shares tendered electronically, together in the
case of physically tendered shares with a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile hereof), and any other
documents required by this Letter of Transmittal, should be mailed or delivered
to the Depositary at the appropriate address set forth herein and must be
delivered to the Depositary on or before the Expiration Date. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES WITHOUT DELIVERY OF AN AGENT'S MESSAGE OR
PURSUANT TO ATOP DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry confirmation (as defined below), which states that the Book-Entry
Transfer Facility has received an express acknowledgment from the participant in
the Book-Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that Purchaser may enforce such agreement against the participant.
Stockholders whose certificates are not immediately available or who cannot
deliver certificates for their Shares and all other required documents to the
Depositary before the Expiration Date, or whose Shares cannot be delivered on a
timely basis pursuant to the procedures for book-entry transfer, must, in any
such case, tender their Shares by or through any Eligible Institution by
properly completing and duly executing and delivering a Notice of Guaranteed
Delivery (or facsimile thereof) and by otherwise complying with the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to
such procedure, certificates for all physically tendered Shares or book-entry
confirmations, as the case may be, as well as a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile hereof) and all
other documents required by this Letter of Transmittal, must be received by the
Depositary within three (3) New York Stock Exchange, Inc. trading days after
receipt by the Depositary of such Notice of Guaranteed Delivery, all as provided
in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth therein.
For Shares to be tendered validly pursuant to the guaranteed delivery procedure,
the Depositary must receive the Notice of Guaranteed Delivery on or before the
Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
9
<PAGE>
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares, except as expressly
provided in the Offer to Purchase. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their tender.
3. Inadequate Space. If the space provided in the box entitled "Description
of Shares Tendered" above is inadequate, the certificate numbers and/or the
number of Shares should be listed on a separate signed schedule and attached to
this Letter of Transmittal.
4. Partial Tenders and Unpurchased Shares. (Not applicable to stockholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares that are to be
tendered in the column entitled "Number of Shares Tendered" in the box entitled
"Description of Shares Tendered" above. In such case, if any tendered Shares are
purchased, a new certificate for the remainder of the Shares (including any
Shares not purchased) evidenced by the old certificate(s) will be issued and
sent to the registered holder(s) thereof, unless otherwise specified in either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" in this Letter of Transmittal, as soon as practicable
after the Expiration Date. Unless otherwise indicated, all Shares represented by
the certificate(s) set forth above and delivered to the Depositary will be
deemed to have been tendered.
5. Indication of Price at Which Shares are Being Tendered. For Shares to be
properly tendered, the stockholder MUST check the box indicating the price per
Share at which such holder is tendering Shares under "Price (In Dollars) Per
Share at Which Shares Are Being Tendered" in this Letter of Transmittal. ONLY
ONE BOX MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES. A stockholder wishing to tender a
portion(s) of such holder's Shares at different prices must complete a separate
Letter of Transmittal for each price at which such holder wishes to tender each
such portion of such holder's Shares. The same Shares cannot be tendered (unless
previously properly withdrawn as provided in Section 4 of the Offer to Purchase)
at more than one price.
6. Signatures on Letter Of Transmittal; Stock Powers and Endorsements.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered hereby, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificate(s) without any change
whatsoever.
(b) If the Shares tendered hereby are registered in the names of two or
more joint holders, each such holder must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles hereof) as there are different
registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered holder(s)
of the Shares tendered hereby, no endorsement(s) of certificate(s) representing
such Shares or separate stock power(s) are required unless payment is to be made
or the certificate(s) for Shares not tendered or not purchased are to be issued
to a person other than the registered holder(s) thereof. SIGNATURE(S) ON SUCH
CERTIFICATE(S) MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. If this Letter of
Transmittal is signed by a person other than the registered holder(s) of the
certificate(s) listed, or if payment is to be made or certificate(s) for Shares
not tendered or not purchased are to be issued to a person other than the
registered holder(s) thereof, such certificate(s) must be endorsed or
accompanied by appropriate stock power(s), in either case signed exactly as the
name(s) of the registered holder(s) appears on the certificate(s), and the
signature(s) on such certificate(s) or stock power(s) must be guaranteed by an
Eligible Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificate(s) or stock power(s)
are signed by a trustee, executor, administrator, guardian, attorney-in- fact,
officer of a corporation or any other person acting in a fiduciary or
representative capacity, such person should so indicate when signing this Letter
of Transmittal and must submit proper evidence satisfactory to the Company of
their authority so to act.
7. Stock Transfer Taxes. Except as provided in this Instruction 7, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter of
Transmittal. The Company will pay any stock transfer taxes payable on the
10
<PAGE>
transfer to it of Shares purchased pursuant to the Offer. If, however, either
(a) payment of the Purchase Price for Shares tendered hereby and accepted for
purchase is to be made to any person other than the registered holder(s); or (b)
Shares not tendered or not accepted for purchase are to be registered in the
name(s) of any person(s) other than the registered holder(s); or (c)
certificate(s) representing tendered Shares are registered in the name(s) of any
person(s) other than the person(s) signing this Letter of Transmittal, then the
Depositary will deduct from such Purchase Price the amount of any stock transfer
taxes (whether imposed on the registered holder(s), such other person(s) or
otherwise) payable on account of the transfer to such person, unless
satisfactory evidence of the payment of such taxes or any exemption therefrom is
submitted.
8. Order of Purchase in Event of Proration. As described in Section 1 of
the Offer to Purchase, stockholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
have an effect on the federal income tax treatment of the Purchase Price for the
Shares purchased. See Sections 1 and 13 of the Offer to Purchase.
9. Special Payment and Delivery Instructions. If certificate(s) for Shares
not tendered or not purchased and/or check(s) are to be issued in the name of a
person other than the signer of this Letter of Transmittal or if such
certificates and/or checks are to be sent to someone other than the person
signing this Letter of Transmittal or to the signer at a different address, the
box entitled "Special Payment Instructions" and/or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal should be completed as
applicable and signatures must be guaranteed as described in Instruction 1.
10. Irregularities. All questions as to the number of Shares to be
accepted, the price to be paid therefor and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Company in its sole discretion, which determination
shall be final and binding on all parties. The Company reserves the absolute
right to reject any or all tenders of Shares it determines not to be in proper
form or the acceptance of which or payment for which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Offer or any defect or irregularity in any
tender with respect to any particular Shares or any particular stockholder, and
the Company's interpretation of the terms of the Offer (including these
Instructions) will be final and binding on all parties. No tender of Shares will
be deemed to be properly made until all defects and irregularities have been
cured by the tendering stockholder or waived by the Company. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as the Company shall determine. None of the Company, the Depositary, the
Information Agent (as defined in the Offer to Purchase) or any other person is
or will be obligated to give notice of any defects or irregularities in tenders
and none of them will incur any liability for failure to give any such notice.
11. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from, the Information Agent at its
address and telephone numbers set forth on the back cover of the Offer to
Purchase or from brokers, dealers, commercial banks or trust companies.
12. Tax Identification Number and Backup Withholding. Federal income tax
law generally requires that a stockholder whose tendered Shares are accepted for
purchase, or such stockholder's assignee (in either case, the "Payee"), provide
the Depositary with such Payee's correct Taxpayer Identification Number ("TIN"),
which, in the case of a Payee who is an individual, is such Payee's social
security number. If the Depositary is not provided with the correct TIN or an
adequate basis for an exemption, such Payee may be subject to a $50 penalty
imposed by the Internal Revenue Service and backup withholding in an amount
equal to 31% of the gross proceeds received pursuant to the Offer. If
withholding results in an overpayment of taxes, a refund may be obtained.
To prevent backup withholding, each Payee must provide such Payee's correct
TIN by completing the Substitute Form W-9 set forth herein, certifying that the
TIN provided is correct (or that such Payee is awaiting a TIN) and that (i) the
Payee is exempt from backup withholding, (ii) the Payee has not been notified by
the Internal Revenue Service that such Payee is subject to backup withholding as
a result of a failure to report all interest or dividends, or (iii) the Internal
Revenue Service has notified the Payee that such Payee is no longer subject to
backup withholding.
If the Payee does not have a TIN, such Payee should (i) consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for instructions on applying for a TIN, (ii) write "Applied
For" in the space provided in Part 1 of the Substitute Form W-9, and (iii) sign
and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer
Identification Number set forth herein. The Depository may reserve up to 31% of
payments made to the Payee to satisfy potential backup withholding, and if the
Payee does not provide such Payee's TIN to the Depositary within sixty (60)
11
<PAGE>
days, backup withholding will be made on payments to the Payee. Note that
writing "Applied For" on the Substitute Form W-9 means that the Payee has
already applied for a TIN or that such Payee intends to apply for one in the
near future.
If Shares are held in more than one name or are not in the name of the
actual owner, consult the W-9 Guidelines for information on which TIN to report.
Exempt Payees (including, among others, all corporations and certain
foreign individuals) are not subject to backup withholding and reporting
requirements. To prevent possible erroneous backup withholding, an exempt Payee
should write "Exempt" in Part 2 of Substitute Form W-9. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions. In order for a nonresident alien or
foreign entity to qualify as exempt, such person must submit a completed Form
W-8 Certificate of Foreign Status, signed under penalty of perjury attesting to
such exempt status. Such form may be obtained from the Depositary.
13. Withholding On Non-United States Holder. Even if a Non-United States
Holder (as defined below) has provided the required certification to avoid
backup withholding, the Depositary will withhold United States federal income
taxes equal to 30% of the gross payments payable to a Non-United States Holder
or such holder's agent unless the Depositary determines that a reduced rate of
withholding is available pursuant to a tax treaty or that an exemption from
withholding is applicable because such gross proceeds are effectively connected
with the conduct of a trade or business within the United States. For this
purpose, a "Non-United States Holder" is any stockholder that for United States
federal income tax purposes is not (i) a citizen or resident of the United
States, (ii) a corporation (or other entity taxable as a corporation) created or
organized in or under the laws of the United States or any State or division
thereof (including the District of Columbia), (iii) an estate the income of
which is subject to United States federal income taxation regardless of the
source of such income, or (iv) a trust (a) the administration over which a
United States court can exercise primary supervision and (b) all of the
substantial decisions of which one or more United States persons have the
authority to control. Notwithstanding the foregoing, to the extent provided in
United States Treasury Regulations, certain trusts in existence on August 20,
1996, and treated as United States persons prior to such date, that elect to
continue to be treated as United States persons also will not be Non-United
States Holders. Non-United States Holders holding Shares through a United States
or foreign partnership are urged to consult their tax advisors regarding
applicable withholding. In order to obtain a reduced rate of withholding
pursuant to a tax treaty, a Non-United States Holder must deliver to the
Depositary before the payment a properly completed and executed IRS Form 1001.
In order to obtain an exemption from withholding on the grounds that the gross
proceeds paid pursuant to the Offer are effectively connected with the conduct
of a trade or business within the United States, a Non-United States Holder must
deliver to the Depositary a properly completed and executed IRS Form 4224. The
Depositary will determine a stockholder's status as a Non-United States Holder
and eligibility for a reduced rate of, or an exemption from, withholding based
on the presumption that the payment will be characterized as a dividend for
federal income tax purposes and by reference to outstanding certificates or
statements concerning eligibility for a reduced rate of, or exemption from,
withholding (e.g., IRS Form 1001 or IRS Form 4224) unless facts and
circumstances indicate that such reliance is not warranted. A Non-United States
Holder may be eligible to obtain a refund of all or a portion of any tax
withheld if such Non-United States Holder meets those tests described in Section
13 of the Offer to Purchase that would characterize the exchange as a sale (as
opposed to a dividend) or is otherwise able to establish that no tax or a
reduced amount of tax is due.
NON-UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE APPLICATION OF UNITED STATES FEDERAL INCOME TAX WITHHOLDING,
INCLUDING ELIGIBILITY FOR A WITHHOLDING TAX REDUCTION OR EXEMPTION, AND THE
REFUND PROCEDURE.
14. Lost, Stolen, Destroyed or Mutilated Certificates. If any
certificate(s) representing Shares has been lost, stolen, destroyed or
mutilated, the stockholder should promptly notify the Depositary by checking the
box set forth above and indicating the number of Shares so lost, stolen,
destroyed or mutilated. Such stockholder will then be instructed by the
Depositary as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, stolen, destroyed or
mutilated certificates have been followed. Stockholders may contact the
Depositary at 1-800-937-5449 (outside New York City) (toll free) or 718-921-8200
(inside New York City) to expedite such process.
THIS LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY EXECUTED (OR
MANUALLY SIGNED FACSIMILE HEREOF), TOGETHER WITH CERTIFICATES REPRESENTING
SHARES BEING TENDERED OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS, OR A NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED PRIOR
TO 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THE EXPIRATION DATE. STOCKHOLDERS ARE
ENCOURAGED TO RETURN A COMPLETED SUBSTITUTE FORM W-9 WITH THIS LETTER OF
TRANSMITTAL.
12
<PAGE>
PAYER: AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<CAPTION>
<S> <C> <C>
SUBSTITUTE PART 1--Taxpayer Identification TIN:
FORM W-9 Number--for all accounts, enter Social Security Number
taxpayer identification number in or Employer
the box at right and certify by Identification Number
signing and dating below. (If awaiting TIN, write
"Applied For")
Department of the Note: If the account is in more than one name,
Treasury, Internal see the chart in the enclosed Guidelines to
Revenue Service determine which number to give the payer.
PAYER'S REQUEST FOR PART 2 - for payees exempt from backup withholding,
TAXPAYER IDENTIFICATION please write "EXEMPT" here (see the enclosed Guidelines):
NUMBER ("TIN")
</TABLE>
PART 3--Certification--UNDER PENALTIES OF PERJURY, I CERTIFY THAT (1) The number
shown on this form is my correct Taxpayer Identification Number (or I am waiting
for a number to be issued to me), (2) I am not subject to backup withholding
because: (a) I am exempt from backup withholding, or (b) I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or dividends or (c)
the IRS has notified me that I am no longer subject to backup withholding.
Certification Instructions--You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return and you have not been
notified by the IRS that you are no longer subject to backup withholding. (Also
see instructions in the enclosed Guidelines.)
SIGNATURE: DATE: ________________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL
SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and that I mailed or delivered an application to receive
a taxpayer identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office (or I intend to mail or deliver
an application in the near future). I understand that, notwithstanding the
information I provided in Part III of the Substitute Form W-9 above (and the
fact that I have completed this Certificate of Awaiting Taxpayer Identification
Number), the Depository may reserve up to 31% of payments made to me to satisfy
potential withholding and if I do not provide a taxpayer identification number
to the Depositary within sixty (60) days, the Depositary is required to withhold
31% of all cash payments made to me.
SIGNATURE: DATE: __________________
- --------------------------------------------------------------------------------
13
<PAGE>
The Information Agent for the Offer is:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
or call toll free 1-800-322-2885
14
<PAGE>
TB WOOD'S CORPORATION
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if certificates
evidencing shares of Common Stock, par value $.01 per share (the "Shares"), of
TB Wood's Corporation, a Delaware corporation (the "Company"), are not
immediately available, or if the procedure for book-entry transfer set forth in
the Offer to Purchase dated November 12, 1999 (the "Offer to Purchase") and the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer") cannot be completed on a timely basis or
time will not permit all required documents, including a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile thereof), to
reach the Depositary prior to the Expiration Date (as defined in the Offer to
Purchase).
This Notice of Guaranteed Delivery, properly completed and duly executed,
may be delivered by hand, mail or facsimile transmission to the Depositary. See
Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
American stock transfer & trust company
<TABLE>
<CAPTION>
<S> <C> <C>
By Hand Delivery: By Overnight Delivery: By Mail:
40 Wall Street 40 Wall Street 40 Wall Street
46th Floor 46th Floor 46th Floor
New York, New York 10005 New York, New York 10005 New York, New York 10005
</TABLE>
Facsimile Transmission:
(for Eligible Institutions only)
(718) 234-5001
Confirm Receipt of Facsimile by Telephone:
(718) 921-8200
-----------------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE
COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT
CONSTITUTE VALID DELIVERY. DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL
NOT CONSTITUTE VALID DELIVERY TO THE DEPOSITARY.
This Notice of Guaranteed Delivery form is not to be used to guarantee
signatures. If a signature on the Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Offer to Purchase)
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company at the price per Share
indicated in this Notice of Guaranteed Delivery, upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the number of Shares
specified below pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES.
(Stockholders who desire to tender Shares at more than one price must complete a
separate Notice of Guaranteed Delivery for each price at which Shares are
tendered.)
[ ] $9.000 [ ] $10.000 [ ] $10.875 [ ] $11.750
[ ] $9.125 [ ] $10.125 [ ] $11.000 [ ] $11.875
[ ] $9.250 [ ] $10.250 [ ] $11.125 [ ] $12.000
[ ] $9.375 [ ] $10.375 [ ] $11.250 [ ] $12.125
[ ] $9.500 [ ] $10.500 [ ] $11.375 [ ] $12.250
[ ] $9.625 [ ] $10.625 [ ] $11.500 [ ] $12.375
[ ] $9.750 [ ] $10.750 [ ] $11.625 [ ] $12.500
[ ] $9.875
Signature(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name(s) of
Record Holder(s):
PLEASE TYPE OR PRINT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Certificate Nos.
(if available):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
ZIP CODE
Area Code and
Telephone Number:
- --------------------------------------------------------------------------------
If Shares will be delivered by book-entry transfer, provide the following
information:
Account Number:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR A SIGNATURE GUARANTEE.)
THE UNDERSIGNED, A BANK, BROKER, DEALER, CREDIT UNION, SAVINGS ASSOCIATION
OR OTHER ENTITY WHICH IS A MEMBER IN GOOD STANDING OF THE SECURITIES TRANSFER
AGENTS MEDALLION PROGRAM OR A BANK, BROKER, DEALER, CREDIT UNION, SAVINGS
ASSOCIATION OR OTHER ENTITY WHICH IS AN "ELIGIBLE GUARANTOR INSTITUTION," AS
SUCH TERM IS DEFINED IN RULE 17AD-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED (EACH OF THE FOREGOING CONSTITUTING AN "ELIGIBLE INSTITUTION"),
GUARANTEES THE DELIVERY TO THE DEPOSITARY OF THE SHARES TENDERED HEREBY, IN
PROPER FORM FOR TRANSFER, OR A CONFIRMATION THAT THE SHARES TENDERED HEREBY HAVE
BEEN DELIVERED PURSUANT TO THE PROCEDURE FOR BOOK-ENTRY TRANSFER SET FORTH IN
THE OFFER TO PURCHASE INTO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER
FACILITY, TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF) AND ANY OTHER REQUIRED
DOCUMENTS, ALL WITHIN THREE (3) NEW YORK STOCK EXCHANGE, INC. TRADING DAYS OF
THE DATE HEREOF.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates representing Shares to the Depositary within the time period set
forth herein. Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ZIP CODE
Area Code and
Telephone No.:
- -----------------------------------------------------
----------------------------------------
AUTHORIZED SIGNATURE
Name:
- --------------------------------------------------------------------------------
PLEASE PRINT
Title:
- --------------------------------------------------------------------------------
Date:
- --------------------------------------------------------------------------------
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS FORM. CERTIFICATES FOR SHARES
SHOULD BE SENT WITH THE LETTER OF TRANSMITTAL
3
<PAGE>
LOGO
TB WOOD'S CORPORATION
OFFER TO PURCHASE FOR CASH UP TO
400,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT IN EXCESS OF $12.50
NOR LESS THAN $9.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, DECEMBER 10, 1999, UNLESS THE OFFER IS EXTENDED.
November 12, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
TB Wood's Corporation, a Delaware corporation (the "Company"), invites its
stockholders to tender shares (the "Shares") of its Common Stock, par value $.01
per share (the "Common Stock"), to the Company at prices not in excess of $12.50
nor less than $9.00 per Share, net to the seller in cash, without interest
thereon, as specified by stockholders tendering their Shares, upon the terms and
subject to the conditions set forth herein and in the related letter of
transmittal (the "Letter of Transmittal") (which, as amended or supplemented
from time to time, together constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the
Offer, determine the single per Share price, not in excess of $12.50 nor less
than $9.00 per Share, net to the seller in cash, without interest thereon (the
"Purchase Price"), that it will pay for Shares properly tendered pursuant to the
Offer, taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company will select the lowest Purchase
Price that will allow it to buy 400,000 Shares (or such lesser number of Shares
as are properly tendered at prices not in excess of $12.50 nor less than $9.00
per Share). All Shares properly tendered prior to the Expiration Date (as
defined in Section 1) at prices at or below the Purchase Price and not properly
withdrawn will be purchased at the Purchase Price, upon the terms and subject to
the conditions of the Offer, including the proration provisions. Shares tendered
at prices in excess of the Purchase Price and Shares not purchased because of
proration will be returned at the Company's expense to the stockholders who
tendered such Shares. The Company reserves the right, in its sole discretion, to
purchase more than 400,000 Shares pursuant to the Offer.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date more than 400,000 Shares (or such greater number of Shares as
the Company may elect to purchase) are properly tendered at or below the
Purchase Price and not properly withdrawn, the Company will buy Shares on a pro
rata basis from all other stockholders who properly tender Shares at prices at
or below the Purchase Price (and do not properly withdraw them prior to the
expiration of the Offer).
For your information and for forwarding to those of your clients for whom
you hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. The Offer to Purchase dated November 12, 1999;
2. The Letter of Transmittal for your use and for the information
of your clients (together with the accompanying Substitute Form W-9).
Facsimile copies of the Letter of Transmittal (with manual signatures) may
be used to tender Shares;
3. A letter to the stockholders of the Company dated November 12,
1999 from Thomas C. Foley, Chairman of the Board, and Michael L. Hurt,
President of the Company;
<PAGE>
4. The Notice of Guaranteed Delivery to be used to accept the
Offer and tender Shares pursuant to the Offer if none of the procedures for
tendering Shares set forth in the Offer to Purchase can be completed on a
timely basis;
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with an instruction form provided for obtaining such clients'
instructions with regard to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to American Stock Transfer & Trust
Company, as Depositary for the Offer (the "Depositary").
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY,
DECEMBER 10, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof)
including any required signature guarantees and any other required documents
should be sent to the Depositary together with either certificate(s)
representing tendered Shares or timely confirmation of their book-entry
transfer, in accordance with the instructions set forth in the Offer to Purchase
and the related Letter of Transmittal.
Holders of Shares whose certificate(s) for such Shares are not immediately
available or who cannot deliver such certificate(s) and all other required
documents to the Depositary, or complete the procedures for book-entry transfer,
prior to the Expiration Date must tender their Shares according to the procedure
for guaranteed delivery set forth in Section 3 of the Offer to Purchase.
No fees or commissions will be payable by the Company nor any officer,
director, stockholder, agent or other representative of the Company to any
broker, dealer or other person for soliciting tenders of Shares pursuant to the
Offer (other than fees paid to MacKenzie Partners, Inc., as Information Agent,
as described in the Offer to Purchase). The Company will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients whose Shares held by
you as a nominee or in a fiduciary capacity. The Company will pay or cause to be
paid any stock transfer taxes applicable to its purchase of Shares, except as
otherwise provided in the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
MacKenzie Partners, Inc., as Information Agent, 156 Fifth Avenue, New York, NY
10010, at (212) 929-5500 or toll free at (800) 322-2885. Requests for additional
copies of the enclosed materials may be directed to the Information Agent at
their respective addresses and telephone numbers set forth above.
Very truly yours,
TB Wood's Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY, THE INFORMATION AGENT OR THE
DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
2
<PAGE>
TB WOOD'S CORPORATION
OFFER TO PURCHASE FOR CASH UP TO
400,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT IN EXCESS OF $12.50
NOR LESS THAN $9.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, DECEMBER 10, 1999, UNLESS THE OFFER IS EXTENDED.
November 12, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated November
12, 1999 (the "Offer to Purchase") and the related Letter of Transmittal (which,
as amended or supplemented from time to time, together constitute the "Offer")
in connection with the offer by TB Wood's Corporation, a Delaware corporation
(the "Company"), to purchase up to 400,000 shares (or such lesser number of
shares as are properly tendered) of its Common Stock, par value $.01 per share
(the "Shares"), at prices not in excess of $12.50 nor less than $9.00 per Share,
net to the seller in cash, without interest thereon, as specified by
stockholders tendering their Shares, upon the terms and subject to the
conditions of the Offer.
The Company will, upon the terms and subject to the conditions of the
Offer, determine the single per Share price, not in excess of $12.50 nor less
than $9.00 per Share, net to the seller in cash, without interest thereon (the
"Purchase Price"), that it will pay for Shares properly tendered pursuant to the
Offer, taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company will select the lowest Purchase
Price that will allow it to buy 400,000 Shares (or such lesser number of Shares
as are properly tendered at prices not in excess of $12.50 nor less than $9.00
per Share). All Shares properly tendered prior to the Expiration Date (as
defined in the Offer to Purchase) at prices at or below the Purchase Price, and
not properly withdrawn, will be purchased at the Purchase Price, upon the terms
and subject to the conditions of the Offer, including the proration provisions.
All Shares acquired in the Offer will be acquired at the Purchase Price. Shares
tendered at prices in excess of the Purchase Price and Shares not purchased
because of proration will be returned at the Company's expense to the
stockholders who tendered such Shares. The Company reserves the right, in its
sole discretion, to purchase more than 400,000 Shares pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date more than 400,000 Shares (or such greater number of Shares as
the Company may elect to purchase) are properly tendered at or below the
Purchase Price and not properly withdrawn, the Company will buy Shares on a pro
rata basis from stockholders who properly tender Shares at prices at or below
the Purchase Price (and do not properly withdraw such Shares prior to the
Expiration Date).
A TENDER OF YOUR SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD
THEREOF AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
YOUR SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender any
or all of the Shares held by us for your account, upon the terms and subject to
the conditions of the Offer.
Please note the following:
1. Shares may be tendered at prices not in excess of $12.50 nor
less than $9.00 per Share, as indicated in the attached Instruction Form,
net to the seller in cash, without interest thereon.
2. The priority in which Shares shall be purchased in the event of
proration may be designated.
3. The Offer is not conditioned on any minimum number of Shares
being tendered. The Offer is, however, subject to certain other conditions
set forth in the Offer to Purchase.
4. The Offer, proration period and withdrawal rights will expire
at 12:00 Midnight, New York City time, on Friday, December 10, 1999, unless
the Offer is extended.
5. The Offer is for 400,000 Shares, constituting approximately
6.8% of the Shares outstanding as of November 11, 1999.
<PAGE>
6. The Board of Directors of the Company has approved the Offer.
However, neither the Company nor its Board of Directors makes any
recommendation to stockholders as to whether to tender or refrain from
tendering their Shares. Each stockholder must make the decision whether to
tender such stockholder's Shares and, if so, how many Shares to tender and
at the price or prices at which such Shares should be tendered.
7. Tendering stockholders will not be obligated to pay any
brokerage fees or commissions or solicitation fees to the Depositary,
Information Agent or the Company or, except as set forth in the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
If you wish to tender portions of your Shares at different prices, you must
complete a separate Instruction Form for each price at which you wish to tender
each such portion of your Shares. We must submit separate Letters of Transmittal
on your behalf for each such price you will accept for each such portion
tendered.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is enclosed.
If you authorize us to tender your Shares, all such Shares will be tendered
unless otherwise indicated on the attached Instruction Form.
PLEASE FORWARD YOUR INSTRUCTION FORM TO US AS SOON AS POSSIBLE TO ALLOW US
AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
As described in the Offer to Purchase, if more than 400,000 Shares (or such
greater number of Shares as the Company may elect to purchase) have been
properly tendered at or below the Purchase Price and not properly withdrawn
prior to the Expiration Date, the Company will purchase tendered Shares properly
tendered at prices at or below the Purchase Price and not properly withdrawn
prior to the Expiration Date, on a pro rata basis (with appropriate adjustments
to avoid purchases of fractional Shares) as described in the Offer to Purchase.
The Offer is being made solely pursuant to the Offer to Purchase and the
related Letter of Transmittal and is being made to all holders of Shares who
were record holders as of November 11, 1999. The Offer is not being made to, nor
will tenders be accepted from or on behalf of, holders of Shares residing in any
jurisdiction in which the making of the Offer or acceptance thereof would not be
in compliance with the securities laws of such jurisdiction.
INSTRUCTION FORM
INSTRUCTIONS FOR TENDER OF SHARES OF TB WOOD'S CORPORATION
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated November 12, 1999 (the "Offer to Purchase") and the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer") in connection with the offer by TB Wood's
Corporation, a Delaware corporation (the "Company"), to purchase up to 400,000
shares (or such lesser number of shares as are properly tendered) of its Common
Stock, par value $.01 per share (the "Shares"), at prices not in excess of
$12.50 nor less than $9.00 per Share, net to the seller in cash, without
interest thereon, as specified by stockholders tendering their Shares, upon the
terms and subject to the conditions of the Offer.
This will instruct you to tender to the Company, on (our) (my) behalf, the
number of Shares indicated below (or if no number is indicated below, all
Shares) which are beneficially owned by (us) (me) and registered in your name,
upon terms and subject to the conditions of Offer.
NUMBER OF SHARES TO BE TENDERED: SHARES*
- --------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
2
<PAGE>
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES.
(Stockholders who desire to tender Shares at more than one price must complete a
separate Instruction Form for each price at which Shares are tendered.)
[ ] $9.000 [ ] $10.000 [ ] $10.875 [ ] $11.750
[ ] $9.125 [ ] $10.125 [ ] $11.000 [ ] $11.875
[ ] $9.250 [ ] $10.250 [ ] $11.125 [ ] $12.000
[ ] $9.375 [ ] $10.375 [ ] $11.250 [ ] $12.125
[ ] $9.500 [ ] $10.500 [ ] $11.375 [ ] $12.250
[ ] $9.625 [ ] $10.625 [ ] $11.500 [ ] $12.375
[ ] $9.750 [ ] $10.750 [ ] $11.625 [ ] $12.500
[ ] $9.875
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
SIGN HERE:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Print Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address(es)
- --------------------------------------------------------------------------------
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
3
<PAGE>
[TB WOOD'S CORPORATION LETTERHEAD]
November 12, 1999
To Our Stockholders:
TB Wood's Corporation (the "Company") is offering to purchase up to 400,000
shares of its common stock (the "Shares") from existing stockholders. The price
will not be in excess of $12.50 nor less than $9.00 per Share. The Company is
conducting the offer through a procedure commonly referred to as a "Dutch
Auction." This procedure allows you to select the price within the specified
price range at which you are willing to sell your Shares to the Company. The
actual purchase price will be determined by the Company in accordance with the
terms of the offer.
Any stockholder whose Shares are properly tendered directly to American
Stock Transfer & Trust Company, the Depositary for the offer, and purchased
pursuant to the offer will receive the net purchase price in cash, without
interest, and will not incur the usual transaction costs associated with open
market sales.
The terms and conditions of the offer are explained in detail in the
enclosed Offer to Purchase and the related Letter of Transmittal. We encourage
you to read these materials carefully before making any decision with respect to
the offer. The instructions on how to tender Shares are also explained in detail
in the accompanying materials.
Neither the Company nor the Board of Directors of the Company makes any
recommendation to stockholders as to whether to tender or refrain from tendering
their Shares. Each stockholder must make the decision whether to tender such
stockholder's Shares and, if so, how many Shares to tender and the price or
prices at which such Shares should be tendered. The Company has been advised
that certain of its directors or executive officers intend to tender Shares
pursuant to the offer.
The offer will expire at 12:00 Midnight, New York City time, on Friday,
December 10, 1999, unless extended by the Company. If you have any questions
regarding the offer or need assistance in tendering your Shares, please contact
MacKenzie Partners, Inc., the Information Agent for the offer, at (212) 929-5500
or toll free at (800) 322-2885.
Sincerely,
Michael L. Hurt
President
Thomas C. Foley
Chairman of the Board
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
======================================================================================
GIVE THE SOCIAL
FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF:
- ------------------------- -------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the account or, if
account) combined funds, any one of other
individuals(1)
3. Husband and wife (joint account) The actual owner of the account or, if joint
funds, either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the only
contributor, the minor(1)
6. Account in the name of guardian or The ward, minor, or incompetent person(3)
committee for a designated ward,
minor, or incompetent person
7. a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is not a The actual owner(1)
legal or valid trust under State law
8. Sole proprietorship account The owner(4)
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF:
- ------------------------- -------------------------
9. A valid trust, estate, or pension trust The legal entity (Do not furnish the
identification number of the personal
representative or trustee unless the legal
entity itself is not designated in the
account title)(5)
10. Corporate account The organization
11. Religious, charitable, or The corporation
educational organization account
12. Partnership account The partnership
13. Association, club or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district, or prison)
that receives agricultural program payments
</TABLE>
<PAGE>
- ------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
2
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments including
the following:
- -- A corporation.
- -- A financial institution.
- -- An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- -- The United States or any agency or instrumentality thereof.
- -- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- -- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- -- An international organization or any agency or instrumentality thereof.
- -- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- -- A real estate investment trust. A common trust fund operated by a bank under
section 584(a) of the Code.
- -- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
- -- An entity registered at all times under the Investment Company Act of 1940.
- -- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- -- Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- -- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- -- Payments of patronage dividends where the amount renewed is not paid in
money.
- -- Payments made by certain foreign organizations.
- -- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include
the following:
- -- Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- - - Payments of tax-exempt interest (including exempt-interest dividends under
section 852) of the code.
- - - Payments described in section 6049(b)(5) of the Code to non-resident aliens.
- - - Payments on tax free covenant bonds under section 1451 of the Code.
3
<PAGE>
- -- Payments made by certain foreign organizations. Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE
FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N of the Code and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
4
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated November
12, 1999 and the related Letter of Transmittal, and any amendments or
supplements thereto, which are being mailed to all holders of Shares. The
Company is not aware of any jurisdiction where the making of the Offer is not in
compliance with applicable law. If the Company becomes aware of any jurisdiction
where the making of the Offer or the acceptance of Shares pursuant thereto is
not in compliance with applicable law, the Company will make a good faith effort
to comply with the applicable law. If, after such good faith effort, the Company
cannot comply with the applicable law, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Company by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
BY
TB WOOD'S CORPORATION
UP TO 400,000 SHARES OF ITS COMMON STOCK
AT A PURCHASE PRICE NOT IN EXCESS OF $12.50
NOR LESS THAN $9.00 PER SHARE IN CASH
TB Wood's Corporation, a Delaware corporation (the "Company"), invites its
stockholders to tender up to 400,000 shares of its Common Stock, par value $.01
per share (the "Shares"), to the Company at prices not in excess of $12.50 nor
less than $9.00 per Share, net to the seller in cash, without interest thereon,
as specified by stockholders tendering their Shares, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated November 12, 1999 and
in the related Letter of Transmittal (which, as amended or supplemented from
time to time, together constitute the "Offer").
--------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 10, 1999, UNLESS THE
OFFER IS EXTENDED.
--------------
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH
IN THE OFFER TO PURCHASE.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SUCH STOCKHOLDER'S
SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH
SUCH SHARES SHOULD BE TENDERED.
The Company will, upon the terms and subject to the conditions of the
Offer, determine the single per Share price, not in excess of $12.50 nor less
than $9.00 per Share, net to the seller in cash, without interest thereon (the
"Purchase Price"), that it will pay for Shares properly tendered pursuant to the
Offer, taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company will select the lowest purchase
price that will allow it to buy 400,000 Shares (or such lesser number of Shares
as are properly tendered at prices not in excess of $12.50 nor less than $9.00
per Share). All Shares properly tendered prior to the Expiration Date (as
defined below) at prices at or below the Purchase Price and not properly
withdrawn will be purchased at the Purchase Price, upon the terms and subject to
<PAGE>
the conditions of the Offer, including the proration provisions. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR THE SHARES,
REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. All Shares acquired in the Offer
will be acquired at the Purchase Price. The term "Expiration Date" means 12:00
Midnight, New York City time, on Friday, December 10, 1999, unless and until the
Company, in its sole discretion, shall have extended the period of time during
which the Offer will remain open, in which event the term "Expiration Date"
shall refer to the latest time and date at which the Offer, as so extended by
the Company, shall expire. The Company reserves the right, in its sole
discretion, to purchase more than 400,000 Shares pursuant to the Offer.
The Board of Directors determined that an offer to repurchase Shares
directly from the Company's stockholders pursuant to this Offer would be in the
best interests of the Company and its stockholders. The Board of Directors
believes that the purchase of Shares at this time is consistent with the
Company's long term corporate goal of seeking to increase stockholder value. In
addition, the Offer will provide the Company's stockholders an opportunity to
sell a portion of their Shares which may not be available to stockholders based
upon the current trading market conditions of its Shares.
Upon the terms and subject to the conditions of the Offer, if at the
Expiration Date more than 400,000 Shares (or such greater number of Shares as
the Company may elect to purchase) are properly tendered at or below the
Purchase Price and not properly withdrawn, the Company will buy Shares on a pro
rata basis from all stockholders who properly tender Shares at prices at or
below the Purchase Price (and do not properly withdraw them prior to the
expiration of the Offer). The Company expressly reserves the right, in its sole
discretion, at any time and from time to time, and regardless of whether or not
any of the events set forth in Section 6 of the Offer to Purchase shall have
occurred or shall be deemed by the Company to have occurred, to extend the
period of time during which the Offer is open and thereby delay acceptance for
payment of, and payment for, any Shares by giving oral or written notice of such
extension to the Depositary and making a public announcement thereof. During any
such extension, all Shares previously tendered and not properly withdrawn will
remain subject to the Offer and to the rights of a tendering stockholder to
withdraw such stockholder's Shares.
Tenders of Shares pursuant to the Offer are irrevocable except that such
Shares may be withdrawn at any time prior to the Expiration Date and, unless
theretofore accepted for payment by the Company pursuant to the Offer, may also
be withdrawn at any time after 12:00 Midnight, New York City time, on Tuesday,
January 11, 2000. For such withdrawal to be effective, a written, telegraphic,
telex or facsimile transmission notice of withdrawal must be timely received by
the Depositary at its address set forth on the back cover of the Offer to
Purchase. Any such notice of withdrawal must specify the name of the tendering
stockholder, the number of Shares to be withdrawn and the name of the registered
holder of such Shares. If the certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the release
of such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
2
<PAGE>
must be guaranteed by an Eligible Institution (as defined in the Offer to
Purchase), unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in the Offer to Purchase, any notice of withdrawal
also must specify the name and the number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares and must otherwise
comply with such Book-Entry Transfer Facility's procedures. All questions as to
the form and validity (including the time of receipt) of any notice of
withdrawal will be determined by the Company, in its sole discretion, whose
determination will be final and binding. None of the Company, the Depositary,
the Information Agent, or any other person will be under any duty to give
notification of any defects or irregularities in any tender or notice of
withdrawal or incur any liability for failure to give any such notification.
The information required to be disclosed by Rule 13e-4(d)(1) under the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal are being
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION WITH
RESPECT TO THE OFFER IS MADE.
Questions and requests for assistance or for copies of the Offer to
Purchase and the related Letter of Transmittal, and other Offer materials, may
be directed to the Information Agent as set forth below, and copies will be
furnished promptly at the Company's expense. No fees or commissions will be paid
to brokers, dealers or other persons (other than the Information Agent) for
soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
or call toll free 1-800-322-2885
November 12, 1999
3
<PAGE>
FOR IMMEDIATE RELEASE
Contact:
Grace Protos
(212) 929-5500
TB WOOD'S CORPORATION
ANNOUNCES AN OFFER TO PURCHASE 400,000 OF ITS SHARES
Chambersburg, Pa November 12, 1999 - TB Wood's Corporation (NYSE:TBW) today
announced that it will commence an offer to purchase for cash up to 400,000
shares of its common stock which represents approximately 6.8% of its currently
outstanding common stock. The offer will be a Dutch Auction self tender that
will commence today, Friday, November 12, 1999, and is set to expire at 12:00
Midnight New York City time, on Friday, December 10, 1999.
The terms of the tender offer, which are described more fully in the Offer to
Purchase and the Letter of Transmittal pursuant to which the tender offer is
made, include a purchase price for each tendered share of not more than $12.50
per share nor less than $9.00 per share net to the seller in cash, without
interest thereon.
In a Dutch Auction, the Company sets a price range, and the stockholders have an
opportunity to specify prices within that range at which they are willing to
sell shares. After the expiration of the tender offer period, the Company will
determine a single per share price to be paid for each share purchased, taking
into consideration the number of shares tendered and the prices specified by
tendering stockholders. If more than 400,000 shares of common stock are properly
tendered, the Company will accept shares on a pro rata basis. The Company is
also reserving the right to purchase more than 400,000 shares of common stock
pursuant to the tender offer. The tender offer is not conditioned on any minimum
number of shares being tendered.
On November 11, 1999, the last trading day prior to the announcement of the
Offer, the price per share for the last trade for the common stock on the New
York Stock Exchange was $9 1/16. The Offer to Purchase, Letter of Transmittal
and related documents are being mailed to the Company's stockholders in the next
few days.
Stockholders may obtain further information by calling the Company directly and
asking for Thomas F. Tatarczuch, Vice President-Finance, or Michael L. Hurt,
President or by calling our Information Agent, MacKenzie Partners, Inc. at (212)
929-5500 or (800) 322-2885.
<PAGE>
FIRST AMENDMENT TO LOAN DOCUMENTS
---------------------------------
This FIRST AMENDMENT TO LOAN DOCUMENTS ("Amendment") dated as of April
7, 1997 and effective as of April 1, 1997 is made by and among TB WOOD'S
INCORPORATED, individually and as Agent under the Borrower Agency Agreement,
(the "Borrower Agent"), and PNC BANK, NATIONAL ASSOCIATION, a national banking
association as Agent for the Banks under the Credit Agreement referred to herein
(the "Agent") and PNC BANK, NATIONAL ASSOCIATION, THE SUMITOMO BANK, LIMITED and
NATIONAL CITY BANK OF PENNSYLVANIA as the Banks.
Reference is made to the Revolving Credit Agreement dated October 10,
1996 by and among TB Wood's Incorporated, a Pennsylvania corporation, Plant
Engineering Consultants, Inc., a Tennessee corporation, Grupo Blaju, S.A., de
C.V., a Mexican corporation, and TB Wood's Canada, Ltd., an Ontario corporation
(such corporations being the "Borrowers"), PNC Bank, National Association, as
Agent and the Banks party thereto (the "Agreement") pursuant to which the Banks
extended to the Borrowers a $40,000,000 revolving line of credit. The
obligations under the Agreement and the Loan Documents are evidenced by the
Borrowers' Notes payable to the Banks. (Capitalized terms used herein not
otherwise defined shall have the meanings provided for in the Agreement.)
The Borrowers wish to cause a manufacturing facility in
Tennessee to be acquired, rehabilitated and equipped in connection with which
The Industrial Development Board of the City of Chattanooga will issue its
Variable Rate Demand Bonds, Series 1997 (TB Wood's Incorporated Project) (the
"Bonds"). To support the Bonds, the Borrowers have requested the Agent to issue
a letter of credit pursuant to the terms of the Agreement but on terms not
<PAGE>
otherwise provided in the Agreement. Accordingly, the Borrowers, the Banks and
the Agent have agreed that the Agreement be amended as provided herein,
effective as of the date hereof, to provide for the issuance of such letter of
credit and to secure further the repayment of the Obligations and certain other
matters.
NOW, THEREFORE, in consideration of the foregoing and for other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Amendment to Agreement.
(a) Section 1.1 of the Agreement is hereby amended by adding the
following definitions:
Tennessee Bonds shall mean the Industrial Development Board of
the City of Chattanooga Variable Rate Demand Bonds, Series 1997 (TB
Wood's Incorporated Project) issued as of April 1, 1997 pursuant to
a Trust Indenture dated April 1, 1997 and having an aggregate
principal amount of $2,550,000 and secured, inter alia, pursuant to
a Trust Indenture dated as of April 1, 1997. The maturity date for
the Tennessee Bonds is April 1, 2022.
Tennessee Facility shall mean the manufacturing facility located
in Chattanooga, Tennessee and owned by The Industrial Development
Board of the City of Chattanooga and to be occupied by the Company
pursuant to a Lease Agreement dated as of April 1, 1997, the
acquisition, rehabilitation and equipping of which is to be financed
pursuant to the Tennessee Bonds.
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<PAGE>
Tennessee Letter of Credit shall mean the Letter of Credit
issued pursuant to, and subject to the limitations set forth in
Section 2.9.1.1.
(b) The Commitments of the Banks are hereby increased to
$42,591,917.81 and the definition of "Commitment" is hereby amended by amending
and restating Schedule 1.1(B) to read in its entirety as shown on the attached
Schedule 1.1(B).
(c) Section 2.9.1 of the Agreement is hereby amended by adding a new
subsection 2.9.1.1 to read in its entirety as follows:
2.9.1.1 The Borrowers may request at any time before April 9,
1997 that the Agent issue a Letter of Credit in the form attached
hereto as Exhibit A in an amount not to exceed $2,591,917.81 to
support the Tennessee Bonds in connection with the Tennessee
Facility (the "Tennessee Letter of Credit"). The Tennessee Letter
of Credit shall be in all respects be a Letter of Credit but the
Letter of Credit Fee for the Tennessee Letter of Credit shall be
equal to .875% per annum through June 30, 1997 and, thereafter,
shall be equal to the per annum rate equal to .125% below the
Applicable Margin. The Tennessee Letter of Credit shall expire on
April 15, 2000, subject to renewal in accordance with the
Agreement as provided in the form of Tennessee Letter of Credit.
The reimbursement obligations under the Tennessee Letter shall be
Obligations under the Loan Documents. Notwithstanding anything
else in the Agreement to the contrary, the face amount of the
Tennessee Letter of Credit shall not be applied to reduce the
3
<PAGE>
$5,000,000 Letter of Credit sublimit referred to in Section
2.9.1.
(d) Section 9.1.3 of the Agreement is hereby amended by adding at
the end thereof the phrase: or there shall occur an event of default under the
Trust Indenture or Lease Agreement relating to the Tennessee Bonds;
(e) Section 9.2.1 of the Agreement is hereby amended by adding a new
item (iii) at the end of the first sentence to read as follows: and (iii) (A)
notify the Trustee and the Paying Agent under the Trust Indenture relating to
the Tennessee Bonds of the occurrence of an Event of Default, (B) direct such
Trustee to declare an event of default as defined in such Indenture and
accelerate the Tennessee Bonds or effect a mandatory purchase of the Tennessee
Bonds in lieu thereof, (C) direct such Trustee to direct such Paying Agent to
draw on the Tennessee Letter of Credit and (D) direct the Trustee to exercise
remedies under such Trust Indenture or such Lease Agreement.
2. Substitute Notes.
Contemporaneously herewith, the Borrowers have executed and
delivered new Notes reflecting the respective Commitments of the Banks.
3. Miscellaneous.
(a) All of the terms, conditions, provisions and covenants in the
Notes, the Agreement, the Loan Documents, and all other documents delivered to
4
<PAGE>
the Banks and the Agent in connection with any of the foregoing documents and
obligations secured thereby shall remain unaltered and in full force and effect
except as modified by this Amendment.
(b) The Borrowers agree to pay all of the Agent's expenses incurred
in connection with the preparation of this Amendment and the transactions
contemplated by this Amendment, including without limitation, the reasonable
fees and expenses of the Agent's counsel.
(c) This Amendment shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
(d) Each and every one of the terms and provisions of this Amendment
shall be binding upon and shall inure to the benefit of the Borrowers, the Banks
and the Agent and their respective successors and assigns.
(e) This Amendment may be executed in one or more counterparts, each
of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall constitute but one and the same
instrument.
(f) Contemporaneously herewith, the Borrowers shall (i) deliver to
each of the Banks an amended and restated Note reflecting the increased amount
of such Bank's Commitment and (ii) pay to the Agent on behalf of the Banks an
amendment fee of $5,000.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
PNC BANK, NATIONAL ASSOCIATION, individually and as Agent
By:______________________________
Title:___________________________
TB WOOD'S INCORPORATED, individually and as Borrower Agent
By:______________________________
Title:___________________________
TB WOOD'S CORPORATION
By:______________________________
Title:___________________________
NATIONAL CITY BANK OF PENNSYLVANIA
By:______________________________
Title:___________________________
THE SUMITOMO BANK, LIMITED
By:______________________________
Title:___________________________
6
<PAGE>
EXHIBIT 1.1(B)
(Effective April 7, 1997)
COMMITMENTS OF BANKS
PNC Bank, National Association $21,295,958.90
National City Bank of Pennsylvania $13,309.974.32
The Sumitomo Bank, Limited $ 7,985,984.59
--------------
TOTAL $42,591,917.81
7
<PAGE>
SECOND AMENDMENT TO LOAN DOCUMENTS
----------------------------------
This SECOND AMENDMENT TO LOAN DOCUMENTS ("Amendment") dated January 20,
1998 is made by and among TB WOOD'S INCORPORATED, individually and as Agent
under the Borrower Agency Agreement, (the "Borrower Agent"), and PNC BANK,
NATIONAL ASSOCIATION, a national banking association as Agent for the Banks
under the Credit Agreement referred to herein (the "Agent") and PNC BANK,
NATIONAL ASSOCIATION, THE SUMITOMO BANK, LIMITED and NATIONAL CITY BANK OF
PENNSYLVANIA as the Banks..
Reference is made to the Revolving Credit Agreement dated October 10,
1996 by and among TB Wood's Incorporated, a Pennsylvania corporation, Plant
Engineering Consultants, Inc., a Tennessee corporation, Grupo Blaju, S.A., de
C.V., a Mexican corporation, and TB Wood's Canada, Ltd., an Ontario corporation
(such corporations being the "Borrowers"), PNC Bank, National Association, as
Agent and the Banks party thereto as amended on April 7, 1997 (as so amended,
the "Agreement") pursuant to which the Banks extended to the Borrowers a
$40,000,000 revolving line of credit. The obligations under the Agreement and
the Loan Documents are evidenced by the Borrowers' Notes payable to the Banks.
(Capitalized terms used herein not otherwise defined shall have the meanings
provided for in the Agreement.)
The Borrowers have requested, and subject to the terms hereof,
the Agent and the Banks have agreed, that, in addition to the Dollar Loans
contemplated in the Agreement prior to the date hereof, the Bank make Loans and
permit Letters of Credit to be issued in currencies other than Dollars.
Accordingly, the Borrowers, the Banks and the Agent have agreed that the
<PAGE>
Agreement be amended as provided herein to provide for a multicurrency loan
subfacility, effective as of the date hereof.
NOW, THEREFORE, in consideration of the foregoing and for other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Amendment to Agreement.
(a) Section 1.1 of the Agreement is hereby amended by amending and
restating the following definitions to read in their entirety as follows:
Borrowing Tranche shall mean specified portions of Loans outstanding
as follows: (i) any Loans to which either a Euro-Rate Option applies which
become subject to the same Interest Rate Option under the same Loan Request by
the Borrowers and which have the same Interest Period and which are denominated
either in Dollars or in the same Optional Currency shall constitute one
Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall
constitute one Borrowing Tranche.
Business Day shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to be closed
for business in Camp Hill, Pennsylvania; and (i) if the applicable Business Day
relates to any Loan to which the Euro-Rate Option applies, such day must also be
a day on which dealings are carried on in the London interbank market and (ii)
with respect to advances or payments of Loans or any other matters relating to
Loans denominated in an Optional Currency, such day also shall be a day on which
dealings in deposits in the relevant Optional Currency are carried on in the
applicable interbank market, (iii) with respect to advances or payments of Loans
denominated in an Optional Currency, such day shall also be a day on which all
applicable Banks into which Loan proceeds may be deposited are open for business
and foreign exchange markets are open for business in the principal financial
center of the country of such currency.
Euro-Rate shall mean the following:
(a) with respect to Dollar Loans comprising any Borrowing Tranche to
which the Euro-Rate Option applies for any Interest Period, the interest rate
per annum determined by the Agent by dividing (the resulting quotient rounded
upward to the nearest 1/100th of 1% per annum) (i) the rate of interest
determined by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the average of
the London interbank offered rates of interest per annum for Dollars quoted by
the British Bankers' Association as set forth on Dow Jones Market Service
(formerly known as Telerate) display page 3750 (or appropriate successor or, if
2
<PAGE>
the British Bankers' Association or its successor ceases to provide such quotes,
a comparable replacement determined by the Agent) two (2) Business Days prior to
the first day of such Interest Period for an amount comparable to such Borrowing
Tranche and having a borrowing date and a maturity comparable to such Interest
Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage.
Such Euro-Rate may also be expressed by the following formula:
Average of London interbank offered
rates on Dow Jones Market Service display
page 3750 quoted by British Bankers'
Euro-Rate = Association or appropriate successor
-----------------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option
outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The Agent shall give prompt notice to the
Borrowers of the Euro-Rate as determined or adjusted in accordance herewith,
which determination shall be conclusive absent manifest error.
(b) with respect to Optional Currency Loans comprising any Borrowing
Tranche to which the Euro-Rate Option applies for any Interest Period, the
interest rate per annum determined by Agent by dividing (the resulting quotient
rounded upward to the nearest 1/100th of 1% per annum) (i) the rate of interest
per annum determined by Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the rate of
interest per annum for deposits in the relevant Optional Currency quoted by the
British Bankers' Association as set forth on Dow Jones Market Service (formerly
known as Telerate) at approximately 9:00 a.m., Camp Hill time, two (2) Business
Days prior to the first day of such Interest Period for delivery on the first
day of such Interest Period for a period, and in an amount, comparable to such
Interest Period and principal amount of such Borrowing Tranche ("LIBO Rate") by
(ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. Such
Euro-Rate may also be expressed by the following formula:
LIBO Rate
Euro-Rate = --------------------------------
1 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option outstanding
on the effective date of any change in the Euro-Rate Reserve Percentage as of
such effective date. The Agent shall give prompt notice to the Borrower of the
Euro-Rate as determined or adjusted in accordance herewith, which determination
shall be conclusive absent manifest error. The Euro-Rate for any Loans shall be
based upon the Euro-Rate for the currency in which such Loans are requested.
Euro-Rate Reserve Percentage shall mean the maximum percentage
(expressed as a decimal rounded upward to the nearest 1/100 of 1%) as determined
by the Agent which is in effect during any relevant period: (i) as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
3
<PAGE>
determining the reserve requirements (including supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities") of a member bank in such System; and
(ii) with respect to any Borrowing Tranche relating to an Optional Currency, to
be maintained by a Bank as required for reserve liquidity, special deposit, or a
similar purpose by any governmental or monetary authority of any country or
political subdivision thereof (including any central bank), against (A) any
category of liabilities that includes deposits by reference to which a Euro-Rate
is to be determined, or (B) any category of extension of credit or other assets
that includes Loans or Borrowing Tranches to which a Euro-Rate applies.
(b) Section 1.1 of the Agreement is further amended by adding
thereto the following new definitions to read in their entirety as follows:
Computation Date shall have the meaning provided in Section 3.3.1.
Dollar Equivalent shall mean, with respect to any amount of any
currency, the Equivalent Amount of such currency expressed in Dollars.
Equivalent Amount shall mean, at any time, as determined by
Agent (which determination shall be conclusive absent manifest error), with
respect to an amount of any currency (the "Reference Currency") which is to be
computed as an equivalent amount of another currency (the "Equivalent
Currency"): (i) if the Reference Currency and the Equivalent Currency are the
same, the amount of such Reference Currency, or (ii) if the Reference Currency
and the Equivalent Currency are not the same, the amount of such Equivalent
Currency converted from such Reference Currency at Agent's spot selling rate
(based on the market rates then prevailing and available to Agent) for the sale
of such Equivalent Currency for such Reference Currency at a time determined by
Agent on the second Business Day immediately preceding the event for which such
calculation is made.
Equivalent Currency shall have the meaning assigned to such term in
the definition of Equivalent Amount.
Optional Currency shall mean deutsche mark (DM) and any other
currency actively traded by PNC Bank, National Association approved by Agent and
all of the Banks pursuant to Section 3.3.3.
Optional Currency Loan Processing Fee shall have the meaning
provided in Section 10.15.
Original Currency shall have the meaning assigned to such term in
Section 5.10.1.
Other Currency shall have the meaning assigned to such term in
Section 5.10.1.
Overnight Rate shall mean for any day with respect to any Loans in
an Optional Currency, the rate of interest per annum as determined by the Agent
at which overnight deposits in the such currency, in an amount approximately
4
<PAGE>
equal to the amount with respect to which such rate is being determined, would
be offered for such day in the applicable offshore interbank market.
Reference Currency shall have the meaning assigned to such term in
the definition of Equivalent Amount.
(c) Section 1.1 of the Agreement is further amended by adding at the
end of the definition of "GAAP" the following sentence:
All references to GAAP shall refer to accounting principles as are
in effect in the United States.
(d) Section 3 of the Agreement, which has heretofore been
"Reserved", is hereby amended and restated to read in its entirety as follows:
3. MULTI CURRENCY LOAN PROVISIONS
3.1 Multicurrency Subfacility.
The Banks and the Agent agree that Loans may be made in Optional
Currencies up to an amount not to exceed a Dollar Equivalent amount of
$10,000,000, subject to the terms of this Section and this Agreement (including
without limitation Section 2). All references herein to currency amounts,
including in respect of Commitments, Revolving Facility Usage, calculations
under Section 5.4, fees and otherwise, shall be expressed and calculated on a
Dollar Equivalent basis, unless otherwise specified.
3.2 General Provisions.
3.2.1 Optional Currency Commitments.
Loans made pursuant to Section 2.1 shall be made either in Dollars or
one or more Optional Currencies and each Bank agrees, subject to the terms of
this Agreement, to fund in accordance with its Ratable Share and pursuant to
Section 2.6 or Section 2.9 (as the case may be) Loans in Dollars or directly in
the applicable Optional Currency. No Loan shall be made if, after given affect
to such Loan, the aggregate Dollar Equivalent of all Loans from any Bank exceed
such Bank's Commitment minus such Bank's Ratable Share of the Dollar Equivalent
amount of Letters of Credit outstanding. Additionally, no loan to which the Base
Rate Option applies shall be made in an Optional Currency. The limitation on any
Bank's obligation to make Loans in respect to its Commitment shall be calculated
based upon the Dollar Equivalent of Loans and Letters of Credit.
5
<PAGE>
3.2.2 Commitment Fees and Other Payments.
Notwithstanding other references herein to the Dollar Equivalent
amounts, the calculations of all fees, including fees payable to Agent and fees
payable under Section 2.3, 2.4 and 10.15, shall be payable in Dollars.
3.2.3 Loan Requests.
Notwithstanding the notice requirement of Section 2.5 with
respect to Loans, any Loan Request for Loans in an Optional Currency (whether
made initially or as a result of the conversion to or renewal of Euro-Rate
Option for Loans in an Optional Currency, shall be made one (1) Business Day
prior to the date when such Loan Request would otherwise be required under
Section 2.5. Any Loan Request made in respect of Euro-Rate Loans in an Optional
Currency shall include all the information required pursuant to Section 2.5 but
shall also identify the aggregate amount of the proposed Loans expressed in the
currency in which such Loans shall be funded and also as Dollar Equivalents. No
Loan Request shall be deemed to be a request for a Euro-Rate Loan in an Optional
Currency unless such Loan Request expressly so states and contains the
information required hereby and otherwise required by the Agent.
3.3 Utilization of Commitments in Optional Currencies.
3.3.1 Periodic Computations of Dollar Equivalent Amounts of Loans and
Letters of Credit Outstanding.
The Agent will determine the Dollar Equivalent amount of (i)
proposed Loans or Letters of Credit to be denominated in an Optional Currency as
of the requested Borrowing Date or date of issuance, as the case may be, (ii)
outstanding Loans or Letters of Credit Outstanding denominated in an Optional
Currency as of the last Business Day of each month, and (iii) outstanding Loans
denominated in an Optional Currency as of the end of each Interest Period (each
such date under clauses (i) through (iii), being a "Computation Date").
3.3.2 Notices From Banks That Optional Currencies Are Unavailable to
Fund New Loans.
The Banks shall be under no obligation to make the Loans
requested by the Borrowers which are denominated in an Optional Currency if any
Bank notifies the Agent by 5:00 p.m. (Camp Hill time) four (4) Business Days
prior to the Borrowing Date for such Loans that such Bank cannot provide its
share of such Loans in such Optional Currency. In the event the Agent timely
receives a notice from a Bank pursuant to the preceding sentence, the Agent will
notify the Borrowers no later than 12:00 noon (Camp Hill time) three (3)
Business Days prior to the Borrowing Date for such Loans that the Optional
Currency is not then available for such Loans, and the Agent shall promptly
thereafter notify the Banks of the same. If the Borrowers receives a notice
described in the preceding sentence, the Borrowers may, by notice to the Agent
not later than 5:00 p.m. (Camp Hill time) three (3) Business Days prior to the
Borrowing Date for such Loans, withdraw the Loan Request for such Loans. If the
Borrowers withdraw such Loan Request, the Agent will promptly notify each Bank
of the same and the Banks shall not make such Loans and no payment shall be due
under Section 5.6.2 with respect to any such withdrawal. If the Borrowers do not
6
<PAGE>
withdraw such Loan Request before such time, (i) the Borrowers shall be deemed
to have requested that the Loans referred to in its Loan Request shall be made
in Dollars in an amount equal to the Dollar Equivalent amount of such Loans and
shall bear interest under the Base Rate Option, and (ii) the Agent shall
promptly deliver a notice to each Bank stating: (A) that such Loans shall be
made in Dollars and shall bear interest under the Base Rate Option, (B) the
aggregate amount of such Loans, and (C) such Bank's Pro Rata Share of such
Loans.
3.3.3 Requests for Additional Optional Currencies.
The Borrowers may deliver to the Agent a written request that
Loans hereunder also be permitted to be made in any other lawful currency (other
than Dollars), in addition to the currencies specified in the definition of
"Optional Currency" herein provided that such currency must be freely traded in
the offshore interbank foreign exchange markets, freely transferable, freely
convertible into Dollars and available to the Banks in the applicable interbank
market. The Agent will promptly notify the Banks of any such request promptly
after the Agent receives such request. The Agent and each Bank may grant or
accept such request in their sole discretion. The Agent will promptly notify the
Borrowers of the acceptance or rejection by the Agent and each of the Banks of
the Borrowers' request. The requested currency shall be approved as an Optional
Currency hereunder only if the Agent and all of the Banks approve of the
Borrowers' request.
3.4 Letters of Credit.
3.4.1 Issuance of Letters of Credit.
Letters of Credit issued pursuant to Section 2.9 may be
denominated in either Dollars or Optional Currency. The calculation of the
Letters of Credit outstanding, and the Letter of Credit subfacility limit set
forth in Section 2.9.1, shall be made in respect of Dollar Equivalent amount.
Letter of Credit Fees shall be payable in Dollars.
3.4.2 Disbursements, Reimbursement.
Reimbursements made to pursuant Section 2.9 shall be made in
Dollars prior to 12:00 noon, Camp Hill time on any Drawing Date in an amount
equal to the Dollar Equivalent amount so paid by the Agent. All reimbursements
by the Borrowers shall be made in the full Dollar Equivalent amount of any
drawing under any Letter of Credit and otherwise in accordance with Section 2.9.
3.4.3 Banks' Funding of Drawings.
Each Bank shall make available to the Agent in Dollars its
Ratable Share of the Dollar Equivalent amount of any drawing and otherwise in
7
<PAGE>
accordance with Section 2.9.3.3. Letter of Credit Borrowings pursuant to Section
2.9.3.4 shall be deemed to be in Dollars in the Dollar Equivalent amount of any
such drawing referred to therein.
3.5 Currency Repayments.
Notwithstanding anything contained herein to the contrary, the entire
amount of principal of and interest on any Loan made in an Optional Currency
shall be repaid in the same Optional Currency in which such Loan was made,
provided, however, that if it is impossible or illegal for Borrowers to effect
payment of a Loan in the Optional Currency in which such Loan was made, or if
Borrowers defaults in its obligations to do so, the Required Banks may at their
option permit such payment to be made (i) at and to a different location,
subsidiary, affiliate or correspondent of Agent, or (ii) in the Equivalent
Amount of Dollars or (iii) in an Equivalent Amount of such other currency
(freely convertible into Dollars) as the Required Banks may solely at their
option designate. Upon any events described in (i) through (iii) of the
preceding sentence, the Borrowers shall make such payment and the Borrowers
agree to hold each Bank harmless from and against any loss incurred by any Bank
arising from the cost to such Bank of any premium, any costs of exchange, the
cost of hedging and covering the Optional Currency in which such Loan was
originally made, and from any change in the value of Dollars, or such other
currency, in relation to the Optional Currency that was due and owing. Such loss
shall be calculated for the period commencing with the first day of the Interest
Period for such Loan and continuing through the date of payment thereof. Without
prejudice to the survival of any other agreement of the Borrowers hereunder, the
Borrowers' obligations under this Section shall survive termination of this
Agreement.
3.6 Optional Currency Amounts.
Notwithstanding anything contained herein to the contrary, Agent may,
with respect to notices by the Borrowers for Loans in an Optional Currency or
voluntary prepayments of less than the full amount of an Optional Currency
Borrowing Tranche, engage in reasonable rounding of the Optional Currency
amounts requested to be loaned or repaid; and, in such event, Agent shall
promptly notify the Borrowers and the Banks of such rounded amounts and
Borrower's request or notice shall thereby be deemed to reflect such rounded
amounts.
3.7 Lending Offices.
The provisions of Section 5.6 shall apply not only to any Bank but also
to any lending office of any Bank under this Agreement. Each Bank agrees that,
upon the occurrence of any event giving rise to the operation of Section 5.6
with respect to such Bank, it will, if requested by Borrowers, use reasonable
efforts (subject to overall policy considerations of such Bank) to designate
another lending office for any Loans affected by such event with the object of
avoiding the consequences of such event, provided, that such designation is made
on terms that, in the sole judgment of such Bank, cause such Bank and its
respective lending offices to suffer no material economic, legal or regulatory
disadvantage.
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3.8 Interest Rate Matters in Respect of Multicurrency Loans.
Interest on the principal amount of each Loan made in an Optional
Currency shall be paid by the Borrowers in such Optional Currency. No Loan to
which a Base Rate applies made be made in an Optional Currency. Notwithstanding
the calculation of interest rates based upon a 360-day year pursuant to Section
4.1.1(ii), if Loans made in an Optional Currency for which a 365-day basis is
the only market practice available to the Agent for calculation, such rates
shall be calculated on the basis of a year of 365 or 366 days, as the case may
be and for the actually number of days elapsed. Rate quotations pursuant to
Section 4.2 may include projections of interest rates and applicable currency
exchange rates then in effect but such projection shall not bind the Agent or
the Banks nor affect the rate of interest or the calculation of Equivalent
Amounts.
3.9 Multicurrency Borrowing Amounts.
The Dollar Equivalent amount of each Borrowing Tranche of
Euro-Rate Loans shall be in integral multiples of $100,000 and shall not be less
than $500,000. The Borrowers may not have any more than three (3) Borrowing
Tranches outstanding in any one time in respect of all Optional Currencies.
[end of Section 3]
(e) Section 4.1 is hereby amended by amending and restating the proviso
therein to read in its entirety as follows:
provided that there shall not be at any one time outstanding more than four (4)
Borrowing Tranches in the aggregate among all of the Loans accruing interest at
a Euro-Rate Option and three (3) Borrowing Tranches in the aggregate among all
of the Loans made in an Optional Currency (as described in Section 3.9 hereof).
(f) Section 4.4.1 of the Agreement is hereby amended by substituting a
comma (,) for the period (.) at the end of subsection (ii) thereof, deleting the
phrase "the Agent shall have the rights specified in Section 4.4.3" and adding a
new subsection (iii) to read in its entirety as follows:
(iii) after making all reasonable efforts, deposits of the relevant
amount in Dollars or in the Optional Currency (as applicable) for the relevant
Interest Period for a Loan to which a Euro-Rate Option applies, respectively,
are not available to such Bank with respect to such Loan, in the London
interbank market,
then the Agent shall have the rights specified in Section 4.4.3.
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(g) Section 4.4.3 of the Agreement is hereby amended by substituting
for the penultimate sentence thereof the following sentence to read in its
entirety is as follows:
If any Bank notifies the Agent of a determination under Section 4.4.2, the
Borrowers shall, subject to the Borrowers' indemnification Obligations under
Section 5.6.2 as to any Loan of the Bank to which a Euro-Rate Option applies, on
the date specified in such notice either (i) as applicable, convert such Loan to
the Base Rate Option otherwise available with respect to such Loan or select a
different Optional Currency or Dollars, or (ii) prepay such Loan in accordance
with Section 5.4.
(h) Section 4.5 of the Agreement is amended by adding at the end
thereof a new sentence to read in its entirety as follows:
At any time, if the Borrower fails to select a new Optional Currency to apply to
any Loan, the Borrowers shall be deemed to have renewed such Loan into a new
Optional Currency Loan commencing on the last day of an existing Interest Period
(and subject in all events to the Borrowers' indemnity obligations under this
Agreement).
(i) Section 5.1 of the Agreement is hereby amended and restated to read
in its entirety as follows:
5.1 Payments.
All payments and prepayments to be made in respect of principal,
interest, Commitment Fees, Facility Fees, Optional Currency Loan Processing
Fees, Letter of Credit Fees, Agent's Fee or other fees or amounts due from the
Borrowers hereunder shall be payable prior to 11:00 a.m., Camp Hill time, on the
date when due without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrowers, and without set-off,
counterclaim or other deduction of any nature, and an action therefor shall
immediately accrue. Such payments shall be made to the Agent at the Principal
Office for the ratable accounts of the Banks with respect to the Loans in
Dollars except that payments of principal or interest shall be made in the
currency in which such Loan was made, and in immediately available funds, and
the Agent shall promptly distribute such amounts to the Banks in immediately
available funds, provided that in the event payments are received by 11:00 a.m.,
Camp Hill time, by the Agent with respect to the Loans and such payments are not
distributed to the Banks on the same day received by the Agent, the Agent shall
pay the Banks the Federal Funds Effective Rate in the case of Loans or other
amounts due in Dollars, or the Overnight Rate in the case of Loans or other
amounts due in an Optional Currency, with respect to the amount of such payments
for each day held by the Agent and not distributed to the Banks. The Agent's and
each Bank's statement of account, ledger or other relevant record shall, in the
absence of manifest error, be conclusive as the statement of the amount of
principal of and interest on the Loans and other amounts owing under this
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Agreement (including the Equivalent Amounts of the applicable currencies where
such computations are required) and shall be deemed an "account stated."
(j) Section 5.2 of the Agreement is amended by inserting in the
parenthetical phrase, after "except for the Agent's Fee," the phrase "and the
Optional Currency Loan Processing Fee".
(k) Section 5.3 of the Agreement is hereby amended by adding a sentence
at the end thereof to read in its entirety as follows: Interest on the principal
amount of each Loan or other monetary Obligation shall be due and payable in the
currency in which such Loan was made.
(l) Section 5.4.1 is hereby amended by adding at the end thereof a new
paragraph to read in its entirety as follows: Payments made hereunder shall be
made in the currency in which the Loan was made. Prepayments made to Euro-Rate
Loans shall be applied first to Dollar Loans and then to Optional Currency
Loans.
(m) Section 5.5 of the Agreement is hereby amended and restated to read
in its entirety as follows:
5.5 Currency Fluctuations.
If on any Computation Date the Revolving Facility Usage is equal to or
greater than the Commitments as a result of a change in exchange rates between
one or more Optional Currencies and Dollars, then the Agent shall notify the
Borrowers of the same. The Borrowers shall pay or prepay Loans (as selected by
the Borrowers and subject to Borrowers' indemnity obligations under this
Agreement and) within one (1) Business Day after receiving such notice so that
the Revolving Facility Usage shall not exceed the Commitments after giving
effect to such payments or prepayments.
(n) Section 5.6.2 is hereby amended by adding at the end thereof a new
sentence to read in its entirety a follows:
The indemnity obligation of the Borrowers pursuant to this Section 5.6.2 shall
apply additionally to the costs associated with terminating foreign currency
hedge, purchase or exchange agreements entered into by the Agent or any Bank in
connection with any Optional Currency Loan.
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(o) The Agreement is hereby amended by adding new Sections 5.8, 5.9 and
5.10 to read in their entirety as follows:
5.8 Interbank Market Presumption.
For all purposes of this Agreement and each Note with respect to any
aspects of the Euro-Rate, any Loan under the Euro-Rate Option or any Optional
Currency, each Bank and the Agent shall be presumed to have obtained rates,
funding, currencies, deposits, and the like in the applicable interbank market
regardless whether it did so or not; and, each Bank's and the Agent's
determination of amounts payable under, and actions required or authorized by,
Sections 4.4 and 5.6 and shall be calculated, at each Bank's and the Agent's
option, as though each Bank and Agent funded its each Borrowing Tranche of Loans
under the Euro-Rate Option through the purchase of deposits of the types and
maturities corresponding to the deposits used as a reference in accordance with
the terms hereof in determining the Euro-Rate applicable to such Loans, whether
in fact that is the case.
5.9 Taxes.
5.9.1 No Deductions.
All payments made by the Borrowers hereunder and under each Note
shall be made free and clear of and without deduction for any present or future
taxes, levies, imposts, deductions, charges, or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on the net income of
any Bank and all income and franchise taxes applicable to any Bank of the United
States or any foreign country or any political subdivision thereof, in which the
principal office or applicable lending office of such Bank is located (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings, and
liabilities being hereinafter referred to as "Taxes"). If the Borrowers shall be
required by Law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) each Bank receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrowers shall make such deductions and (iii) the Borrowers shall
timely pay the full amount deducted to the relevant tax authority or other
authority in accordance with applicable Law.
5.9.2 Stamp Taxes.
In addition, the Borrowers agree to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges, or
similar levies which arise from any payment made hereunder or from the
execution, delivery, or registration of, or otherwise with respect to, this
Agreement or any Note (hereinafter referred to as "Other Taxes").
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5.9.3 Indemnification for Taxes Paid by a Bank.
The Borrowers shall indemnify each Bank for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section ) paid by any
Bank and any liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date a Bank makes written demand therefor.
5.9.4 Certificate.
Within 30 days after the date of any payment of any Taxes by the
Borrowers, the Borrowers shall furnish to each Bank, at its address referred to
herein, the original or a certified copy of a receipt evidencing payment
thereof. If no Taxes are payable in respect of any payment by a Borrower, such
Borrower shall, if so requested by a Bank, provide a certificate of an officer
of such Borrowers to that effect.
5.9.5 Survival.
Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrower contained in
Sections through shall survive the payment in full of principal and interest
hereunder and under any instrument delivered hereunder.
5.10 Judgment Currency.
5.10.1 Currency Conversion Procedures for Judgments.
If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder or under a Note in any currency (the
"Original Currency") into another currency (the "Other Currency"), the parties
hereby agree, to the fullest extent permitted by Law, that the rate of exchange
used shall be that at which in accordance with normal banking procedures each
Bank could purchase the Original Currency with the Other Currency after any
premium and costs of exchange on the Business Day preceding that on which final
judgment is given.
5.10.2 Indemnity in Certain Events.
The obligation of the Borrowers in respect of any sum due from
the Borrowers to any Bank hereunder shall, notwithstanding any judgment in an
Other Currency, whether pursuant to a judgment or otherwise, be discharged only
to the extent that, on the Business Day following receipt by any Bank of any sum
adjudged to be so due in such Other Currency, such Bank may in accordance with
normal banking procedures purchase the Original Currency with such Other
Currency. If the amount of the Original Currency so purchased is less than the
sum originally due to such Bank in the Original Currency, each Borrower agrees,
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<PAGE>
as a separate obligation and notwithstanding any such judgment or payment, to
indemnify such Bank against such loss.
(p) Section 10.15 of the Agreement is hereby amended by adding at the
end of the following sentence:
The Borrowers shall also pay to the Agent for its own account quarterly in
arrears on the first Business Day of each January, April, July and October a
nonrefundable fee equal to $1,000 per Bank per year (the "Optional Currency Loan
Processing Fee") in connection with processing Loans denominated in any Optional
Currency.
(q) Section 10.16 of the Agreement is hereby amended and restated to
read in its entirety as follows:
10.16 Availability of Funds.
The Agent may assume that each Bank has made or will make the proceeds
of a Loan available to the Agent in the applicable currency unless the Agent
shall have been notified by such Bank on or before the later of (1) the close of
Business on the Business Day preceding the Borrowing Date with respect to such
Loan or two (2) hours before the time on which the Agent actually funds the
proceeds of such Loan to the Borrowers (whether using its own funds pursuant to
this Section 10.16 or using proceeds deposited with the Agent by the Banks and
whether such funding occurs before or after the time on which Banks are required
to deposit the proceeds of such Loan with the Agent). The Agent may, in reliance
upon such assumption (but shall not be required to), make available to the
Borrowers a corresponding amount in the applicable currency. If such
corresponding amount is not in fact made available to the Agent by such Bank in
the applicable currency, the Agent shall be entitled to recover such amount on
demand from such Bank (or, if such Bank fails to pay such amount forthwith upon
such demand from the Borrowers) together with interest thereon, in respect of
each day during the period commencing on the date such amount was made available
to the Borrower and ending on the date the Agent recovers such amount, at a rate
per annum equal to the applicable interest rate in respect of such Loan.
(r) Section 10.17 of the Agreement is hereby amended by adding a new
sentence at the end thereof to read as follows:
Notwithstanding the foregoing, any compensation calculated pursuant to this
Section 10.17 in respect of Loans made in an Optional Currency shall be
calculated at the Overnight Rate.
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(s) Section 11.1.4 of the Agreement is hereby amended by adding to the
phrase referring to Section 5.2 the following phrase to read in its entirety as
follows:
Section 3.3.3 [Request for Additional Optional Currencies], Section 5.5
[Currency Fluctutation],
(t) Section 11.17 is hereby amended by adding at the end thereof a new
sentence to read in its entirety as follows:
The Borrowers shall not be required to indemnify or to pay any additional
amounts to any Bank with respect to any Taxes pursuant to Section 5.9.1 to the
extent that any obligation to withhold, deduct or pay amounts with respect to
such tax existed on the date such Bank became a party to this Agreement or as a
result of any such Bank's failure to provide the documents required by this
Section 11.17 and, in such case, the Borrowers may deduct and withhold such tax
from payment made in respect of such Bank.
2. Miscellaneous.
(a) All of the terms, conditions, provisions and covenants in the
Notes, the Agreement, the Loan Documents, and all other documents delivered to
the Banks and the Agent in connection with any of the foregoing documents and
obligations secured thereby shall remain unaltered and in full force and effect
except as modified by this Amendment.
(b) The Borrowers agree to pay all of the Agent's expenses incurred in
connection with the preparation of this Amendment and the transactions
contemplated by this Amendment, including without limitation, the reasonable
fees and expenses of the Agent's counsel.
(c) This Amendment shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
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(d) Each and every one of the terms and provisions of this Amendment
shall be binding upon and shall inure to the benefit of the Borrowers, the Banks
and the Agent and their respective successors and assigns.
(e) This Amendment may be executed in one or more counterparts, each of
which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall constitute but one and the same
instrument.
(f) Contemporaneously herewith, the Borrowers shall pay to the Agent on
behalf of the Banks according to their respective Ratable Shares an amendment
fee of $3,000.
(g) The execution and delivery of this waiver shall not be construed to
establish a course of conduct or imply that any other, future or further
waivers, consents or forbearance shall be considered, provided or agreed to.
(h) The Borrowers represent and warrant that there exists no Event of
Default or Potential Default.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
PNC BANK, NATIONAL ASSOCIATION, individually and as Agent
By:___________________________
Title:________________________
NATIONAL CITY BANK OF PENNSYLVANIA
By:___________________________
Title:________________________
THE SUMITOMO BANK, LIMITED
By:___________________________
Title:________________________
TB WOOD'S INCORPORATED, individually and as Borrower Agent
By:___________________________
Title:________________________
Accepted and Agreed:
TB WOOD'S CORPORATION, as Guarantor
By:___________________________
Title:________________________
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<PAGE>
THIRD AMENDMENT TO LOAN DOCUMENTS
---------------------------------
This THIRD AMENDMENT TO LOAN DOCUMENTS ("Amendment") dated April 24,
1998 is made by and among TB WOOD'S INCORPORATED, individually and as Agent
under the Borrower Agency Agreement (the "Borrower Agent"), and PNC BANK,
NATIONAL ASSOCIATION, a national banking association as Agent for the Banks
under the Credit Agreement referred to herein (the "Agent") and PNC BANK,
NATIONAL ASSOCIATION, THE SUMITOMO BANK, LIMITED and NATIONAL CITY BANK OF
PENNSYLVANIA as the Banks..
Reference is made to the Revolving Credit Agreement dated October 10,
1996 by and among TB Wood's Incorporated, a Pennsylvania corporation, Plant
Engineering Consultants, Inc., a Texas corporation, Group Blaju, S.A., de C.V.,
a Mexican corporation, and TB Wood's Canada, Ltd., an Ontario corporation (such
corporations being the "Borrowers"), PNC Bank, National Association, as Agent
and the Banks party thereto as amended on April 7, 1997 and January 20, 1998 (as
so amended, the "Agreement") pursuant to which the Banks extended to the
Borrowers a $40,000,000 revolving line of credit. The obligations under the
Agreement and the Loan Documents are evidenced by the Borrowers' Notes payable
to the Banks. (Capitalized terms used herein not otherwise defined shall have
the meanings provided for in the Agreement.)
The Borrowers wish to cause a parcel of land in Texas to be acquired,
and a factory to be built thereon, in connection with which the San Marcos Texas
Industrial Development Corporation will issue certain variable rate demand bonds
(the "Bonds"). To support the Bonds, the Borrowers have requested the Agent to
issue a letter of credit pursuant to the terms of the Agreement. Accordingly,
the Borrowers, the Banks and the Agent have agreed that the Agreement be amended
<PAGE>
as provided herein, effective as of the date hereof, to provide for the issuance
of such letter of credit and to secure further the repayment of the Obligations
and certain other matters.
In addition, the Borrowers have requested, and subject to the terms
hereof, the Agent and the Banks have agreed, that, the Commitments be increased,
the pricing for the Loans and the Letter of Credit be adjusted and certain
provisions be modified or amended.
Accordingly, the Borrowers, the Banks and the Agent have agreed that
the Agreement be amended as provided herein to provide therefor, effective as of
the date hereof.
NOW, THEREFORE, in consideration of the foregoing and for other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Increase of Commitment.
The Commitments of the Banks are hereby increased to $47,500,000 and
the definition of "Commitment" is hereby amended by amending and restating
Schedule 1.1(B) to read in its entirety as shown on the attached Schedule
1.1(B). Effective as of the date hereof, the Banks are as set forth on such
Schedule 1.1(B).
2. Amendment to Agreement.
(a) Section 1.1 of the Agreement is hereby amended by amending and
restating the following definitions to read in their entirety as follows:
Direct Pay Letter of Credit shall mean each Letter of Credit
(including without limitation the Tennessee Letters of Credit and the Texas
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Letters of Credit) providing for payment under specified circumstances directly
to the beneficiary thereof and issued to support the Borrowers' financings
through any one or more development authorities or public agencies.
Required Share shall have the meaning assigned to such term in
Section 2.11.8.
Swing Loan Commitment shall mean PNC Bank's commitment to make Swing
Loans to the Borrowers pursuant to Section 2.11.1 in an aggregate principal
amount up to $1,500,000.
Swing Loan Note shall mean the Swing Loan Note of the Borrowers
evidencing the Swing Loans executed and delivered to the order of PNC Bank on
April 24, 1998 together with all amendments, extensions, renewals, replacements,
refinancings or refundings thereof in whole or in part.
Swing Loan Request shall mean a request for Swing Loans made in
accordance with Section 2.11.2.
Swing Loans shall have the meaning assigned to such term in Section
2.11.
Texas Bonds shall mean the San Marcos Industrial Development
Corporation Variable Rate Demand Bonds, Series 1998 (TB Wood's Incorporated
Project) to be issued on or about September 1, 1998 and having an aggregate
principal amount of approximately $3,000,000 and secured, inter alia, pursuant
to a trust indenture to be reasonably acceptable to the Agent. The Texas Bonds
will be scheduled to mature twenty-five (25) years after their date of issuance.
Texas Facility shall mean the manufacturing facility located in San
Marcos, Texas and owned by San Marcos Industrial Development Corporation and to
be occupied by the Company pursuant to a lease agreement to be reasonably
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acceptable to the Agent and the Banks to be dated contemporaneously with the
issuance of the Texas Bonds. The acquisition, rehabilitation and equipping of
the Texas Facility is to be financed pursuant to the Texas Bonds.
Texas Letter of Credit shall shave the meaning assigned to such term
in Section 2.9.1.2.
(b) Section 1.1 of the Agreement is further amended as follows:
(i) The definition of "Commitment" is hereby amended by adding
at the end thereof the following sentence:
Commitment shall also include as to the
Agent, its Swing Loan Commitment, and
Commitments shall mean the aggregate of the
Revolving Credit Commitments of all of the
Banks and Swing Loan Commitment of PNC Bank.
(ii) The definition of "Loans" is hereby amended by adding at
the end thereof the following sentence:
Loans shall also include Swing Loans or any Swing
Loan.
(iii) The definition of "Notes" is hereby amended by adding at
the end thereof the following sentence:
Notes shall also include the Swing Note.
(iv) The definition of "Ratable Share" is hereby amended by
adding at the end thereof the following sentence:
Ratable Share shall be calculated with reference to
the Swing Loan Commitment, without duplication.
(v) The definition of "Required Banks" is hereby amended by
adding at the end thereof the following sentence:
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Required Banks shall be calculated with reference to
the Swing Loan Commitment or the Swing Loans,
without duplication.
(c) Section 2.3 [Commitment Fees] is hereby amended by adding at the
end thereof the following sentence:
For purposes of this computation, PNC Bank's
Swing Loans shall be deemed to be borrowed
amounts under its Revolving Credit Commitment.
(d) Section 2.9 of the Agreement is hereby amended by
(i) adding in third sentence of Section 2.9.1 after the phrase
"Standby Letter of Credit or a Commercial Letter of Credit", the phrase "or a
Direct Pay Letter of Credit";
(ii) substituting for the dollar limit set forth in item (i)
thereof a new dollar limit equal to $12,500,000, item (ii) to remain unchanged
and by adding at the end thereof the following proviso:
and further providing that of Credit
Outstandings in respect of Direct Pay Letters of
Credit shall exceed $7,500,000 and Letter of
Credit Outstandings in respect of Standby Letters of
Credit and Commercial Letters of Credit together
shall never exceed $5,000,000;
(iii) by adding a new subsection 2.9.1.2 to read in its entirety
as follows:
2.9.1.2 The Borrowers may request during 1998 (but only
contemporaneously with the issuance of the Texas Bonds)
that the Agent issue a Direct Pay Letter of Credit in an
amount approximately equal to $3,060,000 to support the
Texas Bonds in connection with the Texas Facility (the
"Texas Letter of Credit"). The Texas Letter of Credit
shall expire three (3) years after its issuance date,
subject to renewal in accordance with the Agreement as
provided in the form of Texas Letter of Credit. The
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<PAGE>
reimbursement obligations under the Texas Letter shall be
Obligations under the Loan Documents.
; and
(iv) by deleting both the second and the final sentences from
Section 2.9.1.1.
(e) Section 2 of the Agreement is hereby amended by adding a
new Section 2.11 to read in its entirety as follows:
2.11.1 Swing Loan Commitment.
Subject to the terms and conditions hereof and relying
upon the representations and warranties herein set forth, and in order to
facilitate loans and repayments between Settlement Dates, PNC Bank may, at its
option, cancelable at any time for any reason whatsoever, make swing loans (the
"Swing Loans") to the Borrowers at any time or from time to time after the date
hereof to, but not including, the Expiration Date, in an aggregate principal
amount up to but not in excess of One Million Five Hundred Thousand Dollars
($1,500,000) (the "Swing Loan Commitment"), provided that the aggregate
principal amount of PNC Bank's Swing Loans and the Revolving Credit Loans of all
the Banks at any one time outstanding shall not exceed the Revolving Credit
Commitments of all the Banks. Within such limits of time and amount and subject
to the other provisions of this Agreement, the Borrowers may borrow, repay and
reborrow pursuant to this Section 2.11.
2.11.2 Swing Loan Requests.
Except as otherwise provided herein, the Borrowers may
from time to time prior to the Expiration Date request PNC Bank to make Swing
Loans by delivery to PNC Bank not later than 12:00 noon Pittsburgh time on the
proposed Borrowing Date of a duly completed request therefor substantially in
the form of Exhibit 2.11.2 hereto or a request by telephone immediately
confirmed in writing by letter or facsimile (each, a "Swing Loan Request"), it
being understood that the Agent may rely on the authority of any individual
making such a telephonic request without the necessity of receipt of such
written confirmation. Each Swing Loan Request shall be irrevocable and shall
specify the proposed Borrowing Date and the principal amount of such Swing Loan,
which shall be not less than $100,000.
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2.11.3 Making Swing Loans.
So long as PNC Bank elects to make Swing Loans, PNC Bank
shall, after receipt by it of a Swing Loan Request pursuant to Section 2.10.2,
fund such Swing Loan to the Borrowers in U.S. Dollars and immediately available
funds at the Principal Office prior to 3:00 o'clock p.m. Pittsburgh time on the
Borrowing Date.
2.11.4 Swing Loan Note.
The obligation of the Borrowers to repay the unpaid
principal amount of the Swing Loans made to it by PNC Bank on demand together
with interest thereon shall be evidenced by the Swing Loan Note.
2.11.5 Borrowing to Repay Swing Loans.
PNC may, at its option, exercisable at any time for any
reason whatsoever, demand repayment of the Swing Loans.
2.11.6 Swing Line Interest Rate.
Principal amounts outstanding as Swing Loans shall bear
interest at PNC Bank "prime rate" (which rate may not be the lowest rate then
charged commercial borrowers by PNC Bank) minus one half percent (.5%) per
annum.
2.11.7 Payments on Swing Loans.
Payments in respect of the Swing Loan shall be made to
the Agent at the Principal Office for the account of PNC Bank with respect to
the Swing Loans.
(f) Section 4.1.1(ii) of the Agreement is hereby amended by
substituting for the pricing grid set forth therein the grid set forth below:
(a) if the Borrowers' Leverage Ratio is less than or equal
to 1.0 to 1.0, then the Applicable Margin shall be .625; and
(b) if the Borrowers' Leverage Ratio is greater than 1.0 to
1.0 but less than or equal to 1.5 to 1.0, then the Applicable
Margin shall be .875; and
(c) if the Borrowers' Leverage Ratio is greater than 1.5 to
1.0 but less than or equal to 2.0 to 1.0, then the Applicable
Margin shall be 1.125; and
7
<PAGE>
(d) if the Borrowers' Leverage Ratio is greater than 2.0 to
1.0 but less than or equal to 2.5 to 1.0, then the Applicable
Margin shall be 1.25; and
(e) if the Borrowers' Leverage Ratio is greater than 2.5 to
1.0, then the Applicable Margin shall be 1.375.
For the purposes of calculation of the Letter of Credit Fee
pursuant to Section 2.9.2, "Applicable Margin" shall mean (x) the
rate per annum described in and calculated pursuant to the grid set
forth above minus (y) one-eighth percent (.125%).
(g) Section 5.2 [Pro Rata Treatment of Banks] is hereby amended to
add a sentence at the end to read as follows:
Notwithstanding any of the foregoing, each borrowing or payment
or prepayment by the Borrower of principal, interest, fees or
other amounts from the Borrowers with respect to Swing Loans
shall be made by or to PNC Bank according to Section 2.11.7.
(h) Section 5.4.1 [Right to Prepay] is hereby amended by adding a
sentence at the end to read as follows:
Prepayment notices with respect to Swing Lines shall be provided
no later than 12:00 noon, Pittsburgh time, on the date of
prepayment of Swing Loans setting forth the following
information:
(x) the date, which shall be a Business Day, on which the
proposed prepayment is to be made; and
(y) a statement indicating the application of the prepayment
between the Swing Loans.
The Equivalent Amount of the payment shall not be less than
$100,000 for any Swing Loan.
8
<PAGE>
(i) Section 8.2.17 [Minimum Tangible Net Worth] of the Agreement is
hereby amended and restated to read in its entirety as follows:
The Borrowers shall not at any time permit Consolidated Tangible
Net Worth to be less than $7,000,000.
(j) Section 8.2 of the Agreement is hereby amended by adding a new
Section 8.2.21 to read in its entirety as follows:
8.2.21 Minimum Net Worth.
The Loan Parties shall not permit at any time within any fiscal
year the Borrowers' consolidated net worth, determined and
consolidated in accordance with GAAP, to be less than the sum of
(x) $21,000,000 and (y) fifty percent (50%) of consolidated net
income of the Borrowers for each fiscal quarter in which such
number is greater than zero ($0) during the period from January
1, 1998 through the date of determination (tested at June 30,
1998 and quarterly thereafter).
(k) Section 9.1.3 of the Agreement is hereby amended by adding at
the end thereof the phrase:
or there shall occur an event of default under the [Trust
Indenture] or [Lease Agreement] relating to the Texas Bonds;
(l) Section 9.2.1 of the Agreement is hereby amended by adding a new
item (iv) at the end of the first sentence to read as follows:
and (iv) with respect to the Texas Bonds (A) notify the trustee
and the paying agent under the trust indenture relating to the
Texas Bonds of the occurrence of an Event of Default, (B) direct
such trustee to declare an event of default as defined in such
indenture and accelerate the Texas Bonds or effect a mandatory
purchase of the Texas Bonds in lieu thereof, (C) direct such
trustee to direct such paying agent to draw on the Texas Letter
of Credit and (D) direct the trustee to exercise remedies under
such trust indenture or such lease agreement.
9
<PAGE>
(m) All references in any Loan Document or otherwise to "Group
Blaju, S.A., de C.V." or "Grupo Blaju, S.A., de C.V.," or similar, shall
hereafter refer to "TB Wood's Mexico, S.A., de C.V., Mexico City, Mexico."
3. Substitute Notes.
Contemporaneously herewith, the Borrowers have executed and
delivered new Notes reflecting the respective Commitments of the Banks.
4. Miscellaneous.
(a) All of the terms, conditions, provisions and covenants in the
Notes, the Agreement, the Loan Documents, and all other documents delivered to
the Banks and the Agent in connection with any of the foregoing documents and
obligations secured thereby shall remain unaltered and in full force and effect
except as modified by this Amendment.
(b) The Borrowers agree to pay all of the Agent's expenses incurred
in connection with the preparation of this Amendment and the transactions
contemplated by this Amendment, including without limitation, the reasonable
fees and expenses of the Agent's counsel.
(c) This Amendment shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
(d) Each and every one of the terms and provisions of this Amendment
shall be binding upon and shall inure to the benefit of the Borrowers, the Banks
and the Agent and their respective successors and assigns.
10
<PAGE>
(e) This Amendment may be executed in one or more counterparts, each
of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall constitute but one and the same
instrument.
(f) Contemporaneously herewith, the Borrowers shall pay to the Agent
on behalf of the Banks according to their respective Ratable Shares an amendment
fee of $10,000.
(g) The execution and delivery of this waiver shall not be construed
to establish a course of conduct or imply that any other, future or further
waivers, consents or forbearance shall be considered, provided or agreed to. (h)
The Borrowers represent and warrant that there exists no Event of Default or
Potential Default.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
PNC BANK, NATIONAL ASSOCIATION, individually and as Agent
By:___________________________
Title:________________________
NATIONAL CITY BANK OF PENNSYLVANIA
By:___________________________
Title:________________________
THE SUMITOMO BANK, LIMITED
By:___________________________
Title:________________________
and
By:___________________________
Title:________________________
11
<PAGE>
[Signatures Continued]
TB WOOD'S INCORPORATED, individually and as Borrower Agent
By:___________________________
Title:________________________
Accepted and Agreed:
TB WOOD'S CORPORATION, as Guarantor
By:___________________________
Title:________________________
12
<PAGE>
EXHIBIT 1.1(B)
(Effective April 24, 1998)
COMMITMENTS OF BANKS
PNC Bank, National Association $23,750,000.00
National City Bank of Pennsylvania $15,764,015.41
The Sumitomo Bank, Limited $ 7,985,984.59
--------------
TOTAL $47,500,000.00
13
<PAGE>
FOURTH AMENDMENT TO LOAN DOCUMENTS
This FOURTH AMENDMENT TO LOAN DOCUMENTS ("Amendment") dated July 21,
1999 is made by and among TB WOOD'S INCORPORATED, individually and as Agent
under the Borrower Agency Agreement (the "Borrower Agent") and PNC BANK,
NATIONAL ASSOCIATION, a national banking association, as Agent for the Banks
under the Credit Agreement referred to herein (the "Agent") and PNC BANK,
NATIONAL ASSOCIATION, SUMMIT BANK, FIRST NATIONAL BANK OF MARYLAND and NATIONAL
CITY BANK OF PENNSYLVANIA as the Banks.
Reference is made to the Revolving Credit Agreement dated October 10,
1996, by and among TB Wood's Incorporated, a Pennsylvania corporation, Plant
Engineering Consultants, Inc., a Texas corporation, TB Wood's Mexico, S.A. de
C.V., Mexico City, Mexico, a Mexican corporation (f/k/a Group Blaju, S.A., de
C.V.) and TB Wood's Canada, Ltd., an Ontario corporation (such corporations
being the "Borrowers"), PNC Bank, National Association, as Agent and the Banks
party thereto as amended on April 7, 1997, January 20, 1998 and April 24, 1998
(as so amended, the "Agreement") pursuant to which the Banks extended to the
Borrowers a $40,000,000 revolving line of credit, which amount has heretofore
been increased to $47,500,000 pursuant to amendment. The obligations under the
Agreement and the Loan Documents are evidenced by the Borrowers' Notes payable
to the Banks. (Capitalized terms used herein not otherwise defined shall have
the meanings provided for in the Agreement.)
The Borrowers wish to extend the term of the Commitments to October 10,
2003, provide for the substitution of First Union National Bank ("First Union")
<PAGE>
for Allfirst Bank (f/k/a First National Bank of Maryland) ("FNBM"), increase the
aggregate Commitments to $52,500,000, establish the "Euro" as an acceptable
"Optional Currency," permit both Berges electronic GmbH and Berges electronic,
S.r.1, each to incur up to $1,000,000 in additional, overseas, secured
Indebtedness (for a total of up to $2,000,000 in additional, overseas, secured
Indebtedness, in the aggregate) and make certain other amendments as provided
herein.
Accordingly, the Borrowers, the Banks and the Agent have agreed that
the Agreement be amended as provided herein to provide therefor.
NOW, THEREFORE, in consideration of the foregoing and for other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Amendment to Agreement.
(a) Section 1.1 of the Agreement is hereby amended by amending and
restating the following definitions to read in their entirety as follows:
(i) Expiration Date shall mean, with respect to the Commitments,
October 10, 2003.
(ii) Euro shall have the meaning assigned to such term in
Section 3.10.
(b) Section 3 of the Agreement is hereby amended by adding a new
Section 3.10 to read in its entirety as follows:
3.10 European Monetary Union.
(a) If, as a result of the implementation of the European
monetary union, (i) any Optional Currency ceases to be lawful
currency of the nation issuing the same and is replaced by a
European common current (the "Euro") or (ii) any Optional
Currency and the Euro are at the same time recognized by any
governmental authority of the nation issuing such currency as
2
<PAGE>
lawful currency of such nation and the Agent shall so request in
a notice delivered to the Borrower, then any amount payable
hereunder by any part hereto in such Currency shall instead by
payable in the Euro and the amount so payable shall be
determined by translating the amount payable in such Optional
Currency to the Euro at the exchange rate recognized by the
European Central Bank for the purpose of implementing European
monetary union. Prior to the occurrence of the event or events
described in clause (i) or (ii) of the preceding sentence, each
amount payable hereunder in any Optional Currency will, except
as otherwise provided herein, continue to be payable only in
that Currency.
(b) The Borrower agrees, at the request of any Bank to
compensate such Bank for any loss, cost, expense or reduction in
return that such Bank shall reasonably determine shall be
incurred or sustained by such Bank as a result of the
implementation of European monetary union and that would not
have been incurred or sustained but for the transactions
provided for herein. A certificate of any Bank setting forth
such Bank's determination of the amount or amounts necessary to
compensate such Bank shall be delivered to the Borrower and
shall be conclusive absent manifest error so long as such
determination is made on a reasonable basis. The Borrower shall
pay such Bank the amount shown as due on any such certificate
within ten (10) days after receipt thereof.
(c) The Borrower, the Guarantor, the Agent and the Banks
agree, at the time of or at any time following the
implementation of European monetary union, to use reasonable
efforts to enter into an agreement amending this Agreement in
order to reflect the implementation of such monetary union, to
permit (if feasible) the Euro to quality as an Optional Currency
3
<PAGE>
under the terms and conditions of the definition of such term
and to place the parties hereto in the position with respect to
the settlement of payments of the Euro as they would have been
with respect to the settlement of the currencies it replaced.
(c) Section 4.1.1(ii) is hereby amended, effective as of March 30,
1999, by adding a new unnumbered paragraph at the end thereof to read in its
entirety as follows:
For purposes only of calculating the Applicable Margin in the
Section 4.1.1(ii) and not for purposes of determining the Letter
of Credit Fee under Section 2.9.2 or the Commitment Fee under
Section 2.3 for periods after September 30, 1998, the Leverage
Ratio shall be calculated by subtracting from Total Debt an
amount equal to the Bond Escrow Amount. For purposes of this
provision, "Bond Escrow Amount" shall mean the dollar amount
held by or deposited with financial institutions for the
purposes of guaranteeing, assuring or securing any Loan Party's
obligations to pay money in respect of municipal bond or other
bonds issued by or for governmental or quasi-governmental
Persons as described in writing to the Agent and the Banks from
time to time.
(d) Section 8.2.1 [Indebtedness] of the Credit Agreement is hereby
amended by substituting for the period (.) at the end of clause (vii) the phrase
"; and" and adding a new clause (viii) to read in its entirety as follows:
Indebtedness not exceeding US $2,000,000 in the aggregate, up to
US $1,000,000 for each of Berges electronic GmbH and Berges
electronic, S.r.1, each of which is a Subsidiary of T.B. Wood's
Incorporated doing business in Europe and which is a Loan Party.
(e) Section 8.2.2 [Liens] of the Credit Agreement is hereby amended
by adding in clause (x) after the phrase "except Permitted Liens" the phrase
"and Liens only on accounts receivable and inventory securing Indebtedness not
exceeding US $2,000,000 in the aggregate, up to US $1,000,000 for each of the
Subsidiaries of T.B. Wood's Incorporated doing business in Europe and which is a
Loan Party, as described in Section 8.2.1 of this Credit Agreement".
4
<PAGE>
(f) The "Loan Parties" shall now include Berges electronic GmbH and
Berges electronic, S.r.1.
2. Increase of Commitment.
The Commitments of the Banks are hereby increased to
$52,500,000 and the definition of "Commitment" is hereby amended by amending and
restating Schedule 1.1(B) to read in its entirety as shown on the attached
Schedule 1.1(B). Effective as of the date hereof, and after giving effect to the
deletion of one "Bank" and the addition of a new "Bank" as described in Section
3 hereof, the Banks, and their respective Commitments, are as set forth on such
Schedule 1.1(B). 3. Assignment.
Contemporaneously herewith, FNBM has assigned all of FNBM's
$5,000,000 Commitment to the Agent pursuant to an Assignment and Assumptions
Agreement and the Agent has, in turn, assigned a $6,500,000 Commitment to First
Union pursuant to an Assignment and Assumption Agreement, all dated the date
hereof.
4. Miscellaneous.
(a) All of the terms, conditions, provisions and covenants in the
Notes, the Agreement, the Loan Documents, and all other documents delivered to
the Banks and the Agent in connection with any of the foregoing documents and
obligations secured thereby shall remain unaltered and in full force and effect
except as modified by this Amendment.
5
<PAGE>
(b) The Borrowers agree to pay all of the Agent's expenses incurred
in connection with the preparation of this Amendment and the transactions
contemplated by this Amendment, including without limitation, the reasonable
fees and expenses of the Agent's counsel.
(c) This Amendment shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
(d) Each and every one of the terms and provisions of this Amendment
shall be binding upon and shall inure to the benefit of the Borrowers, the Banks
and the Agent and their respective successors and assigns.
(e) This Amendment may be executed in one or more counterparts, each
of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall constitute but one and the same
instrument.
(f) The execution and delivery of this waiver shall not be construed
to establish a course of conduct or imply that any other, future or further
waivers, consents or forbearance shall be considered, provided or agreed to.
(g) The Borrowers represent and warrant that there exists no Event
of Default or Potential Default.
5. Substitute Notes.
Contemporaneously herewith, the Borrowers have executed and
delivered new Notes reflecting the respective Commitments of the Banks. 6.
6
<PAGE>
6. Joinder of Subsidiaries.
Contemporaneously herewith, the following Persons have executed a
Joinder pursuant to which they become Borrowers and Loan Parties: Berges
electronic GmbH and Berges electronic, S.r.l.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.
PNC BANK, NATIONAL ASSOCIATION, individually and as Agent
By:_____________________________
Title:
ALLFIRST BANK (f/k/a FIRST NATIONAL BANK OF MARYLAND)
By:_____________________________
Title:__________________________
NATIONAL CITY BANK OF PENNSYLVANIA
By:_____________________________
Title:__________________________
SUMMIT BANK
By:_____________________________
Title:__________________________
TB WOOD'S INCORPORATED, individually and as Borrower Agent
By:_____________________________
Title:__________________________
Accepted and Agreed:
TB WOOD'S CORPORATION, as Guarantor
By:_____________________________
Title:__________________________
and
FIRST UNION NATIONAL BANK
By:_____________________________
Title: _________________________
7
<PAGE>
EXHIBIT 1.1(B)
(Effective July 21, 1999)
COMMITMENTS OF BANKS
PNC Bank, National Association $20,000,000
National City Bank of Pennsylvania $16,000,000
Summit Bank $10,000,000
First Union National Bank $ 6,500,000
-----------
TOTAL $52,500,000
<PAGE>
FIFTH AMENDMENT TO LOAN DOCUMENTS
This FIFTH AMENDMENT TO LOAN DOCUMENTS ("Amendment") dated November 8,
1999 is made by and among TB WOOD'S INCORPORATED, individually and as Agent
under the Borrower Agency Agreement (the "Borrower Agent") and PNC BANK,
NATIONAL ASSOCIATION, a national banking association, as Agent for the Banks
under the Credit Agreement referred to herein (the "Agent") and PNC BANK,
NATIONAL ASSOCIATION, SUMMIT BANK, FIRST UNION NATIONAL BANK and NATIONAL CITY
BANK OF PENNSYLVANIA as the Banks.
Reference is made to the Revolving Credit Agreement dated October 10,
1996, by and among TB Wood's Incorporated, a Pennsylvania corporation, Plant
Engineering Consultants, Inc., a Texas corporation, TB Wood's Mexico, S.A. de
C.V., Mexico City, Mexico, a Mexican corporation (f/k/a Group Blaju, S.A., de
C.V.) and TB Wood's Canada, Ltd., an Ontario corporation (such corporations
being the "Borrowers"), PNC Bank, National Association, as Agent and the Banks
party thereto as amended on April 7, 1997, January 20, 1998, April 24, 1998 and
July 21, 1999 (as so amended, the "Agreement") pursuant to which the Banks
extended to the Borrowers a $40,000,000 revolving line of credit, which amount
has heretofore been increased to $52,500,000 pursuant to amendment. The
obligations under the Agreement and the Loan Documents are evidenced by the
Borrowers' Notes payable to the Banks. (Capitalized terms used herein not
otherwise defined shall have the meanings provided for in the Agreement.)
The Borrowers wish to obtain the consent of the Agent and the Banks to
the repurchase with cash by the Company on the open market shares of its Common
Stock pursuant to the transaction described in the report of the Company on
Schedule 13e-4 to be filed with the Securities and Exchange Commission on
November 12, 1999 as a result of which the repurchased shares shall be
designated treasury shares of the Company (the "Stock Repurchase") and to modify
two financial covenants in connection therewith.
<PAGE>
Accordingly, the Borrowers, the Banks and the Agent have agreed that
the Agreement be amended as provided herein to provide therefor.
NOW, THEREFORE, in consideration of the foregoing and for other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Consent.
--------
The Agent and the Banks hereby consent to the Stock Repurchase provided
that (i) the Company spends no more than $5,000,000 to effect such purchase,
excluding costs, fees and commission in connection therewith, (ii) it is
completed by December 31, 1999; and (iii) the Company provides to the Agent and
the Bank promptly after the effective thereof the details of the number of
shares purchased, the total amount spent therefor and a summary of the stock
ownership of the Company's management.
2. Amendment to Agreement.
-----------------------
(a) Section 8.2.17 [Minimum Tangible Net Worth] of the Agreement is
hereby amended and restated to read in its entirety as follows:
The Borrowers shall not at any time permit Consolidated
Tangible Net Worth to be less than $7,000,000 plus an amount
equal to (x) 50% of consolidated net income of the Borrowers
for each fiscal quarter in which net income was earned (as
opposed to a net loss) during the quarterly reporting periods
from October 1, 1999 through the date of determination.
2
<PAGE>
(b) Section 8.2.21 [Minimum Net Worth] of the Agreement is hereby
amended and restated to read in its entirety as follows:
8.2.21 Minimum Net Worth.
The Loan Parties shall not permit at any time within any
fiscal year the Borrowers' consolidated net worth, determined
and consolidated in accordance with GAAP, to be less than the
(x) 26,924,000 minus (y) the "Repurchase Adjustment" plus (z)
fifty percent (50%) of consolidated net income of the
Borrowers for each fiscal quarter in which such number is
greater than zero ($0) during the quarterly reporting periods
after April 1, 2000 through the date of determination (tested
quarterly). As used herein, "Repurchase Adjustment" shall mean
the Dollar amount not exceeding $2,500,000 equal to one-half
(1/2) of the amount spend by the Company to repurchase on the
open market shares of its publicly held Common Stock pursuant
to the consent of the Agent and the Banks dated November 8,
1999.
3. Fees and Expenses.
------------------
On the date hereof, the Borrowers shall pay to the Agent on behalf of
the Banks according to their relative Commitments a non-refundable amendment fee
of $40,000 in consideration of the Agent and the Banks entering into this
Amendment. Such fee are not payments for the use of money but are to compensate
the Banks for the consideration and approval of this Amendment.
4. Miscellaneous.
--------------
(a) All of the terms, conditions, provisions and covenants in the
Notes, the Agreement, the Loan Documents, and all other documents delivered to
the Banks and the Agent in connection with any of the foregoing documents and
obligations secured thereby shall remain unaltered and in full force and effect
except as modified by this Amendment.
3
<PAGE>
(b) The Borrowers agree to pay all of the Agent's expenses incurred in
connection with the preparation of this Amendment and the transactions
contemplated by this Amendment, including without limitation, the reasonable
fees and expenses of the Agent's counsel.
(c) This Amendment shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
(d) Each and every one of the terms and provisions of this Amendment
shall be binding upon and shall inure to the benefit of the Borrowers, the Banks
and the Agent and their respective successors and assigns.
(e) This Amendment may be executed in one or more counterparts, each of
which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall constitute but one and the same
instrument.
(f) The execution and delivery of this waiver shall not be construed to
establish a course of conduct or imply that any other, future or further
waivers, consents or forbearance shall be considered, provided or agreed to.
(g) The Borrowers represent and warrant that there exists no Event of
Default or Potential Default.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
4
<PAGE>
PNC BANK, NATIONAL ASSOCIATION,
individually and as Agent
-------------------------------
Frank M. Sajer
Assistant Vice President
NATIONAL CITY BANK OF PENNSYLVANIA
-------------------------------
W. Christopher Kohler
Assistant Vice President
SUMMIT BANK
-------------------------------
Mary R. Balciar
Vice President
FIRST UNION NATIONAL BANK
-------------------------------
Lynn Eagleson
Vice President
TB WOOD'S INCORPORATED, individually
and on behalf of all Borrowers as Borrower Agent
By:
----------------------------
Title:
-------------------------
5
<PAGE>
Accepted and Agreed:
TB WOOD'S CORPORATION, as Guarantor
By:
----------------------------
Title:
-------------------------
- and -
BERGES ELECTRONIC GmbH, as a Borrower
and a party to the Borrower Agency Agreement
By:
----------------------------
Title:
-------------------------
- and -
BERGES ELECTRONIC, S.r.l. , as a Borrower
and a party to the Borrower Agency Agreement
By:
----------------------------
Title:
-------------------------
- and -
PLANT ENGINEERING CONSULTANTS, INC. ,
as a Borrower and a party to the Borrower Agency Agreement
By:
----------------------------
Title:
-------------------------
- and -
TB WOOD'S CANADA, LTD. , as a Borrower
and a party to the Borrower Agency Agreement
By:
----------------------------
Title:
-------------------------
- and -
TB WOOD'S MEXICO, S.A. de C.V.,
MEXICO CITY, MEXICO, as a Borrower
and a party to the Borrower Agency Agreement
By:
----------------------------
Title:
-------------------------
6
<PAGE>
OPTION AGREEMENT
This OPTION AGREEMENT by and among Thomas C. Foley ("Foley") and
C. Sean Day ("Grantee") is entered into as of this 9th day of November, 1999.
Background
Foley is the record and beneficial owner of 275,000 shares (the
"Shares") of Common Stock, par value $.01 per share (the "Common Stock") of TB
Wood's Corporation, a Delaware corporation (the "Company"). Foley desires to
grant to Grantee an option to purchase the Shares on the terms and conditions
set forth herein.
Terms
In consideration of the mutual covenants contained herein and intending
to be legally bound hereby, the parties hereto agree as follows.
ARTICLE I
PURCHASE OPTION
Section 1.1. Grant of Purchase Option. Foley hereby grants to Grantee an
exclusive option (the "Purchase Option") to purchase the Shares at the Per Share
Price and on the other terms and conditions set forth in this Agreement. In
consideration for the Purchase Option, the Grantee hereby pays to Foley
$2,500.00 in immediately available funds. As used in this Agreement, "Per Share
Price" means the difference between (a) the "Purchase Price" as finally
determined pursuant to the Company's planned offer to purchase its shares of
Common Stock (the "Offer", to be commenced on November 12, 1999 and filed with
the Securities and Exchange Commission on Schedule 13E-4), and (b) $.05;
provided that in no event will the Per Share Price be less than $9.00. The
Purchase Option shall be exercisable by Grantee at any time from the date hereof
until the earlier of (a) two business days following the Company's notification
of the proration factor resulting from the Offer or (b) 5:00 p.m. Eastern Time
on January 1, 2000 (the "Purchase Option Period").
Section 1.2 Exercise. Grantee may exercise the Purchase Option once, but only
once, upon delivery of written notice to Foley (the "Purchase Option Exercise
Notice") prior to the expiration of the Purchase Option Period. The Purchase
Option Exercise Notice shall state Grantee's election to exercise the Purchase
Option for a specified number of Shares and the business date on which Grantee
requests the applicable purchase to take place (the "Closing"). Once Grantee has
delivered the Purchase Option Exercise Notice, Grantee shall not be permitted to
revoke or rescind such exercise of the Purchase Option. At Closing, Foley shall
deliver to Grantee such Shares free and clear of liens and other encumbrances.
Within 20 days following Closing, Grantee shall deliver to Foley, in immediately
available funds, the cash purchase price equal to the product of the Per Share
Price and the number of Shares specified for purchase in the Purchase Option
Exercise Notice.
<PAGE>
ARTICLE II
MISCELLANEOUS
Section 2.1. Governing Law. This Agreement shall be construed under and governed
by the internal laws of the State of New York without regard to its conflict of
laws provisions.
Section 2.2. Notices. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, or if
sent by registered or certified mail postage prepaid, upon the sooner of the
date on which receipt is acknowledged or the expiration of five days after
deposit in United States post office facilities properly addressed with postage
prepaid or if sent by overnight courier, the day after delivery of such notice
to such courier. All notices to a party will be sent to the addresses set forth
below or to such other address or person as such party may designate by notice
to each other party hereunder:
To Foley: Thomas C. Foley
NTC Group
3 Pickwick Plaza, Suite 200
Greenwich, CT 06830
To Grantee: C. Sean Day
Seagin International, LLC
One East Putnam Avenue
Greenwich, CT 06830
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
Section 2.3. Entire Agreement. This Agreement, including the matters referred to
herein and the other writings specifically identified herein or contemplated
hereby, is complete, reflects the entire agreement of the parties with respect
to its subject matter, and supersedes all previous written or oral negotiations,
commitments and writings. No promises, representations, understandings,
warranties and agreements have been made by any of the parties hereto except as
referred to herein or in such other writings; and all inducements to the making
of this Agreement and the transactions contemplated hereby which were relied
upon by either party hereto have been expressed herein or in such other
writings.
2
<PAGE>
Section 2.4. Assignability; Binding Effect. This Agreement or any of the
obligations or rights hereunder may not be assigned or delegated by any party
without the prior written consent of the other party hereto. This Agreement
shall be binding upon and enforceable by, and shall inure to the benefit of, the
parties hereto and their respective successors and permitted assigns.
Section 2.5 Execution in Counterparts; Amendements. For the convenience of the
parties and to facilitate execution, this Agreement may (a) be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same document, and (b) executed by facsimile.
This Agreement may not be amended or modified, nor may compliance with any
condition or covenant set forth herein be waived, except by a writing duly and
validly executed by the parties hereto or in the case of a waiver, the party
waiving compliance.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the date set forth above by their duly authorized
representatives.
FOLEY:
/s/ Thomas C. Foley
-------------------------------------
Thomas C. Foley
GRANTEE:
/s/ C. Sean Day
----------------------------------
C. Sean Day
3
