EXHIBIT 10.37
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this "Patent Security Agreement") is made
this 5th day of April, 2007, among the Grantors listed on the signature pages
hereof (collectively, jointly and severally, "Grantors" and each individually
"Grantor"), and WELLS FARGO FOOTHILL, INC., in its capacity as administrative
agent for the Lender Group (together with its successors and assigns in such
capacity, "Agent").
WITNESSETH:
WHEREAS, pursuant to that certain Credit Agreement dated of April 5, 2007
(as amended, restated, amended and restated, supplemented or otherwise modified
from time to time, including all exhibits and schedules thereto, the "Credit
Agreement") among TB Wood's Corporation, a Delaware corporation ("Parent"), each
of its Subsidiaries identified on the signature pages thereof (Parent and such
Subsidiaries, "Borrowers"), the lenders party thereto as "Lenders" ("Lenders"),
and Agent, the Lender Group agreed to make certain financial accommodations
available to Borrowers from time to time pursuant to the terms and conditions
thereof;
WHEREAS, the members of Lender Group are willing to make the financial
accommodations to Borrowers as provided for in the Credit Agreement, but only
upon the condition, among others, that the Grantors shall have executed and
delivered to Agent, for the benefit of the Lender Group, that certain Security
Agreement dated as of April 5, 2007 (including all annexes, exhibits or
schedules thereto, as from time to time amended, restated, amended and restated,
supplemented or otherwise modified, the "Security Agreement"); and
WHEREAS, pursuant to the Security Agreement, Grantors are required to
execute and deliver to Agent, for the benefit of the Lender Group, this Patent
Security Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement and/or the
Credit Agreement.
2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby
grants to Agent, for the benefit of the Lender Group, a continuing first
priority security interest (subject to Permitted Liens) in all of such Grantor's
right, title and interest in, to and under the following, whether presently
existing or hereafter created or acquired (collectively, the "Patent
Collateral"):
(a) all of its Patents and rights in and to Patent Intellectual
Property Licenses to which it is a party including those referred to on Schedule
I hereto;
(b) all reissues, continuations, continuations-in-part, substitutes,
extensions or renewals of, and improvements on, the foregoing; and
(c) all products and proceeds of the foregoing, including, without
limitation, any claim by such Grantor against third parties for past, present or
future infringement of any Patent.
3. SECURITY AGREEMENT. The security interests granted pursuant to this
Patent Security Agreement are granted in conjunction with the security interests
granted to Agent, for the benefit of the Lender Group, pursuant to the Security
Agreement. Each Grantor hereby acknowledges and affirms that the rights and
remedies of Agent with respect to the security interest in the Patent Collateral
made and granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein.
4. AUTHORIZATION TO SUPPLEMENT. Grantors hereby authorize Agent
unilaterally to modify this Agreement by amending Schedule I to include any
patentable inventions or applications therefor which become part of the Patent
Collateral under the Security Agreement. Notwithstanding the foregoing, no
failure to so modify this Patent Security Agreement or amend Schedule I shall in
any way affect, invalidate or detract from Agent's continuing security interest
in all Collateral, whether or not listed on Schedule I.
5. COUNTERPARTS. This Patent Security Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument. Any signatures delivered by a party by facsimile transmission or by
e-mail transmission shall be deemed an original signature hereto.
[SIGNATURE PAGES FOLLOW]
2
IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement
to be executed and delivered by its duly authorized officer as of the date first
set forth above.
GRANTORS: TB WOOD'S INCORPORATED,
a Pennsylvania corporation, as a Grantor
By: /s/ Joseph C. Horvath
------------------------------------
Name: Joseph C. Horvath
----------------------------------
Title: Vice President, CFO and
Corporate Secretary
---------------------------------
PLANT ENGINEERING CONSULTANTS, LLC,
a Tennessee limited liability company,
as a Grantor
By: /s/ Joseph C. Horvath
------------------------------------
Name: Joseph C. Horvath
----------------------------------
Title: Treasurer and Secretary
---------------------------------
TB WOOD'S ENTERPRISES, INC.,
a Delaware corporation, as a Grantor
By: /s/ Joseph C. Horvath
------------------------------------
Name: Joseph C. Horvath
----------------------------------
Title: President & Treasurer
---------------------------------
TB WOOD'S CORPORATION,
a Delaware corporation, as a Grantor
By: /s/ Joseph C. Horvath
------------------------------------
Name: Joseph C. Horvath
----------------------------------
Title: Vice President, CFO and
Corporate Secretary
---------------------------------
SIGNATURE PAGE OF WFF - TB WOOD'S PATENT SECURITY AGREEMENT
AGENT: WELLS FARGO FOOTHILL, INC.,
a California corporation, as Agent
By: /s/ Vincent J. Egan, Jr.
------------------------------------
Name: Vincent J. Egan, Jr.
----------------------------------
Title: Vice President
---------------------------------
SIGNATURE PAGE OF WFF - TB WOOD'S PATENT SECURITY AGREEMENT
SCHEDULE I TO PATENT SECURITY AGREEMENT
PATENTS AND PATENT APPLICATIONS
<Table>
<Caption>
GRANTOR COUNTRY PATENT REGISTRATION NO. REGISTRATION DATE
------- ------- ------ ---------------- -----------------
TB Wood's Incorporated United States Housing for Motor D343,387 1/18/1994
Control Equipment
TB Wood's Incorporated United States Combination of a 5,465,804 11/14/1995
Power Steering Pump
and Air Conditioning
Compressor in an
Automotive Vehicle
TB Wood's Incorporated United States Shaft Mountable 5,304,101 4/19/1994
Bushing and Hub for
Industrial Power
Transmissions
TB Wood's Incorporated United States Precision Winding 6,311,920 11/6/2001
Method and Apparatus
TB Wood's Incorporated United States Flexible Coupling 5,611,732 3/18/1997
with End Stress
Relief Structure
</Table>