S-4

As filed with the Securities and Exchange Commission on May 8, 2007

Registration No. 333-          

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Altra Industrial Motion, Inc.

Delaware	3568	30-0283143
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
Incorporation or Organization)	Classification Code Number)	Identification No.)

14 Hayward Street

Quincy, Massachusetts 02171

(617) 328-3300

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Michael L. Hurt

Chief Executive Officer

Altra Industrial Motion, Inc.

14 Hayward Street

Quincy, Massachusetts 02171

(617) 328-3300

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

See Table of Additional Registrants Below

Copies to:

Matthew D. Bloch

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

(212) 310-8000

Approximate date of commencement of proposed sale of the securities to the public:  As soon as practicable after the effective date of this registration statement.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

CALCULATION OF REGISTRATION FEE

		Proposed Maximum	Proposed Maximum	Amount of
Title of Each Class of	Amount to be	Offering Price per	Aggregate Offering	Registration
Securities to be Registered	Registered	Unit	Price(1)	Fee
9% Senior Secured Notes due 2011	$105,000,000	100%	$105,000,000	$3,223.50
Guarantees of 9% Senior Secured Notes due 2011	—	—	—	—(2)

(1)	Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933, as amended, or the Securities Act.
(2)	The additional registrants will guarantee the payment of the 9% Senior Secured Notes due 2011. Pursuant to Section 457(n) of the Securities Act, no separate registration fee for the guarantees is payable.

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

ADDITIONAL REGISTRANTS

	State or		Primary
	Other		Standard
	Jurisdiction of		Industrial
	Incorporation		Classification
Exact Name of Registrant	or		Code		I.R.S. Employer
as Specified in Its Charter	Organization		Number		Identification No.
American Enterprises MPT Corp.		Delaware		3568		52-2005169
American Enterprises MPT Holdings, LLC		Delaware		3568		52-2005171
Ameridrives International, LLC		Delaware		3568		52-1826102
Boston Gear LLC		Delaware		3568		11-3723980
Formsprag LLC		Delaware		3568		01-0712538
Inertia Dynamics, LLC		Delaware		3568		20-4221420
Kilian Manufacturing Corporation		Delaware		3568		06-0933715
Nuttall Gear L L C		Delaware		3568		54-1856788
TB Wood’s Incorporated		Pennsylvania		3568		23-1232420
Plant Engineering Consultants, LLC		Tennessee		3568		62-1230818
TB Wood’s Corporation		Delaware		3568		25-1771145
TB Wood’s Enterprises, Inc.		Delaware		3568		51-0393505
Warner Electric LLC		Delaware		3568		54-1967089
Warner Electric Technology LLC		Delaware		3568		54-1967084
Warner Electric International Holding, Inc.		Delaware		3568		54-1967086

The address, including zip code, and telephone number, including area code, of the principal corporate offices for each of the additional registrants is:

14 Hayward Street

Quincy, Massachusetts 02171

(617) 328-3300

The name, address, including zip code, and telephone number, including area code, of the registered agent for service of process for each of the additional registrants is:

Michael L. Hurt

Chief Executive Officer

Altra Industrial Motion, Inc.

14 Hayward Street

Quincy, Massachusetts 02171

(617) 328-3300

The information in this prospectus is not complete and may be changed. We may not sell or offer these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MAY 8, 2007

PROSPECTUS

Offer to exchange all outstanding

$105,000,000 principal amount of

9% Senior Secured Notes due 2011

for

$105,000,000 principal amount of

9% Senior Secured Notes due 2011

registered under the Securities Act of 1933

We are offering to exchange our outstanding notes described above for the new, registered notes described above. In this prospectus we refer to the outstanding notes as the “old notes” and our new notes as the “registered notes,” and we refer to the old notes and the registered notes, together, as the “notes.” The form and terms of the registered notes are identical in all material respects to the form and terms of the old notes, except for transfer restrictions, registration rights and additional interest payment provisions relating only to the old notes. We do not intend to apply to have any notes listed on any securities exchange or automated quotation system and there may be no active trading market for them.

Material Terms of the Exchange Offer

•  The exchange offer expires at 5:00 p.m., New York City time, on          , 2007, unless extended. Whether or not the exchange offer is extended, the time at which it ultimately expires is referred to in this prospectus as the time of expiration.

•  The only conditions to completing the exchange offer are that the exchange offer not violate any applicable law, regulation or interpretation of the staff of the Securities and Exchange Commission and that no injunction, order or decree of any court or governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer shall be in effect.

•  All old notes that are validly tendered and not validly withdrawn will be exchanged.

•  Tenders of old notes in the exchange offer may be withdrawn at any time prior to the time of expiration.

•  We will not receive any cash proceeds from the exchange offer.

None of our affiliates, no broker-dealers that acquired old notes directly from us and no persons engaged in a distribution of registered notes may participate in the exchange offer. Any broker-dealer that acquired old notes as a result of market-making or other trading activities and receives registered notes for its own account in exchange for those old notes must acknowledge that it will deliver a prospectus in connection with any resale of those registered notes. The letter of transmittal states that, by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer for that purpose. We have agreed that, for a period ending on the earlier of (a) 180 days after the time of expiration and (b) the date on which broker-dealers are no longer required to deliver a prospectus in connection with market-making or other trading activities, we will make this prospectus available to any broker-dealer for use in connection with any resales by that broker-dealer. See “Plan of Distribution.”

Consider carefully the “Risk Factors” beginning on page 18 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is          , 2007

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with any information or represent anything about us, our financial results or this exchange offer that is not contained in this prospectus. If given or made, any such other information or representation should not be relied upon as having being authorized by us. We are not making an offer to sell securities in any jurisdiction where the offer or sale is not permitted.

In this prospectus, we rely on and refer to information regarding market data obtained from internal surveys, market research, publicly available information and industry publications.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration statement on Form S-4 under the Securities Act with respect to the registered notes. This prospectus, which is a part of the registration statement, omits certain information included in the registration statement and the exhibits thereto. For further information with respect to us and the securities, we refer you to the registration statement and its exhibits. You may read and copy any document we file or furnish with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. You can review our SEC filings, including the registration statement by accessing the SEC’s Internet site at http://www.sec.gov. You may request copies of the documents, at no cost to you, by contacting us at the following address:

Altra Industrial Motion, Inc.

14 Hayward Street

Quincy, Massachusetts 02171

Attention: Corporate Secretary

(617) 328-3300

To ensure timely delivery, please make your request promptly and, in any event, no later than five business days prior to the expiration of the exchange offer.

Upon completion of the exchange offer, we will be subject to the informational requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and in accordance therewith, will file reports with the SEC. You may inspect and copy these reports and other information we file with the SEC at the SEC’s address set forth above.

NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS AN OFFER TO EXCHANGE ONLY THE NOTES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE. UNTIL          , 2007, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS’ OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OF SUBSCRIPTIONS.

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FORWARD-LOOKING STATEMENTS

We make “forward-looking statements” throughout this prospectus. These forward-looking statements, including information generally located under the headings “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” generally relate to our strategies, plans and objectives for, and potential results of, future operations and are based upon management’s current plans and beliefs or current estimates of future results or trends. Whenever you read a statement that is not solely a statement of historical fact, such as when we state that we “believe,” “expect,” “anticipate” or “plan” that an event will occur and other similar statements, you should understand that our expectations may not be correct, although we believe they are reasonable, and that our plans may change. We do not guarantee that the transactions and events described in this prospectus will happen as described or that any positive trends noted in this prospectus will continue.

Forward-looking statements regarding management’s present plans or expectations for new product offerings, capital expenditures, increasing sales, cost saving strategies and growth involve risks and uncertainties relative to return expectations, allocation of resources and changing economic or competitive conditions, which could cause actual results to differ from present plans or expectations and such differences could be material. Similarly, forward-looking statements regarding management’s present expectations for operating results and cash flow involve risks and uncertainties relative to these and other factors including:

•  competitive factors in the industry in which we operate;

•  changes in general economic conditions and the cyclical nature of the markets in which we operate;

•  our dependence on our distribution network;

•  our ability to invest in, develop or adapt to changing technologies and manufacturing techniques;

•  our ability to integrate and realize cost savings synergies from acquisitions, including TB Wood’s Corporation;

•  international risks on our operations;

•  loss of our key management;

•  increase in litigation, including product liability claims;

•  our substantial indebtedness; and

•  other factors that are described under “Risk Factors.”

We caution you that the foregoing list of important factors is not exclusive. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this prospectus may not in fact occur. The forward-looking statements contained in this prospectus are current as of the date of this prospectus. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

You should read this prospectus completely and with the understanding that actual future results may be materially different from what we expect.

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TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		18
The Exchange Offer		32
Use of Proceeds		39
Capitalization		40
Unaudited Pro Forma Condensed Combined Financial Statements		41
Selected Historical Financial and Other Data		48
Management’s Discussion and Analysis of Financial Condition and Results of Operations		50
Business		65
Management and Directors		77
Executive Compensation		80
Compensation Discussion and Analysis		85
Ownership of Altra Holdings Common Stock		90
Certain Relationships and Related Party Transactions		92
Description of Certain Indebtedness		94
Description of the Notes		97
United States Federal Income Tax Consequences		135
Plan of Distribution		136
Legal Matters		136
Experts		136
Available Information		137
Index to Consolidated Financial Statements		F-1
EX-1.2 Purchase Agreement dated as of April 3, 2007
EX-3.25 Amended & Restated Certificate of Incorporation of TB Wood's Corporation
EX-3.26 By-laws of TB Wood's Corporation
EX-3.27 Certificate of Incorporation of TB Wood's Enterprises, Inc.
EX-3.28 By-laws of TB Wood's Enterprises, Inc.
EX-3.29 Articles of Organization of Plant Engineering Consultants, LLC
EX-3.30 Operating Agreement of Plant Engineering Consultants LLC
EX-3.31 Amended and Restated Articles of Incorporation of TB Wood's Incorporated
EX-3.32 By-laws of TB Wood's Incorporated
EX-4.15 Registration Rights Agreement, dated April 5, 2007
EX-5.1 Opinion of Weil, Gotshal & Manges LLP
EX-5.2 Opinion of Waller Lansden Dortch & Davis, LLP
EX-5.3 Opinion of Dechert LLP
EX-10.32 Supplement No. 1 to Security Agreement, dated as of April 5, 2007
EX-10.33 Supplement No.2 to Security Agreement, dated as of April 5, 2007
EX-10.34 Fifth Amendment to, and Consent and Waiver under Credit Agreement
EX-10.35 Credit Agreement, dated as of April 5, 2007
EX-10.36 Security Agreement, dated as of April 5, 2007
EX-10.37 Patent Security Agreement, dated as of April 5, 2007
EX-10.38 Trademark Security Agreement, dated as of April 5, 2007
EX-10.39 Amended and Restated Intercreditor and Lien Subordination Agreement
EX-10.40 Intercompany Subordinate Agreement, dated April 5, 2007
EX-10.41 Patent Security Agreement, dated as of April 5, 2007
EX-10.42 Trademark Security Agreement dated as of April 5, 2007
EX-10.43 Patent Security Agreement, dated as of April 5, 2007
EX-10.44 Trademark Security Agreement dated as of April 5, 2007
EX-12.1 Computation of ratio of earnings to fixed charges
EX-21.1 Subsidiaries of Altra Industrial Motion, Inc.
EX-23.1 Consent of Ernst & Young LLP
EX-23.2 Consent of BDO Stoy Hayward LLp
EX-23.3 Consent of Grant Thornton LLP
EX-25.1 Statement of Eligible of Trustee of Form T-1
EX-99.1 Form of Letter of Transmittal
EX-99.2 Form of Notice of Guaranteed Delivery
EX-99.3 Exchange Agent Agreement, between Altra Industrial Motion, Inc.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed information and the financial statements and notes thereto appearing elsewhere in this prospectus. You should carefully read this entire prospectus and consider, among other things, the matters set forth under “Risk Factors”. In this prospectus, unless indicated otherwise, references to (i) the terms “the company,” “we,” “us” and “our” refer to Altra Industrial Motion, Inc., the issuer of the notes, and its subsidiaries, (ii) the terms “pro forma” or “on a pro forma basis,” when used to describe our financial results or operations, refers to our financial results or operations, as applicable, after giving pro forma effect to the acquisition of TB Wood’s Corporation, or TB Wood’s, by our parent company, Altra Holdings, Inc., or Altra Holdings, which we refer to as the “TB Wood’s Acquisition”, the offering of the old notes and the use of proceeds from the offering of the old notes, and the other transactions described under “Unaudited Pro Forma Condensed Combined Financial Statements”, including the acquisition on February 10, 2006 of all the outstanding share capital of Hay Hall Holdings Limited, or Hay Hall, which we refer to as the Hay Hall Acquisition and our redemption on February 27, 2007 of £11.6 million of our 111/4% senior notes due 2013, as if they had occurred as of December 31, 2006 for balance sheet purposes and January 1, 2006 for results of operations purposes and (iii) any “fiscal” year refers to the year ended on December 31 of such year. For the definition of “EBITDA,” a reconciliation of EBITDA to a generally accepted accounting principal, or GAAP, measure, and information about the limitation of the use of this financial measure, see “Non GAAP Financial Data” and “Summary Historical and Unaudited Pro Forma Combined Financial Data.”

Our Company

We are a leading global designer, producer and marketer of a wide range of mechanical power transmission, or MPT, and motion control products serving customers in a diverse group of industries, including energy, general industrial, material handling, mining, transportation and turf and garden. Our product portfolio includes industrial clutches and brakes, enclosed gear drives, open gearing, couplings, engineered bearing assemblies, linear components and other related products. Our products are used in a wide variety of high-volume manufacturing processes, where the reliability and accuracy of our products are critical in both avoiding costly down time and enhancing the overall efficiency of manufacturing operations. Our products are also used in non-manufacturing applications where product quality and reliability are especially critical, such as clutches and brakes for elevators, and residential and commercial lawnmowers.

We market our products under well recognized and established brands, many of which have been in existence for over 50 years. We believe many of our brands, when taken together with our brands in the same product category, achieved the number one or number two position in terms of consolidated market share and brand awareness in their respective product categories. Our products are either incorporated into products sold by original equipment manufacturers, or OEMs, sold to end-users directly or sold through industrial distributors.

We are led by a highly experienced management team that has established a proven track record of execution, successfully completing and integrating major strategic acquisitions and delivering significant growth in both revenue and profits. We employ a comprehensive business process called the Altra Business System, or ABS, which focuses on eliminating inefficiencies from every business process to improve quality, delivery and cost.

Concurrently with the offering of the old notes, we acquired TB Wood’s Corporation, an established designer, manufacturer and marketer of mechanical and electronic industrial power transmission products headquartered in Chambersburg, Pennsylvania. We believe that the acquisition of TB Wood’s will offer significant near and long-term benefits, including enhanced revenue and profitability, improved margins, cost savings synergies, geographic and product line expansion and improved customer coverage. For the year ended December 31, 2006 on a pro forma basis, our pro forma net sales and net income would have been approximately $588.2 million and $6.5 million, respectively.

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Our Industry

Based on industry data supplied by Penton Information Services, we estimate that industrial power transmission products generated sales in the United States of approximately $33.3 billion in 2006. These products are used to generate, transmit, control and transform mechanical energy. The industrial power transmission industry can be divided into three areas: MPT products; motors and generators; and adjustable speed drives. We compete primarily in the MPT area which, based on industry data, we estimate was a $16.7 billion market in the United States in 2006. In addition to the MPT segment, TB Wood’s also competes in the adjustable speed drives segment which we estimate was a $4.9 billion market in the United States in 2006.

The global MPT market is highly fragmented, with over 1,000 small manufacturers. While smaller companies tend to focus on regional niche markets with narrow product lines, larger companies that each generate annual sales over $100 million offer a much broader range of products and have global capabilities. The industry’s customer base is broadly diversified across many sectors of the economy and typically places a premium on factors such as quality, reliability, availability and design and application engineering support. We believe the most successful industry participants are those that leverage their distribution network, their products’ reputations for quality and reliability and their service and technical support capabilities to maintain attractive margins on products and gain market share.

Risks Factors

Our ability to attain our objectives depends upon our success in addressing risks relating to our business and the industries we serve, including the following:

•  We operate in the highly competitive mechanical power transmission industry and if we are not able to successfully compete our business may be harmed.

•  Changes in general economic conditions or the cyclical nature of our markets could harm our operations and financial performance.

•  Our operating results may vary significantly in the future due to both internal and external factors affecting our business and operations.

•  We rely on independent distributors and the loss of these distributors would adversely affect our business.

•  Our ability to develop or adapt to changing technology and manufacturing techniques is uncertain and our failure to do so could place us at a competitive disadvantage.

•  Our operations are subject to international risks that could affect our operating results.

•  We rely on estimated forecasts of our OEM customers’ needs and inaccuracies in such forecasts could adversely affect our business.

•  The materials used to produce our products are subject to price fluctuations that could increase costs of production and adversely affect our profitability.

•  Our future success depends on our ability to effectively integrate acquired companies and manage our growth.

Our Formation, Certain Subsequent Acquisitions and the Altra Holdings IPO

The PTH Acquisition.  On November 30, 2004, we acquired our original core business through the acquisition of Power Transmission Holding LLC, or PTH, from Warner Electric Holding, Inc., a wholly owned subsidiary of Colfax Corporation, or Colfax, for $180.0 million in cash. PTH was organized in June 2004 to be the holding company for a group of companies comprising the power transmission business of Colfax. We refer to our acquisition of PTH as the “PTH Acquisition.”

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The Hay Hall Acquisition.  On February 10, 2006, we acquired all of the outstanding share capital of Hay Hall Holdings Limited, or Hay Hall, for $50.3 million net of cash acquired. Hay Hall and its subsidiaries became our indirect wholly owned subsidiaries. In connection with our acquisition of Hay Hall, we issued £33.0 million of 111/4% senior notes due 2013, which we refer to as the 111/4% senior notes or the existing senior unsecured notes. See “Description of Certain Indebtedness.”

Altra Holdings IPO.  On December 20, 2006, Altra Holdings completed a $155.2 million initial public offering (after exercise of the underwriters’ over-allotment option in full) of its common stock in which Altra Holdings realized gross proceeds of approximately $41.8 million. We refer to this transaction as the “Altra Holdings IPO.”

Our Principal Equity Sponsor

Genstar Capital, LLC, formed in 1988 and based in San Francisco, is a private equity firm that makes investments in high-quality, middle-market companies. Genstar Capital works in partnership with management as an advisor to us to create long-term value for our stockholders. Genstar Capital currently owns approximately 30.6% of Altra Holdings’ outstanding common stock. Genstar Capital has over $900 million of committed capital under management and significant experience investing with a focus on life sciences, business services and industrial technology. Current portfolio companies include American Pacific Enterprises LLC, Andros Incorporated, AXIA Health Management LLC, Fort Dearborn Company, Harlan Sprague Dawley, Inc., INSTALLS inc, LLC, North American Construction Group, OnCURE Medical Corp., Panolam Industries International, Inc., PRA International, Inc. (NASDAQ: PRAI), Propex Inc. and Wood’s Equipment Company. Genstar Capital’s strategy is to make control-oriented investments and acquire companies with $100 million to $1 billion in annual revenues in a variety of growth, buyout, recapitalization and consolidation transactions.

The TB Wood’s Acquisition and Related Transactions

On March 5, 2007, Forest Acquisition Corporation, or FAC, a wholly owned subsidiary of Altra Holdings, commenced a cash tender offer of $24.80 per share for all outstanding shares of TB Wood’s common stock. The tender offer expired on April 2, 2007 and the acquisition was completed on April 5, 2007. We refer to the TB Wood’s Acquisition, the transfer to us of TB Wood’s and its subsidiaries, our offering of the old notes and the use of proceeds therefrom as the “TB Wood’s Acquisition and Related Transactions.”

TB Wood’s is an established designer, manufacturer and marketer of mechanical and electronic industrial power transmission products. TB Wood’s products are sold to North American and international manufacturers and users of industrial equipment. Headquartered in Chambersburg, Pennsylvania, the 150 year-old business operates seven manufacturing and seven distribution facilities with approximately 830 employees in the United States, Canada, Mexico, Germany, Italy and India.

The products manufactured by TB Wood’s are classified into two product lines: mechanical and electronics industrial power transmission products. The mechanical products includes belted drives and couplings. The electronics products includes electronic drives and electronic drive systems. TB Wood’s products are sold to distributors, OEMs, and end-users for manufacturing and commercial applications. TB Wood’s products are sold principally throughout North America and to a lesser extent internationally. In North America, TB Wood’s sells to more than 1,000 authorized independent and multi-branch industrial distributors with over 3,000 locations that resell TB Wood’s products to industrial consumers and OEMs. TB Wood’s distributors include, among others, Motion Industries and Kaman Industrial Technologies, who are among the largest distributors in the industrial power transmission industry. TB Wood’s also sells directly to over 300 OEMs. TB Wood’s marketing alliances include licensing agreements and distribution agreements with distributors and manufacturers who, in some cases, market TB Wood’s products under private label agreements. In North America, TB Wood’s has its own technical sales force of more than 20 people and several specialized manufacturers’ representatives.

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Our Corporate Information

Altra Industrial Motion, Inc. is a Delaware corporation and wholly owned subsidiary of Altra Holdings. Our headquarters are located at 14 Hayward St., Quincy, Massachusetts 02171. Our telephone number is (617) 328-3300 and our website address is www.altraindustrialmotion.com. The content of our website is not part of this prospectus.

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Summary of the Terms of the Exchange Offer

We issued the old notes on April 5, 2007 to Jefferies & Company, Inc., or the Initial Purchaser, pursuant to Section 4(2) of the Securities Act and resold by the Initial Purchaser to qualified institutional buyers, or QIBs, or persons reasonably believed to be QIBs pursuant to Rule 144A under the Securities Act and to non-U.S. persons in offshore transactions pursuant to Regulation S under the Securities Act. We refer to the issuance of the old notes in this prospectus as the “original issuance.”

At the time of the original issuance, we entered into an agreement in which we agreed to register new notes, with substantially the same form and terms of the old notes, and to offer to exchange the registered notes for the old notes. This agreement is referred to in this prospectus as the “registration rights agreement.”

Unless you are a broker-dealer and so long as you satisfy the conditions set forth below under “— Resales of the Registered Notes,” we believe that the registered notes to be issued to you in the exchange offer may be resold by you without compliance with the registration and prospectus delivery provisions of the Securities Act. You should read the discussions under the heading “The Exchange Offer” for further information regarding the exchange offer.

Registration Rights Agreement	Under the registration rights agreement, we are obligated to offer to exchange the old notes for registered notes with terms identical in all material respects to the old notes. The exchange offer is intended to satisfy that obligation. After the exchange offer is complete, except as set forth in the next paragraph, you will no longer be entitled to any exchange or registration rights with respect to your old notes.
	The registration rights agreement requires us to file a shelf registration statement for a continuous offering in accordance with Rule 415 under the Securities Act for your benefit if you would not receive freely tradeable registered notes in the exchange offer or you are ineligible to participate in the exchange offer and indicate that you wish to have your old notes registered under the Securities Act.
	We note that under the registration rights agreement, we were required to file a registration statement with the Securities and Exchange Commission, or the SEC, by or on May 21, 2007 and such registration statement, as amended, is required to be declared effective by or on November 1, 2007. Failure to meet such requirements as of the applicable dates subjects the company to an additional interest penalty on the old notes of .25% per annum for the first 90 days following such date, with an additional increase of .25% per annum for each 90-day period thereafter. The amount of additional interest penalty at any time is capped at 1.00% per annum and such penalty ceases to accrue after we have filed our registration statement or it has been declared effective, as applicable.
The Exchange Offer	We are offering to exchange $1,000 principal amount of 9% Senior Secured Notes due 2011, which have been registered under the Securities Act, for each $1,000 principal amount of unregistered 9% Senior Secured Notes due 2011 that were issued in the original issuance. In order to be exchanged, an old note must be validly tendered and accepted. All old notes that are validly tendered and not validly

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	withdrawn before the time of expiration will be accepted and exchanged.
	As of this date, there are $105.0 million aggregate principal amount of old notes outstanding. We previously issued $165.0 million aggregate principal amount of 9% Senior Secured Notes due 2011 on November 30, 2004, or the “existing notes”. The existing notes are not part of this exchange offer. We will issue the registered notes promptly after the time of expiration.
Resales of the Registered Notes	Except as described below, we believe that the registered notes to be issued in the exchange offer may be offered for resale, resold and otherwise transferred by you without compliance with the registration and (except with respect to broker-dealers) prospectus delivery provisions of the Securities Act if (but only if) you meet the following conditions:
	• you are not an “affiliate” of us, as that term is defined in Rule 405 under the Securities Act;
	• if you are a broker-dealer, you acquired the old notes which you seek to exchange for registered notes as a result of market making or other trading activities and not directly from us and you comply with the prospectus delivery requirements of the Securities Act;
	• the registered notes are acquired by you in the ordinary course of your business;
	• you are not engaging in and do not intend to engage in a distribution of the registered notes; and
	• you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes.
	Our belief is based on interpretations by the staff of the SEC, as set forth in no-action letters issued to third parties unrelated to us. The staff has not considered the exchange offer in the context of a no-action letter, and we cannot assure you that the staff would make a similar determination with respect to the exchange offer.
	If you do not meet the above conditions, you may not participate in the exchange offer or sell, transfer or otherwise dispose of any old notes unless (i) they have been registered for resale by you under the Securities Act and you deliver a “resale” prospectus meeting the requirements of the Securities Act or (ii) you sell, transfer or otherwise dispose of the registered notes in accordance with an applicable exemption from the registration requirements of the Securities Act.
	Any broker-dealer that acquired old notes as a result of market-making activities or other trading activities, and receives registered notes for its own account in exchange for old notes, must acknowledge that it will deliver a prospectus in connection with any resale of the registered notes. See “Plan of Distribution.” A broker-dealer may use this prospectus for an offer to resell or to otherwise transfer those registered notes for a period of 180 days after the time of expiration.

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Time of Expiration	The exchange offer will expire at 5:00 p.m., New York City time, on          , 2007, unless we decide to extend the exchange offer. We do not currently intend to extend the exchange offer, although we reserve the right to do so.
Conditions to the Exchange Offer	The only conditions to completing the exchange offer are that the exchange offer not violate any applicable law, regulation or applicable interpretation of the staff of the SEC and that no injunction, order or decree of any court or any governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer shall be in effect. See “The Exchange Offer — Conditions.”
Procedures for Tendering Old Notes Held in the Form of Book-Entry Interests	The old notes were issued as global notes in fully registered form. Beneficial interests in the old notes held by direct or indirect participants in The Depository Trust Company, or DTC, are shown on, and transfers of those interests are effected only through, records maintained in book-entry form by DTC with respect to its participants.
	If you hold old notes in the form of book-entry interests and you wish to tender your old notes for exchange pursuant to the exchange offer, you must transmit to the exchange agent on or prior to the time of expiration of the exchange offer either:
	• a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other documents required by such letter of transmittal, at the address set forth on the cover page of the letter of transmittal; or
	• a computer-generated message transmitted by means of DTC’s Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book-entry transfer, in which you acknowledge and agree to be bound by the terms of the letter of transmittal.
	The exchange agent must also receive on or prior to the expiration of the exchange offer either:
	• a timely confirmation of book-entry transfer of your old notes into the exchange agent’s account at DTC pursuant to the procedure for book-entry transfers described in this prospectus under the heading “The Exchange Offer — Book-Entry Transfer;” or
	• the documents necessary for compliance with the guaranteed delivery procedures described below.
	A letter of transmittal for your notes accompanies this prospectus. By executing the letter of transmittal or delivering a computer-generated message through DTC’s Automated Tender Offer Program system, you will represent to us that, among other things:
	• you are not an affiliate of us;
	• you are not a broker-dealer who acquired the old notes that you are sending to the issuer directly from the issuer;

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	• the registered notes to be acquired by you in the exchange offer are being acquired in the ordinary course of your business;
	• you are not engaging in and do not intend to engage in a distribution of the registered notes; and
	• you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes.
Procedures for Tendering Certificated Old Notes	If you are a holder of book-entry interests in the old notes, you are entitled to receive, in limited circumstances, in exchange for your book-entry interests, certificated notes which are in equal principal amounts to your book-entry interests. See “The Exchange Offer — Book-Entry Interests.” If you acquire certificated old notes prior to the expiration of the exchange offer, you must tender your certificated old notes in accordance with the procedures described in this prospectus under the heading “The Exchange Offer — Procedures for Tendering — Certificated Old Notes.”
Special Procedures for Beneficial Owners	If you are the beneficial owner of old notes and they are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your old notes, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your old notes, either make appropriate arrangements to register ownership of the old notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. See “The Exchange Offer — Procedures for Tendering — Procedures Applicable to All Holders.”
Guaranteed Delivery Procedures	If you wish to tender your old notes in the exchange offer and:
	(1) they are not immediately available;
	(2) time will not permit your old notes or other required documents to reach the exchange agent before the expiration of the exchange offer; or
	(3) you cannot complete the procedure for book-entry transfer on a timely basis;
	you may tender your old notes in accordance with the guaranteed delivery procedures set forth in “The Exchange Offer — Procedures for Tendering — Guaranteed Delivery Procedures.”
Acceptance of Old Notes and Delivery of Registered Notes	Except under the circumstances described above under “The Exchange Offer — Conditions,” the issuer will accept for exchange any and all old notes which are properly tendered prior to the time of expiration. The registered notes to be issued to you in the exchange offer will be delivered promptly following the time of expiration. See “The Exchange Offer — Terms of the Exchange Offer.”

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Withdrawal	You may withdraw the tender of your old notes at any time prior to the time of expiration. We will return to you any old notes not accepted for exchange for any reason without expense to you as promptly after withdrawal, rejection of tender or termination of the exchange offer.
Exchange Agent	The Bank of New York Trust Company, N.A. is serving as the exchange agent in connection with the exchange offer.
Consequences of Failure to Exchange	If you do not participate in the exchange offer for your old notes, upon completion of the exchange offer, the liquidity of the market for your old notes could be adversely affected. See “The Exchange Offer — Consequences of Failure to Exchange.”
United States Federal Income Tax Consequences of the Exchange Offer	The exchange of old notes for registered notes in the exchange offer will not be a taxable event for United States federal income tax purposes. See “United States Federal Income Tax Consequences.”

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Summary of the Terms of the Registered Notes

The summary below describes the principal terms of the notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The section of this prospectus entitled “Description of the Notes” contains a more detailed description of the terms and conditions of the notes.

Issuer	Altra Industrial Motion, Inc.
Securities Offered	$105,000,000 aggregate principal amount of 9% Senior Secured Notes due 2011. The registered notes will constitute the same series of securities as the existing notes for purposes of the indenture and will vote together on all matters with such notes. The registered notes offered hereby will have substantially identical terms as the existing notes.
Maturity	December 1, 2011.
Interest Rate and Interest Payment Dates	We will pay interest on the registered notes at an annual rate of 9%. We will make interest payments in cash, in arrears, on June 1 and December 1 of each year, beginning on June 1, 2007. The first interest payment will accrue from December 1, 2006.
Guarantees	The registered notes will be unconditionally guaranteed on a senior secured basis by all of our existing and future domestic restricted subsidiaries. The registered notes will be structurally subordinated to all of the existing and future liabilities of our subsidiaries that do not guarantee the registered notes, including all of our foreign subsidiaries.
	As of December 31, 2006, after giving effect to the TB Wood’s Acquisition and Related Transactions, our non-guarantor subsidiaries would have had $44.9 million of indebtedness and other liabilities.
Ranking	The registered notes will be senior obligations and will rank equally in right of payment to all of our existing and future senior indebtedness, including our senior revolving credit facility, the existing notes and our existing senior unsecured notes and senior in right of payment to all of our existing and future subordinated indebtedness. The guarantees will be senior obligations of the subsidiary guarantors and will rank equally in right of payment to all of our subsidiary guarantors’ existing and future senior indebtedness including, our senior revolving credit facility, the existing notes and our existing senior unsecured notes and senior in right of payment to all of our subsidiary guarantors’ existing and future subordinated indebtedness.
Security	The registered notes and the guarantees will be secured by a second priority lien on substantially all of our assets and the assets of the subsidiary guarantors (other than mortgages on existing and future owned real property in the State of New York). Pursuant to the terms of an intercreditor agreement, the security interests securing the registered notes will be subject to first priority liens securing our senior revolving credit facility and any successor credit facility.
	The registered notes and guarantees will be effectively subordinated to indebtedness that may be incurred under our senior revolving

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credit facility, any equipment financing, purchase money debt, capital lease obligations and secured acquired indebtedness, including secured indebtedness of TB Wood’s that remains outstanding, in each case, to the extent of the value of the assets securing that indebtedness. As of December 31, 2006, after giving effect to the TB Wood’s Acquisition and Related Transactions, we would have had outstanding $10.0 million of indebtedness under our senior revolving credit facility, $4.1 million of equipment financing and purchase money debt and capital lease obligations and $14.3 million of secured acquired indebtedness.

Optional Redemption

On or after December 1, 2008, we may redeem some or all of the registered notes at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the date of redemption:

For the Period Below	Percentage
On or after December 1, 2008		104.500	%
On or after December 1, 2009		102.250	%
December 1, 2010 and thereafter		100.000	%

	Prior to December 1, 2007, up to 35% of the aggregate principal amount of the notes issued under the indenture governing the notes (which includes the existing notes) may be redeemed at our option with the net proceeds of certain equity offerings at 109% of their principal amount, plus accrued and unpaid interest and additional interest, if any, to the date of redemption, provided at least 65% of the aggregate principal amount of the notes issued under the indenture governing the notes remain outstanding.
Change of Control Offer	If we experience a change of control, we must give holders of the notes the opportunity to sell us their notes at 101% of their principal amount thereof, plus accrued and unpaid interest and additional interest, if any.
Asset Sale Proceeds	If we sell assets, we must use the net cash proceeds to:
	• repay outstanding indebtedness under our credit agreement;
	• reinvest such net proceeds in property, plant and equipment and other long-term assets used in our business; and/or
	• to the extent such net proceeds are not so used within 360 days of our receipt thereof, offer to purchase the registered notes at a price equal to 100% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the date of purchase.
Restrictive Covenants	We will issue the registered notes under the same indenture under which we issued the old notes and the existing notes. The indenture contains covenants limiting our and our restricted subsidiaries’ ability to:
	• incur additional indebtedness or issue certain preferred stock;
	• pay dividends, redeem or repurchase our stock or subordinated debt or make other distributions;
	• issue stock of our subsidiaries;

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	• make certain investments or acquisitions;
	• merge, consolidate or transfer substantially all of our assets;
	• grant liens on our assets;
	• enter into transactions with affiliates; and
	• transfer or sell assets.
	These covenants are subject to a number of important limitations and exceptions described below in “Description of the Notes.”
Use of Proceeds	We will not receive any cash proceeds upon completion of the exchange offer.

You should refer to “Risk Factors” for an explanation of certain risks of investing in the registered notes.

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Summary Historical And Unaudited Pro Forma Combined Financial Data

The following tables set forth certain historical and unaudited pro forma financial and other data for the periods specified. The historical balance sheet data as of December 31, 2006 and historical summary financial data for the years ended December 31, 2005 and 2006 are derived from our audited financial statements. The historical data for the year ended December 31, 2004 has been derived by combining the audited financial statements of PTH for the period from January 1, 2004 to November 30, 2004 and our audited financial statements for the period from December 1, 2004, our inception, to December 31, 2004. The historical data for TB Wood’s was derived from their audited financial statements for the year ended December 31, 2006. The unaudited pro forma statement of operations and other financial data has been adjusted to give effect to the Hay Hall Acquisition, the TB Wood’s Acquisition and Related Transactions and our redemption of £11.6 million of 111/4% senior notes, assuming they occurred on January 1, 2006, the first day of our 2006 fiscal year. The unaudited pro forma balance sheet data has been adjusted to give effect to the TB Wood’s Acquisition and Related Transactions, and our redemption of £11.6 million of 111/4% senior notes as if they occurred on December 31, 2006. The redemption of our 111/4% senior notes is not directly related to the TB Wood’s Acquisition and Related Transactions, but we believe that the adjustments are material to investors. The information presented in the summary unaudited pro forma combined financial statements assumes no consent fee is necessary in connection with the TB Wood’s Acquisition and Related Transactions. In each case, the unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable and factually supportable under the circumstances. The unaudited pro forma financial information does not purport to represent what our results of operations would have been had the Hay Hall Acquisition, the TB Wood’s Acquisition and Related Transactions, and our redemption of £11.6 million of 111/4% senior notes, actually occurred on January 1, 2006 or December 31, 2006, as applicable, nor do they purport to project the results of our operations for any future period.

The historical financial data should be read in conjunction with “Selected Historical Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes thereto appearing elsewhere in this prospectus. The unaudited pro forma financial information should be read in conjunction with “Unaudited Pro Forma Condensed Combined Financial Statements,” “Selected Historical Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes thereto of the company and TB Wood’s appearing elsewhere in this prospectus.

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	Historical
				Altra Industrial
				Motion, Inc.
	Predecessor			Period from			Combined			Altra Industrial						TB Wood’s		Unaudited
	Eleven Months			December 1, 2004			(Unaudited)			Motion, Inc.						Corporation		Pro Forma
	Ended			Through			Year Ended			Year Ended						Year Ended		Year Ended
	November 30,			December 31,			December 31,			December 31,						December 31,		December 31,
	2004			2004			2004(1)			2005			2006			2006		2006
	(In thousands)
Statement of Operations Data:
Net sales	$	275,037		$	28,625		$	303,662		$	363,465		$	462,285		$	118,935	$	588,166
Cost of sales		209,253			23,847			233,100			271,952			336,836			80,790		423,810
Gross profit		65,784			4,778			70,562			91,513			125,449			38,145		164,356
Selling, general and administrative expenses		45,321			8,973			54,294			61,520			83,256			26,130		113,417
Research and development expenses		3,947			378			4,325			4,683			4,938			2,511		7,449
Gain on curtailment of post-retirement benefit plan		—			—			—			—			(3,838	)		—		(3,838	)
(Gain) on sale of assets		(1,300	)		—			(1,300	)		(99	)		—			—		—
Restructuring charge, asset impairment and transition expenses		947			—			947			—			—			—		—
Income (loss) from operations		16,869			(4,573	)		12,296			25,409			41,093			9,504		47,328
Net income (loss)	$	6,895		$	(5,762	)	$	1,133		$	4,444		$	10,363		$	4,114	$	6,455
Other Financial Data:
EBITDA(2)	$	22,795		$	(3,654	)	$	19,141		$	36,959		$	54,848		$	13,603	$	70,319
Depreciation and amortization		6,074			919			6,993			11,533			14,611			4,099		23,847
Capital expenditures		3,489			289			3,778			6,199			9,408			5,377		14,785

	Year Ended
	December 31,
	2006
	(In thousands,
	except ratio data)
Pro Forma Financial Data and Credit Statistics:
Cash interest expense(3)	$	31,497
Net debt(4)		331,210

	As of December 31, 2006
	Historical		Pro Forma
	(In thousands)
Balance Sheet Data:
Cash and cash equivalents	$	42,527	$	9,174
Total assets		409,368		551,646
Total liabilities		329,849		475,484
Total stockholders’ equity		79,519		76,162

(1) The combined results were prepared by adding our results from December 1 to December 31, 2004 to those from PTH, our Predecessor for the 11 month period ending November 30, 2004. This presentation is

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not in accordance with GAAP. The primary differences between PTH, or our Predecessor, and the successor entity are the inclusion of Kilian in the successor and the successor’s book basis has been stepped up to fair value such that the successor has additional depreciation, amortization and financing costs. The results of Kilian are included in our results for the period from December 1, 2004 through December 31, 2004. Management believes that this combined basis presentation provides useful information for our investors in the comparison to Predecessor trends and operating results. The combined results are not necessarily indicative of what our results of operations may have been if the PTH Acquisition and Kilian Transactions had been consummated earlier, nor should they be construed as being a representation of our future results of operations.

(2) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. EBITDA is used by us as a performance measure. Management believes that EBITDA provides relevant information for our investors because it is useful for trending, analyzing and benchmarking the performance and value of our business. Management also believes that EBITDA is useful in assessing current performance compared with the historical performance of our Predecessor because significant line items within our income statements such as depreciation, amortization and interest expense were significantly impacted by the PTH Acquisition. Internally, EBITDA is used as a financial measure to assess the operating performance and is an important measure in our incentive compensation plans. EBITDA has important limitations, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of those limitations are:

•  EBITDA does not reflect cash expenditures, future requirements for capital expenditures or contractual commitments;

•  EBITDA does not reflect changes in, or cash requirements for, working capital needs;

•  EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt;

•  EBITDA does not reflect tax distributions that would represent a reduction in cash available to us;

•  although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and

•  EBITDA reflects the impact on earnings of income resulting from matters we consider not to be indicative of our ongoing operations, certain of which income we eliminate in our computation of EBITDA.

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The following unaudited table is a reconciliation of our net income to EBITDA:

	Historical
			Altra Industrial
			Motion, Inc.
	Predecessor		Period from			Combined		Altra Industrial				TB Wood’s		Unaudited
	Eleven Months		December 1, 2004			(Unaudited)		Motion, Inc.				Corporation		Pro Forma
	Ended		through			Year Ended		Year Ended				Year Ended		Year Ended
	November 30,		December 31,			December 31,		December 31,				December 31,		December 31,
	2004		2004			2004		2005		2006		2006		2006
								(In thousands)
Net income (loss)	$	6,895	$	(5,762	)	$	1,133	$	4,444	$	10,363	$	4,114	$	6,455
Adjustments:
Provision (benefit) for income taxes		5,532		(221	)		5,311		3,917		6,352		1,762		3,586
Interest expense, net		4,294		1,410			5,704		17,065		23,522		3,628		36,431
Depreciation and amortization		6,074		919			6,993		11,533		14,611		4,099		23,847
EBITDA		22,795		(3,654	)		19,141		36,959		54,848		13,603		70,319

EBITDA is not a recognized measurement under GAAP, and when analyzing our operating performance, you should use EBITDA in addition to, and not as an alternative for, income (loss) from operations and net income (loss) (as determined in accordance with GAAP). Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. The amount shown for EBITDA also differs from the amount calculated under a similarly titled definition in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

To compensate for the limitations of EBITDA, we utilize several GAAP measures to review our performance. These GAAP measures include, but are not limited to, net income (loss), income (loss) from operations, cash provided by (used in) operations, cash provided by (used in) investing activities and cash provided by (used in) financing activities. These important GAAP measures allow management to, among other things, review and understand our use of cash from period to period, compare our operations with competitors on a consistent basis and understand the revenues and expenses matched to each other for the applicable reporting period. We believe that the use of these GAAP measures, supplemented by the use of EBITDA, allows us to have a greater understanding of our performance and allows us to adapt to changing trends and business opportunities.

(3)	Pro forma cash interest expense represents total interest expense less amortization and write-offs of debt issuance costs and amortization of premium.
(4)	Net debt equals total debt on a gross basis less cash and cash equivalents. Does not reflect approximately $1.1 million of premium in connection with the offering of the old notes. See “Unaudited Pro Forma Condensed Combined Financial Statements.”

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RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the ratio of earnings to fixed charges for our Predecessor, for the years ended December 31, 2002 and 2003 and the period from January 1, 2004 through November 30, 2004 and our ratio of earnings to fixed charges for the period from December 1, 2004 through December 31, 2004 and the years ended December 31, 2005 and 2006 and on a pro forma basis:

				Altra Industrial Motion, Inc.								Predecessor
										Period From		Period From
										December 1,		January 1,
										through		through
	Pro									December 31,		November 30,
	Forma 2006			2006			2005			2004		2004			2003		2002
Ratio of earnings to fixed charges(1)		1.3	x(2)		1.7	x		1.5	x		—		3.6	x		—		—

(1)

For purposes of calculating the ratio of earnings to fixed charges, earnings represent income before income taxes, discontinued operations, cumulative effect of change in accounting principles and fixed charges. Fixed charges represent interest expense and a portion of rental expense which we believe is representative of the interest component of rental expense. Earnings were insufficient to cover fixed charges for the years ended December 31, 2002 and 2003, and for the period from December 1, 2004 through December 31, 2004 by $21.7 million, $11.0 million and $6.0 million, respectively.

(2)

Gives effect to the Hay Hall Acquisition, the TB Wood’s Acquisition and Related Transactions and our redemption of £11.6 million of 111/4% senior notes, assuming they occurred on January 1, 2006, the first day of our 2006 fiscal year.

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RISK FACTORS

Participating in the exchange offer and investing in the registered notes involves a high degree of risk. You should read and consider carefully each of the following factors, as well as the other information contained in this prospectus, before making a decision on whether to participate in the exchange offer. Any of the following risks could materially adversely affect our business, financial condition or results of operations. In such case, you may lose all or part of your original investment.

Risks Associated with the Exchange Offer

An active trading market may not develop for the registered notes, which may affect your ability to resell your registered notes.

The registered notes will be registered under the Securities Act, but will constitute a new issue of securities with no established trading market, and there is a risk that:

•  a liquid trading market for the registered notes may not develop;

•  holders may not be able to sell their registered notes; or

•  the price at which the holders would be able to sell their registered notes may be lower than anticipated and lower than the principal amount or original purchase price.

If a trading market were to develop, the trading price of the registered notes will depend on many factors, including prevailing interest rates, the market for similar debentures and our financial performance.

We understand that the Initial Purchaser of the old notes presently intends to make a market in the notes. However, it is not obligated to do so, and any market-making activity with respect to the notes may be discontinued at any time without notice. In addition, any market-making activity will be subject to the limits imposed by the Securities Act and the Exchange Act, and may be limited during the exchange offer or the pendency of an applicable shelf registration statement. An active trading market may not exist for the registered notes, and any trading market that does develop may not be liquid.

In addition, any holder who tenders in the exchange offer for the purpose of participating in a distribution of the registered notes may be deemed to have received restricted securities, and if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. For a description of these requirements, see “The Exchange Offer.”

Your old notes will not be accepted for exchange if you fail to follow the exchange offer procedures.

We will not accept your old notes for exchange if you do not follow the exchange offer procedures. We will issue registered notes as part of this exchange offer only after a timely receipt of your old notes, a properly completed and duly executed letter of transmittal and all other required documents. Therefore, if you wish to tender your old notes, please allow sufficient time to ensure timely delivery. If we do not receive your old notes, letter of transmittal and other required documents by the time of expiration of the exchange offer, we will not accept your old notes for exchange. We are under no duty to give notification of defects or irregularities with respect to the tenders of outstanding old notes for exchange. If there are defects or irregularities with respect to your tender of old notes, we will not accept your old notes for exchange.

If you fail to exchange your old notes, there will continue to be restrictions on your ability to resell your old notes and such note may become less liquid.

Following the exchange offer, old notes that you do not tender or that we do not accept will continue to be restricted securities. You may not offer or sell untendered old notes except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We will issue registered notes in exchange for the old notes pursuant to the exchange offer only following the satisfaction of the procedures and conditions described elsewhere in this prospectus. These procedures and conditions include timely receipt by the exchange agent of the old notes and of a properly completed and duly executed letter of

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transmittal. Because we anticipate that most holders of old notes will elect to exchange their old notes, we expect that the liquidity of the market for any old notes remaining after the completion of the exchange offer will be substantially limited.

Risks Related to the Registered Notes

Our substantial level of indebtedness could adversely affect our financial condition, harm our ability to react to changes to our business and prevent us from fulfilling our obligations under our debt.

As of December 31, 2006 on an as adjusted basis, we had approximately $340.4 million of indebtedness. For the year ended December 31, 2006 on a pro forma basis, our annual debt service cost would have been approximately $31.5 million. As of December 31, 2006, we also had the ability to borrow up to an additional $27.1 million under our senior revolving credit facility. In connection with the TB Wood’s Acquisition, approximately $14.3 million of indebtedness of TB Wood’s will remain outstanding (based on amounts outstanding at December 31, 2006). Subject to restrictions in the indentures governing the notes, our senior revolving credit facility and our secured acquired indebtedness, we may incur additional indebtedness.

Our high level of indebtedness could have significant adverse effects on our business, including the following:

•  our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;

•  we must use a substantial portion of our cash flow from operations to pay interest on the notes and our other indebtedness, which will reduce the funds available to us for operations and other purposes;

•  any and all of the indebtedness outstanding under our senior revolving credit facility will have a prior ranking claim on substantially all of our assets and all of the indebtedness outstanding under our purchase money indebtedness, equipment financing and real estate mortgages will have a prior ranking claim on the underlying assets;

•  our ability to fund a change of control offer may be limited;

•  our high level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt;

•  our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; and

•  our high level of indebtedness makes us more vulnerable to economic downturns and adverse developments in our business.

We expect to use cash flow from operations to pay our expenses and amounts due under outstanding indebtedness. Our ability to make these payments depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future and our anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness, including the registered notes, or to fund other liquidity needs. If we do not have enough money, we may be required to refinance all or part of our then-existing debt (including our notes), sell assets or borrow more money. We may not be able to accomplish any of these alternatives on terms acceptable to us, or at all. In addition, the terms of existing or future debt agreements, including our senior revolving credit facility and our indentures, may restrict us from adopting any of these alternatives. The failure to generate sufficient cash flow or to achieve any of these alternatives could materially and adversely affect the value of the notes and our ability to pay the amounts due under the notes.

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The notes impose significant operating and financial restrictions, which may prevent us from pursuing our business strategies or favorable business opportunities.

Our senior revolving credit facility and the indentures governing the notes and the senior unsecured notes impose significant operating and financial restrictions on us. These restrictions limit or prohibit, among other things, our ability to:

•  incur additional indebtedness;

•  repay subordinated indebtedness prior to stated maturities;

•  pay dividends on or redeem or repurchase our stock or make other distributions;

•  issue capital stock;

•  make investments or acquisitions;

•  sell certain assets or merge with or into other companies;

•  restrict dividends, distributions or other payments from our subsidiaries;

•  sell stock in our subsidiaries;

•  create liens;

•  enter into certain transactions with stockholders and affiliates; and

•  otherwise conduct necessary corporate activities.

Our senior revolving credit facility also requires us to comply with customary financial covenants, including a minimum fixed charge coverage ratio (when and if the available borrowing capacity is less than $12.5 million) of 1.20 for the four quarter period ending December 31, 2006 and for all four quarter periods thereafter. There is a maximum annual limit on capital expenditures, from $11.0 million for fiscal year 2007 to $10.3 million for fiscal year 2009 and each fiscal year thereafter, provided that unspent amounts from prior periods may be used in future fiscal years. In connection with the TB Wood’s Acquisition and Related Transactions, we amended the senior revolving credit facility to increase the maximum annual limits with respect to capital expenditures in each fiscal year to 125% of the budgeted amounts for each such fiscal year.

A breach of any of these covenants or the inability to comply with the required financial ratios could result in a default under our senior revolving credit facility or the indenture governing the notes, as applicable. If any such default occurs, the lenders under our senior revolving credit facility and the holders of the notes may elect to declare all of their respective outstanding debt, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. The lenders under our senior revolving credit facility also have the right in these circumstances to terminate any commitments they have to provide further borrowings. In addition, following an event of default under our senior revolving credit facility, the lenders under the facility will have the right to proceed against the collateral granted to them to secure the debt. If the debt under our senior revolving credit facility or the notes were to be accelerated, our assets may not be sufficient to repay in full the notes and all of our other debt.

The proceeds from the collateral securing the notes may not be sufficient to pay all amounts owed under the notes if an event of default occurs and your right to receive payments under the notes will be effectively subordinated to our senior revolving credit facility, purchase money indebtedness, capital lease obligations, secured acquired indebtedness and other secured indebtedness to the extent of the value of the assets securing that indebtedness.

No appraisal of the value of the collateral has been made in connection with the offering of the old notes and the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. Consequently, we cannot assure you that liquidating the collateral securing the notes would produce proceeds in an amount sufficient to pay any amounts due under the notes after also satisfying the obligations to pay any other senior secured creditors, including the lenders under our

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senior revolving credit facility. Nor can we assure you that the fair market value of the collateral securing the notes would be sufficient to pay any amounts due under the notes following their acceleration.

The notes and guarantees will be effectively subordinated to indebtedness that may be incurred under our senior revolving credit facility, any equipment financing, purchase money debt, capital lease obligations, secured acquired indebtedness and other secured indebtedness. Our senior revolving credit facility will be secured by a first priority lien on substantially all of the collateral securing the notes. In addition, approximately $8.4 million of secured indebtedness under the TB Wood’s senior secured credit facility (based on amounts outstanding at December 31, 2006) will continue to be outstanding following the consummation of the TB Wood’s Acquisition. The notes will be secured by a pledge of the assets of TB Wood’s; however, TB Wood’s senior secured credit facility will have a first priority lien, our senior revolving credit facility will have a second priority lien and the notes will have a third priority lien on these assets. Upon any distribution to our creditors or the creditors of any subsidiary guarantors in bankruptcy, liquidation, reorganization or similar proceedings, or following acceleration of our indebtedness or an event of default under our indebtedness, our lenders under our senior revolving credit facility, our equipment financing, our purchase money indebtedness, our secured acquired indebtedness and other secured indebtedness will be entitled to be repaid in full from the proceeds of the assets securing such indebtedness, or the sale of the equipment subject to the equipment financing, before any payment is made to you from such proceeds.

The rights of the holders of the notes with respect to the collateral securing the notes are limited pursuant to the terms of an intercreditor agreement with the lenders under our senior revolving credit facility. Under the intercreditor agreement, if our senior revolving credit facility or our obligations thereunder are outstanding, any actions that may be taken in respect of collateral, including the ability to cause the commencement of enforcement proceedings against the collateral and to control the conduct of such proceedings, and the approval of amendments to the collateral documents, will be limited and, in certain cases, only be able to be taken at the direction of the lenders under such senior revolving credit facility, and the trustee, on behalf of the holders of the notes, will not have the ability to control or direct such actions, even if the rights of the holders of the notes are or may be adversely affected. Additional releases of collateral from liens securing the notes are permitted under some circumstances. See “Description of the Notes — Collateral” and “Description of the Notes — Modification of the Indenture.”

A court could void the notes, the guarantees or the security interests under fraudulent conveyance laws.

Under the U.S. bankruptcy law and comparable provisions of the state fraudulent transfer laws, the notes, a guarantee or the grant of the security interests could be voided, or claims in respect to the notes, a guarantee or the grant of the security interests could be subordinated to all of our existing debt or our guarantors’ other debts if, among other things, we at the time of the issuance of the notes, our guarantors, at the time they incurred the indebtedness evidenced by their guarantees, or we or our guarantors at the time we or our guarantors granted the security interests:

•  intended to hinder, delay or defraud any present or future creditor; or

•  received less than reasonably equivalent value and/or or fair consideration for the issuance of the notes, the incurrence of the guarantee or the granting of the security interests; or

•  were insolvent or rendered insolvent by reason of the issuance of the notes, the incurrence of the guarantee or the granting of the security interests; or

•  were engaged in a business or transaction for which the we, our guarantor’s or the grantors’ remaining assets constituted unreasonably small capital; or

•  intended to incur, or believed that we or our guarantors would incur, debts beyond our or our guarantors’ ability to pay such debts as they mature.

Moreover, any payments made by us on the notes or by our guarantors pursuant to their guarantees could be voided and required to be returned to us or our guarantors, or to a fund for the benefit of us or our

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guarantors’ creditors. To the extent that the notes, any subsidiary guarantee or security interest is voided as a fraudulent conveyance, the claims of holders of the notes would be adversely affected.

In addition, a legal challenge of the notes, a subsidiary guarantee or the security interest on fraudulent transfer grounds will focus on, among other things, the benefits, if any, realized by us, our guarantors or grantor of security interests as a result of the issuance of the notes. The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the governing law. Generally, however, a guarantor would be considered insolvent if:

•  the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all of its assets; or

•  if the present fair saleable value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or

•  it could not pay its debts as they become due.

On the basis of historical financial information, recent operating history and other factors, we believe that the notes are being issued, guarantees are being incurred and the security interests are being granted for proper purposes, in good faith and for fair consideration and reasonably equivalent value and that we, after giving effect to the issuance of the notes, each guarantor, after giving effect to its guarantee of the notes and each grantor of security interests, after giving effect to the grant of those security interests will not be insolvent, will not have unreasonably small capital for the business in which it is engaged and will not have incurred debts beyond its ability to pay such debts as they mature. There can be no assurance, however, as to what standard a court would apply in making such determinations or that a court would agree with our conclusions in this regard.

The notes will be structurally subordinated to all obligations of our non-guarantor subsidiaries.

The subsidiary guarantors of the notes include only our domestic restricted subsidiaries. The notes will not be guaranteed by our foreign subsidiaries. As a result of this structure, the notes will be structurally subordinated to all indebtedness and other obligations, including trade payables, of our non-guarantor subsidiaries. The effect of this subordination is that, in the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding involving a non-guarantor subsidiary, the assets of that subsidiary cannot be used to pay you until after all other claims against that subsidiary, including trade payables, have been fully paid. In addition, holders of minority equity interests in non-guarantor subsidiaries may receive distributions prior to or pro rata with us depending on the terms of the equity interests.

The historical combined financial data included in this prospectus include our non-guarantor subsidiaries. In fiscal 2006, the aggregate net sales of our non-guarantor subsidiaries were $152.6 million, representing approximately 33.0% of our total sales. As of December 31, 2006, the aggregate total assets (based on book value) of our non-guarantor subsidiaries were $138.3 million, representing approximately 33.8% of our total assets (based on book value).

Rights of holders of notes in the collateral may be adversely affected by the failure to perfect security interests in certain collateral acquired in the future.

The security interest in the collateral securing the notes includes our assets and assets of our subsidiary guarantors, both tangible and intangible, whether now owned or acquired or arising in the future. Applicable law requires that certain property and rights acquired after the grant of a general security interest can only be perfected at the time such property and rights are acquired and identified. There can be no assurance that the trustee or the collateral agent will monitor, or that we will inform the trustee or the collateral agent of, the future acquisition of property and rights that constitute collateral, and that the necessary action will be taken to properly perfect the security interest in such after-acquired collateral. The collateral agent for the notes has no obligation to monitor the acquisition of, or the perfection of any security interests in, additional property or

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rights that constitute collateral. Such failure may result in the loss of the security interest in the collateral or the priority of the security interest in favor of the notes against third parties.

We may not be able to satisfy our obligations to holders of the notes upon a change of control.

Upon the occurrence of a change of control, as defined in the indenture, we will be required to offer to purchase the notes at a price equal to 101% of the principal amount thereof, together with any accrued and unpaid interest and additional interest, if any, to the date of purchase. See “Description of the Notes — Repurchase upon Change of Control.”

We cannot assure you that, if a change of control offer is made, we will have available funds sufficient to pay the change of control purchase price for any or all of the notes that might be delivered by holders of the notes seeking to accept the change of control offer. If we are required to purchase notes pursuant to a change of control offer, we would be required to seek third-party financing to the extent we do not have available funds to meet our purchase obligations. There can be no assurance that we will be able to obtain such financing on acceptable terms to us or at all. Accordingly, none of the holders of the notes may receive the change of control purchase price for their notes. Our failure to make or consummate the change of control offer or pay the change of control purchase price when due will give the holders of the notes the rights described in “Description of the Notes — Events of Default.”

In addition, the events that constitute a change of control under the indenture may also be events of default under our senior revolving credit facility. These events may permit the lenders under our senior revolving credit facility to accelerate the debt outstanding thereunder and, if such debt is not paid, to enforce security interests in our specified assets, thereby limiting our ability to raise cash to purchase the notes and reducing the practical benefit of the offer to purchase provisions to the holders of the notes.

We are a holding company and will depend upon the earnings of our subsidiaries to make payments on the notes.

We are a holding company and conduct all of our operations through our subsidiaries. All of our operating income is generated by our operating subsidiaries. We must rely on dividends and other advances and transfers of funds from our subsidiaries and earnings from our investments in cash and marketable securities to provide the funds necessary to meet our debt service obligations, including payment of principal and interest on the notes. Although we are the sole or majority stockholder of each of our operating subsidiaries and therefore able to control their respective declarations of dividends, applicable laws may prevent our operating subsidiaries from being able to pay such dividends. In addition, such payments may be restricted by claims against our subsidiaries by their creditors, such as suppliers, vendors, leasers and employees, and by any applicable bankruptcy, reorganization or similar laws applicable to our operating subsidiaries. The availability of funds and therefore the ability of our operating subsidiaries to pay dividends or make other payments or advances to us, will depend upon their operating results.

Risks Related to Our Business

We operate in the highly competitive mechanical power transmission and adjustable speed drives industries and if we are not able to compete successfully our business may be significantly harmed.

We operate in highly fragmented and very competitive markets in the MPT and adjustable speed drives industries. Some of our competitors have achieved substantially more market penetration in certain of the markets in which we operate, such as helical gear drives and couplings, and some of our competitors are larger than us and have greater financial and other resources. With respect to certain of our products, we compete with divisions of our OEM customers. Competition in our business lines is based on a number of considerations, including quality, reliability, pricing, availability and design and application engineering support. Our customers increasingly demand a broad product range and we must continue to develop our expertise in order to manufacture and market these products successfully. To remain competitive, we will need to invest regularly in manufacturing, customer service and support, marketing, sales, research and development and intellectual property protection. In the future we may not have sufficient resources to continue to make

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such investments and may not be able to maintain our competitive position within each of the markets we serve. We may have to adjust the prices of some of our products to stay competitive.

Additionally, some of our larger, more sophisticated customers are attempting to reduce the number of vendors from which they purchase in order to increase their efficiency. If we are not selected to become one of these preferred providers, we may lose market share in some of the markets in which we compete.

There is substantial and continuing pressure on major OEMs and larger distributors to reduce costs, including the cost of products purchased from outside suppliers such as us. As a result of cost pressures from our customers, our ability to compete depends in part on our ability to generate production cost savings and, in turn, find reliable, cost effective outside suppliers to source components or manufacture our products. If we are unable to generate sufficient cost savings in the future to offset price reductions, then our gross margin could be materially adversely affected.

Changes in general economic conditions or the cyclical nature of our markets could harm our operations and financial performance.

Our financial performance depends, in large part, on conditions in the markets that we serve and on the U.S. and global economies in general. Some of the markets we serve are highly cyclical, such as the metals, mining, industrial equipment and energy markets. In addition, these markets may experience cyclical downturns. The present uncertain economic environment may result in significant quarter-to-quarter variability in our performance. Any sustained weakness in demand or continued downturn or uncertainty in the economy generally would further reduce our sales and profitability.

We rely on independent distributors and the loss of these distributors could adversely affect our business.

In addition to our direct sales force and manufacturer sales representatives, we depend on the services of independent distributors to sell our products and provide service and aftermarket support to our customers. We support an extensive distribution network, with over 3,000 distributor locations worldwide. Rather than serving as passive conduits for delivery of product, our independent distributors are active participants in the overall competitive dynamics in the MPT industry. During the year ended December 31, 2006, approximately 36% of our net sales were generated through independent distributors. In particular, sales through our largest distributor accounted for approximately 8% of our net sales for the year ended December 31, 2006. Almost all of the distributors with whom we transact business offer competitive products and services to our customers. In addition, the distribution agreements we have are typically non-exclusive and cancelable by the distributor after a short notice period. The loss of any major distributor or a substantial number of smaller distributors or an increase in the distributors’ sales of our competitors’ products to our customers could materially reduce our sales and profits.

We must continue to invest in new technologies and manufacturing techniques; however, our ability to develop or adapt to changing technology and manufacturing techniques is uncertain and our failure to do so could place us at a competitive disadvantage.

The successful implementation of our business strategy requires us to continuously invest in new technologies and manufacturing techniques to evolve our existing products and introduce new products to meet our customers’ needs in the industries we serve and want to serve. For example, motion control products offer more precise positioning and control compared to industrial clutches and brakes. If manufacturing processes are developed to make motion control products more price competitive and less complicated to operate, our customers may decrease their purchases of MPT products.

Our products are characterized by performance and specification requirements that mandate a high degree of manufacturing and engineering expertise. If we fail to invest in improvements to our technology and manufacturing techniques to meet these requirements, our business could be at risk. We believe that our customers rigorously evaluate their suppliers on the basis of a number of factors, including:

•  product quality and availability;

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•  price competitiveness;

•  technical expertise and development capability;

•  reliability and timeliness of delivery;

•  product design capability;

•  manufacturing expertise; and

•  sales support and customer service.

Our success depends on our ability to invest in new technologies and manufacturing techniques to continue to meet our customers’ changing demands with respect to the above factors. We may not be able to make required capital expenditures and, even if we do so, we may be unsuccessful in addressing technological advances or introducing new products necessary to remain competitive within our markets. Furthermore, our own technological developments may not be able to produce a sustainable competitive advantage.

Our operations are subject to international risks that could affect our operating results.

Our net sales outside North America represented approximately 30% of our total net sales for the year ended December 31, 2006. In addition, we sell products to domestic customers for use in their products sold overseas. Our business is subject to risks associated with doing business internationally, and our future results could be materially adversely affected by a variety of factors, including:

•  fluctuations in currency exchange rates;

•  exchange rate controls;

•  tariffs or other trade protection measures and import or export licensing requirements;

•  potentially negative consequences from changes in tax laws;

•  interest rates;

•  unexpected changes in regulatory requirements;

•  changes in foreign intellectual property law;

•  differing labor regulations;

•  requirements relating to withholding taxes on remittances and other payments by subsidiaries;

•  restrictions on our ability to own or operate subsidiaries, make investments or acquire new businesses in various jurisdictions;

•  potential political instability and the actions of foreign governments; and

•  restrictions on our ability to repatriate dividends from our subsidiaries.

As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. However, any of these factors could materially adversely affect our international operations and, consequently, our operating results.

Our operations depend on production facilities throughout the world, many of which are located outside the United States and are subject to increased risks of disrupted production causing delays in shipments and loss of customers and revenue.

We operate businesses with manufacturing facilities worldwide, many of which are located outside the United States including in Canada, China, France, Germany and the United Kingdom. Serving a global customer base requires that we place more production in emerging markets to capitalize on market opportunities and cost efficiencies. Our international production facilities and operations could be disrupted by

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a natural disaster, labor strike, war, political unrest, terrorist activity or public health concerns, particularly in emerging countries that are not well-equipped to handle such occurrences.

Material weaknesses in our internal controls over financial reporting have been identified which could result in a decrease in the value of your investment.

In connection with their audit of our 2006 consolidated financial statements, our independent auditors expressed concerns that as of the date of their opinion, certain plant locations had encountered difficulty closing their books in a timely and accurate manner. Our independent auditors informed senior management and the Audit Committee of the Board of Directors that they believe this is a material weakness in internal controls. We have actively taken steps to address this material weakness. These steps include standardizing the financial close process, providing greater corporate oversight and review as well as implementing other internal control procedures as part of our on-going Sarbanes-Oxley compliance program. We believe that with the addition of these steps we should be able to deliver financial information in a timely and accurate manner.

However, we cannot assure you that our efforts to correct this identified material weakness will be successful or that we will not have other weaknesses in the future. If we fail to correct the existing material weaknesses or have material weaknesses in the future, it could affect the financial results that we report or create a perception that those financial results do not accurately state our financial condition or results of operations. Either of those events could have an adverse effect on your investment.

If we are unable to complete our assessment as to the adequacy of our internal controls over financial reporting as of December 31, 2007 as required by Section 404 of the Sarbanes-Oxley Act of 2002, or if material weaknesses are identified and reported, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of your investment and make it more difficult for us to raise capital in the future.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include in their annual reports on Form 10-K a report of management on the company’s internal controls over financial reporting, including management’s assessment of the effectiveness of the company’s internal controls over financial reporting as of the company’s fiscal year end. In addition, the accounting firm auditing a public company’s financial statements must also attest to, and report on, management’s assessment of the effectiveness of the company’s internal controls over financial reporting as well as the operating effectiveness of the company’s internal controls. While we will expend significant resources in developing the necessary documentation and testing procedures, fiscal 2007 will be the first year for which we must complete the assessment and undergo the attestation process required by Section 404 and there is a risk that we may not comply with all of its requirements. If we do not timely complete our assessment or if our internal controls are not designed or operating effectively as required by Section 404, our independent auditors may either disclaim an opinion as it relates to management’s assessment of the effectiveness of its internal controls or may issue a qualified opinion on the effectiveness of our internal controls. It is possible that material weaknesses in our internal controls could be found. If we are unable to remediate any material weaknesses by December 31, 2007, our independent auditors would be required to issue an adverse opinion on our internal controls. If our independent auditors disclaim an opinion as to the effectiveness of our internal controls or if they render an adverse opinion due to material weaknesses in our internal controls, then investors may lose confidence in the reliability of our financial statements, which could cause the market price of our senior secured and senior notes to decline and make it more difficult for us to raise capital in the future.

We rely on estimated forecasts of our OEM customers’ needs, and inaccuracies in such forecasts could materially adversely affect our business.

We generally sell our products pursuant to individual purchase orders instead of under long-term purchase commitments. Therefore, we rely on estimated demand forecasts, based upon input from our customers, to determine how much material to purchase and product to manufacture. Because our sales are based on purchase orders, our customers may cancel, delay or otherwise modify their purchase commitments with little or no consequence to them and with little or no notice to us. For these reasons, we generally have limited

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visibility regarding our customers’ actual product needs. The quantities or timing required by our customers for our products could vary significantly. Whether in response to changes affecting the industry or a customer’s specific business pressures, any cancellation, delay or other modification in our customers’ orders could significantly reduce our revenue, impact our working capital, cause our operating results to fluctuate from period to period and make it more difficult for us to predict our revenue. In the event of a cancellation or reduction of an order, we may not have enough time to reduce operating expenses to minimize the effect of the lost revenue on our business and we may purchase too much inventory and spend more capital than expected.

The materials used to produce our products are subject to price fluctuations that could increase costs of production and adversely affect our profitability.

The materials used to produce our products, especially copper and steel, are sourced on a global or regional basis and the prices of those materials are susceptible to price fluctuations due to supply and demand trends, transportation costs, government regulations and tariffs, changes in currency exchange rates, price controls, the economic climate and other unforeseen circumstances. As of the year ended December 31, 2006, approximately 57% of our cost of goods sold consisted of the purchase of raw materials required for our manufacturing processes. From the first quarter of 2004 to the end of 2006, the average price of copper and steel has increased approximately 173% and 42%, respectively. If we are unable to continue to pass a substantial portion of such price increases on to our customers on a timely basis, our future profitability may be materially and adversely affected. In addition, passing through these costs to our customers may also limit our ability to increase our prices in the future.

We face potential product liability claims relating to products we manufacture or distribute, which could result in our having to expend significant time and expense to defend these claims and to pay material claims or settlement amounts.

We face a business risk of exposure to product liability claims in the event that the use of our products is alleged to have resulted in injury or other adverse effects. We currently have several product liability claims against us with respect to our products. Although we currently maintain product liability insurance coverage, we may not be able to obtain such insurance on acceptable terms in the future, if at all, or obtain insurance that will provide adequate coverage against potential claims. Product liability claims can be expensive to defend and can divert the attention of management and other personnel for long periods of time, regardless of the ultimate outcome. An unsuccessful product liability defense could have a material adverse effect on our business, financial condition, results of operations or our ability to make payments under our debt obligations when due. In addition, we believe our business depends on the strong brand reputation we have developed. In the event that our reputation is damaged, we may face difficulty in maintaining our pricing positions with respect to some of our products, which would reduce our sales and profitability.

We may be subject to work stoppages at our facilities, or our customers may be subjected to work stoppages, which could seriously impact our operations and the profitability of our business.

As of December 31, 2006, we had approximately 2,500 full time employees, of whom approximately 47% were employed abroad. Approximately 300 of our North American employees and 45 of our employees in Scotland are represented by labor unions. In addition, our employees in Europe are generally represented by local and national social works councils that hold discussions with employer industry associations regarding wage and work issues every two to three years. Our European facilities, particularly those in France and Germany, may participate in such discussions and be subject to any agreements reached with employees.

Our four U.S. collective bargaining agreements will expire on August 10, 2007, September 19, 2007, June 2, 2008 and February 1, 2009. We may be unable to renew these agreements on terms that are satisfactory to us, if at all. In addition, two of our four U.S. collective bargaining agreements contain provisions for additional, potentially significant, lump-sum severance payments to all employees covered by the agreements who are terminated as the result of a plant closing and one of our collective bargaining agreements contains provisions restricting our ability to terminate or relocate operations.

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As of December 31, 2006, TB Wood’s employed 830 people. Approximately 140 production employees in the TB Wood’s Mexican facilities are unionized under collective bargaining agreements that are subject to annual renewals.

If our unionized workers or those represented by a works council were to engage in a strike, work stoppage or other slowdown in the future, we could experience a significant disruption of our operations. Such disruption could interfere with our ability to deliver products on a timely basis and could have other negative effects, including decreased productivity and increased labor costs. In addition, if a greater percentage of our work force becomes unionized, our business and financial results could be materially adversely affected. Many of our direct and indirect customers have unionized work forces. Strikes, work stoppages or slowdowns experienced by these customers or their suppliers could result in slowdowns or closures of assembly plants where our products are used and could cause cancellation of purchase orders with us or otherwise result in reduced revenues from these customers.

Changes in employment laws could increase our costs and may adversely affect our business.

Various federal, state and international labor laws govern our relationship with employees and affect operating costs. These laws include minimum wage requirements, overtime, unemployment tax rates, workers’ compensation rates paid, leaves of absence, mandated health and other benefits, and citizenship requirements. Significant additional government-imposed increases or new requirements in these areas could materially affect our business, financial condition, operating results or cash flow.

In the event our employee-related costs rise significantly, we may have to curtail the number of our employees or shut down certain manufacturing facilities. Any such actions would be not only costly but could also materially adversely affect our business.

We depend on the services of key executives, the loss of whom could materially harm our business.

Our senior executives are important to our success because they are instrumental in setting our strategic direction, operating our business, maintaining and expanding relationships with distributors, identifying, recruiting and training key personnel, identifying expansion opportunities and arranging necessary financing. Losing the services of any of these individuals could adversely affect our business until a suitable replacement could be found. We believe that our senior executives could not easily be replaced with executives of equal experience and capabilities. Although we have entered into employment agreements with certain of our key domestic executives, we cannot prevent our key executives from terminating their employment with us. We do not maintain key person life insurance policies on any of our executives.

If we lose certain of our key sales, marketing or engineering personnel, our business may be adversely affected.

Our success depends on our ability to recruit, retain and motivate highly skilled sales, marketing and engineering personnel. Competition for these persons in our industry is intense and we may not be able to successfully recruit, train or retain qualified personnel. If we fail to retain and recruit the necessary personnel, our business and our ability to obtain new customers, develop new products and provide acceptable levels of customer service could suffer. If certain of these key personnel were to terminate their employment with us, we may experience difficulty replacing them, and our business could be harmed.

We are subject to environmental laws that could impose significant costs on us and the failure to comply with such laws could subject us to sanctions and material fines and expenses.

We are subject to a variety of federal, state, local, foreign and provincial environmental laws and regulations, including those governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances and wastes and the responsibility to investigate and cleanup contaminated sites that are or were owned, leased, operated or used by us or our predecessors. Some of these laws and regulations require us to obtain permits, which contain terms and conditions that impose limitations on our ability to emit and discharge hazardous materials into the environment and periodically may be subject to

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modification, renewal and revocation by issuing authorities. Fines and penalties may be imposed for non-compliance with applicable environmental laws and regulations and the failure to have or to comply with the terms and conditions of required permits. From time to time our operations may not be in full compliance with the terms and conditions of our permits. We periodically review our procedures and policies for compliance with environmental laws and requirements. We believe that our operations generally are in material compliance with applicable environmental laws, requirements and permits and that any lapses in compliance would not be expected to result in us incurring material liability or cost to achieve compliance. Historically, the costs of achieving and maintaining compliance with environmental laws, and requirements and permits have not been material; however, the operation of manufacturing plants entails risks in these areas, and a failure by us to comply with applicable environmental laws, regulations, or permits could result in civil or criminal fines, penalties, enforcement actions, third party claims for property damage and personal injury, requirements to clean up property or to pay for the costs of cleanup, or regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, including the installation of pollution control equipment or remedial actions. Moreover, if applicable environmental laws and regulations, or the interpretation or enforcement thereof, become more stringent in the future, we could incur capital or operating costs beyond those currently anticipated.

Certain environmental laws in the United States, such as the federal Superfund law and similar state laws, impose liability for the cost of investigation or remediation of contaminated sites upon the current or, in some cases, the former site owners or operators and upon parties who arranged for the disposal of wastes or transported or sent those wastes to an off-site facility for treatment or disposal, regardless of when the release of hazardous substances occurred or the lawfulness of the activities giving rise to the release. Such liability can be imposed without regard to fault and, under certain circumstances, can be joint and several, resulting in one party being held responsible for the entire obligation. As a practical matter, however, the costs of investigation and remediation generally are allocated among the viable responsible parties on some form of equitable basis. Liability also may include damages to natural resources. We have not been notified that we are a potentially responsible party in connection with any sites we currently or formerly owned or operated or for liability at any off-site waste disposal facility.

However, there is contamination at some of our current facilities, primarily related to historical operations at those sites, for which we could be liable for the investigation and remediation under certain environmental laws. The potential for contamination also exists at other of our current or former sites, based on historical uses of those sites. We currently are not undertaking any remediation or investigations and our costs or liability in connection with potential contamination conditions at our facilities cannot be predicted at this time because the potential existence of contamination has not been investigated or not enough is known about the environmental conditions or likely remedial requirements. Currently, other parties with contractual liability are addressing or have plans or obligations to address those contamination conditions that may pose a material risk to human health, safety or the environment. In addition, while we attempt to evaluate the risk of liability at the time we acquire them, there may be environmental conditions currently unknown to us relating to our prior, existing or future sites or operations or those of predecessor companies whose liabilities we may have assumed or acquired which could have a material adverse effect on our business.

We are being indemnified, or expect to be indemnified by third parties subject to certain caps or limitations on the indemnification, for certain environmental costs and liabilities associated with certain owned or operated sites. Accordingly, based on the indemnification and the experience with similar sites of the environmental consultants who we have hired, we do not expect such costs and liabilities to have a material adverse effect on our business, operations or earnings. We cannot assure you, however, that those third parties will in fact satisfy their indemnification obligations. If those third parties become unable to, or otherwise do not, comply with their respective indemnity obligations, or if certain contamination or other liability for which we are obligated is not subject to these indemnities, we could become subject to significant liabilities.

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We face additional costs associated with our post-retirement and post-employment obligations to employees which could have an adverse effect on our financial condition.

As part of the PTH Acquisition, we agreed to assume pension plan liabilities for active U.S. employees under the Retirement Plan for Power Transmission Employees of Colfax and the Ameridrives International Pension Fund for Hourly Employees Represented by United Steelworkers of America, Local 3199-10, collectively referred to as the Prior Plans. We have established a defined benefit plan, the Altra Industrial Motion, Inc. Retirement Plan or New Plan, mirroring the benefits provided under the Prior Plans. The New Plan accepted a spin-off of assets and liabilities from the Prior Plans, in accordance with Section 414(l) of the Internal Revenue Code, or the Code, with such assets and liabilities relating to active U.S. employees as of the closing of the PTH Acquisition. Given the funded status of the Prior Plans and the asset allocation requirements of Code Section 414(l), liabilities under the New Plan greatly exceed the assets that were transferred from the Prior Plans. The accumulated benefit obligation (not including accumulated benefit obligations of non-U.S. pension plans in the amount of $3.4 million) was approximately $22.7 million as of December 31, 2006 while the fair value of plan assets was approximately $11.0 million as of December 31, 2006. As the New Plan has a considerable funding deficit, the cash funding requirements are expected to be substantial over the next several years, and could have a material adverse effect on our financial condition. As of December 31, 2006, funding requirements were estimated to be $3.6 million in 2007, $2.5 million in 2008 and $1.9 million annually thereafter until 2011. These amounts are based on actuarial assumptions and actual amounts could be materially different.

Additionally, as part of the PTH Acquisition, we agreed to assume all pension plan liabilities related to non-U.S. employees. The accumulated benefit obligations of non-U.S. pension plans were approximately $3.4 million as of December 31, 2006. There are no assets associated with these plans.

Finally, as part of the PTH Acquisition, we also agreed to assume all post-employment and post-retirement welfare benefit obligations with respect to active U.S. employees. The benefit obligation for post-retirement benefits, which are not funded, was approximately $3.5 million as of December 31, 2006.

For a description of the post-retirement and post-employment costs, see Note 9 to our audited financial statements included elsewhere in this prospectus.

Our future success depends on our ability to integrate acquired companies and manage our growth effectively.

Our growth through acquisitions has placed, and will continue to place, significant demands on our management, operational and financial resources. Realization of the benefits of acquisitions often requires integration of some or all of the acquired companies’ sales and marketing, distribution, manufacturing, engineering, finance and administrative organizations. Integration of companies demands substantial attention from senior management and the management of the acquired companies. In addition, we will continue to pursue new acquisitions, some of which could be material to our business if completed. We may not be able to integrate successfully our recent acquisitions, including TB Wood’s, or any future acquisitions, operate these acquired companies profitably, or realize the potential benefits from these acquisitions.

We may not be able to protect our intellectual property rights, brands or technology effectively, which could allow competitors to duplicate or replicate our technology and could adversely affect our ability to compete.

We rely on a combination of patent, trademark, copyright and trade secret laws in the United States and other jurisdictions, as well as on license, non-disclosure, employee and consultant assignment and other agreements and domain names registrations in order to protect our proprietary technology and rights. Applications for protection of our intellectual property rights may not be allowed, and the rights, if granted, may not be maintained. In addition, third parties may infringe or challenge our intellectual property rights. In some cases, we rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology. In addition, in the ordinary course of our operations, we pursue potential claims from time to time relating to the protection of

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certain products and intellectual property rights, including with respect to some of our more profitable products. Such claims could be time consuming, expensive and divert resources. If we are unable to maintain the proprietary nature of our technologies or proprietary protection of our brands, our ability to market or be competitive with respect to some or all of our products may be affected, which could reduce our sales and profitability.

Goodwill comprises a significant portion of our total assets, and if we determine that goodwill has become impaired in the future, net income in such years may be materially and adversely affected.

Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations. We review goodwill and other intangibles annually for impairment and any excess in carrying value over the estimated fair value is charged to the results of operations. Reduction in net income resulting from the write down or impairment of goodwill would affect financial results. We expect to recognize additional goodwill in connection with the TB Wood’s Acquisition. See “Unaudited Pro Forma Condensed Combined Financial Statements.”

Unplanned repairs or equipment outages could interrupt production and reduce income or cash flow.

Unplanned repairs or equipment outages, including those due to natural disasters, could result in the disruption of our manufacturing processes. Any interruption in our manufacturing processes would interrupt our production of products, reduce our income and cash flow and could result in a material adverse effect on our business and financial condition.

Our operations are highly dependent on information technology infrastructure and failures could significantly affect our business.

We depend heavily on our information technology, or IT, infrastructure in order to achieve our business objectives. If we experience a problem that impairs this infrastructure, such as a computer virus, a problem with the functioning of an important IT application, or an intentional disruption of our IT systems by a third party, the resulting disruptions could impede our ability to record or process orders, manufacture and ship in a timely manner, or otherwise carry on our business in the ordinary course. Any such events could cause us to lose customers or revenue and could require us to incur significant expense to eliminate these problems and address related security concerns.

We are subject to tax laws and regulations in many jurisdictions and the inability to successfully defend claims from taxing authorities related to our current or acquired businesses could adversely affect our operating results and financial position.

We conduct business in many countries, which requires us to interpret the income tax laws and rulings in each of those taxing jurisdictions. Due to the subjectivity of tax laws between those jurisdictions as well as the subjectivity of factual interpretations, our estimates of income tax liabilities may differ from actual payments or assessments. Claims from taxing authorities related to these differences could have an adverse impact on our operating results and financial position.

Genstar Capital Partners III, L.P. and Stargen III, L.P. (together, the Genstar Funds) control us and may have conflicts of interest with our other stockholders in the future.

The Genstar Funds beneficially own 30.6% of the common stock of our parent company, Altra Holdings. The Genstar Funds have significant influence over the election and removal of our directors and our corporate and management policies, including potential mergers or acquisitions, payment of dividends, asset sales and other significant corporate transactions. We cannot assure you that the interests of the Genstar Funds will coincide with your interests.

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THE EXCHANGE OFFER

Purpose and Effect

The old notes were issued by us on April 5, 2007 to the Initial Purchaser pursuant to Section 4(2) of the Securities Act and resold by the Initial Purchaser to qualified institutional buyers, or QIBs, or persons reasonably believed to be QIBs pursuant to Rule 144A under the Securities Act and to non-U.S. persons in offshore transactions pursuant to Regulation S under the Securities Act. In connection with this original issuance, we and the subsidiary guarantors entered into a registration rights agreement. The registration rights agreement requires that we file a registration statement under the Securities Act with respect to the registered notes to be issued in the exchange offer and, upon the effectiveness of the registration statement, offer to you the opportunity to exchange your old notes for a like principal amount of registered notes. Except as set forth below, these registered notes will be issued without a restrictive legend and we believe, may be reoffered and resold by you without registration under the Securities Act. After we complete the exchange offer, our obligations with respect to the registration of the old notes and the registered notes will terminate, except as provided in the last paragraph of this section. Copies of the indenture relating to the notes and the registration rights agreement have been filed as exhibits to the registration statement on Form S-4 of which this prospectus forms a part.

Based on an interpretation by the staff of the SEC set forth in no-action letters issued to third parties unrelated to us, we believe that the registered notes issued to you in the exchange offer may be offered for resale, resold and otherwise transferred by you, without compliance with the registration and prospectus delivery provisions of the Securities Act, unless you are a broker-dealer that receives registered notes in exchange for old notes acquired by you as a result of market-making or other trading activities. This interpretation, however, is based on your representation to us that:

•  the registered notes to be issued to you in the exchange offer are being acquired in the ordinary course of your business;

•  you are not engaging in and do not intend to engage in a distribution of the registered notes to be issued to you in the exchange offer; and

•  you have no arrangement or understanding with any person to participate in the distribution of the registered notes to be issued to you in the exchange offer.

If you have any of the disqualifications described above or cannot make any of the representations set forth above, you may not rely on this interpretation by the staff of the SEC referred to above. Under those circumstances, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a sale, transfer or other disposition of any notes unless you are able to utilize an applicable exemption from all those requirements. Each broker-dealer that receives registered notes for its own account in exchange for old note where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities must acknowledge that it will deliver a prospectus in connection with any resale of those registered notes. See “Plan of Distribution.”

If you will not receive freely tradeable registered notes in the exchange offer or are not eligible to participate in the exchange offer, you may elect to have your old notes registered in a “shelf” registration statement on an appropriate form pursuant to Rule 415 under the Securities Act. If we are obligated to file a shelf registration statement, we will be required to keep the shelf registration statement effective until the earlier of (a) two years from the date the securities were originally issued, (b) the date on which all the securities registered under the shelf registration statement are disposed in accordance with the shelf registration statement or (c) there ceases to be any old notes outstanding. Other than as set forth in this paragraph, you will not have the right to require us to register your old notes under the Securities Act. See “— Procedures for Tendering.”

We note that under the registration rights agreement, we were required to file a registration statement with the SEC by or on May 21, 2007 and such registration statement, as amended, is required to be declared effective by or on November 1, 2007. Failure to meet such requirements as of the applicable dates subjects us

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to an additional interest penalty on the old notes of .25% per annum for the first 90 days following such date, with an additional increase of .25% per annum for each 90-day period thereafter. The amount of additional interest penalty at any time is capped at 1.00% per annum and such penalty ceases to accrue after we have filed our registration statement or it has been declared effective, as applicable.

Consequences of Failure to Exchange

After we complete the exchange offer, if you have not tendered your old notes, you will not have any further registration rights, except as set forth above. Your old notes may continue to be subject to certain restrictions on transfer. Therefore, the liquidity of the market for your old notes could be adversely affected upon completion of the exchange offer if you do not participate in the exchange offer.

Terms of the Exchange Offer

Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept any and all old notes validly tendered and not withdrawn prior to the time of expiration. We will issue a principal amount of registered notes in exchange for the principal amount of old notes accepted in the exchange offer. You may tender some or all of your old notes pursuant to the exchange offer. However, old notes may be tendered only in integral multiples of $1,000 principal amount.

The form and terms of the registered notes are substantially the same as the form and terms of the old notes, except that the registered notes to be issued in the exchange offer have been registered under the Securities Act and will not bear legends restricting their transfer. The registered notes will be issued pursuant to, and entitled to the benefits of, the indenture which governs the old notes. The registered notes and old notes will be deemed a single issue of securities under the indenture.

As of the date of this prospectus, $105.0 million aggregate principal amount of old notes was outstanding. This prospectus, together with the letter of transmittal, is being sent to all registered holders and to others believed to have beneficial interests in the old notes. We intend to conduct the exchange offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the SEC promulgated under the Exchange Act.

We will be deemed to have accepted validly tendered old notes when, as, and if we have given oral or written notice of its acceptance to the exchange agent. The exchange agent will act as our agent for the tendering holders for the purpose of receiving the registered notes from us. If we do not accept any tendered old notes because of an invalid tender or the failure of any conditions to the exchange offer to be satisfied, we will return the unaccepted old notes, without expense, to the tendering holder promptly after the time of expiration or termination of the tender offer. For the conditions of the exchange offer see “— Conditions.”

You will not be required to pay brokerage commissions or fees or, except as set forth below under “— Transfer Taxes,” transfer taxes with respect to the exchange of your old notes in the exchange offer.

We will pay all charges and expenses, other than certain applicable taxes, in connection with the exchange offer. See “— Fees and Expenses” below.

Expiration; Amendments

The exchange offer will expire at 5:00 p.m., New York City time, on          , 2007, unless we determine, in our sole discretion, to extend the exchange offer, in which case it will expire at the later date and time to which it is extended. We do not currently intend to extend the exchange offer, although we reserve the right to do so. If we do extend the exchange offer, we will give oral or written notice of the extension to the exchange agent and give each registered holder of old notes for which the exchange offer is being made notice by means of a press release or other public announcement of any extension prior to 9:00 a.m., New York City time, on the next business day after the scheduled expiration date of the exchange offer.

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We also reserve the right, in our sole discretion:

•  subject to applicable law, to delay accepting any old notes and extend the exchange offer if any of the conditions set forth below under “— Conditions” have not been satisfied or waived, to terminate the exchange offer by giving oral or written notice of the delay or termination to the exchange agent; or

•  to amend the terms of the exchange offer in any manner by complying with Rule 14e-1(d) under the Exchange Act to the extent that rule applies, provided that, in the event of a material change in the exchange offer, involving the waiver of a material condition, we will extend the offer period if necessary so that at least five business days remain in the exchange offer following notice of the material change.

We acknowledge and undertake to comply with the provisions of Rule 14e-1(c) under the Exchange Act, which requires us to return the old notes surrendered for exchange promptly after the termination or withdrawal of the exchange offer. We will notify you promptly of any extension, termination or amendment.

Procedures for Tendering

Book-Entry Interests

The old notes were issued as global notes in fully registered form. Beneficial interests in the global notes, held by direct or indirect participants in DTC, are shown on, and transfers of these interests are effected only through, records maintained in book-entry form by DTC with respect to its participants.

If you hold old notes in the form of book-entry interests and you wish to tender your old notes for exchange pursuant to the exchange offer, you must transmit to the exchange agent on or prior to the time of expiration either:

•  a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other documents required by that letter of transmittal, to the exchange agent at the address set forth on the cover page of the letter of transmittal; or

•  a computer-generated message transmitted by means of DTC’s Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book-entry transfer, in which you acknowledge and agree to be bound by the terms of the letter of transmittal.

In addition, in order to deliver old notes held in the form of book-entry interests:

•  a timely confirmation of book-entry transfer of those old notes into the exchange agent’s account at DTC pursuant to the procedure for book-entry transfers described below under “— Book-Entry Transfer” must be received by the exchange agent prior to the time of expiration; or

•  you must comply with the guaranteed delivery procedures described below.

The method of delivery of old notes and the letter of transmittal and all other required documents to the exchange agent is at your election and risk. Instead of delivery by mail, we recommend that you use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure delivery to the exchange agent before the time of expiration. You should not send the letter of transmittal or old notes to us. You may request your broker, dealer, commercial bank, trust company or other nominee to effect the above transactions for you.

Certificated Old Notes

Only registered holders of certificated old notes may tender those notes in the exchange offer. If your old notes are certificated notes and you wish to tender those notes for exchange pursuant to the exchange offer, you must transmit to the exchange agent on or prior to the time of expiration, a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other required documents, to the

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address set forth below under “— Exchange Agent.” In addition, in order to validly tender your certificated old notes:

•  the certificates representing your old notes must be received by the exchange agent prior to the time of expiration; or

•  you must comply with the guaranteed delivery procedures described below.

Procedures Applicable to All Holders

If you tender an old note and you do not withdraw the tender prior to the time of expiration, you will have made an agreement with us in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal.

If your old notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your old notes, you should contact the registered holder promptly and instruct the registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your old notes, either make appropriate arrangements to register ownership of the old notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time.

Signatures on a letter of transmittal or a notice of withdrawal must be guaranteed by a financial institution, including most banks, savings and loan associations and brokerage houses, that is a medallion signature guarantor, each an “eligible institution,” unless:

•  old notes tendered in the exchange offer are tendered either:

•  by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the holder’s letter of transmittal; or

•  for the account of an eligible institution; and

•  the box entitled “Special Registration Instructions” on the letter of transmittal has not been completed.

If the letter of transmittal is signed by a person other than you, your old notes must be endorsed or accompanied by a properly completed bond power and signed by you as your name appears on those old notes.

If the letter of transmittal or any old notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing. Unless we waive this requirement, in this instance you must submit with the letter of transmittal proper evidence satisfactory to us of its authority to act on your behalf.

We will determine, in our sole discretion, all questions regarding the validity, form, eligibility, including time of receipt, acceptance and withdrawal of tendered old notes. This determination will be final and binding. We reserve the absolute right to reject any and all old notes not properly tendered or any old notes, our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular old notes; provided, however, that, in the event we waive any condition of tender for any noteholder, we will waive that condition for all noteholders. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties.

You must cure any defects or irregularities in connection with tenders of your old notes within the time period we determine unless we waive that defect or irregularity. Although we intend to notify you of defects or irregularities with respect to your tender of old notes, neither we, the exchange agent nor any other person

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will incur any liability for failure to give this notification. Your tender will not be deemed to have been made and your old notes will be returned to you if:

•  you improperly tender your old notes; or

•  you have not cured any defects or irregularities in your tender; and

•  we have not waived those defects, irregularities or improper tender.

Unless otherwise provided in the letter of transmittal, the exchange agent will return your old notes promptly following the expiration of the exchange offer.

In addition, we reserve the right, in our sole discretion, to:

•  purchase or make offers for, or offer registered notes for, any old notes that remain outstanding subsequent to the expiration of the exchange offer;

•  terminate the exchange offer upon the failure of any condition to the exchange offer to be satisfied; and

•  to the extent permitted by applicable law, purchase notes in the open market, in privately negotiated transactions or otherwise.

The terms of any of these purchases or offers could differ from the terms of the exchange offer. By tendering in the exchange offer, you will represent to us that, among other things:

•  you are not an “affiliate” of us, as defined in Rule 405 under the Securities Act;

•  if you are a broker-dealer, you acquired the old notes which you seek to exchange for registered notes as a result of market making or other trading activities and not directly from the issuer and you comply with the prospectus delivery requirements of the Securities Act;

•  the registered notes to be issued to you in the exchange offer are being acquired in the ordinary course of your business;

•  you are not engaging in and do not intend to engage in a distribution of the registered notes to be issued to you in the exchange offer; and

•  you do not have an arrangement or understanding with any person to participate in the distribution of the registered notes to be acquired by you in the exchange offer.

In all cases, issuance of registered notes for old notes that are accepted for exchange in the exchange offer will be made only after timely receipt by the exchange agent of certificates for your old notes or a timely book-entry confirmation of your old notes into the exchange agent’s account at DTC, a properly completed and duly executed letter of transmittal and all other required documents. If any tendered old notes are not accepted for any reason set forth in the terms and conditions of the exchange offer or if old notes are submitted for a greater principal amount than you desire to exchange, the unaccepted or non-exchanged old notes, or old notes in substitution therefor, will be returned without expense to you. In addition, in the case of old notes, tendered by book-entry transfer into the exchange agent’s account at DTC pursuant to the book-entry transfer procedures described below, the non-exchanged old notes will be credited to your account maintained with DTC, as promptly after the expiration or termination of the exchange offer.

Guaranteed Delivery Procedures

If you desire to tender your old notes and your old notes are not immediately available or one of the situations described in the immediately preceding paragraph occurs, you may tender if:

•  you tender through an eligible institution;

•  on or prior to the time of expiration, the exchange agent receives from an eligible institution, a written or facsimile copy of a properly completed and duly executed letter of transmittal and notice of guaranteed delivery, substantially in the form provided by us; and

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•  the certificates for all certificated old notes, in proper form for transfer, or a book-entry confirmation, and all other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery.

The notice of guaranteed delivery may be sent by facsimile transmission, mail or hand delivery. The notice of guaranteed delivery must set forth:

•  your name and address;

•  the amount of old notes you are tendering; and

•  a statement that your tender is being made by the notice of guaranteed delivery and that you guarantee that within three New York Stock Exchange trading days after the execution of the notice of guaranteed delivery, the eligible institution will deliver the following documents to the exchange agent:

•  the certificates for all certificated old notes being tendered, in proper form for transfer or a book-entry confirmation of tender;

•  a written or facsimile copy of the letter of transmittal, or a book-entry confirmation instead of the letter of transmittal; and

•  any other documents required by the letter of transmittal.

Book-Entry Transfer

The exchange agent will establish accounts with respect to book-entry interests at DTC for purposes of the exchange offer promptly after the date of this prospectus. You must deliver your book-entry interest by book-entry transfer to the account maintained by the exchange agent at DTC for the exchange offer. Any financial institution that is a participant in DTC’s systems may make book-entry delivery of book-entry interests by causing DTC to transfer the book-entry interests into the relevant account of the exchange agent at DTC in accordance with DTC’s procedures for transfer.

If you are unable to:

•  deliver a book-entry confirmation of book-entry delivery of your book-entry interests into the relevant account of the exchange agent at DTC; or

•  deliver all other documents required by the letter of transmittal to the exchange agent prior to the time of expiration; then you must tender your book-entry interests according to the guaranteed delivery procedures discussed above.

Withdrawal Rights

You may withdraw tenders of your old notes at any time prior to the time of expiration.

For your withdrawal to be effective, the exchange agent must receive a written or facsimile transmission notice of withdrawal at its address set forth below under “— Exchange Agent” prior to the time of expiration.

The notice of withdrawal must:

•  state your name;

•  identify the specific old notes to be withdrawn, including the certificate number or numbers and the principal amount of old notes to be withdrawn;

•  be signed by you in the same manner as you signed the letter of transmittal when you tendered your old notes, including any required signature guarantees, or be accompanied by documents of transfer sufficient for the exchange agent to register the transfer of the old notes into your name; and

•  specify the name in which the old notes are to be registered, if different from yours.

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We will determine all questions regarding the validity, form and eligibility, including time of receipt, of withdrawal notices. Our determination will be final and binding on all parties. Any withdrawn tenders of old notes will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any old notes which have been tendered for exchange but which are not exchanged for any reason will be returned to you without cost promptly after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn old notes may be retendered by following one of the procedures described under “—Procedures for Tendering” above at any time on or prior to the time of expiration.

Conditions

Notwithstanding any other provision of the exchange offer and subject to our obligations under the registration rights agreement, we will not be required to accept for exchange, or to issue registered notes in exchange for, any old notes in the exchange offer and may terminate or amend the exchange offer, if at any time before the expiration of the exchange offer any of the following events occur:

•  any injunction, order or decree has been issued by any court or any governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer; or

•  the exchange offer violates any applicable law, regulation or interpretation of the staff of the SEC.

These conditions are for our sole benefit and we may assert them regardless of the circumstances giving rise to them, subject to applicable law. We also may waive in whole or in part at any time and from time to time any particular condition to the exchange offer in our sole discretion. If we waive a condition, we may be required to extend the expiration of the exchange offer in order to comply with applicable securities laws. Our failure at any time to exercise any of the foregoing rights will not be deemed a waiver of these rights, and these rights will be deemed ongoing rights which may be asserted at any time and from time to time (in the case of any condition involving governmental approvals necessary for the completion of the exchange offer) and at any time prior to the time of expiration (in the case of all other conditions).

In addition, we will not accept for exchange any old notes tendered, and no registered notes will be issued in exchange for any of those old notes, if at the time the old notes are tendered any stop order is threatened by the SEC or in effect with respect to the registration statement of which this prospectus is a part or the qualification of the indenture under the Trust Indenture Act of 1939, as amended.

The exchange offer is not conditioned on any minimum principal amount of old notes being tendered for exchange.

Exchange Agent

We have appointed The Bank of New York Trust Company, N.A. as exchange agent for the exchange offer. Questions, requests for assistance and requests for additional copies of the prospectus, the letter of transmittal and other related documents should be directed to the exchange agent addressed as follows:

By Hand, Regular, Registered or Certified Mail or Overnight Courier:

The Bank of New York Trust Company, N.A.
Corporate Trust Operations
Reorganization Unit
Attn: Mr. David A. Mauer
101 Barclay Street, 7 East
New York, New York 10286

By Facsimile:

212-298-1915, Attn: Corporate Trust Operations

For more information or confirmation by telephone please call 212-815-3687. Originals of all documents sent by facsimile should be sent promptly by registered or certified mail, by hand or by overnight delivery service.

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Fees and Expenses

We will not pay brokers, dealers or others soliciting acceptances of the exchange offer. The principal solicitation is being made by mail. Additional solicitations, however, may be made in person or by telephone by our officers and employees.

We will pay the cash expenses to be incurred in connection with the exchange offer.

Transfer Taxes

You will not be obligated to pay any transfer taxes in connection with a tender of your old notes for exchange unless you instruct us to register registered notes in the name of, or request that old notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder, in which event, the registered tendering holder will be responsible for the payment of any applicable transfer tax.

Accounting Treatment

We will not recognize any gain or loss for accounting purposes upon the consummation of the exchange offer. We will amortize the expense of the exchange offer and the unamortized expenses related to the issuance of the old notes over the term of the registered notes under accounting principles generally accepted in the United States of America.

USE OF PROCEEDS

The exchange offer is intended to satisfy our obligations under the registration rights agreement. We will not receive any cash proceeds from the issuance of the registered notes. In consideration for issuing the registered notes as contemplated in this prospectus, we will receive, in exchange, an equal number of old notes in like principal amount. The form and terms of the registered notes are identical in all material respects to the form and terms of the old notes, except that the registered notes will be registered under the Securities Act and will not have the same registration rights or additional interest payment provisions. The old notes surrendered in exchange for the registered notes will be retired and marked as cancelled and cannot be reissued.

39

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2006. The table below should be read in conjunction with “Use of Proceeds,” “Unaudited Pro Forma Condensed Combined Financial Statements,” “Selected Historical Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the related notes and the combined financial statements included elsewhere in this prospectus.

	As of December 31, 2006
	Actual		As Adjusted
	(In thousands)
Cash and cash equivalents	$	42,527	$	9,174
Debt:
Senior revolving credit facility(1)	$	—	$	10,000
9% senior secured notes		165,000		270,000	(2)
111/4% senior notes		64,647		41,974	(3)
5.75% mortgage		2,562		2,562
Capital leases and short-term bank borrowings		1,548		1,548
TB Wood’s debt assumed		—		14,300	(4)
Total debt	$	233,757	$	340,384
Stockholders’ equity		79,519		76,162
Total capitalization	$	313,276	$	416,546

(1)	Our senior revolving credit facility has up to $30.0 million of borrowing capacity (including $10.0 million available for letters of credit).
(2)	Reflects $165.0 million of existing senior secured notes plus $105.0 million of the old notes. Does not reflect approximately $1.1 million of premium in connection with the offering of the old notes and $4.6 million net discount in connection with the offering of the existing notes. See “Unaudited Pro Forma Condensed Combined Financial Statements.”
(3)	On February 27, 2007, pursuant to the terms of the indenture governing our 111/4% senior notes, we redeemed £11.6 million, or U.S. $22.7 million (based on an exchange rate of 1.963 U.S. Dollars to U.K. Pounds as of February 27, 2007), of 111/4% senior notes with a portion of the proceeds received from the Altra Holdings IPO.
(4)	Reflects $8.4 million of outstanding borrowings under TB Wood’s senior secured credit facility, which will be refinanced as part of this transaction, $5.3 million of outstanding variable rate demand revenue bonds, $0.4 million of foreign revolving credit facility and term loan, and $0.2 million of equipment financing as of December 31, 2006.

40

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial statements are presented to illustrate the estimated effects of (i) the Hay Hall Acquisition, (ii) the TB Wood’s Acquisition and Related Transactions and (iii) our redemption of £11.6 million of our 111/4% senior notes on February 27, 2007 on our financial condition and results of operations.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2006 assumes that the Hay Hall Acquisition, our redemption of £11.6 million, or U.S. $22.7 million (based on an exchange rate of 1.963 U.S. Dollars to U.K. Pounds as of February 27, 2007), of 111/4% senior notes and the TB Wood’s Acquisition and Related Transactions, as applicable, took place on January 1, 2006, the beginning of our 2006 fiscal year. The unaudited pro forma condensed combined balance sheet as of December 31, 2006 assumes that our redemption of £11.6 million, or U.S. $22.7 million (based on an exchange rate of 1.963 U.S. Dollars to U.K. Pounds as of February 27, 2007), of our 111/4% senior notes on February 27, 2007 and the TB Wood’s Acquisition and Related Transactions occurred on December 31, 2006. The redemption of our 111/4% senior notes is not directly related to the TB Wood’s Acquisition and Related Transactions, but we believe that the adjustment is material to investors in this offering. The information presented in the unaudited pro forma condensed combined financial statements is not necessarily indicative of our financial position or results of operations that would have occurred if the TB Wood’s Acquisition and Related Transactions had been completed as of the dates indicated, nor should it be construed as being a representation of our future financial position or results of operations.

The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. These adjustments are more fully described in the notes to the unaudited pro forma condensed combined financial statements below.

The acquisition of TB Wood’s will be accounted for under the purchase method of accounting. As such, the cost to acquire TB Wood’s will be allocated to the respective assets acquired and liabilities assumed based on their estimated fair values at the closing of the merger. The pro forma adjustments and assumptions are based on preliminary estimates, evaluations and other data currently available and will be revised as additional information becomes available. In particular, such adjustments include information based upon our preliminary allocation of the purchase price for the acquisition of TB Wood’s, which is subject to adjustment based upon our further analysis and events that take place prior to the consummation of the merger and completion of the appraisal of TB Wood’s net assets on the closing date. As of the date of this prospectus, we have not completed the valuation studies necessary to determine the fair values of the assets we expect to acquire and liabilities we expect to assume and the related allocations of purchase price. Accordingly, the allocation of purchase price set forth in the unaudited pro forma condensed combined financial statements will change as a result of the final purchase price allocation and the differences may be material.

The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes and assumptions, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our consolidated financial statements and related notes, the consolidated financial statements of TB Wood’s and the related notes and the other financial information included elsewhere in this prospectus.

41

Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2006

			Hay Hall
			Holdings
			UK GAAP
	Altra		Period from
	Industrial		January 1,		Hay Hall							TB Wood’s
	Motion, Inc.		2006		Holdings							Corporation
	Year Ended		through		UK GAAP			Hay Hall		Hay Hall		Year Ended
	December 31,		February 10,		U.S. GAAP			Holdings		Holdings		December 31,		Pro Forma			Pro Forma
	2006		2006		Adjustments			U.S. GAAP		U.S. GAAP(a)		2006(b)		Adjustments			Combined
	(In thousands)
Net sales	$	462,285	£	4,371	£	—		£	4,371	$	7,662	$	118,935	$	(716	)(1)	$	588,166
Cost of sales		336,836		2,513		(1	)		2,512		4,404		80,790		1,780	(2)		423,810
Gross profit		125,449		1,858		1			1,859		3,258		38,145		(2,496	)		164,356
Selling, general, administrative and other operating expenses, net		84,356		1,706		(12	)		1,694		2,970		28,641		1,061	(3)		117,028
Operating profit		41,093		152		13			165		288		9,504		(3,557	)		47,328
Interest expense, net		23,522		111		—			111		195		3,628		9,086	(4)		36,431
Other expense net		856		—		—			—		—		—		—			856
Income (loss) before income taxes		16,715		41		13			54		93		5,876		(12,643	)		10,041
Income tax expense (benefit)		6,352		13		—			13		23		1,762		(4,551	)(5)		3,586
Net income (loss)	$	10,363	£	28	£	13		£	41	$	70	$	4,114	$	(8,092	)	$	6,455

(a)	Reflects Hay Hall’s Unaudited Interim Condensed Statement of Operations on a U.S. GAAP basis after translation to U.S. dollars at an exchange rate of 1.753 U.S. Dollars to U.K. Pounds (the average exchange rate for the six week period ended February 10, 2006).
(b)	Reflects TB Wood’s audited consolidated Statement of Operations for the year ended December 31, 2006.

See accompanying “Notes to the Unaudited Pro Forma Condensed Combined Statement of Operations.”

42

Notes to Unaudited Pro Forma Condensed Combined Statement of Operations

			Year Ended
			December 31,
			2006
			(In thousands)
(1	)	Adjustments to net sales as follows:
		Elimination of net sales of Engineered Systems of Matrix business which is included in the Hay Hall financial statements but which were not acquired by Altra	$	(291	)
		Elimination of intercompany sales from Hay Hall to Altra		(378	)
		Elimination of intercompany sales from Altra to Hay Hall		(47	)
		Total pro forma adjustment	$	(716	)
(2	)	Adjustments to cost of sales as follows:
		Elimination of cost of sales of Engineered Systems of Matrix business which is included in the Hay Hall financial statements but which were not acquired by Altra	$	(205	)
		Elimination of cost of sales on intercompany sales from Hay Hall to Altra		(378	)
		Elimination of cost of sales on intercompany sales from Altra to Hay Hall		(47	)
		Adjustment to record additional expense to reflect a full year of depreciation expense resulting from the adjustment to the fair market value of property, plant and equipment in connection with the Hay Hall Acquisition		127
		Adjustment to record additional depreciation expense resulting from the adjustment to the fair market value of property, plant and equipment in connection with the TB Wood’s Acquisition		2,283
		Total pro forma adjustment	$	1,780
(3	)	Adjustments to selling, general, administrative and other operating expenses as follows:
		Adjustment to record additional expense to reflect a full year of amortization expense associated with the intangible assets recorded in connection with the Hay Hall Acquisition	$	116
		Elimination of selling, general, administrative and other operating expenses of Engineered Systems of Matrix business which is included in the Hay Hall financial statements but which were not acquired by Altra		(156	)
		Elimination of selling, general, administrative and other operating expenses of Hay Hall’s corporate office business which is included in the Hay Hall financial statements but which were not acquired by Altra		(330	)
		Adjustment to record additional amortization expense associated with the intangible assets recorded in connection with the TB Wood’s Acquisition		2,436
		Elimination of additional expense related to Genstar Capital, L.P. transaction fee in connection with the Hay Hall Acquisition		(1,005	)
		Total pro forma adjustment	$	1,061

43

			Year Ended
			December 31,
			2006
			(In thousands)
(4	)	Adjustments to interest expense as follows:
		Elimination of historical interest expense recorded at Hay Hall	$	(195	)
		Adjustment to record additional amortization expense associated with debt issuance costs in connection with the Hay Hall Acquisition		47
		Adjustment to record additional interest expense associated with the notes issued to finance the Hay Hall Acquisition		756
		Elimination of the interest expense associated with the redemption of 35% of the 111/4% senior notes		(2,495	)
		Adjustment to write-off deferred financing costs associated with the redemption of 35% of the 111/4% senior notes		814
		Adjustment to record additional interest expense associated with the borrowings under our revolving credit facility in connection with the TB Wood’s Acquisition		733
		Adjustment to record the additional interest expense associated with the issuance of the 9% senior secured notes in connection with the TB Wood’s Acquisition		9,450
		Adjustment to write-off deferred financing costs and original issue discount associated with the debt to be repaid in connection with the TB Wood’s Acquisition		1,800
		Elimination of interest expense associated with debt to be repaid in connection with the TB Wood’s Acquisition		(2,769	)
		Adjustment to record additional expense associated with the bridge financing in connection with the TB Wood’s Acquisition		450
		Adjustment to record the amortization of the premium associated with the issuance of the 9% senior secured notes in connection with the TB Wood’s Acquisition		(225	)
		Adjustment to record additional amortization expense associated with debt issuance costs in connection with the TB Wood’s Acquisition		720
		Total pro forma adjustment	$	9,086
(5	)	Adjustments to record additional tax benefit of 36%	$	(4,551	)

44

Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2006

	Altra Industrial		TB Wood’s		Pro Forma			Pro Forma
	Motion, Inc.		Historical(a)		Adjustments			Combined
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	42,527	$	877	$	(34,230	)(1)	$	9,174
Trade accounts receivable, net		61,506		17,592		—			79,098
Inventories, net		75,769		19,668		—			95,437
Deferred income taxes		6,783		—		—			6,783
Prepaid expenses and deferred tax assets		7,532		2,532		—			10,064
Total current assets		194,117		40,669		(34,230	)		200,556
Property, plant and equipment, net		82,387		24,752		10,501	(2)		117,640
Goodwill		65,397		5,891		45,340	(3)		116,628
Intangibles assets, net		59,662		—		46,499	(4)		106,161
Deferred income taxes		2,135		—		—			2,135
Other assets		5,670		1,456		1,400	(5)		8,526
Total assets	$	409,368	$	72,768	$	69,510		$	551,646
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	34,053	$	9,043	$	—		$	43,096
Accruals and other liabilities		29,266		6,367		(148	)(6)		35,485
Taxes payable		6,549		1,471		—			8,020
Deferred income taxes		1,382		462		—			1,844
Current portion of long-term debt		573		4,745		10,000	(7)		15,318
Total current liabilities		71,823		22,088		9,852			103,763
Long-term debt, less current portion and net of accreted debt		228,555		23,884		69,041	(8)		321,480
Deferred income taxes		7,130		250		20,520	(9)		27,900
Pension liabilities		15,169		—		—			15,169
Other post-retirement benefits		3,262		—		—			3,262
Other long term liabilities		3,910		—		—			3,910
Total liabilities	$	329,849	$	46,222	$	99,413		$	475,484
Total stockholders’ equity		79,519		26,546		(29,903	)(10)		76,162
Total liabilities and stockholders’ equity	$	409,368	$	72,768	$	69,510		$	551,646

(a) Reflects TB Wood’s audited consolidated Balance Sheet as of December 31, 2006.

See accompanying “Notes to the Unaudited Pro Forma Condensed Combined Statement of Operations.”

45

Notes to Unaudited Pro Forma Condensed Combined Balance Sheet

			As of
			December 31,
			2006
			(In thousands)
(1	)	Adjustments to cash and cash equivalents as follows:
		Adjustment to record cash used in connection with the TB Wood’s Acquisition	$	(10,900	)
		Adjustment to record the premium received associated with the issuance of the 9% senior secured notes issued in connection with the TB Wood’s Acquisition		1,050
		Adjustment to record cash received for interest from December 1, 2006 associated with the issuance of the 9% senior secured notes issued in connection with the TB Wood’s Acquisition		788
		Adjustment to record the cash used in connection with the redemption of 35% of the outstanding 111/4% senior notes		(22,673	)
		Adjustment to record the cash used for the premium associated with the redemption of 35% of the outstanding 111/4% senior notes		(2,495	)
		Total pro forma adjustment	$	(34,230	)
(2	)	Adjustment to record property, plant and equipment at estimated fair value in connection with the TB Wood’s Acquisition	$	10,501
(3	)	Adjustments to goodwill as follows:
		Adjustment to record initial goodwill at estimated fair market value in connection with the TB Wood’s Acquisition	$	51,231
		Adjustment to remove historical goodwill recorded at TB Wood’s		(5,891	)
		Total pro forma adjustment	$	45,340
(4	)	Adjustment to record initial intangible assets (primarily customer relations and tradenames) at estimated fair market value in connection with the TB Wood’s Acquisition	$	46,499
(5	)	Adjustments to other assets as follows:
		Adjustment to remove the deferred debt issuance costs associated with the redemption of 35% of the 111/4% senior notes	$	(814	)
		Adjustment to remove the deferred financing costs associated with debt that was repaid in connection with the TB Wood’s Acquisition		(1,136	)
		Adjustment to record deferred debt issuance costs in connection with the TB Wood’s Acquisition		3,350
		Total pro forma adjustment	$	1,400
(6	)	Adjustments to accruals and other liabilities as follows:
		Adjustment to record the accrual of interest from December 1, 2006 on the 9% senior secured notes issued in connection with the TB Wood’s Acquisition		788
		Adjustment to eliminate the interest accrual associated with the redemption of 35% of the outstanding 111/4% senior notes		(936	)
				(148	)
(7	)	Adjustment to record additional short-term debt incurred under our revolving credit facility in connection with the TB Wood’s Acquisition		10,000

46

			As of
			December 31,
			2006
			(In thousands)
(8	)	Adjustments to long-term debt as follows:
		Adjustment to remove debt that was repaid in connection with the TB Wood’s Acquisition	$	(14,336	)
		Adjustment to remove debt in connection with the redemption of 35% of the outstanding 111/4% senior notes		(22,673	)
		Adjustment to record the premium received associated with the issuance of the 9% senior secured notes issued in connection with the TB Wood’s Acquisition		1,050
		Adjustment to reflect the issuance of the 9% senior secured notes in connection with the TB Wood’s Acquisition		105,000
		Total pro forma adjustment	$	69,041
(9	)	Adjustments to deferred tax liabilities, at an assumed effective tax rate of 36%, as follows:
		Adjustment to record the deferred tax liability associated with the adjustment to record property, plant and equipment at estimated fair market value	$	3,780
		Adjustment to record the deferred tax liability associated with the adjustment to record initial intangible assets at estimated fair market value		16,740
		Total pro forma adjustment	$	20,520
(10	)	Adjustments to stockholders’ equity as follows:
		Adjustment to remove historical equity balances of TB Wood’s	$	(26,546	)
		Adjustment to reflect the impact of the premium paid in connection with the TB Wood’s debt being repaid in connection with the TB Wood’s Acquisition		(320	)
		Adjustment to reflect the impact of the premium paid in connection with the redemption of 35% of the outstanding 111/4% senior notes		(2,495	)
		Adjustment to reflect the impact of removing the deferred debt issuance costs associated with the redemption of 35% of the 111/4% senior notes		(814	)
		Adjustment to reflect the impact of removing the accrued interest associated with the redemption of 35% of the outstanding 111/4% senior notes		936
		Adjustment to reflect the write-off of original issue discount in connection with the TB Wood’s debt being repaid in connection with the TB Wood’s Acquisition		(664	)
		Total pro forma adjustment	$	(29,903	)

47

SELECTED HISTORICAL FINANCIAL AND OTHER DATA

The following table contains the selected historical financial data for PTH, or our Predecessor, for the years ended December 31, 2002 and 2003 and the period from January 1, 2004 through November 30, 2004 and our selected historical financial data for the period from December 1, 2004 through December 31, 2004 and the years ended December 31, 2005 and 2006. The following table also contains our and our Predecessor’s selected historical balance sheet data as of December 31, 2002, 2003, 2004, 2005 and 2006. The following should be read in conjunction with “Use of Proceeds,” “Capitalization,” “Unaudited Pro Forma Condensed Combined Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and notes included elsewhere in this prospectus.

	Predecessor									Altra Industrial Motion, Inc.
							Period from			Period from
							January 1,			December 1,
							2004 through			2004 through
	Year Ended December 31,						November 30,			December 31,			Year Ended December 31,
	2002			2003			2004			2004			2005			2006
	(In thousands)									(In thousands)
Statement of Operations Data:
Net sales	$	253,217		$	266,863		$	275,037		$	28,625		$	363,465		$	462,285
Cost of sales		190,465			207,941			209,253			23,847			271,952			336,836
Gross profit		62,752			58,922			65,784			4,778			91,513			125,449
Selling, general, administrative and other operating expenses		48,303			49,513			45,321			8,973			61,520			83,256
Research and development expenses		3,103			3,455			3,947			378			4,683			4,938
Gain on curtailment of post-retirement benefit plan		—			—			—			—			—			(3,838	)
Gain on sale of assets		—			—			(1,300	)		—			(99	)		—
Restructuring charge, asset impairment and transition expenses		27,825			11,085			947			—			—			—
Income (loss) from operations		(16,479	)		(5,131	)		16,869			(4,573	)		25,409			41,093
Interest expense		5,489			5,368			4,294			1,410			17,065			23,522
Other expense (income)		(312	)		465			148			—			(17	)		856
Income (loss) before income taxes, discontinue operations and cumulative effect of change in accounting principles		(21,656	)		(10,964	)		12,427			(5,983	)		8,361			16,715
Provision (benefit) for income taxes		2,455			(1,658	)		5,532			(221	)		3,917			6,352
Loss from disposal of discontinued, net of income taxes		(700	)		—			—			—			—			—
Income (loss) from operations and disposal of discontinued operations, net of income taxes		(24,811	)		(9,306	)		6,895			(5,762	)		4,444			10,363
Cumulative effect of change in accounting principle — goodwill impairment		(83,412	)		—			—			—			—			—
Net income (loss)	$	(108,223	)	$	(9,306	)	$	6,895		$	(5,762	)	$	4,444		$	10,363
Other Financial Data:
Depreciation and amortization	$	9,547		$	8,653		$	6,074		$	$919		$	11,533		$	14,611
Purchase of fixed assets		5,911			5,294			3,489			289			6,199			9,408
Cash flow provided by (used in):
Operating activities		21,934			(14,289	)		3,604			5,623			13,835			13,413
Investing activities		(4,585	)		(1,573	)		953			(180,401	)		(5,197	)		(63,163	)
Financing activities		(13,037	)		12,746			(6,696	)		179,432			(2,783	)		81,552
Ratio of earnings to fixed charges(1)		—			—			3.6	x		—			1.5	x		1.7	x

48

	Predecessor						Altra Industrial Motion, Inc.
	As of December 31,						As of December 31,
	2002			2003			2004		2005		2006
	(In thousands)								(In thousands)
Balance Sheet Data (at end of period):
Cash and cash equivalents	$	5,214		$	3,163		$	4,729	$	10,060	$	42,527
Total assets		173,034			174,324			299,051		297,404		409,368
Long-term debt, excluding current portion		46,183			1,025			158,740		159,574		228,555
Total stockholders’ equity (deficit)/Invested capital		(9,418	)		(3,004	)		42,879		38,613		79,519

(1) For purposes of calculating the ratio of earnings to fixed charges, earnings represent income before income taxes, discontinued operations, cumulative effect of change in accounting principles and fixed charges. Fixed charges represent interest expense and a portion of rental expense which we believe is representative of the interest component of rental expense. Earnings were insufficient to cover fixed charges for the years ended December 31, 2002 and 2003, and for the period from December 1, 2004 through December 31, 2004 by $21.7 million, $11.0 million and $6.0 million, respectively.

49

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read together with “Selected Historical Financial And Other Data,” “Unaudited Pro Forma Condensed Combined Financial Statements” and the financial statements and related notes included elsewhere in this registration statement. The following discussion includes forward-looking statements. For a discussion of important factors that could cause actual results to differ materially from the results referred to in the forward-looking statements, see “Forward-Looking Statements.”

Overview

We are a leading global designer, producer and marketer of a wide range of MPT and motion control products with a presence in over 70 countries. Our global sales and marketing network includes over 700 direct OEM customers and over 3,000 distributor outlets. Our product portfolio includes industrial clutches and brakes, enclosed gear drives, open gearing, couplings, engineered bearing assemblies, linear components and other related products. Our products serve a wide variety of end markets including energy, general industrial, material handling, mining, transportation and turf and garden. We primarily sell our products to a wide range of OEMs and through long-standing relationships with industrial distributors such as Motion Industries, Applied Industrial Technologies, Kaman Industrial Technologies and W.W. Grainger.

Our net sales have grown at a compound annual growth rate of approximately 20% over the last three fiscal years. We believe this growth has been a result of recent acquisitions, greater overall global demand for our products due to a strengthening economy, increased consumption in certain geographic markets such as China, expansion of our relationships with our customers and distributors and implementation of improved sales and marketing initiatives.

We improved our gross profit margin and operating profit margin every year from fiscal year 2002 through fiscal year 2006 by implementing strategic price increases, utilizing low-cost country sourcing of components, increasing our productivity and employing a more efficient sales and marketing strategy.

While the power transmission industry has undergone some consolidation, we estimate that in 2006 the top five broad-based MPT companies represented approximately 19% of the U.S. power transmission market. The remainder of the power transmission industry remains fragmented with many small and family-owned companies that cater to a specific market niche often due to their narrow product offerings. We believe that consolidation in our industry will continue because of the increasing demand for global distribution channels, broader product mixes and better brand recognition to compete in this industry.

Key Components of Results of Operations

Net sales.  We derive revenues primarily from selling products that are either incorporated into products sold by OEMs to end-users directly or sold through industrial distributors. Although we have exclusive arrangements with less than 5% of our distributors, we believe our long history of serving the replacement part market will continue to yield recurring purchases from our customers resulting in consistent revenues. Our net sales are derived by eliminating allowances for sales returns, cash discount and other deductions from revenues.

Cost of sales.  Cost of sales includes direct expenses we incur in producing our products. This includes the amounts we pay for our raw materials, energy costs and labor expenses. Our cost of sales has increased due to increasing prices in our raw materials, energy increases and minimum wage increases. We have offset certain cost increases by passing through these costs to our customers by way of product price increases or surcharges, as well as by focusing on operating efficiencies and cost savings programs.

Selling, general and administrative expense.  Selling, general and administrative expense includes departmental costs for executive, legal and administrative services, finance, telecommunications, facilities and information technology.

50

Research and development expense.  Research and development expense primarily consists of personnel expenses and contract services associated with the development of our products.

History and Recent Acquisitions

Our current business began with the acquisition by Colfax of the MPT group of Zurn Technologies, Inc. in December 1996. Colfax subsequently acquired Industrial Clutch Corp. in May 1997, Nuttall Gear Corp. in July 1997 and the Boston Gear and Delroyd Worm Gear brands in August 1997 as part of Colfax’s acquisition of Imo Industries, Inc. In February 2000, Colfax acquired Warner Electric, Inc., which sold products under the Warner Electric, Formsprag Clutch, Stieber and Wichita Clutch brands. Colfax formed PTH in June 2004 to serve as a holding company for all of these power transmission businesses.

On November 30, 2004, we acquired our original core business through the acquisition of PTH from Colfax for $180.0 million in cash.

On October 22, 2004, The Kilian Company, or Kilian, a company formed at the direction of Genstar Capital, our principal equity sponsor, acquired Kilian Manufacturing Corporation from Timken U.S. Corporation for $8.8 million in cash and the assumption of $12.2 million of debt. At the completion of the PTH Acquisition, (i) all of the outstanding shares of Kilian capital stock were exchanged for approximately $8.8 million of shares of our capital stock and Kilian and its subsidiaries were transferred to us and (ii) all outstanding debt of Kilian was retired with a portion of the proceeds of the sale of our 9% senior secured notes.

On November 7, 2005, we entered into a purchase agreement with the shareholders of Hay Hall pursuant to which we agreed to acquire all of the outstanding share capital of Hay Hall for $49.2 million. The acquisition closed on February 10, 2006 and Hay Hall and its subsidiaries became our indirect wholly owned subsidiaries. We paid $6.0 million of the total purchase price in the form of deferred consideration. At the closing of the Hay Hall Acquisition, we deposited such deferred consideration into an escrow account for the benefit of the former Hay Hall shareholders, which is represented by a loan note. While the former Hay Hall shareholders hold the note, their rights are limited to receiving the amount of the deferred consideration placed in the escrow account. They have no recourse against us unless we take action to prevent or interfere in the release of such funds from the escrow account.

Hay Hall is a U.K.-based holding company that is focused primarily on the manufacture of flexible couplings and clutch brakes. Through Hay Hall, we acquired 15 strong brands in complementary product lines, improved customer leverage and expanded geographic presence in over 11 countries. Hay Hall’s product offerings diversified our revenue base and strengthened our key product areas, such as electric clutches, brakes and couplings. Matrix International, Inertia Dynamics and Twiflex, three Hay Hall businesses, combined with Warner Electric, Wichita Clutch, Formsprag Clutch and Stieber, make the consolidated company one of the largest individual manufacturers of industrial clutches and brakes in the world. The Hay Hall Acquisition did not create a new reportable segment.

On May 18, 2006, we acquired substantially all of the assets of Bear Linear for $5.0 million. Approximately $3.5 million was paid at closing and the remaining $1.5 million is payable over approximately the next two years. Bear Linear manufactures high value-added linear actuators which are electromechanical power transmission devices designed to move and position loads linearly for mobile off-highway and industrial applications. Bear Linear’s product design and engineering expertise, coupled with our sourcing alliance with a low cost country manufacturer, were critical components in our strategic expansion into the motion control market.

On December 20, 2006, Altra Holdings completed a $155.2 million initial public offering of its common stock in which Altra Holdings realized gross proceeds of approximately $41.8 million.

On February 27, 2007, pursuant to the terms of the indenture governing our 111/4% senior notes, we redeemed £11.6 million, or U.S. $22.7 million (based on an exchange rate of 1.963 U.S. Dollars to U.K. Pounds as of February 27, 2007), of 111/4% senior notes with a portion of the proceeds received from the Altra Holdings IPO.

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On March 5, 2007, Forest Acquisition Corporation, or FAC, a wholly owned subsidiary of Alta Holdings, commenced a cash tender offer of $24.80 per share for all outstanding shares of TB Wood’s common stock. The tender offer expired on April 2, 2007 and the acquisition was completed on April 5, 2007.

Cost Savings and Productivity Enhancement Initiatives

Our Predecessor enacted significant cost savings programs prior to our acquisition of PTH and we subsequently enacted other cost savings programs to reduce overall cost structure and improve cash flows. Cost reduction programs included the consolidation of facilities, headcount reductions and reduction in overhead costs, which resulted in restructuring charges, asset impairment and transition expenses of $11.1 million in the year ended December 31, 2003. Cash outflows related to the restructuring programs were $2.2 million in 2004 and $13.9 million in 2003. The financial effects of some of the specific cost reduction programs are listed below:

•  In 2003, our Predecessor incurred transition expenses, including relocation, training, recruiting and moving costs, directly related to implementing its restructuring activities amounting to $9.1 million.

•  In 2003, our Predecessor recorded a $2.0 million loss from the sale of certain real estate associated with facilities closed as a part of its restructuring activities.

•  In 2005, we re-negotiated two of our U.S. collective bargaining agreements which we estimate provide for savings of $0.8 million annually.

•  In 2006, we re-negotiated one of our U.S. collective bargaining agreements which we estimate provides for savings of $2.2 million annually.

Non-GAAP Financial Measures

The discussion of Results of Operations below includes certain references to financial results on a “combined basis.” The combined results were prepared by adding our results from inception on December 1, 2004 to December 31, 2004 to those from our Predecessor for the 11 month period ending November 30, 2004. This presentation is not in accordance with GAAP. The primary differences between the predecessor entity and the successor entity are the inclusion of Kilian in the successor and the successor’s book basis has been stepped up to fair value, such that the successor has additional depreciation, amortization and financing costs. The results of Kilian are included in our results for the period from December 1, 2004 through December 31, 2004. Management believes that this combined basis presentation provides useful information for our investors in the comparison to Predecessor trends and operating results. The combined results are not necessarily indicative of what our results of operations may have been if the PTH Acquisition and Kilian Transactions had been consummated earlier, nor should they be construed as being a representation of our future results of operations.

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Results of Operations

	Predecessor			From Inception
	11 Months			(December 1,			Combined Twelve
	Ended			2004) through			Months Ended			Year Ended			Year Ended
	November 30,			December 31,			December 31,			December 31,			December 31,
	2004			2004			2004			2005			2006
	(In thousands, except						(In thousands, except percentage data)
	percentage data)
Net sales	$	275,037		$	28,625		$	303,662		$	363,465		$	462,285
Cost of sales		209,253			23,847			233,100			271,952			336,836
Gross profit		65,784			4,778			70,562			91,513			125,449
Gross profit percentage		23.9	%		16.7	%		23.2	%		25.2	%		27.1	%
Selling, general and administrative expenses		45,321			8,973			54,294			61,520			83,256
Research and development expenses		3,947			378			4,325			4,683			4,938
(Gain) on sale of assets		(1,300	)		—			(1,300	)		(99	)		—
Gain on curtailment of post-retirement benefit plan		—			—			—			—			(3,838	)
Restructuring charge, asset impairment and transition expenses		947			—			947			—			—
Income (loss) from operations		16,869			(4,573	)		12,296			25,409			41,093
Interest expense, net		4,294			1,410			5,704			17,065			23,522
Other non-operating (income) expense		148			—			148			(17	)		856
Income (loss) before income taxes)		12,427			(5,983	)		6,444			8,361			16,715
Provision (benefit) for income taxes		5,532			(221	)		5,311			3,917			6,352
Net income (loss)	$	6,895		$	(5,762	)	$	1,133		$	4,444		$	10,363

Year Ended December 31, 2006 Compared with Year Ended December 31, 2005

Net sales.

Net sales increased $98.8 million, or 27.2%, from $363.5 million, for the year ended December 31, 2005 to $462.3 million for the year ended December 31, 2006. Net sales increased primarily due to the inclusion of Hay Hall and Warner Linear in the results of the year ended December 31, 2006. Hay Hall net sales for the period February 10 to December 31, 2006 were $65.5 million and Warner Linear’s sales for the period May 18 to December 31, 2006 were $3.2 million. The remaining net increase was due to price increases and strong distribution sales for the aftermarket and the strength of several key markets including energy, primary metals and mining.

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Gross profit.

Gross profit increased $33.9 million, or 37.1%, from $91.5 million (25.2% of net sales), in 2005 to $125.4 million (27.1% of net sales) in 2006. The increase includes $14.1 million from Hay Hall for the period February 10 to December 31, 2006 and $0.7 million from Warner Linear for the period May 18 to December 31, 2006. Excluding Hay Hall and Warner Linear, gross profit increased approximately $19.2 million, or 21.0%, and gross profit as a percent of sales increased to 28.1% due to price increases during the first quarter of 2006 and an increase in low cost country material sourcing and manufacturing efficiencies implemented by the management team in the second half of 2005.

Selling, general and administrative expenses.

Selling, general and administrative expenses increased $21.8 million, or 35.4%, from $61.5 million in 2005 to $83.3 million in 2006. The increase in selling, general and administrative expenses is due to the inclusion of Hay Hall for the period February 10 to December 31, 2006 and Warner Linear for the period May 18 to December 31, 2006, which contributed $11.1 million and $0.6 million, respectively. Excluding Hay Hall and Warner Linear, selling, general and administrative expenses, as a percentage of net sales, increased from 16.9% in 2005 to 18.2% in 2006, primarily due to the $3.0 million termination fee paid to Genstar, $1.0 million transaction fee paid to Genstar in connection with the Hay Hall acquisition and $1.9 million stock based compensation expense offset by the cost savings initiatives.

Research and development expenses.

Research and development expenses increased $0.2 million, or 5.4%, from $4.7 million in 2005 to $4.9 million in 2006. The increase was primarily due to the inclusion of Hay Hall for the period February 10 to December 31, 2006.

EBITDA.

To reconcile net income to EBITDA for 2006 we added back to net income $6.4 million provision of income taxes, $23.5 million of interest expense and $14.6 million of depreciation and amortization expenses. To reconcile net income to EBITDA for 2005, we added back to net income $3.9 million provision of income taxes, $17.1 million of interest expense and $11.5 million of depreciation and amortization expenses. Taking into account the foregoing adjustments, our resulting EBITDA was $54.8 million for 2006 and $37.0 million for 2005. The increase is due to the inclusion of Hay Hall which contributed $5.4 million of EBITDA, the $3.8 million gain on other post-retirement benefit plan curtailment, price increases initiated at the beginning of 2006 and from the benefit of manufacturing and operating efficiencies and cost savings measures implemented during the second half of 2005, the benefits of which were realized in 2006. The increase was partially offset by the $1.0 million fee paid to Genstar for advisory services provided in connection with the Hay Hall acquisition and the $3.0 million fee paid to Genstar as a termination fee when Altra Holdings completed its initial public offering.

Interest expense, net.

We recorded interest expense of $23.5 million during 2006 primarily relating to the 9% senior secured notes, 111/4% senior notes and the amortization of related deferred financing costs. Interest expense of $17.1 million was recorded during 2005. The increase was due to the issuance of the 111/4% senior notes during 2006.

Other non-operating (income) expense.

We recorded $0.9 million of non-operating expense in 2006 which was primarily due to foreign currency translation losses due to the strengthening of the British Pound Sterling and Euro.

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Provision for income taxes.

The provision for income taxes was $6.4 million, or 38.0%, of income before taxes, for 2006, versus a combined provision of $3.9 million, or 46.8%, of income before taxes, for 2005. The 2006 provision as a percent of income before taxes was lower than that of 2005 primarily due to the Hay Hall acquisition and a greater proportion of taxable income in jurisdictions possessing lower statutory tax rates. For further discussion, refer to Note 8 in the Altra Industrial Motion, Inc. audited financial statements.

Year Ended December 31, 2005 Compared with Year Ended December 31, 2004

Net sales.

Net sales increased $59.8 million, or 19.7%, from $303.7 million on a combined basis, for the year ended December 31, 2004 to $363.5 million for the year ended December 31, 2005. Net sales increased primarily due to the inclusion of Kilian in the results of the year ended December 31, 2005. Kilian’s net sales for 2005 were $42.5 million. The remaining net increase was due to price increases, improving economic conditions at our customers in the steel, power generation and petro chemical industries and increased sales to certain transportation and mining OEM customers, partially offset by a weakening at our turf and garden OEM customers. On a constant currency basis sales increased $58.7 million, or 19.3%, in 2005. Excluding Kilian, the constant currency increase in sales was $17.0 million, or 5.6%.

Gross profit.

Gross profit increased $21.0 million, or 29.7%, from $70.6 million (23.2% of net sales) on a combined basis, in 2004 to $91.5 million (25.2% of net sales) in 2005. The increase includes $9.1 million from Kilian for 2005. Excluding Kilian, gross profit increased approximately $11.9 million, or 16.8%, and gross profit as a percent of sales increased to 25.7%. The remaining increase in gross profit was attributable to price increases during the second half of 2005, an increase in low cost country material sourcing and manufacturing efficiencies implemented by the new management team.

Selling, general and administrative expenses.

Selling, general and administrative expenses increased $7.2 million, or 13.3%, from $54.3 million on a combined basis in 2004 to $61.5 million in 2005. The increase in selling, general and administrative expenses was due to the inclusion of Kilian in 2005, which contributed $3.4 million to the increase, $3.0 million of amortization of intangibles, $1.0 million management fee paid to Genstar offset by cost savings initiatives put in place during 2005. Excluding Kilian, selling, general and administrative expenses, as a percentage of net sales, increased from 17.9% in 2004 to 18.1% in 2005, primarily due to the amortization of intangibles and the management fee paid to Genstar, offset by the cost savings initiatives. On a constant currency basis, selling, general and administrative expenses increased $6.4 million, or 11.8%, from $54.3 million, on a combined basis, in 2004. Excluding Kilian, selling, general and administrative expenses, on a constant currency basis, increased $3.0 million, or 5.6%, and was 17.9% of sales.

Research and development expenses.

Research and development expenses increased $0.4 million, or 8.3%, from $4.3 million on a combined basis in 2004 to $4.7 million in 2005. The increase was primarily due to development projects for the turf and garden and petro-chemical industries.

Gain on sale of assets.

The Predecessor recorded a gain on sale of assets of $1.3 million during 2004 relating to the sale of surplus real estate. We recorded a gain of $0.1 million from the sale of surplus machinery during 2005.

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EBITDA.

To reconcile net income to EBITDA for 2005, we added back to net income $3.9 million provision of income taxes, $17.1 million of interest expense and $11.5 million of depreciation and amortization expenses. To reconcile net income to EBITDA for 2004, we added back to net income $5.3 million provision of income taxes, $5.7 million of interest expense and $7.0 million of depreciation and amortization expenses. Taking into account the foregoing adjustments, our resulting EBITDA was $37.0 million for 2005 and $19.1 million for 2004.

Interest expense, net.

We recorded interest expense of $17.1 million during 2005 primarily due to the senior secured notes and the amortization of related deferred financing costs. On a combined basis, interest expense of $5.7 million was recorded during 2004.

Provision for income taxes.

The provision for income taxes was $3.9 million, or 46.8%, of income before taxes, for 2005, versus a combined provision of $5.3 million, or 82.4%, of income before taxes, for 2004. The 2004 provision as a percent of income before taxes was higher than that of 2005 primarily due to the impact of non-deductible transaction expenses incurred in connection with the PTH Acquisition in 2004.

Seasonality

We experience seasonality in our turf and garden business, which in recent years has represented approximately 10% of our net sales. As our large OEM customers prepare for the spring season, our shipments generally start increasing in December, peak in February and March, and begin to decline in April and May. This allows our customers to have inventory in place for the peak consumer purchasing periods for turf and garden products. Our low season is typically June through November for us and our customers in the turf and garden market. Seasonality for the turf and garden business is also affected by weather and the level of housing starts.

Inflation

Inflation can affect the costs of goods and services we use. The majority of the countries that are of significance to us, from either a manufacturing or sales viewpoint, have in recent years enjoyed relatively low inflation. The competitive environment in which we operate inevitably creates pressure on us to provide our customers with cost-effective products and services.

Liquidity and Capital Resources

Overview

Historically, our Predecessor financed capital and working capital requirements through a combination of cash flows from operating activities and borrowings from financial institutions and its former parent company, Colfax. We finance our capital and working capital requirements through a combination of cash flows from operating activities and borrowings under our senior revolving credit facility. We expect that our primary ongoing requirements for cash will be for working capital, debt service, capital expenditures and pension plan funding. If additional funds are needed for strategic acquisitions or other corporate purposes, we believe we could borrow additional funds or raise funds through the issuance of equity securities or asset sales.

Borrowings

In connection with the PTH Acquisition, we incurred substantial indebtedness. To partially fund the PTH acquisition, we issued $165.0 million of 9% senior secured notes, Altra Holdings issued $14.0 million of subordinated notes, or the CDPQ subordinated notes, to Caisse de dépôt et placement du Québec, or CDPQ, a limited partner of Genstar Capital Partners III, L.P., and we entered into a $30.0 million senior revolving credit

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facility. All of the CDPQ subordinated notes were redeemed in 2006. In connection with our acquisition of Hay Hall in February 2006, we issued £33.0 million of 111/4% senior notes. Based on an exchange rate of 1.7462 U.S. Dollars to U.K. pounds sterling (as of February 8, 2006), the proceeds from these notes were approximately $57.6 million. The notes are unsecured and are due in 2013. Interest on the 111/4% senior notes is payable in U.K. pounds sterling semiannually in arrears on February 15 and August 15 of each year, commencing August 15, 2006.

As of December 31, 2006, we had outstanding $165.0 million of 9% senior secured notes, $64.6 million of 111/4% senior notes, $1.5 million in capital leases, $2.6 million in mortgages and had no outstanding borrowings and $2.9 million of outstanding letters of credit under our senior revolving credit facility. This constitutes approximately $233.7 million of total indebtedness which results in approximately $24.1 million of interest expense.

In February 2007, we redeemed £11.6 million, or U.S. $22.7 million (based on an exchange rate of 1.963 U.S. Dollars to U.K. Pounds as of February 27, 2007), aggregated principal amount of our outstanding 111/4% senior notes, at a redemption price of 111.25% of the principal amount of the 111/4% senior notes, plus accrued and unpaid interest to the redemption date, using a portion of the proceeds received from the Altra Holdings IPO.

Our senior revolving credit facility provides for senior secured financing of up to $30.0 million, including $10.0 million available for letters of credit. The senior revolving credit facility requires us to comply with a minimum fixed charge coverage ratio of 1.20 for all four quarter periods when availability falls below $12.5 million.

We and all of our domestic subsidiaries are borrowers, or Borrowers, under the senior revolving credit facility. Certain of our existing and subsequently acquired or organized domestic subsidiaries which are not Borrowers do and will guarantee (on a senior secured basis) the senior revolving credit facility. Obligations of the other Borrowers under the senior revolving credit facility and the guarantees are secured by substantially all of the Borrowers’ assets and the assets of each of our existing and subsequently acquired or organized domestic subsidiaries that is a guarantor of our obligations under the senior revolving credit facility (with such subsidiaries being referred to as the “U.S. subsidiary guarantors”), including but not limited to: (a) a first-priority pledge of all the capital stock of subsidiaries held by the Borrowers or any U.S. subsidiary guarantor (which pledge, in the case of any foreign subsidiary, will be limited to 100% of any non-voting stock and 65% of the voting stock of such foreign subsidiary) and (b) perfected first-priority security interests in and mortgages on substantially all tangible and intangible assets of each Borrower and U.S. subsidiary guarantor, including accounts receivable, inventory, equipment, general intangibles, investment property, intellectual property, real property (other than (i) leased real property and (ii) our existing and future real property located in the State of New York), cash and proceeds of the foregoing (in each case subject to materiality thresholds and other exceptions).

An event of default under the senior revolving credit facility would occur in connection with a change of control if: (i) after an initial public offering, a person or group, other than Genstar Capital and our affiliates, beneficially owns more than 35% of our stock and such amount is more than the amount of shares owned by Genstar Capital and its affiliates, (ii) we cease to own or control 100% of each of its borrower subsidiaries, or (iii) a change of control occurs under the 9% senior secured notes, 111/4% senior notes or any other subordinated indebtedness.

An event of default under the senior revolving credit facility would occur if an event of default occurs under the indentures governing the 9% senior secured notes or the 111/4% senior notes or if there is a default under any other indebtedness any Borrower may have involving an aggregate amount of $3 million or more and such default: (i) occurs at final maturity of such debt, (ii) allows the lender thereunder to accelerate such debt or (iii) causes such debt to be required to be repaid prior to its stated maturity. An event of default would also occur under the senior revolving credit facility if any of the indebtedness under the senior revolving credit facility ceases to be senior in priority to any of our other contractually subordinated indebtedness, including the obligations under the 9% senior secured notes and the 111/4 senior notes.

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Under the agreements governing our indebtedness, our subsidiaries are permitted to make dividend payments to us for use in its operations and to pay off its senior revolving credit facility and outstanding notes. The outstanding balance due under the CDPQ subordinated notes was paid in full on December 7, 2006. In addition, the first priority liens against us, its subsidiaries and their assets created by our indebtedness limits our ability to sell or transfer such subsidiaries or assets.

As of December 31, 2006, we were in compliance with all covenant requirements associated with all of our borrowings.

Net Cash

Cash and cash equivalents totaled $42.5 million at December 31, 2006 compared to $10.1 million at December 31, 2005. The primary source of funds for fiscal 2006 was cash provided by financing and operating activities of $81.6 million and $13.4 million, respectively. Net cash provided by operating activities for 2006 resulted mainly from net income of $10.4 million, non cash depreciation, amortization and deferred financing costs of $15.6 million, non cash amortization of $2.3 million for inventory step ups recorded as part of the Hay Hall Acquisition and $1.1 million related to the loss on foreign currency which was offset by a non-cash gain on the curtailment of other post-retirement benefit plan of $3.8 million and by cash used by a net decrease in operating liabilities of $12.6 million and by cash used from a net increase in operating assets of $4.2 million.

Net cash used in investing activities of $63.2 million for 2006 resulted from $9.4 million of purchases of property, plant and equipment primarily for investment in manufacturing equipment and for the consolidation of our IT infrastructure and $53.8 million related to the acquisitions of Hay Hall and Bear Linear.

Net cash provided by financing activities of $81.6 million for 2006 consisted primarily of $57.6 million from the issuance of the 111/4% senior notes, $2.5 million from mortgage proceeds and $24.4 million received from Altra Holdings, net of payments made on behalf of Altra Holdings. These amounts are offset by $2.7 million payment of debt issuance costs associated with the 111/4% senior notes.

Capital Expenditures

We made capital expenditures of approximately $9.4 million and $6.2 million in the year ended December 31, 2006 and December 31, 2005, respectively. These capital expenditures will support on-going business needs. We expect to spend approximately $10.5 million on capital expenditures in 2007.

Our senior revolving credit facility imposes a maximum annual limit on our capital expenditures of $11.0 million for fiscal year 2007, $10.0 million for fiscal year 2008, and $10.3 million for fiscal year 2009 and each fiscal year thereafter, provided that unspent amounts from prior periods may be used in future fiscal years.

Pension Plans

As of December 31, 2006, we had cash funding requirements associated with our pension plan which we estimated to be $3.6 million in 2007, $2.5 million in 2008 and $1.9 million annually thereafter until 2011. These amounts represent funding requirements for the previous pension benefits we provided our employees. In 2006, we eliminated pension benefits in one of our locations. These amounts are based on actuarial assumptions and actual amounts could be materially different. Note 9 to our audited financial statements included elsewhere in this prospectus.

Debt Repayment

During the year ended December 31, 2006, we prepaid approximately $14.0 million of debt owed to CDPQ on Altra Holdings’ behalf. The outstanding balance due under the CDPQ subordinated notes was paid in full on December 7, 2006. We also paid approximately $0.8 million and $0.8 million of interest and prepayment premium, respectively.

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On February 27, 2007, pursuant to the terms of the indenture governing our 111/4% senior notes, we redeemed £11.6 million of 111/4% senior notes with a portion of the proceeds received from the Altra Holdings IPO.

Contractual Obligations

The following table is a summary of contractual obligations as of December 31, 2006 (in millions):

	Payments Due by Period
	2007		2008		2009		2010		2011		Thereafter		Total
Senior revolving credit facility(1)	$	—	$	—	$	—	$	—	$	—	$	—	$	—
9% senior secured notes(2)		—		—		—		—		165.0		—		165.0
111/4% senior notes(3)		—		—		—		—		—		64.6		64.6
Mortgage(4)		0.1		0.1		0.1		0.1		0.1		2.1		2.6
Capital leases		0.6		0.4		0.4		0.1		0.1		—		1.6
Operating leases		4.1		2.9		1.9		0.9		0.6		1.5		11.9
Total contractual obligations	$	4.8	$	3.4	$	2.4	$	1.1	$	165.8	$	68.2	$	245.7

(1)	We have up to $30.0 million of borrowing capacity, through November 2009, under our senior revolving credit facility (including $10.0 million available for use for letters of credit). At December 31, 2006, we had no outstanding borrowings and $2.9 million of outstanding letters of credit under our senior revolving credit facility.
(2)	We have semi-annual cash interest requirements due on the 9% senior secured notes with $14.9 million payable in 2007, 2008, 2009, 2010 and thereafter.
(3)	Assuming an exchange rate of 1.959 of U.S. Dollars to U.K. Pounds as of December 31, 2006, we have semi-annual cash interest requirements due on the 111/4% senior notes with $7.3 million payable in 2007, 2008, 2009, 2010, 2011 and $10.9 million thereafter. The principal balance of £33 million is due in 2013 which, assuming an exchange rate of 1.959, equals approximately $64.6 million. On February 27, 2007, we redeemed £11.6 million aggregated principal amount of our outstanding 111/4% senior notes, at a redemption price of 111.25% of the principal amount of the 111/4% senior notes, plus accrued and unpaid interest to the redemption date, using a portion of the proceeds from the Altra Holdings IPO.
(4)	In June, 2006, our German subsidiary entered into a mortgage on its building in Heidelberg, Germany, with a local bank. As of December 31, 2006, the mortgage has a principal of €2.0 million, an interest rate of 5.75% and is payable in monthly installments over 15 years.

We have cash funding requirements associated with our pension plan. As of December 31, 2006, these requirements were $3.6 million in 2007, $2.5 million in 2008 and $1.9 million annually thereafter until 2011. These amounts are based on actuarial assumptions and actual amounts could be different. See Note 9 to our audited financial statements included elsewhere in this prospectus.

Following the consummation of the TB Wood’s Acquisition, we have $14.3 million of TB Wood’s senior secured credit facility, variable rate demand revenue bonds, the foreign revolving credit facility and term loan, and equipment financing outstanding. Such amounts and the amount related to the issuance of the old notes and borrowings under our revolving credit facility needed to fund the TB Wood’s Acquisition are not reflected in the table above.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that provide liquidity, capital resources, market or credit risk support that expose us to any liability that is not reflected in our combined financial statements included elsewhere in this prospectus.

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Income Taxes

We are subject to taxation in multiple jurisdictions throughout the world. Our effective tax rate and tax liability will be affected by a number of factors, such as the amount of taxable income in particular jurisdictions, the tax rates in such jurisdictions, tax treaties between jurisdictions, the extent to which we transfer funds between jurisdictions and repatriate income, and changes in law. Generally, the tax liability for each legal entity is determined either (a) on a non-consolidated and non-combined basis or (b) on a consolidated and combined basis only with other eligible entities subject to tax in the same jurisdiction, in either case without regard to the taxable losses of non-consolidated and non-combined affiliated entities. As a result, we may pay income taxes to some jurisdictions even though on an overall basis we incur a net loss for the period.

We have completed an analysis of the American Jobs Creation Act that was passed by both the U.S. House of Representatives and Senate and signed by the President in October 2005. The Act provides a deduction that has the effect of reducing our tax rate and will be phased in over the next five years. As of the year ended December 31, 2006, there is no impact on our tax rate from the American Jobs Creation Act.

Critical Accounting Policies

The methods, estimates and judgments we use in applying our critical accounting policies have a significant impact on the results we report in our financial statements. We evaluate our estimates and judgments on an on-going basis. Our estimates are based upon historical experience and assumptions that we believe are reasonable under the circumstances. Our experience and assumptions form the basis for our judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary from what our management anticipates and different assumptions or estimates about the future could change our reported results.

We believe the following accounting policies are the most critical in that they are important to the financial statements and they require the most difficult, subjective or complex judgments in the preparation of the financial statements.

Revenue Recognition.  Product revenues are recognized, net of sales tax collected, at the time title and risk of loss pass to the customer, which generally occurs upon shipment to the customer. Service revenues are recognized as services are performed. Amounts billed for shipping and handling are recorded as revenue. Product return reserves are accrued at the time of sale based on the historical relationship between shipments and returns, and are recorded as a reduction of net sales.

Certain large distribution customers receive quantity discounts which are recognized net at the time the sale is recorded.

Inventory.  We value raw materials, work-in-progress and finished goods produced since inception at the lower of cost or market, as determined on a first-in, first-out (FIFO) basis. We periodically review the carrying value of the inventory and have at times determined that a certain portion of our inventories are excess or obsolete. In those cases, we write down the value of those inventories to their net realizable value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Retirement Benefits.  Pension obligations and other post retirement benefits are actuarially determined and are affected by several assumptions, including the discount rate, assumed annual rates of return on plan assets, and per capita cost of covered health care benefits. Changes in discount rate and differences from actual results for each assumption will affect the amounts of pension expense and other post retirement expense recognized in future periods.

Goodwill and Intangible Assets.  Intangible assets of our Predecessor consisted of goodwill, which represented the excess of the purchase price paid over the fair value of the net assets acquired. In connection with the PTH Acquisition, intangible assets were identified and recorded at their fair value, in accordance with Statement of Financial Accounting Standards, or SFAS No. 141, Business Combinations. We recorded

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intangible assets for customer relationships, trade names and trademarks, product technology and patents, and goodwill. In valuing the customer relationships, trade names and trademarks and product technology intangible assets, we utilized variations of the income approach. The income approach was considered the most appropriate valuation technique because the inherent value of these assets is their ability to generate current and future income. The income approach relies on historical financial and qualitative information, as well as assumptions and estimates for projected financial information. Projected information is subject to risk if our estimates are incorrect. The most significant estimate relates to our projected revenues. If we do not meet the projected revenues used in the valuation calculations then the intangible assets could be impaired. In determining the value of customer relationships, we reviewed historical customer attrition rates which were determined to be approximately 5% per year. Most of our customers tend to be long-term customers with very little turnover. While we do not typically have long-term contracts with customers, we have established long-term relationships with customers which make it difficult for competitors to displace us. Additionally, we assessed historical revenue growth within our industry and customers’ industries in determining the value of customer relationships. The value of our customer relationships intangible asset could become impaired if future results differ significantly from any of the underlying assumptions. This could include a higher customer attrition rate or a change in industry trends such as the use of long-term contracts which we may not be able to obtain successfully. Customer relationships and product technology and patents are considered finite-lived assets, with estimated lives ranging from 8 years and 12 years. The estimated lives were determined by calculating the number of years necessary to obtain 95% of the value of the discounted cash flows of the respective intangible asset. Goodwill and trade names and trademarks are considered indefinite lived assets. Trade names and trademarks were determined to be indefinite lived assets based on the criteria stated in paragraph 11 in SFAS No. 142, Goodwill and Other Intangible Assets. Other intangible assets include trade names and trademarks that identify us and differentiate us from competitors, and therefore competition does not limit the useful life of these assets. All of our brands have been in existence for over 50 years and therefore are not susceptible to obsolescence risk. Additionally, we believe that our trade names and trademarks will continue to generate product sales for an indefinite period. All indefinite lived intangible assets are reviewed at least annually to determine if an impairment exists. An impairment could be triggered by a loss of a major customer, discontinuation of a product line, or a change in any of the underlying assumptions utilized in estimating the value of the intangible assets. If an impairment is identified it will be recognized in that period.

In accordance with SFAS No. 142, we assess the fair value of our reporting units for impairment of intangible assets based upon a discounted cash flow methodology. Estimated future cash flows are based upon historical results and current market projections, discounted at a market comparable rate. If the carrying amount of the reporting unit exceeds the estimated fair value determined using the discounted cash flow calculation, goodwill impairment may be present. We would evaluate impairment losses based upon the fair value of the underlying assets and liabilities of the reporting unit, including any unrecognized intangible assets, and estimate the implied fair value of the intangible asset. An impairment loss would be recognized to the extent that a reporting unit’s recorded value of the intangible asset exceeded its calculated fair value.

We have calculated goodwill and intangible assets arising from the application of purchase accounting from our acquisitions, and have allocated these assets across our reporting units. We evaluated our intangible assets at the reporting unit level at December 31, 2006 and found no evidence of impairment at that date. If the book value of a reporting unit exceeds its fair value, the implied fair value of goodwill is compared with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recorded in an amount equal to that excess. The fair value of a reporting unit is estimated using the discounted cash flow approach, and is dependent on estimates and judgments related to future cash flows and discount rates. If the actual cash flows differ significantly from the estimates used by management, we may be required to record an impairment charge to write down the goodwill to its realizable value.

Long-lived Assets.  Long-lived assets are reviewed for impairment when events or circumstances indicate that the carrying amount of a long-lived asset may not be recovered. Long-lived assets held for use are reviewed for impairment by comparing the carrying amount of an asset to the undiscounted future cash flows expected to be generated by the asset over its remaining useful life. If an asset is considered to be impaired,

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the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value, and is charged to results of operations at that time. Assets to be disposed of are reported at the lower of the carrying amounts or fair value less cost to sell. Our management determines fair value using discounted future cash flow analysis. Determining market values based on discounted cash flows requires our management to make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate discount rates.

Income Taxes.  We record income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. We evaluate the realizability of our net deferred tax assets and assess the need for a valuation allowance on a quarterly basis. The future benefit to be derived from our deferred tax assets is dependent upon our ability to generate sufficient future taxable income to realize the assets. We record a valuation allowance to reduce our net deferred tax assets to the amount that may be more likely than not to be realized. To the extent we establish a valuation allowance, an expense will be recorded within the provision for income taxes line on the statement of operations. In periods subsequent to establishing a valuation allowance, if we were to determine that we would be able to realize our net deferred tax assets in excess of our net recorded amount, an adjustment to the valuation allowance would be recorded as a reduction to income tax expense in the period such determination was made.

Recent Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. (“FIN”) 48, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109”, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 will be effective for fiscal years beginning after December 15, 2006. The provision of FIN 48 are effective January 1, 2007. The Company is currently evaluating the effect that adoption of FIN 48 will have on its financial position and results of operations.

In September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108 “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements.” SAB No. 108 states that registrants should use both a balance sheet approach and an income statement approach when quantifying and evaluating the materiality of a misstatement. The interpretations in SAB No. 108 contain guidance on correcting errors under the dual approach as well as provide transition guidance for correcting errors. This interpretation does not change the requirements within SFAS No. 154, “Accounting Changes and Error Corrections — a replacement of APB No. 20 and FASB Statement No. 3,” for the correction of an error on financial statements. The Company adopted this pronouncement during 2006, the effect of this statement was not material to the financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This standard defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America, and expands disclosure about fair value measurements. This pronouncement applies under other accounting standards that require or permit fair value measurements. Accordingly, this statement does not require any new fair value measurement. This statement is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not expect the effect to be material.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R).” This pronouncement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability on its statement of financial position. SFAS No. 158 also requires an employer to recognize changes in that funded status in the year in which the changes occur through comprehensive income. On December 31, 2006, the Company adopted the recognition and disclosure provisions of SFAS No. 158. The effect of adopting Statement 158 is not included

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on the Company’s consolidated financial condition at December 31, 2005 or 2004. SFAS No. 158’s provisions regarding the change in the measurement date of postretirement benefit plans are not applicable as the Company already uses a measurement date of December 31 for its pension plans. See Note 9 for further discussion of the effect of adopting SFAS 158 on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159. The Fair Value Option for financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value and is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157. The Company is in the process of evaluating the impact this pronouncement may have on our results of operations and financial condition and whether to adopt the provisions of SFAS 159 for the fiscal year beginning January 1, 2007.

Qualitative and Quantitative Information about Market Risk

We are exposed to various market risk factors such as fluctuating interest rates and changes in foreign currency rates. At present, we do not utilize derivative instruments to manage this risk.

Foreign Currency Exchange Rate Risk

Currency translation.  The results of operations of our non-guarantor subsidiaries (which include all our non-domestic subsidiaries) are translated into U.S. dollars at the average exchange rates for each period concerned. The balance sheets of foreign subsidiaries are translated into U.S. dollars at the exchange rates in effect at the end of each period. Any adjustments resulting from the translation are recorded as other comprehensive income. As of December 31, 2006 and 2005, the aggregate total assets (based on book value) of our non-guarantor subsidiaries were $138.3 million and $74.6 million, respectively, representing approximately 33.8% and 25.1%, respectively, of our total assets (based on book value). Our foreign currency exchange rate exposure is primarily with respect to the Euro and British Pound Sterling. The approximate exchange rates in effect at December 31, 2006 and 2005 were $1.31 and $1.19, respectively to the Euro. The approximate exchange rates in effect at December 31, 2006 and 2005 were $1.96 and $1.73, respectively to the British Pound Sterling. The result of a hypothetical 10% strengthening of the U.S. dollar against the Euro and British Pound Sterling would result in a decrease in the book value of the aggregate total assets of our non-guarantor subsidiaries of approximately $13.8 million as of December 31, 2006. The result of a hypothetical 10% strengthening of the U.S. dollar against the Euro and British Pound Sterling would result in a decrease in net income of approximately $0.2 million for the year ended December 31, 2006.

Currency transaction exposure.  Currency transaction exposure arises where actual sales and purchases are made by a business or company in a currency other than its own functional currency. Any transactional differences at an international location are accounted for on a monthly basis.

Interest Rate Risk

We are subject to market exposure to changes in interest rates based on our financing activities. This exposure relates to borrowings under our senior revolving credit facility that are payable at prime rate plus 1.25% in the case of prime rate loans, or LIBOR rate plus 2.50%, in the case of LIBOR rate loans. As of December 31, 2006, we had no outstanding borrowings and $2.9 million of outstanding letters of credit under our senior revolving credit facility. Because we have no outstanding debt under our senior revolving credit facility, a hypothetical change in interest rates of 1% would not have a material effect on our near-term financial condition or results of operations. In connection with the TB Wood’s Acquisition, we assumed $5.3 million in variable rate demand revenue bonds which bear variable interest rates (3.77% as of December 31, 2006). See “Description of Certain Indebtedness.”

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The Sarbanes-Oxley Act of 2002 and Material Weakness in Internal Control

In connection with their audit of our 2006 consolidated financial statements, our independent auditors expressed concerns that as of the date of their opinion, certain plant locations had encountered difficulty closing their books in a timely and accurate manner. The outside auditors informed senior management and the Audit Committee of the Board of Directors that they believe this is a material weakness in internal controls. We have actively taken steps to address this material weakness. These steps include standardizing the financial close process, providing greater corporate oversight and review as well as implementing other internal control procedures as part of our ongoing Sarbanes-Oxley compliance program. We believe that with the addition of these steps we should be able to deliver financial information in a timely and accurate manner.

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BUSINESS

Our Company

We are a leading global designer, producer and marketer of a wide range of MPT and motion control products serving customers in a diverse group of industries, including energy, general industrial, material handling, mining, transportation and turf and garden. Our product portfolio includes industrial clutches and brakes, enclosed gear drives, open gearing, couplings, engineered bearing assemblies, linear components and other related products. Our products are used in a wide variety of high-volume manufacturing processes, where the reliability and accuracy of our products are critical in both avoiding costly down time and enhancing the overall efficiency of manufacturing operations. Our products are also used in non-manufacturing applications where product quality and reliability are especially critical, such as clutches and brakes for elevators and residential and commercial lawnmowers. For the year ended December 31, 2006, we had net sales of $462.3 million, net income of $10.4 million and EBITDA of $54.8 million.

We market our products under well recognized and established brand names, including Warner Electric, Boston Gear, Kilian Manufacturing, Nuttall Gear, Ameridrives, Wichita Clutch, Formsprag Clutch, Bibby Transmissions, Stieber, Matrix International, Inertia Dynamics, Twiflex Limited, Industrial Clutch, Huco Dynatork, Marland Clutch, Delroyd Worm Gear, Warner Linear and Saftek. Most of these brands have been in existence for over 50 years. We believe over 50% of our sales are generated from products where, according to the most recently published Motion Systems Design magazine survey, our brands on a consolidated basis have the number one or number two brand recognition in the markets we serve.

Our products are either incorporated into products sold by original equipment manufacturers, or OEMs, sold to end-users directly or sold through industrial distributors. We sell our products in over 70 countries to over 700 direct OEM customers and over 3,000 distributor outlets through our global sales and marketing network. Substantially all of our products are moving, wearing components which are consumed in use. Due to the complexity of many of our customers’ manufacturing operations and the high cost of process failure, our customers have demonstrated a strong preference to replace their worn Altra brand products with new Altra products. This replacement dynamic drives recurring replacement sales, resulting in aftermarket revenue that we estimate accounted for approximately 43% of our revenues for the year ended December 31, 2006.

We are led by a highly experienced management team with over 425 years of cumulative industrial business experience and an average of 14 years with our companies. Our management team has established a proven track record of execution, successfully completing and integrating major strategic acquisitions and delivering significant growth in both revenues and profits. We employ a comprehensive business process called the ABS, which focuses on eliminating inefficiencies from every business process to improve quality, delivery and cost.

Our Industry

Based on industry data supplied by Penton Information Services, or Penton, we estimate that industrial power transmission products generated sales in the United States of approximately $33.3 billion in 2006. These products are used to generate, transmit, control and transform mechanical energy. The industrial power transmission industry can be divided into three areas: MPT products; motors and generators; and adjustable speed drives. We compete primarily in the MPT area which, based on industry data, we estimate was a $16.7 billion market in the United States in 2006. In addition to the MPT segment, TB Wood’s also competes in the adjustable speed drives segment which we estimate was a $4.9 billion market in the United States in 2006.

The global MPT market is highly fragmented, with over 1,000 small manufacturers. While smaller companies tend to focus on regional niche markets with narrow product lines, larger companies that each generate annual sales over $100 million offer a much broader range of products and have global capabilities. The industry’s customer base is broadly diversified across many sectors of the economy and typically places a premium on factors such as quality, reliability, availability and design and application engineering support. We believe the most successful industry participants are those that leverage their distribution network, their

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products’ reputations for quality and reliability and their service and technical support capabilities to maintain attractive margins on products and gain market share.

Our Strengths

We believe the following business strengths have allowed us to develop and maintain a leading position within the mechanical power transmission industry:

Leading Market Shares and Brand Names.  We believe that we hold the number one or number two market position in key products across several of our core platforms. For example, according to a report published by the Global Industry Analysts, Inc., in February 2005, we are one of the leading manufacturers of industrial clutches and brakes in the world. Our brands, most of which have been in existence for more than 50 years, are widely known in the MPT product markets. We believe over 50% of our sales are generated from products where, according to the most recently published Motion Systems Design magazine survey, our brands on a consolidated basis have the number one or number two brand recognition in the markets we serve.

Large Installed Base Supporting Recurring Aftermarket Sales.  With a history dating back to 1877 with the formation of Boston Gear, we believe we benefit from one of the largest installed customer bases in the industry. Given the moving, wearing nature of our products, which require regular replacement, our large installed base of products with a diversified group of end-user customers, generates significant aftermarket replacement demand which creates a recurring revenue stream. Many of our products serve critical functions, where the cost of product failure would substantially exceed any potential cost reduction benefits from using cheaper, less proven parts. This end-user preference and consistently recurring replacement demand in turn help to stabilize our revenue base from the cyclical nature of the broader economy. For the year ended December 31, 2006 we estimate that approximately 43% of our revenues were derived from aftermarket sales.

Diversified End-Markets.  Our revenue base has balanced exposure across a diverse mix of end-user industries, including energy, general industrial, material handling, mining, transportation and turf and garden, which helps mitigate the impact of business and economic cycles. No single industry represented more than 9% of our total sales in 2006. In addition, for the year ended December 31, 2006, approximately 30% of our sales were from outside North America. Our geographic diversification is further enhanced as some of our products sold into the North American market are ultimately exported into international markets as part of the final product sold by the customer.

Strong Relationships with Distributors and OEMs.  We have over 700 direct OEM customers and enjoy established, long-term relationships with the leading MPT industrial distributors, both of which are critical factors that contribute to our high base of recurring aftermarket revenues. We sell our products through more than 3,000 distributor outlets worldwide. We believe our scale, end-user preference and expansive product lines make our product portfolio attractive to both large and multi-branch distributors, as well as regional and independent distributors in our industry.

Experienced, High-Caliber Management Team.  We are led by a highly experienced management team with over 425 years of cumulative industrial business experience and an average of 14 years with our companies. Our CEO, Michael Hurt, has over 40 years of experience in the MPT industry, while COO Carl Christenson has over 26 years of experience. Our management team has established a proven track record of execution, successfully completing and integrating major strategic acquisitions and delivering significant growth and profitability.

The Altra Business System.  We benefit from an established culture of lean management emphasizing quality, delivery and cost through the ABS. ABS is at the core of our performance-driven culture and drives both our strategic development and operational improvements. We estimate that in the period from January 1, 2005 through December 31, 2006, ABS has enabled us to achieve savings of over $5 million through various initiatives, including: (a) set-up time reduction and productivity improvement, (b) finished goods inventory reduction, (c) improved quality and reduction of internal scrap, (d) on-time delivery improvement, (e) utilizing value stream mapping to minimize work in process inventory and increase productivity and (f) headcount reductions. We believe these initiatives will continue to provide us with recurring annual savings. We intend to

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continue to aggressively implement operational excellence initiatives by utilizing the ABS tools throughout our company.

Proven Product Development Capabilities.  Our extensive application engineering know-how drives both new and repeat sales. Our broad portfolio of products, knowledge and expertise across various MPT applications allows us to provide our customers customized solutions to meet their specific needs. We are highly focused on developing new products in response to customer requirements. We employ approximately 170 non-manufacturing engineers involved with product development, research and development, test and technical customer support. Recent new product development examples include the Foot/Deck Mount Kopper Kool Brake which was designed for very high heat dissipation in extremely rugged tensioning applications such as drawworks for oil and gas wells and anchoring systems for on-shore and off-shore drilling platforms.

Our Business Strategy

We intend to continue to increase our sales through organic growth, expand our geographic reach and product offering through strategic acquisitions and improve our profitability through cost reduction initiatives. We seek to achieve these objectives through the following strategies:

•  Leverage Our Sales and Distribution Network.  We intend to continue to leverage our relationships with our distributors to gain shelf space, further integrate our recently acquired brands with our core brands and sell new products. In addition, we intend to continue to actively pursue new OEM opportunities with innovative and cost-effective product designs and applications to help maintain and grow our aftermarket revenues. For example, in 2002 we launched a new product in the wrap spring category. Despite established competition within this particular category, we were able to quickly penetrate the market and we exceeded 15% in global market share in 2006 due to the strength of our Warner Electric brand. We seek to capitalize on customer brand preference for our products to generate pull-through aftermarket demand from our distribution channel. We believe this strategy also allows our distributors to achieve high profit margins, further enhancing our preferred position with them.

•  Focus our Strategic Marketing on New Growth Opportunities.  We intend to expand our emphasis on strategic marketing to focus on new growth opportunities in key end-user markets. Through a systematic process that leverages our core brands and products, we seek to identify attractive markets and product niches, collect customer and market data, identify market drivers, tailor product and service solutions to specific market and customer requirements and deploy resources to gain market share and drive future sales growth.

•  Accelerate New Product and Technology Development.  We are highly focused on developing new products across our business in response to customer needs in various markets. We expect new products developed by us during the past three years to generate approximately $60 million in revenues in 2007.

Recent new product development examples include the Foot/Deck Mount Kopper Kool Brake, a new clutch brake design which significantly extends product life and can dramatically reduce blade stop time on commercial and residential lawn tractors, a new magnetic particle clutch designed to solve a number of long-standing performance issues on soft-drink bottle capping applications, and the RA10 speed reducer, designed for use in the rapidly growing market for armor-fitted military vehicles used by the U.S. military.

•  Capitalize on Growth and Sourcing Opportunities in the Asia-Pacific Market.  We intend to leverage our established sales offices in China, Taiwan and Singapore, as well as add representation in Japan and South Korea. We also intend to expand our manufacturing presence in Asia beyond our current plant in Shenzhen, China, to increase sales in the high-growth Asia-Pacific region. This region also offers opportunities for low-cost country sourcing of raw materials. During 2006, we sourced approximately 17% of our purchases from low-cost countries, resulting in average cost reductions of approximately 45% for these products. Within the next five years, we intend to utilize our sourcing office in Shanghai to significantly increase our current level of low-cost country sourced purchases. We may also consider

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opportunities to outsource some of our production from North American and Western European locations to Asia.

•  Continue to Improve Operational and Manufacturing Efficiencies through ABS.  We believe we can continue to improve profitability through cost control, overhead rationalization, global process optimization, continued implementation of lean manufacturing techniques and strategic pricing initiatives. Our operating plan, based on manufacturing centers of excellence, provides additional opportunities to reduce costs by sharing best practices across geographies and business lines and by consolidating purchasing processes. We have implemented these principles with our recent acquisitions of Hay Hall, Bear Linear and TB Wood’s and intend to apply such principles to future acquisitions.

•  Pursue Strategic Acquisitions that Complement our Strong Platform.  With our extensive MPT and motion control products, our strong customer and distributor relationships and our know-how in implementing lean enterprise initiatives through ABS, we believe we have an ideal platform for acquiring and successfully integrating related businesses, as evidenced through our acquisition and integration of Hay Hall, Bear Linear and TB Wood’s. Management believes that there may be a number of attractive potential acquisition candidates in the future, in part due to the fragmented nature of the industry. We plan to continue our disciplined pursuit of strategic acquisitions to accelerate our growth, enhance our industry leadership and create value.

Products

We produce and market a wide variety of MPT products. Our product portfolio includes industrial clutches and brakes, open and enclosed gearing, couplings, engineered bearing assemblies and other related power transmission components which are sold across a wide variety of industries. Our products benefit from our industry leading brand names including Warner Electric, Boston Gear, Kilian Manufacturing, Nuttall Gear, Ameridrives, Wichita Clutch, Formsprag Clutch, Bibby Transmissions, Stieber, Matrix International, Inertia Dynamics, Twiflex Limited, Industrial Clutch, Huco Dynatork, Marland Clutch, Delroyd Worm Gear, Warner Linear and Saftek. Our products serve a wide variety of end markets including aerospace, energy, food processing, general industrial, material handling, mining, petrochemical, transportation and turf and garden. We primarily sell our products to OEMs and through long-standing relationships with the industry’s leading industrial distributors such as Motion Industries, Applied Industrial Technologies, Kaman Industrial Technologies and W.W. Grainger. The following discussion of our products does not include detailed product category revenue because such information is not individually tracked by our financial reporting system and is not separately reported by our general purpose financial statements. Conducting a detailed product revenue internal assessment and audit would involve unreasonable effort and expense as revenue information by product line is not available. We maintain sales information by operating facility, but do not maintain any accounting sales data by product line.

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Our products, principal brands and markets and sample applications are set forth below:

Products	Principal Brands	Principal Markets	Sample Applications
Clutches and Brakes	Warner Electric, Wichita Clutch, Formsprag Clutch, Stieber Clutch, Matrix International, Inertia Dynamics, Twiflex Limited, Industrial Clutch, Marland Clutch	Aerospace, energy, material handling, metals, turf and garden, mining	Elevators, forklifts, lawn mowers, oil well drawworks, punch presses, conveyors
Gearing	Boston Gear, Nuttall Gear, Delroyd Worm Gear	Food processing, material handling, metals, transportation	Conveyors, ethanol mixers, packaging machinery, rail car wheel drives
Engineered Couplings	Ameridrives, Bibby Transmissions	Energy, metals, plastics	Extruders, turbines, steel strip mills
Engineered Bearing Assemblies	Kilian Manufacturing	Aerospace, material handling, transportation	Cargo rollers, steering columns, conveyors
Power Transmission Components	Warner Electric, Boston Gear, Huco Dynatork, Warner Linear, Matrix International, Saftek	Material handling, metals, turf and garden	Conveyors, lawn mowers, machine tools

Clutches and Brakes.  Clutches are devices which use mechanical, magnetic, hydraulic, pneumatic, or friction type connections used to facilitate engaging or disengaging two rotating members. Brakes are combinations of interacting parts that work to slow or stop machinery. We manufacture a variety of clutches and brakes in three main product categories: electromagnetic, overrunning and heavy duty. Our core clutch and brake manufacturing facilities are located in Connecticut, Indiana, Illinois, Michigan, Texas, the United Kingdom, Germany, France and China.

•  Electromagnetic Clutches and Brakes.  Our industrial products include clutches and brakes with specially designed controls for material handling, forklift, elevator, medical mobility, mobile off-highway, baggage handling and plant productivity applications. We also offer a line of clutch and brake products for walk-behind mowers, residential lawn tractors and commercial mowers. While industrial applications are predominant, we also manufacture several vehicular niche applications including on-road refrigeration compressor clutches and agricultural equipment clutches. We market our electromagnetic products under the Warner Electric, IDI and Matrix brand names.

•  Overrunning Clutches.  Specific product lines include the Formsprag and Stieber indexing and backstopping clutches. Primary industrial applications include conveyors, gear reducers, hoists and cranes, mining machinery, machine tools, paper machinery, packaging machinery, pumping equipment and other specialty machinery. We market and sell these products under the Formsprag, Marland and Stieber brand names.

•  Heavy Duty Clutches and Brakes.  Our heavy duty clutch and brake product lines serve various markets including metal forming, off-shore and land-based oil and gas drilling platforms, mining material handling, marine applications and various off-highway and construction equipment segments. Our line of heavy duty pneumatic, hydraulic and caliper clutches and brakes are marketed under the Wichita Clutch and Twiflex brand names.

Gearing.  Gears reduce the output speed and increase the torque of an electric motor or engine to the level required to drive a particular piece of equipment. These products are used in various industrial, material handling, mixing, transportation and food processing applications. Specific product lines include vertical and horizontal gear drives, speed reducers and increasers, high-speed compressor drives, enclosed custom gear drives, various enclosed gear drive configurations and open gearing products such as spur, helical, worm and

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miter/bevel gears. We design and manufacture a broad range of gearing products under the Boston Gear, Nuttall Gear and Delroyd Worm Gear brand names. We manufacture our gearing products at our facilities in New York and North Carolina and sell to a variety of end markets.

Engineered Couplings.  Couplings are the interface between two shafts, which enable power to be transmitted from one shaft to the other. Because shafts are often misaligned, we designed our couplings with a measure of flexibility that accommodates various degrees of misalignment. Our coupling product line includes gear couplings, high-speed disc and diaphragm couplings, grid couplings, universal joints and spindles. Our coupling products are used in the power generation, steel and custom machinery industries. We manufacture a broad range of coupling products under the Ameridrives and Bibby brand names. Our engineered couplings are manufactured in our facilities in Pennsylvania and the United Kingdom.

Engineered Bearing Assemblies.  Bearings are components that support, guide and reduce friction of motion between fixed and moving machine parts. Our engineered bearing assembly product line includes ball bearings, roller bearings, thrust bearings, track rollers, stainless steel bearings, polymer assemblies, housed units and custom assemblies. We manufacture a broad range of engineered bearing products under the Kilian brand name. We sell bearing products to a wide range of end markets, including the general industrial and automotive markets, with a particularly strong OEM customer focus. We manufacture our bearing products at our facilities in New York and Canada.

Power Transmission Components.  Power transmission components are used in a number of industries to generate, transfer or control motion from a power source to an application requiring rotary or linear motion. Power transmission products are applicable in most industrial markets, including, but not limited to metals processing, turf and garden and material handling applications. Specific product lines include linear actuators, miniature and small precision couplings, air motors, friction materials and other various items. We manufacture or market a broad array of power transmission components under several businesses including Warner Linear, Huco Dynatork, Saftek, Boston Gear, Warner Electric and Matrix. Our core power transmission component manufacturing facilities are located in Illinois, North Carolina, the United Kingdom and China.

•  Warner Linear.  Warner Linear is a designer and manufacturer of rugged service electromechanical linear actuators for off-highway vehicles, agriculture, turf care, special vehicles, medical equipment, industrial and marine applications.

•  Huco Dynatork.  Huco Dynatork is a leading manufacturer and supplier of a complete range of precision couplings, universal joints, rod ends and linkages.

•  Saftek.  Saftek manufactures a broad range of high quality non-asbestos friction materials for industrial, marine, construction, agricultural and vintage and classic cars and motorcycles.

•  Other Accessories.  Our Boston Gear, Warner Electric and Matrix businesses make or market several other accessories such as sensors, sleeve bearings, AC/DC motors, adjustable speed drives, shaft accessories, face tooth couplings and fluid power components that are used in numerous end markets.

Research and Development and Product Engineering

We closely integrate new product development with marketing, manufacturing and product engineering in meeting the needs of our customers. We have product engineering teams that work to enhance our existing products and develop new product applications for our growing base of customers that require custom solutions. We believe these capabilities provide a significant competitive advantage in the development of high quality industrial power transmission products. Our product engineering teams focus on:

•  lowering the cost of manufacturing our existing products;

•  redesigning existing product lines to increase their efficiency or enhance their performance; and

•  developing new product applications.

Our continued investment in new product development is intended to help drive customer growth as we address key customer needs.

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Sales and Marketing

We sell our products in over 70 countries to over 700 direct OEM customers and over 3,000 distributor outlets. We offer our products through our direct sales force comprised of 101 company-employed sales associates as well as independent sales representatives. Our worldwide sales and distribution presence enables us to provide timely and responsive support and service to our customers, many of which operate globally, and to capitalize on growth opportunities in both developed and emerging markets around the world.

We employ an integrated sales and marketing strategy concentrated on both key industries and individual product lines. We believe this dual vertical market and horizontal product approach distinguishes us in the marketplace allowing us to quickly identify trends and customer growth opportunities and deploy resources accordingly. Within our key industries, we market to OEMs, encouraging them to incorporate our products into their equipment designs, to distributors and to end-users, helping to foster brand preference. With this strategy, we are able to leverage our industry experience and product breadth to sell MPT and motion control solutions for a host of industrial applications.

Distribution

Our MPT components are either incorporated into end products sold by OEMs or sold through industrial distributors as aftermarket products to end-users and smaller OEMs. We operate a geographically diversified business. For the year ended December 31, 2006, 70.5% of our net sales were derived from customers in North America, 21.6% from customers in Europe and 7.9% from customers in Asia and the rest of the world. Our global customer base is served by an extensive global sales network comprised of our sales staff as well as our network of over 3,000 distributor outlets.

Rather than serving as passive conduits for delivery of product, our industrial distributors are active participants in influencing product purchasing decisions in the MPT industry. In addition, distributors play a critical role through stocking inventory of our products, which affects the accessibility of our products to aftermarket buyers. It is for this reason that distributor partner relationships are so critical to the success of the business. We enjoy strong established relationships with the leading distributors as well as a broad, diversified base of specialty and regional distributors.

Competition

We operate in highly fragmented and very competitive markets within the MPT market. Some of our competitors have achieved substantially more market penetration in certain of the markets in which we operate, such as helical gear drives and couplings, and some of our competitors are larger than us and have greater financial and other resources. In particular, we compete with Emerson Power Transmission Manufacturing, L.P., Regal-Beloit Corporation and Baldor Electric Company. In addition, with respect to certain of our products, we compete with divisions of our OEM customers. Competition in our business lines is based on a number of considerations including quality, reliability, pricing, availability and design and application engineering support. Our customers increasingly demand a broad product range and we must continue to develop our expertise in order to manufacture and market these products successfully. To remain competitive, we will need to invest regularly in manufacturing, customer service and support, marketing, sales, research and development and intellectual property protection. We may have to adjust the prices of some of our products to stay competitive. In addition, some of our larger, more sophisticated customers are attempting to reduce the number of vendors from which they purchase in order to increase their efficiency. There is substantial and continuing pressure on major OEMs and larger distributors to reduce costs, including the cost of products purchased from outside suppliers such as us. As a result of cost pressures from our customers, our ability to compete depends in part on our ability to generate production cost savings and, in turn, find reliable, cost-effective outside component suppliers or manufacture our products.

Intellectual Property

We rely on a combination of patents, trademarks, copyright and trade secret laws in the United States and other jurisdictions, as well as employee and third-party non-disclosure agreements, license arrangements and

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domain name registrations to protect our intellectual property. We sell our products under a number of registered and unregistered trademarks, which we believe are widely recognized in the MPT industry. With the exception of Boston Gear and Warner Electric, we do not believe any single patent, trademark or trade name is material to our business as a whole. Any issued patents that cover our proprietary technology and any of our other intellectual property rights may not provide us with adequate protection or be commercially beneficial to us and, patents applied for, may not be issued. The issuance of a patent is not conclusive as to its validity or its enforceability. Competitors may also be able to design around our patents. If we are unable to protect our patented technologies, our competitors could commercialize technologies or products which are substantially similar to ours.

With respect to proprietary know-how, we rely on trade secret laws in the United States and other jurisdictions and on confidentiality agreements. Monitoring the unauthorized use of our technology is difficult and the steps we have taken may not prevent unauthorized use of our technology. The disclosure or misappropriation of our intellectual property could harm our ability to protect our rights and our competitive position.

Some of our registered and unregistered trademarks include: Warner Electric, Boston Gear, Kilian Manufacturing, Nuttall Gear, Ameridrives, Wichita Clutch, Formsprag Clutch, Bibby Transmissions, Stieber, Matrix International, Inertia Dynamics, Twiflex Limited, Industrial Clutch, Huco Dynatork, Marland Clutch, Delroyd Worm Gear, Warner Linear and Saftek.

Backlog

Our backlog of unshipped orders was $128.2 million at December 31, 2006 and $102.0 million at December 31, 2005, an increase of $26.2 million. The increase in backlog was primarily due to the acquisition of Hay Hall, which accounted for approximately $16.7 million of the increase.

Employees

As of December 31, 2006, we had approximately 2,500 full-time employees, of whom approximately 58% were located in North America, 28% in Europe, and 14% in Asia. Approximately 21% of our full-time factory North American employees are represented by labor unions. In addition, approximately 39% of our employees in our facility in Scotland are represented by a labor union. The four U.S. collective bargaining agreements to which we are a party will expire on August 10, 2007, September 19, 2007, June 2, 2008 and February 1, 2009. We are currently in negotiations with the union in Scotland and we do not expect the negotiations to have a material adverse effect on our operations. Two of the four U.S. collective bargaining agreements contain provisions for additional, potentially significant, lump-sum severance payments to all employees covered by the agreements who are terminated as the result of a plant closing and one of our collective bargaining agreements contains provisions restricting our ability to terminate or relocate operations. See “Risk Factors — Risks Related to Our Business — We may be subject to work stoppages at our facilities, or our customers may be subjected to work stoppages, which could seriously impact our operations and the profitability of our business.”

The remainder of our European facilities have employees who are generally represented by local and national social works councils which are common in Europe. Social works councils meet with employer industry associations every two to three years to discuss employee wages and working conditions. Our facilities in France and Germany often participate in such discussions and adhere to any agreements reached.

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Properties

In addition to our leased headquarters in Quincy, Massachusetts, we maintain 23 production facilities, ten of which are located in the United States, two in Canada, ten in Europe and one in China. The following table lists all of our facilities, other than sales offices and distribution centers, as of December 31, 2006 indicating the location, principal use, square footage and whether the facilities are owned or leased.

					Owned/	Lease
Location	Brand	Major Products	Sq. Ft.		Leased	Expiration
United States
South Beloit, Illinois	Warner Electric	Electromagnetic Clutches & Brakes		104,288	Owned	N/A
Syracuse, New York	Kilian Manufacturing	Engineered Bearing Assemblies		97,000	Owned	N/A
Wichita Falls, Texas	Wichita Clutch	Heavy Duty Clutches and Brakes		90,400	Owned	N/A
Warren, Michigan	Formsprag	Overrunning Clutches		79,000	Owned	N/A
Erie, Pennsylvania	Ameridrives	Couplings		76,200	Owned	N/A
Columbia City, Indiana	Warner Electric	Electromagnetic Clutches & Brakes & Coils		35,000	Owned	N/A
Charlotte, North Carolina	Boston Gear	Gearing & Power Transmission Components		193,000	Leased	February 28, 2013
Niagara Falls, New York	Nuttall Gear	Gearing		155,509	Leased	March 31, 2008
Torrington, Connecticut	Inertia Dynamics	Electromagnetic Clutches & Brakes		32,000	Leased	May 31, 2007
Belvidere, Illinois	Warner Linear	Linear Actuators		21,000	Leased	June 30, 2009
Quincy, Massachusetts(1)	Altra, Boston Gear	—		30,350	Leased	February 12, 2008
International
Heidelberg, Germany	Stieber	Overrunning Clutches		57,609	Owned	N/A
Saint Barthelemy, France	Warner Electric	Electromagnetic Clutches & Brakes		50,129	Owned	N/A
Bedford, England	Wichita Clutch	Heavy Duty Clutches and Brakes		49,000	Owned	N/A
Allones, France	Warner Electric	Electromagnetic Clutches & Brakes		38,751	Owned	N/A
Toronto, Canada	Kilian Manufacturing	Engineered Bearing Assemblies		29,000	Owned	N/A
Dewsbury, England	Bibby Transmissions	Couplings		26,100	Owned	N/A
Shenzhen, China	Warner Electric	Electromagnetic Clutches & Precision Components		112,271	Leased	December 15, 2008
Brechin, Scotland	Matrix International	Clutch Brakes, Couplings		52,500	Leased	February 28, 2011
Garching, Germany	Stieber	Overrunning Clutches		32,292	Leased	(2)
Toronto, Canada	Kilian Manufacturing	Engineered Bearing Assemblies		30,120	Leased	(3)
Twickenham, England	Twiflex	Heavy Duty Clutches and Brakes		27,500	Leased	September 30, 2009
Hertford, England	Huco Dynatork	Couplings, Power Transmission Components		13,565	Leased	July 31, 2007
Telford, England	Saftek	Friction Material		4,400	Leased	August 31, 2008

(1)	Corporate Headquarters and selective Boston Gear functions.
(2)	Must give the lessor twelve month notice for termination.
(3)	Month to month lease.

Suppliers and Raw Materials

We obtain raw materials, component parts and supplies from a variety of sources, generally from more than one supplier. Our suppliers and sources of raw materials are based in both the United States and other

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countries and we believe that our sources of raw materials are adequate for our needs for the foreseeable future. We do not believe the loss of any one supplier would have a material adverse effect on our business or result of operations. Our principal raw materials are steel, castings and copper. We generally purchase our materials on the open market, where certain commodities such as steel and copper have increased in price significantly in recent years. We have not experienced any significant shortage of our key materials and have not historically engaged in hedging transactions for commodity suppliers.

Regulation

We are subject to a variety of government laws and regulations that apply to companies engaged in international operations. These include compliance with the Foreign Corrupt Practices Act, U.S. Department of Commerce export controls, local government regulations and procurement policies and practices (including regulations relating to import-export control, investments, exchange controls and repatriation of earnings). We maintain controls and procedures to comply with laws and regulations associated with our international operations. In the event we are unable to remain compliant with such laws and regulations, our business may be adversely affected.

Environmental and Health and Safety Matters

We are subject to a variety of federal, state, local, foreign and provincial environmental laws and regulations, including those governing health and safety requirements, the discharge of pollutants into the air or water, the management and disposal of hazardous substances and wastes and the responsibility to investigate and cleanup contaminated sites that are or were owned, leased, operated or used by us or our predecessors. Some of these laws and regulations require us to obtain permits, which contain terms and conditions that impose limitations on our ability to emit and discharge hazardous materials into the environment and periodically may be subject to modification, renewal and revocation by issuing authorities. Fines and penalties may be imposed for non-compliance with applicable environmental laws and regulations and the failure to have or to comply with the terms and conditions of required permits. From time to time our operations may not be in full compliance with the terms and conditions of our permits. We periodically review our procedures and policies for compliance with environmental laws and requirements. We believe that our operations generally are in material compliance with applicable environmental laws and requirements and that any non-compliance would not be expected to result in us incurring material liability or cost to achieve compliance. Historically, the costs of achieving and maintaining compliance with environmental laws and requirements have not been material.

Certain environmental laws in the United States, such as the federal Superfund law and similar state laws, impose liability for the cost of investigation or remediation of contaminated sites upon the current or, in some cases, the former site owners or operators and upon parties who arranged for the disposal of wastes or transported or sent those wastes to an off-site facility for treatment or disposal, regardless of when the release of hazardous substances occurred or the lawfulness of the activities giving rise to the release. Such liability can be imposed without regard to fault and, under certain circumstances, can be joint and several, resulting in one party being held responsible for the entire obligation. As a practical matter, however, the costs of investigation and remediation generally are allocated among the viable responsible parties on some form of equitable basis. Liability also may include damages to natural resources. We have not been notified that we are a potentially responsible party in connection with any sites we currently or formerly owned or operated or for liability at any off-site waste disposal facility.

However, there is contamination at some of our current facilities, primarily related to historical operations at those sites, for which we could be liable for the investigation and remediation under certain environmental laws. The potential for contamination also exists at other of our current or former sites, based on historical uses of those sites. We currently are not undertaking any remediation or investigations and our costs or liability in connection with potential contamination conditions at our facilities cannot be predicted at this time because the potential existence of contamination has not been investigated or not enough is known about the environmental conditions or likely remedial requirements. Currently, other parties with contractual liability are addressing or have plans or obligations to address those contamination conditions that may pose a material

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risk to human health, safety or the environment. In addition, while we attempt to evaluate the risk of liability at the time we acquire them, there may be environmental conditions currently unknown to us relating to our prior, existing or future sites or operations or those of predecessor companies whose liabilities we may have assumed or acquired which could have a material adverse effect on our business.

We are being indemnified, or expect to be indemnified by third parties subject to certain caps or limitations on the indemnification, for certain environmental costs and liabilities associated with certain owned or operated sites. Accordingly, based on the indemnification and the experience with similar sites of the environmental consultants who we have hired, we do not expect such costs and liabilities to have a material adverse effect on our business, operations or earnings. We cannot assure you, however, that those third parties will in fact satisfy their indemnification obligations. If those third parties become unable to, or otherwise do not, comply with their respective indemnity obligations, or if certain contamination or other liability for which we are obligated is not subject to these indemnities, we could become subject to significant liabilities.

Legal Proceedings

We are, from time to time, party to various legal proceedings arising out of our business. These proceedings primarily involve commercial claims, product liability claims, intellectual property claims, environmental claims, personal injury claims and workers’ compensation claims. We cannot predict the outcome of these lawsuits, legal proceedings and claims with certainty. Nevertheless, we believe that the outcome of any currently existing proceedings, even if determined adversely, would not have a material adverse effect on our business, financial condition and results of operations.

TB Wood’s Business

The products manufactured by TB Wood’s are classified into two product lines, mechanical and electronics industrial power transmission products. The mechanical business products includes belted drives and couplings. The electronics products includes electronic drives and electronic drive systems. TB Wood’s products are sold to distributors, OEMs, and end-users for manufacturing and commercial applications. TB Wood’s mechanical product offering includes a full line of stock and made-to-order products including V-belt drives, synchronous drives, variable speed drives, and a broad line of flexible couplings, as well as hydrostatic drives, clutches, and brakes. In the electronic business segment, TB Wood’s designs and manufactures AC electronic variable frequency drives and integrated electronic drive systems that are marketed throughout North America and internationally.

TB Wood’s products are sold principally throughout North America and to a lesser extent internationally. In North America, TB Wood’s sells to more than 1,000 authorized independent and multi-branch industrial distributors with over 3,000 locations that resell TB Wood’s products to industrial consumers and OEMs. TB Wood’s also sells directly to over 300 OEMs. TB Wood’s marketing alliances include licensing agreements and distribution agreements with distributors and manufacturers who, in some cases, market TB Wood’s products under private label agreements. In North America, TB Wood’s has its own technical sales force of more than 20 people and several specialized manufacturers’ representatives.

Competition in TB Wood’s mechanical product offering is based on availability, quality, price, product line breadth, engineering, and customer support. Competition in TB Wood’s AC electronic drive product categories is based on product performance, physical size of the product, tolerance for hostile environments, application support, availability and price.

As of December 31, 2006, TB Wood’s employed 830 people. Approximately 140 production employees in the TB Wood’s Mexican facilities are unionized under collective bargaining agreements that are subject to annual renewals.

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The following table lists all of TB Wood’s facilities as of December 31, 2006 indicating the location, principal use, square footage and whether facilities are owned or leased.

				Owned/
Location	Major Products	Sq. Ft.		Leased
United States
Chambersburg, Pennsylvania	Mechanical and Electronic Products		440,000	Owned
Scotland, Pennsylvania	Electronic Products		51,300	Owned
San Marcos, Texas	Mechanical Products		51,000	Owned
Mt. Pleasant, Michigan	Mechanical Products		30,000	Owned
Chattanooga, Tennessee	Integrated Electronic Drive Systems		60,000	Owned
Reno, Nevada	Distribution Facility		29,000	Leased
International
Stratford, Ontario, Canada	Distribution Facility		46,000	Owned
San Luis Potosi, Mexico	Mechanical Products		71,800	Leased
Naturns, Italy	Electronic Products		19,500	Leased
Bangalore, India	Distribution Facility		5,000	Leased
Marienheide, Germany	Distribution Facility		3,000	Leased
Montreal, Quebec	Distribution Facility		3,000	Leased
Edmonton, Alberta	Distribution Facility		5,280	Leased
Mexico City, Mexico	Distribution Facility		20,000	Leased

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MANAGEMENT AND DIRECTORS

Our directors and principal officers, and their positions and ages as of December 31, 2006, are as follows:

Name	Age		Position
Michael L. Hurt		61	Chief Executive Officer and Chairman of the Board of Directors
Carl R. Christenson		47	President and Chief Operating Officer
David A. Wall		48	Chief Financial Officer
Gerald Ferris		57	Vice President of Global Sales
Timothy McGowan		50	Vice President of Human Resources
Edward L. Novotny		54	Vice President and General Manager, Boston Gear, Overrunning Clutch, Huco
Craig Schuele		43	Vice President of Marketing and Business Development
Jean-Pierre L. Conte		43	Director
Richard D. Paterson		64	Director
Darren J. Gold		36	Director
Larry McPherson		61	Director
James H. Woodward Jr.		54	Director
Edmund M. Carpenter		63	Director

Michael L. Hurt, P.E. has been our Chief Executive Officer and a director since our formation in 2004. In November 2006, Mr. Hurt was elected as chairman of our board. During 2004, prior to our formation, Mr. Hurt provided consulting services to Genstar Capital and was appointed Chairman and Chief Executive Officer of Kilian in October 2004. From January 1991 to November 2003, Mr. Hurt was the President and Chief Executive Officer of TB Wood’s Incorporated, a manufacturer of industrial power transmission products. Prior to TB Wood’s, Mr. Hurt spent 23 years in a variety of management positions at the Torrington Company, a major manufacturer of bearings and a subsidiary of Ingersoll Rand. Mr. Hurt holds a B.S. degree in Mechanical Engineering from Clemson University and an M.B.A. from Clemson-Furman University.

Carl R. Christenson has been our President and Chief Operating Officer since January 2005. From 2001 to 2005, Mr. Christenson was the President of Kaydon Bearings, a manufacturer of custom-engineered bearings and a division of Kaydon Corporation. Prior to joining Kaydon, Mr. Christenson held a number of management positions at TB Wood’s Incorporated and several positions at the Torrington Company. Mr. Christenson holds a M.S. and B.S. degree in Mechanical Engineering from the University of Massachusetts and a M.B.A. from Rensselaer Polytechnic.

David A. Wall has been our Chief Financial Officer since January 2005. From 2000 to 2004, Mr. Wall was the Chief Financial Officer of Berman Industries, a manufacturer and distributor of portable lighting products. From 1994 to 2000, Mr. Wall was the Chief Financial Officer of DoALL Company, a manufacturer and distributor of machine tools and industrial supplies. Mr. Wall is a Certified Public Accountant and holds a B.S. degree in Accounting from the University of Illinois and a M.B.A. in Finance from the University of Chicago.

Gerald Ferris has been our Vice President of Global Sales since November 2004 and held the same position with Power Transmission Holdings, LLC, our Predecessor, since March 2002. He is responsible for the worldwide sales of our broad product platform. Mr. Ferris joined our Predecessor in 1978 and since joining has held various positions. He became the Vice President of Sales for Boston Gear in 1991. Mr. Ferris holds a B.A. degree in Political Science from Stonehill College.

Timothy McGowan has been our Vice President of Human Resources since November 2004 and held the same position with our Predecessor since June 2003. Prior to joining us, from 1994 to 1998 and again from 1999 to 2003 Mr. McGowan was Vice President, Human Resources for Bird Machine, part of Baker Hughes, Inc., an oil equipment manufacturing company. Before his tenure with Bird Machine, Mr. McGowan spent

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many years with Raytheon in various Human Resources positions. Mr. McGowan holds a B.A. degree in English from St. Francis College in Maine.

Edward L. Novotny has been our Vice President and General Manager of Boston Gear, Overrunning Clutch, Huco since November 2004 and held the same position with our Predecessor since May 2001. Prior to joining our Predecessor in 1999, Mr. Novotny served in a plant management role and then as the Director of Manufacturing for Stabilus Corporation, an automotive supplier, since October 1990. Prior to Stabilus, Mr. Novotny held various plant management and production control positions with Masco Industries and Rockwell International. Mr. Novotny holds a B.S. degree in Business Administration from Youngstown State University.

Craig Schuele has been our Vice President of Marketing and Business Development since November 2004 and held the same position with our Predecessor since July 2004. Prior to his current position, Mr. Schuele has been Vice President of Marketing since March 2002, and previous to that he was a Director of Marketing. Mr. Schuele joined our Predecessor in 1986 and holds a B.S. degree in Management from Rhode Island College.

Jean-Pierre L. Conte was elected as one of our directors in connection with the PTH Acquisition which occurred in November 2004. Mr. Conte also served as chairman of our board from November 2004 until November 2006. Mr. Conte is currently Chairman and Managing Director of Genstar Capital. Mr. Conte joined Genstar Capital in 1995. Prior to leading Genstar Capital, Mr. Conte was a principal for six years at the NTC Group, Inc., a private equity investment firm. He began his career at Chase Manhattan in 1985. He has served as a director and chairman of the board of PRA International, Inc. since 2000. Mr. Conte has also served as a director of Propex Fabrics, Inc. since December 2004 and as a director of Panolam Industries International, Inc. since September 2005. Mr. Conte holds a B.A. from Colgate University and an M.B.A. from Harvard University.

Richard D. Paterson was elected as one of our directors in connection with the PTH Acquisition. Since 1987, Mr. Paterson has been a Managing Director at Genstar Capital. Prior to joining Genstar Capital, Mr. Paterson was a Senior Vice President and Chief Financial Officer of Genstar Corporation, a New York Stock Exchange listed company. He has served as a director of North American Energy Partners Inc. since 2005, Propex Fabrics, Inc. since 2004, American Pacific Enterprises, LLC since 2004, Wood’s Equipment Company since 2004 and INSTALLS inc, LLC since 2004. Mr. Paterson is a Chartered Accountant and holds a Bachelor of Commerce degree from Concordia University.

Darren J. Gold was elected as one of our directors in connection with the PTH Acquisition. Mr. Gold is currently a Managing Director of Genstar Capital. Mr. Gold joined Genstar Capital in 2000. Prior to joining Genstar Capital, Mr. Gold was an engagement manager with McKinsey & Company. He has served as a director at INSTALLS inc., LLC since 2002 and Panolam Industries International, Inc. since 2005. Mr. Gold holds a B.A. in Political Science and History from the University of California, Los Angeles and a J.D. from the University of Michigan.

Larry McPherson was elected as one of our directors in January 2005. Prior to joining our board, Mr. McPherson was a Director of NSK Ltd. from 1997 until his retirement in 2003 and served as Chairman and CEO of NSK Europe from January 2002 to December 2003. In total he was employed by NSK Ltd. for 21 years and was Chairman and CEO of NSK Americas for the six years prior to his European assignment. Mr. McPherson continues to serve as an advisor to the board of directors of NSK Ltd. as well as a board member of McNaughton and Gunn, Inc. and of a privately owned printing company. Mr. McPherson earned his MBA from Georgia State and his undergraduate degree in Electrical Engineering from Clemson University.

James H. Woodward, Jr. was elected as one of our directors in March 2007. Mr. Woodward has been Executive Vice President and Chief Financial Officer of Joy Global Inc. since January 2007. Prior to joining Joy Global Inc., Mr. Woodward was Executive Vice President and Chief Financial Officer of JLG Industries, Inc. from August 2000 until its sale in December 2006. Prior to JLG Industries, Inc., Mr. Woodward held various financial positions at Dana Corporation since 1982. Mr. Woodward holds a B.A. degree in Accounting from Michigan State University.

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Edmund M. Carpenter was elected as one of our directors in March 2007. Mr. Carpenter was President and Chief Executive Officer of Barnes Group Inc. from 1998 until his retirement in December 2006. Prior to joining Barnes Group Inc., Mr. Carpenter was Senior Managing Director of Clayton, Dubilier & Rice from 1996 to 1998, and Chief Executive Officer of General Signal from 1988 to 1995. He has served as a director at Campbell Soup Company since 1990 and Dana Corporation since 1991. He holds both an M.B.A. and a B.S.E. in Industrial Engineering from the University of Michigan.

Compensation Committee Interlocks and Insider Participation

During our last completed fiscal year, none of our executive officers served on our compensation committee or served on the compensation committee or board of directors of any other company of which any of our directors is an executive officer.

Mr. Richard Paterson and Mr. Darren Gold are employees of Genstar Capital, our largest stockholder. Please see “Certain Relationships and Related Party Transactions” for a description of Genstar Capital’s relationship with us.

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EXECUTIVE COMPENSATION

Compensation of Named Executives

The following table summarizes all compensation paid to our principal executive officer, our principal financial officer and to our three other most highly compensated executive officers whose total annual salary and bonus exceeded $100,000 for services rendered in all capacities to us during the year ended December 31, 2006. We will refer to these executive officers as the named executive officers. All references to shares, stock, restricted stock and options refer to shares, stock, restricted stock and options of Altra Holdings, our parent.

Summary Compensation Table

									Long-Term
									Compensation
									Restricted
	Annual Compensation								Stock						Total
			Salary		Bonus		Other		Awards			All Other			Compensation
Name & Principal Position	Year		($)		($)		($)		($)			($)			($)
Michael L. Hurt		2006	$	373,190	$	521,902		—	$	1,258,164	(1)	$	26,587	(6)	$	2,179,843
Chief Executive Officer
Carl R. Christenson		2006	$	273,542	$	320,650		—	$	646,334	(2)	$	25,127	(6)	$	1,265,653
President & Chief Operating Officer
David A. Wall		2006	$	228,750	$	214,544		—	$	7,410	(3)	$	25,068	(6)	$	475,772
Chief Financial Officer
Edward L. Novotny		2006	$	187,600	$	132,239		—	$	3,705	(4)	$	25,967	(6)	$	349,511
Vice President and General Manager of Boston Gear, Formsprag, Steiber and Huco Business Units
Gerald Ferris		2006	$	184,037	$	169,303		—	$	3,705	(5)	$	20,793	(7)	$	377,838
Vice President of Global Sales

(1)	Includes two-fifths of the shares granted to Mr. Hurt in 2006 and one-fifth of the vested shares granted to Mr. Hurt in each of 2004 and 2005. The aggregate restricted stock holdings of Mr. Hurt at the end of 2006 were 847,259 shares.
(2)	Includes two-fifths of the shares granted to Mr. Christenson in 2006 and one-fifth of the vested shares granted to Mr. Christenson in 2005. The aggregate restricted stock holdings of Mr. Christenson at the end of 2006 were 568,221 shares.
(3)	Includes one-fifth of vested shares granted to Mr. Wall in 2005. The aggregate restricted stock holdings of Mr. Wall at the end of 2006 were 220,500 shares.
(4)	Includes one-fifth of the shares granted to Mr. Novotny in 2005. The aggregate restricted stock holdings of Mr. Novotny at the end of 2006 were 126,000 shares.
(5)	Includes one-fifth of vested shares granted to Mr. Ferris in 2005. The aggregate restricted stock holdings of Mr. Ferris at the end of 2006 was 110,250 shares.
(6)	Represents our 401(k) contribution of $13,200, premiums paid for medical and dental insurance of $8,000 and premiums paid for life and disability benefits.
(7)	Represents our 401(k) contribution of $7,650, premiums paid for medical and dental insurance of $8,000 and premiums paid for life and disability benefits.

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The following table presents information regarding grants of plan based awards to our named executive officers during the fiscal year ended December 31, 2006.

Grants of Plan-Based Awards

	Estimated Future Payouts														All Other
	Under Non-Equity Incentive														Stock Num		Market
	Plan Awards						Estimated Further Payouts Under Equity Incentive Plan Awards								Share		Price on		Grant Date Fair
			Threshold		Target		Maximum		Threshold		Target		Maximum		Stock Units		Grant		Value of Stock &
Name	Grant Date		($)		($)		($)		(#)		(#)		(#)		(#)		Date		Option Awards
Michael L. Hurt(1)		August 30,2006		—		—		—		203,899		203,899		203,899		—	$	16.00	$	3,262,384
Carl R. Christenson(2)		August 30,2006		—		—		—		103,857		103,857		103,857		—	$	16.00	$	1,661,704
David A. Wall				—		—		—		—		—		—		—		—		—
Edward L. Novotny				—		—		—		—		—		—		—		—		—
Gerald Ferris				—		—		—		—		—		—		—		—		—

(1)	81,559 shares vest in January 2007 and 40,780 shares vest in January 2008, 2009 and 2010.
(2)	41,554 shares vest in January 2007 and 20,771 shares vest in January 2008, 2009 and 2010.

The following table presents information concerning the number and value of restricted stock that has not vested for our named executive officers outstanding as of the end of the fiscal year ended December 31, 2006.

Outstanding Equity at Fiscal Year-End

									Stock Awards
												Market
									Number of			Value of
									Shares or			Shares or
	Option Awards								Units of			Units of
			Number of						Stock			Stock
	Number of		Securities		Option		Option		That Have			That Have
	Options		Options		Price		Expiration		Not Vested			Not Vested
	(#)		(#)		($)		Date		(#)			($)
Michael L.Hurt		—		—		—		—		564,632	(1)	$	7,933,078
Carl R. Christenson		—		—		—		—		415,857	(2)	$	5,842,784
David A. Wall		—		—		—		—		156,000	(3)	$	2,191,800
Edward L. Novotny		—		—		—		—		78,000	(4)	$	1,095,900
Gerald Ferris		—		—		—		—		78,000	(4)	$	1,095,900

(1)	149,792 shares will vest in January 2007; 29,267 shares will vest in October 2007, 2008 and 2009; and 109,013 shares will vest in January 2008, 2009 and 2010.
(2)	119,544 shares will vest in January 2007, and 98,771 shares will vest in January 2008, 2009 and 2010.
(3)	39,000 shares will vest in January 2007, 2008, 2009 and 2010.
(4)	19,500 shares will vest in January 2007, 2008, 2009 and 2010.

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The following table presents information concerning the vesting of restricted stock for our named executive officers during the fiscal year ended December 31, 2006. Neither we nor Altra Holdings have granted any options.

Option Exercises and Stock Vested

	Number of				Number of
	Shares				Shares
	Acquired		Value Realized		Acquired		Value Realized
	on Exercise		on Exercise		on Vesting		on Vesting
Name	(#)		($)		(#)		($)
Michael L. Hurt		—		—		97,500	$	580,176
Carl R. Christenson		—		—		78,000	$	127,920
David A. Wall		—		—		39,000	$	63,960
Edward L. Novotny		—		—		19,500	$	31,980
Gerald Ferris		—		—		19,500	$	31,980

Pension Benefits

The following table presents information concerning payments or other benefits for our named executive officers in connection with their retirement.*

		Number of		Present Value		Payments
		Years Credited		of Accumulated		During Last
Name	Plan Name	Service (#)		Benefits ($)		Fiscal Year
Michael L. Hurt	—		—		—		—
Carl R. Christenson	—		—		—		—
David A. Wall	—		—		—		—
Edward L. Novotny	—		—		—		—
Gerald Ferris(1)	Altra Industrial Motion, Inc. Retirement Plan		21	$	310,756		0

*

For further discussion of the valuation method and material assumptions used in quantifying the present value of accumulated benefit, see Note 9 of our Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

(1)

Reflects pension benefits accrued for Mr. Ferris under PTH’s Colfax PT Pension Plan, which Altra assumed in connection with its acquisition of PTH. Mr. Ferris’s participation in and benefits accrued under such plan were frozen since December 31, 1998. Altra Industrial Motion, Inc. Retirement Plan manages the assumed liabilities under the Colfax Plan. Under the provisions of the Colfax Plan, upon reaching the normal retirement age of 65, Mr. Ferris will receive annual payments of approximately $38,700. Mr. Ferris is eligible to receive a reduced annual payment in the event of his early retirement.

2004 Equity Incentive Plan

Our 2004 Equity Incentive Plan, or Incentive Plan, permits the grant of restricted stock, stock units, stock appreciation rights, cash, non-qualified stock options and incentive stock options to purchase shares of Altra Holdings’ common stock, par value $0.001 per share. Currently, the maximum number of shares of Altra Holdings’ common stock that may be issued under the terms of the Incentive Plan is 3,004,256 and the maximum number of shares that may be subject to “incentive stock options” (within the meaning of Section 422 of the Code) is 1,750,000 shares. The Compensation Committee administers the Incentive Plan and has discretion to establish the specific terms and conditions for each award. Our employees, consultants and directors are eligible to receive awards under our Incentive Plan. Stock options, stock appreciation rights, restricted stock, stock units and cash awards may constitute performance-based awards in accordance with Section 162(m) of the Code at the discretion of the Compensation Committee. Any grant of restricted stock under the Incentive Plan may be subject to vesting requirements, as provided in its applicable award

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agreement, and will generally vest in five equal annual installments. The Compensation Committee may provide that any time prior to a change in control, any outstanding stock options, stock appreciation rights, stock units and unvested cash awards shall immediately vest and become exercisable and any restriction on restricted stock awards or stock units shall immediately lapse. In addition, the Compensation Committee may provide that all awards held by participants who are in our service at the time of the change of control, shall remain exercisable for the remainder of their terms notwithstanding any subsequent termination of a participant’s service. All awards shall be subject to the terms of any agreement effecting a change of control. Other than Mr. Hurt’s grants, upon a participant’s termination of employment (other than for cause), unless the Board or committee provides otherwise: (i) any outstanding stock options or stock appreciation rights may be exercised 90 days after termination, to the extent vested, (ii) unvested restricted stock awards and stock units shall expire and (iii) cash awards and performance-based awards shall be forfeited. Under the terms of his restricted stock agreements, in the event Mr. Hurt’s employment is terminated by us other than for cause, or terminates for good reason, death or disability all of his unvested restricted stock awards shall vest automatically.

Potential Payments Upon Termination or Change-In-Control

Severance Policy

Employment Agreements

Three of our named executives, Messrs. Hurt, Christenson and Wall, entered into employment agreements with us and Altra Holdings in early January 2005. Mr. Hurt’s employment agreement was subsequently amended on December 5, 2006. Under the terms of his employment agreement, Mr. Hurt has a three-year employment term, following which the agreement will automatically renew for successive one-year terms unless either Mr. Hurt or Altra Holdings terminates the agreement upon 6 months prior notice to such renewal date. Under the terms of their respective employment agreements, Messrs. Christenson and Wall have five-year employment terms. The employment agreements contain usual and customary restrictive covenants, including 12 month non-competition provisions and non-solicitation/no hire of employees or customers provisions, non-disclosure of proprietary information provisions and non-disparagement provisions. In the event of a termination without “cause” or departure for “good reason,” the terminated senior executives are entitled to severance equal to 12 months salary, continuation of medical and dental benefits for the 12-month period following the date of termination, and an amount equal to their pro-rated bonus for the year of termination. In addition, upon such termination, all of Mr. Hurt’s unvested restricted stock received from our Incentive Plan shall automatically vest.

Under the agreements, each of Messrs. Hurt, Christenson and Wall is also eligible to participate in all compensation or employee benefit plans or programs and to receive all benefits and perquisites for which our salaried employees generally are eligible under any current or future plan or program on the same basis as our other senior executives.

As part of the compensation review process, the Compensation Committee of the Board of Directors of Altra Holdings, or the Compensation Committee, is currently reviewing the 2007 compensation levels and terms for Messrs. Hurt, Christenson and Wall with the assistance of outside consultants.

Retirement

As part of the PTH Acquisition, we agreed to assume active pension plan liabilities of PTH, including certain liabilities under its Colfax PT Pension Plan. Mr. Ferris previously participated in the Colfax PT Pension Plan; however, on December 31, 1998, his participation in and benefits accrued under such plan were frozen. Under the provisions of the plan, upon reaching the normal retirement age of 65, Mr. Ferris will receive annual payments of approximately $38,700. This amount was determined from a formula set forth in the plan and is based upon (i) a participant’s years of service, (ii) a participant’s compensation at the time the plan was frozen, and (iii) a standard set of benefit percentage multipliers. The assumed liabilities of the Colfax

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PT Pension Plan, including the retirement benefits payable to Mr. Ferris, will be managed under our Retirement Plan, which has been frozen at identical levels to the Colfax PT Pension Plan.

Change of Control

As more fully discussed in the caption “2004 Equity Incentive Plan” herein, the Compensation Committee has the authority to effect immediate vesting of various employee incentive awards upon a change of control of Altra Holdings. The Compensation Committee may provide that any time prior to a change in control, any outstanding stock options, stock appreciation rights, stock units and unvested cash awards shall immediately vest and become exercisable and any restriction on restricted stock awards or stock units shall immediately lapse. In addition, the Compensation Committee may provide that all awards held by participants who are in our service at the time of the change of control, shall remain exercisable for the remainder of their terms notwithstanding any subsequent termination of a participant’s service.

As more fully discussed under the caption “Severance Policy,” Messrs. Hurt, Christenson and Wall may be eligible to receive certain severance benefits pursuant to their respective employment agreements.

Potential Post-Employment Payments to Named Executive Officers

The table below sets forth potential payments that could be received by our named executive officers upon termination from employment with Altra Holdings, assuming such event took place on December 31, 2006 for the purposes of quantifying the amounts below. Messrs. Novotny and Ferris are not entitled to any potential post-employment payments.*

	Michael L. Hurt						Carl R. Christenson						David A. Wall
			Termination						Termination						Termination
			Without						Without						Without
			Cause		Involuntary				Cause		Involuntary				Cause		Involuntary
			or for		for Cause/				or for		for Cause/				or for		for Cause/
	Death or		Good		Voluntary		Death or		Good		Voluntary		Death or		Good		Voluntary
	Disability		Reason		Termination		Disability		Reason		Termination		Disability		Reason		Termination
Benefit	Incremental and Earned Compensation
Cash Severance(1)		—	$	373,190		—		—	$	273,875		—		—	$	228,750		—
Health Insurance(1)		—	$	8,000		—		—	$	8,000		—		—	$	8,000		—
Restricted Stock(2)(3)	$	7,933,078	$	7,933,078		—		—	$	1,145,912		—		—		—		—
Performance Bonus(1)	$	521,902	$	521,902	$	521,902	$	320,650	$	320,650	$	320,650	$	214,544	$	214,544	$	214,544
Total	$	8,454,480	$	8,836,170	$	521,802	$	320,650	$	1,748,437	$	320,650	$	214,544	$	451,294	$	214,544

(1)	Cash severance, health insurance and performance bonus amounts payable upon termination as reflected herein were determined by the terms of each of the executive’s employment agreement, which are further discussed in this prospectus under the caption “Severance Policy.”
(2)	The restricted stock values were determined using the number of shares that will immediately vest upon termination per each of the executive’s stock agreement multiplied by Altra Holdings’ stock price at December 29, 2006.
(3)	Pursuant to his restricted stock grant agreement, 83,085 shares of Mr. Christenson’s restricted stock would vest if he was terminated before January 6, 2007. As of January 6, 2007 such shares vested and the vesting upon termination indicated in the table is no longer applicable.
*	Mr. Ferris will be entitled to receive certain annual pension payments upon reaching the normal retirement age of 65 or a reduced benefit if earlier than normal retirement age, as further described in this prospectus under the caption “Retirement.” In addition, Messrs. Ferris and Novotny were both parties to transition agreements that provided for certain severance benefits upon the sale of Altra, but such transition agreements terminated on April 1, 2007 and neither Mr. Ferris nor Novotny received any payments from Altra in connection with such agreements.

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COMPENSATION DISCUSSION AND ANALYSIS

The following discussion provides an overview and analysis of our compensation programs and policies and the major factors that shape the creation and implementation of those policies. In this discussion and analysis, and in the more detailed tables and narrative that follow, we will discuss compensation and compensation decisions relating to the following persons, whom we refer to as our named executive officers:

Michael L. Hurt, Chief Executive Officer and Chairman of the Board;

Carl R. Christenson, President and Chief Operating Officer;

David A. Wall, Chief Financial Officer, Treasurer and Secretary;

Edward L. Novotny, Vice President and General Manager of Boston Gear, Formsprag, Steiber and Huco Business Units; and

Gerald Ferris, Vice President of Global Sales.

Compensation Committee

The Compensation Committee of the Board of Directors of Altra Holdings, or the Compensation Committee, has responsibility for establishing, implementing and monitoring adherence with our compensation program. The role of the Compensation Committee is to oversee, on behalf of the Board and for our benefit and our shareholders, our compensation and benefit plans and policies, review and approve equity grants to directors and executive officers and determine and approve annually all compensation relating to the CEO and our other executive officers. The Compensation Committee utilizes our Human Resources Department and reviews data from market surveys and proxy statements to assess our competitive position with respect to base salary, annual incentives and long-term incentive compensations. The Compensation Committee has the authority to engage the services of independent compensation consultants and has recently done so to perform an executive compensation study for purposes of assisting in the establishment of 2007 executive compensation. The Compensation Committee meets a minimum of four times annually to review executive compensation programs, determine compensation levels and performance targets, review management performance, and approve final executive bonus distributions.

The Compensation Committee operates in accordance with a charter which sets forth its rights and responsibilities. The Compensation Committee and the Board review the charter annually and it was recently updated in November 2006.

Objectives of Our Compensation Programs

We believe that compensation paid to executive officers should be closely aligned with our performance on both a short-term and long-term basis, and that such compensation should assist us in attracting and retaining key executives critical to our success. To this end, our compensation program for executive officers is structured to achieve the following objectives:

Recruiting and Retention of Talented Professionals

We believe that it is primarily the dedication, creativity, competence and experience of our workforce that enables us to compete, given the realities of the industry in which we operate. We aim to compensate our executives at competitive levels in order to attract and retain highly qualified professionals critical to our success. There are many important factors in attracting and retaining qualified individuals. Compensation is one of them but not the only one.

Alignment of Individual and Short-Term and Long-Term Organizational Goals

We attempt to link compensation to executive short-term performance by structuring a significant portion of executive compensation as a performance-based bonus. In particular, the level of cash incentive

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compensation is determined by the use of annual performance targets, which we believe encourages superior short-term performance.

We strive to align the long-term interests of our executives with those of our stockholders and foster an ownership mentality in our executives by giving them a meaningful stake in our success through our equity incentive programs. Our equity compensation program for executives is designed to link the long-term compensation levels of our executives to the creation of lasting shareholder value.

Rewarding Meaningful Results

We believe that compensation should be structured to encourage and reward performance that leads to meaningful results for us. Both our cash and equity incentive compensation programs are tied primarily to each executive’s contribution to earnings growth and our working capital management. Our strategy is to compensate our executives at competitive levels, with the opportunity to earn above-median compensation for above-market performance as compared to our peer group, through programs that emphasize performance-based incentive compensation in the form of annual cash payments and equity-based awards. We believe that the total compensation paid or awarded to our named executive officers during 2006 was consistent with our financial performance and the individual performance of each of the named executive officers. Based on our’s and our Compensation Committee’s analysis, we believe that the 2006 compensation was reasonable in its totality and is consistent with the compensation philosophies as described above.

Elements of Compensation

Total compensation for our executive officers consists of the following elements of pay:

•  Base salary;

•  Annual cash incentive bonus dependent on our financial performance and achievement of individual objectives;

•  Long-term incentive compensation through grants of equity-based awards. Past equity awards have been in the form of restricted stock;

•  Participation in retirement benefits through a 401(k) Savings Plan;

•  Severance benefits payable upon termination under specified circumstances to certain of our key executive officers;

•  Medical and dental benefits that are available to substantially all our employees. We share the expense of such health benefits with our employees, the cost depending on the level of benefits coverage an employee elects to receive. Our health plan offerings are the same for our executive officers and our other non-executive employees; and

•  The named executive officers are provided with the same life, short-term and long-term disability insurance benefits as our other salaried employees. Additionally, the named executive officers are provided with supplemental long-term disability benefits that are not available to all salaried employees.

What We Reward, Why We Pay Each Element of Compensation and How Each Element Relates to Our Compensation Objectives

We compensate our executives through programs that emphasize performance-based incentive compensation. We have structured annual cash and long-term non-cash compensation to motivate executives to achieve the business goals set by us and reward the executives for achieving such goals.

Base salary is intended to provide a level of income commensurate with the executive’s position, responsibilities and contributions to us. We believe the combined value of base salary plus annual cash incentives is competitive with the salary and bonus provided to similarly situated executives in the industry.

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Through our annual cash bonus program, we attempt to tailor performance goals to each individual executive officer and to our current priorities and needs. Through our long-term non-cash incentive compensation, we attempt to align the interests of our executive officers with those of our stockholders by rewarding our executives based on increases in Altra Holdings’ stock price over time through awards of restricted stock.

How We Determine the Amounts We Pay

The Compensation Committee has found it advisable to conduct a review of its executive compensation structure and practices. As permitted in its charter, the Compensation Committee has retained the services of the Hay Group, an independent compensation consultant to assist in this review. The Hay Group is assisting the Compensation Committee in assessing the current compensation and benefit programs and helping to develop future compensation and benefit programs. This includes benchmarking our current programs against industry peers and other public companies of similar size and providing insight into the structuring of compensation programs to achieve various short-term and long-term objectives while retaining key executives. The Compensation Committee expects to receive the Hay Group’s report later this year and will make a recommendation to the Board of Directors regarding the appropriate compensation structure for our executives going forward.

Base Salary

Base salaries for executives are determined based upon job responsibilities, level of experience, individual performance, comparisons to the salaries of executives in similar positions, as well as internal comparisons of the relative compensation paid to the members of our executive team.

Our CEO, Mr. Hurt, makes recommendations to the Compensation Committee with respect to the base compensation of our executives other than himself. In the case of the CEO, the Compensation Committee evaluates his performance and makes a recommendation of base compensation to the Board. These recommendations are then evaluated, discussed, modified as appropriate and ultimately approved by the Compensation Committee or the Board as appropriate. Pursuant to the employment agreements we have entered into with Messrs. Hurt, Christenson and Wall, the Board may not reduce, but may increase, their base salaries so long as their employment agreements are in effect. For further discussion of the employment agreements, please see the section entitled “Executive Compensation — Employment Agreements” in this prospectus.

Base salaries of our named executive officers for the year 2006 are disclosed in the Summary Compensation Table in this prospectus and in the table below. For the year 2007, certain of our named executive officers will receive base salaries as set forth below. Base salaries for Messrs. Hurt, Christenson and Wall are currently being reviewed as part of the Compensation Committee’s review of executive compensation. Until such review is complete, Messrs. Hurt, Christenson and Wall will receive base salary equal to that received in 2006.

						Percentage
Officer	2006 Base		2007 Base			Increase
Michael L. Hurt	$	373,190		TBD	(1)		—
Carl R. Christenson	$	273,542		TBD	(1)		—
David A. Wall	$	228,750		TBD	(1)		—
Edward L. Novotny	$	187,600	$	191,350			2.0	%
Gerald Ferris	$	184,037	$	190,575			3.6	%

(1) Officers continue to be paid at 2006 base salary rate; however, the 2007 base salary may be adjusted upon completion of the executive compensation review being conducted by the Compensation Committee with the assistance of outside consultants.

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Annual Cash Incentives

Our executive officers are eligible to participate in the Management Incentive Compensation Program, or MICP. The Compensation Committee annually establishes a target bonus opportunity. Under the MICP, the Compensation Committee approves an annual incentive cash bonus calculation for the executive officers. Our financial performance targets in 2006 were based on adjusted EBITDA and working capital management. Adjusted EBITDA is established by the Compensation Committee and consists of earnings before interest, income taxes, depreciation and amortization and is adjusted further for certain non-recurring costs, including, but not limited to, inventory fair value adjustments recorded in connection with acquisitions. The working capital management target was based on the prior year’s ending working capital. For fiscal year 2006, Messrs. Hurt, Christenson, Wall, Novotny and Ferris had target bonus percentage amounts of 60%, 50%, 40%, 35% and 40% of base salary, respectively. These percentages are then adjusted upwards or downwards based on our financial performance in relation to our targeted EBITDA and working capital numbers. Based on the approved MICP, the named executives would earn no bonus if they did not achieve at least 80% of their respective targets. Based on our performance in 2006, it achieved levels substantially in excess of the targets established by the Compensation Committee. Therefore, the Compensation Committee approved bonuses equal to 220% of the target bonus for Messrs. Hurt, Christenson, Wall and Ferris. Mr. Novotny’s award was 190% of his target bonus. The bonuses earned are fully paid in cash following the end of the year earned and after the completion of the consolidated financial statement audit.

Long-Term Incentive Compensation

Altra Holdings and we believe that equity-based compensation ensures that our executives have a continuing stake in our long-term success. Altra Holdings issues equity-based compensation in the form of restricted stock, which generally vests ratably over five years. The purpose of these equity incentives is to encourage stock ownership, offer long-term performance incentive and to more closely align the executive’s compensation with the return received by our shareholders.

Prior to 2006, Altra Holdings made grants of an aggregate of 1,267,500 shares of restricted stock to our named executive officers.

During 2006 and prior to Altra Holdings’ initial public offering, Altra Holdings granted an additional 203,899 and 103,857 shares of restricted common stock to our CEO and President and COO, respectively.

As part of its review of executive compensation following its initial public offering, the Compensation Committee is reviewing the long-term incentive compensation structure of its executive officers. Any future grants of equity-based compensation to our executive officers, if any, will be based upon the findings of such review.

Other Benefits

We have a 401(k) plan in which the named executive officers currently participate. We also have a frozen defined benefit plan from which Mr. Ferris is eligible to receive benefits. We also provide life, disability, medical and dental insurance as part of our compensation package. The Compensation Committee considers all of these plans and benefits when reviewing the total compensation of our executive officers.

The 401(k) plan offers a company match of $0.50 for every dollar contributed by a named executive officer to the plan, up to 6% of pre-tax pay. Additionally, we contribute an amount equal to 3% of a named executive’s pre-tax pay to their account regardless of the amount of the contributions made by the named executive officer.

Mr. Ferris previously participated in the Colfax PT Pension Plan, however on December 31, 1998 participation in and benefits accrued under such plan were frozen. Under the provisions of the plan, upon reaching the normal retirement age of sixty-five, Mr. Ferris will receive annual payments of approximately $38,700. As part of its acquisition of Power Transmission Holding LLC from Colfax Corporation, we assumed certain liabilities of the Colfax PT Pension Plan, including such future payments to Mr. Ferris.

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The named executive officers are provided with the same short-term and long-term disability benefits as our other salaried employees. Additionally, the named executive officers are provided with supplemental long-term disability benefits that are not available to all salaried employees.

Perquisites

We do not provide the named executive officers with perquisites or other personal benefits such as company vehicles, club memberships, financial planning assistance, tax preparation or other such benefits.

Change of Control Matters and Employment Contracts

Employment Agreements

Three of our named executives, Messrs. Hurt, Christenson and Wall, entered into employment agreements with us and Altra Holdings in early January 2005. Mr. Hurt’s employment agreement was subsequently amended on December 5, 2006. Under the terms of his employment agreement, Mr. Hurt has a three-year employment term, following which the agreement will automatically renew for successive one-year terms unless either Mr. Hurt or Altra Holdings terminates the agreement upon 6 months prior notice to such renewal date. Under the terms of their respective employment agreements, Messrs. Christenson and Wall have five-year employment terms. The employment agreements contain usual and customary restrictive covenants, including 12 month non-competition provisions and non-solicitation/no hire of employees or customers provisions, non-disclosure of proprietary information provisions and non-disparagement provisions. In the event of a termination without “cause” or departure for “good reason,” the terminated senior executives are entitled to severance equal to 12 months salary, continuation of medical and dental benefits for the 12-month period following the date of termination, and an amount equal to their pro-rated bonus for the year of termination. In addition, upon such termination, all of Mr. Hurt’s unvested restricted stock received from our Incentive Plan shall automatically vest.

Under the agreements, each of Messrs. Hurt, Christenson and Wall is also eligible to participate in all compensation or employee benefit plans or programs and to receive all benefits and perquisites for which our salaried employees generally are eligible under any current or future plan or program on the same basis as our other senior executives.

As part of the annual review process, the Compensation Committee is currently reviewing the 2007 compensation levels and terms for Messrs. Hurt, Christenson and Wall with the assistance of outside consultants.

Change of Control Provisions

Pursuant to the terms of the employment agreements discussed above under the caption “Employment Agreements,” we provide benefits to Messrs. Hurt, Christenson and Wall upon terminations of employment from us under certain circumstances. The benefits described under the caption “Employment Agreements” are in addition to the benefits to which the executives would be entitled upon a termination of employment generally (i.e. vested retirement benefits accrued as of the date of termination, stock awards that are vested as of the date of termination and the right to elect continued health coverage pursuant to COBRA).

Amounts payable to our named executive officers due to termination of employment or a change of control under any employment agreements or otherwise are disclosed in further detail in the table entitled “Executive Compensation — Potential Post-Employment Payments to Named Executive Officers” contained in this prospectus.

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OWNERSHIP OF ALTRA HOLDINGS COMMON STOCK

Securities Owned by Certain Beneficial Owners

The following table sets forth certain information as of April 16, 2007 regarding the beneficial ownership of shares of Altra Holdings common stock by: (i) each person or entity known to us to be the beneficial owner of more than 5% of Altra Holdings common stock; (ii) each of Altra Holdings named executive officers; (iii) each member of Altra Holdings Board of Directors; and (iv) all members of Altra Holdings Board of Directors and executive officers as a group.

Except as otherwise noted below, each of the following individual’s address of record is c/o Altra Holdings, Inc., 14 Hayward Street, Quincy, Massachusetts 02171.

Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock issuable upon the exercise of stock options or warrants or the conversion of other securities held by that person that are currently exercisable or convertible, or are exercisable or convertible within 60 days of April 16, 2007, are deemed to be issued and outstanding. These shares, however, are not deemed outstanding for the purposes of computing percentage ownership of each other stockholder. Percentage of beneficial ownership is based on 23,087,591 shares of common stock outstanding as of April 16, 2007.

	Securities Beneficially Owned
	Shares of Common
Name and Address	Stock Beneficially		Percentage of Common
of Beneficial Owner	Owned		Stock Outstanding
Principal Securityholders:
Genstar III GP LLC(1)		7,058,700		30.6	%
Caisse de dépôt et placement du Québec(3)		1,901,516		8.2	%
Capital Research and Management Company(2)		1,314,700		5.7	%
Directors and Named Executive Officers:
Michael L. Hurt		706,049		3.1	%
Carl R. Christenson		536,653		2.3	%
David A. Wall		208,250		*
Edward L. Novotny		119,000		*
Gerald Ferris		104,125		*
Edmund M. Carpenter		—		—
Jean-Pierre L. Conte(1)		7,058,700		30.6	%
Darren J. Gold(4)		—		—
Larry McPherson		119,343		*
Richard D. Paterson(1)		7,058,700		30.6	%
James H. Woodward Jr.		—		—
All directors and executive officers as a group (13 persons)		9,292,200		40.2	%

*

Represents beneficial ownership of less than 1%.

(1)

Genstar III GP LLC, a Delaware limited liability company (“Genstar LLC”) is the sole general partner of Genstar Capital III, L.P., a Delaware limited partnership (“Genstar Capital”), which exercises investment discretion and control over 6,813,132 shares held by Genstar Capital Partners III, L.P., a Delaware limited partnership (“Genstar III”) and 245,568 shares held by Stargen III, L.P., a Delaware limited partnership (“Stargen”). Messrs. Jean-Pierre L. Conte and Richard D. Paterson are managing members of Genstar LLC. Mr. Conte is also the chairman and a managing director of Genstar Capital, and Mr. Paterson is a managing director of Genstar Capital. In such capacities, each of Messrs. Conte and Paterson may be deemed to share beneficial ownership of the shares shown as beneficially owned by Genstar III and

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	Stargen, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein. The address of Genstar LLC, Genstar Capital, Genstar III and Stargen is Four Embarcadero Center, Suite 1900, San Francisco, California 94111.
(2)	The address of Capital Research and Management Company is 333 South Hope Street, Los Angeles, CA 90071. Share amounts listed are derived from Capital Research and Management Company’s Schedule 13G filed with the SEC on February 12, 2007.
(3)	Caisse de dépôt et placement du Québec (“CDPQ”) is a limited partner of Genstar III and its address is 1000 place Jean-Paul-Riopelle, Montreal, Quebec. Luc Houle, Senior Vice President, Investments-Manufacturing Sector and Louise Lalonde, Investment Director-Manufacturing, may be deemed to share beneficial ownership of the shares shown as beneficially owned by CDPQ and exercise voting and investment control over such shares. Mr. Houle and Ms. Lalonde disclaim beneficial ownership of all such shares.
(4)	Mr. Gold is a Managing Director of Genstar III. Mr. Gold does not directly or indirectly have or share voting or investment power or the ability to influence voting or investment power over the shares shown as beneficially owned by Genstar III

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Equity Investments

Genstar & CDPQ Purchase.  In connection with the PTH Acquisition, the Genstar Funds and Caisse de dépôt et placement du Québec, or CDPQ, purchased approximately 26.3 million shares of preferred stock of Altra Holdings for approximately $26.3 million.

Pursuant to the initial public offering of Altra Holdings, the Genstar Funds and CDPQ sold 5,933,801 and 1,598,484 shares, respectively, of Altra Holdings common stock and now own a total of 7,058,700 shares and 1,901,516 shares, respectively.

The Kilian Transactions.  Prior to our organization, the Genstar Funds formed Kilian to facilitate an acquisition of the Kilian Manufacturing Corporation from Timken U.S. Corporation. Michael L. Hurt, our CEO, purchased 5,000 shares of Kilian preferred stock at a price of $100 per share upon its formation. In addition, Mr. Hurt served as CEO of Kilian and received 2,922 shares of Kilian restricted common stock pursuant to Kilian’s equity incentive plan. On October 22, 2004, Kilian acquired Kilian Manufacturing Corporation from Timken U.S. Corporation for $8.8 million in cash and the assumption of $12.2 million of debt.

Prior to the consummation of the PTH Acquisition, the Genstar Funds determined that the Kilian and PTH businesses should be combined. Consequently, concurrently with the consummation of the PTH Acquisition, the Genstar Funds, Mr. Hurt, and certain other Kilian investors exchanged all of their Kilian preferred stock, at a value of $8.8 million, for an additional 8.8 million shares of our preferred stock. In addition, members of Kilian’s management who had received a total of 8,767 shares of Kilian restricted common stock, exchanged all such shares for a total of 439,057 shares of Altra Holdings’ restricted common stock pursuant to Altra Holdings’ equity incentive plan. As part of this exchange, Mr. Hurt exchanged his 5,000 shares of Kilian preferred stock for 500,000 shares of Altra Holdings’ preferred stock and his 2,922 shares of Kilian restricted common stock for 146,336 shares of Altra Holdings’ restricted common stock. The Kilian preferred stock and restricted common stock received from these exchanges represented all of the outstanding ownership interests in Kilian.

Contribution to Us.  All of the cash and Kilian preferred stock received by Altra Holdings from such sales of its preferred stock were contributed to us, and the cash portion thereof provided a portion of the funds necessary to complete the PTH Acquisition.

Employee Grants and Sales.  In January 2005 and January 2006, Altra Holdings issued an aggregate of 1,394,165 shares and 39,000 shares, respectively, of its restricted common stock to members of our management pursuant to Altra Holdings’ equity incentive plan. In addition, in August 2006 Altra Holdings issued 203,899 shares of its restricted common stock to Mr. Hunt and 103,857 shares of its restricted common stock to Carl Christenson, our President and COO, in each case, pursuant to Altra Holdings’ equity incentive plan.

In 2005, subsequent to their date of hire, Mr. Christenson and David Wall, our CFO, also purchased 300,000 and 100,000 shares of Altra Holdings’ preferred stock for a purchase price of $300,000 and $100,000, respectively.

CDPQ Subordinated Notes Investment

In connection with the PTH Acquisition, CDPQ entered into a note purchase agreement with Altra Holdings, pursuant to which CDPQ purchased $14.0 million of Altra Holdings’ subordinated notes, to provide a portion of the funds necessary to complete the transaction.

During 2006, we repaid the outstanding balance under the CDPQ subordinated notes.

Genstar Advisory Services Agreement

In connection with the PTH Acquisition, we entered into an advisory services agreement with Genstar Capital, L.P., an affiliate of Genstar Management LLC, for management, business strategy, consulting and

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financial advisory and acquisition related services to be provided to us and our subsidiaries. The agreement provides for the payment to Genstar Capital, L.P. of an annual fee of $1 million (payable quarterly) for advisory and other consulting services. In addition, Genstar Capital, L.P. is entitled to receive an advisory fee of 2% of the aggregate consideration relating to any merger, acquisition, disposition or other strategic transactions, as approved by our board of directors, plus reimbursement of out-of-pocket expenses, including legal fees. Following the completion of the initial public offering of Altra Holdings’ common stock and payment of a $3.0 million fee to Genstar Capital L.P., the advisory services agreement terminated in accordance with its terms.

Management Consulting Service Fees

Following the consummation of the PTH Acquisition, our board of directors granted, and Mr. Hurt and Frank E. Bauchiero, one of our former directors, were paid, one-time consulting fees of $125,000 and $75,000, respectively, for certain consulting and advisory services rendered to us in connection with the PTH Acquisition.

Severance Agreements

Upon completion of the PTH Acquisition, we assumed severance agreements with certain of our named executive officers as described in “Management — Severance Agreements.” As of December 31, 2005 all severance agreements had expired.

Indebtedness of Management

On January 10, 2006, we loaned Mr. Wall $100,000 at an interest rate of 4.05%, our then current rate of funds. The loan was paid in full and terminated on March 22, 2006.

Bear Linear Acquisition

On May 18, 2006, we entered into a purchase agreement with Bear Linear and certain of its members to purchase the business and substantially all of the assets of Bear Linear for $5.0 million. We based the value of Bear Linear on a multiple of the estimated future earnings of the business. Bear Linear was founded by its three members in 2001 and manufactured high value-added linear actuators for mobile off-highway and industrial applications. One of the three members of Bear Linear, Robert F. Bauchiero, is the son of Frank E. Bauchiero, who served as a member of our board of directors at that time. Our Board of Directors unanimously approved the acquisition of Bear Linear which was conducted by arms-length negotiations between the parties.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

Senior Revolving Credit Facility

We summarize below the principal terms of the agreements that govern our senior revolving credit facility. This summary is not a complete description of all of the terms of the agreements.

General.  On November 30, 2004, the Borrowers entered into a senior revolving credit facility with the lenders signatory thereto and Wells Fargo Foothill, Inc., as the arranger and administrative agent. The senior revolving credit facility is in an aggregate amount of up to $30.0 million. Up to $10.0 million of the senior revolving credit facility is available in the form of letters of credit and amounts repaid under the senior revolving credit facility may be reborrowed (subject to satisfaction of the applicable borrowing conditions, including availability under a borrowing base formula) at any time prior to the maturity of the senior revolving credit facility, which will be November 30, 2009. Our availability under the senior revolving credit facility is based on a formula that calculates the borrowing base, based on a percentage of the value of accounts receivable, inventory, owned real property and equipment, subject to customary eligibility requirements and net of customary reserves. All borrowings are subject to the satisfaction of customary conditions, including delivery of borrowing notice, accuracy of representations and warranties in all material respects and absence of defaults. Proceeds of the senior revolving credit facility will be used to provide working capital and for general corporate purposes, including permitted acquisitions, if any, and general corporate needs.

Interest and Fees.  Borrowings under the senior revolving credit facility bear interest, at our option, at the prime rate plus 1.25%, in the case of prime rate loans, or the LIBOR rate plus 2.50%, in case of LIBOR rate loans. At no time will the indebtedness under the senior revolving credit facility bear interest at a rate per annum less than 3.75%.

We will pay 2.0% per annum on all outstanding letters of credit, unused revolver fees in an amount equal to 0.375% per year on the unused commitments under the senior revolving credit facility, and servicing fees of $10,000 per quarter. These fees are payable quarterly in arrears and upon the maturity or termination of the commitments, calculated based on the number of days elapsed in a 360-day year. We paid a one-time closing fee of $375,000 to Wells Fargo Foothill, Inc. and approximately $1.2 million of related accounting, legal and other professional fees.

Guarantees and Collateral.  Certain of our existing and subsequently acquired or organized domestic subsidiaries which are not Borrowers do and will guarantee (on a senior secured basis) the senior revolving credit facility. Obligations of the other Borrowers under the senior revolving credit facility and the guarantees are secured by substantially all of the Borrowers’ assets and the assets of each of our existing and subsequently acquired or organized domestic subsidiaries that is a guarantor of our obligations under the senior revolving credit facility (with such subsidiaries being referred to as the “U.S. subsidiary guarantors”), including but not limited to: (a) a first-priority pledge of all the capital stock of subsidiaries held by all of the Borrowers or any U.S. subsidiary guarantor (which pledge, in the case of any foreign subsidiary, will be limited to 100% of any non-voting stock and 65% of the voting stock of such foreign subsidiary) and (b) perfected first-priority security interests in and mortgages on substantially all of the tangible and intangible assets of each Borrower and U.S. subsidiary guarantor, including accounts receivable, inventory, equipment, general intangibles, investment property, intellectual property, real property (other than (i) leased real property and (ii) the Borrowers’ existing and future real property located in the State of New York), cash and proceeds of the foregoing (in each case subject to materiality thresholds and other exceptions).

Covenants and Other Matters.  The senior revolving credit facility requires us to comply with a minimum fixed charge coverage ratio (when availability falls below $12,500,000) of 1.20 for all four quarter periods ended December 31, 2006 and thereafter. There is a maximum annual limit on capital expenditures from $11.0 million for fiscal year 2007 to $10.3 million for fiscal year 2009 and each fiscal year thereafter, provided that unspent amounts from prior periods may be used in future fiscal years.

We would suffer an event of default under the senior revolving credit facility for a change of control if: (i) prior to an initial public offering, 50% of our voting stock is no longer beneficially owned by Genstar

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Capital, L.P. and its affiliates, (ii) after an initial public offering, if a person or group, other than Genstar Capital, L.P. and its affiliates, beneficially owns more than 35% of Altra Holdings’ stock and such amount is more than the amount of shares owned by Genstar Capital, L.P. and its affiliates, (iii) we cease to own or control 100% of each of our borrower subsidiaries, or (iv) a change of control occurs under the notes or any other subordinated indebtedness.

We would cause an event of default under the senior revolving credit facility if an event of default occurs under the indenture or if there is a default under any other indebtedness any Borrower may have involving an aggregate amount of $3.0 million or more and such default: (i) occurs at final maturity of such debt, (ii) allows the lender thereunder to accelerate such debt or (iii) causes such debt to be required to be repaid prior to its stated maturity. An event of default would also occur under the senior revolving credit facility if any of the indebtedness under the senior revolving credit facility ceases to be senior in priority to any of our other contractually subordinated indebtedness, including the obligations under the 9% senior secured notes and the 111/4% senior notes.

We entered into amendments to our senior revolving credit facility to permit the TB Wood’s Acquisition and Related Transactions, including the offering of the old notes. Further, we entered into amendments to the facility to (i) reduce certain rates of interest charged and fees paid thereunder, (ii) extend the maturity thereof from November 30, 2009 to November 30, 2010 and (iii) increase the maximum annual limit on capital expenditures permitted thereunder.

The senior revolving credit facility contains customary representations and warranties and affirmative covenants.

9% Senior Secured Notes due 2011

As of December 31, 2006, we had outstanding 9% senior secured notes in an aggregate principal amount of $165.0 million (the “existing notes”). The old notes were, and the registered notes will be, issued pursuant to the indenture governing the existing notes. For a description of the terms of the notes and the 9% senior secured notes, see “Description of the Notes.”

111/4% Senior Notes due 2013

As of December 31, 2006, we had outstanding 111/4% senior notes in an aggregate principal amount of £33 million. The 111/4% senior notes are our general obligations. The 111/4% senior notes are effectively subordinated to all of our secured indebtedness, including the senior revolving credit facility and the 9% senior secured notes. The senior notes are unconditionally guaranteed by all of our existing and future domestic restricted subsidiaries. The indenture governing our 111/4% senior notes contains covenants that are substantially similar to those governing the 9% senior secured notes except with respect to security.

Mortgage

In June 2006, our German subsidiary, Stieber GmbH, entered into a mortgage on its building in Heidelberg, Germany with a local bank. The mortgage has a principal of €2.0 million and an interest rate of 5.75% and is payable in monthly installments over 15 years.

Capital Leases

We have entered into capital leases for certain buildings and equipment. As of December 31, 2006 we had approximately $1.6 million of outstanding capital lease obligations.

TB Wood’s Indebtedness

Senior Secured Credit Facility.  As of December 31, 2006, TB Wood’s had approximately $8.4 million outstanding under a senior secured credit facility. Borrowings under the senior secured credit facility bear variable interest of a margin plus LIBOR or U.S. Prime Rate. The average borrowing rate for TB Wood’s under the senior secured credit facility at December 31, 2006 was 7.86%. The senior secured credit facility is

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secured by substantially all of TB Wood’s domestic assets and pledges of 65% of the outstanding stock of its Canadian, German and Mexican subsidiaries. In connection with the TB Wood’s Acquisition and Related Transactions, the senior secured credit facility was amended and restated to reflect Wells Fargo Foothill, Inc. as the lender, permitting TB Wood’s and its domestic subsidiaries to guarantee and pledge their assets to secure our obligations under our existing senior secured revolving credit facility and the 9% senior secured notes (including the registered notes) and to guarantee our obligations under our 111/4% senior notes, eliminating the covenant restricting dividends and changing the covenants and events of default to be substantially the same as under our existing senior revolving credit facility.

Variable Rate Demand Revenue Bonds.  TB Wood’s previously borrowed approximately $3.0 million and $2.3 million by issuing variable rate demand revenue bonds under the authority of the industrial development corporations of the City of San Marcos, Texas and City of Chattanooga, Tennessee, respectively. The variable rate demand revenue bonds bear variable interest rates (3.77% at December 31, 2006) and mature in April 2024 and April 2022. The variable rate demand revenue bonds were issued to finance production facilities for TB Wood’s manufacturing operations located in those cities, and are secured by letters of credit issued under the terms of TB Wood’s loan agreement. The variable rate demand revenue bonds remain outstanding.

Foreign Revolving Credit Facility and Term Loan.  As of December 31, 2006, $0.4 million was outstanding under the terms of an unsecured revolving credit facility and a term loan, each borrowed by TB Wood’s Italian subsidiary. Interest only was payable on the term loan during 2004, and principal repayments commenced beginning in 2005. The rates for these loans ranged from 1.3% to 3.9%.

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DESCRIPTION OF THE NOTES

The old notes were, and the registered notes will be, issued under an indenture dated as of November 30, 2004 (the “Indenture”), as amended, among the Company, the Guarantors and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”), pursuant to which we issued the existing notes. The registered notes will have identical terms to the old notes and the existing notes. The registered notes will constitute the same series of securities on our outstanding senior secured notes for purposes of the Indenture, and will vote together on all matters with such notes. The Indenture is subject to and governed by the Trust Indenture Act of 1939, as amended (the “TIA”), and the terms of the notes will include those stated in the Indenture and those made part of the Indenture by reference to the TIA.

The following description is only a summary of the material provisions of the Indenture. We have filed copies of the Indenture as an exhibit to the registration statement of which this prospectus forms a part. You may also request copies of this agreement at our address set forth under the heading “— Available Information.” We urge you to read the Indenture because it, not this description, defines your rights as holders of the notes.

In the following summary:

•  “registered notes” refers to the registered notes being offered by this prospectus;

•  “old notes” refers to your old notes that may be exchanged for new notes in the exchange offer;

•  references to the “Company” include only Altra Industrial Motion, Inc. and not any of its subsidiaries; and

•  you can find definitions of various terms under the subsection “— Certain Definitions.”

The Company will issue the registered notes solely in exchange for an equal principal amount of old notes in denominations of $1,000 and integral multiples of $1,000. The Trustee will initially act as Paying Agent and Registrar. The old notes may be presented for registration or transfer and exchange at the offices of the Registrar. The Company may change any Paying Agent and Registrar without notice to holders of the notes. Any old notes that remain outstanding after the completion of this exchange offer, together with the registered notes issued in connection with this exchange offer, will be treated as a single class of securities under the Indenture.

Except if the context otherwise expressly requires, for purposes of the covenants, events of default, redemption and other terms of the notes described in this section, the term “Notes” includes the registered notes and the old notes.

Brief Description of the Notes and the Guarantees

The Notes

The Notes will:

•  be senior obligations of the Company;

•  rank equally in right of payment with all existing and future senior obligations of the Company (including under the Credit Agreement and the senior unsecured notes) and senior in right of payment to all existing and future Indebtedness that by its terms is subordinated to the Notes;

•  be secured by second priority security interests in substantially all of the assets of the Company, subject to Permitted Liens; and

•  be unconditionally guaranteed, jointly and severally, by all of the Company’s Domestic Restricted Subsidiaries, as set forth under “— Guarantees” below.

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The Guarantees

Each Guarantee of a Guarantor will:

•  be a senior obligation of such Guarantor;

•  rank equally in right of payment with all existing and future senior obligations of such Guarantor (including under the Credit Agreement and the senior unsecured notes) and senior in right of payment to all existing and future Indebtedness that by its terms is subordinated to the Guarantee of such Guarantor; and

•  be secured by a second priority security interest in substantially all of the assets of such Guarantor, subject to Permitted Liens.

The Notes will be effectively subordinated to all first priority secured Indebtedness of the Company to the extent of the assets securing such Indebtedness, including, without limitation, Indebtedness of the Company under the Credit Agreement, Purchase Money Indebtedness, Capitalized Lease Obligations, secured Acquired Indebtedness and other secured Indebtedness permitted to be incurred under the Indenture.

The Notes will be structurally subordinated to all of the existing and future liabilities of our non-guarantor subsidiaries. In the event of a bankruptcy, liquidation or reorganization of any of our non-guarantor subsidiaries, such non-guarantor subsidiaries will pay the holders of their debt, their trade creditors and holders of preference shares, if any, before they will be able to distribute any of their assets to the Company. As of December 31, 2006, the aggregate total assets (based on book value) of our non-guarantor subsidiaries were $138.3 million, representing approximately 33.8% of our total assets (based on book value). See “Risk Factors — Risks Related to the Registered Notes — The notes will be structurally subordinated to all obligations of our non-guarantor subsidiaries.”

As of the date of this prospectus, all of our Subsidiaries will be Restricted Subsidiaries. However, under certain circumstances in compliance with “— Certain Covenants — Limitation on Restricted Payments,” we will be permitted to designate certain of our Subsidiaries as “Unrestricted Subsidiaries.”

Principal, Maturity and Interest

The Company will issue the registered notes in fully registered form in denominations of $1,000 and integral multiples thereof. The Notes are unlimited in aggregate principal amount, of which $165.0 million in aggregate principal amount were issued on November 30, 2004 and $105.0 million in aggregate principal amount will be issued in the exchange offer. The Company may issue additional Notes (the “Additional Notes”) from time to time, subject to compliance with the terms of the Indenture. The Notes and any Additional Notes will be substantially identical other than the issuance dates. Unless the context otherwise requires, for all purposes of the Indenture and this “Description of the Notes,” references to the Notes include any Additional Notes. Any Additional Notes issued after this exchange offer will be secured equally and ratably with the Notes. As a result, the issuance of Additional Notes will have the effect of diluting the security interest in the Collateral for the then outstanding Notes. Because any Additional Notes may not be fungible with the Notes for federal income tax purposes, they may have a different CUSIP number or numbers and be represented by a different global Note or Notes.

The Notes will mature on December 1, 2011.

Interest on the Notes will be payable semiannually in cash on each June 1 and December 1, commencing on June 1, 2007 to the Persons who are registered Holders at the close of business on each May 15 and November 15 immediately preceding the applicable interest payment date. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including December 1, 2006. Interest on the Notes will accrue at a rate per annum of 9%.

Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Additional Interest may accrue on the Notes in certain circumstances pursuant to the Registration Rights Agreement.

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Collateral

The Notes and the Guarantees will be secured by a second priority lien on substantially all of the assets of the Company and the Guarantors (other than the Syracuse Facility and any other existing and future owned real property located in the State of New York), including a pledge of the Capital Stock owned directly by the Company and the Guarantors; provided, that no such pledge will include more than 65% of the Voting Stock of our Foreign Subsidiaries directly owned by the Company or any Guarantor. In the event that we or the Guarantors, as applicable, execute first-priority mortgages of the Syracuse Facility or any other existing and future owned real property in the State of New York under the Credit Agreement in the future, the Indenture provides that we must simultaneously execute second-priority mortgages of such real property in favor of the Collateral Agent for the benefit of the Holders of the Notes.

The Indenture provides that mortgages, title insurance commitments and policies, and surveys, together with opinions of counsel in respect of such mortgages reasonably acceptable to the Initial Purchaser, in respect of any future owned real properties must be executed and delivered within 90 days after the acquisition of such property.

The Collateral securing the Notes and the Guarantees also serves as collateral to secure the obligations under the Credit Agreement. The Company, the Guarantors and the Collateral Agent, on behalf of itself, the Trustee and the Holders, and the Administrative Agent, on behalf of itself and the Lenders, entered into the Intercreditor Agreement on November 30, 2004. The Intercreditor Agreement provides, among other things, that:

(1) Liens on the assets securing the Notes will be junior to the Liens in favor of the Administrative Agent under the Credit Agreement, and consequently, the Lenders will be entitled to receive proceeds from the foreclosure of any such assets prior to the Holders,

(2) during any insolvency proceedings, the Administrative Agent and the Collateral Agent will coordinate their efforts to give effect to the relative priority of their security interests in the Collateral, and

(3) the procedure for enforcing the Liens on the collateral, including (a) the distribution of sale, insurance or other proceeds of the Collateral and (b) permitting the Administrative Agent and the Lenders under the Credit Agreement to enter into and use the Collateral securing the Notes in order to realize on their collateral.

The Intercreditor Agreement also provides that the Collateral Agent and the Administrative Agent will provide notices to each other with respect to the occurrence of events of default and the acceleration of the Notes or the Indebtedness outstanding under the Credit Agreement, as the case may be.

Upon the occurrence of an Event of Default, the proceeds from the sale of Collateral securing the Notes may be insufficient to satisfy the Company’s obligations under the Notes. No appraisals of any of the Collateral have been prepared in connection with the offering of the Notes. Moreover, the amount to be received upon such a sale would be dependent upon numerous factors, including the condition, age and useful life of the Collateral at the time of the sale, as well as the timing and manner of the sale. By its nature, all or some of the Collateral will be illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the Collateral, if saleable, can be sold in a short period of time.

Subject to the terms of the Collateral Agreements, the Company and the Guarantors have the right to remain in possession and retain exclusive control of the Collateral securing the Notes to freely operate the Collateral and to collect, invest and dispose of any income therefrom in their sole discretion.

The security interests granted by the Company and the Guarantors that secure the Notes and the Guarantees will also be junior to Permitted Liens securing other existing Indebtedness. Subject to the restrictions on incurring Indebtedness in the Indenture and the Credit Agreement, the Company and its Restricted Subsidiaries also have the right to grant Liens securing Acquired Indebtedness, Capital Lease Obligations and Purchase Money Indebtedness.

To the extent third parties hold Permitted Liens, such third parties may have rights and remedies with respect to the property subject to such Liens that, if exercised, could adversely affect the value of the

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Collateral. Given the intangible nature of certain of the Collateral, any such sale of such Collateral separately from the assets of the Company as a whole may not be feasible. The ability of the Company to grant or perfect a security interest in certain Collateral may be limited by legal or other logistical considerations. The ability of the Holders to realize upon the Collateral may be subject to certain bankruptcy law limitations in the event of a bankruptcy. See “— Certain Bankruptcy and Other Limitations.”

The Company is permitted to form new Restricted Subsidiaries and, subject to certain restrictions in the Indenture and the Credit Agreement, to transfer all or a portion of the Collateral to one or more of its Restricted Subsidiaries; provided, that each such new Restricted Subsidiary will be required to execute a Guarantee in respect of the Company’s obligations under the Notes and the Indenture and a supplement to the Security Agreement granting to the Collateral Agent a security interest in all of the assets of such Restricted Subsidiary on the same basis and subject to the same limitations as described in this section. See “— Certain Covenants — Additional Subsidiary Guarantees.”

So long as no Event of Default shall have occurred and be continuing, and subject to certain terms and conditions in the Indenture and the Collateral Agreements, each of the Company and the Guarantors will be entitled to receive all cash dividends, interest and other payments made upon or with respect to the equity interests of any of its Subsidiaries and to exercise any voting, consensual rights and other rights pertaining to such Collateral pledged by it. Upon the occurrence and during the continuance of an Event of Default upon notice from the Collateral Agent, and subject to the Intercreditor Agreement,

(a) all rights of the Company or such Guarantor, as the case may be, to exercise such voting, consensual rights, or other rights shall cease and all such rights shall become vested in the Collateral Agent, which, to the extent permitted by law, shall have the sole right to exercise such voting, consensual rights or other rights,

(b) all rights of the Company or such Guarantor, as the case may be, to receive cash dividends, interest and other payments made upon or with respect to the Collateral shall cease, and such cash dividends, interest and other payments shall be paid to the Collateral Agent, and

(c) the Collateral Agent may sell the Collateral or any part thereof in accordance with, and subject to the terms of, the Collateral Agreements.

All funds distributed under the Collateral Agreements and received by the Collateral Agent for the ratable benefit of the Holders shall be distributed by the Collateral Agent in accordance with the provisions of the Indenture.

The collateral release provisions of the Indenture permit the release of Collateral without substitution of collateral having at least equal value under certain circumstances, including asset sales or dispositions made in compliance with the Indenture.

The Company will be entitled to releases of assets (including Capital Stock of Restricted Subsidiaries) included in the Collateral from the Liens securing the Notes under any one or more of the following circumstances:

(1) to enable the Company to consummate asset sales or dispositions that are not Asset Sales or that are Asset Sales permitted under the covenant described below under the caption “— Certain Covenants — Limitation on Asset Sales;”

(2) to enable the Company to consummate mergers, consolidations or sales of assets that are permitted under the covenant described below under the caption “— Certain Covenants — Merger, Consolidation and Sale of Assets;”

(3) if any Subsidiary that is a Guarantor is released from its Guarantee, that Subsidiary’s assets will also be released;

(4) if the Company exercises its legal defeasance option or our covenant defeasance option as described below under the caption “— Legal Defeasance and Covenant Defeasance;” or

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(5) upon satisfaction and discharge of the Indenture or payment in full of the principal of and premium, if any, accrued and unpaid interest and Additional Interest, if any, on the Notes and all other Obligations that are then due and payable.

Certain Bankruptcy and Other Limitations

The right of the Collateral Agent to repossess and dispose or otherwise exercise remedies in respect of the Collateral upon the occurrence of an Event of Default is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy proceeding were to be commenced by or against the Company or any of its Domestic Restricted Subsidiaries prior to the Collateral Agent having repossessed and disposed of the Collateral or otherwise completed the exercise of its remedies with respect to the Collateral. Under the Bankruptcy Code, a secured creditor such as the Collateral Agent is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from such debtor, without obtaining relief from the automatic stay imposed by Section 362 for the Bankruptcy Code. Moreover, the Bankruptcy Code permits the debtor to continue to retain and to use collateral even though the debtor is in default under the applicable debt instruments; provided that, under the Bankruptcy Code, the secured creditor is given “adequate protection.” The meaning of the term “adequate protection” may vary according to the particular facts and circumstances, but it is intended in general to protect against any diminution in the value of the secured creditor’s interest in the collateral securing the obligations owed to it and may include cash payments or the granting of additional security, if and at such times as the bankruptcy court in its discretion determines, for any diminution in the value of such collateral as a result of the imposition of the automatic stay or any use of the collateral by the debtor during the pendency of the bankruptcy case. In view of the lack of a precise definition of the term “adequate protection” and the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the Notes could be delayed following commencement of a bankruptcy case, whether or when the Collateral Agent could repossess or dispose of the Collateral or whether or to what extent Holders would be compensated for any delay in payment or loss of value of the Collateral through the requirement of “adequate protection.”

Moreover, the Collateral Agent may need to evaluate the impact of the potential liabilities before determining to foreclose on Collateral consisting of real property because a secured creditor that holds a lien on real property may be held liable under environmental laws for the costs of remediating or preventing release or threatened releases of hazardous substances at such real property. Consequently, the Collateral Agent may decline to foreclose on such Collateral or exercise remedies available if it does not receive indemnification to its satisfaction from the Holders.

In addition, because a portion of the Collateral consists of pledges of a portion of the Capital Stock of certain of our Foreign Subsidiaries, the validity of those pledges under applicable foreign law, and the ability of the Holders to realize upon that Collateral under applicable foreign law, to the extent applicable, may be limited by such law, which limitations may or may not affect such Liens.

The Collateral Agent’s ability to foreclose on the Collateral may be subject to lack of perfection, the consent of third parties, prior liens and practical problems associated with the realization of the Collateral Agent’s Lien on the Collateral. See “Risk Factors — Risks Related to the Registered Notes — The proceeds from the collateral securing the notes may not be sufficient to pay all amounts owed under the notes if an event of default occurs and your right to receive payments under the notes will effectively be subordinated to our senior revolving credit facility, purchase money indebtedness, capital lease obligations, secured acquired indebtedness and other secured indebtedness to the extent of the value of the assets securing that indebtedness.”

Guarantees

The full and prompt payment of the Company’s payment obligations under the Notes and the Indenture will be guaranteed, jointly and severally, by all present and future, direct and indirect, Domestic Restricted Subsidiaries. Each Guarantor will fully and unconditionally guarantee on a senior secured basis (each a “Guarantee” and, collectively, the “Guarantees”), jointly and severally, to each Holder and the Trustee, the

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full and prompt performance of the Company’s Obligations under the Indenture and the Notes, including the payment of principal of, interest on, premium, if any, on and Additional Interest, if any, on the Notes. The Guarantee of each Guarantor will rank senior in right of payment to all existing and future subordinated Indebtedness of such Guarantor and equally in right of payment with all other existing and future senior Indebtedness of such Guarantor. The obligations of each Guarantor will be limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under the Indenture, will result in the obligations of such Guarantor under the Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. The net worth of any Guarantor for such purpose shall include any claim of such Guarantor against the Company for reimbursement and any claim against any other Guarantor for contribution. Each Guarantor may consolidate with or merge into or sell its assets, including Capital Stock of Restricted Subsidiaries, to the Company or another Guarantor without limitation. See “— Certain Covenants — Merger, Consolidation and Sale of Assets” and “— Limitation on Asset Sales.”

A Guarantor will be released from its Guarantee without any action required on the part of the Trustee or any Holder:

(1) if (a) all of the Capital Stock issued by such Guarantor or all or substantially all of the assets of such Guarantor are sold or otherwise disposed of (including by way of merger or consolidation) to a Person other than the Company or any of its Domestic Restricted Subsidiaries or (b) such Guarantor ceases to be a Restricted Subsidiary, and the Company otherwise complies, to the extent applicable, with the covenant described below under “— Certain Covenants — Limitation on Asset Sales;”

(2) if the Company designates such Guarantor as an Unrestricted Subsidiary in accordance with the covenant described below under “— Certain Covenants — Limitation on Restricted Payments;”

(3) if the Company exercises the legal defeasance option or its covenant defeasance option as described below under “— Legal Defeasance and Covenant Defeasance;” or

(4) upon satisfaction and discharge of the Indenture or payment in full of the principal of premium, if any, accrued and unpaid interest and Additional Interest, if any, on the Notes and all other Obligations that are then due and payable.

At the Company’s request and expense, the Trustee will execute and deliver an instrument evidencing such release. A Guarantor may also be released from its obligations under its Guarantee in connection with a permitted amendment of the Indenture. See “— Modification of the Indenture.”

As of the date of this prospectus, all of our Subsidiaries will be Restricted Subsidiaries. However, under certain circumstances described below under the subheading “— Certain Covenants — Limitation on Restricted Payments,” the Company will be permitted to designate certain of its Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to the restrictive covenants of the Indenture and will not guarantee the Notes. Also, as of the date of this prospectus, none of the Company’s Foreign Subsidiaries will guarantee the Notes. The Notes will be structurally subordinated to all of the existing and future liabilities of our Subsidiaries that do not guarantee the Notes.

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Optional Redemption

Except as described below, the Notes are not redeemable before December 1, 2008. On or after December 1, 2008, the Company may redeem the Notes, at its option, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on December 1 of the year set forth below:

Year	Percentage
2008		104.500	%
2009		102.250	%
2010 and thereafter		100.000	%

In addition, the Company must pay accrued and unpaid interest and Additional Interest, if any, on the Notes redeemed to the date of redemption (subject to the right of the Holders of the relevant record date to receive interest due on the relevant interest payment date).

In addition, at any time, or from time to time, until December 1, 2007, the Company may, at its option, use an amount not to exceed the net cash proceeds of one or more Equity Offerings to redeem up to 35% of the aggregate principal amount of the Notes (which includes the Existing Notes, the Notes and Additional Notes, if any) originally issued under the Indenture at a redemption price of 109% of the aggregate principal amount thereof, plus accrued and unpaid interest and Additional Interest, thereon, if any, to the date of redemption; provided that:

(1) at least 65% of the original principal amount of Notes (which includes the Existing Notes, the Notes and Additional Notes, if any) issued under the Indenture remains outstanding immediately after any such redemption; and

(2) the Company makes such redemption not more than 120 days after the consummation of any such Equity Offering.

Selection and Notice of Redemption

In the event that the Company chooses to redeem less than all of the Notes, selection of the Notes for redemption will be made by the Trustee either:

(1) in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed; or

(2) if the Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee may reasonably determine is fair and appropriate.

If a partial redemption is made with the proceeds of an Equity Offering, the Trustee will select the Notes only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to DTC procedures), unless such method is otherwise prohibited. No Notes of a principal amount of $1,000 or less shall be redeemed in part and Notes of a principal amount in excess of $1,000 may be redeemed in part in multiples of $1,000 only.

Notice of redemption will be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each Holder to be redeemed at its registered address. If Notes are to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed. A new Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note (or appropriate adjustments to the amount and beneficial interests in the Global Note will be made).

The Company will pay the redemption price for any Note together with accrued and unpaid interest and Additional Interest, if any, thereon to the date of redemption. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Company has deposited with the paying agent funds in satisfaction of the applicable redemption price pursuant to the Indenture.

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Mandatory Redemption; Offers to Purchase; Open Market Purchases

The Company is not required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, the Company may be required to offer to purchase the Notes as described under the captions “— Repurchase upon Change of Control” and “— Certain Covenants — Limitation on Asset Sales.” The Company may at any time and from time to time purchase Notes in the open market or otherwise, including pursuant to our option to purchase from the initial purchaser certain Notes offered hereby. See “Plan of Distribution.”

Repurchase upon Change of Control

Upon the occurrence of a Change of Control, the Company will be required to offer to purchase all or a portion (in integral multiples of $1,000) of each Holder’s Notes pursuant to the offer described below (the “Change of Control Offer”), at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase.

Within 30 days following the date upon which the Change of Control occurred, the Company must send, by registered first-class mail, an offer to each Holder with a copy to the Trustee. Such offer shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other than as may be required by law (the “Change of Control Payment Date”).

Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, to the paying agent at the address specified in the notice prior to the close of business on the third business day prior to the Change of Control Payment Date. If only a portion of a Note is purchased pursuant to a Change of Control Offer, a new Note in a principal amount equal to the portion thereof not purchased will be issued in the name of the Holder thereof upon cancellation of the original Note (or appropriate adjustments to the amount and beneficial interests in a Global Note will be made). Notes (or portions thereof) purchased pursuant to a Change of Control Offer will be cancelled and cannot be reissued.

The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

If a Change of Control Offer is made, there can be no assurance that the Company will have available funds sufficient to pay the Change of Control purchase price for all the Notes that might be delivered by Holders seeking to accept the Change of Control Offer. If the Company is required to purchase outstanding Notes pursuant to a Change of Control Offer, the Company would be required to seek third-party financing to the extent it does not have available funds to meet its purchase obligations. However, there can be no assurance that the Company would be able to obtain such financing on acceptable terms or at all, and the terms of the Credit Agreement, the Indenture or future debt and financing agreements may restrict the ability of the Company to obtain such financing.

Restrictions in the Indenture described herein on the ability of the Company and its Restricted Subsidiaries to incur additional Indebtedness, to grant Liens on its property, to make Restricted Payments and to make Asset Sales may also make more difficult or discourage a takeover of the Company, whether favored or opposed by the management or the Board of Directors of the Company. Such restrictions and the restrictions on transactions with Affiliates may, in certain circumstances, make more difficult or discourage any leveraged buyout of the Company or any of its Subsidiaries by the management of the Company. While such restrictions cover a wide variety of arrangements that have traditionally been used to effect highly leveraged transactions, the Indenture may not afford the Holders protection in all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger, recapitalization or similar transaction.

One of the events that constitutes a Change of Control under the Indenture is the disposition of “all or substantially all” of the Company’s assets under certain circumstances. This term has not been interpreted

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under New York law (which is the governing law of the Indenture) to represent a specific quantitative test. As a consequence, there can be no assurance as to how a court interpreting New York law would interpret the phrase.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the “Change of Control” provisions of the Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the “Change of Control” provisions of the Indenture by virtue thereof.

Certain Covenants

The Indenture contains, among others, the following covenants:

Limitation on Incurrence of Additional Indebtedness.  The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, “incur”) any Indebtedness (other than Permitted Indebtedness). Notwithstanding the foregoing the Company and the Guarantors may incur Indebtedness (including Acquired Indebtedness) if on the date of (after giving effect to) the incurrence of such Indebtedness:

(i) no Default or Event of Default shall have occurred and be continuing; and

(ii) the Consolidated Fixed Charge Coverage Ratio of the Company will be at least 2.0 to 1.0.

Limitation on Restricted Payments.  The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any distribution (other than dividends or distributions payable (i) in Qualified Capital Stock of the Company or (ii) to the Company or a Guarantor) on or in respect of shares of Capital Stock of the Company or its Restricted Subsidiaries;

(2) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company, any Restricted Subsidiary or any Affiliate of the Company (other than any such Capital Stock owned by the Company or any Guarantor);

(3) make any principal payment on, purchase, defease, redeem, prepay or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company or any Guarantor that is subordinate or junior in right of payment to the Notes or a Guarantee; or

(4) make any Investment (other than Permitted Investments);

(each of the foregoing actions set forth in clauses (1), (2), (3) and (4) being referred to as a “Restricted Payment”), if at the time of such Restricted Payment or immediately after giving effect thereto:

(i) a Default or an Event of Default shall have occurred and be continuing;

(ii) the Company is not permitted to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the covenant described under “— Limitation on Incurrence of Additional Indebtedness;” or

(iii) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the Fair Market Value of such property at the time of the making thereof) shall exceed the sum of:

(A) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income is a loss, minus 100% of such loss) of the Company during the period beginning on the

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first day of the first fiscal quarter after the Issue Date and ending on the last day of the Company’s most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are available (the “Reference Date”) (treating such period as a single accounting period); plus

(B) 100% of the aggregate net cash proceeds received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to the Issue Date and on or prior to the Reference Date of Qualified Capital Stock of the Company (which shall include capital contributions to the Company) (excluding any net proceeds from an Equity Offering to the extent used to redeem Notes pursuant to the provisions described under “Optional Redemption”); plus

(C) 100% of the aggregate net cash proceeds received from the issuance of Indebtedness or shares of Disqualified Capital Stock of the Company (other than to a Subsidiary of the Company) that have been converted into or exchanged for Qualified Capital Stock of the Company subsequent to the Issue Date and on or prior to the Reference Date; plus

(D) the net reduction in the Investments (other than Permitted Investments) treated as a Restricted Payment previously made by the Company or any Restricted Subsidiary in any Person (other than a Restricted Subsidiary) to the extent such reduction results from net proceeds received by the Company and its Restricted Subsidiaries upon the (x) repurchase, repayment or redemption of such Investments by such Person (but only to the extent constituting return of capital) and (y) the sale of such Investment (but only to the extent such sale does not increase Consolidated Net Income of the Company), in each case, in an amount not exceeding the aggregate amount of such Investments; plus

(E) (1) the Company’s portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of any Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary in an amount not to exceed the amount of Investments (excluding Permitted Investments) previously made (and treated as a Restricted Payment) by the Company of any or its Restricted Subsidiaries in such Unrestricted Subsidiary and (2) the aggregate amount of cash dividends or cash distributions received by the Company or the Guarantors from an Unrestricted Subsidiary from the Issue Date to the Reference Date.

In the case of clause (iii)(B) above, any net cash proceeds from issuances and sales of Qualified Capital Stock of the Company financed directly or indirectly using funds borrowed from the Company or any Subsidiary of the Company, shall be excluded until and to the extent such borrowing is repaid.

The provisions set forth in the immediately preceding paragraph do not prohibit:

(1) the payment of any dividend or other distribution or redemption within 60 days after the date of declaration of such dividend or call for redemption if such payment would have been permitted on the date of declaration or call for redemption;

(2) the acquisition of any shares of Qualified Capital Stock of the Company, solely in exchange for other shares of Qualified Capital Stock of the Company;

(3) the acquisition of any Indebtedness of the Company or the Guarantors that is subordinate or junior in right of payment to the Notes and Guarantees or the acquisition of Disqualified Capital Stock either (i) solely in exchange for shares of Qualified Capital Stock of the Company, or (ii) through the application of net proceeds of a sale for cash (other than to a Subsidiary of the Company) within 60 days after such sale if no Default or Event of Default would exist after giving effect thereto, of Refinancing Indebtedness;

(4) an Investment either (i) solely in exchange for shares of Qualified Capital Stock of the Company or (ii) through the application of the net proceeds of a sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company within 60 days after such sale;

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(5) in the event of a Change of Control, and if no Default shall have occurred and be continuing or would exist after giving effect thereto, the payment, purchase, redemption, defeasance, satisfaction, discharge or other acquisition or retirement of Indebtedness that is subordinated to the Notes or the Guarantees, in each case, at a purchase price not greater than 101% of the principal amount of such Indebtedness (or, if such Indebtedness was issued with original issue discount, 101% of the accreted value), plus any accrued and unpaid interest thereon; provided, however, that prior to such payment, purchase, redemption, defeasance, satisfaction, discharge or other acquisition or retirement, the Company has made a Change of Control Offer with respect to the Notes as a result of such Change of Control and has repurchased all Notes validly tendered and not withdrawn in connection with such Change of Control Offer;

(6) (i) general corporate overhead expenses of Altra Holdings, including, without limitation, franchise taxes and other fees required to maintain the existence of Altra Holdings, insurance premiums and indemnification claims made by directors or officers of Altra Holdings attributable to the ownership or operation of the Company and its Subsidiaries and (ii) reasonable fees and expenses paid to members of the board of directors of Altra Holdings; provided, that such fees and expenses described in this clause (ii) are in an aggregate amount not to exceed $500,000 in any fiscal year;

(7) the application of the proceeds from the issuance of the Notes on the Issue Date as described under the “Use of Proceeds” section of the offering circular for the senior secured notes offering on November 22, 2004;

(8) advances to any direct or indirect parent entity of the Company to be used by such entity solely to pay federal, state and local income taxes made no earlier than five days prior to the date on which such entity is required to make such payment in an amount not to exceed the aggregate tax liability of the Company and its Restricted Subsidiaries for such calendar year determined as if the Company and its Restricted Subsidiaries were a separate affiliated group (as defined in Section 1504 of the Internal Revenue Code of 1986, as amended) filing a consolidated return, or, to the extent applicable, a separate group filing combined or unitary returns, and then only to the extent that any such payments are actually paid by such entity to governmental entities;

(9) if no Default or Event of Default has occurred and is continuing or would exist after giving effect thereto, the purchase, repurchase, redemption or other acquisition of Capital Stock of the Company from employees, former employees, directors, or former directors of the Company (or permitted transferees of such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors of the Company under which such individuals purchase or sell, or are granted the option to purchase or sell, shares of such Capital Stock; provided, that the aggregate amount of such repurchases and other acquisitions in any calendar year shall not exceed $500,000;

(10) if no Default or Event of Default has occurred and is continuing or would exist after giving effect thereto, the payment of the consulting fee pursuant to the Management Agreement; provided, that the aggregate amount of such fee in any calendar year shall not exceed $1.0 million; and

(11) if no Default or Event of Default shall have occurred and be continuing or would exist after giving effect thereto, other Restricted Payments not to exceed $10.0 million in the aggregate since the Issue Date.

In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the first paragraph of this “Limitation on Restricted Payments” covenant amounts expended pursuant to clauses (1), (4)(ii) and (9) shall be included in such calculation and amounts expended pursuant to clauses (2), (3), 4(i), (5), (6), (7), (8), (10) and (11) shall not be included in such calculation.

Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment complies with the Indenture and setting forth in

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reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company’s latest available internal quarterly financial statements.

Limitation on Asset Sales.  The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed;

(2) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale is in the form of cash or Cash Equivalents received substantially concurrent with the time of such disposition; provided that the amount of any liabilities (as shown on the most recent applicable balance sheet) of the Company or such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets shall be deemed to be cash for purposes of this provision if the documents governing such liabilities provide that there is no further recourse to the Company or any of its Subsidiaries with respect to such liabilities; and

(3) the Company shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 360 days of receipt thereof either:

(a) to repay any outstanding Indebtedness under the Credit Agreement and correspondingly reduce the commitments thereunder;

(b) to reinvest in property, plant, equipment or other long-term assets that replace the properties and assets that were the subject of such Asset Sale or that will be used or useful in the Permitted Business (including expenditures for maintenance, repair or improvement of existing properties and assets); or

(c) a combination of repayment and investment permitted by the foregoing clauses (3)(a)and (3)(b).

Pending the final application of Net Cash Proceeds, the Company may temporarily reduce revolving credit borrowings or invest such Net Cash Proceeds in Cash Equivalents. On the 361st day after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (3)(a), 3(b) or 3(c) of the preceding paragraph (each, a “Net Proceeds Offer Trigger Date”), such aggregate amount of Net Cash Proceeds which have not been applied (each a “Net Proceeds Offer Amount”) shall be applied by the Company or such Restricted Subsidiary to make an offer to purchase (the “Net Proceeds Offer”) on a date (the “Net Proceeds Offer Payment Date”) not less than 30 nor more than 45 days following the applicable Net Proceeds Offer Trigger Date, from all Holders of the Notes the maximum principal amount of Notes that may be purchased with the Net Proceeds Offer Amount at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase.

If at any time any consideration other than cash and Cash Equivalents received by the Company or any Restricted Subsidiary, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash or Cash Equivalents (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to be an Asset Sale on the date of such conversion or disposition, as the case may be, and the Net Cash Proceeds thereof shall be applied in accordance with this covenant.

The Company may defer any Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $5.0 million resulting from one or more Asset Sales in which case the accumulation of such amount shall constitute a Net Proceeds Offer Trigger Date (at which time, the entire unutilized Net Proceeds Offer Amount, and not just the amount in excess of $5.0 million, shall be applied as required pursuant to this covenant). If any of the Net Cash Proceeds Amount remains after consummation of a

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Net Proceeds Offer, the Company may use such amount for any corporate purpose to the extent not otherwise prohibited by the Indenture and the Net Proceeds Offer Amount will be reset at zero.

In the event of the transfer of substantially all (but not all) of the property and assets of the Company and its Restricted Subsidiaries as an entirety to a Person in a transaction permitted under “— Merger, Consolidation and Sale of Assets” that does not constitute a Change of Control, the successor entity shall be deemed to have sold the properties and assets of the Company and its Restricted Subsidiaries not so transferred for purposes of this covenant, and shall comply with the provisions of this covenant with respect to such deemed sale as if it constituted an Asset Sale. The Fair Market Value of such properties and assets of the Company or its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant.

Each notice of a Net Proceeds Offer shall be mailed first class, postage prepaid, to the record Holders as shown on the register of Holders within 20 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Notes in whole or in part in integral multiples of $1,000 in exchange for cash. To the extent Holders properly tender Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be purchased on a pro rata basis (based on amounts tendered). A Net Proceeds Offer shall remain open for a period of 20 business days or such longer period as may be required by law.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the “Asset Sale” provisions of the Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the “Asset Sale” provisions of the Indenture by virtue of such compliance.

Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.  The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on or in respect of its Capital Stock;

(2) make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary; or

(3) transfer any of its property or assets to the Company or any other Restricted Subsidiary,

(4) except for such encumbrances or restrictions existing:

(a) under applicable law, rule, regulation, order, license or permit;

(b) under the Indenture and the Collateral Agreements;

(c) by reason of customary non-assignment provisions of any lease of any Restricted Subsidiary to the extent such provisions restrict the transfer of the lease or the property leased thereunder;

(d) under any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired;

(e) under the Credit Agreement;

(f) by reason of restrictions on the transfer of assets subject to any Permitted Lien;

(g) under customary agreements to sell assets or Capital Stock permitted to be sold under the Indenture pending the closing of such sale;

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(h) under Purchase Money Indebtedness or Capitalized Lease Obligations permitted under the Indenture; provided, that such encumbrances and restrictions relate only to the assets financed with such Indebtedness;

(i) by reason of restrictions on cash or other deposits under bona fide arrangements with customers entered into in the ordinary course of business, consistent with past practice;

(j) on any Foreign Restricted Subsidiary under Indebtedness of such Subsidiary permitted under the Indenture; or

(k) under Refinancing Indebtedness incurred to Refinance the Indebtedness referred to in clause (b), (d) or (e); provided, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are no more adverse to the Holders and no less favorable or more onerous to the Company and its Restricted Subsidiaries than the provisions relating to such encumbrance or restriction contained in agreements referred to in the Indebtedness being Refinanced.

Limitation on Issuances and Sales of Capital Stock of Subsidiaries.  The Company will not, and will not permit or cause any of its Restricted Subsidiaries to, transfer, convey, issue or sell any Capital Stock of any Restricted Subsidiary to any Person (other than to the Company or to a Wholly Owned Subsidiary and directors’ qualifying shares); provided, that this provision shall not prohibit:

(1) any transfer, issuance or sale if, immediately after giving effect thereto, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect to such issuance or sale would have been permitted to be made under the “— Limitation on Restricted Payments” covenant if made on the date of such issuance or sale or

(2) the sale of all of the Capital Stock of a Restricted Subsidiary in compliance with the provisions of the “— Limitation on Asset Sales” covenant.

Limitation on Liens.  The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist any Liens (other than Permitted Liens) of any kind against or upon any property or assets of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom.

Merger, Consolidation and Sale of Assets.  The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company’s assets (determined on a consolidated basis for the Company and its Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless:

(1) either:

(a) the Company shall be the surviving or continuing corporation; or

(b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company’s Restricted Subsidiaries substantially as an entirety (the “Surviving Entity”):

(x) shall be an entity organized and validly existing under the laws of the United States or any State thereof or the District of Columbia; and

(y) shall expressly assume (i) by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, interest and Additional Interest, if any, on all of the Notes and the performance of every covenant of the Notes, the Indenture and the Registration

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Rights Agreement on the part of the Company to be performed or observed thereunder and (ii) by amendment, supplement or other instrument (in form and substance reasonably satisfactory to the Trustee and the Collateral Agent), executed and delivered to the Trustee, all obligations of the Company under the Collateral Agreements, and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Collateral Agreements on the Collateral owned by or transferred to the surviving entity;

(2) immediately after giving effect to such transaction and the assumption contemplated by clause (1)(b)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), (a) the Company or such Surviving Entity, as the case may be, is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the covenant described under “— Limitation on Incurrence of Additional Indebtedness” and (b) no Default or Event of Default shall have occurred or be continuing; and

(3) the Company or the Surviving Entity shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied.

For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company, the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

Upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with the foregoing, in which the Company is not surviving or the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture and the Notes with the same effect as if such surviving entity had been named as such. Upon such substitution, the Company and any Guarantors that remain Subsidiaries of the Company shall be released and discharged from their obligations under the Indenture and the Guarantees.

Each Guarantor will not, and the Company will not cause or permit any Guarantor to, consolidate with or merge with or into any Person, other than the Company or any other Guarantor unless:

(1) the entity formed by or surviving any such consolidation or merger (if other than the Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia;

(2) such entity assumes (a) by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, all of the obligations of the Guarantor under the Guarantee and the performance of every covenant of the Guarantee, the Indenture and the Registration Rights Agreement and (b) by amendment, supplement or other instrument (in form and substance satisfactory to the Trustee and the Collateral Agent) executed and delivered to the Trustee and the Collateral Agent, all obligations of the Guarantor under the Collateral Agreements and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Collateral Agreements on the Collateral owned by or transferred to the surviving entity; and

(3) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing.

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Limitation on Transactions with Affiliates.  The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an “Affiliate Transaction”), other than:

(x) Permitted Affiliate Transactions, and

(y) Affiliate Transactions on terms that are no less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm’s-length basis from a Person that is not an Affiliate of the Company or such Restricted Subsidiary.

With respect to all Affiliate Transactions (other than Permitted Affiliated Transactions):

(i) the Company will deliver an Officers’ Certificate to the Trustee certifying that such transactions are in compliance with clause (y) of the preceding paragraph;

(ii) if such Affiliate Transaction involves aggregate payments or other property with a Fair Market Value in excess of $2.5 million shall be approved by a majority of the members of the Board of Directors of the Company (including a majority of the disinterested members thereof), as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions; and

(iii) if such Affiliate Transaction involves an aggregate Fair Market Value of more than $5.0 million, the Company will, prior to the consummation thereof, obtain a favorable opinion as to the fairness of the financial terms of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be, from an Independent Financial Advisor and file the same with the Trustee.

The restrictions set forth in the first paragraph of this covenant will not apply to the following transactions (collectively, “Permitted Affiliate Transactions”):

(1) reasonable fees and compensation paid to and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary;

(2) transactions exclusively between or among the Company and any of its Wholly Owned Subsidiaries or exclusively between or among such Wholly Owned Subsidiaries, provided, that such transactions are not otherwise prohibited by the Indenture;

(3) any agreement as in effect as of the Issue Date or any transaction contemplated thereby and any amendment thereto or any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders, the Company or the Restricted Subsidiaries in all material respects than the original agreement as in effect on the Issue Date;

(4) Restricted Payments permitted by the Indenture or Permitted Investments;

(5) any merger or other transaction with an Affiliate solely for the purpose of reincorporating the Company in another jurisdiction or creating a holding company of the Company;

(6) any employment, stock option, stock repurchase, employee benefit compensation, business expense reimbursement, severance, termination or other employment-related agreements, arrangements or plans entered into in good faith by the Company or any of its Restricted Subsidiaries in the ordinary course of business;

(7) sales or purchases of inventory, other products or services to or from any Affiliate of the Company entered into in the ordinary course of business on terms no less favorable to the Company and its Subsidiaries than those that could be obtained at the time of such sale or purchase in arm’s-length dealings with a Person who is not an Affiliate; and

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(8) any agreement existing and as in effect on the Issue Date, including the Management Agreement.

Additional Subsidiary Guarantees.  If the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Restricted Subsidiary after the Issue Date (other than an Unrestricted Subsidiary), then the Company shall cause such Domestic Restricted Subsidiary to:

(1) execute and deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee pursuant to which such Subsidiary shall unconditionally guarantee on a senior secured basis all of the Company’s obligations under the Notes and the Indenture on the terms set forth in the Indenture;

(2) execute and deliver to the Collateral Agent such amendments to the Collateral Agreements as the Collateral Agent deems necessary or advisable in order to grant to the Collateral Agent, for the benefit of the Holders, a perfected security interest in the Capital Stock of such new Domestic Restricted Subsidiary and any debt securities of such new Subsidiary, subject to the Permitted Liens, which are owned by the Company or Subsidiary and required to be pledged pursuant to the Security Agreement, (b) deliver to the Collateral Agent any certificates representing such Capital Stock and debt securities, together with (i) in the case of such Capital Stock, undated stock powers or instruments of transfer, as applicable, endorsed in blank, and (ii) in the case of such debt securities, endorsed in blank, in each case executed and delivered by an Officer of the Company or such Subsidiary, as the case may be;

(3) take such actions as are necessary or as the Collateral Agent reasonably determines to be advisable to grant to the Collateral Agent for the benefit of the Holders a perfected security interest in the assets of such new Domestic Restricted Subsidiary, subject to the Permitted Liens, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Security Agreement or by law or as may be reasonably requested by the Collateral Agent;

(4) take such further action and execute and deliver such other documents specified in the Indenture or otherwise reasonably requested by the Trustee or the Collateral Agent to effectuate the foregoing; and

(5) deliver to the Trustee an Opinion of Counsel that such supplemental indenture and any other documents required to be delivered have been duly authorized, executed and delivered by such Domestic Restricted Subsidiary and constitutes a legal, valid, binding and enforceable obligations of such Domestic Restricted Subsidiary and such other opinions regarding the perfection of such Liens in the assets of such Domestic Restricted Subsidiary as provided for in the Indenture.

Thereafter, such Subsidiary shall be a Guarantor for all purposes of the Indenture.

Impairment of Security Interest.  Neither the Company nor any of its Restricted Subsidiaries will (a) take or omit to take any action which would adversely affect or impair in any material respect the Liens (other than the incurrence of Permitted Liens) in favor of the Collateral Agent with respect to the Collateral, (b) grant to any Person (other than the Collateral Agent), or permit any Person (other than the Collateral Agent), to retain any interest whatsoever in the Collateral other than Permitted Liens or (c) enter into any agreement that requires the proceeds received from any sale of Collateral to be applied to repay, redeem, defease or otherwise acquire or retire any Indebtedness of any Person, other than as permitted by the Indenture, the Notes and the Collateral Agreements. The Company shall, and shall cause each Guarantor to, at their sole cost and expense, (i) execute and deliver all such agreements and instruments as the Collateral Agent shall reasonably request to more fully or accurately describe the property intended to be Collateral or the obligations intended to be secured by the Collateral Agreements and (ii) file any such notice filings or other agreements or instruments as may be reasonably necessary or desirable under applicable law to perfect the Liens created by the Collateral Agreements at such times and at such places as the Collateral Agent may reasonably request.

Real Estate Mortgages and Filings.  With respect to any fee interest in any real property (individually and collectively, the “Premises”) (a) owned by the Company or a Domestic Restricted Subsidiary on the Issue Date (other than the Syracuse Facility) or (b) acquired by the Company or a Domestic Restricted Subsidiary after the Issue Date (other than real property located in the State of New York), (i) with a purchase price, or

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with a Fair Market Value as of the Issue Date, as applicable, greater than $500,000, and (ii) within 60 days of the Issue Date in the case of clause (a) or within 90 days of the acquisition thereof in the case of clause (b), the Company shall deliver to the Collateral Agent:

(1) as mortgagee, fully executed counterparts of Mortgages, each dated as of a date prior to the 60th day after the Issue Date or the date of acquisition of such property, as the case may be, duly executed by the Company or the applicable Domestic Restricted Subsidiary, together with evidence of the completion (or satisfactory arrangements for the completion), of all recordings and filings of such Mortgage as may be necessary to create a valid, perfected Lien, subject to Permitted Liens, against the properties purported to be covered thereby;

(2) mortgagee’s title insurance policies in favor of the Collateral Agent, as mortgagee for the ratable benefit of the Collateral Agent, the Trustee and the Holders in an amount equal to 100% of the Fair Market Value of the Premises purported to be covered by the related Mortgage, insuring that title to such property is marketable and that the interests created by the Mortgage constitute valid Liens thereon free and clear of all Liens, defects and encumbrances other than Permitted Liens, and such policies shall also include, to the extent available, other customary endorsements and shall be accompanied by evidence of the payment in full of all premiums thereon; and

(3) with respect to each of the covered Premises, the most recent survey of such Premises, together with either (i) an updated survey certification in favor of the Trustee and the Collateral Agent from the applicable surveyor stating that, based on a visual inspection of the property and the knowledge of the surveyor, there has been no change in the facts depicted in the survey or (ii) an affidavit from the Company or the applicable Guarantor, as applicable, stating that there has been no change, other than, in each case, changes that do not materially adversely affect the use by the Company or Guarantor, as applicable, of such Premises for the Company or such Guarantor’s business as so conducted, or intended to be conducted, at such Premises.

In the event that we or the Guarantors, as applicable, execute first-priority mortgages of the Syracuse Facility or any other existing and future owned real property in the State of New York under the Credit Agreement in the future, the Indenture provides that we must simultaneously execute second-priority mortgages of such real property in favor of the Collateral Agent for the benefit of the Holders of the Notes.

Leasehold Mortgages and Filings; Landlord Waivers.  The Company and each of its Domestic Restricted Subsidiaries shall deliver Mortgages with respect to the Company’s leasehold interests in the premises (the “Leased Premises”) occupied by the Company or such Domestic Restricted Subsidiary pursuant to leases entered into after the Issue Date (collectively, the “Leases,” and individually, a “Lease”).

Prior to the effective date of any Lease, the Company and such Subsidiaries shall provide to the Trustee all of the items described in clauses (2) and (3) of “— Certain Covenants — Real Estate Mortgages and Filings” above and in addition shall use their respective reasonable commercial efforts to obtain an agreement executed by the lessor under the Lease, whereby the lessor consents to the Mortgage and waives or subordinates its landlord Lien (whether granted by the instrument creating the leasehold estate or by applicable law), if any, and which shall be entered into by the Collateral Agent.

Each of the Company and each of its Domestic Restricted Subsidiaries that is a lessee of, or becomes a lessee of, real property, is, and will be, required to use commercially reasonable efforts to deliver to the Collateral Agent a landlord waiver, substantially in the form of the exhibit form thereof to be attached to the Indenture, executed by the lessor of such real property; provided that in the case where such lease is a lease in existence on the Issue Date, the Company or its Domestic Restricted Subsidiary that is the lessee thereunder shall be required to use such commercially reasonable efforts to deliver within 90 days from the Issue Date.

Conduct of Business.  The Company will not, and will not permit any of its Restricted Subsidiaries to, engage in any businesses other than Permitted Businesses.

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Reports to Holders.  Whether or not required by the rules and regulations of the Securities and Exchange Commission (the “SEC”), so long as any Notes are outstanding, the Company will furnish to the Trustee and, upon request, to the Holders:

(1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company, if any) and, with respect to the annual information only, a report thereon by the Company’s certified independent accountants; and

(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the SEC’s rules and regulations.

Notwithstanding the foregoing, the Company may satisfy such requirements prior to the effectiveness of the registration statement contemplated by the Registration Rights Agreement by filing with the SEC such registration statement, to the extent that any such registration statement contains substantially the same information as would be required to be filed by the Company if it were subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, and by providing the Trustee and Holders with such Registration Statement (and any amendments thereto) promptly following the filing thereof.

In addition, following the consummation of the Exchange Offer, whether or not required by the rules and regulations of the SEC, the Company will file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC’s rules and regulations (unless the SEC will not accept such a filing). In addition, the Company has agreed that, prior to the consummation of the Exchange Offer, for so long as any Notes remain outstanding, it will furnish to the Holders upon their request, the information required to be delivered pursuant to Rule 144(A)(d)(4) under the Securities Act.

Payments for Consent.  The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture, the Notes, any Collateral Agreement or the Intercreditor Agreement unless such consideration is offered to be paid or is paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Hay Hall Acquisition

Notwithstanding anything contained elsewhere in the Indenture, the Indenture provides that: (a) the Company or any Restricted Subsidiary may acquire all of the outstanding capital stock of Hay Hall Holdings Limited and its Subsidiaries (the “Hay Hall Acquisition”) for a purchase price not to exceed $50.5 million (plus any purchase price adjustments provided for in the stock purchase agreement therefor), which purchase price shall be paid in cash as follows: (i) not less than $44.5 million in cash payable to the sellers and (ii) up to $6.0 million of cash which shall be deposited in an escrow account to be released to Sellers on or prior to December 31, 2006 (the “Deferred Cash”); and (b) the Company may issue and the Guarantors may guarantee on a senior unsecured basis up to $55.0 million aggregate principal amount of the Notes, the net proceeds of which are to be used by the Company directly or indirectly (by a loan or loans from the Company to one or more of its Restricted Subsidiaries) to finance the Hay Hall Acquisition and pay related fees and expenses. The obligation to pay the Deferred Cash shall be represented by loan notes (the “Loan Notes”); provided that the sole recourse of the holders of the Loan Notes shall be to amounts in such escrow account unless the Company takes action to prevent or interfere in the release of such funds from such escrow account. Without limiting the foregoing, the Hay Hall Acquisition (and any loans from the Company to one or more of its

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Restricted Subsidiaries in connection therewith) shall not be a Restricted Payment, the Loan Notes shall not constitute Indebtedness, and any Liens on such account securing obligations under such Loan Notes shall be “Permitted Liens” (and the assets in such account shall not be Collateral). Following such transaction, substantially simultaneous transfers of assets between the Foreign Restricted Subsidiaries solely to consolidate operations in connection with the Hay Hall Acquisition shall not be Asset Sales and shall not otherwise be deemed to violate the Indenture and the consummation of any transaction solely to transfer the ownership of Inertia Dynamics LLC from being owned by a Foreign Restricted Subsidiary to instead be owned by a Guarantor shall not be a Restricted Payment and shall not otherwise be deemed to violate the Indenture.

Events of Default

The following events are defined in the Indenture as “Events of Default”:

(1) the failure to pay interest and Additional Interest, if any, on any Notes when the same becomes due and payable and the default continues for a period of 30 days;

(2) the failure to pay the principal of or premium, if any, on any Notes, when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer when such payments become due);

(3) a default in the observance or performance of any other covenant or agreement contained in the Indenture (other than the payment of the principal of, or premium, if any, or interest or Additional Interest, if any, on any Note) or any Collateral Agreement which default continues for a period of 30 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes (except in the case of a default with respect to the “— Certain Covenants — Merger, Consolidation and Sale of Assets” covenant, which will constitute an Event of Default with such notice requirement but without such passage of time requirement);

(4) the failure to pay at final maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or any Restricted Subsidiary other than the Notes and Guarantees, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 20 days from the date of acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated (in each case with respect to which the 20-day period described above has elapsed), aggregates $5.0 million or more at any time;

(5) one or more judgments in an aggregate amount in excess of $5.0 million shall have been rendered against the Company or any of its Restricted Subsidiaries (other than any judgment as to which a reputable and solvent third party insurer has accepted full coverage) and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable;

(6) certain events of bankruptcy affecting the Company or any of its Significant Subsidiaries;

(7) any Collateral Agreement at any time for any reason shall cease to be in full force and effect in all material respects, or ceases to give the Collateral Agent the Liens, rights, powers and privileges purported to be created thereby, superior to and prior to the rights of all third Persons other than the holders of Permitted Liens and subject to no other Liens except as expressly permitted by the applicable Collateral Agreement;

(8) the Company or any of the Guarantors, directly or indirectly, contest in any manner the effectiveness, validity, binding nature or enforceability of any Collateral Agreement; or

(9) any Guarantee of a Significant Subsidiary ceases to be in full force and effect or any Guarantee of a Significant Subsidiary is declared to be null and void and unenforceable or any Guarantee of a

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Significant Subsidiary is found to be invalid or any Guarantor denies its liability under its Guarantee (other than by reason of release of a Guarantor in accordance with the terms of the Indenture).

If an Event of Default (other than an Event of Default specified in clause (6) above with respect to the Company) shall occur and be continuing and has not been waived, the Trustee or the Holders of at least 25% in principal amount of outstanding Notes may declare the principal of and premium, if any, accrued interest and Additional Interest, if any, on all the Notes to be due and payable by notice in writing to the Company and the Trustee specifying the Event of Default and that it is a “notice of acceleration” (the “Acceleration Notice”), and the same shall become immediately due and payable.

If an Event of Default specified in clause (6) above with respect to the Company occurs and is continuing, then all unpaid principal of, and premium, if any, and accrued and unpaid interest and Additional Interest, if any, on all of the outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

At any time after a declaration of acceleration with respect to the Notes as described in the preceding paragraphs, the Holders of a majority in principal amount of the Notes may rescind and cancel such declaration and its consequences:

(1) if the rescission would not conflict with any judgment or decree;

(2) if all existing Events of Default have been cured or waived except nonpayment of principal, premium, if any, interest or Additional Interest, if any, that has become due solely because of the acceleration;

(3) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal and premium, if any, and Additional Interest, if any, which has become due otherwise than by such declaration of acceleration, has been paid;

(4) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its reasonable expenses, disbursements and its advances; and

(5) in the event of the cure or waiver of an Event of Default of the type described in clause (7) of the description above of Events of Default, the Trustee shall have received an Officers’ Certificate and an Opinion of Counsel that such Event of Default has been cured or waived.

No such rescission shall affect any subsequent Default or impair any right consequent thereto.

The Holders of a majority in principal amount of the Notes may waive any existing Default or Event of Default under the Indenture, and its consequences, except a default in the payment of the principal of or premium, if any, interest or Additional Interest, if any, on any Notes.

Holders may not enforce the Indenture or the Notes except as provided in the Indenture and under the TIA. Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable indemnity. Subject to the provisions of the Indenture and applicable law, the Holders of a majority in aggregate principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee.

No past, present or future director, officer, employee, incorporator, or stockholder of the Company or a Guarantor, as such, shall have any liability for any obligations of the Company or the Guarantors under the Notes, the Guarantees or the Indenture or for any claim based on, in respect of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

Under the Indenture, the Company is required to provide an Officers’ Certificate to the Trustee promptly upon any Officer obtaining knowledge of any Default or Event of Default (provided that such Officers’

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Certificate shall be provided at least annually whether or not such Officers know of any Default or Event of Default) that has occurred and, if applicable, describe such Default or Event of Default and the status thereof.

Legal Defeasance and Covenant Defeasance

The Company may, at its option and at any time, elect to have its obligations and the obligations of the Guarantors discharged with respect to the outstanding Notes (“Legal Defeasance”). Such Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, except for:

(1) the rights of Holders to receive payments in respect of the principal of, premium, if any, interest and Additional Interest, if any, on the Notes when such payments are due;

(2) the Company’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payments;

(3) the rights, powers, trust, duties and immunities of the Trustee and the Company’s obligations in connection therewith; and

(4) the Legal Defeasance provisions of the Indenture.

In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, reorganization and insolvency events) described under “Events of Default” will no longer constitute an Event of Default with respect to the Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, non-callable U.S. government obligations, or a combination thereof, in such amounts and at such times as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, interest and Additional Interest, if any, on the Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be;

(2) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that:

(a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or

(b) since the date of the Indenture, there has been a change in the applicable federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(1) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(2) no Default or Event of Default shall have occurred and be continuing on the date of such deposit pursuant to clause (1) of this paragraph (except such Default or Event of Default resulting from the failure to comply with “— Certain Covenants — Limitation on Incurrence of Additional Indebtedness” as

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a result of the borrowing of funds required to effect such deposit) or insofar as Defaults or Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of such deposit;

(3) such Legal Defeasance or Covenant Defeasance shall not result in a breach of, or constitute a default under the Indenture or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;

(4) the Company shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others;

(5) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and

(6) the Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary qualifications and exclusions) to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940.

Satisfaction and Discharge

The Indenture (and all Liens on Collateral in connection with the issuance of the Notes) will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the Notes, as expressly provided for in the Indenture) as to all outstanding Notes when:

(1) either:

(a) all the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation; or

(b) all Notes not theretofore delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable at their stated maturity within one year or (iii) are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, interest and Additional Interest, if any, on the Notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

(2) the Company has paid all other sums payable under the Indenture and the Collateral Agreements by the Company; and

(3) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with.

Modification of the Indenture

From time to time, the Company, the Guarantors, the Trustee and, if such amendment, modification or supplement relates to any Collateral Agreement, the Collateral Agent, without the consent of the Holders, may amend, modify or supplement the Indenture, the Notes, the Guarantees and the Collateral Agreements:

(1) to cure any ambiguity, defect or inconsistency contained therein;

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(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(3) to provide for the assumption of the Company’s or a Guarantor’s obligations to Holders in accordance with the covenant described under “— Certain Covenants — Merger, Consolidation and Sale of Assets;”

(4) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights of any such Holder under the Indenture, the Notes, the Guarantees or the Collateral Agreements;

(5) to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA;

(6) to allow any Subsidiary or any other Person to guarantee the Notes;

(7) to release a Guarantor as permitted by the Indenture and the relevant Guarantee; or

(8) if necessary, in connection with any addition or release of Collateral permitted under the terms of the Indenture or Collateral Agreements.

Other amendments of, modifications to and supplements to the Indenture, the Notes, the Guarantees, the Registration Rights Agreement and the Collateral Agreements may be made with the consent of the Holders of a majority in principal amount of the then outstanding Notes issued under the Indenture, except that, without the consent of each Holder affected thereby, no amendment may:

(1) reduce the amount of Notes the Holders of which must consent to an amendment, supplement or waiver of any provision of the Indenture or the Notes;

(2) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest, or Additional Interest on any Notes;

(3) reduce the principal of or change or have the effect of changing the fixed maturity of any Notes, or change the date on which any Notes may be subject to redemption or reduce the redemption price therefor;

(4) make any Notes payable in money other than that stated in the Notes;

(5) make any change in provisions of the Indenture protecting the right of each Holder to receive payment of principal of, premium, if any, interest and Additional Interest, if any, on such Note on or after the due date thereof or to bring suit to enforce such payment, or permitting Holders of a majority in principal amount of Notes to waive Defaults or Events of Default;

(6) amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer after the occurrence of a Change of Control or modify any of the provisions or definitions with respect thereto;

(7) subordinate the Notes in right of payment to any other Indebtedness of the Company or any Guarantor;

(8) release any Guarantor from any of its obligations under its Guarantee or the Indenture otherwise than in accordance with the terms of the Indenture; or

(9) release all or substantially all of the Collateral otherwise than in accordance with the terms of the Indenture and the Collateral Agreements.

Governing Law

The Indenture provides that it, the Notes and the Guarantees will be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby.

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The Trustee

The Indenture provides that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it by the Indenture, and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

The Indenture and the provisions of the TIA contain certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payments of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. Subject to the TIA, the Trustee will be permitted to engage in other transactions; provided that if the Trustee acquires any conflicting interest as described in the TIA, it must eliminate such conflict or resign.

Certain Definitions

Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms, as well as any other terms used herein for which no definition is provided.

“Acquired Indebtedness” means Indebtedness of a Person or any of its Subsidiaries:

(a) (i) existing at the time such Person becomes a Restricted Subsidiary or at the time it merges or consolidates with or into the Company or any of its Restricted Subsidiaries or assumed in connection with the acquisition of assets from such Person or (ii) incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary upon the consummation of the acquisition of all or substantially all of the assets or all of the Capital Stock of such Person by the Company or any of its Restricted Subsidiaries; and

(b) that is without recourse to the Company or any of its Subsidiaries or to any of their respective properties or assets other than the Person or the assets to which such Indebtedness relates.

“Administrative Agent” has the meaning set forth in the definition of the term “Credit Agreement.”

“Affiliate” means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; provided, that Beneficial Ownership of 10% or more of the Voting Stock of any Person shall be deemed to be control of such Person. The terms “controlling” and “controlled” have meanings correlative of the foregoing.

“Altra Holdings” means Altra Holdings, Inc.

“Asset Acquisition” means:

(1) an Investment by the Company or any Restricted Subsidiary in any Person (other than a Subsidiary) pursuant to which such Person becomes a Wholly Owned Subsidiary, or is merged with or into the Company or any Restricted Subsidiary, or

(2) the acquisition by the Company or any Restricted Subsidiary of the assets of any Person (other than a Subsidiary) that constitute all or substantially all of the assets of such Person or comprise any division or line of business of such Person.

“Asset Sale” means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business, consistent with past practice), assignment or other transfer of:

(1) any Capital Stock of any Restricted Subsidiary; or

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(2) any other property or assets of the Company or any Restricted Subsidiary other than in the ordinary course of business, consistent with past practice;

(3) provided, that Asset Sales shall not include:

(a) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $2.5 million;

(b) the transfer of all or substantially all of the assets of the Company as permitted under “— Certain Covenants — Merger, Consolidation and Sale of Assets;”

(c) any Restricted Payment permitted under “— Certain Covenants — Limitation on Restricted Payments,” or any Permitted Investment;

(d) the sale of Cash Equivalents;

(e) the creation of a Permitted Lien (but not the sale or other disposition of the property subject to such Lien); and

(f) a transfer to the Company or to a Guarantor.

“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended, and codified as 11 U.S.C. §§101 et seq.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and “Beneficially Owned” have meanings correlative to the foregoing.

“Board of Directors” means, as to any Person, the board of directors or similar governing body of such Person or any duly authorized committee thereof.

“Board Resolution” means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Capital Stock” means:

(1) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person;

(2) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person; and

(3) any warrants, rights or options to purchase any of the instruments or interests referred to in clause (1) or (2) above.

“Capitalized Lease Obligation” means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP.

“Cash Equivalents” means:

(1) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof;

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(2) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor’s Ratings Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”);

(3) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s;

(4) certificates of deposit or bankers’ acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined net capital and surplus of not less than $250.0 million;

(5) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (1) above entered into with any bank meeting the qualifications specified in clause (4) above; and

(6) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (1) through (5) above.

“Change of Control” means the occurrence of one or more of the following events:

(1) any direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one transaction or a series of related transactions, of all or substantially all of the assets of the Company to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a “Group”), other than a transaction in which the transferee is controlled by one or more Permitted Holders;

(2) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, other than (A) a transaction in which the surviving or Transferee Person is a Person that is controlled by the Permitted Holders or (B) any such transaction where the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Capital Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance);

(3) the approval by the holders of Capital Stock of the Company of any plan or proposal for the liquidation, winding up or dissolution of the Company;

(4) prior to the first Public Equity Offering, the Permitted Holders cease for any reason to be the Beneficial Owner, directly or indirectly, in the aggregate of at least a majority of the total voting power of the Voting Stock of the Company, whether by virtue of the issuance, sale or other disposition of Capital Stock of the Company, a merger, consolidation or sale of assets involving the Company, a Restricted Subsidiary, any voting trust or other agreement; or

(5) subsequent to the first Public Equity Offering, (a) any Person or Group is or becomes the Beneficial Owner, directly or indirectly, in the aggregate of more than 35% of the total voting power of the Voting Stock of the Company, and (b) the Permitted Holders Beneficially Own, directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company than such other Person or Group.

“Collateral” shall mean collateral as such term is defined in the Security Agreement, all property mortgaged under the Mortgages and any other property, whether now owned or hereafter acquired, upon which a Lien securing the Obligations is granted or purported to be granted under any Collateral Agreement.

“Collateral Agent” means the collateral agent and any successor under the Indenture.

“Collateral Agreements” means, collectively, the Intercreditor Agreement, the Security Agreement and each Mortgage, in each case, as the same may be in force from time to time.

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“Common Stock” of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock.

“Consolidated EBITDA” means, for any period, the sum (without duplication) of:

(1) Consolidated Net Income; and

(2) to the extent Consolidated Net Income has been reduced thereby:

(a) all income taxes paid or accrued in accordance with GAAP for such period;

(b) Consolidated Interest Expense and interest attributable to write-offs of deferred financing costs; and

(c) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period.

all as determined on a consolidated basis in accordance with GAAP.

“Consolidated Fixed Charge Coverage Ratio” means the ratio of Consolidated EBITDA during the four consecutive full fiscal quarters (the “Four Quarter Period”) most recently ending on or prior to the date of the transaction or event giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio for which financial statements are available (the “Transaction Date”) to Consolidated Fixed Charges for the Four Quarter Period.

For purposes of this definition, “Consolidated EBITDA” and “Consolidated Fixed Charges” shall be calculated after giving effect on a pro forma basis for the period of such calculation to:

(1) the incurrence or repayment of any Indebtedness of the Company or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period; and

(2) any Asset Sale or Asset Acquisition (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Company or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of any such Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date), as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or liability for any such Indebtedness or Acquired Indebtedness and also including any Consolidated EBITDA associated with such Asset Acquisition) occurred on the first day of the Four Quarter Period.

Furthermore, in calculating “Consolidated Fixed Charges” for purposes of determining the denominator (but not the numerator) of this “Consolidated Fixed Charge Coverage Ratio”:

(1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date (including Indebtedness actually incurred on the Transaction Date) and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; and

(2) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.

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“Consolidated Fixed Charges” means, with respect to any Person for any period, the sum, without duplication, of:

(1) Consolidated Interest Expense (excluding amortization or write-off of deferred financing costs); plus

(2) the product of (x) the amount of all dividend payments on any series of Preferred Stock of such Person (other than dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal.

“Consolidated Interest Expense” means, with respect to any Person for any period, the aggregate of the interest expense of such Person and its consolidated Subsidiaries for such period, on a consolidated basis, as determined in accordance with GAAP, and including, without duplication, (a) all amortization or accretion of original issue discount; (b) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period; and (c) net cash costs under all Interest Swap Obligations (including amortization of fees).

“Consolidated Net Income” means, for any period, the aggregate net income (or loss) of the Company and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided, that there shall be excluded therefrom (to the extent otherwise included therein):

(1) gains from Asset Sales and extraordinary gains, in each case together with any provision for taxes on such gains;

(2) the net income (but not loss) of any Subsidiary of the Company to the extent that the declaration of dividends or similar distributions by that Subsidiary of that income is restricted by a contract, operation of law or otherwise;

(3) the net income (but not loss) of any Person, other than the Company or a Restricted Subsidiary, except to the extent of cash dividends or distributions paid to the Company or to a Restricted Subsidiary by such Person;

(4) any restoration to income of any material contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date;

(5) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued);

(6) all gains realized on or because of the purchase or other acquisition by the Company or any of its Restricted Subsidiaries of any securities of such Person or any of its Restricted Subsidiaries;

(7) the cumulative effect of a change in accounting principles; and

(8) in the case of a successor to the Company by consolidation or merger or as a transferee of the Company’s assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets.

“Consolidated Non-cash Charges” means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash items and expenses of such Person and its consolidated Subsidiaries to the extent they reduce Consolidated Net Income of such Person for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss or any such charge that requires an accrual of or a reserve for cash charges for any future period).

“Credit Agreement” means the Credit Agreement, dated as of the Issue Date, among the Company and the lenders party thereto (together with their successors and assigns, the “Lenders”) and Wells Fargo Foothill, Inc., as administrative agent (in such capacity, together with its successors and assigns, the “Administrative Agent”), together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), or any agreement extending the maturity of, refinancing, replacing, refunding,

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restating or otherwise restructuring (whether upon or at any time or from time to time after termination or otherwise) all or any portion of the Indebtedness under such agreement or document or any successor or replacement agreement or document and whether by the same or any other agent, lender or group of lenders, or institutional investors, providing for revolving credit loans, term loans, letters of credit or issuance of notes or any other debt, in each of the above cases as such agreements may be amended, supplemented or otherwise modified from time to time.

“Currency Agreement” means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary against fluctuations in currency values.

“Default” means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default.

“Disqualified Capital Stock” with respect to any Person means that portion of any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event that would constitute a Change of Control), matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except in each case, upon the occurrence of a Change of Control) on or prior to the first anniversary of the final maturity date of the Notes for cash or is convertible into or exchangeable for debt securities of the Company or its Subsidiaries at any time prior to such anniversary.

“Domestic Restricted Subsidiary” means, with respect to any Person, a Domestic Subsidiary of such Person that is a Restricted Subsidiary of such Person.

“Domestic Subsidiary” means, with respect to any Person, a Subsidiary of such Person that is not a Foreign Subsidiary of such Person.

“Equity Offering” means an underwritten public offering of Common Stock of the Company or any holding company of the Company (including Altra Holdings) pursuant to a registration statement filed with the SEC (other than on Form S-8) or any private placement of Common Stock of the Company or any holding company of the Company (including Altra Holdings) to any Person other than issuances upon exercise of options by employees of any holding company, the Company or any of the Restricted Subsidiaries.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.

“Exchange Offer” means an exchange offer that may be made by the Company, pursuant to the Registration Rights Agreement, to exchange for any and all the Notes a like aggregate principal amount of Notes having substantially identical terms to the Notes registered under the Securities Act.

“Fair Market Value” means, with respect to any asset or property, the price which could be negotiated in an arm’s length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined by the Board of Directors of the Company acting in good faith and shall be evidenced by a Board Resolution.

“Foreign Restricted Subsidiary” means any Restricted Subsidiary that is organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia.

“Foreign Subsidiary” means, with respect to any Person, any Subsidiary of such Person that is organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia.

“GAAP” means accounting principles generally accepted in the United States set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other

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statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect from time to time.

“Guarantor” means (1) each of the Company’s Domestic Restricted Subsidiaries existing on the Issue Date and (2) each of the Company’s Domestic Restricted Subsidiaries that in the future executes a supplemental indenture in which such Domestic Restricted Subsidiary agrees to be bound by the terms of the Indenture as a Guarantor; provided that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its respective Guarantee is released in accordance with the terms of the Indenture.

“Holder” means the Person in whose name a Note is registered on the registrar’s books.

“Indebtedness” means with respect to any Person, without duplication:

(1) all Obligations of such Person for borrowed money;

(2) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) all Capitalized Lease Obligations of such Person;

(4) all Obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business, consistent with past practice, that are not overdue by 90 days or more or are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and any deferred purchase price represented by earn outs consistent with the Company’s past practice);

(5) all Obligations for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction, whether or not then due;

(6) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (1) through (5) above and clause (8) below;

(7) all Obligations of any other Person of the type referred to in clauses (1) through (6) which are secured by any Lien on any property or asset of such Person, the amount of any such Obligation being deemed to be the lesser of the Fair Market Value of the property or asset securing such Obligation or the amount of such Obligation;

(8) all Interest Swap Obligations and all Obligations under Currency Agreements of such Person; and

(9) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any.

For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the Fair Market Value of such Disqualified Capital Stock, such Fair Market Value shall be determined reasonably and in good faith by the board of directors of the issuer of such Disqualified Capital Stock.

“Independent Financial Advisor” means a nationally-recognized accounting, appraisal or investment banking firm: (1) that does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Company; and (2) that, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged.

“Intercreditor Agreement” means the Intercreditor Agreement among the Administrative Agent, the Trustee, the Collateral Agent, the Company and the Guarantors, dated as of the Issue Date, as the same may be amended, supplemented or modified from time to time.

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“Interest Swap Obligations” means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements.

“Investment” in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business, consistent with past practice, that are required to be recorded in accordance with GAAP as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition for value of Capital Stock, Indebtedness or other similar instruments issued by such Person. If the Company or any Restricted Subsidiary issues, sells or otherwise disposes of any Capital Stock of a Person that is a Restricted Subsidiary such that, after giving effect thereto, such Person is no longer a Restricted Subsidiary, any Investment by the Company or any Restricted Subsidiary in such Person remaining after giving effect thereto will be deemed to be a new Investment at such time. The acquisition by the Company or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person at such time. Except as otherwise provided for herein, the amount of an Investment shall be its fair market value at the time the Investment is made and without giving effect to subsequent changes in value.

For purposes of the definition of “Unrestricted Subsidiary”, the definition of “Restricted Payment” and the covenant described under “— Certain Covenants — Limitation on Restricted Payments”:

(i) “Investment” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to (A) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

(ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company.

“Issue Date” means November 30, 2004.

“Lenders” has the meaning set forth in the definition of the term “Credit Agreement.”

“Lien” means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest).

“Management Agreement” means the advisory services agreement, dated as of the Issue Date, by and among the Company, Altra Holdings and Genstar Capital, L.P.

“Mortgages” means the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents securing Liens on the Premises and/or the Leased Premises, as well as the other Collateral secured by and described in the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents.

“Net Cash Proceeds” means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash

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or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of:

(1) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions);

(2) all taxes and other costs and expenses actually paid or estimated by the Company (in good faith) to be payable in cash in connection with such Asset Sale;

(3) repayment of Indebtedness that is secured by the property or assets that are the subject of such Asset Sale and is required to be repaid in connection with such Asset Sale; and

(4) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale;

provided, however, that if, after the payment of all taxes with respect to such Asset Sale, the amount of estimated taxes, if any, pursuant to clause (2) above exceeded the tax amount actually paid in cash in respect of such Asset Sale, the aggregate amount of such excess shall, at such time, constitute Net Cash Proceeds.

“Obligations” means all obligations for principal, premium, interest, Additional Interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“Offering” means the offering of the Notes hereunder.

“Officer” means the Chief Executive Officer, the President, the Chief Financial Officer or any Vice President of the Company.

“Officers’ Certificate” means a certificate signed by two Officers of the Company, at least one of whom shall be the principal financial officer of the Company, and delivered to the Trustee.

“Opinion of Counsel” means a written opinion of counsel who shall be reasonably acceptable to the Trustee.

“Permitted Business” means any business that is the same as or similar, reasonably related, complementary or incidental to the business in which the Company and its Restricted Subsidiaries are engaged on the Issue Date.

“Permitted Holders” means Genstar Capital, L.P. and its Affiliates.

“Permitted Indebtedness” means, without duplication, each of the following:

(1) Indebtedness under the Notes issued in the original offering or in the Exchange Offer, in an aggregate outstanding principal amount not to exceed $165.0 million, and the related Guarantees;

(2) Indebtedness incurred pursuant to the Credit Agreement in an aggregate principal amount at any time outstanding not to exceed $30.0 million, as such amount may be reduced from time to time as a result of permanent reductions of the commitments thereunder as provided in “— Certain Covenants — Limitation on Asset Sales;”

(3) other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date;

(4) Interest Swap Obligations of the Company or any Restricted Subsidiary of the Company covering Indebtedness of the Company or any of its Restricted Subsidiaries; provided, however, that such Interest Swap Obligations are entered into for the purpose of fixing or hedging interest rates with respect to any fixed or variable rate Indebtedness that is permitted by the Indenture to be outstanding to the

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extent that the notional amount of any such Interest Swap Obligation does not exceed the principal amount of Indebtedness to which such Interest Swap Obligation relates;

(5) Indebtedness under Currency Agreements; provided that in the case of Currency Agreements which relate to Indebtedness, such Currency Agreements do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;

(6) Intercompany Indebtedness of the Company or a Guarantor for so long as such Indebtedness is held by the Company or a Guarantor; provided that if as of any date any other Person owns or holds any such Indebtedness or a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness under this clause (6) by the issuer of such Indebtedness;

(7) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, consistent with past practice; provided, that such Indebtedness is extinguished within three business days of incurrence;

(8) Indebtedness of the Company or any of its Restricted Subsidiaries represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, to provide security for workers’ compensation claims, payment obligations in connection with self-insurance or similar requirements in the ordinary course of business, consistent with past practice;

(9) obligations in respect of performance, bid and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business, consistent with past practice;

(10) Indebtedness represented by Capitalized Lease Obligations and Purchase Money Indebtedness incurred in the ordinary course of business, consistent with past practice (including Refinancings thereof that do not result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by the Company in connection with such Refinancing)) not to exceed $5.0 million at any time outstanding;

(11) Refinancing Indebtedness;

(12) Indebtedness represented by guarantees by the Company or a Restricted Subsidiary of Indebtedness incurred by the Company or a Restricted Subsidiary so long as the incurrence of such Indebtedness by the Company or any such Restricted Subsidiary is otherwise permitted by the terms of the Indenture;

(13) Indebtedness of the Company or any of its Restricted Subsidiaries to the extent the net proceeds thereof are promptly used to redeem the Notes in full or deposited to defease or discharge the Notes, in each case, in accordance with the Indenture; and

(14) additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount not to exceed $15.0 million at any time outstanding.

For purposes of determining compliance with the “— Certain Covenants — Limitation on Incurrence of Additional Indebtedness” covenant, (a) the outstanding principal amount of any item of Indebtedness shall be counted only once and (b) in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (14) above or is entitled to be incurred pursuant to the Consolidated Fixed Charge Coverage Ratio provisions of such covenant, the Company shall, in its sole discretion, classify (or later reclassify) such item of Indebtedness in any manner that complies with this covenant.

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“Permitted Investments” means:

(1) Investments in any Person that is or will become immediately after such Investment a Guarantor or that will merge or consolidate with or into the Company or a Guarantor, or that transfers or conveys all or substantially all of its assets to the Company or a Guarantor;

(2) Investments in the Company by any Restricted Subsidiary; provided that any Indebtedness evidencing such Investment is unsecured and subordinated, pursuant to a written agreement, to the Company’s Obligations under the Notes and the Indenture;

(3) Investments in cash and Cash Equivalents;

(4) Currency Agreements and Interest Swap Obligations entered into in the ordinary course of the Company’s or its Restricted Subsidiaries’ businesses, consistent with past practice, and otherwise in compliance with the Indenture;

(5) Investments in the Notes and Exchange Notes;

(6) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers in exchange for claims against such trade creditors or customers;

(7) Investments as a result of non-cash consideration received in connection with an Asset Sale made in compliance with the “— Certain Covenants — Limitation on Asset Sales” covenant;

(8) Investments in existence on the Issue Date;

(9) loans and advances, including advances for travel and moving expenses, to employees, officers and directors of the Company and its Restricted Subsidiaries in the ordinary course of business, consistent with past practice, for bona fide business purposes and in accordance with applicable laws not in excess of $500,000 at any one time outstanding; and

(10) advances to suppliers and customers in the ordinary course of business, consistent with past practice.

“Permitted Liens” means the following types of Liens:

(1) Liens (other than Liens arising under ERISA) for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP;

(2) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law or pursuant to customary reservations or retentions of title incurred in the ordinary course of business, consistent with past practice, for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;

(3) Liens incurred or deposits made in the ordinary course of business, consistent with past practice, in connection with workers’ compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business, consistent with past practice, in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);

(4) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business, consistent with past practice, of the Company or any of its Restricted Subsidiaries;

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(5) any interest or title of a lessor under any Capitalized Lease Obligation permitted pursuant to clause (10) of the definition of “Permitted Indebtedness;” provided that such Liens do not extend to any property or assets which is not leased property subject to such Capitalized Lease Obligation;

(6) Liens securing Purchase Money Indebtedness permitted pursuant to clause (10) of the definition of “Permitted Indebtedness;” provided, that (a) the Indebtedness shall not exceed the cost of the property or assets acquired, together, in the case of real property, with the cost of the construction thereof and improvements thereto, and shall not be secured by a Lien on any property or assets of the Company or any Restricted Subsidiary other than such property or assets so acquired or constructed and improvements thereto and (b) the Lien securing such Indebtedness shall be created within 180 days of such acquisition or construction or, in the case of a refinancing of any Purchase Money Indebtedness, within 180 days of such refinancing;

(7) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(8) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;

(9) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;

(10) Liens securing Interest Swap Obligations that relate to Indebtedness that is otherwise permitted under the Indenture;

(11) Liens securing Indebtedness under Currency Agreements that are permitted under the Indenture;

(12) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within such proceedings may be initiated shall not have expired;

(13) Liens securing Acquired Indebtedness incurred in accordance with the “— Certain Covenants — Limitation on Incurrence of Additional Indebtedness” covenant; provided, that such Liens do not extend to or cover any property or assets of the Company or of any of its Restricted Subsidiaries other than the property or assets that secure the Acquired Indebtedness;

(14) Liens securing the Notes and all other monetary obligations under the Indenture and the Guarantees;

(15) Liens securing Indebtedness under the Credit Agreement to the extent such Indebtedness is permitted under clause (2) of the definition of the term “Permitted Indebtedness;” and

(16) Liens securing Refinancing Indebtedness incurred to Refinance any Indebtedness secured by a Lien permitted under this paragraph and incurred in accordance with the “— Certain Covenants — Limitation on Incurrence of Additional Indebtedness” provisions of the Indenture; provided, that such Liens: (i) are no less favorable to the Holders and are not more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced; and (ii) do not extend to or cover any property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so Refinanced.

“Person” means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.

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“Preferred Stock” of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.

“Public Equity Offering” means an underwritten public offering of Common Stock of the Company or any holding company of the Company pursuant to a registration statement filed with the SEC (other than on Form S-8).

“Purchase Money Indebtedness” means Indebtedness of the Company and its Restricted Subsidiaries incurred for the purpose of financing all or any part of the purchase price, or the cost of installation, construction or improvement, of property or equipment, provided, that the aggregate principal amount of such Indebtedness does not exceed the lesser of the Fair Market Value of such property or such purchase price or cost.

“Qualified Capital Stock” means any Capital Stock that is not Disqualified Capital Stock.

“Refinance” means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. “Refinanced” and “Refinancing” shall have correlative meanings.

“Refinancing Indebtedness” means any Refinancing by the Company or any Restricted Subsidiary of Indebtedness incurred in accordance with the “— Certain Covenants — Limitation on Incurrence of Additional Indebtedness” covenant (other than pursuant to Permitted Indebtedness) or clauses (1), (3) or (11) of the definition of Permitted Indebtedness, in each case that does not:

(1) have an aggregate principal amount (or, if such Indebtedness is issued with original issue discount, an aggregate offering price) greater than the sum of (x) the aggregate principal amount of the Indebtedness being Refinanced (or, if such Indebtedness being Refinanced is issued with original issue discount, the aggregate accreted value) as of the date of such proposed Refinancing plus (y) the amount of fees, expenses, premium, defeasance costs and accrued but unpaid interest relating to the Refinancing of such Indebtedness being Refinanced;

(2) create Indebtedness with: (a) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced; or (b) a final maturity earlier than the final maturity of the Indebtedness being Refinanced; or

(3) affect the security, if any, for such Refinancing Indebtedness (except to the extent that less security is granted to holders of such Refinancing Indebtedness).

If such Indebtedness being Refinanced is subordinate or junior by its terms to the Notes, then such Refinancing Indebtedness shall be subordinate by its terms to the Notes at least to the same extent and in the same manner as the Indebtedness being Refinanced.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of April 5, 2007, between the Company, the Guarantors and the Initial Purchaser, as the same may be amended or modified from time to time in accordance with the terms thereof.

“Restricted Subsidiary” means any Subsidiary of the Company which at the time of determination is not an Unrestricted Subsidiary.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Security Agreement” means the Security Agreement, dated as of the Issue Date, made by the Company and the Guarantors in favor of the Collateral Agent, as amended or supplemented from time to time in accordance with its terms.

“Significant Subsidiary” with respect to any Person, means any Restricted Subsidiary of such Person that satisfies the criteria for a “significant subsidiary” set forth in Rule 1-02(w) of Regulation S-X under the Exchange Act.

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“Subsidiary” with respect to any Person, means:

(1) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person; or

(2) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person.

“Syracuse Facility” means the facility of the Company located at 1728 Burnet Avenue, Syracuse, Onondago County, New York.

“Unrestricted Subsidiary” means:

(1) any Subsidiary of the Company that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and

(2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors may designate any Subsidiary (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated, provided that:

(1) the Company certifies to the Trustee that such designation complies with the “— Certain Covenants — Limitation on Restricted Payments” covenant; and

(2) each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries.

The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if:

(1) immediately after giving effect to such designation, the Company is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the “— Certain Covenants — Limitation on Incurrence of Additional Indebtedness” covenant; and

(2) immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing.

Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.

“Voting Stock” means, with respect to any Person, securities of any class or classes of Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors (or equivalent governing body) of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (1) the then outstanding aggregate principal amount of such Indebtedness into (2) the sum of the total of the products obtained by multiplying:

(a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by

(b) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.

“Wholly Owned Subsidiary” means any Guarantor of which all the outstanding Capital Stock (other than directors’ qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by the Company or any other Wholly Owned Subsidiary.

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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the material U.S. federal income tax consequences relating to the exchange of old notes for registered notes in the exchange offer. This discussion does not address all tax aspects relating to the exchange. This discussion deals only with the material U.S. federal income tax consequences to persons who hold such notes as capital assets and does not deal with the consequences to special classes of holders of the notes, such as dealers in securities or currencies, brokers, traders that mark-to-market their securities, insurance companies, tax-exempt entities, financial institutions or “financial services entities,” persons with a functional currency other than the U.S. dollar, regulated investment companies, real estate investment trusts, retirement plans, expatriates or former long-term residents of the United States, persons who hold their notes as part of a straddle, hedge, “conversion transaction,” “constructive sale” or other integrated investment, persons subject to the alternative minimum tax, partnerships or other pass-through entities or investors in partnerships or other pass-through entities that hold the notes. The discussion is based upon the Internal Revenue Code of 1986, as amended, which we refer to as the Code, and the Treasury Regulations promulgated thereunder, and rulings and judicial interpretations thereof, all as in effect on the date of this prospectus, any of which may be repealed or subject to change, possibly with retroactive effect.

Consequences of Tendering Old Notes

The exchange of old notes for registered notes (with substantially identical terms) in the exchange offer will not be a taxable event for U.S. federal income tax purposes, and a holder will have the same adjusted tax basis and holding period in such registered notes that the holder had in the old notes immediately before the exchange. The U.S. federal income tax consequences of holding and disposing of such registered notes will be the same as those applicable to the old notes.

THE PRECEDING DISCUSSION OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF OLD NOTES FOR REGISTERED NOTES IS NOT TAX ADVICE. ACCORDINGLY, EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO IT RELATING TO THE EXCHANGE, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAW.

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PLAN OF DISTRIBUTION

Any broker-dealer who holds old notes that were acquired for its own account as a result of market-making activities or other trading activities (other than old notes acquired directly from the issuer), may exchange such old notes pursuant to the exchange offer; however, such broker-dealer may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the registered notes received by such broker-dealer in the exchange offer, which prospectus delivery requirement may be satisfied by the delivery of such broker-dealer of this prospectus. We have agreed that, for a period ending on the earlier of (a) 180 days after the registration statement containing this prospectus is declared effective and (b) the date on which a broker-dealer is no longer required to deliver a prospectus in connection with market-making or other trading activities, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until          , 2007, all dealers effecting transactions in the registered notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of registered notes by broker-dealers. Registered notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over the counter market, in negotiated transactions, through the writing of options on the registered notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such registered notes. Any broker-dealer that resells registered notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such registered notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of registered notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

We will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

Weil, Gotshal & Manges LLP, New York, New York has passed upon the validity of the registered notes and certain of the related guarantees on our behalf. Dechert LLP, Washington, District of Columbia has passed upon the validity of certain of the related guarantees on our behalf.

EXPERTS

The consolidated financial statements of Altra Industrial Motion, Inc. for the years ended December 31, 2005 and December 31, 2006 and for the period from inception (December 1, 2004) through December 31, 2004, and the combined financial statements of the Predecessor for the period from January 1, 2004 through November 30, 2004, appearing in this Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of Hay Hall Holdings Limited included in this prospectus and in the Registration Statement have been audited by BDO Stoy Hayward, LLP, independent chartered accountants,

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to the extent and for the periods set forth in their report appearing elsewhere herein, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

The consolidated financial statements of TB Wood’s Corporation as of December 31, 2005 and 2006 and for the years ended December 31, 2004, 2005 and 2006, appearing in this registration statement have been audited by Grant Thornton LLP, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

We have filed with the Securities and Exchange Commission a registration statement on Form S-4 under the Securities Act with respect to the registered notes. This prospectus, which is a part of the registration statement, omits certain information included in the registration statement and the exhibits thereto. For further information with respect to us and the securities, we refer you to the registration statement and its exhibits. The descriptions of each contract and document contained in this prospectus are summaries and qualified in their entirety by reference to the copy of each such contract or document filed as an exhibit to the registration statement. You may read and copy any document we file or furnish with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. You can review our SEC filings, including the registration statement by accessing the SEC’s Internet site at http://www.sec.gov.

Upon completion of the exchange offer, we will be subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith, will file reports with the SEC. You may inspect and copy these reports and other information at the address set forth above. You may request copies of the documents, at no cost, by telephone at (617) 328-3300 or by mail to Altra Industrial Motion, Inc., 14 Hayward Street, Quincy, Massachusetts 02171.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Altra Industrial Motion, Inc.
Audited Financial Statements:
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets — as of December 31, 2006 and 2005		F-3
Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2006 and December 31, 2005, for the period from Inception (December 1, 2004) through December 31, 2004, and Combined Statement of Operations and Comprehensive Income for the Predecessor for the eleven months ended November 30, 2004		F-4
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2006 and December 31, 2005, for the period from Inception (December 1, 2004) through December 31, 2004, and for the Predecessor for the eleven months ended November 30, 2004		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2006 and December 31, 2005, for the period from Inception (December 1, 2004) through December 31, 2004, and Combined Statement of Cash Flows for the Predecessor for the eleven months ended November 30, 2004		F-6
Notes to Consolidated Financial Statements		F-7
TB Wood’s Corporation
Audited Financial Statements:
Report of Independent Registered Public Accounting Firm		F-45
Consolidated Balance Sheets as of December 31, 2006 and December 31, 2005		F-46
Consolidated Statements of Operations for the Years Ended December 31, 2006 and December 31, 2005, December 31, 2004		F-47
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2006, December 31, 2005, and December 31, 2004		F-48
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2006, December 31, 2005, and December 31, 2004		F-49
Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, December 31, 2005, and December 31, 2004		F-50
Notes to Consolidated Financial Statements		F-51
Hay Hall Holdings Limited
Audited Financial Statements:
Independent Auditors’ Report		F-68
Consolidated Profit and Loss Account for the year ended December 31, 2005		F-69
Consolidated Statement of Total Recognised Gains and Losses for year ended December 31, 2005		F-70
Consolidated Balance Sheet as of December 31, 2005		F-71
Company Balance Sheet as of December 31, 2005		F-72
Cash Flow Statement for year ended December 31, 2005		F-73
Notes to Accounts		F-74

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Altra Industrial Motion, Inc.

We have audited the accompanying consolidated balance sheets of Altra Industrial Motion, Inc. (the Company), as of December 31, 2006 and 2005 and the related consolidated statements of operations and comprehensive income (loss), changes in stockholder’s equity, and cash flows for the years ended December 31, 2006 and December 31, 2005 and the period from inception (December 1, 2004) through December 31, 2004, and the combined statements of operations and comprehensive income, stockholder’s equity and cash flows of the Predecessor for the period from January 1, 2004 through November 30, 2004. Our audits also included the financial statement schedule listed in the index at Item 21(b). These financial statements and schedule are the responsibility of management of the Company and its Predecessor. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Altra Industrial Motion, Inc. at December 31, 2006 and 2005 and the consolidated results of the operations and cash flows of the Company for the years ended December 31, 2006 and 2005 and the period from inception (December 1, 2004) through December 31, 2004, and the combined results of operations and cash flows of its Predecessor for the period from January 1, 2004 through November 30, 2004 in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, in 2006 the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 158, “Employers Accounting for Defined Benefit Pension and Other Postretirement Plans — An amendment of FASB Statements No. 87, 88, 106 and 132(R).”

/s/  Ernst & Young LLP

Boston, Massachusetts

March 9, 2007

F-2

ALTRA INDUSTRIAL MOTION, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2006			2005
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	42,527		$	10,060
Trade receivables, less allowance for doubtful accounts of $2,017 and $1,797		61,506			46,441
Inventories, less allowance for obsolete materials of $10,163 and $6,843		75,769			54,654
Deferred income taxes		6,783			2,779
Prepaid expenses and other		7,532			1,973
Total current assets		194,117			115,907
Property, plant and equipment, net		82,387			66,393
Intangible assets, net		59,662			44,751
Goodwill		65,397			65,345
Deferred income taxes		2,135			—
Other assets		5,670			5,008
Total assets	$	409,368		$	297,404
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	34,053		$	30,724
Accrued payroll		15,557			16,016
Accruals and other liabilities		13,709			5,940
Taxes Payable		6,549			2,932
Deferred income taxes		1,382			33
Current portion of long-term debt		573			186
Total current liabilities		71,823			55,831
Long-term debt, less current portion and net of unaccreted discount		228,555			159,574
Deferred income taxes		7,130			7,550
Pension liabilities		15,169			21,735
Other post retirement benefits		3,262			12,500
Other long term liabilities		3,910			1,601
Commitments and Contingencies (see Note 15)		—			—
Stockholder’s equity:
Common stock (1,000 shares authorized, issued & outstanding, $0.001 par value)		—			—
Additional paid-in capital		48,814			48,814
Due to (from) Parent		24,724			(1,610	)
Retained earnings (deficit)		9,045			(1,318	)
Accumulated other comprehensive loss		(3,064	)		(7,273	)
Total stockholder’s equity		79,519			38,613
Total liabilities and stockholder’s equity	$	409,368		$	297,404

See accompanying notes.

F-3

ALTRA INDUSTRIAL MOTION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

							From
							Inception			Predecessor
							(December 1,			(Note 1)
							2004)			11 Months
	Year-Ended			Year-Ended			through			Ended
	December 31,			December 31,			December 31,			November 30,
	2006			2005			2004			2004
	(In thousands)
Consolidated Statement of Operations
Net sales	$	462,285		$	363,465		$	28,625		$	275,037
Cost of sales		336,836			271,952			23,847			209,253
Gross profit		125,449			91,513			4,778			65,784
Selling, general and administrative expenses		83,256			61,520			8,973			45,321
Research and development expenses		4,938			4,683			378			3,947
Restructuring charge, asset impairment and transition expenses		—			—			—			947
Gain on curtailment of post-retirement benefit plan		(3,838	)		—			—			—
Gain on sale of fixed assets		—			(99	)		—			(1,300	)
Income (loss) from operations		41,093			25,409			(4,573	)		16,869
Interest expense, net		23,522			17,065			1,410			4,294
Other non-operating expense (income), net		856			(17	)		—			148
Income (loss) before income taxes		16,715			8,361			(5,983	)		12,427
Provision (benefit) for income taxes		6,352			3,917			(221	)		5,532
Net income (loss)	$	10,363		$	4,444		$	(5,762	)	$	6,895
Consolidated Statement of Comprehensive Income (Loss)
Minimum pension liability adjustment		696			(700	)		(722	)		(6,031	)
Foreign currency translation adjustment		677			(6,400	)		549			478
Other comprehensive income (loss)		1,373			(7,100	)		(173	)		(5,553	)
Comprehensive income (loss)	$	11,736		$	(2,656	)	$	(5,935	)	$	1,342

See accompanying notes.

F-4

ALTRA INDUSTRIAL MOTION, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

			Accumulated
			Other
	Invested		Comprehensive			Net Invested
	Capital		Loss			Capital
	(In thousands)
For the Predecessor
Balance at December 31, 2003	$	30,221	$	(33,225	)	$	(3,004	)
Net income		6,895		—			6,895
Contribution from affiliates		7,922		—			7,922
Other comprehensive income, net of $3,697 tax benefit		—		(5,553	)		(5,553	)
Balance at November 30, 2004	$	45,038	$	(38,778	)	$	6,260

											Accumulated
			Additional		Retained						Other
	Common		Paid-In		Earnings			Due to			Comprehensive
	Stock		Capital		(Deficit)			(From) Parent			Loss			Total
	(In thousands)
For the Company
Initial capital contribution	$	—	$	39,994	$	—		$	—		$	—		$	39,994
Common stock issuance related to acquisition		—		8,820		—			—			—			8,820
Net loss		—		—		(5,762	)		—			—			(5,762	)
Other comprehensive loss		—		—		—			—			(173	)		(173	)
Balance at December 31, 2004		—		48,814		(5,762	)		—			(173	)		42,879
Net income		—		—		4,444			—			—			4,444
Payments made on behalf of parent company		—		—		—			(1,610	)		—			(1,610	)
Other comprehensive loss, net of $1,938 tax benefit		—		—		—			—			(7,100	)		(7,100	)
Balance at December 31, 2005	$	—	$	48,814	$	(1,318	)	$	(1,610	)	$	(7,273	)	$	38,613
Net Income		—		—		10,363			—			—			10,363
Net Proceeds received from parent company		—		—		—			26,334			—			26,334
Cumulative foreign currency translation adjustment, net of $880 tax expense		—		—		—			—			677			677
Minimum pension liability adjustment and cumulative transition to SFAS No. 158, net of $2,165 tax expense		—		—		—			—			3,532			3,532
Balance at December 31, 2006	$	—	$	48,814	$	9,045		$	24,724		$	(3,064	)	$	79,519

See accompanying notes.

F-5

ALTRA INDUSTRIAL MOTION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

							From
							Inception			Predecessor
							(December 1,			(Note 1)
							2004			11 Months
	Year-Ended			Year-Ended			through			Ended
	December 31,			December 31,			December 31,			November 30,
	2006			2005			2004)			2004
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	10,363		$	4,444		$	(5,762	)	$	6,895
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation		10,821			8,574			673			6,074
Amortization of intangible assets		3,790			2,959			246			—
Amortization of deferred loan costs		968			621			49			—
Loss on foreign currency, net		1,079			—			—			—
Accretion of debt discount		942			942			79			—
Gain on sale of fixed assets		—			(99	)		—			(1,300	)
Amortization of inventory step-up		2,278			1,699			1,699			—
Stock-based compensation		1,945			—			—			—
Gain on curtailment of post-retirement benefit plan		(3,838	)		—			—			—
Provision (benefit) for deferred taxes		1,190			248			(1,031	)		117
Changes in operating assets and liabilities:
Trade receivables		(330	)		(2,654	)		(324	)		(4,197	)
Inventories		(3,973	)		(1,353	)		(412	)		(6,418	)
Accounts payable and accrued liabilities		(10,277	)		(1,832	)		9,473			3,734
Other current assets and liabilities		(2,297	)		2,226			(2,126	)		1,477
Other operating assets and liabilities		752			(1,940	)		3,059			(2,778	)
Net cash provided by operating activities		13,413			13,835			5,623			3,604
Cash flows from investing activities:
Purchases of fixed assets		(9,408	)		(6,199	)		(289	)		(3,489	)
Acquisitions, net of $775 and $2,367 of cash acquired in 2006 and 2004, respectively		(53,755	)		1,607			(180,112	)		—
Payment of additional Kilian purchase price		—			(730	)		—			—
Proceeds from sale of fixed assets		—			125			—			4,442
Net cash (used in) provided by investing activities		(63,163	)		(5,197	)		(180,401	)		953
Cash flows from financing activities:
Contributed capital		—			—			39,994			—
Proceeds from issuance of senior secured subordinated notes		—			—			158,400			—
Proceeds from issuance of senior notes		57,625			—			—			—
Payments of debt acquired in acquisitions		—			—			(12,178	)		—
Payment of debt issuance costs		(2,731	)		(338	)		(6,747	)		—
Net payments received from (made on behalf of) parent company		24,389			(1,610	)		—			—
Borrowings under revolving credit agreement		5,057			4,408			4,988			—
Payments on revolving credit agreement		(5,057	)		(4,408	)		(4,988	)		—
Proceeds from mortgages		2,510			—			—			—
Payment of capital leases		(241	)		(835	)		(37	)		—
Contribution from affiliates		—			—			—			7,922
Change in affiliate debt		—			—			—			(14,618	)
Net cash provided by (used in) financing activities		81,552			(2,783	)		179,432			(6,696	)
Effect of exchange rates on cash		665			(524	)		75			159
Increase (decrease) in cash and cash equivalents		32,467			5,331			4,729			(1,980	)
Cash and cash equivalents, beginning of period		10,060			4,729			—			3,163
Cash and cash equivalents, end of period	$	42,527		$	10,060		$	4,729		$	1,183
Cash paid during the period for:
Interest	$	23,660		$	15,448		$	—		$	2,796
Income Taxes	$	2,341		$	1,761		$	—		$	446
Non-Cash Financing:
Acquisition of capital equipment under capital lease	$	613		$	—		$	—		$	—

See accompanying notes.

F-6

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Description of Business and Summary of Significant Accounting Policies

Basis of Preparation and Description of Business

Headquartered in Quincy, Massachusetts, Altra Industrial Motion, Inc. (“the Company”) produces, designs and distributes a wide range of mechanical power transmission products, including industrial clutches and brakes, enclosed gear drives, open gearing and couplings. The Company consists of several power transmission component manufacturers including Warner Electric, Boston Gear, Formsprag Clutch, Stieber Clutch, Ameridrives Couplings, Wichita Clutch, Nuttall Gear, Kilian Manufacturing, Inertia Dynamics, Twiflex Limited, Industrial Clutch, Huco Dynatork, Matrix International, Warner Linear and Delroyd Worm Gear. The Company designs and manufactures products that serve a variety of applications in the food and beverage, material handling, printing, paper and packaging, specialty machinery, and turf and garden industries. Primary geographic markets are in North America, Western Europe and Asia.

The Company was formed on November 30, 2004 following acquisitions of certain subsidiaries of Colfax Corporation (“Colfax”) and The Kilian Company (“Kilian”) and is a wholly owned subsidiary of Altra Holdings, Inc. The consolidated financial statements of the Company include the accounts of the Company subsequent to November 30, 2004. The financial statements of “the Predecessor” include the combined historical financial statements of the Colfax entities acquired by the Company that formerly comprised the Power Transmission Group of Colfax, a privately-held industrial manufacturing company, that are presented for comparative purposes.

The historical financial results of Kilian, which was not related to the Predecessor, are not included in the presentation of Predecessor balances in the financial statements or the accompanying footnotes.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, the Predecessor (where noted) and their wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Reclassification

Certain prior period amounts have been reclassified in the consolidated financial statements to conform to the current period presentation.

Fair Value of Financial Instruments

The carrying values of financial instruments, including accounts receivable, accounts payable and other accrued liabilities, approximate their fair values due to their short-term maturities. The carrying amount of the 9% Senior Secured Notes was $160.4 and $159.4 million at December 31, 2006 and 2005, respectively. The carrying amount of the 11.25% Senior Notes was $64.6 million as of December 31, 2006. The estimated fair value of the 9% Senior Secured Notes at December 31, 2006 and December 31, 2005 was $168.3 million and $160.1 million, respectively based on quoted market prices for such Notes. The estimated fair value of the 11.25% Senior Notes was approximately £36.3 million ($71.1 million) as of December 31, 2006.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the financial statements. Actual results could differ from those estimates.

F-7

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Foreign currency translation

Assets and liabilities of subsidiaries operating outside of the United States with a functional currency other than the U.S. dollar are translated into U.S. dollars using exchange rates at the end of the respective period. Revenues and expenses are translated at average exchange rates effective during the respective period.

Foreign currency translation adjustments are included in accumulated other comprehensive loss as a separate component of stockholder’s equity. Net foreign currency transaction gains and losses are included in the results of operations in the period incurred.

Cash and Cash Equivalents

Cash and cash equivalents include all financial instruments purchased with an initial maturity of three months or less. Cash equivalents are stated at cost, which approximates fair value.

Trade Receivables

An allowance for doubtful accounts is recorded for estimated collection losses that will be incurred in the collection of receivables. Estimated losses are based on historical collection experience, as well as, a review by management of the status of all receivables. Collection losses have been within the Company’s expectations.

Inventories

Inventories are stated at the lower of cost or market using the first-in, first-out (“FIFO”) method. The cost of inventories acquired by the Company in its acquisitions reflect their fair values at the date acquisition as determined by the Company based on the replacement cost of raw materials, the sales price of the finished goods less an appropriate amount representing the expected profitability from selling efforts, and for work-in-process the sales price of the finished goods less an appropriate amount representing the expected profitability from selling efforts and costs to complete.

The Company periodically reviews its quantities of inventories on hand and compares these amounts to the expected usage of each particular product or product line. The Company records as a charge to cost of sales any amounts required to reduce the carrying value of inventories to net realizable value.

Property, Plant and Equipment

Property, plant, and equipment are stated at cost, net of accumulated depreciation incurred since November 30, 2004.

Depreciation of property, plant, and equipment is provided using the straight-line method over the estimated useful life of the asset, as follows:

Buildings and improvements	15 to 45 years
Machinery and equipment	2 to 15 years

Improvements and replacements are capitalized to the extent that they increase the useful economic life or increase the expected economic benefit of the underlying asset. Repairs and maintenance expenditures are charged to expense as incurred.

Intangible Assets

Intangibles represent product technology and patents, tradenames and trademarks and customer relationships. Product technology, patents and customer relationships are amortized on a straight-line basis over 8 to 12 years. The tradenames and trademarks are considered indefinite-lived assets and are not being amortized.

F-8

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Intangibles are stated at fair value on the date of acquisition, at December 31, 2006, and 2005 intangibles are stated net of accumulated amortization incurred since the date of acquisition.

Goodwill

Goodwill represents the excess of the purchase price paid by the Company for the Predecessor, Kilian, Hay Hall and Bear Linear over the fair value of the net assets acquired in each of the acquisitions. Goodwill can be attributed to the value placed on the Company being an industry leader with a market leading position in the Power Transmission industry. The Company’s leadership position in the market was achieved by developing and manufacturing innovative products and management anticipates that its leadership position and profitability will continue to expand, enhanced by cost improvement programs associated with ongoing consolidation and centralization of it operations.

Impairment of Goodwill and Indefinite-Lived Intangible Assets

The Company evaluates the recoverability of goodwill and indefinite-lived intangible assets annually, or more frequently if events or changes in circumstances, such as a decline in sales, earnings, or cash flows, or material adverse changes in the business climate, indicate that the carrying value of an asset might be impaired. Goodwill is considered to be impaired when the net book value of a reporting unit exceeds its estimated fair value. Fair values are established using a discounted cash flow methodology (specifically, the income approach). The determination of discounted cash flows is based on the Company’s strategic plans and long-range forecasts. The revenue growth rates included in the forecasts are the Company’s best estimates based on current and anticipated market conditions, and the profit margin assumptions are projected based on current and anticipated cost structures. This analysis included consideration of discounted cash flows as well as EBITDA multiples. The analysis indicated no impairment to be present as of December 31, 2006 and 2005.

Impairment of Long-Lived Assets Other Than Goodwill and Indefinite-Lived Intangible Assets

The Company assesses its long-lived assets other than goodwill and indefinite-lived intangible assets for impairment whenever facts and circumstances indicate that the carrying amounts may not be fully recoverable. To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining lives of such assets. If these projected cash flows are less than the carrying amounts, an impairment loss would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings. The impairment loss is measured based upon the difference between the carrying amounts and the fair values of the assets. Assets to be disposed of are reported at the lower of the carrying amounts or fair value less cost to sell. Management determines fair value using the discounted cash flow method or other accepted valuation techniques.

Debt Issuance Costs

Costs directly related to the issuance of debt are capitalized, included in other long-term assets and amortized using the effective interest method over the term of the related debt obligation. The net carrying value of debt issuance costs was approximately $5.4 million and $3.6 million at December 31, 2006 and 2005, respectively.

Revenue Recognition

Product revenues are recognized, net of sales tax collected, at the time title and risk of loss pass to the customer, which generally occurs upon shipment to the customer. Service revenues are recognized as services are performed. Amounts billed for shipping and handling are recorded as revenue. Product return reserves are accrued at the time of sale based on the historical relationship between shipments and returns, and are recorded as a reduction of net sales.

F-9

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Certain large distribution customers receive quantity discounts which are recognized net at the time the sale is recorded.

Shipping and Handling Costs

Shipping and handling costs associated with sales are classified as a component of cost of sales.

Warranty Costs

Estimated expenses related to product warranties are accrued at the time products are sold to customers. Estimates are established using historical information as to the nature, frequency, and average costs of warranty claims.

Self-Insurance

Certain operations are self-insured up to pre-determined amounts above which third-party insurance applies, for medical claims, workers’ compensation, vehicle insurance, product liability costs and general liability exposure. The accompanying balance sheets include reserves for the estimated costs associated with these self-insured risks, based on historic experience factors and management’s estimates for known and anticipated claims. A portion of medical insurance costs are offset by charging employees a premium equivalent to group insurance rates.

Research and Development

Research and development costs are expensed as incurred.

Advertising

Advertising costs are charged to selling, general, and administrative expenses as incurred and amounted to approximately $2.4 million, $2.2 million, $0.2 million and $2.0 million, for the year ended December 31, 2006, December 31, 2005, and for the periods from December 1, 2004 through December 31, 2004 and January 1, 2004 through November 30, 2004.

Stock-Based Compensation

The Company has authorized, issued and outstanding 1,000 shares of $0.001 par-value common stock, all of which is held by Altra Holdings, Inc. (“Holdings”), the Company’s parent and sole shareholder.

In 2005 Holdings approved the 2004 Equity Incentive Plan that provides for various forms of stock-based compensation to officers, senior-level employees and other persons who make significant contributions to the success of the Company. Awards granted under the 2004 Equity Incentive Plan are for equity instruments of Holdings. As awards are granted in connection with services performed for the benefit of the Company, the related compensation expense is recognized in the accompanying financial statements on a straight-line basis over the vesting period of the grant. All awards to date have been in the form of restricted stock. Compensation expense recorded in selling, general and administrative expense during the year ended December 31, 2006 was $1.9 million. Total remaining compensation cost is approximately $2.0 million as of December 31, 2006 and will be recognized over a weighted average remaining period of three years.

Prior to the initial public offering on December 14, 2006, the fair value of Holdings common stock was determined by Holding’s Board of Directors (the Board), at the time of grant. In the absence of a public trading market for Holding’s common stock, Holding’s Board considered objective and subjective factors in determining the fair value of the Company’s common stock and related options. Consistent with the guidance provided by the AICPA’s Technical Practice Aid on The Valuation of Privately-held-Company Equity Securities

F-10

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Issued as Compensation (the TPA), such considerations included, but were not limited to, the following factors:

•  Historical and expected future earnings performance

•  The liquidation preferences and dividend rights of the preferred stock

•  Milestones achieved by the company

•  Marketplace and major competition

•  Market barriers to entry

•  The Company’s workforce and related skills

•  Customer and vendor characteristics

•  Strategic relationships with suppliers

•  Risk factors and uncertainties facing the Company

Income Taxes

The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company evaluates the realizability of its net deferred tax assets and assesses the need for a valuation allowance in purchase price accounting and on a quarterly basis. The future benefit to be derived from its deferred tax assets is dependent upon the Company’s ability to generate sufficient future taxable income to realize the assets. The Company records a valuation allowance to reduce its net deferred tax assets to the amount that may be more likely than not to be realized. In periods subsequent to an acquisition, if the Company were able to realize net deferred tax assets in excess of their net recorded amount established in the purchase price allocation, an adjustment to the valuation allowance would be recorded as a reduction to goodwill in the period such determination was made.

To the extent the Company establishes a valuation allowance on net deferred assets generated from operations, an expense will be recorded within the provision for income taxes line on the statement of operations. In periods subsequent to establishing a valuation allowance on net deferred assets from operations, if the Company were to determine that it would be able to realize its net deferred tax assets in excess of their net recorded amount, an adjustment to the valuation allowance would be recorded as a reduction to income tax expense in the period such determination was made.

F-11

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accumulated Other Comprehensive Income (Loss)

The Company’s total accumulated other comprehensive income (loss) is comprised of the following:

				Cumulative
	Minimum			Foreign			Accumulated
	Pension			Currency			Other
	Liability/SFAS			Translation			Comprehensive
	No. 158 Liability			Adjustment			Income (Loss)
For the Predecessor
Balance at December 31, 2003	$	(36,820	)	$	3,595		$	(33,225	)
Minimum pension liability adjustment		478						478
Cumulative foreign currency translation adjustment		—			(6,031	)		(6,031	)
Balance at November 30, 2004	$	(36,342	)	$	(2,436	)	$	(38,778	)
For the Company
Opening balance December 2004		—			—			—
Minimum pension liability adjustment		(722	)		—			(722	)
Cumulative foreign currency translation adjustment		—			549			549
Balance at December 31, 2004		(722	)		549			(173	)
Minimum pension liability adjustment		(700	)		—			(700	)
Cumulative foreign currency translation adjustment		—			(6,400	)		(6,400	)
Balance at December 31, 2005		(1,422	)		(5,851	)		(7,273	)
Minimum pension liability adjustment		696			—			696
Cumulative foreign currency translation adjustment		—			677			677
Cumulative adjustment for transition to SFAS No. 158		2,836			—			2,836
Balance at December 31, 2006	$	2,110		$	(5,174	)	$	(3,064	)

2.   Recent Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. (“FIN 48”), “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 will be effective for fiscal years beginning after December 15, 2006. The provisions of FIN 48 are effective January 1, 2007. The Company is currently evaluating the effect that the adoption of FIN 48 will have on its financial position and results of operations.

In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 108 “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements,”. SAB No. 108 states that registrants should use both a balance sheet approach and an income statement approach when quantifying and evaluating the materiality of a misstatement. The interpretations in SAB No. 108 contain guidance on correcting errors under the dual approach as well as provide transition guidance for correcting errors. This interpretation does not change the requirements within SFAS No. 154, “Accounting Changes and Error Corrections — a replacement of APB No. 20 and FASB Statement No. 3,” for the correction of an error on financial statements. The Company adopted this pronouncement during 2006, the effect of this statement was not material to the financial statements.

F-12

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This standard defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America, and expands disclosure about fair value measurements. This pronouncement applies under other accounting standards that require or permit fair value measurements. Accordingly, this statement does not require any new fair value measurement. This statement is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not expect the effect to be material.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R).” This pronouncement requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability on its statement of financial position. SFAS No. 158 also requires an employer to recognize changes in that funded status in the year in which the changes occur through comprehensive income. On December 31, 2006, the Company adopted the recognition and disclosure provisions of SFAS No. 158. The effect of adopting Statement 158 is not included on the Company’s consolidated balance sheet at December 31, 2005 or 2004. SFAS No. 158’s provisions regarding the change in the measurement date of postretirement benefit plans are not applicable as the Company already uses a measurement date of December 31 for its pension plans. See Note 9 for further discussion of the effect of adopting SFAS No. 158 on the Company’s consolidated financial statements.

3.   Acquisitions

On February 10, 2006, the Company purchased all of the outstanding share capital of Hay Hall for $49.2 million. The purchase price is still subject to a change as a result of the finalization of a working capital adjustment in accordance with the terms of the purchase agreement. Included in the purchase price was $6.0 million paid in the form of deferred consideration. At the closing we deposited such deferred consideration into an escrow account for the benefit of the former Hay Hall shareholders. The deferred consideration is represented by a loan note. While the former Hay Hall shareholders will hold the note, their rights will be limited to receiving the amount of the deferred consideration placed in the escrow account. They will have no recourse against the Company unless we take action to prevent or interfere in the release of such funds from the escrow account. At closing, Hay Hall and its subsidiaries became the Company’s direct or indirect wholly owned subsidiaries. Hay Hall is a UK-based holding company established in 1996 that is focused primarily on the manufacture of couplings and clutch brakes. Hay Hall consists of five main businesses that are niche focused and have strong brand names and established reputations within their primary markets.

The Hay Hall acquisition has been accounted for in accordance with SFAS No. 141. The closing date of the Hay Hall acquisition was February 10, 2006, and as such, the Company’s consolidated financial statements reflect Hay Hall’s results of operations only from that date forward.

F-13

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company has completed its final purchase price allocation. The value of the acquired assets, assumed liabilities and identified intangibles from the acquisition of Hay Hall, as presented below, are based upon fair value as of the date of the acquisition. The goodwill and intangibles recorded in connection with the acquisition of Hay Hall have been allocated across the business units acquired. The final purchase price allocation is as follows:

Total purchase price, including closing costs of approximately $1.8 million	$	51,030
Cash and cash equivalents		775
Trade receivables		12,111
Inventories		17,004
Prepaid expenses and other		510
Property, plant and equipment		13,670
Intangible assets		16,352
Total assets acquired		60,422
Accounts payable, accrued payroll, and accruals and other current liabilities		12,971
Other liabilities		8,784
Total liabilities assumed		21,755
Net assets acquired		38,667
Excess purchase price over the fair value of net assets acquired	$	12,363

The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill.

The amounts recorded as intangible assets consist of the following:

Patents, subject to amortization	$	110
Customer relationships, subject to amortization		9,312
Trade names and trademarks, not subject to amortization		6,930
Total intangible assets	$	16,352

Customer relationships are amortized on a straight-line over 11 years, representing the anticipated periods over which the Company estimates it will benefit from the acquired assets. The Company anticipates that substantially all of this amortization is deductible for income tax purposes. The acquisition of Hay Hall did not result in any tax deductible goodwill.

On May 18, 2006, the Company entered into a purchase agreement with the shareholders of Bear Linear LLC, or Bear, to purchase substantially all of the assets of the company for $5.0 million. Approximately $3.5 million was paid at closing and the remaining $1.5 million is payable over the next 2.5 years. One of Bear’s selling shareholders is a direct relative of one of the Company’s directors. Bear manufacturers high value-added linear actuators for mobile off-highway and industrial applications.

The Bear acquisition has been accounted for in accordance with SFAS No. 141. The closing date of the Bear acquisition was May 18, 2006, and as such, the Company’s consolidated financial statements reflect Bear’s results of operations only from that date forward.

Bear had approximately $0.5 million of net assets at closing consisting primarily of accounts receivable, inventory, fixed assets and accounts payable and accrued liabilities. The Company did not identify any specifically identifiable intangible assets. The Company recorded the $4.2 million excess purchase price over the fair value of the net assets acquired as goodwill. The Company has completed its final purchase price allocation.

F-14

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the unaudited pro forma results of operations of the Company for the year to date periods ended December 31, 2006 and December 31, 2005 as if the Company had acquired Hay Hall and Bear Linear as of January 1, 2005. The pro forma information contains the actual operating results of the Company, Bear Linear and Hay Hall with the results prior to May 18, 2006, for Bear Linear, and February 10, 2006, for Hay Hall, adjusted to include the pro forma impact of (i) the elimination of additional expense as a result of the fair value adjustment to inventory recorded in connection with the Hay Hall Acquisition; (ii) additional interest expense associated with debt issued on February 8, 2006; (iii) the elimination of intercompany sales between Hay Hall and the Company; (iv) additional expense as a result of estimated amortization of identifiable intangible assets; (v) and an adjustment to the tax provision for the tax effect of the above adjustments. These pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisitions occurred as of January 1, 2005 or that may be obtained in the future.

	Year to Date		Year to Date
	Ended		Ended
	December 31,		December 31,
(Pro Forma, Unaudited)	2006		2005
Total Revenues	$	471,618	$	426,446
Net income	$	12,286	$	1,042

On November 30, 2004, the Company acquired the Predecessor for $180.0 million in cash and Kilian for an $8.8 million issuance of common stock plus the assumption of Kilian debt in the amount of approximately $12.2 million. The purchase price of both acquisitions has been adjusted following the completion of certain negotiations surrounding adjustments to the respective seller’s recorded working capital at the acquisition date. In 2005 Predecessor negotiations were finalized resulting in the return of approximately $1.6 million of the purchase price to the Company. Negotiations were also finalized for Kilian which resulted in a final payment by the Company of approximately $0.7 million.

The acquisitions have been accounted for in accordance with SFAS No. 141, “Business Combinations.” As discussed in the Basis of Presentation in Note 1, the consolidated financial statements include the results of operations for the period December 1, 2004 through December 31, 2004, and those of the Predecessor for prior periods.

F-15

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company has completed its purchase price allocations. The value of the acquired assets, assumed liabilities and identified intangibles from the acquisition of the Predecessor and Kilian, as presented below, are based upon management’s estimates of fair value as of the date of the acquisition. The goodwill and intangibles recorded in connection with the acquisition of the Predecessor have been allocated across the business units acquired from the Predecessor. The purchase price allocations are as follows:

	Predecessor		Kilian		Total
Total purchase price, including closing costs of approximately $2.6 million	$	178,519	$	9,594	$	188,113
Cash and cash equivalents		1,183		1,184		2,367
Trade receivables		39,163		6,096		45,259
Inventories		52,761		5,108		57,869
Prepaid expenses and other		4,770		207		4,977
Property, plant and equipment		59,320		9,111		68,431
Intangible assets		49,004		—		49,004
Deferred income taxes — long term		8,262		104		8,366
Other assets		150		—		150
Total assets acquired		214,613		21,810		236,423
Accounts payable, accrued payroll, and accruals and other current liabilities		46,422		3,125		49,547
Bank debt		—		12,178		12,178
Pensions, other post retirement benefits and other liabilities		34,166		—		34,166
Total liabilities assumed		80,588		15,303		95,891
Net assets acquired		134,025		6,507		140,532
Excess purchase price over the fair value of net assets acquired	$	44,494	$	3,087	$	47,581

The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. The amounts recorded as identifiable intangible assets consist of the following:

	Predecessor		Kilian		Total
Customer relationships	$	27,802	$	—	$	27,802
Product technology and patents		5,122		—		5,122
Total intangible assets subject to amortization		32,924		—		32,924
Trade names and trademarks, not subject to amortization		16,080		—		16,080
Total intangible assets	$	49,004	$	—	$	49,004

Customer relationships, product technology and patents, are subject to amortization over their estimated useful lives of twelve and eight years, respectively, which reflects the anticipated periods over which the Company estimates it will benefit from the acquired assets. The weighted average estimated useful life of all intangible assets subject to amortization is approximately 11.1 years. Substantially all of this amortization is deductible for income tax purposes.

F-16

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the unaudited pro forma results of operations of the Company for the period ended December 31, 2004 as if the Company had acquired the Predecessor and Kilian as of January 1, 2004. The pro forma information contains the actual combined operating results of the Company, the Predecessor and Kilian with the results prior to the December 1, 2004 adjusted to include the pro forma impact of (i) additional amortization and depreciation expense associated with the adjustment to and recognition of fair value of fixed and intangible assets; (ii) the elimination of additional expense as a result of the fair value adjustment to inventory recorded in connection with the Acquisition; (iii) additional expenses associated with new contractual commitments created at Inception; (iv) additional expenses associated with general and administrative services previously performed by the Predecessor’s parent and not charged to the Predecessor; (v) additional interest expense associated with debt issued at Inception; (vi) the elimination of previously incurred interest expense of the Predecessor and Kilian; and (vii) the elimination of expense associated with pension and OPEB obligations retained by the Predecessor. These pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisitions occurred as of January 1, 2004 or that may be obtained in the future.

(Pro Forma, Unaudited)	2004
Total Revenues	$	343,308
Net loss		(541	)

4.   Inventories

Inventories at December 31, 2006 and 2005 consisted of the following:

	2006			2005
Raw materials	$	29,962		$	22,512
Work in process		19,112			13,876
Finished goods		36,858			25,109
		85,932			61,497
Less — Allowance for excess, slow-moving and obsolete inventory		(10,163	)		(6,843	)
	$	75,769		$	54,654

5.   Property, Plant and Equipment

Property, plant and equipment at December 31, 2006 and 2005, consisted of the following:

	2006			2005
Land	$	9,599		$	7,892
Buildings and improvements		19,849			16,500
Machinery and equipment		71,866			50,402
		101,314			74,794
Less — Accumulated depreciation		(18,927	)		(8,401	)
	$	82,387		$	66,393

F-17

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6.   Goodwill and Intangible Assets

Goodwill as of December 31, 2006 and 2005 consisted of the following:

Goodwill
Balance December 31, 2005	$	65,345
Additions related to Hay Hall acquisition		12,363
Additions related to Bear Linear acquisition		4,231
Other adjustments, net		(18,819	)
Impact of changes in foreign currency		2,277
Balance December 31, 2006	$	65,397

The other adjustments primarily relate to the reversal of valuation allowances on certain deferred tax assets that had been previously established as part of purchase accounting. Goodwill was further reduced by $2.5 million for a settlement with Colfax that resulted in a return of a portion of the purchase price.

	December 31, 2006				December 31, 2005
			Accumulated					Accumulated
	Cost		Amortization		Cost			Amortization
Other Intangibles
Intangible assets not subject to amortization:
Tradenames and trademarks	$	23,010	$	—	$	16,080		$	—
Intangible assets subject to amortization:
Customer relationships		37,114		5,679		27,802			2,515
Product technology and patents		5,232		1,316		5,122			690
Impact of changes in foreign currency		1,301		—		(1,048	)		—
Total intangible assets	$	66,657	$	6,995	$	47,956		$	3,205

The Company recorded $3.8 million, $3.0 million and $0.2 million of amortization for the year-ended December 31, 2006 and December 31, 2005, and the period from inception through December 31, 2004, respectively.

Customer relationships, product technology and patents are amortized over their useful lives of 12 and 8 years, respectively. The weighted average estimated useful life of intangible assets subject to amortization is approximately 11 years.

The estimated amortization expense for intangible assets is approximately $3.9 million in each of the next five years and then $15.9 million thereafter.

F-18

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7.   Warranty Costs

Estimated expenses related to product warranties are accrued at the time products are sold to customers. Estimates are established using historical information as to the nature, frequency and average costs of warranty claims. Changes in the carrying amount of accrued product warranty costs for the year ended December 31, 2006 and 2005 are as follows:

	Year-Ended			Year-Ended
	December 31,			December 31,
	2006			2005
Balance at beginning of period	$	1,876		$	1,528
Accrued warranty costs		1,666			1,265
Payments and adjustments		(1,459	)		(917	)
Balance at end of period	$	2,083		$	1,876

8.   Income Taxes

Pre-tax income (loss) by domestic and foreign locations were as follows:

									Predecessor
									(Note 1)
						December 1,			11 Months
						2004 through			Ended
	December 31,			December 31,		December 31,			November 30,
	2006			2005		2004			2004
Domestic	$	17,946		$	4,635	$	(6,337	)	$	9,125
Foreign		(1,231	)		3,726		354			3,302
	$	16,715		$	8,361	$	(5,983	)	$	12,427

The components of the provision (benefit) for income taxes were as follows:

									Predecessor
									(Note 1)
						December 1,			11 Months
						2004 through			Ended
	December 31,		December 31,			December 31,			November 30,
	2006		2005			2004			2004
Current:
Federal	$	3,171	$	1,631		$	—		$	3,851
Foreign and state		1,991		2,038			810			1,564
		5,162		3,669			810			5,415
Deferred:
Federal		998		532			(564	)		98
Foreign and state		192		(284	)		(467	)		19
		1,190		248			(1,031	)		117
Provision (benefit) for income taxes	$	6,352	$	3,917		$	(221	)	$	5,532

F-19

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

U.S. income taxes at the statutory tax rate reconciled to the overall U.S. and foreign provision (benefit) for income taxes were as follows:

							From			Predecessor
							Inception			(Note 1)
							(December 1,			11 Months
							2004) through			Ended
	December 31,			December 31,			December 31,			November 30,
	2006			2005			2004			2004
Tax at U.S. federal income tax rate	$	5,850		$	2,926		$	(2,094	)	$	4,371
State taxes, net of federal income tax effect		682			373			(67	)		366
Valuation allowance		—			—			2,011			895
Foreign taxes, net		944			786			—			—
Interest		(1,361	)		—			—			—
Other		237			(168	)		(71	)		(100	)
Provision (benefit) for income taxes	$	6,352		$	3,917		$	(221	)	$	5,532

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred tax assets and liabilities as of December 31, 2006 and 2005 were as follows:

	December 31,			December 31,
	2006			2005
Deferred tax assets:
Post-retirement obligations	$	5,247		$	12,050
Goodwill		7,555			789
Inventory		2,036			1,217
Expenses not currently deductible		5,852			6,651
Net operating loss carryover		2,899			1,740
Other		557			883
Total deferred tax assets		24,146			23,330
Valuation allowance for deferred tax assets		(1,252	)		(16,389	)
Net deferred tax assets		22,894			6,941
Deferred tax liabilities:
Property, plant and equipment		9,650			6,264
Intangible assets		11,730			5,278
Other		1,108			203
Total deferred tax liabilities		22,488			11,745
Net deferred tax assets (liabilities)	$	406		$	(4,804	)

At December 31, 2006 and 2005, the Company had net operating loss carryforwards primarily related to operations in France of $3.4 million and $4.3 million, respectively, and in the United Kingdom of $4.2 million and $0, respectively, which can be carried forward indefinitely.

The decrease in net deferred tax liabilities for the year includes a deferred tax benefit of approximately $16.4 million attributable to the release of valuation allowances initially established in purchase accounting.

F-20

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The release of the valuation allowance resulted in a reduction of book goodwill. The decrease in net deferred tax liability from the release of previously established valuation allowance was offset by additional deferred tax liabilities generated as a result of the Hay Hall acquisition of $6.4 million and approximately $4.3 million attributable to accrued pension liabilities and currency translation adjustments recorded through other comprehensive income.

Valuation allowances are established for a deferred tax asset that management believes may not be realized. The Company continually reviews the adequacy of the valuation allowance and recognizes tax benefits only as reassessments indicate that it is more likely than not the benefits will be realized. A valuation allowance at December 31, 2006 of $1.3 million, related to a valuation allowance established on NOL’s acquired as part of the Hay Hall acquisition, and $16.4 million as of December 31, 2005, has been recognized to offset deferred tax assets due to the uncertainty of realizing the benefits of the deferred tax assets. The decrease in the valuation allowance relates primarily to deferred tax adjustments associated with purchase price accounting and have been recorded to goodwill. The total valuation allowance existing at December 31, 2006 of approximately $1.3 million will be allocated to reduce book goodwill if and when released in subsequent periods.

The undistributed earnings of the Company’s foreign subsidiaries on which tax is not provided was approximately $2.3 million as of December 31, 2006, and are considered to be indefinitely reinvested. As of December 31, 2006, the Company has not recorded U.S. federal deferred income taxes on these undistributed earnings from its foreign subsidiaries. It is expected that these earnings will be permanently reinvested in operations outside the U.S. If the undistributed earnings were not reinvested in operations outside the U.S., the tax impact would be approximately $0.9 million to the Company.

The Company is included in the consolidated income tax return filing of Altra Holdings Inc. & Subsidiaries.

9.   Pension and Other Employee Benefits

Defined Benefit (Pension) and Postretirement Benefit Plans

The Company sponsors various defined benefit (pension) and postretirement (medical and life insurance coverage) plans for certain, primarily unionized, active employees (those in the employment of the Company at or hired since November 30, 2004). The Predecessor sponsored similar plans that covered certain employees, former employees and eligible dependents. At November 30, 2004, the Company assumed the pension and postretirement benefit obligations of all active U.S. employees and all non-U.S. employees of the Predecessor. Additionally, the Company assumed all post-employment and post-retirement welfare benefit obligations with respect to active U.S. employees. Colfax retained all other pension and postretirement benefit obligations relating to the Predecessor’s former employees.

On December 31, 2006, the Company adopted the recognition and disclosure provisions of SFAS No. 158. SFAS No. 158 required the Company to recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of its pension plans and postretirement benefit plan in the December 31, 2006 balance sheet, with a corresponding adjustment to accumulated other comprehensive income (loss), net of tax. The adjustment to accumulated other comprehensive income (loss) at adoption represents the net unrecognized actuarial losses, unrecognized prior service costs, and unrecognized transition obligation remaining from the initial adoption of SFAS No. 87 Employers’ Accounting for Pensions (“SFAS No. 87”), all of which were previously netted against the plan’s funded status in the Company’s statement of financial position pursuant to the provisions of SFAS No. 87.

These amounts will be subsequently recognized as net periodic pension cost pursuant to the Company’s historical accounting policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic pension cost in the same periods will be recognized

F-21

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

as a component of other comprehensive income. Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in accumulated other comprehensive income at adoption of SFAS No. 158.

The incremental effects of adopting the provisions of SFAS No. 158 on the Company’s balance sheet at December 31, 2006 are presented in the following table. The adoption of SFAS No. 158 had no effect on the Company’s consolidated statement of operations for the year ended December 31, 2006, or for any prior period presented, and it will not effect the Company’s operating results in future periods. Had the Company not been required to adopt SFAS No. 158 at December 31, 2006, it would have recognized an additional minimum liability pursuant to the provisions of SFAS No. 87. The effect of recognizing the additional minimum liability is included in the table below in the column labeled “Prior to Application of SFAS No. 158.”

	Pension as of December 31, 2006
	Prior to			As Reported
	Adopting			at December 31,
	SFAS No. 158			2006
Plan Funded Status:
Benefit obligation	$	(26,121	)	$	(26,121	)
Allowance for future salary increases		—			—
Projected benefit obligation		(26,121	)		(26,121	)
Fair value of assets		10,952			10,952
Funded Status	$	(15,169	)	$	(15,169	)
Unrecognized loss		1,154			N/A
Unrecognized prior service cost		43			N/A
Accrued benefit cost		(13,972	)		N/A
Balance Sheet:
Prepaid benefit cost	$	—			N/A
Intangible asset		43			N/A
Accrued benefit cost		(15,122	)		N/A
Net liability	$	(15,079	)	$	(15,169	)
Corresponding charges to equity accounts:
Retained earnings	$	13,972		$	13,972
Accumulated other comprehensive income (loss)		1,154			1,197
Total charges to equity	$	15,126		$	15,169

F-22

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Post-Retirement Benefits as of
	December 31, 2006
	Prior to			As Reported
	Adopting			at December 31,
	SFAS No. 158			2006
Plan Funded Status:
Benefit obligation	$	(3,549	)	$	(3,549	)
Fair value of assets		—			—
Funded Status		(3,549	)		(3,549	)
Unrecognized gain		(1,016	)		N/A
Unrecognized prior service cost		(3,602	)		N/A
Accrued benefit cost		(8,167	)		N/A
Balance Sheet:
Prepaid benefit cost		N/A			N/A
Intangible asset		N/A			N/A
Accrued benefit cost		N/A			N/A
Net liability	$	N/A		$	(3,549	)
Corresponding charges to equity accounts:
Retained earnings		N/A			8,167
Accumulated other comprehensive income (loss)		N/A			(4,618	)
Total charges to equity	$	N/A		$	3,549

Included in accumulated other comprehensive income (loss) at December 31, 2006 are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized prior service costs of $0.4 million ($0.2 net of tax) and unrecognized actuarial losses $1.5 million ($0.9 net of tax).

The following tables represent the reconciliation of the benefit obligation, fair value of plan assets and funded status of the respective defined benefit (pension) and postretirement benefit plans as of December 31, 2006 and 2005:

	Pension Benefits						Post Retirement Benefits
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Change in benefit obligation:
Obligation at beginning of period	$	27,697		$	24,706		$	10,983		$	12,570
Service cost		513			591			140			295
Interest cost		1,491			1,362			315			549
Amendments		57			55			(2,564	)		(2,088	)
Curtailments		119			—			(3,838	)		—
Actuarial loss (gain)		(1,188	)		1,610			(1,291	)		(218	)
Foreign exchange effect		326			(424	)		—			—
Benefits paid		(2,894	)		(203	)		(196	)		(125	)
Obligation at end of period	$	26,121		$	27,697		$	3,549		$	10,983

F-23

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Pension Benefits						Post Retirement Benefits
	Year Ended			Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,
	2006			2005			2006			2005
Change in plan assets:
Fair value of plan assets, beginning of period	$	5,832		$	4,647		$	—		$	—
Actual return on plan assets		821			309			—			—
Employer contribution		7,193			961			196			125
Benefits paid		(2,894	)		(85	)		(196	)		(125	)
Fair value of plan assets, end of period	$	10,952		$	5,832		$	—		$	—
Funded status	$	(15,169	)	$	(21,865	)	$	(3,549	)	$	(10,983	)
Amounts Recognized in the balance sheet consist of:
Non current assets	$	—		$	(49	)	$	—		$	—
Current liabilities		—			(7,448	)		(287	)		—
Non-current liabilities		(15,169	)		(14,368	)		(3,262	)		(12,500	)
Total	$	(15,169	)	$	(21,865	)	$	(3,549	)	$	(12,500	)

For all pension plans presented above, the accumulated and projected benefit obligations exceed the fair value of plan assets. The accumulated benefit obligation at December 31, 2006 and 2005 was $26.1 million and $27.7 million, respectively. Non-US pension liabilities recognized in the amounts presented above are $3.4 million and $2.9 million at December 31, 2006 and 2005, respectively.

The weighted average discount rate used in the computation of the respective benefit obligations at December 31, 2006 and 2005 presented above are as follows:

	Pension Benefits
	2006			2005
Pension Benefits		5.75	%		5.5	%
Other Postretirement Benefits		5.75	%		5.5	%

F-24

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table represents the components of the net periodic benefit cost associated with the respective plans:

	Pension Benefits												Post Retirement Benefits
							From												From
							Inception			Predecessor									Inception		Predecessor
							(December 1,			(Note 1)									(December 1,		(Note 1)
							2004)			11 Months									2004)		11 Months
	Year Ended			Year Ended			through			Ended			Year Ended			Year Ended			through		Ended
	December 31,			December 31,			December 31,			November 30,			December 31,			December 31,			December 31,		November 30,
	2006			2005			2004			2004			2006			2005			2004		2004
Service cost	$	513		$	591		$	35		$	530		$	140		$	295		$	30	$	269
Interest cost		1,491			1,362			112			8,352			315			549			59		1,654
Recognized net actuarial loss		—			—			—			2,783			(113	)		—			—		183
Expected return on plan assets		(829	)		(431	)		(31	)		(9,747	)		—			—			—		—
Settlement/Curtailment		119			—			—			—			(3,838	)		—			—		—
Amortization		6			72			—			14			(640	)		(423	)		—		(19	)
Net periodic benefit cost	$	1,300		$	1,594		$	116		$	1,932		$	(4,136	)	$	421		$	89	$	2,087

The key economic assumptions used in the computation of the respective net periodic benefit cost for the periods presented above are as follows:

	Pension Benefits												Postretirement Benefits
							From												From
							Inception			Predecessor									Inception			Predecessor
							(December 1,			(Note 1)									(December 1,			(Note 1)
							2004)			11 Months			Year			Year			2004)			11 Months
	Year Ended			Year Ended			through			Ended			Ended			Ended			through			Ended
	December 31,			December 31,			December 31,			November 30,			December 31,			December 31,			December 31,			November 30,
	2006			2005			2004			2004			2006			2005			2004			2004
Discount rate		5.5	%		5.5	%		6.0	%		6.2	%		5.5	%		5.5	%		6.0	%		6.3	%
Expected return on plan assets		8.5	%		8.5	%		8.5	%		8.5	%		N/A			N/A			N/A			N/A
Compensation rate increase		N/A			N/A			N/A			N/A			N/A			N/A			N/A			N/A

The reasonableness of the expected return on the funded pension plan assets was determined by three separate analyses: (i) review of forty years of historical data of portfolios with similar asset allocation characteristics, (ii) analysis of six years of historical performance for the Predecessor plan assuming the current portfolio mix and investment manager structure, and (iii) a projected portfolio performance, assuming the plan’s target asset allocation.

For measurement of the postretirement benefit obligations and net periodic benefit costs, an annual rate of increase in the per capita cost of covered health care benefits of approximately 7.5% was assumed. This rate was assumed to decrease gradually to 5% by 2008 and remain at that level thereafter. The assumed health care trends are a significant component of the postretirement benefit costs. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	1-Percentage-		1-Percentage-
	Point		Point
	Increase		Decrease
Effect on service and interest cost components for the period January 1, 2006 through December 31, 2006	$	67	$	(51	)
Effect on the December 31, 2006 post-retirement benefit obligation	$	324	$	(266	)

F-25

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In December 2003, Congress passed the “Medicare Prescription Drug Improvement and Modernization Act of 2003” (the Act) that reformed Medicare in such a way that the Company may have been eligible to receive subsidies for certain prescription drug benefits that are incurred on behalf of plan participants. There has been no impact on the company’s plans as either prescription drug coverage is not offered past the age of 65 or we have not applied for any subsidy. Accordingly, the amounts recorded and disclosed in these financial statements do not reflect any amounts related to this Act.

The asset allocations for the Company’s funded retirement plan at December 31, 2006 and 2005, respectively, and the target allocation for 2006, by asset category, are as follows:

	Allocation Percentage of Plan Assets at Year-End
	2006			2006			2005
	Actual			Target			Actual
Asset Category
Equity securities		59	%		65	%		67	%
Fixed income securities		41	%		35	%		33	%

The investment strategy is to achieve a rate of return on the plan’s assets that, over the long-term, will fund the plan’s benefit payments and will provide for other required amounts in a manner that satisfies all fiduciary responsibilities. A determinant of the plan’s returns is the asset allocation policy. The plan’s asset mix will be reviewed by the Company periodically, but at least quarterly, to rebalance within the target guidelines. The Company will also periodically review investment managers to determine if the respective manager has performed satisfactorily when compared to the defined objectives, similarly invested portfolios, and specific market indices.

Expected cash flows

The following table provides the amounts of expected benefit payments, which are made from the plans’ assets and includes the participants’ share of the costs, which is funded by participant contributions. The amounts in the table are actuarially determined and reflect the Company’s best estimate given its current knowledge; actual amounts could be materially different.

		Pension		Postretirement
		Benefits		Benefits
Expected benefit payments (from plan assets)	2007	$	594	$	287
	2008		801		302
	2009		1,035		298
	2010		1,228		299
	2011		1,392		282
	2012-2016		9,586		1,049

The Company contributed $6.9 million to its pension plan in 2006. The Company has cash funding requirements associated with its pension plan which are estimated to be $3.6 million in 2007, $2.5 million in 2008 and $1.9 million annually until 2011.

In May 2006, the Company renegotiated its contract with the labor union at its South Beloit, IL manufacturing facility. As a result of the renegotiation, participants in the Company’s pension plan cease to accrue additional benefits starting July 3, 2006. Additionally, the other post retirement benefit plan for employees at that location has been terminated for all eligible participants who had not retired, or given notice to retire in 2006, by August 1, 2006. The Company recognized a non-cash gain associated with the curtailment of these plans in 2006 of $3.8 million.

F-26

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Defined Contribution Plans

At November 30, 2004, the Company established a defined contribution plan for substantially all full-time U.S.-based employees on terms that mirror those previously provided by the Predecessor. All active employees became participants of the Company’s plan and all of their account balances in the Predecessor plans were transferred to the Company’s plan at Inception.

Under the terms of the Company’s plan, eligible employees may contribute from one to fifteen percent of their compensation to the plan on a pre-tax basis. The Company makes a matching contribution equal to half of the first six percent of salary contributed by each employee and makes a unilateral contribution of three percent of all employees’ salary (including non-contributing employees). The Company’s expense associated with the defined contribution plan was $2.9 million and $2.5 million during the years ended December 31, 2006 and December 31, 2005, respectively.

10.   Long-Term Debt

Revolving Credit Agreement

At November 30, 2004, the Company entered into an agreement for up to $30 million of revolving borrowings from a commercial bank (the Revolving Credit Agreement), subject to certain limitations requiring that the Company maintain certain levels of collateralized assets, as defined in the Revolving Credit Agreement. The Company may use up to $10 million of its availability under the Revolving Credit Agreement for standby letters of credit issued on its behalf, the issuance of which will reduce the amount of borrowings that would otherwise be available to the Company. The Company may re-borrow any amounts paid to reduce the amount of outstanding borrowings; however, all borrowings under the Revolving Credit Agreement must be repaid in full as of November 30, 2009.

Borrowings under the Revolving Credit Agreement bear interest, at the Company’s election, at LIBOR plus 250 basis points annually or the lenders Prime Rate plus 125 basis points, but in no event no lower than 3.75%. The Company must also pay 2.0% per annum on all outstanding letters of credit, 0.375% per annum on the unused availability under the Revolving Credit Agreement and $10 per quarter in service fees. The Company incurred approximately $1.5 million in fees associated with the issuance of the Revolving Credit Agreement which have been capitalized as deferred financing costs and will be amortized over the five year life of the Revolving Credit Agreement as a component of interest expense.

Substantially all of the Company’s assets have been pledged as collateral against outstanding borrowings under the Revolving Credit Agreement. The Revolving Credit Agreement requires the Company to maintain a minimum fixed charge coverage ratio (when availability under the line falls below $12.5 million) and imposes customary affirmative covenants and restrictions on the Company. The Company was in compliance with all requirements of the Revolving Credit Agreement at December 31, 2006. The Company was in compliance with certain covenants and obtained a waiver for noncompliance with one covenant at December 31, 2005.

There were no borrowings under the Revolving Credit Agreement at December 31, 2006 and 2005; the lender had issued $2.9 million and $2.4 million of outstanding letters of credit on behalf of the Company at December 31, 2006 and 2005, respectively.

9% Senior Secured Notes

At November 30, 2004, the Company issued 9% Senior Secured Notes (Senior Secured Notes), with a face value of $165 million. Interest on the Senior Secured Notes is payable semiannually, in arrears, on June 1 and December 1 of each year, beginning June 1, 2005, at an annual rate of 9%. The effective interest rate on the Senior Secured Notes is approximately 10.0%, after consideration of the amortization of $6.6 million

F-27

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

related to initial offer discounts (included in long-term debt) and $2.8 million of deferred financing costs (included in other assets).

The Senior Secured Notes mature on December 1, 2011 unless previously redeemed by the Company. Through December 1, 2007, The Company may elect to redeem up to 35% of the Senior Secured Notes with the proceeds of certain equity transactions by paying a 9% premium of the amounts paid by such redemption. From December 1, 2008 through November 30, 2009, the Company may also elect to redeem any or all of the Senior Secured Notes still outstanding by paying a 4.5% premium of the amounts paid for such redemptions. A 2.25% premium is due for redemptions completed from December 1, 2009 to November 30, 2010. Subsequent to November 30, 2010, the Company may elect to redeem any or all of the Senior Notes then outstanding at face value.

The Senior Secured Notes are guaranteed by the Company’s U.S. domestic subsidiaries and are secured by a second priority lien, subject to first priority liens securing the Revolving Credit Agreement, on substantially all of the Company’s assets. The Senior Secured Notes contain numerous terms, covenants and conditions, which impose substantial limitations on the Company. As of December 31, 2006 the Company was in compliance with all of the requirements of the Senior Secured Notes.

11.25% Senior Notes

At February 8, 2006, the Company issued 11.25% Senior Notes (Senior Notes), with a face value of £33 million. Interest on the Senior Notes is payable semiannually, in arrears, on August 15 and February 15 of each year, beginning August 15, 2006, at an annual rate of 11.25%. The effective interest rate on the Senior Notes is approximately 11.7%, after consideration of the $2.5 million of deferred financing costs (included in other assets).

The Senior Notes mature on February 13, 2013, unless previously redeemed by the Company. Through February 15, 2009, the Company may elect to redeem up to 35% of the Senior Notes with the proceeds of certain equity transactions by paying an 11.25% premium of the amounts paid by such redemption. From February 15, 2010 through February 14, 2011, the Company may also elect to redeem any or all of the Senior Notes still outstanding by paying a 5.63% premium of the amounts paid for such redemptions. A 2.81% premium is due for redemptions completed from February 15, 2011 to February 14, 2012. Subsequent to February 14, 2012, the Company may elect to redeem any or all of the Senior Notes then outstanding at face value.

The Senior Notes are guaranteed on a senior unsecured basis by the Company’s U.S. domestic subsidiaries. The Senior Notes contain numerous terms, covenants and conditions, which impose substantial limitations on the Company. The Company was in compliance with all covenants of the Senior Notes as of December 31, 2006.

On February 27, 2007, the Company redeemed £11.6 million aggregate principal amount of the outstanding Senior Notes, at a redemption price of 111.25% of the principal amount of the Notes, plus accrued and unpaid interest. The remaining principal of the Senior Notes mature on February 13, 2013, unless previously redeemed by the Company.

Mortgage

In June 2006, the Company’s German subsidiary entered into a mortgage on their building in Heidelberg, Germany, with a local bank. The mortgage has a principal of €2.0 million, an interest rate of 5.75% and is payable in monthly installments over 15 years. The balance of the mortgage as of December 31, 2006 was $2.6 million.

F-28

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Capital Leases (see also Note 15)

The Company has certain equipment under capital lease arrangements, whose obligations are included in both short-term and long-term debt. Capital lease obligations amounted to approximately $1.5 million and $0.3 million at December 31, 2006 and 2005, respectively. Assets under capital leases are included in property, plant and equipment with the related amortization recorded as depreciation expense.

Cash Obligations

The company has cash obligations of $0.1 million, $0.1 million, $0.1 million, $0.1 million, $0.1 million for the years ended December 31, 2007, 2008, 2009, 2010, 2011 and $231.7 million thereafter.

11.   Stockholder’s Equity

The Company has authorized, issued and outstanding 1,000 shares of $0.001 par-value common stock, all of which is held by Altra Holdings, Inc. (“Holdings”), the Company’s parent and sole shareholder.

For the Predecessor, all historical equity balances are reflected in the consolidated financial statements as invested capital. The annual net cash flows from the Boston Gear division, the recognition or settlement of intercompany balances of any of the Predecessor entities with Colfax, federal and state income taxes payable or receivable and allocations of balances from Colfax are reflected as contributions from and distributions to affiliates in the consolidated statements of stockholders’ equity.

12.   Related-Party Transactions

Bear Linear Acquisition

One of the three members of Bear Linear, Robert F. Bauchiero, is the son of one of our directors, Frank E. Bauchiero. The Board of Directors of the Company unanimously approved the acquisition of Bear Linear which was conducted by arms length negotiations between the parties.

Kilian Acquisition

As discussed in Note 3, the Company acquired Kilian in exchange for the assumption of $12.2 million of Kilian’s debt and the issuance of $8.8 million of common stock issued to Holdings. Holdings had previously acquired Kilian through the exchange of preferred and common stock in Holdings that was issued to certain preferred and common shareholders of Kilian, the majority of whom were represented by Genstar Capital Partners III, L.P., one of the primary shareholders in Holdings.

Management Agreement

At November 30, 2004, the Company and Holdings entered into an advisory services agreement with Genstar Capital, L.P. (“Genstar”), whereby Genstar agreed to provide certain management, business strategy, consulting, financial advisory and acquisition related services to the Company. Pursuant to the agreement, the Company was required to pay Genstar an annual consulting fee of $1.0 million (payable quarterly, in arrears at the end of each calendar quarter), reimbursement of out-of-pocket expenses incurred in connection with the advisory services and an advisory fee of 2.0% of the aggregate consideration relating to any acquisition or dispositions completed by the Company. The Company recorded $1.0 million, $1.0 million and $0.1 million in management fees, included in selling, general and administrative expenses for the years ended December 31, 2006, December 31, 2005 and for the period from inception through December 31, 2004, respectively. Genstar also received a one-time transaction fee of $4.0 million, and $0.4 million in reimbursement of transaction related expenses, for advisory services it provided in connection with the acquisitions and related financings for the PTH acquisition, and $1.0 million for the Hayhall acquisition and such amounts are reflected in selling,

F-29

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

general and administrative expenses for the period from inception (December 1) through December 31, 2004 and year ended December 31, 2006, respectively. At December 31, 2005, the Company had $0.3 million recorded in accruals and other liabilities as a payable to Genstar in connection with the annual consulting fee. In December 2006, the Genstar management agreement was terminated and $3.0 million was paid to Genstar as a termination fee. There are no amounts in accruals or other liabilities payable to Genstar as of December 31, 2006.

Transition Services Agreement

In connection with the acquisition of the Predecessor operations from Colfax, the Company entered into a transition services agreement with Colfax whereby Colfax agreed to provide the Company with transitional support services. The transition services include the continued access to Colfax’ employee benefit plans through February 2005, the provision of certain accounting, treasury, tax and payroll services through various periods all of which ended by May 2005 and the transition of management oversight of various on- going business initiatives through May 2005. The cost of these services was less than $0.1 million.

Predecessor Related Party Transactions

Danaher Corporation (Danaher) was related to the Predecessor through common ownership. Revenue from sales of products to Danaher was approximately $0.3 for the eleven months ended November 30, 2004. Purchases of products from Danaher amounted to $5.8 million in the eleven months ending November 30, 2004.

Certain corporate and administrative services were performed for the Predecessor by Colfax personnel. Such services consist primarily of executive management, accounting, legal, tax, treasury and finance. Services performed for the Predecessor by Colfax were allocated to the Predecessor to the extent that they were identifiable, clearly applicable to the Predecessor and factually supported as attributable to the Predecessor. Management believes that this method of allocation is reasonable and it is consistent throughout all periods presented. No significant amounts are included in the Company’s financial statements for such services although certain professional fees including auditing fees have been allocated to the Predecessor results in the Statement of Operations and Comprehensive Income (Loss). Management estimates that these expenses would increase by approximately $1.0 million if the Predecessor was a stand alone entity. In addition, the Predecessor participated in group purchasing arranged by Colfax for costs such as insurance, health care and raw materials. These direct expenses were charged to the Predecessor entities as incurred.

The Predecessor utilized a materials sourcing operation located in China that was operated by Colfax for the benefit of all affiliated entities. Management estimates that expenses would increase approximately $0.6 million if the Predecessor had to operate this sourcing function on a stand alone basis.

The Predecessor also participated in the Colfax treasury function whereby funds were loaned to and borrowed from affiliates in the normal course of business. The net amount due to Colfax and its subsidiaries, which are not a component of the Predecessor, are reported as affiliate debt in the Balance Sheet.

13.   Concentrations of Credit, Business Risks and Workforce

Financial instruments, which are potentially subject to concentrations of credit risk, consist primarily of trade accounts receivable. The Company manages this risk by conducting credit evaluations of customers prior to delivery or commencement of services. When the Company enters into a sales contract, collateral is normally not required from the customer. Payments are typically due within thirty days of billing. An allowance for potential credit losses is maintained, and losses have historically been within management’s expectations.

Credit related losses may occur in the event of non-performance by counterparties to financial instruments. Counterparties typically represent international or well established financial institutions.

F-30

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

No customer represented greater than 10% of total sales for the year ended December 31, 2006, December 31, 2005 or the period December 1, 2004 through December 31, 2004. One customer represented 10.3% of total sales in the period January 1, 2004 through November 30, 2004.

The Company and its Predecessor operate in a single business segment for the development, manufacturing and sales of mechanical power transmission products. The Company’s chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company. Net sales to third parties and property, plant and equipment by geographic region are as follows:

	Net Sales								Property, Plant and Equipment
							Predecessor
							(Note 1)
					December 1,		11 Months
	Year-Ended		Year-Ended		2004 through		Ended
	December 31,		December 31,		December 31,		November 30,		December 31,		December 31,
	2006		2005		2004		2004		2006		2005
North America (primarily U.S.)	$	332,647	$	288,883	$	23,071	$	207,731	$	50,673	$	47,587
Europe		113,799		59,176		4,632		54,141		29,865		16,968
Asia and other		15,839		15,406		922		13,165		1,849		1,838
Total	$	462,285	$	363,465	$	28,625	$	275,037	$	82,387	$	66,393

Net sales to third parties are attributed to the geographic regions based on the country in which the shipment originates. Amounts attributed to the geographic regions for property, plant and equipment are based on the location of the entity, which holds such assets.

See the Non-Guarantor balance sheet in Note 16 for net assets of foreign subsidiaries at December 31, 2006 and 2005.

The Company has not provided specific product line sales as our general purpose financial statements do not allow us to readily determine groups of similar product sales.

Approximately 26.9% of the Company’s labor force (22.7% and 53.3% in the United States and Europe, respectively) is represented by collective bargaining agreements. Approximately 8% of our employees are covered by collective bargaining agreements due to expire during 2007.

F-31

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

14.   Predecessor Restructuring, Asset Impairment and Transition Expenses

Beginning in the fourth quarter of 2002, the Predecessor adopted certain restructuring programs intended to improve operational efficiency by reducing headcount, consolidating its operating facilities and relocating manufacturing and sourcing to low-cost countries. The Predecessor did not exit any of its operating activities and these programs did not reduce sales. The amounts recorded as restructuring charges, asset impairment and transition expenses in the Consolidated Statement of Comprehensive Income (Loss) for the period January 1, 2004 through November 30, 2004 amounted to approximately $0.9 and were comprised of the following major categories:

	11 Months Ended
	November 30,
	2004
Accrued restructuring charge	$	—
Impairment or loss on sale of fixed assets		306
Period cost transition expenses		641
	$	947

Certain period costs such as relocation, training, recruiting, duplicative associates and moving costs resulting from restructuring programs amounted to $0.6 million for the period January 1, 2004 through

November 30, 2004 were included as a component of transition expense. A summary of Predecessor cost reduction programs follows.

United States Programs

The speed reducer product line consolidation resulted in the closure of the Florence, KY distribution center, the Louisburg, NC manufacturing facility and the Charlotte, NC manufacturing facility. The three closed locations were moved into a new leased facility in Charlotte, NC. In addition the Norwalk, CA distribution center was downsized and moved into a smaller facility and the engineering and purchasing functions were moved from Quincy, MA to the new Charlotte, NC production facility. This program, other than the payment of accrued severance amounts, was substantially completed in the third quarter of 2003.

The electronic clutch brake product line consolidation resulted in the closure of the Roscoe, IL manufacturing facility. The high volume turf and garden product line was moved to the Columbia City, IN coil production facility, while the industrial and vehicular product lines were moved into the South Beloit, IL manufacturing facility.

This program, other than the payment of accrued severance amounts and certain remaining transition expenses, was substantially completed in the fourth quarter of 2003.

The sprag clutch product line consolidation resulted in the closure of the LaGrange, IL manufacturing facility. Production was relocated to the Formsprag production facility in Warren, MI. This program, other than the payment of accrued severance amounts, was substantially completed in the fourth quarter of 2002.

The heavy duty clutch product relocation resulted in the closure of the Waukesha, WI production facility, which was consolidated into the Wichita Falls, TX heavy duty clutch production facility. Engineering support remained in Waukesha in a separate smaller leased facility. This program, other than the payment of accrued severance amounts, was substantially completed in the third quarter of 2003.

Administrative process streamlining primarily involved the consolidation of the speed reducer and electronic clutch brake product lines customer service function in South Beloit, IL. This program, other than the payment of accrued severance amounts, was substantially completed in the third quarter of 2003.

F-32

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

European and Asian Programs

The European and Asian electronic clutch brake consolidation resulted in the closure of the Bishop Auckland, United Kingdom manufacturing facility with production being relocated to Angers, France and Shenzhen, China. In addition, customer service and engineering functions were centralized in Angers, France. The two French facilities in Angers and Lemans were also rationalized. The Lemans facility was downsized to focus exclusively on machining operations. All other manufacturing and administrative functions were centralized in Angers. This program, other than the payment of accrued severance amounts, was substantially completed in the fourth quarter of 2003.

Predecessor asset impairment and losses on sales of assets by program for the period January 1, 2004 through November 30, 2004, were as follows:

	11 Months Ended
	November 30,
	2004
United States programs:
Speed reducer product line consolidation	$	—
Electronic clutch brake consolidation		306
Total United States programs	$	306
Total non-cash asset impairment and loss on sale of assets	$	306

Predecessor total transition expenses by program for the period January 1, 2004 through November 30, 2004 were as follows:

	11 Months Ended
	November 30,
	2004
United States programs:
Speed reducer product line consolidation	$	—
Electronic clutch brake consolidation		641
Sprag clutch consolidation		—
Heavy duty clutch consolidation		—
Administrative streamlining		—
Total United States programs	$	641
Europe and Asia electronic clutch brake consolidation		—
Total transition expense	$	641

F-33

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Predecessor transition expense by major expense component for the period January 1, 2004 through November 30, 2004 were as follows:

	11 Months Ended
	November 30,
	2004
Training	$	—
Relocation		—
Moving costs		—
Severance		—
Duplicate employees		—
ERP system integration		—
Other		641
Total transition expense	$	641

Cash paid by the Predecessor to support its restructuring programs for the period January 1, 2004 through November 30, 2004 was as follows:

	11 Months Ended
	November 30,
	2004
United States programs:
Speed reducer product line consolidation	$	331
Electronic clutch brake consolidation		711
Sprag clutch consolidation		89
Heavy duty clutch consolidation		158
Administrative streamlining		8
Total United States programs	$	1,297
Europe and Asia electronic clutch brake consolidation		288
Cash charged against the restructuring reserve	$	1,585
Transition expense		641
Total cash utilized	$	2,226

The Predecessor’s accrued restructuring expenses were essentially fully-paid by the Predecessor at November 30, 2004, as follows:

	11 Months Ended
	November 30,
	2004
Balance at beginning of period	$	1,606
Cash payments		(1,585	)
Balance at end of period	$	21

F-34

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

15.   Commitments and Contingencies

Minimum Lease Obligations

The Company leases certain offices, warehouses, manufacturing facilities, automobiles and equipment with various terms that range from a month to month basis to ten year terms and which, generally, include renewal provisions. Future minimum rent obligations under non-cancelable operating and capital leases are as follows:

	Operating		Capital
Year Ending December 31:	Leases		Leases
2007	$	4,149	$	573
2008		2,938		433
2009		1,943		393
2010		875		146
2011		555		64
Thereafter		1,464		—
Total lease obligations	$	11,924		1,609
Less amounts representing interest				(61	)
Present value of minimum capital lease obligations			$	1,548

Net rent expense under operating leases for the years ended December 31, 2006, December 31, 2005 and the periods from Inception to December 31, 2004, and January 1, 2004 to November 30, 2004 was approximately $6.6 million, $4.3 million, $0.5 million and $5.4 million, respectively.

General Litigation

The Company is involved in various pending legal proceedings arising out of the ordinary course of business. None of these legal proceedings is expected to have a material adverse effect on the financial condition of the Company. With respect to these proceedings, management believes that it will prevail, has adequate insurance coverage or has established appropriate reserves to cover potential liabilities. Any costs that management estimates may be paid related to these proceedings or claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adversely to the Company, there could be a material adverse effect on the financial condition of the Company. Colfax has agreed to indemnify the Company for certain pre-existing matters up to agreed upon limits.

F-35

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

16.   Guarantor Subsidiaries

The following tables present separately the financial position, results of operations, and cash flows for the Company and its Predecessor for: (a) the subsidiaries of the Company and its Predecessor that are guarantors of the Notes, which are all 100% owned U.S. domestic subsidiaries of the Company (Guarantor Subsidiaries), and (b) the subsidiaries of the Company and its Predecessor that are not guaranteeing the Notes, which include all non-domestic subsidiaries of the Company (Non-Guarantor Subsidiaries). Separate financial statements of the Guarantor Subsidiaries are not presented because their guarantees are full and unconditional and joint and several, and the Company believes separate financial statements and other disclosures regarding the Guarantor Subsidiaries are not material to investors. The Notes were entered into and issued in connection with the acquisition of the Predecessor and Kilian.

CONDENSED CONSOLIDATING BALANCE SHEETS OF THE COMPANY
December 31, 2006

	December 31, 2006
						Non
	Issuer		Guarantor			Guarantor			Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	41,016	$	(5,488	)	$	6,999		$	—		$	42,527
Trade receivables, less allowance for doubtful accounts		—		37,780			23,726			—			61,506
Loan receivable from related parties		9,866		36,681			—			(46,547	)		—
Inventories, less allowances for obsolete materials		—		50,573			25,196			—			75,769
Deferred income taxes		—		7,159			(376	)		—			6,783
Prepaid expenses and other		1,875		3,353			2,304			—			7,532
Total current assets		52,757		130,058			57,849			(46,547	)		194,117
Property, plant and equipment, net		—		48,762			33,625			—			82,387
Intangible assets, net		—		36,708			22,954			—			59,662
Goodwill		—		41,660			23,737			—			65,397
Deferred income taxes		—		2,120			15			—			2,135
Other assets		5,302		279			89			—			5,670
Investments in subsidiaries		258,221		—			—			(258,221	)		—
	$	316,280	$	259,587		$	138,269		$	(304,768	)	$	409,368
LIABILITIES AND STOCKHOLDER’S (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	—	$	18,316		$	15,737		$	—		$	34,053
Accrued payroll		330		9,714			5,513			—			15,557
Accruals and other current liabilities		7,485		3,428			2,796			—			13,709
Taxes payable		3,935		1,509			1,105			—			6,549
Deferred income taxes		—		—			1,382			—			1,382
Current portion of long-term debt		—		254			319			—			573
Loans payable from related parties		—		—			46,547			(46,547	)		—
Total current liabilities		11,750		33,221			73,399			(46,547	)		71,823
Long-term debt, less current portion		225,011		349			3,195			—			228,555
Deferred income taxes		—		(1,156	)		8,286			—			7,130
Pension liabilities		—		11,797			3,372			—			15,169
Other post-retirement benefits		—		3,262			—			—			3,262
Other long-term liabilities		—		682			3,228			—			3,910
Total liabilities		236,761		48,155			91,480			(46,547	)		329,849
Total stockholder’s equity		79,519		211,432			46,789			(258,221	)		79,519
	$	316,280	$	259,587		$	138,269		$	(304,768	)	$	409,368

F-36

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING BALANCE SHEETS OF THE COMPANY
December 31, 2005

	December 31, 2005
						Non
	Issuer		Guarantor			Guarantor		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	8,819	$	(2,713	)	$	3,954	$	—		$	10,060
Trade receivables, less allowance for doubtful accounts		—		32,892			13,549		—			46,441
Loan receivable from related parties		—		34,306			4,301		(38,607	)		—
Inventories, less allowances for obsolete materials		—		43,562			11,092		—			54,654
Deferred income taxes		—		2,652			127		—			2,779
Prepaid expenses and other		25		934			1,014		—			1,973
Total current assets		8,844		111,633			34,037		(38,607	)		115,907
Property, plant and equipment, net		—		45,405			20,988		—			66,393
Intangible assets, net		—		36,729			8,022		—			44,751
Goodwill		—		53,784			11,561		—			65,345
Other assets		4,804		167			37		—			5,008
Investments in subsidiaries		225,974		—			—		(225,974	)		—
	$	239,622	$	247,718		$	74,645	$	(264,581	)	$	297,404
LIABILITIES AND STOCKHOLDER’S (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	44	$	21,931		$	8,749	$	—		$	30,724
Accrued payroll		—		12,487			3,529		—			16,016
Accruals and other current liabilities		2,499		1,613			1,828		—			5,940
Taxes payable		438		1,404			1,090		—			2,932
Deferred income taxes		—		—			33		—			33
Current portion of long-term debt		—		186			—		—			186
Loans payable from related parties		38,607		—			—		(38,607	)		—
Total current liabilities		41,688		37,621			15,229		(38,607	)		55,831
Long-term debt, less current portion		159,421		153			—		—			159,574
Deferred income taxes		—		1,719			5,831		—			7,550
Pension liabilities		—		18,872			2,863		—			21,735
Other post-retirement benefits		—		12,500			—		—			12,500
Other long-term liabilities		—		107			1,494		—			1,601
Total liabilities		200,009		70,972			25,417		(38,607	)		258,791
Total stockholder’s equity		38,613		176,746			49,228		(225,974	)		38,613
	$	239,622	$	247,718		$	74,645	$	(264,581	)	$	297,404

F-37

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS OF THE COMPANY
Year ended December 31, 2006

	Year Ended December 31, 2006
							Non-
	Issuer			Guarantor			Guarantor			Eliminations			Consolidated
Net sales	$	—		$	325,684		$	152,641		$	(16,040	)	$	462,285
Cost of sales		—			237,138			115,738			(16,040	)		336,836
Gross profit		—			88,546			36,903			—			125,449
Selling, general and administrative expenses		4,005			50,082			29,169			—			83,256
Research and development costs		—			2,689			2,249						4,938
Other post-retirement benefit plan curtailment		—			(3,838	)		—			—			(3,838	)
Income from operations		(4,005	)		39,613			5,485			—			41,093
Interest expense (income)		17,444			(124	)		6,202			—			23,522
Other non-operating expense (income)		435			(93	)		514			—			856
Equity in earnings of subsidiaries		32,247			—			—			(32,247	)		—
Income before income taxes		10,363			39,830			(1,231	)		(32,247	)		16,715
Provision for income taxes		—			5,144			1,208			—			6,352
Net (loss) income	$	10,363		$	34,686		$	(2,439	)	$	(32,247	)	$	10,363

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS OF THE COMPANY
Year ended December 31, 2005

	Year Ended December 31, 2005
							Non-
	Issuer			Guarantor			Guarantor		Eliminations			Consolidated
Net sales	$	—		$	279,292		$	93,201	$	(9,028	)	$	363,465
Cost of sales		—			211,898			69,082		(9,028	)		271,952
Gross profit		—			67,394			24,119		—			91,513
Selling, general and administrative expenses		—			43,729			17,692		—			61,421
Research and development expenses		—			2,478			2,205		—			4,683
Income from operations		—			21,187			4,222		—			25,409
Interest expense (income)		16,908			(339	)		496		—			17,065
Other non-operating expense (income)		(17	)		—			—		—			(17	)
Equity in earnings of subsidiaries		21,335			—			—		(21,335	)		—
Income before income taxes		4,444			21,526			3,726		(21,335	)		8,361
Provision for income taxes		—			2,655			1,262		—			3,917
Net income	$	4,444		$	18,871		$	2,464	$	(21,335	)	$	4,444

F-38

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS OF THE COMPANY
Period from Inception (December 1, 2004) through December 31, 2004

	Period from Inception (December 1, 2004) to December 31, 2004
							Non-
	Issuer			Guarantor			Guarantor		Eliminations			Consolidated
Net sales	$	—		$	22,591		$	6,850	$	(816	)	$	28,625
Cost of sales		—			19,115			5,548		(816	)		23,847
Gross profit		—			3,476			1,302		—			4,778
Selling, general and administrative expenses		4,855			3,480			638		—			8,973
Research and development expenses		—			176			202		—			378
(Loss) income from operations		(4,855	)		(180	)		462		—			(4,573	)
Interest expense (income)		1,384			(82	)		108		—			1,410
Equity in earnings of subsidiaries		256			—			—		(256	)		—
Income (loss) before income taxes		(5,983	)		(98	)		354		(256	)		(5,983	)
(Benefit) provision for income taxes		(221	)		—			—		—			(221	)
Net (loss) income	$	(5,762	)	$	(98	)	$	354	$	(256	)	$	(5,762	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS OF THE PREDECESSOR
Period from January 1, 2004 through November 30, 2004

	Predecessor (Note 1)
	Period from January 1, 2004 to November 30, 2004
	Guarantor			Non-Guarantor		Eliminations			Consolidated
Net sales	$	212,005		$	72,402	$	(9,370	)	$	275,037
Cost of sales		166,989			51,634		(9,370	)		209,253
Gross profit		45,016			20,768		—			65,784
Selling, general and administrative expenses		31,538			13,783		—			45,321
Research and development expenses		1,972			1,975		—			3,947
Gain on sale of assets		(1,300	)		—		—			(1,300	)
Restructuring charge, asset impairment and transition expenses		947			—		—			947
Income from operations		11,859			5,010		—			16,869
Interest expense		2,751			1,543		—			4,294
Other non-operating expense (income)		(17	)		165		—			148
Equity in income of subsidiaries		1,742			—		(1,742	)		—
Income before income taxes		10,867			3,302		(1,742	)		12,427
Provision for income taxes		3,972			1,560		—			5,532
Net income	$	6,895		$	1,742	$	(1,742	)	$	6,895

F-39

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS OF THE COMPANY
Year ended December 31, 2006

							Non-
	Issuer			Guarantor			Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	10,363		$	34,686		$	(2,439	)	$	(32,247	)	$	10,363
Undistributed equity in earnings of subsidiaries		(32,247	)		—			—			32,247			—
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation		—			6,593			4,228			—			10,821
Amortization of intangible assets		—			3,469			321			—			3,790
Amortization and write-off of deferred loan costs		968			—			—			—			968
Accretion of debt discount		942			—			—			—			942
Amortization of inventory fair value adjustment		—			245			2,033			—			2,278
Provision for deferred taxes		—			2,341			(1,151	)		—			1,190
Stock-based compensation		1,945			—			—			—			1,945
Loss on foreign currency, net		415			—			664			—			1,079
Gain on curtailment of post-retirement benefit plan		—			(3,838	)		—			—			(3,838	)
Changes in operating assets and liabilities:
Trade receivables		—			(2,363	)		2,033			—			(330	)
Inventories		—			(4,285	)		312			—			(3,973	)
Accounts payable and accrued liabilities		8,769			(15,905	)		(3,141	)		—			(10,277	)
Other current assets and liabilities		(1,849	)		128			(576	)		—			(2,297	)
Other operating assets and liabilities		1,265			280			(793	)		—			752
Net cash (used in) provided by continuing operating activities	$	(9,429	)	$	21,351		$	1,491			—		$	13,413
Cash flows from investing activities:
Purchases of fixed assets		—			(7,213	)		(2,195	)		—			(9,408	)
Acquisitions, net of cash acquired		—			(13,065	)		(40,690	)		—			(53,755	)
Net cash used in investing activities	$	—		$	(20,278	)	$	(42,885	)		—		$	(63,163	)
Cash flows from financing activities:
Proceeds from issuance of senior notes, net of costs		57,625			—			—			—			57,625
Proceeds from mortgages		—			—			2,510			—			2,510
Payment of debt issuance costs		(2,731	)		—			—			—			(2,731	)
Payment on behalf of parent company		24,389			—			—			—			24,389
Borrowings under revolving credit agreements		5,057			—			—			—			5,057
Payments on revolving credit agreements		(5,057	)		—			—			—			(5,057	)
Payment of capital leases		—			(183	)		(58	)		—			(241	)
Change in affiliated debt		(37,657	)		(3,665	)		41,322			—			—
Net cash provided by (used in) financing activities	$	41,626		$	(3,848	)	$	43,774			—			81,552
Effect of exchange rates on cash		—			—			665			—			665
Increase (decrease) in cash and cash equivalents		32,197			(2,775	)		3,045			—			32,467
Cash and cash equivalents, beginning of the period		8,819			(2,713	)		3,954			—			10,060
Cash and cash equivalents, end of period	$	41,016		$	(5,488	)	$	6,999		$	—		$	42,527

F-40

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS OF THE COMPANY
Year Ended December 31, 2005

							Non-
	Issuer			Guarantor			Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	4,444		$	18,871		$	2,464		$	(21,335	)	$	4,444
Undistributed equity in earnings of subsidiaries		(21,335	)		—			—			21,335			—
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation		—			5,845			2,729			—			8,574
Amortization of intangible assets		—			2,261			698			—			2,959
Amortization and write-off of deferred loan costs		621			—			—			—			621
Accretion of debt discount		942			—			—			—			942
Amortization of inventory fair value adjustment		—			1,270			429			—			1,699
Gain on sale of fixed assets		—			—			(99	)		—			(99	)
Provision for deferred taxes		—			568			(320	)		—			248
Changes in operating assets and liabilities:
Trade receivables		—			(1,608	)		(1,046	)		—			(2,654	)
Inventories		—			(2,894	)		1,541			—			(1,353	)
Accounts payable and accrued liabilities		(882	)		(6,632	)		5,682			—			(1,832	)
Other current assets and liabilities		(26	)		2,727			475			—			2,226
Other operating assets and liabilities		(1,746	)		87			(281	)		—			(1,940	)
Net cash (used in) provided by continuing operating activities		(17,982	)		20,495			11,322			—			13,835
Cash flows from investing activities:
Purchases of fixed assets		—			(4,099	)		(2,100	)		—			(6,199	)
Acquisitions, net of cash acquired		—			1,607			—			—			1,607
Payment of additional Kilian purchase price		—			(730	)		—			—			(730	)
Proceeds from sale of fixed assets		—			20			105			—			125
Net cash used in investing activities		—			(3,202	)		(1,995	)		—			(5,197	)
Cash flows from financing activities:
Payment of debt issuance costs		(338	)		—			—			—			(338	)
Payment on behalf of parent company		(1,610	)		—			—			—			(1,610	)
Borrowings under revolving credit agreements		4,408			—			—			—			4,408
Payments on revolving credit agreements		(4,408	)		—			—			—			(4,408	)
Payment of capital leases		—			(169	)		(666	)		—			(835	)
Change in affiliated debt		26,530			(17,924	)		(8,606	)		—			—
Net cash provided by (used in) financing activities		24,582			(18,093	)		(9,272	)		—			(2,783	)
Effect of exchange rates on cash		—			—			(524	)		—			(524	)
Increase (decrease) in cash and cash equivalents		6,600			(800	)		(469	)		—			5,331
Cash and cash equivalents, beginning of the period		2,219			(1,913	)		4,423			—			4,729
Cash and cash equivalents, end of period	$	8,819		$	(2,713	)	$	3,954		$	—		$	10,060

F-41

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS OF THE COMPANY
Period from Inception (December 1, 2004) through December 31, 2004

							Non-
	Issuer			Guarantor			Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net (loss) income	$	(5,762	)	$	(98	)	$	354		$	(256	)	$	(5,762	)
Undistributed equity in earnings of subsidiaries		(256	)		—			—			256			—
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation		—			551			122			—			673
Amortization of intangible assets		—			196			50			—			246
Amortization and write-off of deferred loan costs		49			—			—			—			49
Accretion of debt discount		79			—			—			—			79
Amortization of inventory fair value adjustment		—			1,270			429			—			1,699
Benefit for deferred taxes		—			(1,031	)		—			—			(1,031	)
Changes in operating assets and liabilities:
Trade receivables		—			(1,403	)		1,079			—			(324	)
Inventories		—			994			(1,406	)		—			(412	)
Accounts payable and accrued liabilities		1,900			8,899			(1,326	)		—			9,473
Other current assets and liabilities		—			(2,222	)		96			—			(2,126	)
Other operating assets and liabilities		3,357			(356	)		58			—			3,059
Net cash (used in) provided by continuing operating activities		(633	)		6,800			(544	)		—			5,623
Cash flows from investing activities:
Purchases of fixed assets		—			(243	)		(46	)		—			(289	)
Acquisitions, net of cash acquired		(182,479	)		(1,949	)		4,316			—			(180,112	)
Net cash used in investing activities		(182,479	)		(2,192	)		4,270			—			(180,401	)
Cash flows from financing activities:
Contributed capital		39,994			—			—			—			39,994
Proceeds from issuance of senior subordinated notes		158,400			—			—			—			158,400
Payment of debt acquired in acquisitions		(12,178	)		—			—			—			(12,178	)
Payment of debt issuance costs		(6,747	)		—			—			—			(6,747	)
Payment of capital leases		—			(37	)		—			—			(37	)
Borrowings under revolving credit agreements		4,988			—			—			—			4,988
Payments on revolving credit agreements		(4,988	)		—			—			—			(4,988	)
Change in affiliated debt		5,862			(6,484	)		622			—			—
Net cash provided by (used in) financing activities		185,331			(6,521	)		622			—			179,432
Effect of exchange rates on cash		—			—			75			—			75
Increase (decrease) in cash and cash equivalents		2,219			(1,913	)		4,423			—			4,729
Cash and cash equivalents, beginning of the period		—			—			—			—			—
Cash and cash equivalents, end of period	$	2,219		$	(1,913	)	$	4,423		$	—		$	4,729

F-42

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS OF THE PREDECESSOR
Period from January 1, 2004 through November 30, 2004

				Non-
	Guarantor			Guarantor			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	6,895		$	1,742		$	(1,742	)	$	6,895
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation		5,038			1,036			—			6,074
Gain on sale of fixed assets		(1,300	)		—			—			(1,300	)
Provision for deferred taxes		102			15			—			117
Changes in operating assets and liabilities:
Trade receivables		(492	)		(3,705	)		—			(4,197	)
Inventories		(2,610	)		(3,808	)		—			(6,418	)
Accounts payable and accrued liabilities		4,825			(1,091	)		—			3,734
Other current assets and liabilities		2,883			(1,406	)		—			1,477
Other operating assets and liabilities		(2,794	)		16			—			(2,778	)
Net cash provided by (used in) operating activities		12,547			(7,201	)		(1,742	)		3,604
Cash flows from investing activities:
Purchases of fixed assets		(2,533	)		(956	)		—			(3,489	)
Sale of fixed assets		4,442			—			—			4,442
Net cash provided by (used in) investing activities		1,909			(956	)		—			953
Cash flows from financing activities:
Change in affiliated debt		(13,697	)		(921	)		—			(14,618	)
Contribution from affiliates		2,019			4,161			1,742			7,922
Net cash (used in) provided by financing activities		(11,678	)		3,240			1,742			(6,696	)
Effect of exchange rates on cash		—			159			—			159
Increase (decrease) in cash and cash equivalents		2,778			(4,758	)		—			(1,980	)
Cash and cash equivalents, beginning of the period		(125	)		3,288			—			3,163
Cash and cash equivalents, end of period	$	2,653		$	(1,470	)	$	—		$	1,183

F-43

ALTRA INDUSTRIAL MOTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

17.   Unaudited Quarterly Results of Operations (in thousands):

YEAR ENDING DECEMBER 31, 2006

	Fourth			Third		Second		First
Net Sales	$	114,774		$	112,953	$	119,774	$	114,784
Gross Profit		30,897			30,425		32,273		31,854
Net (loss) income		(1,587	)		3,949		3,917		4,084

YEAR ENDING DECEMBER 31, 2005

	Fourth		Third		Second		First
Net Sales	$	90,205	$	85,056	$	92,902	$	95,302
Gross Profit		25,075		21,396		23,162		21,880
Net income		2,012		414		1,822		196

YEAR ENDING DECEMBER 31, 2004

	Period from			Predecessor (Note 1)
	Inception			Period from
	(December 1)			October 1, 2004
	to			to
	December 31,			November 30,
	2004			2004		Third			Second		First
Net Sales	$	28,625		$	46,770	$	72,413		$	77,963	$	77,891
Gross Profit		4,778			10,088		17,838			18,459		19,399
Net income (loss)		(5,762	)		843		(1,241	)		2,516		4,777

18.   Subsequent Event

On February 17, 2007, our Parent entered into an Agreement and Plan of Merger (“Merger Agreement”) with TB Woods’s Corporation. Under the Merger Agreement, a wholly owned subsidiary of the Parent is to acquire all of the outstanding shares of common stock, par value $0.01 per share, of TB Wood’s at a price of $24.80 per share. The transaction is expected to close in April 2007.

F-44

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and

Shareholders of TB Wood’s Corporation:

We have audited the accompanying consolidated balance sheets of TB Wood’s Corporation and subsidiaries (the Company) as of December 31, 2006 and 2005 and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatements. The Company is not required to have, nor were we engaged to perform an audit of internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TB Wood’s Corporation and subsidiaries as of December 31, 2006 and December 31, 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

We have also audited schedule II for each of the three years in the period ended December 31, 2006. In our opinion, this schedule when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information therein.

/s/  Grant Thornton LLP

Baltimore, Maryland

March 1, 2007

F-45

TB WOOD’S CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	2006			2005
	(In thousands, except per share and share amounts)
ASSETS
Current Assets:
Cash and cash equivalents	$	877		$	3,419
Accounts receivable, less allowances of $494 and $495		17,592			14,827
Inventory		19,668			15,579
Other Current Assets		2,532			3,061
Total Current Assets		40,669			36,886
Property, Plant, and Equipment:
Machinery and equipment		65,232			60,732
Land, buildings, and improvements		20,043			19,684
		85,275			80,416
Less accumulated depreciation		60,523			57,361
Total Property, Plant and Equipment		24,752			23,055
Other Assets:
Goodwill		5,891			5,676
Loan issue costs, net of amortization		1,267			1,564
Other		189			572
Total Other Assets		7,347			7,812
	$	72,768		$	67,753
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		9,043			8,465
Accrued expenses		7,838			6,996
Current maturities of long-term debt		4,745			4,138
Deferred income taxes		462			716
Total current liabilities		22,088			20,315
Long-term debt, less current maturities		23,884			25,829
Deferred income taxes		250			91
Commitments and contingencies (Note 8)		—			—
Shareholders’ Equity:
Preferred stock, $.01 par value; 100 shares authorized; no shares issued		—			—
Common stock, $.01 par value; 10,000,000 shares authorized; 5,639,798 issued; and 3,743,486 and 3,703,902 outstanding at December 31, 2006 and December 31, 2005		57			57
Additional paid-in capital		28,947			28,153
Retained earnings		12,538			9,216
Accumulated other comprehensive (loss) income		439			(151	)
Treasury stock at cost; 1,896,312 and 1,935,896 shares at December 31, 2006 and December 31, 2005		(15,435	)		(15,757	)
Total shareholders’ equity		26,546			21,518
	$	72,768		$	67,753

The accompanying notes are an integral part of these consolidated financial statements.

F-46

TB WOOD’S CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	2006			2005			2004
	(In thousands, except per share amounts)
Net sales	$	118,935		$	110,897		$	101,515
Cost of sales		80,790			77,192			73,792
Gross profit		38,145			33,705			27,723
Selling, general, and administrative expenses		28,641			27,717			28,371
Gain on termination of post-retirement benefit plan (Note 7)		—			—			9,258
Operating income		9,504			5,988			8,610
Interest and other finance costs		(3,628	)		(2,319	)		(1,585	)
Income before income taxes		5,876			3,669			7,025
Income taxes		1,762			1,289			2,407
Net income	$	4,114		$	2,380		$	4,618
Income per share of common stock
Basic:
Net income	$	1.10		$	0.48		$	0.89
Weighted average shares of common stock and equivalents		3,731			4,933			5,164
Diluted:
Net income	$	1.05		$	0.48		$	0.89
Weighted average shares of common stock and equivalents		3,929			4,961			5,166

The accompanying notes are an integral part of these consolidated financial statements.

F-47

TB WOOD’S CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	2006		2005			2004
	(In thousands)
Net income	$	4,114	$	2,380		$	4,618
Other comprehensive income:
Foreign currency translation adjustment		590		(309	)		768
Comprehensive income	$	4,704	$	2,071		$	5,386

The accompanying notes are an integral part of these consolidated financial statements.

F-48

TB WOOD’S CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

											Accumulated
						Additional					Other
	Common			Common		Paid-In		Retained			Comprehensive			Treasury
	Shares			Stock		Capital		Earnings			Income (Loss)			Stock
	(In thousands, except share amounts)
Balance at January 2, 2004		5,153,553		$	57	$	26,910	$	3,764		$	(610	)	$	(4,703	)
Net income					—		—		4,618			—			—
Stock issued for employee benefit plans		19,137			—		—		(46	)		—			185
Dividends declared					—		—		(1,393	)		—			—
Stock options granted					—		185		—			—			—
Foreign currency translation adjustment					—		—		—			768			—
Balance at December 31, 2004		5,172,690			57		27,095		6,943			158			(4,518	)
Net income					—		—		2,380			—			—
Stock issued for employee benefit plans		31,212			—		—		(107	)		—			293
Dividends declared					—		—		—			—			—
Treasury stock purchases		(1,500,000	)		—		—		—			—			(11,532	)
Stock options granted					—		303		—			—			—
Warrants issued					—		755		—			—			—
Foreign currency translation adjustment					—		—		—			(309	)		—
Balance at December 31, 2005		3,703,902			57		28,153		9,216			(151	)		(15,757	)
Net income					—		—		4,114			—			—
Stock issued for employee benefit plans		21,811			—		43		(9	)		—			177
Options exercised		17,773			—		42		(108	)		—			145
Dividends declared					—		—		(675	)		—			—
Stock options granted					—		709		—			—
Foreign currency translation adjustment					—		—		—			590			—
Balance at December 31, 2006		3,743,486		$	57	$	28,947	$	12,538		$	439		$	(15,435	)

The accompanying notes are an integral part of these consolidated financial statements.

F-49

TB WOOD’S CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	2006			2005			2004
	(In thousands)
Cash Flows from Operating Activities:
Net income	$	4,114		$	2,380		$	4,618
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,517			4,765			5,423
Change in deferred income taxes		(80	)		(228	)		1,755
Stock options and employee stock benefit expense		920			429			270
Gain on termination of post-retirement plan		—			(270	)		(9,258	)
Other, net		(6	)		(247	)		(10	)
Changes in operating assets and liabilities:
Accounts receivable		(2,765	)		(1,474	)		714
Inventories		(4,089	)		4,839			1,216
Other current assets		529			681			(152	)
Accounts payable		578			662			634
Accrued and other liabilities		842			748			(1,010	)
Net cash provided by operating activities		4,560			12,285			4,200
Cash Flows from Investing Activities:
Capital expenditures		(5,377	)		(3,062	)		(2,009	)
Proceeds from sales of fixed assets		—			428			69
Other, net		(88	)		137			(803	)
Net cash used in investing activities		(5,465	)		(2,497	)		(2,743	)
Cash Flows from Financing Activities:
Proceeds from revolving credit facilities		118,401			111,551			37,739
Repayments of revolving credit facilities		(118,334	)		(128,794	)		(38,870	)
Proceeds from term loans		88			12,200			33
Repayments of term loans		(1,618	)		(4,395	)		(14	)
Proceeds from subordinated debt and detachable warrants, net of issue costs		—			14,260			—
Payment of dividends		(675	)		—			(1,393	)
Proceeds from exercise of stock options		5			—			—
Proceeds from stock issued under employee stock program		74			59			55
Treasury stock purchased		—			(11,591	)		—
Net cash used in financing activities		(2,059	)		(6,710	)		(2,450	)
Effect of changes in foreign exchange rates		422			(215	)		768
Increase (decrease) in cash and cash equivalents		(2,542	)		2,863			(225	)
Cash and cash equivalents at beginning of year		3,419			556			781
Cash and cash equivalents at end of year	$	877		$	3,419		$	556
Income taxes paid (refunded), net	$	1,632		$	245		$	22
Interest paid during the year	$	3,527		$	2,466		$	1,564

The accompanying notes are an integral part of these consolidated financial statements.

F-50

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

1.   Nature of Business and Principles of Consolidation

TB Wood’s Corporation and subsidiaries (collectively “TB Wood’s” or the “Company”) is an established designer, manufacturer, and marketer of electronic and mechanical industrial power transmission products that are sold to distributors, domestic and international Original Equipment Manufacturers (OEMs), and end users of industrial equipment. Principal products of the Company include electronic drives, integrated electronic drive systems, mechanical belted drives, and flexible couplings. The Company has operations in the United States, Canada, Mexico, Germany, Italy and India. The accompanying consolidated financial statements include the accounts of TB Wood’s Corporation, its wholly owned subsidiaries, and its majority-owned joint venture. All inter-company accounts and transactions have been eliminated in consolidation.

Prior to fiscal year 2005, the Company’s 52/53-week fiscal year ended on the Friday closest to the last day of December. Effective in 2005, the Company changed to a calendar fiscal year ending on December 31. Fiscal years ended on December 31, 2006, 2005 and 2004 were 52 week fiscal years, and the fiscal year ended January 2, 2004 was a 53 week fiscal year.

2.   Summary of Significant Accounting Policies

Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less, and all bond instruments which are readily convertible to known amounts of cash, to be cash equivalents. Cash equivalents of $842 and $1,110 were held in foreign bank accounts of our subsidiaries and joint venture as at December 31, 2006 and 2005 respectively.

Accounts Receivable

The majority of the Company’s accounts receivable are due from selected authorized industrial distributors who resell the Company’s products to OEMs and end users for replacement parts. Accounts receivable potentially subject the Company to concentrations of credit risk. Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are generally due within 30 days and are stated at amounts due from the customers net of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Company determines its allowances considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligations to the Company, and the condition of the general economy and the industry as a whole. The Company believes that its allowance for doubtful accounts is adequate to cover any potential losses on its credit risk exposure. The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowances for doubtful accounts.

Inventory

Inventories located in the United States are stated at the lower of current cost or market, principally using the last-in, first-out (LIFO) method. Inventories for foreign operations are stated at the lower of cost or market using the first-in, first-out (FIFO) method. Market is defined as net realizable value. Cost includes raw

F-51

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

materials, direct labor, and manufacturing overhead. A summary of inventories at December 31, 2006 and 2005 follows:

	2006			2005
Finished goods	$	13,709		$	11,159
Work in process		3,475			3,452
Raw materials		9,194			7,009
Total inventories at FIFO		26,378			21,620
less LIFO reserve		(6,710	)		(6,041	)
Total inventories at LIFO	$	19,668		$	15,579

Approximately 71% and 71% of total inventories at December 31, 2006 and 2005, respectively, were valued using the LIFO method. In the year ended December 31, 2006, the LIFO reserve increased by $669 which increased the Cost of Goods Sold by the same amount. In the year ended December 31, 2005 the LIFO reserve decreased by $41 which decreased the Cost of Goods Sold by the same amount.

The Company writes down inventory for estimated obsolescence or unmarketability equal to the difference between the cost of the inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. The Company depreciates its property, plant, and equipment, including any equipment acquired under the terms of capital leases, principally using the straight-line method over the estimated useful lives of the assets. Major renewals and improvements to property, plant and equipment that extend the useful life of the assets are capitalized while maintenance and repair costs are charged to expense as incurred. The depreciable lives of the major classes of property, plant and equipment are summarized as follows:

Asset Type	Lives
Machinery and equipment		3 — 15 years
Buildings and improvements		10 — 40 years

Long-Lived Assets, including Goodwill

Goodwill which is deemed to have an indefinite life is subject to an annual impairment test to determine if any adjustment for decline in value is necessary. The Company conducts its impairment tests by reviewing whether events or changes in circumstances have occurred that could indicate that the carrying amount of an asset may not be recoverable and the value of its long-lived assets may be impaired. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the expected future net cash flows generated by the assets. If the assets are considered to be impaired, the impairment is

F-52

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

recognized by the amount by which the carrying amount of the asset exceeds its fair value. A reconciliation of the Goodwill account is as follows:

	Mechanical		Electronics			Total
Goodwill, balance at January 2, 2004	$	3,503	$	2,151		$	5,654
Addition due to earn out payment		94		—			94
Adjustment for impairment		—		(24	)		(24	)
Change due to foreign currency translation		—		178			178
Goodwill, balance at December 31, 2004		3,597		2,305			5,902
Addition due to earn out payment		67		—			67
Change due to foreign currency translation		—		(293	)		(293	)
Goodwill balance at December 31, 2005		3,664		2,012			5,676
Change due to foreign currency translation		—		215			215
Goodwill balance at December 31, 2006	$	3,664	$	2,227		$	5,891

Revenue Recognition

The Company’s revenue recognition policies are in compliance with Staff Accounting Bulletin No. 104 “Revenue Recognition in Financial Statements” issued by the Securities and Exchange Commission. Revenue is recognized at the time product is shipped and title passes pursuant to the terms of the agreement with the customer, the amount due from the customer is fixed and collectibility of the related receivable is reasonably assured. The Company establishes allowances to cover anticipated doubtful accounts, sales discounts, product warranty, and returns based upon historical experience. Shipping and handling costs charged to customers are included as a component of net sales. Shipping and handling costs incurred in the delivery of products to customers were $6,743, $6,402 and $6,747 for fiscal 2006, 2005 and 2004, respectively, and are included as a component of selling, general and administrative expenses.

Major Customers

The Company’s five largest customers accounted for approximately 32%, 32% and 33% of the Company’s consolidated revenue for fiscal years 2006, 2005 and 2004, respectively. One such customer, an industrial distributor with a large diversified customer base, accounted for approximately 17%, 17% and 14% of the Company’s consolidated revenue for fiscal 2006, 2005 and 2004, respectively. The loss of one or more of these customers could have an adverse effect on the Company’s performance and operations. Foreign and export sales accounted for 30%, 26%, and 27% of total sales in fiscal years 2006, 2005 and 2004, respectively.

Product Warranty

In the ordinary course of business, the Company warrants its products against defect in design, materials, and workmanship over various time periods. Warranty reserve and allowance for product returns are established based upon management’s best estimates of amounts necessary to settle future and existing claims on products sold as of the balance sheet date.

Self-Insurance

The Company’s workers’ compensation insurance policies are high deductible self-insurance programs that have the potential for retrospective premium adjustments based upon actual claims incurred. Insurance administrators assist the Company in estimating the fully developed workers’ compensation liability insurance reserves that are accrued by the Company. In the opinion of management, adequate provision has been made

F-53

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

for all incurred claims. At December 31, 2006, the Company’s senior secured lender had issued letters of credit on behalf of the Company totaling $1.8 million to cover incurred but unpaid claims and other costs related to its workers’ compensation liability.

Post Retirement Benefits Obligations

Prior to terminating its post-retirement benefits for healthcare and life insurance in 2004 and 2005, respectively, the Company, in consultation with an actuarial firm specializing in the valuation of postretirement benefit obligations, selected certain actuarial assumptions to base the actuarial valuation of the Company’s post retirement benefit obligation, such as the discount rate (interest rate used to determine present value of obligations payable in the future), initial health care cost trend rate, the ultimate care cost trend rate, and mortality tables to determine the expected future mortality of plan participants. As a result of actions to terminate its post-retirement benefit plans, the Company does not expect that any future costs or cash contributions related to post-retirement benefits for retirees or former employees to be material

Foreign Currency Translation

The financial statements of the Company’s foreign subsidiaries have been translated into U.S. dollars in accordance with Statement of Financial Accounting Standards (SFAS) No. 52, “Foreign Currency Translation” and SFAS No. 130, “Reporting Comprehensive Income.” Translation adjustments are included in other comprehensive income. All balance sheet accounts of foreign subsidiaries are translated into U.S. dollars at the current exchange rate at the balance sheet date. Statement of operations items are translated at the average foreign currency exchange rates. The resulting foreign currency translation adjustment is recorded in accumulated other comprehensive income (loss). The Company has no other components of comprehensive income (loss). Gains and losses from foreign currency transactions are included in the consolidated statements of income.

Fair Value of Financial Instruments

The fair value of financial instruments classified as current assets or liabilities, including cash and cash equivalents, accounts receivable, and accounts payable, approximate carrying value due to the short-term maturity of the instruments. The fair value of secured short-term and long-term debt amounts approximate their carrying value and are based on their effective interest rates compared to current market rates. The Company’s unsecured subordinated term-debt carries a fixed stated rate. Adjusted for changes in the interest rate for 5-year U.S. Treasury Bill from the time that the stated rate was determined to December 31, 2006, the current fair value of such securities would be reduced by $0.2 million.

Research and Development Cost

Research and development costs consist substantially of projects related to new product development within the electronics business and are expensed as incurred. Total research and development costs were $2,511 in 2006, $1,947 in 2005, and $2,323 in 2004.

Stock Based Compensation

The Company currently sponsors stock option plans. Prior to January 1, 2006, the Company accounted for these plans under the fair value recognition and measurement provisions of Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation.” Effective January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), “Share Based Payment” (SFAS No. 123(R)) using the modified prospective method. The adoption of SFAS No. 123(R) did not have a material impact on our stock-based compensation expense for the year ended December 31, 2006 and it is not expected to have a material impact on our Company’s future stock-based compensation expense. The fair values of the stock

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TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

awards are determined using an estimated expected life. The Company recognizes compensation expense on a straight-line basis over the period the award is earned by the employee.

Income Taxes

The Company records deferred tax assets and liabilities for the future tax consequences attributable to differences between financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Net Income Per Share

Basic Earnings Per Share (EPS) is computed by dividing net income by the weighted average shares outstanding. No dilution for any potentially dilutive securities is included in basic EPS. Diluted EPS is computed by dividing net income by weighted average shares and common equivalent shares outstanding. The computation of weighted average shares outstanding for fiscal years 2006, 2005 and 2004 is as follows:

	2006		2005		2004
Common shares outstanding for basic EPS		3,731		4,933		5,164
Shares issued upon assumed exercise of outstanding stock options and warrants		198		28		2
Weighted average number of common and common equivalent shares outstanding for diluted EPS		3,929		4,961		5,166

Outstanding options of 139,567, 649,418, and 675,928 shares for fiscal 2006, 2005 and 2004, respectively, are excluded from the calculation of weighted average shares outstanding because they are anti-dilutive.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current year presentation.

Recent Accounting Pronouncements

In June 2006, the FASB issued FIN No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109”, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes”. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN No. 48 requires recognition of tax benefits that satisfy a more likely than not threshold. FIN No. 48 also provides guidance on derecognizing, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN No. 48 is required to be adopted by the Company at the beginning of fiscal year 2007. The Company is currently evaluating the impact of FIN No. 48 on its consolidated financial statements, but is not yet in a position to make this determination.

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TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Current Year Misstatements”. SAB 108 provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. The SEC staff believes that registrants should quantify errors using both a balance sheet and an income statement approach and evaluate whether either approach results in the quantification of a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. The Company adopted SAB 108 for its year ending December 31, 2006. The adoption of SAB 108 did not have an impact on the Company’s consolidated results of operations or financial position.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the impact of SFAS No. 157 on its results of operations and financial position.

3.   Other Current Assets and Accrued Liabilities

Components of other current assets at December 31, 2006 and 2005 were as follows:

	2006		2005
Refundable foreign value added tax	$	812	$	970
Maintenance and repair supplies		610		597
Prepaid insurance and deposits		221		505
Prepaid expenses and other		889		989
Total	$	2,532	$	3,061

Components of accrued expenses at December 31, 2006 and 2005 were as follows:

	2006		2005
Accrued payroll and other compensation	$	2,803	$	2,339
Accrued income taxes		1,471		1,672
Accrued workers’ compensation		255		195
Accrued customer rebates		1,178		1,116
Accrued warranty reserves		727		564
Accrued professional fees		452		270
Other accrued liabilities		952		840
Total	$	7,838	$	6,996

F-56

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4.   Debt

Debt obligations at December 31, 2006 and December 31, 2005 were as follows:

	2006			2005
Revolving line of credit — secured	$	1,102		$	1,035
Term Loans — secured		7,305			8,805
Industrial revenue bonds — secured		5,290			5,290
Other revolving and term loans, principally with foreign banks		603			586
Senior Subordinated Notes, net of unamortized discount — unsecured		14,329			14,251
		28,629			29,967
Less current maturities		(4,745	)		(4,138	)
	$	23,884		$	25,829

The Company’s effective borrowing rates at December 31, 2006 and 2005 for its debt obligations were approximately 9.93% and 9.49% respectively.

On January 7, 2005, the Company entered into a senior secured loan and security agreement (the “Loan Agreement”) that originally provided for up to an $18.3 million revolving line of credit and two term loans totaling $13.0 million (Term Loan A — $10.0 million and Term Loan B — $3.0 million). The proceeds were used to retire amounts outstanding under the Company’s outstanding revolving line of credit as well as to fund existing letters of credit that support $5.3 million of industrial revenue bonds and certain obligations under various self-insured workers compensation insurance policies. The borrowings under the Loan Agreement are secured by substantially all of the Company’s domestic assets and pledges of 65% of the outstanding stock of the Company’s Canadian, German and Mexican subsidiaries. The Loan Agreement was amended on July 29, 2005 to extend the term for an additional two years through April 2009 and permit the Company to borrow up to $15.0 million under the Security Purchase Agreement described below to fund the purchase of up to 1.5 million shares of outstanding common stock and repay Term Loan B, the outstanding balance of which was approximately $2.0 million.

All borrowings under the Loan Agreement bear variable interest of a margin plus LIBOR or U.S. Prime Rate, and the remaining Term Loan A is repayable in monthly principal installments totaling $0.13 million. The average borrowing rates for the Company’s short-term borrowings under the senior secured credit arrangement at December 31, 2006 and 2005 were 7.86% and 7.97%, respectively. At December 31, 2006, the Company had remaining borrowing capacity of $8.3 million.

The Loan Agreement contains restrictive financial covenants that require the Company to comply with certain financial tests including, among other things, maintaining minimum tangible net worth, having a minimum earnings before interest, taxes and depreciation and amortization (EBITDA), and meeting certain specified leverage and operating ratios, all as defined in the Loan Agreement. The Loan Agreement also contains other restrictive covenants that restrict outside investments, capital expenditures, and dividends. The Company was in compliance with the debt covenants at December 31, 2006.

The Company previously borrowed approximately $3.0 million and $2.3 million by issuing Variable Rate Demand Revenue Bonds under the authority of the industrial development corporations of the City of San Marcos, Texas and City of Chattanooga, Tennessee, respectively. These bonds bear variable interest rates (3.77% at December 31, 2006) and mature in April 2024 and April 2022. The bonds were issued to finance production facilities for the Company’s manufacturing operations located in those cities, and are secured by letters of credit issued under the terms of the Company’s senior secured borrowing agreement.

F-57

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On October 20, 2005, the Company entered into a Securities Purchase Agreement in exchange for the issuance of $15.0 million of senior subordinated notes valued at $14.24 million and detachable warrants, valued at $0.76 million, to purchase 174,000 shares of the Company’s common stock. The senior subordinated notes have a stated rate of 12% (approximate effective rate of 13%), are due on October 12, 2012, and contain customary financial covenants similar to, but less restrictive than the Company’s senior secured bank indebtedness described above. The proceeds from the sale of the notes and detachable warrants were used to acquire 1.5 million shares of the Company’s common stock at a purchase price of $11.25 million, repay approximately $2.0 million of term debt under the Company’s senior secured borrowing agreement, pay $1.0 million of transaction costs related to the stock purchase and related financing transaction, with the balance providing additional working capital.

In addition to the above borrowing arrangements, $0.4 million and $0.5 million were outstanding at December 31, 2006 and 2005, under the terms of an unsecured revolving credit facility and a term loan, each borrowed by the Company’s Italian subsidiary. Interest only was payable on the term loan during 2004, and principal repayments commenced beginning in 2005. The rates for these loans ranged from 1.3% to 3.9%.

Aggregate future maturities of debt as of December 31, 2006 are as follows:

2007	$	4,744
2008		1,636
2009		2,400
2010		73
2011		74
Thereafter		20,372
		29,300
Less: Unamortized discount		(671	)
	$	28,629

5.   Income Taxes

The components of the income tax provision (benefit) for fiscal years 2006, 2005, and 2004 are shown below:

	2006			2005			2004
Current:
Federal and state	$	(7	)	$	1,069		$	103
Foreign		1,797			448			549
		1,790			1,517			652
Deferred income tax (benefit) provision		(28	)		(228	)		1,755
Total provision for income taxes	$	1,762		$	1,289		$	2,407

F-58

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A reconciliation of the provision for income taxes on income before cumulative effect of change in accounting principle at the statutory federal income tax rate to the Company’s tax provision as reported in the accompanying consolidated statements of operations is shown below:

	2006			2005			2004
Federal statutory income tax expense	$	1,998		$	1,247		$	2,388
State income taxes, net of federal income tax benefit		(21	)		(115	)		211
Foreign taxes, net of related credits		130			473			107
Research and development credits		(135	)		(295	)		(207	)
Change in estimate with respect to federal and state liabilities		(90	)		(140	)		(143	)
Other		(120	)		119			51
	$	1,762		$	1,289		$	2,407

In 2006, 2005, and 2004 earnings before income taxes included $3,289, $831, and $952, respectively, of earnings generated by the Company’s foreign operations. No federal or state income tax benefit or provision has been provided on the undistributed earnings of certain of these foreign operations, as the earnings will continue to be indefinitely reinvested. It is not practical to estimate the additional income taxes, including any foreign withholding taxes that might be payable with the eventual remittance of such earnings.

Under SFAS No. 109, deferred tax assets or liabilities at the end of each period are determined by applying the current tax rate to temporary difference between the financial reporting and income tax bases of assets and liabilities. The components of deferred income taxes at December 31, 2006 and 2005 are as follows:

	2006			2005
Deferred income tax liabilities:
Book basis in long-lived assets over tax basis	$	(900	)	$	(839	)
LIFO inventory basis difference		(1,260	)		(1,426	)
Other		—			(17	)
Total deferred income tax liabilities		(2,160	)		(2,282	)
Deferred income tax assets:
Accrued liabilities not currently deductible		762			458
Allowance for doubtful accounts and inventory reserves		460			460
Net operating loss and tax credit carryforwards		175			557
Other		51			—
Total deferred income tax assets		1,448			1,475
Net deferred income tax liability	$	(712	)	$	(807	)

As of December 31, 2006, the Company has net operating loss and foreign tax credit carryforwards totaling approximately $142 and $33, respectively. These credits expire beginning 2014 through 2025. The ability of the Company to benefit from the carryforwards is dependent on the Company’s ability to generate sufficient taxable income prior to the expiration dates.

F-59

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6.   Shareholders’ Equity

The table below summarizes the transactions in the Company’s Common Stock held in the treasury in numbers of shares during fiscal 2006 and 2005.

	2006			2005
Balance at beginning of year, number of shares		1,935,896			467,108
Purchases during the year		—			1,500,000
Transfers to 401(k) Profit Sharing Plan		(11,812	)		(19,189	)
Transfers to Employee Stock Purchase Plan		(9,999	)		(12,023	)
Transfers for Exercise of Options		(17,773	)		—
Balance at end of year, number of shares		1,896,312			1,935,896

On October 20, 2005, Company accepted for payment 1,500,000 shares of its Common Stock, at a price of $7.50 per share, pursuant to its “Dutch Auction” self-tender offer. The shares of common stock accepted for purchased represent approximately 28.84% of TB Wood’s 5,201,162 shares of common stock then outstanding. The total share purchase price was $11.25 million, together with $0.28 million of transaction cost, and was funded through the issuance of 12% senior subordinated notes in the amount of $15.0 million and detachable warrants to purchase 174,000 shares of the Company’s common stock, valued at $0.76 million.

7.   Benefit Plans

Compensation Plans

The Company maintains a discretionary compensation plan for certain salaried employees that provides for incentive awards based on certain levels of earnings, as defined. In 2006 and 2005, the Company accrued $0.85 million and $0.35 million, respectively, for such incentives, which were paid in 2007 and 2006. No amounts were accrued under the plan in 2004.

Profit-Sharing Plans

The Company maintains a defined contribution 401(k) profit-sharing plan covering substantially all United States employees. Under this plan, the Company, on a discretionary basis, matches a specified percentage of each eligible employee’s contribution and, at the election of the employee, the matching contribution may be in the form of either cash, shares of the Company’s common stock, or a combination thereof. The Company contributed cash of approximately $479, $448, and $302 for fiscal years 2006, 2005 and 2004, respectively, and contributed 11,812 shares of common stock held in treasury in 2006, 19,189 shares in 2005, and 10,290 shares in 2004. During portions of 2003 and 2002, the Company suspended the matching portion. In addition, the Company has a noncontributory profit-sharing plan covering its Canadian employees for which $23, $28, and $24 was charged to expense for fiscal years 2006, 2005, and 2004, respectively.

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (ESPP) enables employees of the Company to subscribe for shares of common stock on quarterly offering dates, at a purchase price which is the lesser of 85% of the fair value of the shares on either the first or last day of the quarterly period. Pursuant to the ESPP, 9,999 shares were issued to employees during 2006, 12,023 during 2005, and 8,847 during 2004. Employee contributions to the ESPP were $67, $59, and $55 for fiscal years 2006, 2005 and 2004, respectively.

F-60

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Options

The Company has stock-based incentive compensation plans (the Plans), the purpose of which is to assist the Company in attracting and retaining valued personnel and to encourage ownership of the Company’s common stock by such personnel. The Plans are administered by a committee (the “Committee”) designated by the board of directors. Although the Committee may grant either incentive stock options (ISOs) or nonqualified stock options, as well as shares of common stock in the form of either deferred stock or restricted stock, as defined in the Plans, the Company’s practice with respect to share based payments has been limited to granting nonqualified stock options. The Committee also determines the exercise price and term of the options. The maximum term of an option granted under the Plans shall not exceed ten years from the date of grant. No option may be exercisable sooner than six months from the date the option is granted.

Effective January 1, 2006, the Company adopted SFAS No. 123(R). The Company adopted SFAS No. 123(R), using the modified prospective method. Prior to 2006, our Company accounted for stock option plans and restricted stock plans under the fair value recognition provisions of SFAS No. 123. The adoption of SFAS No. 123(R) did not have a material impact on our stock-based compensation expense for the year ended December 31, 2006, and is not expected to have a material impact on our Company’s future stock-based compensation expense.

The fair value of each option award is estimated on the date of the grant using a Black-Scholes-Merton option-pricing model that uses the assumptions noted in the following table. The expected term of the options granted represents the period of time that options granted are expected to be outstanding and is derived by analyzing historic exercise behavior. Volatility was based on the historical volatility of the Company’s stock. The risk-free interest rate for the period matching the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The dividend yield is the calculated yield on the Company’s stock at the time of the grant. The following table sets forth information about the weighted-average fair value of options granted during the past three years and the weighted-average assumptions used for such grants:

	2006	2005	2004
Risk free interest rate	4.70%	4.50%	4.40%
Expected lives	10 years	10 years	5 & 10 years
Expected volatility	60.8%	28.8%	30.3%
Dividend yield	4.8%	0.0%	4.3%

The fair value, net of tax, of options granted in 2006, 2005 and 2004 using the Black-Scholes method was $354, $313, and $211, respectively, which is being recognized as expense ratably over the three year vesting period of the options. In addition, during 2006 the Company modified the exercise period for 89,800 options previously awarded to the Company’s former chairman, who left the Company to enter into government service. As a result of this modification, the Company recognized an additional charge for share based payments of $245 in 2006. Total stock-based compensation expense was approximately $703, $303 and $185 in 2006, 2005 and 2004, respectively, and is included in selling, general and administrative expense. As of December 31, 2006, the total of unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company’s plans approximately $599. This cost, which excludes the impact of any future stock-based compensation awards, is expected to be recognized as stock-based compensation expense over a weighted-average period of 1.7 years, however this period could be accelerated as a result of a change of control provision enacted by the Committee in contemplation of the merger transaction described in Note 10.

F-61

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock option activity for the fiscal years 2006, 2005 and 2004 is as follows:

						Weighted
						Average
				Weighted		Remaining
	Number of			Average		Contractual		Aggregate
	Shares Subject			Exercise		Term		Intrinsic
	to Option			Price		(In Years)		Value
Options outstanding at January 2, 2004		874,050		$	11.73
Granted		187,800			9.75
Canceled		(383,399	)		11.91
Exercised		—			—
Options outstanding at December 31, 2004		678,451			11.08
Granted		184,000			7.08
Canceled		(197,000	)		12.82
Exercised		—			—
Options outstanding at December 31, 2005		665,451			9.46
Granted		99,000			9.37
Canceled		(88,269	)		12.45
Exercised		(57,433	)		8.94
Options outstanding at December 31, 2006		618,749		$	9.20		6.25	$	4,399
Options vested or expected to vest at December 31, 2006		618,749		$	9.20		6.25	$	4,399
Options exercisable at December 31, 2006		358,383		$	9.77		4.75	$	2,221

The aggregate intrinsic value in the above table represents the total pre-tax intrinsic value (the differences between the Company’s closing stock price on the last day of trading in 2006 and the stock option exercise prices, multiplied by the applicable number of in-the-money options) that would have been received by option holders had all such holders exercised their options on December 31, 2006. The aggregate intrinsic value will change based on the fair market value of the Company’s stock.

The aggregate intrinsic value of options exercised during the year ended December 31, 2006 was $221; there were no option exercises in 2005 or 2004. The total income tax benefit recognized in the income statement for share-based compensation arrangements attributable to options exercised in 2006 was approximately $75.

As a result of the merger transaction described in Note 10, due to vesting modifications for all options established by the Committee in the event of a change of control, the Company expects that all issued and outstanding options will vest.

F-62

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the range of exercise price, number of shares, weighted average exercise price, and remaining contractual lives by groups of similar price and grant dates as of December 31, 2006.

	Options Outstanding						Options Exercisable
			Weighted		Weighted				Weighted
			Average		Average				Average
Range of	Number of		Exercise		Contractual		Number of		Exercise
Exercise Price	Shares		Price		Life		Shares		Price
$ 4.80 - $ 7.50		146,018	$	6.16		10.0 years		61,235	$	6.17
$ 7.51 - $ 9.00		210,716	$	8.08		10.0 years		117,586	$	8.24
$ 9.01 - $11.00		94,782	$	9.46		7.80 years		64,892	$	9.40
$11.01 - $13.00		119,349	$	12.11		5.90 years		80,353	$	12.37
$13.01 - $21.00		47,884	$	15.58		10.0 years		34,317	$	16.00
Total Options Outstanding		618,749						358,383

Postretirement Benefits

The Company does not presently sponsor any post-retirement benefit programs. In the second quarter of 2005, the Company announced to employees that it was discontinuing its sponsorship of an unfunded defined benefit post employment group term life insurance plan that provided life insurance coverage for active employees and retirees. As a result the company recognized a non-recurring termination gain of $270, which was recorded as a reduction of selling, general and administrative expense.

In 2004 the Company terminated its post-retirement healthcare benefit program. As a result, the Company recognized a non-recurring pre-tax gain aggregating $9.26 million. The Company also recorded $3.61 million deferred tax expense arising from the reduction of a previously recognized deferred tax asset associated with these benefits, resulting in a $1.09 increase in earnings per share in 2004 associated with the termination gain. Prior to the termination of the aforementioned benefit plan and resulting non-recurring gain, selling, general and administrative expenses included a net credit reducing such costs by $0.78 million principally relating to the amortization of actuarial gains and deferred credits arising during the operation of the benefit plan.

8.   Commitments and Contingencies

Legal Proceedings

The Company is subject to legal actions arising in the ordinary course of business. In management’s opinion, the ultimate resolution of these actions will not materially affect the Company’s financial position or results of operations.

Environmental Risks

The Company’s operations and properties are subject to federal, state, and local laws, regulations, and ordinances relating to certain materials, substances, and wastes. The nature of the Company’s operations exposes it to the risk of claims with respect to environmental matters. Based on the Company’s experience to date, management believes that the future cost of compliance with existing environmental requirements will not have a material adverse effect on the Company’s operations or financial position.

F-63

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Operating Lease Commitments

The Company leases warehouse and office space, office equipment, and other items under non-cancelable operating leases. The expense for non-cancelable operating leases was approximately $1,230, $1,289, and $1,304 for fiscal 2006, 2005 and 2004, respectively. At December 31, 2006, future minimum lease payments under non-cancelable operating leases are as follows:

2007	$	1,093
2008		877
2009		628
2010		555
2011		517
2012 and thereafter		1,050
	$	4,720

9.   Business Segment Information

Description of the Types of Products from which each Segment Derives its Revenues

The Company is engaged principally in the design, manufacture, and sale of industrial power transmission products. The products manufactured by the Company are classified into two segments, mechanical business and electronics business. The mechanical business segment includes belted drives and couplings. The electronics business segment includes electronic drives and electric drive systems. Products of these segments are sold to distributors, OEM’s, and end users for manufacturing and commercial applications.

Measurement of Segment Profit or Loss and Segment Assets

The Company evaluates performance and allocates resources based on profit or loss from operations before income taxes. The accounting policies of the reportable segments are the same as described in the summary of significant accounting policies. Inter-segment sales are not material.

Factors Management Used to Identify the Company’s Reportable Segments

The Company’s reportable segments are business units that manufacture and market separate and distinct products and are managed separately because each business requires different processes, technologies, and market strategies. The following table summarizes revenues, operating income, depreciation and amortization, total assets, and expenditures for long-lived assets by business segment for fiscal 2006, 2005, and 2004:

	2006		2005		2004
Sales
Mechanical Business	$	79,773	$	72,361	$	63,732
Electronics Business		39,162		38,536		37,783
		118,935		110,897		101,515
Operating income (loss), exclusive of gain on benefit plan termination
Mechanical Business		7,727		4,885		951
Electronics Business		1,777		1,103		(1,599	)
		9,504		5,988		(648	)

F-64

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	2006		2005		2004
Depreciation and amortization
Mechanical Business		2,261		2,578		2,884
Electronics Business		1,196		1,158		1,443
Corporate (before divisional allocation)		1,060		1,029		1,096
		4,517		4,765		5,423
Assets
Mechanical Business		45,406		42,097		43,541
Electronics Business		22,786		20,760		22,136
Corporate		4,576		4,896		3,693
		72,768		67,753		69,370
Expenditures for long-lived assets
Mechanical Business		4,158		1,002		1,652
Electronics Business		760		1,398		254
Corporate		459		662		103
	$	5,377	$	3,062	$	2,009

The following table reconciles segment profit to consolidated income before income taxes:

	2006			2005			2004
Total operating profit (loss) for reportable segments	$	9,504		$	5,988		$	(648	)
Interest expense		(3,628	)		(2,319	)		(1,585	)
Gain on benefit plan termination		—			—			9,258
Income before income taxes	$	5,876		$	3,669		$	7,025

The following table reconciles segment assets to consolidated total assets as of December 31, 2006 and, 2005:

	2006			2005
Total assets for reportable segments	$	68,192		$	62,857
Corporate fixed assets		4,705			3,739
Interdivision elimination		(129	)		1,157
Consolidated total	$	72,768		$	67,753

F-65

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Information regarding the Company’s domestic and foreign operations is as follows:

			Long-Lived
	Net Sales		Assets
2006
United States	$	87,866	$	24,005
Canada		11,113		318
Germany		4,899		2,236
Italy		10,571		574
Mexico		2,978		3,474
India		1,508		36
Consolidated	$	118,935	$	30,643
2005
United States	$	82,402	$	22,896
Canada		10,291		308
Germany		4,561		2,024
Italy		9,940		381
Mexico		2,808		3,084
India		900		38
Consolidated	$	110,897	$	28,731
2004
United States	$	74,186	$	23,670
Canada		8,937		328
Germany		4,627		2,320
Italy		9,980		674
Mexico		2,878		3,326
India		907		43
Consolidated	$	101,515	$	30,361

10.   Subsequent Event — Merger Transaction

On February 17, 2007, the Company entered into a merger agreement with Altra Holdings, Inc. and Forest Acquisition Corporation, a wholly owned subsidiary of Altra (collectively “Altra”). Under the terms of the merger agreement, Altra has commenced a cash tender offer (the “Offer”) to acquire all of the outstanding shares of common stock, par value $0.01 per share, of the Company at a price of $24.80 per share. The tender offer, which is expected to close in April 2007, is subject to at least 662/3% of the shares of TB Wood’s Corporation (adjusted to take into account the potential exercise of certain securities exercisable for shares of TB Wood’s) being tendered and not withdrawn, as well as other customary tender offer conditions, including, among others, the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Mr. Thomas C. Foley, the largest stockholder of TB Wood’s, has entered into a support agreement, dated February 17, 2006, in which he has agreed to tender 1.6 million shares in the Offer, representing approximately 42.5% of the shares of TB Wood’s currently issued and outstanding. The obligations under this agreement terminate in the event the merger is terminated and the payment by TB Wood’s, in certain circumstances, of a termination fee. TB Wood’s also has agreed not to solicit or support any alternative

F-66

TB WOOD’S CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

acquisition proposals, subject to customary exceptions for TB Wood’s to respond to an unsolicited “superior proposal”, as defined in the merger agreement, in the exercise of the fiduciary duties of its Board of Directors. In the event the merger is terminated, the Company may be obligated to pay a termination fee of $4.5 million under certain circumstances.

In connection with the merger, TB Wood’s and certain of its subsidiaries have entered into a side letter with its senior subordinated lender dated February 17, 2007. Pursuant to the terms of the side letter, each of AEA Mezzanine Funding LLC and AEA Mezzanine (Unleveraged) Fund LP has agreed to exercise, at the close of the tender offer, its put rights to cause TB Wood’s and certain of its subsidiaries to prepay the 12% Senior Subordinated Notes due 2012 at the change of control redemption price of 101%, which amounts shall be paid upon consummation of the Merger.

11.   Quarterly Financial Data (Unaudited)

	First			Second			Third			Fourth
2006
Sales	$	29,419		$	29,750		$	29,894		$	29,872
Gross Profit		9,104			9,495			9,668			9,878
Gross Profit %		30.9	%		31.9	%		32.3	%		33.1	%
Net income		642			947			1,294			1,231
Basic net income per share	$	0.17		$	0.25		$	0.35		$	0.33
Diluted net income per share	$	0.17		$	0.24		$	0.33		$	0.31
Dividends declared and paid per share		—			—		$	0.09		$	0.09

	First			Second			Third			Fourth
2005
Sales	$	27,711		$	27,844		$	27,673		$	27,669
Gross Profit		8,153			8,276			8,254			9,022
Gross Profit %		29.4	%		29.7	%		29.8	%		32.6	%
Net income		372			497			565			946
Basic net income per share	$	0.07		$	0.10		$	0.11		$	0.20
Diluted net income per share	$	0.07		$	0.10		$	0.11		$	0.20
Dividends declared and paid per share		—			—			—			—

The fourth quarter of 2006 included a non-cash charge of $154,000, net of tax, or $0.04 per share resulting from the Company’s decision to allow the former Chairman, who left the Company to enter government service, to retain his rights under his existing option agreements.

F-67

Hay Hall Holdings Limited

Independent Auditors’ Report

To the Shareholders of Hay Hall Holdings Limited

Hay Hall Holdings Limited

Group Headquarters

Hay Hall Works

134 Redfern Road

Tyseley

Birmingham

B11 2BE

We have audited the accompanying consolidated balance sheet of Hay Hall Holdings Limited as of December 31, 2005 and the related consolidated profit and loss account and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hay Hall Holdings Limited at December 31, 2005, and the results of its consolidated profit and loss account and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United Kingdom, which differ in certain respects from those followed in the United States, as described in Note 28 to the financial statements.

/s/  BDO Stoy Hayward LLP

Chartered Accountants

Birmingham, United Kingdom

8 June 2006

F-68

Hay Hall Holdings Limited

Consolidated Profit and Loss Account

For the year ended 31 December 2005

			Year Ended
			31 December
	Notes		2005
			£’000
Turnover		2		39,262
Operating costs less other income		3		(37,924	)
Operating profit		4		1,338
Interest receivable				56
Interest payable		5		(1,286	)
Other financial income				107
Profit on ordinary activities before taxation				215
Tax on profit on ordinary activities		8		(292	)
				(77	)
Minority interests				—
(Loss) profit for the financial period				(77	)

All the group’s turnover and operating profit were derived from continuing activities.

The accompanying notes are an integral part of this profit and loss account.

F-69

Hay Hall Holdings Limited

Consolidated Statement of Total Recognised Gains and Losses

For the year ended 31 December 2005

	Year Ended
	31 December
	2005
	£’000
(Loss) profit for the financial period		(77	)
Profit (loss) on foreign currency translation		118
Actuarial (losses) gains on retirement benefit scheme		(2,148	)
Total recognised gains and losses relating to the period		(2,107	)

F-70

Hay Hall Holdings Limited

Consolidated Balance Sheet

31 December 2005

	Notes		2005
			£’000
Fixed assets
Goodwill		9		2,593
Tangible assets		10		6,131
Investments		11		19
				8,743
Current assets
Stocks		12		8,659
Debtors		13		7,537
Cash at bank and in hand				2,207
				18,403
Creditors: Amounts falling due within one year		14		(13,673	)
Net current assets				4,730
Total assets less current liabilities				13,473
Financed by:
Creditors: Amounts falling due after more than one year Obligations under finance leases and hire purchase contracts		15		513
Borrowings		16		9,185
Pension obligations		25		3,573
				13,271
Capital and reserves
Called-up share capital		18		2,130
Profit and loss account		19		(1,928	)
Shareholders’ funds		20		202
Minority interests		21		—
				13,473

The accounts were approved by the board of directors on 8, June 2006 and signed on its behalf by: D Wall

The accompanying notes are an integral part of this consolidated balance sheet.

F-71

Hay Hall Holdings Limited

Company Balance Sheet

31 December 2005

	Notes		2005
			£’000
Fixed assets
Investments		11		2,280
Creditors: Amounts falling due after more than one year		14		(150	)
Total assets less current liabilities				2,130
Financed by:
Capital and reserves
Called-up share capital		18		2,130
Profit and loss account		19		—
Shareholders’ funds		20		2,130

The accounts were approved by the board of directors on 8 June 2006 and signed on its behalf by: D Wall

The accompanying notes are an integral part of this balance sheet.

F-72

Hay Hall Holdings Limited

Cash Flow Statement

For the period ended 31 December 2005

			Year Ended
			31 December
	Notes		2005
			£’000
Net cash inflow from operating activities		22		2,789
Returns on investments and servicing of finance
Interest received				56
Interest paid — HP and finance lease				(26	)
Interest paid — other interest				(1,129	)
Net cash outflow for returns on investments and servicing of finance				(1,099	)
Taxation
Tax paid				(186	)
Net cash outflow for taxation				(186	)
Capital expenditure
Purchase of tangible fixed assets				(680	)
Sale of tangible fixed assets				8
Net cash outflow for capital expenditure				(672	)
Acquisition and disposals
Purchase of subsidiary undertaking				(288	)
Net cash acquired with subsidiary undertakings				42
Purchase of investments				(5	)
Net cash outflow for acquisition and disposals				(251	)
Cash outflow before financing				581
Financing
Capital element of finance lease rental payments				(178	)
New loans				238
Repayment of loans				(1,007	)
Net cash (outflow) inflow from financing				(947	)
Decrease in cash in the period		23		(366	)

The accompanying notes are an integral part of this consolidated cash flow statement

F-73

HAY HALL HOLDINGS LIMITED

Notes to Accounts

1   Accounting policies

The principal accounting policies are set out below. They have all been applied consistently throughout the period.

a) Basis of accounting

The accounts have been prepared under the historical cost convention and in accordance with applicable accounting standards. The Group has adopted the full accounting requirements of FRS17 — Retirement Benefits in the 2005 accounts and comparative figures for 2004 have been restated accordingly. The change in accounting policy had the effect of increasing group profits after tax for the year by £75,000, and decreasing group shareholders’ funds by £2,069,000.

b) Accounting period

The financial statements cover the period for the year ended 31 December 2005.

c) Basis of consolidation

The Group accounts consolidate the accounts of Hay Hall Holdings Limited and its material subsidiary undertakings drawn up to 31 December. The results of subsidiaries acquired or sold are consolidated for the periods from or to the date on which control passed. Acquisitions are accounted for under the acquisition method.

As permitted by Section 230 of the Companies Act 1985, no profit and loss account is presented in respect of Hay Hall Holdings Limited. The retained profit for the financial period of the parent company was £Nil.

d) Goodwill

Goodwill arising on acquisitions is capitalised and written off on a straight line basis over its useful economic life which is a maximum of twenty years. Provision is made for any impairment.

e) Tangible fixed assets

Tangible fixed assets are shown at cost, net of depreciation and any provision for impairment. Depreciation is provided on all tangible fixed assets other than freehold land, at rates calculated to write off the cost, less estimated residual value, of fixed assets on a straight-line basis over their expected useful lives, as follows:

Freehold buildings	2% to 31/3% per annum
Improvements to short leasehold premises	Over term of lease
Plant and machinery and equipment	4% to 331/33% per annum

Residual value is calculated on prices prevailing at the date of acquisition or revaluation.

Where depreciation charges are increased following a revaluation, an amount equal to the increase is transferred annually from the revaluation reserve to the profit and loss account as a movement on reserves. On the disposal or recognition of a provision for impairment of a revalued fixed asset, any related balance remaining in the revaluation reserve is also transferred to the profit and loss account as a movement on reserves.

f) Investments

Fixed asset investments are shown at cost less provision for impairment.

F-74

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

g) Stocks

Stocks are stated at the lower of cost and net realisable value. Cost includes materials, direct labour and an attributable proportion of manufacturing overheads based on normal levels of activity. Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion and disposal. Provision is made for obsolete, slow-moving or defective items where appropriate.

h) Taxation

Corporation tax payable is provided on taxable profits at the current rate. Payment is made in certain cases by group companies for group relief surrendered to them.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the company’s taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Deferred tax is not recognised when fixed assets are revalued unless by the balance sheet date there is a binding agreement to see the revalued assets and the gain or loss expected to arise on sale has been recognised in the financial statements. Neither is deferred tax recognised when fixed assets are sold and it is more likely than not that the taxable gain will be rolled over, being charged to tax only if and when the replacements assets are sold.

Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries and associates only to the extent that, at the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future has been entered into by the subsidiary or associates.

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.

i) Foreign currency

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction or, if hedged, at the forward contract rate. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date or, if appropriate, at the forward contract rate. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the profit and loss account.

The results of overseas operations are translated at the average rates of exchange during the period and their balance sheets at the rates ruling at the balance sheet date. Exchange differences arising on translation of the opening net assets and on foreign currency borrowings, to the extent that they hedge the group’s investment in such operations, are dealt with through reserves. All other exchange differences are included in the profit and loss account.

F-75

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

j) Leases

Assets held under finance leases, which confer rights and obligations similar to those attached to owned assets, are capitalised as tangible fixed assets and are depreciated over the shorter of the lease terms and their useful lives. The capital elements of future lease obligations are recorded as liabilities, while the interest elements are charged to the profit and loss account over the period of the leases to produce a constant rate of charge on the balance of capital repayments outstanding. Hire purchase transactions are dealt with similarly, except that assets are depreciated over their useful lives.

Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis.

k) Turnover

Turnover represents amounts receivable for goods and services provided in the normal course of business, net of trade discounts, VAT and other sales related taxes.

l) Pension costs

Contributions to the group’s defined contribution pension scheme are charged to the profit and loss account in the year in which they become payable.

The difference between the fair value of the assets held in the group’s defined benefit pension scheme and the scheme’s liabilities measures on an actuarial basis using the projected unit method are recognised in the group’s balance sheet as a pension asset or liability as appropriate. The carrying value of any resulting pension scheme asset is restricted to the extent that the group is able to recover the surplus either through reduced contributions in the future or through refunds from the scheme. The pension scheme balance is recognised net of any related deferred tax balance.

Charges in the defined benefit scheme asset or liability arising from factors other than cash contribution by the group are charged to the profit and loss account or the statement of total recognised gains and losses in accordance with FRS17 ’Retirement benefits’.

m) Finance costs

Finance costs of debt and non-equity shares are recognised in the profit and loss account over the term of such instruments at a constant rate on the carrying amount. Where the finance costs for non-equity shares are not equal to the dividends on these instruments, the difference is also accounted for in the profit and loss account as an appropriation of profits.

n) Debt

Debt is initially stated at the amount of the net proceeds after deduction of issue costs. The carrying amount is increased by the finance cost in respect of the accounting year and reduced by payments made in the year.

F-76

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

2   Turnover

Turnover relates to the Group’s principal activities as described in the directors’ report. An analysis of turnover by geographical destination for the year ended 31 December 2005 is as follows:

	2005
	£’000
UK		12,348
Rest of Europe		8,471
Americas		14,086
Rest of the World		4,357
		39,262

Turnover by origin is as follows:

	2005
	£’000
UK		30,050
Rest of Europe		700
USA		7,192
Africa		1,320
		39,262

3   Operating costs less other income

	2005
	Continuing
	Operations
	£’000
Change in stocks of finished goods and work in progress		607
Other operating income		54
Raw materials and consumables		(14,438	)
Other external charges		(7,317	)
Staff costs		(15,631	)
Depreciation and Amortisation		(1,200	)
		(37,924	)

4   Operating profit

Operating profit is stated after charging:

	2005
	£’000
Depreciation of tangible fixed assets		1,075
Amortisation of goodwill		125
Auditors’ remuneration for audit services		71
Operating lease rentals — plant and machinery		113
— other		473

F-77

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

Amounts payable to BDO Stoy Hayward LLP in respect of non-audit services were £23,000. Auditors’ remuneration for audit services charged to the company profit and loss account of Hay Hall Holdings Limited was £Nil.

5   Interest payable and similar charges

	2005
	£’000
Bank loans and overdrafts		1,079
Finance leases and hire purchase contracts		26
Amortisation of loan issue costs		181
		1,286

6   Staff costs

The average monthly number of employees (including executive directors) was as follows:

	2005
	Number
Works employees		349
Staff		199
		548

Their aggregate remuneration comprised:

	2005
	£’000
Wages and salaries		13,969
Redundancy costs		55
Social security costs		1,328
Other pension costs		279
		15,631

7   Directors’ remuneration

The directors did not receive any remuneration from the company during the period.

F-78

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

8   Tax on profit on ordinary activities

The tax charge (credit) comprises:

	2005
	£’000
Current tax
UK corporation tax at 30%		5
Overseas tax		215
		220
Deferred tax (see note 17)
Origination and reversal of timing differences		72
Total tax on profit on ordinary activities		292

The difference between the total current tax shown above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is as follows:

	2005
	£’000
Profit on ordinary activities before tax		215
Tax on profit on ordinary activities at standard UK corporation tax rate of 30%		65
Effects of:
Expenses not deductible for tax purposes		6
Depreciation in excess of capital allowances		125
Other timing differences		24
Current tax charges for period		220

F-79

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

9   Goodwill

Group	£’000
Cost
Beginning of year (as previously reported)		745
Prior year adjustment		1,604
Beginning of year (as restated)		2,349
Goodwill on acquisition in the year (note 11)		399
End of year		2,748
Amortisation
Beginning of year (as previously reported)		(10	)
Prior year adjustment		(20	)
Beginning of year (as restated)		(30	)
Charge for the year		(125	)
End of year		(155	)
Net book value
End of year		2,593
Beginning of year (as restated)		2,319

10   Tangible fixed assets

	Freehold		Short			Plant,
	Land and		Leasehold			Machinery &
Group	Buildings		Buildings			Equipment			Total
	£’000		£’000			£’000			£’000
Cost or valuation
Beginning of year		1,579		218			10,331			12,128
Acquisitions		—		—			13			13
Additions		—		—			672			672
Disposal		—		(132	)		(395	)		(527	)
Exchange adjustment		—		2			173			175
End of year		1,579		88			10,794			12,461
Depreciation
Beginning of year		212		114			5,405			5,731
Acquisitions							4			4
Charge for the year		30		34			1,003			1,067
Disposal				(132	)		(391	)		(523	)
Exchange adjustment							51			51
End of year		242		16			6,072			6,330
Net book value
Beginning of year		1,367		104			4,926			6,397
End of year		1,337		72			4,722			6,131

F-80

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

The net book value of tangible fixed assets includes an amount of £629,000 in respect of assets held under finance leases and hire purchase contracts. The related depreciation charge on these assets for the year was £78,000.

Freehold land and buildings include land of £400,000 which has not been depreciated.

Company

The company does not have any tangible fixed assets.

11   Fixed asset investments

	2005
	Group		Company
	2005		2005
	£’000		£’000
Subsidiary undertaking		—		2,280
Investments		19		—
		19		2,280

F-81

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

Investment in subsidiary undertaking

The company has an investment in the following subsidiary undertaking:

	Country of
	Registration	Holding	%
The Hay Hall Group Limited	England	Ordinary		85
		Preference		82
		B Preference		84
		C Preference		100
The subsidiary undertaking has investments in the following companies:
Trading companies
Matrix International Limited	England	Ordinary		100
Inertia Dynamics Inc.	USA	Ordinary		100
Matrix International GmbH	Germany	Ordinary		100
Bibby Transmissions Limited	England	Ordinary		100
Huco Engineering Industries Limited	England	Ordinary		100
Twiflex Limited	England	Ordinary		100
Bibby Turboflex (SA) (Pty) Limited	South Africa	Ordinary		100
Scandicom AB	Sweden	Ordinary		100
Saftek Limited	England	Ordinary		100
Holding companies
Bibby Group Limited	England	Ordinary		100
Huco Power Transmissions Limited	England	Ordinary		100
MEL Holding Inc.	USA	Ordinary		100
Non trading companies
Turboflex Limited	England	Ordinary		100
Matrix Engineering Limited	England	Ordinary		100
Hay Hall Leicester Limited	England	Ordinary		100
Stainless Steel Tubes Limited	England	Ordinary		100
Hay Hall Tyseley Limited	England	Ordinary		100
T&A Nash (Penn) Limited	England	Ordinary		100
Motion Developments Limited	England	Ordinary		100
Hay Hall Trustees Limited	England	Ordinary		100
Turboflex (South Africa) (Pty) Limited	South Africa	Ordinary		100
Torsiflex Limited	England	Ordinary		100
Dynatork Air Motors Limited	England	Ordinary		100
Dynatork Limited	England	Ordinary		100

The principal activity of all the above operating companies was the design and manufacture of industrial power transmission components.

The group has an investment in the following associated undertaking.

	Country of
	Registration	Holding	%
Rathi Turboflex Pty Limited	India	Ordinary		50

F-82

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

The investment in the associated undertaking is not material therefore it has not been included in the consolidated results of the group.

Acquisition of subsidiary undertaking

	Book and Fair
	Value
	£’000
Tangible fixed assets		13
Stocks		25
Debtors		56
Creditors		(6	)
Taxation		(41	)
Cash acquired		42
		89
Goodwill (note 9)		399
		488
Satisfied by:
Cash		288
Deferred consideration		200
		488

Dynatork Air Motors Limited earned a profit after taxation of £48,000 in the year ended 31 March 2005. The summarised profit and loss account for the period from 1 April 2005 to 31 July 2005, shown on the basis of the accounting policies of Dynatork Air Motors Limited prior to the acquisition, are as follows:

Profit and Loss Account
	£’000
Turnover		144
Cost of sales		(43	)
Operating profit		101
Finance charges (net)		—
Profit on ordinary activities before taxation		101
tax on profit on ordinary activities		(20	)
Profit for the financial period		81

F-83

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

On 30 September 2004 the company acquired the majority of the issued share capital of The Hay Hall Group Limited, a company based in Birmingham. The following table sets out the identifiable assets and liabilities acquired and their book and fair value:

		Book and
		Fair Value
		£’000
		(As restated)
Investments			10
Tangible fixed assets			6,563
Stocks			7,309
Debtors			8,728
Creditors			(7,074	)
Overdrafts acquired			(5,206	)
Loans			(8,280	)
Obligations under finance leases and hire purchase contracts			(515	)
Pension obligations			(1,604	)
Goodwill (note 9) (as previously reported)	745		(69	)
Prior year adjustment	1,604		2,349
			2,280
Satisfied by:
Cash			150
Issue of shares			2,130
			2,280

The calculation of goodwill above has been restated following the adoption of FRS17 — Retirement Benefits. This has resulted in the inclusion of the book value of Pension obligations in the amount of £1,604,000 as set out in note 25.

12   Stocks

	2005
	£’000
Group
Raw materials and consumables		1,668
Work in progress		1,848
Finished goods and goods for resale		5,143
		8,659

There is no material difference between the balance sheet value of stocks and their replacement cost.

Company

The company held no stocks at either year end.

F-84

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

13   Debtors

	2005
	Group		Company
	£’000		£’000
Amounts falling due within one year:
Trade debtors		6,792		—
VAT		262		—
Taxation recoverable		11		—
Deferred tax debtor		83		—
Prepayments and accrued income		389		—
		7,537		—

14   Creditors: Amounts falling due within one year

	2005
	Group		Company
	£’000		£’000
Bank loans and overdrafts (secured)		5,668		—
Trade creditors		4,531		—
Amounts due to group undertakings				150
Corporate tax payable		353		—
Other taxation and social security		437		—
Obligations under finance leases and hire purchase contracts		233		—
Accruals		2,451		—
		13,673		150

The bank loans and overdrafts are secured by fixed and floating charges over the assets of the subsidiary undertakings.

15   Creditors: Amounts falling due after more than one year

	2005
	Group		Company
	£’000		£’000
Obligations under finance leases and hire purchase contracts		331		—
Deferred consideration		182		—
Amounts due to subsidiary undertaking		—		150
		513		150

F-85

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

Finance leases

	2005
	£’000
Amounts payable:
— Within one year		233
— between one and two years		163
— between two and five years		168
		564

Deferred consideration

Deferred consideration of £200,000 is due in respect of the acquisition during the year of Dynatork Air Motors Limited, of which £182,000 is due after more than 1 year. The rate of payment of the deferred consideration is dependent upon the value of sales made of the company’s product range subsequent to the acquisition and is payable bi-annually commencing on 31 January 2006.

16   Creditors: Amounts falling due after more than one year

	2005
	Group		Company
	£’000		£’000
Senior Loans		9,185		—

The senior loans were at variable rate and were repayable in varying installments. The loans were secured on the assets of the principal subsidiary and its subsidiary undertakings.

Analysis of borrowings

Loans were repayable by installments and not wholly within five years. Amounts due at 31 December were payable as follows:

	2005
	Group
	£’000
Amounts payable:
— Within one year		1,200
— between one and two years		1,200
— between two and five years		7,985
		10,385
Loan issue costs not amortised		—
		10,385

In accordance with Financial Reporting Standard 4, the carrying value of the loans is shown net of issue costs of which £181,000 has been charged to the profit and loss account in the year.

On 10 February 2006 all of the loans were repaid in full following the acquisition of the company by the Warner Electric (U.K.) Group.

F-86

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

17   Provisions for liabilities and charges

	2005
	Group			Company
	£’000			£’000
Deferred tax
At beginning of period		131			—
On acquisitions		—
Charged to the profit and loss account		(72	)		—
Differences on exchange		(12	)		—
Offset against pension obligations		32
Transferred to debtors		(83	)		—
At end of period		—			—
The deferred tax provision comprises:
Accelerated capital allowances		(8	)		—
Other timing differences		91			—
		83			—

The group also has losses of £761,000, giving a deferred tax asset of £228,000 which is unprovided. This deferred tax asset has not been recognised on the basis that it is unlikely to be utilised in the foreseeable future.

18   Called-up share capital

	2005
	£’000
Authorised
2,600,000 ordinary shares of £1 each		2,600
Allotted, called-up and fully-paid
2,130,370 ordinary shares of £1 each		2,130

19   Reserves

	Profit and
	Loss Account
	£’000
Group
Beginning of year (as restated)		179
Retained loss for the period		(77	)
Profit on foreign currency translation		118
Actuarial losses on pension scheme		(2,148	)
End of year		(1,928	)
Company
Beginning and end of period		—

F-87

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

20   Reconciliation of movements in shareholders’ funds

	2005
	Group			Company
	£’000			£’000
(Loss) Profit for the financial period		(77	)		—
Issue of share capital		—			—
Profit (Loss) on foreign currency translation		118			—
Actuarial losses on pension scheme		(2,148	)		—
Net (reduction in) addition to shareholders’ funds		(2,107	)		—
Opening shareholders’ funds		2,309			2,130
Closing shareholders’ funds		202			2,130

21   Minority interests

	2005
	£’000
At 1 January 2005 (as restated)		—
Profit on ordinary activities after taxation for the year		—
At 31 December 2005		—

On 10 February 2006 the Company acquired the remaining shares in The Hay Hall Group Limited that it did not previously own with the result that The Hay Hall Group Limited became a 100% owned subsidiary at that date.

22   Reconciliation of operating profit to operating cash flows

	2005
	£’000
Operating profit		1,338
Depreciation and amortisation charges		1,200
(Increase) in stocks		(841	)
Decrease in debtors		392
Decrease in creditors		700
Net cash inflow from operating activities		2,789

23   Analysis and reconciliation of net debt

	At Start								Exchange			At End
	of Year			Cash Flow			Acquisition		Adjustment			of Year
	£’000			£’000			£’000		£’000			£’000
Cash in hand, at bank		1,958			207			42		—			2,207
Overdrafts		(3,853	)		(615	)		—		—			(4,468	)
		(1,895	)		(408	)		42					(2,261	)
Debt due after one year		(9,583	)		645			—		(247	)		(9,185	)
Debt due within one year		(1,200	)		—			—		—			(1,200	)
Net debt		(12,678	)		237			42		(247	)		(12,646	)

F-88

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

	2005
	£’000
Decrease in cash in the year		(366	)
Cash inflow (outflow) from (decrease) increase in debt		398
Change in net debt resulting from cash flows in the year		32
Net debt at start of year		(12,678	)
Net debt at end of year		(12,646	)

24   Guarantees and other financial commitments

a)  Capital commitments

At the end of the period, capital commitments were:

	2005
	£’000
Group
Contracted but not provided for		—

Company

The company had no capital commitments at the period end.

b)  Operating lease commitments

Annual commitments under non-cancellable operating leases are as follows:

	2005
	Land and		Plant and
	Buildings		Machinery
	2005		2005
	£’000		£’000
Group
Expiry date
— within one year		5		51
— between one and two years		168		65
— between two and five years		281		52
		454		168

Company

The Company did not have any commitments at the period end.

F-89

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

c)  Other commitments

Other commitments extant at the year end were as follows:

	2005
	£’000
Group
Trade guarantees		79
HM Customs and Excise		36

Company

Cross guarantees between the Group companies are in place to guarantee the Group’s borrowings.

25   Pension arrangements

Composition of the Scheme

The Hay Hall Group Limited, the Company’s principal subsidiary, operates a defined benefit scheme in the UK. A full actuarial valuation was carried out at 05 April 2003 and updated to 31 December 2005 by a qualified actuary. The major assumptions used by the actuary were:

	At 31 December 2005
Rate of increase in pensions in payment (where increases are not fixed)		2.65	%
Discount rate		5.00	%
Inflation assumption.		2.75	%

The scheme also holds assets and liabilities in respect of defined contribution benefits. As at 31 December 2005, the liabilities and matching assets have a value of £1,935,900 and are excluded from the following figures.

Contributions to defined contribution schemes in the year were £279,000.

The assets in the scheme and expected rates of return were:

	Long Term Rate
	of Return
	Expected at			Market Value at
	31 December			31 December
	2005			2005
				£’000
Equities		8.00	%		11,366
Bonds		4.70	%		15,656
Cash		4.10	%		155
Total market value of assets					27,177
Present value of scheme liabilities					32,281
(Deficit) surplus in the Scheme					(5,104	)
Related deferred tax asset (liability)					1,531
Net pension liability					(3,573	)

F-90

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

	31 December 2005
	£’000
Analysis of the amount charged in operating profit
Current service cost		—
Past service cost		—
Curtailment (gain)/loss		—
Total Operating Charge		—
Analysis of the amount credited to other finance income
Expected return on pension scheme assets		1,571
Interest on pensions scheme liabilities		(1,464	)
Net return		107

	31 December 2005
	£’000
Analysis of amount recognised in statement of total recognised gains and losses (STRGL)
Actual return less expected return on scheme assets		1,777
Experience gains and losses arising on the scheme liabilities		(334	)
Changes in assumptions underlying the present value of the scheme liabilities		(4,511	)
Actuarial (loss) gain recognised in STRGL		(3,068	)
Movement in (deficit) during the period
Deficit in scheme at beginning of the period		(2,143	)
Movement in the period:
Current service cost		—
Contributions		—
Past service cost		—
Curtailments gain/(loss)		—
Other finance income		107
Actuarial loss		(3,068	)
		(5,104	)
History of experience gains and losses
Actuarial less expected return		1,777
		7	%
Experience gain on the liabilities		(334	)
		(1	)%
Total amount recognised in the STRGL		(3,068	)
		(10	)%

26   Subsequent Events

On 10 February 2006 the Company and the majority of its trading subsidiaries were acquired by Warner Electric (U.K.) Group Limited, a company incorporated in England, which is a subsidiary of Altra Industrial Motion, Inc., a company incorporated in the U.S.

F-91

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

27   Related Party Disclosures

On 10 February 2006 the company was acquired by Warner Electric (U.K.) Group Limited, a company incorporated in England. With effect from this date the company’s ultimate parent company is Altra Industrial Motion, Inc., a company incorporated in the U.S.

28   Summary of differences between accounting principles in the United Kingdom and the United States of America

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United Kingdom (“UK GAAP”) which differs in certain respects from accounting principles in the United States of America (“US GAAP”).

The following are the adjustments to net income and shareholders’ funds determined in accordance with UK GAAP, necessary to reconcile to net income and shareholders’ funds determined in accordance with US GAAP.

	Notes		2005
			£’000
Net (loss) income in accordance with UK GAAP				(77	)
Goodwill		a		125
Tangible assets		b		7
Net (loss) income in accordance with US GAAP				55
Shareholders’ funds in accordance with UK GAAP				202
Goodwill		a		155
Tangible assets		b		(268	)
Shareholders’ funds in accordance with US GAAP				89

  (a)   Goodwill Amortization

Under UK GAAP, goodwill is recorded at its actual cost in sterling, or at the original foreign currency amount translated at the exchange rate applying on the acquisition date. Goodwill is then held in the currency of the acquiring entity at historic cost and amortized at a rate calculated to write off its value on a straight-line basis over its estimated useful life, which is currently considered to be twenty years. Furthermore, goodwill is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.

Under US GAAP, goodwill is not amortized but rather tested at least annually for impairment. Furthermore, goodwill is denominated in the functional currency of the acquired entity. Consequently, the goodwill is retranslated at each period end at the closing rate of exchange.

  (b)   Tangible Assets

Under UK GAAP, certain assets may be revalued, while under US GAAP, they are shown as historical cost.

1.   Balance sheet and profit and loss account presentation

General

The format of a balance sheet prepared in accordance with UK GAAP differs in certain respects from US GAAP. UK GAAP requires assets to be presented in ascending order of liquidity whereas US GAAP assets are

F-92

HAY HALL HOLDINGS LIMITED

Notes to Accounts — (Continued)

presented in descending order of liquidity. In addition, current assets under UK GAAP include amounts that fall due after more than one year, whereas under US GAAP, such assets are classified as non-current assets.

2.   Consolidated statement of cashflow

The consolidated statement of cash flow prepared under UK GAAP presents substantially the same information as that required under US GAAP. Cash flow under UK GAAP represents increases or decreases in “cash”, which comprises cash in hand, deposits repayable on demand and bank overdrafts. Under US GAAP, cash flow represents increases or decreases in “cash and Cash equivalents”, which includes short-term, highly liquid investments with original maturities of less than three months, and excludes bank overdrafts.

Under UK GAAP, cash flows are presented separately for operating activities, equity dividends, returns on investment and servicing of finance, taxation, capital expenditure and financial investment, acquisitions and disposals, management of liquid resources and financing activities. Under US GAAP, only three categories of cash flow activity are presented, being cash flows relating to operating activities, investing activities and financing activities. Cash flows from taxation and returns on investments and servicing of finance, with the exception of servicing of members’ finance, are included as operating.

The following statements summarize the statements of cash flows as if they had been presented in accordance with US GAAP, and include the adjustments that reconcile cash and cash equivalents under US GAAP to cash and short term deposits under UK GAAP.

	2005
	£’000
Net cash provided by operating activities		1,504
Net cash used by investing activities		(923	)
Net cash provided by financing activities		(947	)
Net decrease in cash and cash equivalents		(366	)
Cash and cash equivalents under US GAAP at beginning of the period		(1,895	)
Cash and cash equivalents under US GAAP at end of the period		(2,261	)
Cash and cash equivalents under UK GAAP at end of the period		(2,261	)

F-93

No person has been authorized to give any information or to make any representations other than those contained in this prospectus and, if given or made, such information and representations must not be relied upon as having been authorized. This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities other than the securities to which it relates or any offer to sell or the solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of Altra Industrial Motion, Inc. since the date hereof or that the information contained herein is correct as of any time subsequent the date hereof.

TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		18
The Exchange Offer		32
Use of Proceeds		39
Capitalization		40
Unaudited Pro Forma Condensed Combined Financial Statements		41
Selected Historical Financial and Other Data		48
Management’s Discussion and Analysis of Financial Condition and Results of Operations		50
Business		65
Management and Directors		77
Executive Compensation		80
Compensation Discussion and Analysis		85
Ownership of Altra Holdings Common Stock		90
Certain Relationships and Related Party Transactions		92
Description of Certain Indebtedness		94
Description of the Notes		97
United States Federal Income Tax Consequences		135
Plan of Distribution		136
Legal Matters		136
Experts		136
Available Information		137
Index to Financial Statements		F-1

$105,000,000

Offer to exchange all outstanding

$105,000,000 principal amount of

9% Senior Secured Notes due 2011

for

$105,000,000 principal amount of

9% Senior Secured Notes due 2011

registered under the

Securities Act of 1933

PROSPECTUS

          , 2007

PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 20.   Indemnification of Directors and Officers.

The following is a summary of the statutes, charter and by-law provisions or other arrangements under which the registrants’ directors and officers are insured or indemnified against liability in their capacities as such. All the directors and officers of the registrants are covered by insurance policies maintained and held in effect by Altra Industrial Motion, Inc. against certain liabilities for actions taken in their capacities as such, including liabilities under the Securities Act.

REGISTRANTS INCORPORATED UNDER DELAWARE LAW

Altra Industrial Motion, Inc., American Enterprises MPT Corp., Kilian Manufacturing Corporation, TB Wood’s Corporation, TB Wood’s Enterprises, Inc. and Warner Electric International, Inc. are incorporated under the laws of the State of Delaware.

Section 145 of Delaware General Corporation Law.

Section 145 of the Delaware General Corporation Law, or DGCL, provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful.

Section 145 also provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of Delaware or such other court shall deem proper.

To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith; provided that indemnification provided for by Section 145 or granted pursuant thereto shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and a Delaware corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity or arising out of such person’s status as such whether

II-1

or not the corporation would have the power to indemnify such person against such liabilities under Section 145.

Certificate of Incorporation Provisions on Indemnification.

The Certificate of Incorporation of Altra Industrial Motion, Inc. provides that a director of the corporation shall not be personally liable to either the corporation or any stockholder for monetary damages for a breach of fiduciary duty except for (i) breaches of the duty of loyalty, (ii) acts not in good faith or involving intentional misconduct, (iii) as required by Section 174 of the DGCL or (iv) a transaction resulting in an improper personal benefit. In addition the corporation has the power to indemnify any person serving as a director, officer or agent of the corporation to the fullest extent permitted by law.

The Amended and Restated Certificate of Incorporation of American Enterprises MPT Corp. provides that a director of the corporation shall not be personally liable to either the corporation or any stockholder for monetary damages for a breach of fiduciary duty except for (i) breaches of the duty of loyalty, (ii) acts not in good faith or involving intentional misconduct, (iii) as required by Section 174 of the DGCL or (iv) a transaction resulting in an improper personal benefit. In addition, to the extent permitted by law, the corporation has the power to indemnify employees or agents and shall indemnify its directors and officers.

The Certificate of Incorporation of Kilian Manufacturing Corporation provides that to the fullest extent permitted by the DGCL, a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. In addition, the corporation shall indemnify a director, officer or employee to the fullest extent permitted by law.

The Certificate of Incorporation of Warner Electric International Holding, Inc. provides that a director of the corporation shall not be personally liable to either the corporation or any stockholder for monetary damages for a breach of fiduciary duty except for (i) breaches of the duty of loyalty, (ii) acts not in good faith or involving intentional misconduct, (iii) as required by Section 174 of the DGCL or (iv) a transaction resulting in an improper personal benefit.

The Restated Certificate of Incorporation of TB Wood’s Corporation provides that a director of the corporation shall not be personally liable to either the corporation or any stockholder for monetary damages for a breach of fiduciary duty except for liability (i) for breaches of the duty of loyalty, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction resulting in an improper personal benefit.

The Certificate of Incorporation of TB Wood’s Enterprises, Inc. provides that a director of the corporation shall not be personally liable to either the corporation or any stockholder for monetary damages for a breach of fiduciary duty except for liability (i) for breaches of the duty of loyalty, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction resulting in an improper personal benefit. In addition, the corporation shall indemnify a director, officer or employee to the fullest extent permitted by law.

By-law Provisions on Indemnification.

The By-laws of Altra Industrial Motion, Inc., Kilian Manufacturing Corporation, TB Wood’s Corporation, TB Wood’s Enterprises, Inc. and Warner Electric International Holding, Inc. generally provide that each corporation has the power to indemnify its directors, officers, employees and agents who are or were a party, or threatened to be made a party, to any threatened, pending, or contemplated action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was the director, officer, employee or agent of the corporation, or is or was serving in such a position at its request of any other corporation, partnership, joint venture, trust, organization or other enterprise.

The By-laws of American Enterprises MPT Corp., Kilian Manufacturing Corporation and TB Wood’s Corporation generally provide that the corporation may purchase and maintain insurance to indemnify or insure directors, officers, employees and agents against liability arising from such persons status as such.

II-2

The above discussion of the DGCL and of the Certificates of Incorporation and By-Laws of the registrants incorporated under Delaware law is not intended to be exhaustive and is qualified in its entirety by such Certificates of Incorporation, By-Laws and the DGCL.

REGISTRANTS EXISTING AS LIMITED LIABILITY COMPANIES UNDER DELAWARE LAW

American Enterprises MPT Holdings, LLC, Ameridrives International, LLC, Boston Gear LLC, Formsprag LLC, Inertia Dynamics, LLC, Nuttall Gear L L C, Warner Electric LLC and Warner Electric Technology LLC are limited liability companies organized under the laws of the State of Delaware.

Section 18-108 of the Delaware Limited Liability Company Act.

Section 18-108 of the Delaware Limited Liability Company Act, or the DLLC Act, provides that a limited liability company may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever, subject to the standards and restrictions, if any, set forth in its limited liability company agreement.

Limited Liability Company Agreement Provisions on Indemnification.

The Limited Liability Company Agreement of American Enterprises MPT Holdings, LLC, Limited Liability Company Agreement of Ameridrives International, LLC, Limited Liability Company Agreement of Boston Gear LLC, Limited Liability Company Agreement of Inertia Dynamics, LLC, Operating Agreement of Nuttall Gear L L C, Limited Liability Company Agreement of Warner Electric LLC and Limited Liability Company Agreement of Warner Electric Technology LLC, each provide that such company shall indemnify any member or officer of the company from any claim, action, liability, loss or damage in which such person may be involved and arising from or incidental to the business or activities of the company, provided such person’s conduct does not constitute willful misconduct and the claim, action, suit, proceeding or counterclaim is not initiated by or on behalf of such person.

The Limited Liability Company Agreement of Formsprag LLC provides that the company shall indemnify any member or officer of the company from any claim, action, liability, loss or damage in which such person may be involved and arising from or incidental to the business or activities of the company, provided such person’s conduct (i) does not constitute a breach of the duty of loyalty, (ii) does not constitute willful misconduct and (iii) such person does not receive any improper personal benefit. In addition, the company may purchase and maintain insurance on behalf of the members or such other persons as the members shall determine.

The above discussion of the Limited Liability Company Agreements of the registrants and of the DLLC Act is not intended to be exhaustive and is qualified in its entirety by the LLC Agreements and the DLLC Act.

REGISTRANT EXISTING AS LIMITED LIABILITY COMPANIES UNDER

TENNESSEE LAW

Plant Engineering Consultants, LLC is a limited liability company organized under the laws of the State of Tennessee.

Section 48-243-101 of the Tennessee Limited Liability Company Act.

Section 48-243-101 of the Tennessee Limited Liability Company Act, or the TLLC Act, provides that a limited liability company may indemnify governors, officers and members of the limited liability company against liability if (1) the individual acted in good faith and (2) reasonably believed that such individual’s conduct in his or her official capacity was in the best interest of the limited liability company and in all other cases that such individual’s conduct was at least not opposed to the best interests of the limited liability company and (3) in a criminal proceeding, the individual had no cause to believe such individual’s conduct was unlawful. Section 48-243-101(b) also provides that unless otherwise provided by its articles of

II-3

organization, a limited liability company may not indemnify governors, officers and members in connection with a proceeding to which such responsible person was adjudged liable to the limited liability company or in connection with a proceeding whereby such responsible person is adjudged liable on the basis of receiving an improper personal benefit, whether or not involving action in such person’s official capacity. Section 48-243-101(c) provides that unless otherwise limited by its articles of organization, a limited liability company shall indemnify a governor, officer and member who was wholly successful in the defense of a proceeding against that person as a responsible person for the limited liability company against reasonable expenses incurred by the person in connection with the proceeding. Section 48-243-101(h) authorizes a limited liability company to purchase and maintain insurance on behalf of any person who is or was a governor, officer, member, manager, employee, independent contractor or agent of the limited liability company or who, while a governor, officer, member, manager, employee, independent contractor or agent of the limited liability company, is or was serving at the request of the limited liability company as a governor, officer, member, manager, partner, trustee, employee, independent contractor or agent of another foreign or domestic limited liability company, corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against liability asserted against or incurred by him in such capacity or arising out of his status as such, whether or not the limited liability company would have power to indemnify him against such liability under Section 48-243-101(b)-(c). Section 48-243-101(i) prohibits indemnification if a governor, officer or member is adjudged liable for a breach of the duty of loyalty to the limited liability company or its members, for acts or omissions not in good faith that involve intentional misconduct or a knowing violation of law or for a wrongful distribution.

Operating Agreement Provisions on Indemnification.

The Operating Agreement of Plant Engineering Consultants, LLC provides that the company shall indemnify its members and, upon approval of the members, an officer, employee or agent of the company to the fullest extent permitted by the Tennessee Limited Liability Company Act against judgments, penalties, fines, settlements and reasonable expenses actually incurred in connection with any proceeding. The Operating Agreement also provides that no member or officer shall be personally liable for any action taken unless such member or officer breached or failed to perform the duties of his office and the breach or failure to perform constituted self-dealing, willful misconduct or recklessness. In addition, the company may purchase and maintain insurance, at its expense, to protect itself and any person who serves as a member, employee or agent of the company.

The above discussion of the Operating Agreement of the registrant and of the TLLC Act is not intended to be exhaustive and is qualified in its entirety by the Operating Agreement and the TLLC Act.

REGISTRANT INCORPORATED UNDER PENNSYLVANIA LAW

TB Wood’s Incorporated is incorporated under the laws of the Commonwealth of Pennsylvania.

Pennsylvania Business Corporation Law

Subchapter D of Chapter 17 of the Pennsylvania Business Corporation Law of 1988, as amended, or Subchapter D, provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a representative of the corporation, or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal proceeding, had no reasonable cause to believe the person’s conduct was unlawful.

Subchapter D also provides that a corporation may indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action by or in the right of the

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corporation to procure a judgment in its favor by reason of the fact that such person is or was a representative of the corporation, or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action if the person acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the court of common pleas of the judicial district embracing the county in which the registered office of the corporation is located or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court of common pleas or such other court shall deem proper.

To the extent that a representative of a business corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith; provided, that indemnification provided for by Subchapter D or granted pursuant thereto shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and a Pennsylvania corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a representative of the corporation, or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit, or not-for-profit, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity or arising out of such person’s status as such whether or not the corporation would have the power to indemnify such person against such liabilities under Subchapter D.

Certificate of Incorporation Provisions on Indemnification

The Restated Certificate of Incorporation of TB Wood’s Incorporated provides that a director of the corporation shall not be personally liable to either the corporation or any stockholder for monetary damages for a breach of fiduciary duty except for liability (i) for breaches of the duty of loyalty, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Subchapter D or (iv) for any transaction resulting in an improper personal benefit.

By-law Provisions on Indemnification

The By-laws of TB Wood’s Incorporated provide that the corporation has the power to indemnify its directors, officers, employees and agents who are or were a party, or threatened to be made a party, to any threatened, pending, or contemplated action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was the director, officer, employee or agent of the corporation, or is or was serving in such a position at its request of any other corporation, partnership, joint venture, trust, organization or other enterprise.

The above discussion of Subchapter D, the Certificate of Incorporation and By-Laws of TB Wood’s Incorporated is not intended to be exhaustive and is qualified in its entirety by such Certificate of Incorporation, By-Laws and Subchapter D.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrants as disclosed above, the registrants have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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ITEM 21.   Exhibits.

(a) The following exhibits are filed with this Registration Statement. Exhibits to be filed with an amendment are denominated with a (+).

Number			Description
	1	.1*	Purchase Agreement, dated as of November 22, 2004, between Altra Industrial Motion, Inc., Jefferies & Company, Inc. and the Guarantors listed therein
	1	.2	Purchase Agreement, dated as of April 3, 2007, between Altra Industrial Motion, Inc., Jefferies & Company, Inc. and the Guarantors listed therein
	2	.1*	LLC Purchase Agreement, dated as of October 25, 2004, among Warner Electric Holding, Inc., Colfax Corporation and Altra Industrial Motion, Inc.
	2	.2*	Assignment and Assumption Agreement, dated as of November 21, 2004, between Altra Holdings, Inc. and Altra Industrial Motion, Inc.
	3	.1*	Certificate of Incorporation of Altra Industrial Motion, Inc.
	3	.2*	By-laws of Altra Industrial Motion, Inc.
	3	.3*	Amended and Restated Certificate of Incorporation of American Enterprises MPT Corp.
	3	.4*	By-laws of American Enterprises MPT Corp.
	3	.5*	Certificate of Formation of American Enterprises MPT Holdings, LLC
	3	.6*	Limited Liability Company Agreement of American Enterprises MPT Holdings, LLC
	3	.7*	Certificate of Formation of Ameridrives International, LLC
	3	.8*	Limited Liability Company Agreement of Ameridrives International, LLC
	3	.9*	Certificate of Formation of Boston Gear LLC
	3	.10*	Limited Liability Company Agreement of Boston Gear LLC
	3	.11*	Certificate of Formation of Formsprag LLC, as amended
	3	.12*	Limited Liability Company Agreement of Formsprag LLC, as amended
	3	.13*	Certificate of Formation of Inertia Dynamics, LLC
	3	.14*	Operating Agreement of Inertia Dynamics, LLC
	3	.15*	Certificate of Incorporation of Kilian Manufacturing Corporation
	3	.16*	By-laws of Kilian Manufacturing Corporation
	3	.17*	Certificate of Formation of Nuttall Gear L L C
	3	.18*	Amended and Restated Limited Liability Company Agreement of Nuttall Gear L L C
	3	.19*	Certificate of Formation of Warner Electric LLC
	3	.20*	Limited Liability Company Agreement of Warner Electric LLC
	3	.21*	Certificate of Formation of Warner Electric Technology LLC
	3	.22*	Limited Liability Company Agreement of Warner Electric Technology LLC
	3	.23*	Certificate of Incorporation of Warner Electric International Holding, Inc.
	3	.24*	By-laws of Warner Electric International Holding, Inc.
	3	.25	Amended and Restated Certificate of Incorporation of TB Wood’s Corporation
	3	.26	By-laws of TB Wood’s Corporation
	3	.27	Certificate of Incorporation of TB Wood’s Enterprises, Inc.
	3	.28	By-laws of TB Wood’s Enterprises, Inc.
	3	.29	Articles of Organization of Plant Engineering Consultants, LLC
	3	.30	Operating Agreement of Plant Engineering Consultants, LLC
	3	.31	Amended and Restated Articles of Incorporation of TB Wood’s Incorporated
	3	.32	By-laws of TB Wood’s Incorporated
	4	.1*	Indenture, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the Guarantors party thereto and The Bank of New York Trust Company, N.A., as trustee

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Number			Description
	4	.2*	Form of 9% Senior Secured Notes due 2011 (included in Exhibit 4.1)
	4	.3*	Registration Rights Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., Jefferies & Company, Inc., and the Subsidiary Guarantors party thereto
	4	.4*	Indenture, dated as of February 8, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto, The Bank of New York, as trustee and paying agent and The Bank of New York (Luxembourg) S.A., as Luxembourg paying agent
	4	.5*	Form of 111/4% Senior Notes due 2013
	4	.6*	Registration Rights Agreement, dated as of February 8, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto and Jefferies International Limited, as initial purchasers
	4	.7*	First Supplemental Indenture, dated as of February 7, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust Company, N.A. as trustee
	4	.8*	Second Supplemental Indenture, dated as of February 8, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust Company, N.A. as trustee
	4	.9*	Third Supplemental Indenture, dated as of April 24, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust Company, N.A. as trustee
	4	.10*	First Supplemental Indenture, dated as of April 24, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York as trustee
	4	.11(1)	Fourth Supplemental Indenture, dated as of March 21, 2007, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust Company, N.A. as trustee
	4	.12(1)	Second Supplemental Indenture, dated as of March 26, 2007, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust as trustee
	4	.13(2)	Fifth Supplemental Indenture, dated as of April 5, 2007, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust Company, N.A. as trustee
	4	.14(2)	Third Supplemental Indenture, dated as of April 5, 2007, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust as trustee
	4	.15	Registration Rights Agreement, dated as of April 5, 2007, among Altra Industrial Motion, Inc., Jefferies & Company, Inc., and the Subsidiary Guarantors party thereto
	5	.1	Opinion of Weil, Gotshal & Manges LLP.
	5	.2	Opinion of Waller Lansden Dortch & Davis, LLP.
	5	.3	Opinion of Dechert LLP.
	10	.1*	Agreement, dated as of October 24, 2004, between Ameridrives International, L.P. and United Steel Workers of America Local 3199-10
	10	.2*	Labor Agreement, dated as of December 3, 2001, between Warner Electric LLC (formerly Warner Electric Inc.) and International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America, Local No. 155
	10	.3*	Labor Agreement, dated as of January 30, 2005, between Warner Electric LLC (formerly Warner Electric Inc.) and United Steelworkers of America and Local Union No. 3245
	10	.4*	Labor Agreement between, dated as of August 9, 2004 between Warner Electric LLC (formerly Warner Electric Inc.) and International Association of Machinists and Aerospace Works, AFL-CIO, and Aeronautical Industrial District Lode 776, Local Lodge 2771
	10	.5*	Transition Services Agreement, dated as of November 30, 2004, among Warner Electric Holding, Inc., Colfax Corporation and Altra Industrial Motion, Inc.
	10	.6*	Trademarks and Technology License Agreement, dated November 30, 2004, among Colfax Corporation, Altra Holdings, Inc. and Altra Industrial Motion, Inc.
	10	.7*	Lease Agreement, dated as of February 13, 2004, between Quincy Hayward Street, LLC and Boston Gear LLC.
	10	.8*	Lease Agreement, dated as of April 1, 1993, between Textron, Inc. and Nuttall Gear LLC
	10	.9*	Lease Agreement, dated as of January 29, 2003, between Olds Properties Corporation and Warner Electric LLC.

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Number			Description
	10	.10*	Ontario Net Industrial Single Lease, dated November 4, 1994, between Slough Estates Canada Limited and Kilian Manufacturing Corporation, with extension dated June 22, 1999
	10	.11*	Lease Agreement, dated as of January 1, 2003, between Warner Shui Hing Limited and Bogang Economic Development Company. (English language summary)
	10	.12*	Lease Agreement, dated August 5, 1981, between Stieber GmbH and Schmidt Lacke GmbH. (English language summary)
	10	.13*	Lease Agreement, dated as of December 21, 1984, between Stieber GmbH and Carola Grundstucksverwaltungsgesellschft GmbH. (English language summary)
	10	.14*	Employment Agreement, dated as of January 6, 2005, between Altra Industrial Motion, Inc. and Michael L. Hurt
	10	.15*	Employment Agreement, dated as of January 6, 2005, between Altra Industrial Motion, Inc. and Carl Christenson
	10	.16*	Employment Agreement, dated as of January 12, 2005, between Altra Industrial Motion, Inc. and David Wall
	10	.17*	Form of Transition Agreement
	10	.18*	Advisory Services Agreement, dated as of November 30, 2004, among Altra Holdings, Inc., Altra Industrial Motion, Inc. and Genstar Capital L.P.
	10	.19*	Altra Holdings, Inc. 2004 Equity Incentive Plan
	10	.20*	Form of Restricted Stock Award Agreement
	10	.21*	Stock Purchase Agreement dated as of November 30, 2004, between Altra Holdings, Inc. and Altra Industrial Motion, Inc.
	10	.22*	Credit Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc. and certain subsidiaries of the Company, as Guarantors, the financial institutions listed therein, as Lenders, and Wells Fargo Bank, as Lead Arranger
	10	.23*	Security Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the other Grantors listed therein and The Bank of New York Trust Company, N.A.
	10	.24*	Patent Security Agreement, dated as of November 30, 2004, among Kilian Manufacturing Corporation, Warner Electric Technology LLC, Formsprag LLC, Boston Gear LLC, Ameridrives International, L.P. and The Bank of New York Trust Company, N.A.
	10	.25*	Trademark Security Agreement, dated as of November 30, 2004, among Warner Electric Technology LLC, Boston Gear LLC and The Bank of New York Trust Company, N.A.
	10	.26*	Intercreditor and Lien Subordination Agreement, dated as of November 30, 2004, among Wells Fargo Foothill, Inc., The Bank of New York Trust Company, N.A. and Altra Industrial Motion, Inc.
	10	.27*	Share Purchase Agreement, dated as of November 7, 2005, among Altra Industrial Motion, Inc. and the stockholders of Hay Hall Holdings Limited listed therein
	10	.28*	First Amendment to Credit Agreement, dated as of December 30, 2004, among Altra Industrial Motion, Inc., the financial institutions listed therein, as Lenders, and Wells Fargo Foothill, Inc.
	10	.29*	Second Amendment to Credit Agreement, dated as of January 14, 2005, among Altra Industrial Motion, Inc., the financial institutions listed therein, as Lenders, and Wells Fargo Foothill, Inc.
	10	.30*	Third Amendment to Credit Agreement, dated as of January 31, 2005, among Altra Industrial Motion, Inc., the financial institutions listed therein, as Lenders, and Wells Fargo Foothill, Inc.
	10	.31*	Fourth Amendment to Credit Agreement, dated as of February 16, 2007, among Altra Industrial Motion, Inc., the financial institutions listed therein, as Lenders, and Wells Fargo Foothill, Inc.
	10	.32	Supplement Number 1 to Security Agreement, dated as of April 5, 2007, among TB Wood’s Incorporated, TB Wood’s Corporation, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc. and Wells Fargo Foothill, Inc.
	10	.33	Supplement Number 2 to Security Agreement, dated as of April 5, 2007, among Altra Industrial Motion, Inc., the other Grantors listed therein and The Bank of New York Trust Company, N.A.

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Number			Description
	10	.34	Fifth Amendment to, and Consent and Waiver under, Credit Agreement and Joinder to Loan Documents, dated April 5, 2007, by and among, Altra Industrial Motion, Inc., as Administrative Borrower for the borrowers of each of the New Loan Parties, the Lenders thereto and Wells Fargo Foothill, Inc.
	10	.35	Credit Agreement, dated as of April 5, 2007, among Altra Industrial Motion, Inc. and certain of its subsidiaries, as Guarantors, the financial institutions listed therein, as Lenders, and Wells Fargo Foothill, Inc., as Arranger and Administrative Agent
	10	.36	Security Agreement, dated as of April 5, 2007, among TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc., TB Wood’s Corporation and Wells Fargo Foothill, Inc.
	10	.37	Patent Security Agreement, dated as of April 5, 2007, among TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc., TB Wood’s Corporation and Wells Fargo Foothill, Inc.
	10	.38	Trademark Security Agreement, dated as of April 5, 2007, among TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc., TB Wood’s Corporation and Wells Fargo Foothill, Inc.
	10	.39	Amended and Restated Intercreditor and Lien Subordination Agreement, dated as of April 5, 2007, among Wells Fargo Foothill, Inc., The Bank of New York Trust Company, N.A., Altra Industrial Motion, Inc. and certain subsidiaries of Altra.
	10	.40	Intercompany Subordination Agreement, dated as of April 5, 2007, among TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc., TB Wood’s Corporation and Wells Fargo Foothill, Inc.
	10	.41	Patent Security Agreement, dated as of April 5, 2007, among TB Wood’s Corporation, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc. and Wells Fargo Foothill, Inc.
	10	.42	Trademark Security Agreement, dated as of April 5, 2007, among TB Wood’s Corporation, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc. and Wells Fargo Foothill, Inc.
	10	.43	Patent Security Agreement, dated as of April 5, 2007, among TB Wood’s Corporation, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc. and Wells Fargo Foothill, Inc.
	10	.44	Trademark Security Agreement, dated as of April 5, 2007, among TB Wood’s Corporation, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc. and Wells Fargo Foothill, Inc.
	12	.1	Computation of ratio of earnings to fixed charges
	21	.1	Subsidiaries of Altra Industrial Motion, Inc.
	23	.1	Consent of Ernst & Young LLP
	23	.2	Consent of BDO Stoy Hayward LLP
	23	.3	Consent of Grant Thornton LLP
	23	.4	Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1)
	23	.5	Consent of Waller Lansden Dortch & Davis, LLP (included in Exhibit 5.2)
	23	.6	Consent of Dechert LLP (included in Exhibit 5.3)
	25	.1	Statement of Eligibility of Trustee on Form T-1
	99	.1	Form of Letter of Transmittal
	99	.2	Form of Notice of Guaranteed Delivery
	99	.3	Form of Exchange Agent Agreement

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* Filed previously.

(1)	Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 333-124944) filed with the Securities and Exchange Commission on March 26, 2007.
(2)	Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 333-124944) filed with the Securities and Exchange Commission on April 11, 2007.

(b) Financial Statement Schedules

See financial statement Schedule II — Valuation and Qualifying Accounts that appears immediately following the index to exhibits of this registration statement.

All other schedules are omitted because they are not applicable or because the required information is shown in the financial statements as referred thereto.

Item 21(b)

Altra Industrial Motion, Inc.

SCHEDULE II — Valuation and Qualifying Accounts

	Balance at
	Beginning of							Balance at
	Period		Additions		Deductions			End of Period
Reserve for Inventory Obsolescence:
Predecessor — For the year ended November 30, 2004	$	6,813	$	1,459	$	(2,084	)	$	6,188
From Inception (December 1) through December 31, 2004		6,188		545		(372	)		6,361
For the year ended December 31, 2005		6,361		2,385		(1,903	)		6,843
For the year ended December 31, 2006	$	6,843	$	5,596	$	(2,276	)	$	10,163

	Balance at
	Beginning of							Balance at
	Period		Additions		Deductions			End of Period
Reserve for Uncollectible Accounts:
Predecessor — For the year ended November 30, 2004	$	1,616	$	589	$	(772	)	$	1,433
From Inception (December 1) through December 31, 2004		1,433		135		(145	)		1,424
For the year ended December 31, 2005		1,424		687		(314	)		1,797
For the year ended December 31, 2006	$	1,797	$	923	$	(703	)	$	2,017

	Balance at
	Beginning of							Balance at
	Period		Additions		Deductions			End of Period
Income Tax Assets Valuation Allowances:
Predecessor — For the year ended November 30, 2004	$	17,834	$	895	$	—		$	18,729
From Inception (December 1) through December 31, 2004(1)		18,462		—		(88	)		18,374
For the year ended December 31, 2005		18,374		—		(1,985	)		16,389
For the year ended December 31, 2006	$	16,389	$	1,252	$	(16,389	)	$	1,252

(1) The difference between the balance at the end of the period ending November 30, 2004 and the balance at December 1, 2004 is the result of purchase accounting for the PTH Acquisition.

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ITEM 22.   Undertakings.

a) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 20 or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

b) The undersigned registrants hereby undertake:

(1) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

(2) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(A) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933.

(B) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(C) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

c) That, for the purpose of determining liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

d) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the exchange offer.

e) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of the receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

f) The undersigned registrant hereby undertakes that, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of this registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in this

II-11

registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of this registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of this registration statement will, as to a purchase with a time of contract of sale prior to such first use, supersede or modify any statement that was mad in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

g) The undersigned registrant hereby undertakes that insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other then the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Altra Industrial Motion, Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, Commonwealth of Massachusetts, on the 7th day of May, 2007.

ALTRA INDUSTRIAL MOTION, INC.

By:  /s/  Michael L. Hurt

Name: Michael L. Hurt

Title:  Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 7th day of May, 2007.

Signature	Title
/s/  Michael L. Hurt Michael L. Hurt	Chief Executive Officer and Director (principal executive officer)
/s/  David Wall David Wall	Chief Financial Officer (principal financial officer and principal accounting officer)
/s/  Jean-Pierre L. Conte Jean-Pierre L. Conte	Director
/s/  Darren J. Gold Darren J. Gold	Director
/s/  Larry McPherson Larry McPherson	Director
/s/  Richard D. Paterson Richard D. Paterson	Director
/s/  James H. Woodward, Jr. James H. Woodward, Jr.	Director
/s/  Edmund M. Carpenter Edmund M. Carpenter	Director

II-13

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of the registrants, as listed on the attached Schedule A, has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, Commonwealth of Massachusetts, on the 7th day of May, 2007.

On behalf of each Registrant listed on
Schedule A hereto.

By:  /s/  Michael L. Hurt

Name: Michael L. Hurt

Title:  Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 7th day of May, 2007.

Signature	Title
/s/  Michael L. Hurt Michael L. Hurt	Chief Executive Officer and Director (principal executive officer)
/s/  David Wall David Wall	Chief Financial Officer (principal financial officer and principal accounting officer)
/s/  Jean-Pierre L. Conte Jean-Pierre L. Conte	Director
/s/  Darren J. Gold Darren J. Gold	Director

II-14

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of the registrants, as listed on the attached Schedule B, has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, Commonwealth of Massachusetts, on the 7th day of May, 2007.

On behalf of each Registrant listed on
Schedule B hereto.

By:  /s/  Michael L. Hurt

Name: Michael L. Hurt

Title:  Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 7th day of May, 2007.

Signature	Title
/s/  Michael L. Hurt Michael L. Hurt	Chief Executive Officer (principal executive officer)
/s/  David Wall David Wall	Chief Financial Officer (principal financial officer and principal accounting officer)
/s/  Michael L. Hurt Michael L. Hurt	Chief Executive Officer of Altra Industrial Motion, Inc., as Member

II-15

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of the registrants, as listed on the attached Schedule C has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, Commonwealth of Massachusetts, on the 7th day of May, 2007.

On behalf of each Registrant listed on
Schedule C hereto.

By:  /s/  Michael L. Hurt

Name: Michael L. Hurt

Title:  Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 7th day of May, 2007.

Signature	Title
/s/  Michael L. Hurt Michael L. Hurt	Chief Executive Officer (principal executive officer)
/s/  David Wall David Wall	Chief Financial Officer (principal financial officer and principal accounting officer)
/s/  Michael L. Hurt Michael L. Hurt	Chief Executive Officer of American Enterprises MPT Corp., as Member

II-16

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, each of the registrants, as listed on the attached Schedule D, has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, Commonwealth of Massachusetts, on the 7th day of May, 2007.

On behalf of each Registrant listed on
Schedule D hereto.

By:  /s/  Michael L. Hurt

Name: Michael L. Hurt

Title: Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 7th day of May, 2007.

Signature	Title
/s/  Michael L. Hurt Michael L. Hurt	Chief Executive Officer and Director (principal executive officer)
/s/  Joseph C. Horvath Joseph C. Horvath	Chief Financial Officer (principal financial officer and principal accounting officer)
/s/  Jean-Pierre L. Conte Jean-Pierre L. Conte	Director
/s/  Darren J. Gold Darren J. Gold	Director

II-17

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Formsprag LLC has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, Commonwealth of Massachusetts, on the 7th day of May, 2007.

FORMSPRAG LLC

By:  /s/  Michael L. Hurt

Name: Michael L. Hurt

Title:  Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 7th day of May, 2007.

Signature	Title
/s/  Michael L. Hurt Michael L. Hurt	Chief Executive Officer (principal executive officer)
/s/  David Wall David Wall	Chief Financial Officer (principal financial officer and principal accounting officer)
/s/  Michael L. Hurt Michael L. Hurt	Chief Executive Officer of Warner Electric LLC., as Member; and Chief Executive Officer of Ameridrives International, LLC, as Member

II-18

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Inertia Dynamics, LLC has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, Commonwealth of Massachusetts, on the 7th day of May, 2007.

INERTIA DYNAMICS, LLC

By:  /s/  David Wall

Name: David Wall

Title:  Manager

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 7th day of May, 2007.

Signature	Title
/s/  David Wall David Wall	Manager (principal executive officer, principal financial officer and principal accounting officer)
/s/  Carl Christenson Carl Christenson	Manager
/s/  David Wall David Wall	Principal Executive Officer of The Hay Hall Group Limited, as Member

II-19

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Plant Engineering Consultants, LLC has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, Commonwealth of Massachusetts, on the 7th day of May, 2007.

PLANT ENGINEERING CONSULTANTS, LLC

By:  /s/  Michael L. Hurt

Name: Michael L. Hurt

Title: President

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 7th day of May, 2007.

Signature	Title
/s/  Michael L. Hurt Michael L. Hurt	President (principal executive officer)
/s/  Joseph C. Horvath Joseph C. Horvath	Treasurer (principal financial officer and principal accounting officer)
/s/  Michael L. Hurt Michael L. Hurt	Chief Executive Officer of TB Wood’s Incorporated, as Member

II-20

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, TB Wood’s Enterprises, Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Quincy, Commonwealth of Massachusetts, on the 7th day of May, 2007.

TB WOOD’S ENTERPRISES, INC.

By:  /s/  Joseph C. Horvath

Name: Joseph C. Horvath

Title:  President

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 7th day of May, 2007.

Signature	Title
/s/  Joseph C. Horvath Joseph C. Horvath	President and Treasurer (principal executive officer, principal financial officer and principal accounting officer)
/s/  Michael L. Hurt Michael L. Hurt	Director
/s/  Jean-Pierre L. Conte Jean-Pierre L. Conte	Director
/s/  Darren J. Gold Darren J. Gold	Director

II-21

SCHEDULE A

AMERICAN ENTERPRISES MPT CORP.
KILIAN MANUFACTURING CORPORATION
WARNER ELECTRIC INTERNATIONAL HOLDING, INC

II-22

SCHEDULE B

BOSTON GEAR LLC
WARNER ELECTRIC LLC
WARNER ELECTRIC TECHNOLOGY LLC

II-23

SCHEDULE C

AMERICAN ENTERPRISES MPT HOLDINGS, LLC
AMERIDRIVES INTERNATIONAL, LLC
NUTTALL GEAR L L C

II-24

SCHEDULE D

TB WOOD’S CORPORATION
TB WOOD’S INCORPORATED

II-25

EXHIBIT INDEX

Number			Description
	1	.1*	Purchase Agreement, dated as of November 22, 2004, between Altra Industrial Motion, Inc., Jefferies & Company, Inc. and the Guarantors listed therein
	1	.2	Purchase Agreement, dated as of April 3, 2007, between Altra Industrial Motion, Inc., Jefferies & Company, Inc. and the Guarantors listed therein
	2	.1*	LLC Purchase Agreement, dated as of October 25, 2004, among Warner Electric Holding, Inc., Colfax Corporation and Altra Industrial Motion, Inc.
	2	.2*	Assignment and Assumption Agreement, dated as of November 21, 2004, between Altra Holdings, Inc. and Altra Industrial Motion, Inc.
	3	.1*	Certificate of Incorporation of Altra Industrial Motion, Inc.
	3	.2*	By-laws of Altra Industrial Motion, Inc.
	3	.3*	Amended and Restated Certificate of Incorporation of American Enterprises MPT Corp.
	3	.4*	By-laws of American Enterprises MPT Corp.
	3	.5*	Certificate of Formation of American Enterprises MPT Holdings, LLC
	3	.6*	Limited Liability Company Agreement of American Enterprises MPT Holdings, LLC
	3	.7*	Certificate of Formation of Ameridrives International, LLC
	3	.8*	Limited Liability Company Agreement of Ameridrives International, LLC
	3	.9*	Certificate of Formation of Boston Gear LLC
	3	.10*	Limited Liability Company Agreement of Boston Gear LLC
	3	.11*	Certificate of Formation of Formsprag LLC, as amended
	3	.12*	Limited Liability Company Agreement of Formsprag LLC, as amended
	3	.13*	Certificate of Formation of Inertia Dynamics, LLC
	3	.14*	Operating Agreement of Inertia Dynamics, LLC
	3	.15*	Certificate of Incorporation of Kilian Manufacturing Corporation
	3	.16*	By-laws of Kilian Manufacturing Corporation
	3	.17*	Certificate of Formation of Nuttall Gear L L C
	3	.18*	Amended and Restated Limited Liability Company Agreement of Nuttall Gear L L C
	3	.19*	Certificate of Formation of Warner Electric LLC
	3	.20*	Limited Liability Company Agreement of Warner Electric LLC
	3	.21*	Certificate of Formation of Warner Electric Technology LLC
	3	.22*	Limited Liability Company Agreement of Warner Electric Technology LLC
	3	.23*	Certificate of Incorporation of Warner Electric International Holding, Inc.
	3	.24*	By-laws of Warner Electric International Holding, Inc.
	3	.25	Amended and Restated Certificate of Incorporation of TB Wood’s Corporation
	3	.26	By-laws of TB Wood’s Corporation
	3	.27	Certificate of Incorporation of TB Wood’s Enterprises, Inc.
	3	.28	By-laws of TB Wood’s Enterprises, Inc.
	3	.29	Articles of Organization of Plant Engineering Consultants, LLC
	3	.30	Operating Agreement of Plant Engineering Consultants, LLC
	3	.31	Amended and Restated Articles of Incorporation of TB Wood’s Incorporated
	3	.32	By-laws of TB Wood’s Incorporated
	4	.1*	Indenture, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the Guarantors party thereto and The Bank of New York Trust Company, N.A., as trustee
	4	.2*	Form of 9% Senior Secured Notes due 2011 (included in Exhibit 4.1)

II-26

Number			Description
	4	.3*	Registration Rights Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., Jefferies & Company, Inc., and the Subsidiary Guarantors party thereto
	4	.4*	Indenture, dated as of February 8, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto, The Bank of New York, as trustee and paying agent and The Bank of New York (Luxembourg) S.A., as Luxembourg paying agent
	4	.5*	Form of 111/4% Senior Notes due 2013
	4	.6*	Registration Rights Agreement, dated as of February 8, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto and Jefferies International Limited, as initial purchasers
	4	.7*	First Supplemental Indenture, dated as of February 7, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust Company, N.A. as trustee
	4	.8*	Second Supplemental Indenture, dated as of February 8, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust Company, N.A. as trustee
	4	.9*	Third Supplemental Indenture, dated as of April 24, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust Company, N.A. as trustee
	4	.10*	First Supplemental Indenture, dated as of April 24, 2006, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York as trustee
	4	.11(1)	Fourth Supplemental Indenture, dated as of March 21, 2007, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust Company, N.A. as trustee
	4	.12(1)	Second Supplemental Indenture, dated as of March 26, 2007, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust as trustee
	4	.13(2)	Fifth Supplemental Indenture, dated as of April 5, 2007, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust Company, N.A. as trustee
	4	.14(2)	Third Supplemental Indenture, dated as of April 5, 2007, among Altra Industrial Motion, Inc., the guarantors party thereto and The Bank of New York Trust as trustee
	4	.15	Registration Rights Agreement, dated as of April 5, 2007, among Altra Industrial Motion, Inc., Jefferies & Company, Inc., and the Subsidiary Guarantors party thereto
	5	.1	Opinion of Weil, Gotshal & Manges LLP.
	5	.2	Opinion of Waller Lansden Dortch & Davis, LLP.
	5	.3	Opinion of Dechert LLP.
	10	.1*	Agreement, dated as of October 24, 2004, between Ameridrives International, L.P. and United Steel Workers of America Local 3199-10
	10	.2*	Labor Agreement, dated as of December 3, 2001, between Warner Electric LLC (formerly Warner Electric Inc.) and International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America, Local No. 155
	10	.3*	Labor Agreement, dated as of January 30, 2005, between Warner Electric LLC (formerly Warner Electric Inc.) and United Steelworkers of America and Local Union No. 3245
	10	.4*	Labor Agreement between, dated as of August 9, 2004 between Warner Electric LLC (formerly Warner Electric Inc.) and International Association of Machinists and Aerospace Works, AFL-CIO, and Aeronautical Industrial District Lode 776, Local Lodge 2771
	10	.5*	Transition Services Agreement, dated as of November 30, 2004, among Warner Electric Holding, Inc., Colfax Corporation and Altra Industrial Motion, Inc.
	10	.6*	Trademarks and Technology License Agreement, dated November 30, 2004, among Colfax Corporation, Altra Holdings, Inc. and Altra Industrial Motion, Inc.
	10	.7*	Lease Agreement, dated as of February 13, 2004, between Quincy Hayward Street, LLC and Boston Gear LLC.
	10	.8*	Lease Agreement, dated as of April 1, 1993, between Textron, Inc. and Nuttall Gear LLC

II-27

Number			Description
	10	.9*	Lease Agreement, dated as of January 29, 2003, between Olds Properties Corporation and Warner Electric LLC.
	10	.10*	Ontario Net Industrial Single Lease, dated November 4, 1994, between Slough Estates Canada Limited and Kilian Manufacturing Corporation, with extension dated June 22, 1999
	10	.11*	Lease Agreement, dated as of January 1, 2003, between Warner Shui Hing Limited and Bogang Economic Development Company. (English language summary)
	10	.12*	Lease Agreement, dated August 5, 1981, between Stieber GmbH and Schmidt Lacke GmbH. (English language summary)
	10	.13*	Lease Agreement, dated as of December 21, 1984, between Stieber GmbH and Carola Grundstucksverwaltungsgesellschft GmbH. (English language summary)
	10	.14*	Employment Agreement, dated as of January 6, 2005, between Altra Industrial Motion, Inc. and Michael L. Hurt
	10	.15*	Employment Agreement, dated as of January 6, 2005, between Altra Industrial Motion, Inc. and Carl Christenson
	10	.16*	Employment Agreement, dated as of January 12, 2005, between Altra Industrial Motion, Inc. and David Wall
	10	.17*	Form of Transition Agreement
	10	.18*	Advisory Services Agreement, dated as of November 30, 2004, among Altra Holdings, Inc., Altra Industrial Motion, Inc. and Genstar Capital L.P.
	10	.19*	Altra Holdings, Inc. 2004 Equity Incentive Plan
	10	.20*	Form of Restricted Stock Award Agreement
	10	.21*	Stock Purchase Agreement dated as of November 30, 2004, between Altra Holdings, Inc. and Altra Industrial Motion, Inc.
	10	.22*	Credit Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc. and certain subsidiaries of the Company, as Guarantors, the financial institutions listed therein, as Lenders, and Wells Fargo Bank, as Lead Arranger
	10	.23*	Security Agreement, dated as of November 30, 2004, among Altra Industrial Motion, Inc., the other Grantors listed therein and The Bank of New York Trust Company, N.A.
	10	.24*	Patent Security Agreement, dated as of November 30, 2004, among Kilian Manufacturing Corporation, Warner Electric Technology LLC, Formsprag LLC, Boston Gear LLC, Ameridrives International, L.P. and The Bank of New York Trust Company, N.A.
	10	.25*	Trademark Security Agreement, dated as of November 30, 2004, among Warner Electric Technology LLC, Boston Gear LLC and The Bank of New York Trust Company, N.A.
	10	.26*	Intercreditor and Lien Subordination Agreement, dated as of November 30, 2004, among Wells Fargo Foothill, Inc., The Bank of New York Trust Company, N.A. and Altra Industrial Motion, Inc.
	10	.27*	Share Purchase Agreement, dated as of November 7, 2005, among Altra Industrial Motion, Inc. and the stockholders of Hay Hall Holdings Limited listed therein
	10	.28*	First Amendment to Credit Agreement, dated as of December 30, 2004, among Altra Industrial Motion, Inc., the financial institutions listed therein, as Lenders, and Wells Fargo Foothill, Inc.
	10	.29*	Second Amendment to Credit Agreement, dated as of January 14, 2005, among Altra Industrial Motion, Inc., the financial institutions listed therein, as Lenders, and Wells Fargo Foothill, Inc.
	10	.30*	Third Amendment to Credit Agreement, dated as of January 31, 2005, among Altra Industrial Motion, Inc., the financial institutions listed therein, as Lenders, and Wells Fargo Foothill, Inc.
	10	.31*	Fourth Amendment to Credit Agreement, dated as of February 16, 2007, among Altra Industrial Motion, Inc., the financial institutions listed therein, as Lenders, and Wells Fargo Foothill, Inc.

II-28

Number			Description
	10	.32	Supplement Number 1 to Security Agreement, dated as of April 5, 2007, among TB Wood’s Incorporated, TB Wood’s Corporation, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc. and Wells Fargo Foothill, Inc.
	10	.33	Supplement Number 2 to Security Agreement, dated as of April 5, 2007, among Altra Industrial Motion, Inc., the other Grantors listed therein and The Bank of New York Trust Company, N.A.
	10	.34	Fifth Amendment to, and Consent and Waiver under, Credit Agreement and Joinder to Loan Documents, dated April 5, 2007, by and among, Altra Industrial Motion, Inc., as Administrative Borrower for the borrowers of each of the New Loan Parties, the Lenders thereto and Wells Fargo Foothill, Inc.
	10	.35	Credit Agreement, dated as of April 5, 2007, among Altra Industrial Motion, Inc. and certain of its subsidiaries, as Guarantors, the financial institutions listed therein, as Lenders, and Wells Fargo Foothill, Inc., as Arranger and Administrative Agent
	10	.36	Security Agreement, dated as of April 5, 2007, among TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc., TB Wood’s Corporation and Wells Fargo Foothill, Inc.
	10	.37	Patent Security Agreement, dated as of April 5, 2007, among TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc., TB Wood’s Corporation and Wells Fargo Foothill, Inc.
	10	.38	Trademark Security Agreement, dated as of April 5, 2007, among TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc., TB Wood’s Corporation and Wells Fargo Foothill, Inc.
	10	.39	Amended and Restated Intercreditor and Lien Subordination Agreement, dated as of April 5, 2007, among Wells Fargo Foothill, Inc., The Bank of New York Trust Company, N.A., Altra Industrial Motion, Inc. and certain subsidiaries of Altra.
	10	.40	Intercompany Subordination Agreement, dated as of April 5, 2007, among TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc., TB Wood’s Corporation and Wells Fargo Foothill, Inc.
	10	.41	Patent Security Agreement, dated as of April 5, 2007, among TB Wood’s Corporation, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc. and Wells Fargo Foothill, Inc.
	10	.42	Trademark Security Agreement, dated as of April 5, 2007, among TB Wood’s Corporation, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc. and Wells Fargo Foothill, Inc.
	10	.43	Patent Security Agreement, dated as of April 5, 2007, among TB Wood’s Corporation, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc. and Wells Fargo Foothill, Inc.
	10	.44	Trademark Security Agreement, dated as of April 5, 2007, among TB Wood’s Corporation, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Enterprises, Inc. and Wells Fargo Foothill, Inc.
	12	.1	Computation of ratio of earnings to fixed charges
	21	.1	Subsidiaries of Altra Industrial Motion, Inc.
	23	.1	Consent of Ernst & Young LLP
	23	.2	Consent of BDO Stoy Hayward LLP
	23	.3	Consent of Grant Thornton LLP
	23	.4	Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1)
	23	.5	Consent of Waller Lansden Dortch & Davis, LLP (included in Exhibit 5.2)
	23	.6	Consent of Dechert LLP (included in Exhibit 5.3)
	25	.1	Statement of Eligibility of Trustee on Form T-1

II-29

Number			Description
	99	.1	Form of Letter of Transmittal
	99	.2	Form of Notice of Guaranteed Delivery
	99	.3	Form of Exchange Agent Agreement

* Filed previously.

(1)	Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 333-124944) filed with the Securities and Exchange Commission on March 26, 2007.
(2)	Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 333-124944) filed with the Securities and Exchange Commission on April 11, 2007.

II-30

EX-1.2

                                                                     EXHIBIT 1.2

                                  $105,000,000

                          ALTRA INDUSTRIAL MOTION, INC.

                        9% SENIOR SECURED NOTES DUE 2011

                               PURCHASE AGREEMENT

                                  April 3, 2007

JEFFERIES & COMPANY, INC.
520 Madison Avenue, 12th Floor
New York, NY 10022

Ladies and Gentlemen:

     Altra Industrial Motion, Inc., a Delaware corporation (the "Company"), and
each of the Guarantors (as hereinafter defined) hereby agree with you as
follows:

          1. ISSUANCE OF NOTES. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to Jefferies & Company, Inc.
(the "Initial Purchaser") $105,000,000 aggregate principal amount of 9% Senior
Secured Notes due 2011 (the "Notes"). The Notes will be issued pursuant to the
Indenture, dated as of November 30, 2004, among the Company, the subsidiary
guarantors named therein and The Bank of New York Trust Company, N.A., as
trustee (the "Trustee") as supplemented by the First Supplemental Indenture
dated February 7, 2006, the Second Supplemental Indenture dated February 8,
2006, the Third Supplemental Indenture dated April 24, 2006 and the Fifth
Supplemental Indenture, dated April 5, 2007 (the "Indenture"). On November 30,
2004, the Company issued $165,000,000 aggregate principal amount of 9% Senior
Secured Notes due 2011 (the "Existing Notes") pursuant to the Indenture.
Capitalized terms used, but not defined herein, shall have the meanings set
forth in the "Description of the Notes" section of the Final Offering Circular
(as hereinafter defined).

     The proceeds of the Notes, along with cash on hand and funds from the
Company's senior revolving credit facility, will be used to finance the
acquisition (the "Acquisition") of all of the outstanding share capital of TB
Wood's Corporation ("TB Wood's"), as described under "The TB Wood's Acquisition
and Related Transactions" section of the Offering Circular (as defined below).
In connection with the Acquisition, the Company, through its affiliates, has
made a tender offer (the "Tender Offer") for all of the outstanding shares of TB
Wood's and, in the event that less than all of the outstanding shares of TB
Wood's are tendered, will acquire all of the outstanding shares of TB Wood's
pursuant to a statutory "short-form" merger (the "Back-end Merger"). The
Offering (as defined below) is conditioned upon the consummation of the Tender
Offer.

     The Notes will be offered and sold to the Initial Purchaser pursuant to
exemptions from the registration requirements under the Securities Act of 1933,
as amended (the "Act"). Upon original issuance thereof, and until such time as
the same are no longer required under the applicable requirements of the Act,
the Notes shall bear the legends set forth under the "Notice to Investors"
section of the final



offering circular, dated the date hereof (the "Final Offering Circular"). The
Company has prepared (i) a preliminary offering circular, dated March 26, 2007
(the "Preliminary Offering Circular"), (ii) a pricing term sheet attached hereto
as Exhibit A, which includes pricing terms and other information with respect to
the Notes (the "Pricing Term Sheet") and (iii) the Final Offering Circular
relating to the offer and sale of the Notes (the "Offering"). "Offering
Circular" means the Preliminary Offering Circular and any exhibits and schedules
thereto, as supplemented by the Pricing Term Sheet at 9:00 a.m. New York City
time on the date hereof (the "Applicable Time"). No later than the second
Business Day following the date hereof, the Company will prepare and deliver to
the Initial Purchaser the Final Offering Circular and from and after the time
such Final Offering Circular is delivered to the Initial Purchaser, all
references herein to the "Offering Circular" shall be deemed collectively to
refer to (i) the Preliminary Offering Circular (as supplemented by the Pricing
Term Sheet and any exhibits thereto) and (ii) the Final Offering Circular (and
any amendment or supplement to either such document), including exhibits and
schedules thereto. The Preliminary Offering Circular immediately prior to the
Applicable Time, taken together with the Pricing Term Sheet, is referred to as
the "Pricing Disclosure Package."

          2. TERMS OF OFFERING. The Initial Purchaser has advised the Company,
and the Company understands, that the Initial Purchaser will make offers to sell
(the "Exempt Resales") some or all of the Notes purchased by the Initial
Purchaser hereunder on the terms set forth in the Pricing Disclosure Package and
the Final Offering Circular, as amended or supplemented, to persons (the
"Subsequent Purchasers") whom the Initial Purchaser reasonably believes to be
(i) "qualified institutional buyers" ("QIBs") as defined in Rule 144A under the
Act, as such may be amended from time to time or (ii) non-U.S. persons permitted
to purchase the Notes in offshore transactions in reliance upon Regulation S
under the Act (each, a "Reg S Person" and, together with the QIBs and the
Institutional Accredited Investors, "Eligible Purchasers").

          Pursuant to the Indenture, all Domestic Restricted Subsidiaries of the
Company shall fully and unconditionally guarantee, on a senior secured basis, to
each holder of the Notes and the Trustee, the payment and performance of the
Company's obligations under the Indenture and the Notes (each such subsidiary
being referred to herein as a "Guarantor" and each such guarantee being referred
to herein as a "Guarantee").

          Pursuant to the terms of the Collateral Agreements, all of the
obligations under the Notes and the Indenture will be secured by a second
priority lien and security interest on substantially all of the assets of the
Company and the Guarantors described therein (subject to a prior ranking lien
for the benefit of the lenders under the Credit Agreement and the Permitted
Liens).

          Holders of the Notes (including Subsequent Purchasers) will have the
registration rights set forth in the registration rights agreement applicable to
the Notes attached hereto as Exhibit B (the "Registration Rights Agreement"), to
be executed on and dated as of the Closing Date (as hereinafter defined).
Pursuant to the Registration Rights Agreement, the Company will agree, among
other things, to file with the Securities and Exchange Commission (the "SEC")
(a) a registration statement under the Act relating to Senior Secured Notes (the
"Exchange Notes"), which shall be identical to the Notes (except that the
Exchange Notes shall have been registered pursuant to such registration
statement and will not be subject to restrictions on transfer or contain
additional interest provisions) to be offered in exchange for the Notes (such
offer to exchange being referred to as the "Exchange Offer"), and/or (b) under
certain circumstances, a shelf registration statement pursuant to Rule 415 under
the Act (the "Shelf Registration Statement") relating to the resale by certain
holders of the Notes. If required under the Registration Rights Agreement, the
Company will issue Exchange Notes to the Initial Purchaser (the "Private
Exchange Notes"). If the Company fails to satisfy its obligations under the
Registration Rights Agreement, it will be required to pay additional interest to
the holders of the Notes under certain circumstances.


                                       2



          This Agreement, the Indenture, Collateral Agreements, the Registration
Rights Agreement, the Notes, the Guarantees, the Exchange Notes and the Private
Exchange Notes are collectively referred to herein as the "Documents."

          3. PURCHASE, SALE AND DELIVERY. On the basis of the representations,
warranties, agreements and covenants herein contained and subject to the terms
and conditions herein set forth, the Company agrees to issue and sell to the
Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Company, the Notes at a purchase price of $103,398,750 (constituting 97.5% of
the $106,050,000 of gross proceeds of the Offering) plus accrued interest from
December 1, 2006. Delivery to the Initial Purchaser of and payment for the Notes
shall be made at the closing of the Offering to be held at 10:00 a.m., New York
City time, on April 5, 2007 (the "Closing Date") at the New York offices of
Weil, Gotshal & Manges LLP, 767 Fifth Avenue New York, NY 10153.

     The Company shall deliver to the Initial Purchaser one or more certificates
representing the Notes in definitive form, registered in such names and
denominations as the Initial Purchaser may request, against payment by the
Initial Purchaser of the purchase price therefor by immediately available
federal funds bank wire transfer to such bank account or accounts as the Company
shall designate to the Initial Purchaser at least two business days prior to the
Closing Date. The certificates representing the Notes in definitive form shall
be made available to the Initial Purchaser for inspection at the New York
offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue New York, NY 10153 (or
such other place as shall be reasonably acceptable to the Initial Purchaser) not
later than 10:00 a.m. one business day immediately preceding the Closing Date.
Notes to be represented by one or more definitive global securities in
book-entry form will be deposited on the Closing Date, by or on behalf of the
Company, with The Depository Trust Company ("DTC") or its designated custodian,
and registered in the name of Cede & Co.

          4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTORS.
The Company and the Guarantors jointly and severally represent and warrant to
the Initial Purchaser that, as of the date hereof, as of the Applicable Time and
as of the Closing Date (after giving effect to the Acquisition):

(a)  As of the Applicable Time, the Pricing Disclosure Package and Final
     Offering Circular do not, and at the Closing Date, will not, contain any
     untrue statement of a material fact or omit to state a material fact
     necessary in order to make the statements therein, in the light of the
     circumstances under which they were made, not misleading; provided that the
     representations and warranties set forth in this Section 4(a) do not apply
     to statements or omissions made in reliance upon and in conformity with
     information relating to the Initial Purchaser furnished to the Company in
     writing by the Initial Purchaser expressly for use in the Offering
     Circular. For the purposes of this Agreement, the only information
     furnished in writing to the Company by the Initial Purchaser specifically
     for use in the Pricing Disclosure Package or the Final Offering Circular or
     any amendment or supplement thereto is the information set forth in the
     third paragraph under the heading "Plan of Distribution" in the Offering
     Circular (such information, the "Furnished Information"). No injunction or
     order has been issued that either (i) asserts that any of the transactions
     contemplated by the Documents is subject to the registration requirements
     of the Act or (ii) would prevent or suspend the issuance or sale of any of
     the Notes or the use of the Preliminary Offering Circular, the Pricing
     Disclosure Package, the Final Offering Circular or any amendment or
     supplement thereto, in any jurisdiction. The Pricing Disclosure Package as
     of the Applicable Time and each of the Preliminary Offering Circular and
     the Final Offering Circular, as of their respective dates, contained, and
     the Pricing Disclosure Package and the Offering Circular, as of the Closing
     Date, will contain, all the information specified in, and meet the
     requirements of, Rule 144A(d)(4) under the Act.


                                       3



(b)  Each corporation, partnership or other entity in which the Company,
     directly or indirectly through any of its subsidiaries, owns more than
     fifty percent (50%) of any class of equity securities or interests is
     listed on Schedule I attached hereto (the "Subsidiaries"). Each Subsidiary
     that is a Foreign Restricted Subsidiary has an asterisk ("*") next to its
     name on such schedule.

(c)  Each of the Company and its Subsidiaries (i) has been duly organized or
     formed, as the case may be, is validly existing and is in good standing
     under the laws of its jurisdiction of organization, (ii) has all requisite
     power and authority to carry on its business as described in the Offering
     Circular and to own, lease and operate its properties and assets as
     described in the Offering Circular and (iii) is duly qualified or licensed
     to do business and is in good standing as a foreign corporation,
     partnership, limited liability company or other entity, as the case may be,
     authorized to do business in each jurisdiction in which the nature of such
     business or the ownership or leasing of such properties requires such
     qualification, except where the failure to be so qualified would not,
     individually or in the aggregate, have a material adverse effect on (A) the
     properties, business, operations, earnings, assets, liabilities or
     condition (financial or otherwise) of the Company and the Subsidiaries,
     taken as a whole, (B) the ability of the Company to perform its obligations
     in all material respects under any Document, (C) the enforceability of the
     Collateral Agreements or the attachment, perfection or priority of any of
     the Liens or security interests intended to be created thereby, (D) the
     validity or enforceability of any of the Documents or (E) the consummation
     of any of the transactions contemplated under any of the Documents (each, a
     "Material Adverse Effect").

(d)  All of the issued and outstanding shares of capital stock of or membership
     interests in, as the case may be, the Company and the Subsidiaries have
     been duly authorized and validly issued, are fully paid and nonassessable,
     and were not issued in violation of, and are not subject to, any preemptive
     or similar rights. The table under the caption "Capitalization" in the
     Pricing Disclosure Package (including the footnotes thereto) sets forth, as
     of its date, (i) the actual cash and cash equivalents and capitalization of
     the Company and the Subsidiaries on a consolidated basis and (ii) the
     adjusted cash and cash equivalents and capitalization of the Company and
     the Subsidiaries, on a consolidated basis, after giving effect to the offer
     and sale of the Notes, the application of the net proceeds therefrom, the
     Acquisition and the other transactions described in the Offering Circular
     under the section entitled "Use of Proceeds." Except as set forth in such
     table, immediately following the closing of the Offering, neither the
     Company nor any of the Subsidiaries will have any liabilities, absolute,
     accrued, contingent or otherwise, other than (A) liabilities that are
     reflected in the Financial Statements (as hereinafter defined) or (B)
     liabilities incurred subsequent to the date thereof in the ordinary course
     of business, consistent with past practice, or in connection with the
     Acquisition, that would not, individually or in the aggregate, have a
     Material Adverse Effect. All of the outstanding shares of capital stock or
     other equity interests of each of the Subsidiaries are owned, directly or
     indirectly, by the Company, free and clear of all liens, security
     interests, mortgages, pledges, charges, equities, claims or restrictions on
     transferability or encumbrances of any kind (collectively, "Liens"), other
     than those described in the Pricing Disclosure Package, (i) pursuant to the
     senior revolving credit facility among the Company, the other parties named
     therein and Wells Fargo Foothill, Inc. (as amended, supplemented, modified,
     extended or restated from time to time, the "Credit Agreement"), (ii)
     pursuant to the Indenture, (iii) pursuant to the assumed debt of TB Wood's
     as part of the Acquisition as described in the Pricing Disclosure Package,
     or (iv) imposed by the Act and the securities or "Blue Sky" laws of certain
     domestic or foreign jurisdictions. Except as disclosed in the Pricing
     Disclosure Package, there are no outstanding (A) options, warrants or other
     rights to purchase from the Company or any of the Subsidiaries, (B)
     agreements, contracts, arrangements or other obligations of the Company or
     any of the Subsidiaries to issue or (C) other rights to convert any
     obligation into or exchange any securities for, in the case of each of
     clauses (A)


                                       4



     through (C), shares of capital stock of or other ownership or equity
     interests in the Company or any of the Subsidiaries.

(e)  No holder of securities of the Company or any of the Subsidiaries will be
     entitled to have such securities registered under the registration
     statements required to be filed by the Company and the Guarantors with
     respect to the Notes pursuant to the Registration Rights Agreement.

(f)  The Company and each of the Subsidiaries that are corporations have the
     requisite corporate power and authority, and the Company and each of the
     Subsidiaries that are limited partnerships or limited liability companies
     have all the requisite partnership or other power and authority, to
     execute, deliver and perform their respective obligations under the
     Documents to which they are a party and to consummate the transactions
     contemplated thereby.

(g)  This Agreement has been duly and validly authorized, executed and delivered
     by the Company and the Guarantors. Each of the Indenture and the Collateral
     Agreements have been duly and validly authorized by the Company and the
     Guarantors. Each of the Indenture and the Collateral Agreements constitutes
     a legal, valid and binding obligation of each of the Company and
     Guarantors, enforceable against each of the Company and the Guarantors in
     accordance with its terms, except that the enforcement thereof may be
     subject to (i) bankruptcy, insolvency, reorganization, receivership,
     moratorium, fraudulent conveyance or other similar laws now or hereafter in
     effect relating to creditors' rights generally and (ii) general principles
     of equity (whether applied by a court of law or equity) and the discretion
     of the court before which any proceeding therefor may be brought.

(h)  The Registration Rights Agreement has been duly and validly authorized by
     the Company and the Guarantors. The Registration Rights Agreement, when
     executed and delivered by the Company and the Guarantors, will constitute a
     legal, valid and binding obligation of the Company and the Guarantors,
     enforceable against the Company and the Guarantors in accordance with its
     terms, except that (i) the enforcement thereof may be subject to (A)
     bankruptcy, insolvency, reorganization, receivership, moratorium,
     fraudulent conveyance or other similar laws now or hereafter in effect
     relating to creditors' rights generally and (B) general principles of
     equity (whether applied by a court of law or equity) and the discretion of
     the court before which any proceeding therefor may be brought and (ii) any
     rights to indemnity or contribution thereunder may be limited by federal
     and state securities laws and public policy considerations.

(i)  The Notes, when issued, will be in the form contemplated by the Indenture.
     The Indenture meets the requirements for qualification under the Trust
     Indenture Act of 1939, as amended (the "TIA"). The Notes, Exchange Notes
     and Private Exchange Notes have each been duly and validly authorized by
     the Company and, in the case of the Notes, when delivered to and paid for
     by the Initial Purchaser in accordance with the terms of this Agreement and
     authenticated by the Trustee in accordance with the Indenture, will have
     been duly executed, issued and delivered and will be legal, valid and
     binding obligations of the Company, entitled to the benefit of the
     Indenture, the Collateral Agreements and the Registration Rights Agreement,
     and enforceable against the Company in accordance with their terms, except
     that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
     reorganization, receivership, moratorium, fraudulent conveyance or other
     similar laws now or hereafter in effect relating to creditors' rights
     generally and (ii) general principles of equity (whether applied by a court
     of law or equity) and the discretion of the court before which any
     proceeding therefor may be brought.

(j)  The Guarantees have been duly and validly authorized by the Guarantors and,
     when executed by the Guarantors, will have been duly executed, issued and
     delivered and will be legal, valid and


                                       5



     binding obligations of the Guarantors, entitled to the benefit of the
     Indenture, the Collateral Agreements and the Registration Rights Agreement,
     and enforceable against the Guarantors in accordance with their terms,
     except that the enforcement thereof may be subject to (i) bankruptcy,
     insolvency, reorganization, receivership, moratorium, fraudulent conveyance
     or other similar laws now or hereafter in effect relating to creditors'
     rights generally and (ii) general principles of equity (whether applied by
     a court of law or equity) and the discretion of the court before which any
     proceeding therefor may be brought.

(k)  Neither the Company nor any of the Subsidiaries is in violation of its
     certificate of incorporation, by-laws or other organizational documents
     (the "Charter Documents"). Neither the Company nor any of the Subsidiaries
     is (i) in violation of any federal, state, local or foreign statute, law
     (including, without limitation, common law) or ordinance, or any judgment,
     decree, rule, regulation or order (collectively, "Applicable Law") of any
     federal, state, local and other governmental authority, governmental or
     regulatory agency or body, court, arbitrator or self-regulatory
     organization, domestic or foreign (each, a "Governmental Authority")
     applicable to any of them or any of their respective properties, or (ii) in
     breach of or default under any bond, debenture, note or other evidence of
     indebtedness, indenture, mortgage, deed of trust, lease or any other
     agreement or instrument to which any of them is a party or by which any of
     them or their respective property is bound (collectively, "Applicable
     Agreements"), except for such violations, breaches or defaults that would
     not, individually or in the aggregate, reasonably be expected to have a
     Material Adverse Effect. To the knowledge of the Company, there exists no
     condition that, with the passage of time or otherwise, would constitute (a)
     a violation of such Charter Documents or Applicable Laws, (b) a breach of
     or default under any Applicable Agreement or (c) result in the imposition
     of any penalty or the acceleration of any indebtedness.

(l)  Neither the execution, delivery or performance of the Documents, as
     applicable, nor the consummation of any transactions contemplated therein
     will conflict with, violate, constitute a breach of or a default (with the
     passage of time or otherwise) under, require the consent of any person
     (other than consents already obtained and in full force and effect) under,
     result in the imposition of a Lien on any assets of the Company or any of
     its Subsidiaries (except for Liens pursuant to the Collateral Agreements),
     or result in an acceleration of indebtedness under or pursuant to (i) the
     Charter Documents, (ii) any Applicable Agreement or (iii) any Applicable
     Law, except for, with respect to clauses (ii) and (iii), any conflict,
     violation, breach or default that would not, individually or in the
     aggregate, reasonably be expected to have a Material Adverse Effect. After
     consummation of the Offering and transactions contemplated in the
     Documents, no Default or Event of Default under the Indenture will exist.

(m)  When executed and delivered, the Documents will conform in all material
     respects to the descriptions thereof in the Pricing Disclosure Package.
     Except as disclosed in the Pricing Disclosure Package, there are no related
     party transactions that would be required to be disclosed in the Pricing
     Disclosure Package if the Pricing Disclosure Package were a prospectus
     included in a Registration Statement on Form S-1 filed under the Act.

(n)  No consent, approval, authorization or order of any Governmental Authority
     or third party is required for the issuance and sale by the Company of the
     Notes to the Initial Purchaser or the consummation by the Company of the
     other transactions contemplated hereby, except such as have been obtained
     and such as may be required under state securities or "Blue Sky" laws in
     connection with the purchase and resale of the Notes by the Initial
     Purchaser and such as may be required in connection with the Exchange Offer
     or Shelf Registration Statement.


                                       6



(o)  Except as disclosed in the Pricing Disclosure Package, there is no action,
     claim, suit, demand, hearing, notice of violation or deficiency, or
     proceeding, domestic or foreign (collectively, "Proceedings"), pending or,
     to the knowledge of the Company, threatened, that either (i) seeks to
     restrain, enjoin, prevent the consummation of or otherwise challenge any of
     the Documents or any of the transactions contemplated therein or (ii)
     would, individually or in the aggregate, have a Material Adverse Effect.
     The Company is not subject to any judgment, order, decree, rule or
     regulation of any Governmental Authority that would, individually or in the
     aggregate, have a Material Adverse Effect.

(p)  The Company and its Subsidiaries possess all licenses, permits,
     certificates, consents, orders, approvals and other authorizations from,
     and has made all declarations and filings with, all Governmental
     Authorities presently required or necessary to own or lease, as the case
     may be, and to operate their respective properties and to carry on their
     respective businesses as now or proposed to be conducted as set forth in
     the Pricing Disclosure Package ("Permits"), except where the failure to
     possess such Permits would not, individually or in the aggregate, have a
     Material Adverse Effect; each of the Company and its Subsidiaries has
     fulfilled and performed all of its obligations with respect to such Permits
     and no event has occurred that allows, or after notice or lapse of time
     would allow, revocation or termination thereof or results in any other
     material impairment of the rights of the holder of any such Permit that
     would individually or in the aggregate, have a Material Adverse Effect; and
     none of the Company or its Subsidiaries has received any notice of any
     proceeding relating to revocation or modification of any such Permit,
     except as described in the Pricing Purchase Package or except where such
     revocation or modification would not, individually or in the aggregate,
     have a Material Adverse Effect.

(q)  Each of the Company and its Subsidiaries has good and indefeasible title to
     all real property owned by it and good title to all personal property owned
     by it and good title to all leasehold estates in real and personal property
     being leased by it and, as of the Closing Date, all such owned or leased
     real or personal property will be free and clear of all Liens (other than
     Permitted Liens). All Applicable Agreements to which the Company or any of
     its Subsidiaries is a party or by which any of them is bound are legal,
     valid and binding obligations, other than as disclosed in the Pricing
     Disclosure Package, and are enforceable against each of the Company or such
     Subsidiary, as applicable, and are enforceable against the other party or
     parties thereto and are in full force and effect with only such exceptions
     as would not, individually or in the aggregate, have a Material Adverse
     Effect.

(r)  Except with respect to Warner Electric UK Group which has not filed its
     Company Tax Return Form or Corporation Tax Computation for fiscal years
     ended 2004 and 2005 which failure to file will not have a Material Adverse
     Effect, all Tax returns required to be filed by the Company and each of the
     Subsidiaries have been filed and all such returns are true, complete and
     correct in all material respects. All material Taxes that are due from the
     Company and its Subsidiaries have been paid other than those (i) currently
     payable without penalty or interest or (ii) being contested in good faith
     and by appropriate proceedings and for which adequate reserves have been
     established in accordance with generally accepted accounting principles of
     the United States, consistently applied ("GAAP"). To the knowledge of the
     Company, after reasonable internal inquiry, there are no actual or proposed
     Tax assessments against the Company or any of the Subsidiaries that would,
     individually or in the aggregate, have a Material Adverse Effect. The
     accruals and reserves on the books and records of the Company and its
     Subsidiaries in respect of any material Tax liability for any period not
     finally determined are adequate to meet any assessments of Tax for any such
     period. For purposes of this Agreement, the term "Tax" and "Taxes" shall
     mean all federal, state, local and foreign taxes, and other assessments of
     a similar


                                       7



     nature (whether imposed directly or through withholding), including any
     interest, additions to tax or penalties applicable thereto.

(s)  Each of the Company and the Subsidiaries owns, or is licensed under, and
     has the right to use, all patents, patent rights, licenses, inventions,
     copyrights, know-how (including trade secrets and other unpatented and/or
     unpatentable proprietary or confidential information, systems or
     procedures), trademarks, service marks and trade names (collectively,
     "Intellectual Property") necessary for the conduct of its business and, as
     of the Closing Date, such Intellectual Property will be free and clear of
     all Liens, other than Permitted Liens. No claims or notices of any
     potential claim have been asserted by any person challenging the use of any
     such Intellectual Property by the Company or any of the Subsidiaries or
     questioning the validity or effectiveness of the Intellectual Property or
     any license or agreement related thereto (other than any claims that would
     not, individually or in the aggregate, have a Material Adverse Effect). The
     use of such Intellectual Property by the Company or any of the Subsidiaries
     will not infringe on the Intellectual Property rights of any other person.

(t)  The Company maintains a system of internal accounting controls
     sufficient to provide reasonable assurance that (i) material transactions
     are executed in accordance with management's general or specific
     authorization, (ii) material transactions are recorded as necessary to
     permit preparation of financial statements in conformity with GAAP, and to
     maintain asset accountability, (iii) access to assets is permitted only in
     accordance with management's general or specific authorization and (iv) the
     recorded accountability for assets is compared with the existing assets at
     reasonable intervals and appropriate action is taken with respect to any
     material differences.

(u)  The audited consolidated financial statements and related notes of the
     Company and the Predecessor (as such term is defined in the Pricing
     Disclosure Package and the Final Offering Circular) contained in the
     Pricing Disclosure Package and the Final Offering Circular (the "Company
     Financial Statements") present fairly (without giving effect to the
     Acquisition) the consolidated financial position, results of operations and
     cash flows of the Company and its consolidated Subsidiaries and the
     Predecessor (without giving effect to the Acquisition), as the case may be,
     as of the respective dates and for the respective periods to which they
     apply and have been prepared in accordance with GAAP and the requirements
     of Regulation S-X of the Act. The consolidated financial statements and
     related notes of TB Wood's contained in the Pricing Disclosure Package and
     the Final Offering Circular (the "Target Financial Statements" and,
     together with the Company Financial Statements, the "Financial Statements")
     present fairly its financial position, results of operations and cash
     flows, as of the respective dates and for the respective periods to which
     they apply and have been prepared or adjusted in accordance with GAAP and
     the requirements of Regulation S-X of the Act. The financial data set forth
     under "Summary Historical and Pro Forma Consolidated Financial Data" and
     "Selected Historical Consolidated Financial Data" included in the Pricing
     Disclosure Package and the Final Offering Circular has been prepared on a
     basis consistent with that of the Financial Statements and present fairly
     the consolidated financial position and results of operations of the
     Company, the Predecessor, Hay Hall (as such term is defined in the Pricing
     Disclosure Package and the Final Offering Circular) and TB Wood's as of the
     respective dates and for the respective periods indicated. The unaudited
     pro forma financial statements and related notes of the Company contained
     in the Pricing Disclosure Package and the Final Offering Circular have been
     prepared in accordance with the requirements of Regulation S-X and give
     effect to assumptions used in the preparation thereof on a reasonable basis
     and in good faith. All other financial, statistical, market and industry
     related data included in the Pricing Disclosure Package and the Final
     Offering Circular are fairly and accurately presented in all material
     respects and are based on or derived from sources that the Company believes
     to be reliable and accurate.


                                       8



(v)  Subsequent to the respective dates as of which information is given in the
     Pricing Disclosure Package and the Final Offering Circular, except as
     disclosed in the Pricing Disclosure Package and the Final Offering
     Circular, (i) neither the Company nor any of the Subsidiaries has incurred
     any liabilities, direct or contingent, that are material, individually or
     in the aggregate, to the Company, or has entered into any transactions not
     in the ordinary course of business, (ii) there has not been any material
     decrease in the capital stock or any material increase in long-term
     indebtedness or any material increase in short-term indebtedness of the
     Company, or any payment of or declaration to pay any dividends or any other
     distribution with respect to the Company, and (iii) there has not been any
     material adverse change in the properties, business, operations, earnings,
     assets, liabilities or condition (financial or otherwise) of the Company
     and the Subsidiaries taken as a whole in the aggregate (each of clauses
     (i), (ii) and (iii), a "Material Adverse Change"). To the knowledge of the
     Company, after reasonable internal inquiry, there is no event that is
     reasonably likely to occur, which would, individually or in the aggregate,
     have a Material Adverse Effect except as disclosed in the Pricing
     Disclosure Package and the Final Offering Circular.

(w)  No "nationally recognized statistical rating organization" (as such term is
     defined for purposes of Rule 436(g)(2) under the Act) (i) has imposed (or
     has informed the Company that it is considering imposing) any condition
     (financial or otherwise) on the Company retaining any rating assigned to
     the Company or any of the Subsidiaries or to any securities of the Company
     or any of the Subsidiaries or (ii) has indicated to the Company that it is
     considering (A) the downgrading, suspension or withdrawal of, or any review
     for a possible change that does not indicate the direction of the possible
     change in, any rating so assigned, or (B) any negative change in the
     outlook for any rating of the Company or any of the Subsidiaries or any
     securities of the Company or any of the Subsidiaries.

(x)  All indebtedness represented by the Notes is being incurred in good faith
     and for the purposes set forth in the "Use of Proceeds" section of the
     Pricing Disclosure Package. On the Closing Date, after giving pro forma
     effect to the Offering and the use of proceeds therefrom as indicated in
     the "Use of Proceeds" section of the Pricing Disclosure Package and the
     Final Offering Circular, the Company and the Guarantors, on a consolidated
     basis, (i) will be solvent, (ii) will have sufficient capital for carrying
     on its business and (iii) will be able to pay its debts as they mature. As
     used in this paragraph, the term "Solvent" means, with respect to a
     particular date, that on such date (i) the present fair market value (or
     present fair saleable value) of the assets of the Company and each
     Guarantor is not less than the total amount required to pay the liabilities
     of the Company and each Guarantor on its total existing debts and
     liabilities (including contingent liabilities) as they become absolute and
     matured; (ii) the Company and each Guarantor is able to pay its debts and
     other liabilities, contingent obligations and commitments as they mature
     and become due in the normal course of business; (iii) assuming
     consummation of the issuance of the Notes and Guarantees as contemplated by
     this Agreement and the Pricing Disclosure Package and the Final Offering
     Circular, neither the Company nor any Guarantor is incurring debts or
     liabilities beyond its ability to pay as such debts and liabilities mature;
     (iv) neither the Company nor any Guarantor is engaged in any business or
     transaction, and does not propose to engage in any business or transaction,
     for which its property would constitute unreasonably small capital after
     giving due consideration to the prevailing practice in the industry in
     which the Company or any Guarantor is engaged; and (v) neither the Company
     nor any Guarantor is otherwise insolvent under the standards set forth in
     applicable laws.

(y)  The Company has not and, to its knowledge after reasonable internal
     inquiry, no one acting on its behalf (excluding for such purposes, the
     Initial Purchaser) has, (i) taken, directly or indirectly, any action
     designed to cause or to result in, or that has constituted or that might
     reasonably be


                                       9



     expected to constitute, the stabilization or manipulation of the price of
     any security of the Company to facilitate the sale or resale of any of the
     Notes, (ii) sold, bid for, purchased or paid anyone any compensation for
     soliciting purchases of any of the Notes or (iii) except as disclosed in
     the Pricing Disclosure Package, paid or agreed to pay to any person any
     compensation for soliciting another to purchase any other securities of the
     Company.

(z)  Assuming (i) the accuracy of the representations contained in Section 6
     hereof (including, without limitation, the accuracy of the Initial
     Purchaser's representations contained herein regarding the absence of
     general solicitation in connection with the sale of the Notes to the
     Initial Purchaser and in the Exempt Resales), (ii) that the purchasers in
     the Exempt Resales are QIBs, Institutional Accredited Investors or non-U.S.
     persons (as defined under Regulation S of the Act) and (iii) the accuracy
     of the representations made by each Institutional Accredited Investor that
     purchases the Notes pursuant to an Exempt Resale as set forth in the
     Accredited Investor Letter, without limiting any provision herein, no
     registration under the Act and no qualification of the Indenture under the
     TIA is required for the sale of the Notes to the Initial Purchaser as
     contemplated hereby or for the Exempt Resales.

(aa) Assuming the accuracy of the representations contained in Section 6 hereof,
     the Notes are eligible for resale pursuant to Rule 144A under the Act and
     no other securities of the Company are of the same class (within the
     meaning of Rule 144A under the Act) as the Notes and listed on a national
     securities exchange registered under Section 6 of the Exchange Act or
     quoted in a U.S. automated inter-dealer quotation system. No securities of
     the Company of the same class as the Notes have been offered, issued or
     sold by the Company or any of its respective Affiliates within the
     six-month period immediately prior to the date hereof.

(bb) Neither of the Company nor any of its Affiliates or other person acting on
     behalf of the Company (excluding for such purposes, the Initial Purchaser)
     has offered or sold the Notes by means of any general solicitation or
     general advertising within the meaning of Rule 502(c) under the Act or,
     with respect to Notes sold outside the United States to non-U.S. persons
     (as defined in Rule 902 under the Act), by means of any directed selling
     efforts within the meaning of Rule 902 under the Act, and the Company, any
     affiliate of the Company and any person acting on behalf of the Company
     have complied with and will implement the "offering restrictions" within
     the meaning of such Rule 902; provided, that no representation is made in
     this subsection with respect to the actions of the Initial Purchaser.

(cc) Except as disclosed in the Pricing Disclosure Package, each of the Company,
     the Subsidiaries and each ERISA Affiliate has fulfilled its obligations, if
     any, under the minimum funding standards of Section 302 of the United
     States Employee Retirement Income Security Act of 1974, as amended
     ("ERISA"), with respect to each "pension plan" (as defined in Section 3(2)
     of ERISA) subject to Section 302 of ERISA that the Company, the
     Subsidiaries or any ERISA Affiliate sponsors or maintains, or with respect
     to which it has (or within the last three years had) any obligation to make
     contributions, and each such plan is in compliance in all material respects
     with the presently applicable provisions of ERISA and the Internal Revenue
     Code of 1986, as amended (the "Code"), in each case, except as would not,
     individually or in the aggregate, have a Material Adverse Effect. Except as
     disclosed in the Pricing Disclosure Package, neither the Company, the
     Subsidiaries, nor any ERISA Affiliate has incurred any unpaid liability to
     the Pension Benefit Guaranty Corporation (other than for the payment of
     premiums in the ordinary course) or to any such plan under Title IV of
     ERISA. "ERISA Affiliate" means a corporation, trade or business that is,
     along with the Company or any Subsidiary, a member of a controlled group of
     corporations or a controlled group of trades or businesses, as described in
     Section 414 of the Code or Section 4001 of ERISA.


                                       10



(dd) Other than as disclosed in the Pricing Disclosure Package, (i) neither the
     Company nor any of the Subsidiaries is party to or bound by any collective
     bargaining agreement with any labor organization; (ii) none of the
     employees of the Company or the Subsidiaries is represented by a labor
     union, and, to the knowledge of the Company after reasonable internal
     inquiry, no union organizing activities are taking place that could,
     individually or in the aggregate, have a Material Adverse Effect; (iii) to
     the Company's knowledge, no union organizing or decertification efforts are
     underway or threatened against the Company or the Subsidiaries; (iv) no
     labor strike, work stoppage, slowdown or other material labor dispute is
     pending against the Company or the Subsidiaries, or, to the knowledge of
     the Company, after reasonable internal inquiry, threatened against the
     Company or the Subsidiaries; (v) there is no worker's compensation
     liability, experience or matter that could be reasonably expected to have a
     Material Adverse Effect; (vi) to the knowledge of the Company, after
     reasonable internal inquiry, there is no threatened or pending liability
     against the Company or the Subsidiaries pursuant to the Worker Adjustment
     Retraining and Notification Act of 1988, as amended ("WARN"), or any
     similar state or local law; (vii) there is no employment-related charge,
     complaint, grievance, investigation, unfair labor practice claim or inquiry
     of any kind pending against the Company or the Subsidiaries that could,
     individually or in the aggregate, have a Material Adverse Effect; (viii) to
     the knowledge of the Company, after reasonable internal inquiry, no
     employee or agent of the Company or the Subsidiaries has committed any act
     or omission giving rise to liability for any violation identified in
     subsection (vi) and (vii) above, other than such acts or omissions that
     would not, individually or in the aggregate, have a Material Adverse
     Effect; and (ix) no term or condition of employment exists through
     arbitration awards, settlement agreements, or side agreement that is
     contrary to the express terms of any applicable collective bargaining
     agreement.

(ee) None of the transactions contemplated in the Documents or the application
     by the Company or any of the Subsidiaries of the proceeds of the Notes will
     violate or result in a violation of Section 7 of the Exchange Act
     (including, without limitation, Regulation T (12 C.F.R. Part 220),
     Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of
     the Board of Governors of the Federal Reserve System).

(ff) Neither the Company nor any of the Subsidiaries is an open-end investment
     company, unit investment trust or face-amount certificate company that is
     or is required to be registered under Section 8 of the United States
     Investment Company Act of 1940 (the "Investment Company Act"); and neither
     the Company nor any of the Subsidiaries, after giving effect to the
     Offering and sale of the Notes and the application of the proceeds thereof
     as described in the Offering Circular, will be an "investment company" as
     defined in the Investment Company Act.

(gg) The Company has not engaged any broker, finder, commission agent or other
     person (other than the Initial Purchaser) in connection with the Offering
     or any of the transactions contemplated in the Documents, and the Company
     is not under any obligation to pay any broker's fee or commission in
     connection with such transactions (other than commissions or fees to the
     Initial Purchaser).

(hh) Each of the Company and the Subsidiaries is (i) in compliance with any and
     all applicable foreign, provincial, federal, state and local laws and
     regulations relating to health and safety, or the pollution or the
     protection of the environment or hazardous or toxic substances or wastes,
     pollutants or contaminants ("Environmental Laws"), (ii) has received and is
     in compliance with all permits, licenses or other approvals required of
     them under applicable Environmental Laws to conduct its respective
     businesses and (iii) has not received notice of, and is not aware of, any
     actual or potential liability for damages to natural resources or the
     investigation or remediation of any disposal, release or existence of
     hazardous or toxic substances or wastes, pollutants or


                                       11



     contaminants, in each case except where such non-compliance with
     Environmental Laws, failure to receive and comply with required permits,
     licenses or other approvals, or liability would not, individually or in the
     aggregate, have a Material Adverse Effect. Neither the Company nor any of
     the Subsidiaries has been named as a "potentially responsible party" under
     the Comprehensive Environmental Response, Compensation, and Liability Act
     of 1980, as amended, or any similar state or local or foreign or provincial
     Environmental Laws or regulations requiring the Company or any of its
     Subsidiaries to investigate or remediate any pollutants or contaminants,
     except where such requirements would not, individually or in the aggregate,
     have a Material Adverse Effect, whether or not arising from transactions in
     the ordinary course of business.

     In the ordinary course of its business, the Company periodically reviews
     the effects of Environmental Laws on the business, operations and
     properties of the Company and the Subsidiaries, in the course of which it
     identifies and evaluates associated costs and liabilities (including,
     without limitation, any capital or operating expenditures required for
     clean-up, closure of properties or compliance with Environmental Laws, or
     any permit, license or approval, any related constraints on operating
     activities and any potential liabilities to third parties). On the basis of
     such review and the indemnification for certain costs and liabilities that
     the Company or its Subsidiaries is entitled to receive from the Company's
     former parent company, the Company has reasonably concluded that such
     associated costs would not, individually or in the aggregate, have a
     Material Adverse Effect on the Company's business, operations or earnings.

     In connection with the Acquisition, the Company reviewed the effects of
     Environmental Laws on the business, operations and properties of the
     Company and the Subsidiaries, and has identified and evaluated associated
     costs and liabilities (including, without limitation, any capital or
     operating expenditures required for clean-up, closure of properties or
     compliance with Environmental Laws, or any permit arising from the
     Company's or its Subsidiaries' or any predecessors' or formerly owned or
     operated properties or license or approval, any related constraints on
     operating activities and any potential liabilities to third parties). Based
     on such review, the Company has reasonably concluded that such associated
     costs and liabilities would not, individually or in the aggregate, have a
     Material Adverse Effect on the Company's business, operations or earnings.

(ii) As of the Closing Date, except as provided in the Credit Agreement and the
     Indenture and as disclosed in the Pricing Disclosure Package, there will be
     no encumbrances or restrictions (other than under applicable law) on the
     ability of any Subsidiary of the Company (x) to pay dividends or make other
     distributions on such Subsidiary's capital stock or to pay any indebtedness
     to the Company or any other Subsidiary of the Company, (y) to make loans or
     advances or pay any indebtedness to, or investments in, the Company or any
     other Subsidiary of the Company or (z) to transfer any of its property or
     assets to the Company or any other Subsidiary of the Company.

(jj) Upon execution and delivery of certain modification agreements in
     connection with the existing Collateral Agreements and the issuance of the
     Notes, (i) the Collateral Agreements, as modified, will provide, in favor
     of the Collateral Agent, for the benefit of the Holders of the Notes, a
     legal, valid and enforceable security interest in all right, title and
     interest of the Company and any Guarantor (subject only to Permitted Liens)
     in the Collateral (as defined in the Security Agreement), subject to the
     Intercreditor Agreement, and (ii) upon the filing of any necessary
     additional UCC financing statements, together with any necessary amendments
     to such existing UCC financing statements required under the Code (as
     defined in the Security Agreement), or other filings as may be required
     under federal law, in the case of any Patents, Trademarks or Copyrights
     (each as defined in the Security Agreement), such security interests will
     be valid and perfected, and subject to the Intercreditor Agreement, will
     constitute a second priority security


                                       12



     interest in the Collateral (as defined in the Security Agreement), subject
     only to Permitted Liens. As of the Closing Date, the Collateral (as defined
     in the Security Agreement) will be subject to no Liens other than Permitted
     Liens. Upon the execution and delivery by the Company and/or any Guarantor
     of a Control Agreement (as defined in the Security Agreement), such
     security interest will be valid and perfected (to the extent required
     thereunder), and will constitute a second priority security interest such
     Securities Account or Deposit Account, as applicable (each as defined in
     the Security Agreement), subject to the Intercreditor Agreement. As of the
     Closing Date, any such Securities Account or Deposit Account, as applicable
     (each as defined in the Security Agreement), if any, will be subject to no
     Liens other than Permitted Liens.

(kk) Each certificate signed by any officer of the Company, or any Subsidiary
     thereof, delivered to the Initial Purchaser shall be deemed a
     representation and warranty by the Company or any such Subsidiary thereof
     (and not individually by such officer) to the Initial Purchaser with
     respect to the matters covered thereby.

(ll) Each of the Company and its Subsidiaries is insured by insurers of
     recognized financial responsibility against such losses and risks and in
     such amounts as are prudent and customary in the businesses in which they
     are engaged. All policies of insurance insuring the Company or any of its
     Subsidiaries or their respective businesses, assets, employees, officers
     and directors are in full force and effect. The Company and the
     Subsidiaries are in compliance with the terms of such policies and
     instruments in all material respects, and there are no claims by the
     Company or any of the Subsidiaries under any such policy or instrument as
     to which any insurance company is denying liability or defending under a
     reservation of rights clause. Neither the Company nor any such Subsidiary
     has been refused any insurance coverage sought or applied for, and neither
     the Company nor any such Subsidiary has any reason to believe that it will
     not be able to renew its existing insurance coverage as and when such
     coverage expires or to obtain similar coverage from similar insurers as may
     be necessary to continue its business at a cost that would not,
     individually or in the aggregate, have a Material Adverse Effect.

(mm) There is and has been no failure on the part of the Company and the
     Subsidiaries or any of the officers and directors of the Company or any of
     the Subsidiaries, in their capacities as such, to comply in all material
     respects with the applicable provisions of The Sarbanes-Oxley Act of 2002
     and the rules and regulations in connection therewith.

(nn) (i) The Company has established and maintains "disclosure controls and
     procedures" (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange
     Act) and (ii) the Company's "disclosure controls and procedures" are
     reasonably designed to ensure that all information (both financial and
     non-financial) required to be disclosed by the Company in the reports that
     it files or submits under the Exchange Act is recorded, processed,
     summarized and reported within the time periods specified in the rules and
     regulations thereunder, and that all such information is accumulated and
     communicated to the Company's management as appropriate to allow timely
     decisions regarding required disclosure and to make the certifications of
     the Chief Executive Officer and Chief Financial Officer of the Company
     required under the Exchange Act with respect to such reports.

(oo) The accountants who certified the financial statements included in the
     Pricing Disclosure Package and Final Offering Circular are independent
     public accountants as required by the Act, the regulations promulgated
     under the Act and the Exchange Act.

(pp) No forward-looking statement (within the meaning of Section 27A of the Act
     and Section 21E of the Exchange Act) or presentation of market-related or
     statistical data contained in the Pricing


                                       13



     Disclosure Package has been made or reaffirmed without a reasonable basis
     or has been disclosed in other than good faith.

(qq) All of the conditions to the Tender Offer have been satisfied or waived by
     the Company. Upon the expiration of the Tender Offer, the Company has
     accepted letters of transmittal pursuant to the Tender Offer representing
     95% of the outstanding shares of common stock of TB Wood's.

(rr) The Company has not taken any action or omitted to take any action (such as
     issuing any press release or made any other public announcement referring
     to the Offering without the "Stabilization/FSZ" legend) which may result in
     the loss by the Initial Purchaser of the ability to rely on the
     stabilization safe harbor provided by the Financial Services Authority
     under the Financial Services and Markets Act 2000 (the "FSMA"); provided,
     however, that the such "Stabilization/FSZ" legend was not in the
     Preliminary Offering Circular or the Pricing Term Sheet. The Company has
     been informed of the guidance relating to stabilization provided by the
     Financial Services Authority, in particular Section MAR 2 Annex 2G of the
     Financial Services Handbook.

          5. COVENANTS OF THE COMPANY AND THE GUARANTORS. Each of the Company
and the Guarantors jointly and severally agrees:

(a)  To (i) advise the Initial Purchaser promptly after obtaining knowledge
     (and, if requested by the Initial Purchaser, confirm such advice in
     writing) of (A) the issuance by any state securities commission of any stop
     order suspending the qualification or exemption from qualification of any
     of the Notes for offer or sale in any jurisdiction, or the initiation of
     any proceeding for such purpose by any state securities commission or other
     regulatory authority, or (B) the happening of any event that makes any
     statement of a material fact made in the Pricing Disclosure Package or the
     Final Offering Circular untrue or that requires the making of any additions
     to or changes in the Pricing Disclosure Package or the Final Offering
     Circular in order to make the statements therein, in the light of the
     circumstances under which they were made, not misleading, (ii) use its
     commercially reasonable efforts to prevent the issuance of any stop order
     or order suspending the qualification or exemption from qualification of
     any of the Notes under any state securities or Blue Sky laws, and (iii) if,
     at any time, any state securities commission or other regulatory authority
     shall issue an order suspending the qualification or exemption from
     qualification of any of the Notes under any such laws, use its commercially
     reasonable efforts to obtain the withdrawal or lifting of such order at the
     earliest possible time.

(b)  To (i) furnish the Initial Purchaser, without charge, with as many copies
     of the Preliminary Offering Circular, the Pricing Disclosure Package and
     the Final Offering Circular, and any amendments or supplements thereto, as
     the Initial Purchaser may reasonably request, and (ii) promptly prepare,
     upon the Initial Purchaser's reasonable request, any amendment or
     supplement to the Pricing Disclosure Package and the Offering Circular that
     the Initial Purchaser, upon advice of legal counsel, reasonably determine
     may be necessary in connection with Exempt Resales (and the Company hereby
     consents to the use of the Preliminary Offering Circular, the Pricing
     Disclosure Package and the Final Offering Circular, and any amendments and
     supplements thereto, by the Initial Purchaser in connection with Exempt
     Resales).

(c)  Not to amend or supplement the Pricing Disclosure Package or the Offering
     Circular prior to the Closing Date, or at any time prior to the completion
     of the resale by the Initial Purchaser of all the Notes purchased by the
     Initial Purchaser, unless the Initial Purchaser shall previously have been
     advised thereof and shall have provided its written consent thereto.


                                       14



(d)  So long as the Initial Purchaser shall hold any of the Notes, (i) if any
     event shall occur as a result of which, in the reasonable judgment of the
     Company or the Initial Purchaser, it becomes necessary or advisable to
     amend or supplement the Pricing Disclosure Package or the Final Offering
     Circular in order to make the statements therein, in the light of the
     circumstances under which they were made, not misleading, or if it is
     necessary to amend or supplement the Pricing Disclosure Package or the
     Final Offering Circular to comply with Applicable Law, to prepare, at the
     expense of the Company, an appropriate amendment or supplement to the
     Pricing Disclosure Package or the Final Offering Circular (in form and
     substance reasonably satisfactory to the Initial Purchaser) so that (A) as
     so amended or supplemented, the Pricing Disclosure Package and the Final
     Offering Circular will not include an untrue statement of material fact or
     omit to state a material fact necessary in order to make the statements
     therein, in the light of the circumstances under which they were made, not
     misleading, and (B) the Pricing Disclosure Package and the Final Offering
     Circular will comply with Applicable Law and (ii) if in the reasonable
     judgment of the Company it becomes necessary or advisable to amend or
     supplement the Pricing Disclosure Package or the Final Offering Circular so
     that the Pricing Disclosure Package and the Final Offering Circular will
     contain all of the information specified in, and meet the requirements of,
     Rule 144A(d)(4) of the Act, to prepare an appropriate amendment or
     supplement to the Pricing Disclosure Package or the Final Offering Circular
     (in form and substance reasonably satisfactory to the Initial Purchaser) so
     that the Pricing Disclosure Package and the Final Offering Circular, as so
     amended or supplemented, will contain the information specified in, and
     meet the requirements of, such Rule.

(e)  To cooperate with the Initial Purchaser and the Initial Purchaser's counsel
     in connection with the qualification of the Notes under the securities or
     Blue Sky laws of such jurisdictions as the Initial Purchaser may request
     and continue such qualification in effect so long as reasonably required
     for Exempt Resales.

(f)  Whether or not any of the Offering or the transactions contemplated under
     the Documents are consummated or this Agreement is terminated, to pay (i)
     all costs, expenses, fees and taxes incident to and in connection with: (A)
     the preparation, printing and distribution of the Preliminary Offering
     Circular, the Pricing Disclosure Package and the Final Offering Circular
     and all amendments and supplements thereto (including, without limitation,
     financial statements and exhibits), and all other agreements, memoranda,
     correspondence and other documents prepared and delivered in connection
     herewith, (B) the negotiation, printing, processing and distribution
     (including, without limitation, word processing and duplication costs) and
     delivery of, each of the Documents, (C) the preparation, issuance and
     delivery of the Notes, (D) the qualification of the Notes for offer and
     sale under the securities or Blue Sky laws of the several states
     (including, without limitation, the fees and disbursements of the Initial
     Purchaser's counsel relating to such registration or qualification), (E)
     furnishing such copies of the Preliminary Offering Circular, the Pricing
     Disclosure Package and the Final Offering Circular, and all amendments and
     supplements thereto, as may reasonably be requested for use by the Initial
     Purchaser and (F) the performance of the obligations of the Company and the
     Guarantors under the Registration Rights Agreement, including but not
     limited to the Exchange Offer, the Exchange Offer Registration Statement
     and any Shelf Registration Statement, (ii) all fees and expenses of the
     counsel, accountants and any other experts or advisors retained by the
     Company, (iii) all expenses and listing fees in connection with the
     application for quotation of the Notes on the Private Offerings, Resales
     and Trading Automated Linkages ("PORTAL") market, (iv) all fees and
     expenses (including fees and expenses of counsel) of the Company in
     connection with approval of the Notes by DTC for "book-entry" transfer, (v)
     all fees charged by rating agencies in connection with the rating of the
     Notes, (vi) all fees and expenses (including reasonable fees and expenses
     of counsel) of the Trustee and (vii) up to $250,000 of the fees,
     disbursements and out-


                                       15



     of-pocket expenses incurred by the Initial Purchaser in connection with
     their services to be rendered hereunder including, without limitation, the
     reasonable fees and disbursements of Proskauer Rose LLP, counsel to the
     Initial Purchaser, travel and lodging expenses, word processing charges,
     messenger and duplicating services, facsimile expenses and other customary
     expenditures. If the sale of the Notes provided for herein is not
     consummated because any condition to the obligations of the Initial
     Purchaser set forth in Section 7 hereof is not satisfied, because this
     Agreement is terminated pursuant to Section 9 hereof or because of any
     failure, refusal or inability on the part of the Company to perform all
     obligations and satisfy all conditions on its part to be performed or
     satisfied hereunder (other than in each such case solely by reason of a
     default by the Initial Purchaser on their obligations hereunder after all
     conditions hereunder have been satisfied in accordance herewith), the
     Company agrees to promptly reimburse the Initial Purchaser in cash upon
     demand for up to $250,000 of the fees, disbursements and out- of-pocket
     expenses (including reasonable fees, disbursements of Proskauer Rose LLP,
     counsel to Initial Purchaser) that shall have been incurred by the Initial
     Purchaser in connection with the proposed purchase and sale of the Notes.

(g)  To use the proceeds of the Offering in the manner described in the Pricing
     Disclosure Package under the caption "Use of Proceeds."

(h)  To do and perform all things required to be done and performed under the
     Documents prior to and after the Closing Date.

(i)  Not to, and to ensure that no affiliate (as defined in Rule 501(b) of the
     Act) of the Company will, sell, offer for sale or solicit offers to buy or
     otherwise negotiate in respect of any "security" (as defined in the Act)
     that would be integrated with the sale of the Notes in a manner that would
     require the registration under the Act of the sale to the Initial Purchaser
     or to the Subsequent Purchasers of the Notes.

(j)  For so long as any of the Notes remain outstanding, during any period in
     which the Company is not subject to Section 13 or 15(d) of the Exchange
     Act, to make available, upon request, to any owner of the Notes in
     connection with any sale thereof and any prospective Subsequent Purchasers
     of such Notes from such owner, the information required by Rule 144A(d)(4)
     under the Act.

(k)  To comply with the representation letter of the Company to DTC relating to
     the approval of the Notes by DTC for "book entry" transfer.

(l)  To use its commercially reasonable efforts to effect the inclusion of the
     Notes in Private Offerings, Resales and Trading through Automated Linkages
     Market.

(m)  For so long as any of the Notes remain outstanding, the Company will
     furnish to the Initial Purchaser copies of all reports and other
     communications (financial or otherwise) furnished by the Company to the
     Trustee or to the holders of the Notes and, as soon as available, copies of
     any reports or financial statements furnished to or filed by the Company
     with the SEC or any national or foreign securities exchange on which any
     class of securities of the Company may be listed.

(n)  Except in connection with the Exchange Offer or the filing of the Shelf
     Registration Statement, not to, and not to authorize or permit any person
     acting on its behalf to, (i) distribute any offering material in connection
     with the offer and sale of the Notes other than the Preliminary Offering
     Circular, the Pricing Disclosure Package and the Final Offering Circular
     and any amendments and supplements to the Pricing Disclosure Package and
     the Final Offering Circular prepared in


                                       16



     compliance with this Agreement, or (ii) solicit any offer to buy or offer
     to sell the Notes by means of any form of general solicitation or general
     advertising (including, without limitation, as such terms are used in
     Regulation D under the Act) or in any manner involving a public offering
     within the meaning of Section 4(2) of the Act.

(o)  During the two year period after the Closing Date (or such shorter period
     as may be provided for in Rule 144(k) under the Act, as the same may be in
     effect from time to time), to not, and to not permit any current or future
     Subsidiaries of either the Company or any other affiliates (as defined in
     Rule 144A under the Act) controlled by the Company to, resell any of the
     Notes which constitute "restricted securities" under Rule 144 that have
     been reacquired by the Company, any current or future Subsidiaries or any
     other "affiliates" (as defined in Rule 144A under the Act) controlled by
     the Company, except pursuant to an effective registration statement under
     the Act.

(p)  The Company shall pay all stamp, documentary and transfer taxes and other
     duties, if any, which may be imposed by the United States or any political
     subdivision thereof or taxing authority thereof or therein with respect to
     the issuance of the Notes or the sale thereof to the Initial Purchaser.

(q)  To use their best efforts to complete on or prior to the Closing Date all
     filings and other similar actions required in connection with the
     perfection of security interests as and to the extent contemplated by the
     Collateral Agreements.

(r)  To deliver to the Initial Purchaser on and as of the Closing Date
     satisfactory evidence of the good standing of the Company and the
     Guarantors in their respective jurisdictions of organization and the good
     standing of the Company and its subsidiaries in such other jurisdictions as
     the Initial Purchaser may reasonably request, in each case in writing or
     any standard form of telecommunication, from the appropriate governmental
     authorities of such jurisdictions.

(s)  To file on the Closing Date a certificate of merger with the Secretary of
     State of the State of Delaware to consummate the Back-end Merger and to
     cause TB Wood's and its subsidiaries to execute a counterpart to this
     Agreement in the form attached as Exhibit C hereto upon the Closing Date.

          6. REPRESENTATIONS AND WARRANTIES OF THE INITIAL PURCHASER. The
Initial Purchaser represents and warrants that:

(a)  It is a QIB as defined in Rule 144A under the Act and it will offer the
     Notes for resale only upon the terms and conditions set forth in this
     Agreement and in the Pricing Disclosure Package and the Final Offering
     Circular.

(b)  It is not acquiring the Notes with a view to any distribution thereof that
     would violate the Act or the securities laws of any state of the United
     States or any other applicable jurisdiction. In connection with the Exempt
     Resales, it will solicit offers to buy the Notes only from, and will offer
     and sell the Notes only to, (A) persons reasonably believed by the Initial
     Purchaser to be QIBs or (B) persons reasonably believed by the Initial
     Purchaser to be Institutional Accredited Investors or (C) non-U.S. persons
     reasonably believed by the Initial Purchaser to be a purchaser referred to
     in Regulation S under the Act; provided, however, that in purchasing such
     Notes, such persons are deemed to have represented and agreed as provided
     under the caption "Notice to Investors" contained in the Pricing Disclosure
     Package and the Final Offering Circular.


                                       17



(c)  No form of general solicitation or general advertising in violation of the
     Act has been or will be used nor will any offers in any manner involving a
     public offering within the meaning of Section 4(2) of the Act or, with
     respect to Notes to be sold in reliance on Regulation S, by means of any
     directed selling efforts be made by such Initial Purchaser or any of its
     representatives in connection with the offer and sale of any of the Notes.

(d)  The Initial Purchaser will deliver to each Subsequent Purchaser of the
     Notes, in connection with its original distribution of the Notes, a copy of
     the Pricing Disclosure Package and the Final Offering Circular, as amended
     and supplemented at the date of such delivery.

(e)  (i) It has only communicated or caused to be communicated and will only
     communicate or cause to be communicated any invitation or inducement to
     engage in investment activity (within the meaning of Section 21 of the
     FSMA) received by it in connection with the issue or sale of any of the
     Notes in circumstances in which Section 21(1) of the FSMA does not apply to
     the Issuer and (ii) it has complied and will comply with all applicable
     provisions of the FSMA, with respect to anything done by it in relation to
     the Notes in, from or otherwise involving the United Kingdom

          7. CONDITIONS. The obligations of the Initial Purchaser to purchase
the Notes under this Agreement are subject to the satisfaction of each of the
following conditions:

(a)  All the representations and warranties of the Company and the Guarantors
     contained in this Agreement and in each of the Documents to which it is a
     party shall be true and correct in all material respects (except that any
     representation or warranty that already contains a materiality exception
     therein, in each such case shall be true and correct as written) as of the
     date hereof and at the Closing Date (after giving effect to the Acquisition
     and Related Transaction). On or prior to the Closing Date, the Company and
     each other party to the Documents (other than the Initial Purchaser) shall
     have performed or complied with all of the agreements and satisfied all
     conditions on their respective parts to be performed, complied with or
     satisfied pursuant to the Documents (other than conditions to be satisfied
     by such other parties, which the failure to so satisfy would not reasonably
     be expected to, individually or in the aggregate, have a Material Adverse
     Effect).

(b)  No injunction, restraining order or order of any nature by a Governmental
     Authority shall have been issued as of the Closing Date that would prevent
     or materially interfere with the consummation of the Offering or any of the
     transactions contemplated under the Documents; and no stop order suspending
     the qualification or exemption from qualification of any of the Notes in
     any jurisdiction shall have been issued and no Proceeding for that purpose
     shall have been commenced or, to the knowledge of the Company, after
     reasonable internal inquiry, be pending as of the Closing Date.

(c)  No action shall have been taken and no Applicable Law shall have been
     enacted, adopted or issued that would, as of the Closing Date, prevent the
     consummation of the Offering or any of the transactions contemplated under
     the Documents. No Proceeding other than as set forth in the Pricing
     Disclosure Package shall be pending or, to the knowledge of the Company
     after reasonable internal inquiry, threatened other than Proceedings that
     (i) if adversely determined would not, individually or in the aggregate,
     adversely affect the issuance or marketability of the Notes, and (ii) would
     not, individually or in the aggregate, have a Material Adverse Effect.

(d)  Subsequent to the respective dates as of which data and information is
     given in the Pricing Disclosure Package there shall not have been any
     Material Adverse Change.


                                       18



(e)  The Notes shall have been designated PORTAL securities in accordance with
     the rules and regulations adopted by the National Association of Securities
     Dealers, Inc. relating to trading in The PORTAL Market.

(f)  On or after the date hereof and on or prior to the Closing Date, (i) there
     shall not have occurred any downgrading, suspension or withdrawal of, nor
     shall any notice have been given of any potential or intended downgrading,
     suspension or withdrawal of, or of any review (or of any potential or
     intended review) for a possible change that does not indicate the direction
     of the possible change in, any rating of the Company or any securities of
     the Company (including, without limitation, the placing of any of the
     foregoing ratings on credit watch with negative or developing implications
     or under review with an uncertain direction) by any "nationally recognized
     statistical rating organization" as such term is defined for purposes of
     Rule 436(g)(2) under the Act, (ii) there shall not have occurred any
     negative change, nor shall any notice have been given of any potential or
     intended negative change, in the outlook for any rating of the Company or
     any securities of the Company by any such rating organization and (iii) no
     such rating organization shall have given notice that it has assigned (or
     is considering assigning) a lower rating to the Notes than that on which
     the Notes were marketed.

(g)  The Initial Purchaser shall have received on the Closing Date:

     (i)  certificates dated the Closing Date, signed by the Chief Executive
          Officer and the principal financial or accounting officer of the
          Company, on behalf of the Company, to the effect that (A) the
          representations and warranties set forth in Section 4 hereof and in
          each of the Documents that are not qualified by materiality were true
          and correct in all material respects as of the Applicable Time and are
          true and correct in all material respects as of the Closing Date, with
          the same force and effect as though expressly made at and as of the
          Closing Date, (B) the representations and warranties set forth in
          Section 4 hereof and in each of the Documents that are qualified by
          materiality were true and correct as of the Applicable Time and are
          true and correct as of the Closing Date, with the same force and
          effect as though expressly made at and as of the Closing Date, (C) the
          Company has performed and complied in all material respects with all
          agreements and satisfied in all material respects all conditions on
          its part to be performed or satisfied by the Company at or prior to
          the Closing Date, (D) at the Closing Date, since the Applicable Time
          or since the date of the most recent financial statements in the
          Pricing Disclosure Package and except as described in the Pricing
          Disclosure Package, (exclusive of any amendment or supplement thereto
          after the date hereof), to the knowledge of such officers, no event or
          events have occurred, no information has become known nor does any
          condition exist that, individually or in the aggregate, would have a
          Material Adverse Effect, (E) since the date of the most recent
          financial statements in the Pricing Disclosure Package (exclusive of
          any amendment or supplement thereto after the date hereof), other than
          as described in the Pricing Disclosure Package or contemplated hereby,
          neither the Company nor any Subsidiary of the Company has incurred any
          liabilities or obligations, direct or contingent, not in the ordinary
          course of business, that are material to the Company and the
          Subsidiaries, taken as a whole, or entered into any transactions not
          in the ordinary course of business that are material to the business,
          condition (financial or otherwise) or results of operations or
          prospects of the Company and the Subsidiaries, taken as a whole, and
          there has not been any change in the capital stock or long-term
          indebtedness of the Company or any Subsidiary of the Company that is
          material to the business, condition (financial or otherwise) or
          results of operations or prospects of the Company and the
          Subsidiaries, taken as a whole, and (F) the sale of the Notes has not
          been enjoined (temporarily or permanently);


                                       19



     (ii) a certificate, dated the Closing Date, executed by the Secretary of
          the Company and each Guarantor, certifying such matters as the Initial
          Purchaser may reasonably request;

     (iii) a certificate of solvency, dated the Closing Date, executed by the
          principal financial or accounting officer of the Company substantially
          in the form previously approved by the Initial Purchaser or its
          counsel;

     (iv) the opinion of Weil, Gotshal & Manges LLP, counsel to the Company,
          dated the Closing Date, in the form of Exhibit D attached hereto; and

     (v)  an opinion, dated the Closing Date, of Proskauer Rose LLP, counsel to
          the Initial Purchaser, in form satisfactory to the Initial Purchaser
          covering such matters as are customarily covered in such opinions.

(h)  The Initial Purchaser shall have received from each of Ernst & Young LLP,
     independent auditors, with respect to the Company, BDO Stoy Hayward LLP,
     independent auditors, with respect to Hay Hall Holdings Limited and Hay
     Hall Group Limited, and Grant Thornton LLP, independent auditors, with
     respect to TB Wood's Corporation, (A) a comfort letter, dated as of April
     3, 2007, in form and substance reasonably satisfactory to the Initial
     Purchaser and their counsel, with respect to the financial statements and
     certain financial information contained in the Pricing Disclosure Package
     and the Final Offering Circular, and (B) a comfort letter, dated the
     Closing Date, in form and substance reasonably satisfactory to the Initial
     Purchaser and their counsel, to the effect that Ernst & Young LLP, BDO Stoy
     Hayward LLP and Grant Thornton LLP, respectively, each reaffirms the
     statements made in its letter furnished pursuant to clause (A).

(i)  Each of the Documents shall have been executed and delivered by all parties
     thereto, and the Initial Purchaser shall have received a fully executed
     original of each Document.

(j)  The Initial Purchaser shall have received copies of all opinions,
     certificates, letters and other documents delivered under or in connection
     with the Offering or any transaction contemplated in the Documents.

(k)  The terms of each Document shall conform in all material respects to the
     description thereof in the Pricing Disclosure Package and the Final
     Offering Circular.

(l)  [INTENTIONALLY DELETED]

(m)  [INTENTIONALLY DELETED]

(n)  The Company shall have received an executed waiver and consent from Wells
     Fargo Foothill, Inc., in accordance with the terms of the Credit Agreement,
     authorizing the Company to consummate the Acquisition without violating any
     provision of the Credit Agreement. TB's Wood's shall have received an
     executed waiver and consent from and creditors of TB Wood's with respect to
     TB Wood's existing senior secured revolving credit facility assumed by the
     Company in connection with the Acquisition, in accordance with the terms of
     such credit facility, authorizing TB Wood's to become subject to the terms
     of the Indenture and Senior Unsecured Notes Indentures (including becoming
     a Guarantor and providing security under the Indenture and becoming a
     guarantor under the terms of the Senior Unsecured Notes Indenture) without
     violating any provision of such credit facility.


                                       20


(o)  Immediately prior to the Closing Date, Forest Acquisition Corporation shall
     be a direct, wholly-owned subsidiary of the Company. Forest Acquisition
     Corporation shall remain a direct, wholly-owned subsidiary of the Company
     until the Back-end Merger is completed.

          8. INDEMNIFICATION AND CONTRIBUTION.

(a)  The Company and each of the Guarantors jointly and severally agree to
     indemnify and hold harmless the Initial Purchaser, and each person, if any,
     who control the Initial Purchaser within the meaning of Section 15 of the
     Act or Section 20 of the Exchange Act, against any losses, claims, damages
     or liabilities of any kind to which the Initial Purchaser or such
     controlling person may become subject under the Act, the Exchange Act or
     otherwise, insofar as any such losses, claims, damages or liabilities (or
     actions in respect thereof) arise out of or are based upon:

     (i)  any untrue statement or alleged untrue statement of any material fact
          contained in the Preliminary Offering Circular, the Pricing Disclosure
          Package or the Final Offering Circular (or any amendment or supplement
          thereto);

     (ii) the omission or alleged omission to state in the Preliminary Offering
          Circular, the Pricing Disclosure Package or the Final Offering
          Circular (or any amendment or supplement thereto) a material fact
          required to be stated therein or necessary to make the statements
          therein, in light of the circumstances under which they were made, not
          misleading; or

     (iii) any breach by the Company or any of the Guarantors of their
          respective representations, warranties and agreements set forth
          herein;

     and, subject to the provisions hereof, will reimburse, as incurred, the
     Initial Purchaser and each such controlling person for any legal or other
     expenses reasonably incurred by the Initial Purchaser or such controlling
     person in connection with investigating, defending against or appearing as
     a third-party witness in connection with any such loss, claim, damage,
     liability or action in respect thereof; provided, however, the Company and
     the Guarantors will not be liable in any such case to the extent (but only
     to the extent) that any such loss, claim, damage or liability is finally
     judicially determined by a court of competent jurisdiction in a final,
     unappealable judgment, to have resulted solely from any untrue statement or
     alleged untrue statement or omission or alleged omission made in the
     Preliminary Offering Circular, the Pricing Disclosure Package or the Final
     Offering Circular (or any amendment or supplement thereto) in reliance upon
     and in conformity with the Furnished Information. This indemnity agreement
     will be in addition to any liability that the Company and the Guarantors
     may otherwise have to the indemnified parties. The Company and the
     Guarantors shall not be liable under this Section 8 for any settlement of
     any claim or action effected without their prior written consent, which
     shall not be unreasonably withheld.

(b)  Each Initial Purchaser, severally and not jointly, agrees to indemnify and
     hold harmless each of the Company and the Guarantors and their respective
     directors, officers and each person, if any, who controls the Company
     within the meaning of Section 15 of the Act or Section 20 of the Exchange
     Act against any losses, claims, damages or liabilities to which the Company
     or any such director, officer or controlling person may become subject
     under the Act, the Exchange Act or otherwise, insofar as such losses,
     claims, damages or liabilities (or actions in respect thereof) are finally
     judicially determined by a court of competent jurisdiction in a final,
     unappealable judgment, to have resulted solely from (i) any untrue
     statement or alleged untrue statement of any material fact contained in any
     Offering Circular or any amendment or supplement thereto or (ii) the
     omission or the alleged omission to state therein a material fact required
     to be stated in any


                                       21



     Offering Circular or any amendment or supplement thereto or necessary to
     make the statements therein not misleading, in each case to the extent (but
     only to the extent) that such untrue statement or alleged untrue statement
     or omission or alleged omission was made in reliance upon and in conformity
     with the Furnished Information; and, subject to the limitation set forth
     immediately preceding this clause, will reimburse, as incurred, any legal
     or other expenses incurred by the Company, each of the Guarantors or any
     such director, officer or controlling person in connection with any such
     loss, claim, damage, liability or action in respect thereof. This indemnity
     agreement will be in addition to any liability that the Initial Purchaser
     may otherwise have to the indemnified parties.

(c)  As promptly as reasonably practicable after receipt by an indemnified party
     under this Section 8 of notice of the commencement of any action for which
     such indemnified party is entitled to indemnification under this Section 8,
     such indemnified party will, if a claim in respect thereof is to be made
     against the indemnifying party under this Section 8, notify the
     indemnifying party of the commencement thereof in writing; but the omission
     to so notify the indemnifying party (i) will not relieve such indemnifying
     party from any liability under paragraph (a) or (b) above unless and only
     to the extent it is materially prejudiced as a result thereof and (ii) will
     not, in any event, relieve the indemnifying party from any obligations to
     any indemnified party other than the indemnification obligation provided in
     paragraphs (a) and (b) above. In case any such action is brought against
     any indemnified party, and it notifies the indemnifying party of the
     commencement thereof, the indemnifying party will be entitled to
     participate therein and, to the extent that it may determine, jointly with
     any other indemnifying party similarly notified, to assume the defense
     thereof, with counsel reasonably satisfactory to such indemnified party;
     provided, however, that if (i) the use of counsel chosen by the
     indemnifying party to represent the indemnified party would present such
     counsel with a conflict of interest, (ii) the defendants in any such action
     include both the indemnified party and the indemnifying party, and the
     indemnified party shall have been advised by counsel in writing that there
     may be one or more legal defenses available to it and/or other indemnified
     parties that are different from or additional to those available to the
     indemnifying party, or (iii) the indemnifying party shall not have employed
     counsel reasonably satisfactory to the indemnified party to represent the
     indemnified party within a reasonable time after receipt by the
     indemnifying party of notice of the institution of such action, then, in
     each such case, the indemnifying party shall not have the right to direct
     the defense of such action on behalf of such indemnified party or parties
     and such indemnified party or parties shall have the right to select
     separate counsel to defend such action on behalf of such indemnified party
     or parties at the expense of the indemnifying party. After notice from the
     indemnifying party to such indemnified party of its election so to assume
     the defense thereof and approval by such indemnified party of counsel
     appointed to defend such action, the indemnifying party will not be liable
     to such indemnified party under this Section 8 for any legal or other
     expenses, other than reasonable costs of investigation, subsequently
     incurred by such indemnified party in connection with the defense thereof,
     unless (i) the indemnified party shall have employed separate counsel in
     accordance with the proviso to the immediately preceding sentence (it being
     understood, however, that in connection with such action the indemnifying
     party shall not be liable for the expenses of more than one separate
     counsel (in addition to local counsel) in any one action or separate but
     substantially similar actions in the same jurisdiction arising out of the
     same general allegations or circumstances, designated by the Initial
     Purchaser in the case of paragraph (a) of this Section 8 or the Company in
     the case of paragraph (b) of this Section 8, representing the indemnified
     parties under such paragraph (a) or paragraph (b), as the case may be, who
     are parties to such action or actions) or (ii) the indemnifying party has
     authorized in writing the employment of counsel for the indemnified party
     at the expense of the indemnifying party. After such notice from the
     indemnifying party to such indemnified party, the indemnifying party will
     not be liable for the costs and expenses of any settlement of such action
     effected by


                                       22



     such indemnified party without the prior written consent of the
     indemnifying party (which consent shall not be unreasonably withheld),
     unless such indemnified party waived in writing its rights under this
     Section 8, in which case the indemnified party may effect such a settlement
     without such consent.

(d)  No indemnifying party shall be liable under this Section 8 for any
     settlement of any claim or action (or threatened claim or action) effected
     without its written consent, which shall not be unreasonably withheld, but
     if a claim or action is settled with its written consent, or if there is a
     final judgment for the plaintiff with respect to any such claim or action,
     each indemnifying party jointly and severally agrees, subject to the
     exceptions and limitations set forth above, to indemnify and hold harmless
     each indemnified party from and against any and all losses, claims, damages
     or liabilities (and legal and other expenses as set forth above) incurred
     by reason of such settlement or judgment. No indemnifying party shall,
     without the prior written consent of the indemnified party (which consent
     shall not be unreasonably withheld), effect any settlement or compromise of
     any pending or threatened proceeding in respect of which the indemnified
     party is or could have been a party, or indemnity could have been sought
     hereunder by the indemnified party, unless such settlement (A) includes an
     unconditional written release of the indemnified party, in form and
     substance satisfactory to the indemnified party, from all liability on
     claims that are the subject matter of such proceeding and (B) does not
     include any statement as to an admission of fault, culpability or failure
     to act by or on behalf of the indemnified party.

(e)  In circumstances in which the indemnity agreement provided for in the
     preceding paragraphs of this Section 8 is unavailable to, or insufficient
     to hold harmless, an indemnified party in respect of any losses, claims,
     damages or liabilities (or actions in respect thereof), each indemnifying
     party, in order to provide for just and equitable contributions, shall
     contribute to the amount paid or payable by such indemnified party as a
     result of such losses, claims, damages or liabilities (or actions in
     respect thereof) in such proportion as is appropriate to reflect (i) the
     relative benefits received by the indemnifying party or parties, on the one
     hand, and the indemnified party, on the other hand, from the Offering or
     (ii) if the allocation provided by the foregoing clause (i) is not
     permitted by applicable law, not only such relative benefits but also the
     relative fault of the indemnifying party or parties, on the one hand, and
     the indemnified party, on the other hand, in connection with the statements
     or omissions or alleged statements or omissions that resulted in such
     losses, claims, damages or liabilities (or actions in respect thereof). The
     relative benefits received by the Company, on the one hand, and the Initial
     Purchaser, on the other hand, shall be deemed to be in the same proportion
     as the total proceeds from the Offering (before deducting expenses)
     received by the Company bear to the total discounts and commissions
     received by the Initial Purchaser. The relative fault of the parties shall
     be determined by reference to, among other things, whether the untrue or
     alleged untrue statement of a material fact or the omission or alleged
     omission to state a material fact relates to information supplied by the
     Company, on the one hand, or the Initial Purchaser, on the other hand, the
     parties' relative intent, knowledge, access to information and opportunity
     to correct or prevent such statement or omission or alleged statement or
     omissions, and any other equitable considerations appropriate in the
     circumstances.

(f)  The Company, the Guarantors and the Initial Purchaser agree that it would
     not be equitable if the amount of such contribution determined pursuant to
     the immediately preceding paragraph (e) were determined by pro rata or per
     capita allocation or by any other method of allocation that does not take
     into account the equitable considerations referred to in the first sentence
     of the immediately preceding paragraph (e). Notwithstanding any other
     provision of this Section 8, the Initial Purchaser shall not be obligated
     to make contributions hereunder that in the aggregate exceed the total
     discounts, commissions and other compensation received by such Initial


                                       23



     Purchaser under this Agreement, less the aggregate amount of any damages
     that such Initial Purchaser has otherwise been required to pay by reason of
     the untrue or alleged untrue statements or the omissions or alleged
     omissions to state a material fact. No person guilty of fraudulent
     misrepresentation (within the meaning of Section 11(f) of the Act) shall be
     entitled to contribution from any person who was not guilty of such
     fraudulent misrepresentation. For purposes of the immediately preceding
     paragraph (e), each person, if any, who controls the Initial Purchaser
     within the meaning of Section 15 of the Act or Section 20 of the Exchange
     Act shall have the same rights to contribution as the Initial Purchaser,
     and each director of the Company and the Guarantors, each officer of the
     Company and the Guarantors and each person, if any, who controls either of
     the Company or the Guarantors within the meaning of Section 15 of the Act
     or Section 20 of the Exchange Act, shall have the same rights to
     contribution as the Company and the Guarantors.

          9. TERMINATION. The Initial Purchaser may terminate this Agreement at
any time prior to the Closing Date by written notice to the Company if any of
the following has occurred:

(a)  since the date hereof, any Material Adverse Effect or development involving
     or reasonably expected to result in a prospective Material Adverse Effect
     that could, in the Initial Purchaser's sole judgment, be expected to (i)
     make it impracticable or inadvisable to proceed with the offering or
     delivery of the Notes on the terms and in the manner contemplated in the
     Offering Circular, or (ii) materially impair the investment quality of any
     of the Notes;

(b)  the failure of the Company or the Guarantors to satisfy the conditions
     contained in Section 7(a) hereof on or prior to the Closing Date;

(c)  any outbreak or escalation of hostilities or other national or
     international calamity or crisis, including acts of terrorism, or material
     adverse change or disruption in economic conditions in, or in the financial
     markets of, the United States (it being understood that any such change or
     disruption shall be relative to such conditions and markets as in effect on
     the date hereof), if the effect of such outbreak, escalation, calamity,
     crisis, act or material adverse change in the economic conditions in, or in
     the financial markets of, the United States could be reasonably expected to
     make it, in the Initial Purchaser's sole judgment, impracticable or
     inadvisable to market or proceed with the offering or delivery of the Notes
     on the terms and in the manner contemplated in the Offering Circular or to
     enforce contracts for the sale of any of the Notes;

(d)  the enactment, publication, decree or other promulgation after the date
     hereof of any Applicable Law that in the Initial Purchaser's counsels' sole
     opinion materially and adversely affects, or could be reasonably expected
     to materially and adversely affect, the properties, business, prospects,
     operations, earnings, assets, liabilities or condition (financial or
     otherwise) of the Company and the Subsidiaries, taken as a whole;

(e)  any securities of the Company shall have been downgraded or placed on any
     "watch list" for possible downgrading by any "nationally recognized
     statistical rating organization," as such term is defined for purposes of
     Rule 436(g)(2) under the Act; or

(f)  the declaration of a banking moratorium by any Governmental Authority; or
     the taking of any action by any Governmental Authority after the date
     hereof in respect of its monetary or fiscal affairs that in the Initial
     Purchaser's opinion could reasonably be expected to have a material adverse
     effect on the financial markets in the United States or elsewhere.

          10. SURVIVAL OF REPRESENTATIONS AND INDEMNITIES. The representations
and warranties, covenants, indemnities and contribution and expense
reimbursement provisions and other


                                       24



agreements, representations and warranties of the Company and the Guarantors set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of the Initial
Purchaser, (ii) acceptance of the Notes, and payment for them hereunder, and
(iii) any termination of this Agreement.

          11. DEFAULT BY THE INITIAL PURCHASER. If either Initial Purchaser
shall breach its obligations to purchase the Notes that it has agreed to
purchase hereunder on the Closing Date and arrangements satisfactory to the
Company for the purchase of such Notes are not made within 36 hours after such
default, this Agreement shall terminate with respect to such Initial Purchaser
without liability on the part of the Company or the Guarantors or any other
Initial Purchaser. Nothing herein shall relieve the defaulting Initial Purchaser
from liability for its default.

          12. NO FIDUCIARY DUTY. The Company hereby acknowledges that the
Initial Purchaser is acting solely in connection with the purchase and sale of
the Notes. The Company further acknowledges that the Initial Purchaser are
acting pursuant to a contractual relationship created solely by this Purchase
Agreement entered into on an arm's length basis and in no event do the parties
intend that the Initial Purchaser act or be responsible as a fiduciary to the
Company, its management, stockholders, creditors or any other person in
connection with any activity that the Initial Purchaser may undertake or have
undertaken in furtherance of the purchase and sale of the Notes, either before
or after the date hereof. The Initial Purchaser hereby expressly disclaim any
fiduciary or similar obligations to the Company, either in connection with the
transactions contemplated by this Purchase Agreement or any matters leading up
to such transactions, and the Company hereby confirms its understanding and
agreement to that effect. The Company and the Initial Purchaser agree that they
are each responsible for making their own independent judgments with respect to
any such transactions, and that any opinions or views expressed by the Initial
Purchaser to the Company regarding such transactions, including but not limited
to any opinions or views with respect to the price or market for the Notes, do
not constitute advice or recommendations to the Company. The Company hereby
waives and releases, to the fullest extent permitted by law, any claims that the
Company may have against the Initial Purchaser with respect to any breach or
alleged breach of any fiduciary or similar duty to the Company in connection
with the transactions contemplated by this Purchase Agreement or any matters
leading up to such transactions.

          13. MISCELLANEOUS.

(a)  Notices given pursuant to any provision of this Agreement shall be
     addressed as follows: (i) if to the Company, to: 14 Hayward St., Quincy,
     Massachusetts 02171, Attention: Michael L. Hurt, with a copy to: Weil,
     Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153,
     Attention: Matthew Bloch, Esq., and (ii) if to the Initial Purchaser, to:
     Jefferies & Company, Inc., 520 Madison Avenue, 12th Floor, New York, NY
     10022, Attention: Josh Targoff, Esq., with a copy to: Proskauer Rose LLP,
     1585 Broadway, New York, New York 10036, Attention: Julie M. Allen, Esq.
     (or in any case to such other address as the person to be notified may have
     requested in writing).

(b)  This Agreement has been and is made solely for the benefit of and shall be
     binding upon the Company and the Guarantors, the Initial Purchaser and, to
     the extent provided in Section 8 hereof, the controlling persons, officers,
     directors, partners, employees, representatives and agents referred to in
     Section 8, and their respective heirs, executors, administrators,
     successors and assigns, all as and to the extent provided in this
     Agreement, and no other person shall acquire or have any right under or by
     virtue of this Agreement. The term "successors and assigns" shall not
     include a purchaser of any of the Notes from the Initial Purchaser merely
     because of such purchase. Notwithstanding the foregoing, it is expressly
     understood and agreed that each


                                       25



     purchaser who purchases Notes from the Initial Purchaser is intended to be
     a beneficiary of the covenants of the Company and the Guarantors contained
     in the Registration Rights Agreement to the same extent as if the Notes
     were sold and those covenants were made directly to such purchaser by the
     Company and the Guarantors, and each such purchaser shall have the right to
     take action against the Company and the Guarantors to enforce, and obtain
     damages for any breach of, those covenants.

(c)  THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND
     CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN
     ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
     MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT REGARD TO PRINCIPLES OF
     CONFLICTS OF LAW.

(d)  EACH OF THE COMPANY AND THE GUARANTORS HEREBY EXPRESSLY AND IRREVOCABLY (I)
     SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS
     SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR
     PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
     CONTEMPLATED THEREBY; AND (II) WAIVES (A) ITS RIGHT TO A TRIAL BY JURY IN
     ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE TRANSACTIONS
     CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
     STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE INITIAL PURCHASER
     AND FOR ANY COUNTERCLAIM RELATED TO ANY OF THE FOREGOING AND (B) ANY
     OBLIGATION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE
     OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
     CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(e)  This Agreement may be signed in various counterparts, which together shall
     constitute one and the same instrument.

(f)  The headings in this Agreement are for convenience of reference only and
     shall not limit or otherwise affect the meaning hereof.

(g)  If any term, provision, covenant or restriction of this Agreement is held
     by a court of competent jurisdiction to be invalid, illegal, void or
     unenforceable, the remainder of the terms, provisions, covenants and
     restrictions set forth herein shall remain in full force and effect and
     shall in no way be affected, impaired or invalidated, and the parties
     hereto shall use their best efforts to find and employ an alternative means
     to achieve the same or substantially the same result as that contemplated
     by such term, provision, covenant or restriction. It is hereby stipulated
     and declared to be the intention of the parties that they would have
     executed the remaining terms, provisions, covenants and restrictions
     without including any of such that may be hereafter declared invalid,
     illegal, void or unenforceable.

(h)  This Agreement may be amended, modified or supplemented, and waivers or
     consents to departures from the provisions hereof may be given, provided
     that the same are in writing and signed by all of the signatories hereto.

(i)  Please confirm that the foregoing correctly sets forth the agreement among
     the Company, the Guarantors and the Initial Purchaser.


                                       26



     Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Guarantors and the Initial Purchaser.

                                        Very truly yours,

                                        ALTRA INDUSTRIAL MOTION, INC.


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Name: Michael L. Hurt
                                        Title: Chief Executive Officer


                                        AMERICAN ENTERPRISES MPT CORP.
                                        AMERICAN ENTERPRISES MPT HOLDINGS, LLC
                                        AMERIDRIVES INTERNATIONAL, LLC
                                        BOSTON GEAR LLC
                                        FORMSPRAG LLC
                                        INERTIA DYNAMICS LLC
                                        KILIAN MANUFACTURING CORPORATION
                                        NUTTALL GEAR LLC
                                        WARNER ELECTRIC INTERNATIONAL HOLDING,
                                           INC.
                                        WARNER ELECTRIC LLC
                                        WARNER ELECTRIC TECHNOLOGY LLC


                                        By:  /s/ Michael L. Hurt
                                            ------------------------------------
                                        Name: Michael L. Hurt
                                        Title: Chief Executive Officer



ACCEPTED AND AGREED TO:

JEFFERIES & COMPANY, INC.


By:  /s/ Craig Zaph
    ---------------------------------
Name:  Craig Zaph
      -------------------------------
Title:  Managing Director
       ------------------------------



                                                                      SCHEDULE I

                              LIST OF SUBSIDIARIES



ALTRA INDUSTRIAL MOTION, INC. SUBSIDIARIES     JURISDICTION OF INCORPORATION/FORMATION
- ------------------------------------------     ---------------------------------------
                                            
3091780 Nova Scotia Company*                   Nova Scotia, Canada
American Enterprises MPT Corp.                 Delaware
American Enterprises MPT Holdings, LLC         Delaware
Ameridrives International, LLC                 Delaware
Bibby Group Ltd.*                              United Kingdom
Bibby Transmissions Ltd.*                      United Kingdom
Bibby Turboflex SA*                            South Africa
Boston Gear LLC                                Delaware
Dynatork Air Motors Ltd.*                      United Kingdom
Dynatork, Ltd.*                                United Kingdom
Formsprag LLC                                  Delaware
The Hay Hall Group Ltd.*                       United Kingdom
Hay Hall Holdings Ltd.*                        United Kingdom
Huco Engineering Industries Ltd.*              United Kingdom
Huco Power Transmission, Ltd.*                 United Kingdom
Inertia Dynamics, LLC                          Delaware
Kilian Canada, ULC*                            Nova Scotia, Canada
Kilian Manufacturing Corporation               Delaware
Matrix International GmbH*                     Germany
Matrix International, Ltd.*                    United Kingdom
Nuttall Gear LLC                               Delaware
Rathi Turboflex Pty Ltd.*                      India
Saftek Ltd.*                                   United Kingdom
Stieber GmbH*                                  Germany
Torsiflex Ltd.*                                United Kingdom
Turboflex Ltd.*                                United Kingdom
Twiflex Ltd.*                                  United Kingdom
Warner Electric Australia Pty. Ltd.*           Australia
Warner Electric Europe SAS*                    France
Warner Electric Group GmbH*                    Germany
Warner Electric (Holding) SAS*                 France




                                            
Warner Electric International Holding, Inc.    Delaware
Warner Electric LLC                            Delaware
Warner Electric (Netherlands) Holding, B.V.*   Netherlands
Warner Electric (Singapore), Ltd.*             Singapore
Warner Electric (Taiwan) Ltd.*                 Taiwan
Warner Electric Technology LLC                 Delaware
Warner Electric (Thailand) Ltd.*               Thailand
Warner Electric UK Group Ltd.*                 United Kingdom
Warner Electric UK Holding, Ltd.*              United Kingdom
Warner Electric Verwaltungs GmbH*              Germany
Warner Shui Hing Limited, (HK)*                Hong Kong
Wichita Company Ltd.*                          United Kingdom





TB WOOD'S CORPORATION SUBSIDIARIES             JURISDICTION OF INCORPORATION/FORMATION
- ----------------------------------             ---------------------------------------
                                            
Berges electronic GmbH*                        Germany
Berges electronic S.r.l.*                      Italy
Industrial Blaju, S.A. de C.V.*                Mexico
Plant Engineering Consultants, LLC             Tennessee
T.B. Wood's Canada Ltd.*                       Canada
TB Wood's Enterprises, Inc.                    Delaware
TB Wood's Incorporated                         Pennsylvania
TB Wood's (India) Private Ltd.*                India


*    Denotes a Foreign Restricted Subsidiary of the Company



                                    EXHIBIT A

                              [PRICING TERM SHEET]



                                    EXHIBIT B

                         [REGISTRATION RIGHTS AGREEMENT]



                                    EXHIBIT C

                      COUNTERPART TO THE PURCHASE AGREEMENT

                                  APRIL 5, 2007

     The undersigned hereby agrees to be bound by the terms of the Purchase
Agreement dated April 3, 2007, among Altra Industrial Motion, Inc., a Delaware
corporation and each of the Guarantors (as defined therein) and the Initial
Purchaser (as defined therein). For the avoidance of doubt, such obligors shall
include, but not be limited to, the obligations enumerated in Section 8(a) of
the Purchase Agreement. The undersigned hereby also agrees that all references
to "Guarantors" in the Purchase Agreement shall include the undersigned and the
undersigned shall be bound by all provisions of the Purchase Agreement
containing such references.

                                        TB WOOD'S CORPORATION


                                        By: /s/ William T. Fejes, Jr.
                                            ------------------------------------
                                        Name: William T. Fejes, Jr.
                                              ----------------------------------
                                        Title: President, CEO and Director
                                               ---------------------------------


                                        PLANT ENGINEERING CONSULTANTS, LLC


                                        By: /s/ William T. Fejes, Jr.
                                            ------------------------------------
                                        Name: William T. Fejes, Jr.
                                              ----------------------------------
                                        Title: President
                                               ---------------------------------


                                        TB WOOD'S ENTERPRISES, INC.


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: President and Treasurer
                                               ---------------------------------


                                        TB WOOD'S INCORPORATED


                                        By: /s/ William T. Fejes, Jr.
                                            ------------------------------------
                                        Name: William T. Fejes, Jr.
                                              ----------------------------------
                                        Title: President, CEO and Director
                                               ---------------------------------

Dated: April 5, 2007



                                    EXHIBIT D

                  [WEIL OPINION AND NEGATIVE ASSURANCE LETTER]

EX-3.25

                                                                    EXHIBIT 3.25

                              AMENDED AND RESTATED

                          CERTIFICATE OF INCORPORATION

                                       OF

                              TB WOOD'S CORPORATION

                                   ARTICLE I.

              The name of the Corporation is TB Wood's Corporation.

                                   ARTICLE II.

          The registered office of the Corporation in the State of Delaware is
located at 2711 Centerville Road in the City of Wilmington, Suite 400, County of
New Castle, Delaware 19808. The name of the registered agent of the Corporation
in the State of Delaware at such address is Corporation Service Company.

                                  ARTICLE III.

          The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware, as from time to time amended.

                                   ARTICLE IV.

          The Corporation is authorized to issue one (1) class of stock to be
designated "Common Stock." The total number of shares of Common Stock which the
Corporation is authorized to issue is one thousand (1,000) shares, $0.01 par
value.

                                   ARTICLE V.

          (a) A director of the Corporation shall not be personally liable
either to the Corporation or to any stockholder for monetary damages for breach
of fiduciary duty as a director, except (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, or (ii) for acts or
omissions which are not in good faith or which involve intentional misconduct or
knowing violation of the law, or (iii) for any matter in respect of which such
director shall be liable under Section 174 of Title 8 of the General Corporation
Law of the State of Delaware or any amendment thereto or successor provision
thereto, or (iv) for any transaction from which the director shall have derived
an improper personal benefit. Neither amendment nor repeal of this paragraph (a)
nor the adoption of any provision of the Certificate of Incorporation
inconsistent with this paragraph (a) shall eliminate or reduce the effect of
this paragraph (a) in respect of any matter occurring, or any cause of action,
suit or claim that, but for this paragraph (a) of this Article, would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent provision.



          (b) The Corporation shall have the power to indemnify any person who
was or is a party or is threatened to be made a party to, or testifies in, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, by reason of the fact that
such person is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding to
the full extent permitted by law, and the Corporation may adopt Bylaws or enter
into agreements with any such person for the purpose of providing for such
indemnification.

                                   ARTICLE VI.

          The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.

                                  ARTICLE VII.

          Election of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.

                                  ARTICLE VIII.

          The number of directors which shall constitute the whole Board of
Directors of the Corporation shall be fixed from time to time by, or in the
manner provided in, the Bylaws of the Corporation or in an amendment thereof
duly adopted by the Board of Directors of the Corporation or by the stockholders
of the Corporation.

                                   ARTICLE IX.

          Meetings of stockholders of the Corporation may be held within or
without the State of Delaware, as the Bylaws of the Corporation may provide. The
books of the corporation may be kept (subject to any provision contained in the
statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors of the Corporation or in
the Bylaws of the Corporation.

                                   ARTICLE X.

          Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors of the Corporation is expressly authorized to make, repeal, alter,
amend and rescind any or all of the Bylaws of the Corporation.

EX-3.26

                                                                    EXHIBIT 3.26

                                     BYLAWS

                                       OF

                              TB WOOD'S CORPORATION
                             A DELAWARE CORPORATION

                                   ARTICLE I.
                                     OFFICES

     Section 1. Registered Office. The registered office shall be at the office
of Corporation Service Company in the City of Wilmington, County of New Castle,
State of Delaware.

     Section 2. Other Offices. The corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require.

                                   ARTICLE II.
                            MEETINGS OF STOCKHOLDERS

     Section 1. Annual Meeting. An annual meeting of the stockholders for the
election of directors shall be held at such place either within or without the
State of Delaware as shall be designated on an annual basis by the Board of
Directors and stated in the notice of the meeting. Meetings of stockholders for
any other purpose may be held at such time and place, within or without the
State of Delaware, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof. Any other proper business may be transacted
at the annual meeting.

     Section 2. Notice of Annual Meeting. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting.

     Section 3. Voting List. The officer who has charge of the stock ledger of
the corporation shall prepare and make, or cause a third party to prepare and
make, at least ten days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.



     Section 4. Special Meetings. Special meetings of the stockholders of this
corporation, for any purpose or purposes, unless otherwise prescribed by statute
or by the Certificate of Incorporation, shall be called by the Chief Executive
Officer, President or Secretary at the request in writing of a majority of the
members of the Board of Directors, the Chief Executive Officer, the President or
holders or 10% of all outstanding stock of this corporation then entitled to
vote, and may not be called absent such a request. Such request shall state the
purpose or purposes of the proposed meeting.

     Section 5. Notice of Special Meetings. As soon as reasonably practicable
after receipt of a request as provided in Section 4 of this Article II, written
notice of a special meeting, stating the place, date (which shall be not less
than ten nor more than sixty days from the date of the notice) and hour of the
special meeting and the purpose or purposes for which the special meeting is
called, shall be given to each stockholder entitled to vote at such special
meeting.

     Section 6. Scope of Business at Special Meeting. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice.

     Section 7. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the chairman of the meeting or
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting as provided in Section 5 of this Article
II.

     Section 8. Qualifications to Vote. The stockholders of record on the books
of the corporation at the close of business on the record date as determined by
the Board of Directors and only such stockholders shall be entitled to vote at
any meeting of stockholders or any adjournment thereof.

     Section 9. Record Date. The Board of Directors may fix a record date for
the determination of the stockholders entitled to notice of or to vote at any
stockholders' meeting and at any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action. The record date shall not be more
than sixty nor less than ten days before the date of such meeting, and not more
than sixty days prior to any other action. If no record date is fixed by the
Board of Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or if
notice is waived, at the close of


                                                                               2



business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.

     Section 10. Action at Meetings. When a quorum is present at any meeting,
the vote of the holders of a majority of the shares of stock having voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of applicable law or of the Certificate of Incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.

     Section 11. Voting and Proxies. Unless otherwise provided in the
Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted on after three years from its date, unless the proxy provides for a
longer period. Each proxy shall be revocable unless expressly provided therein
to be irrevocable and unless it is coupled with an interest sufficient in law to
support an irrevocable power.

     Section 12. Action by Stockholders Without a Meeting. Unless otherwise
provided in the Certificate of Incorporation, any action required to be taken at
any annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in the State
of Delaware (by hand or by certified or registered mail, return receipt
requested), to its principal place of business, or to an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded provided, however, that action by written consent to
elect directors, if less than unanimous, shall be in lieu of holding an annual
meeting only if all the directorships to which directors could be elected at an
annual meeting held at the effective time of such action are vacant and are
filled by such action. Prompt notice of the taking of corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing and who, if the action had been
taken at a meeting, would have been entitled to notice of the meeting if the
record date for such meeting had been the date that written consents signed by a
sufficient number of stockholders to take the action were delivered to the
corporation by delivery to its registered office in the State of Delaware (by
hand or by certified or registered mail, return receipt requested), to its
principal place of business, or to an officer or agent of the corporation having
custody of the book in which proceedings or meetings of stockholders are
recorded.


                                                                               3



                                  ARTICLE III.
                                    DIRECTORS

     Section 1. Powers. The business of the corporation shall be managed by or
under the direction of its Board of Directors, which may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
applicable law or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.

     Section 2. Number; Election; Tenure and Qualification. The number of
directors which shall constitute the whole board shall be fixed from time to
time by resolution of the Board of Directors or by the Stockholders at an annual
meeting of the Stockholders (unless the directors are elected by written consent
in lieu of an annual meeting as provided in Article II, Section 12). With the
exception of the first Board of Directors, which shall be elected by the
incorporator, and except as provided in the corporation's Certificate of
Incorporation or in Section 3 of this Article III, the directors shall be
elected at the annual meeting of the stockholders by a plurality vote of the
shares represented in person or by proxy and each director elected shall hold
office until his successor is elected and qualified unless he shall resign,
become disqualified, disabled, or otherwise removed. Directors need not be
stockholders.

     Section 3. Vacancies and Newly Created Directorships. Unless otherwise
provided in the Certificate of Incorporation, vacancies and newly-created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director. The directors so chosen shall serve
until the next annual election and until their successors are duly elected and
shall qualify, unless sooner displaced. If there are no directors in office,
then an election of directors may be held in the manner provided by applicable
law. If, at the time of filling any vacancy or any newly created directorship,
the directors then in office shall constitute less than a majority of the whole
board (as constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten percent of the total number of shares at the time outstanding having
the right to vote for such directors, summarily order an election to be held to
fill any such vacancies or newly created directorships, or to replace the
directors chosen by the directors then in office.

     Section 4. Location of Meetings. The Board of Directors of the corporation
may hold meetings, both regular and special, either within or without the State
of Delaware.

     Section 5. Meeting of Newly Elected Board of Directors. The first meeting
of each newly elected Board of Directors shall be held immediately following the
annual meeting of stockholders and no notice of such meeting shall be necessary
to the newly elected directors in order legally to constitute the meeting,
provided a quorum shall be present. In the event such meeting is not held at
such time, the meeting may be held at such time and place as shall be specified
in a notice given as hereinafter provided for special meetings of the Board of
Directors, or as shall be specified in a written waiver signed by all of the
directors.

     Section 6. Regular Meetings. Regular meetings of the Board of Directors may
be held without notice at such time and at such place as shall from time to time
be determined by


                                                                               4



the Board of Directors; provided that any director who is absent when such a
determination is made shall be given notice of such location.

     Section 7. Special Meetings. Special meetings of the Board of Directors may
be called by the Chief Executive Officer or President on two days' notice to
each director by mail, electronic mail, overnight courier service, telephone or
facsimile; special meetings shall be called by the Chief Executive Officer,
President or Secretary in a like manner and on like notice on the written
request of two directors unless the Board of Directors consists of only one
director, in which case special meetings shall be called by the Chief Executive
Officer, President or Secretary in a like manner and on like notice on the
written request of the sole director. Notice may be waived in accordance with
Section 229 of the General Corporation Law of the State of Delaware.

     Section 8. Quorum and Action at Meetings. At all meetings of the Board of
Directors, a majority of the directors then in office shall constitute a quorum
for the transaction of business, and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by statute or by
the Certificate of Incorporation. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.

     Section 9. Action Without a Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.

     Section 10. Telephonic Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, members of the Board of Directors,
or any committee designated by the Board of Directors, may participate in a
meeting of the Board of Directors, or any committee, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.

     Section 11. Committees. The Board of Directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.


                                                                               5



     Section 12. Committee Authority. Any such committee, to the extent provided
in the resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation,
if any, to be affixed to all papers which may require it; but no such committee
shall have the power or authority in reference to (a) approving, adopting or
recommending to the stockholders, any action or matter expressly required by the
General Corporation Law of the State of Delaware to be submitted to stockholders
for approval, or (b) adopting, amending or repealing any Bylaw of the
corporation. Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the Board of Directors.

     Section 13. Committee Minutes. Each committee shall keep regular minutes of
its meetings and report the same to the Board of Directors when required to do
so by the Board of Directors.

     Section 14. Directors Compensation. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, the Board of Directors shall have
the authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee meetings.

     Section 15. Resignation. Any director or officer of the corporation may
resign at any time. Each such resignation shall be made in writing and shall
take effect at the time specified therein, or, if no time is specified, at the
time of its receipt by either the Board of Directors, the President or the
Secretary. The acceptance of a resignation shall not be necessary to make it
effective unless expressly so provided in the resignation.

     Section 16. Removal. Unless otherwise restricted by the Certificate of
Incorporation, these Bylaws or applicable law, any director or the entire Board
of Directors may be removed, with or without cause, by the holders of a majority
of shares entitled to vote at an election of directors.

                                   ARTICLE IV.
                                     NOTICES

     Section 1. Notice to Directors and Stockholders. Whenever, under the
provisions of the statutes or of the Certificate of Incorporation or of these
Bylaws, notice is required to be given to any director or stockholder, it shall
not be construed to mean personal notice, but such notice may be given in
writing, by mail, or by electronic mail, addressed to such director or
stockholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. An affidavit of
the Secretary or an Assistant Secretary or of the transfer agent of the
corporation that the notice has been given shall in the absence of fraud,


                                                                               6



be prima facie evidence of the facts stated therein. Notice to directors may
also be given by telephone, facsimile, electronic mail, or telegram (with
confirmation of receipt).

     Section 2. Waiver. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. The written waiver need not specify the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at the meeting is not a waiver of
any right to object to the consideration of matters required by the General
Corporation Law of the State of Delaware to be included in the notice of the
meeting but not so included, if such objection is expressly made at the meeting.

                                   ARTICLE V.
                                    OFFICERS

     Section 1. Enumeration. The officers of the corporation shall be chosen by
the Board of Directors and shall include a Chief Executive Officer, President, a
Secretary, a Treasurer or Chief Financial Officer and such other officers with
such other titles as the Board of Directors shall determine. The Board of
Directors may elect from among its members a Chairman or Chairmen of the Board
and a Vice Chairman of the Board. The Board of Directors may also choose one or
more Vice-Presidents, Assistant Secretaries and Assistant Treasurers. Any number
of offices may be held by the same person, unless the Certificate of
Incorporation or these Bylaws otherwise provide.

     Section 2. Election. The Board of Directors at its first meeting after each
annual meeting of stockholders shall elect a President, a Secretary, a Treasurer
and such other officers with such other titles as the Board of Directors shall
determine.

     Section 3. Appointment of Other Agents. The Board of Directors may appoint
such other officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.

     Section 4. Compensation. The salaries of all officers of the corporation
shall be fixed by the Board of Directors or a committee thereof. The salaries of
agents of the corporation shall, unless fixed by the Board of Directors, be
fixed by the President or any Vice-President of the corporation.

     Section 5. Tenure. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
Board of Directors may be removed at any time by the affirmative vote of a
majority of the directors of the Board of


                                                                               7



Directors. Any vacancy occurring in any office of the corporation shall be
filled by the Board of Directors.

     Section 6. Chairman of the Board and Vice-Chairman of the Board. The
Chairman of the Board, if any, shall preside at all meetings of the Board of
Directors and of the stockholders at which the Chairman shall be present. The
Chairman shall have and may exercise such powers as are, from time to time,
assigned to the Chairman by the Board of Directors and as may be provided by
law. In the absence of the Chairman of the Board, the Vice Chairman of the
Board, if any, shall preside at all meetings of the Board of Directors and of
the stockholders at which the Vice Chairman shall be present. The Vice Chairman
shall have and may exercise such powers as are, from time to time, assigned to
such person by the Board of Directors and as may be provided by law.

     Section 7. Chief Executive Officer/President. The President shall be the
Chief Executive Officer of the corporation unless such title is assigned to
another officer of the corporation; in the absence of a Chairman and Vice
Chairman of the Board, the Chief Executive Officer shall preside as the chairman
of meetings of the stockholders and the Board of Directors; and the President
shall have general and active management of the business of the corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The Chief Executive Officer or any President or Vice President
shall execute bonds, mortgages and other contracts requiring a seal, under the
seal of the corporation, if any, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of the corporation.

     Section 8. Vice-President. In the absence of the President or in the event
of the President's inability or refusal to act, the Vice-President, if any (or
in the event there be more than one Vice-President, the Vice-Presidents in the
order designated by the Board of Directors, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the President, and when so acting shall have all the powers of and be subject to
all the restrictions upon the President. The Vice-President shall perform such
other duties and have such other powers as the Board of Directors may from time
to time prescribe.

     Section 9. Secretary. The Secretary shall attend all meetings of the Board
of Directors and all meetings of the stockholders and record all the proceedings
of the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or President, under whose supervision the Secretary shall be subject. The
Secretary shall have custody of the corporate seal of the corporation, if one
exists, and the Secretary, or an Assistant Secretary, shall have authority to
affix the same to any instrument requiring it and when so affixed, it may be
attested by the Secretary's signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by such
officer's signature.


                                                                               8



     Section 10. Assistant Secretary. The Assistant Secretary, or if there be
more than one, the Assistant Secretaries in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the Secretary or in the event of the
Secretary's inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.

     Section 11. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, President or Chief Executive Officer, taking
proper vouchers for such disbursements, and shall render to the President, Chief
Executive Officer and the Board of Directors, at its regular meetings, or when
the Board of Directors so requires, an account of all such transactions as
Treasurer and of the financial condition of the corporation. If required by the
Board of Directors, the Treasurer shall give the corporation a bond (which shall
be renewed every six years) in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of the Treasurer's office and for the restoration to the corporation,
in case of the Treasurer's death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in the possession or under the control of the Treasurer that belongs to the
corporation.

     Section 12. Assistant Treasurer. The Assistant Treasurer, or if there be
more than one, the Assistant Treasurers in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the Treasurer or in the event of the
Treasurer's inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.

                                   ARTICLE VI.
                                  CAPITAL STOCK

     Section 1. Certificates. The shares of the corporation shall be represented
by a certificate, unless and until the Board of Directors adopts a resolution
permitting shares to be uncertificated. Certificates shall be signed by, or in
the name of the corporation by, (a) the Chairman of the Board, the Vice-Chairman
of the Board, the Chief Executive Officer, the President or a Vice-President,
and (b) the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary, certifying the number of shares owned by such stockholder
in the corporation. Certificates may be issued for partly paid shares and in
such case upon the face or back of the certificates issued to represent any such
partly paid shares, the total amount of the consideration to be paid therefor
and the amount paid thereon shall be specified.

     Section 2. Class or Series. If the corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and


                                                                               9



the qualifications, limitations or restrictions of such preferences and/or
rights shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such class or series
of stock, provided that, except as otherwise provided in Section 202 of the
General Corporation Law of the State of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the corporation shall issue to represent such class or series of stock, a
statement that the corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights. Within a reasonable time after the issuance or transfer of
uncertificated stock, the corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the Delaware
Corporation Law or a statement that the corporation will furnish without charge,
to each stockholder who so requests, the powers, designations, preferences and
relative participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.

     Section 3. Signature. Any of or all of the signatures on a certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.

     Section 4. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or such owner's legal representative, to advertise the same in
such manner as it shall require and/or to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.

     Section 5. Transfer of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Upon receipt of proper transfer instructions from
the registered owner of uncertificated shares such uncertificated shares shall
be canceled and issuance of new equivalent uncertificated shares or certificated
shares shall be made to the person entitled thereto and the transaction shall be
recorded upon the books of the corporation.

     Section 6. Record Date. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholder or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to


                                                                              10



receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.

     Section 7. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.

                                  ARTICLE VII.
                               GENERAL PROVISIONS

     Section 1. Dividends. Dividends upon the capital stock of the corporation,
subject to the applicable provisions, if any, of the Certificate of
Incorporation, may be declared by the Board of Directors at any regular or
special meeting, pursuant to law. Dividends may be paid in cash, in property or
in shares of capital stock, subject to the provisions of the Certificate of
Incorporation. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the Board
of Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the Board of Directors shall think conducive to the interest of the
corporation, and the Board of Directors may modify or abolish any such reserve
in the manner in which it was created.

     Section 2. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.

     Section 3. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the Board of Directors.

     Section 4. Seal. The Board of Directors may adopt a corporate seal having
inscribed thereon the name of the corporation, the year of its organization and
the words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.

     Section 5. Loans. The Board of Directors of this corporation may, without
stockholder approval, authorize loans to, or guaranty obligations of, or
otherwise assist, including, without limitation, the adoption of employee
benefit plans under which loans and


                                                                              11



guarantees may be made, any officer or other employee of the corporation or of
its subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the Board of
Directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the Board
of Directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation.

                                  ARTICLE VIII.
                                 INDEMNIFICATION

     Section 1. Third Party Actions. The corporation may indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise (each an "Indemnitee"),
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding.

     Section 2. Derivative Actions. The corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit.

     Section 3. Expenses. To the extent that a director or officer of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Article VIII, Sections 1 and 2, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.

     Section 4. Authorization and Request for Indemnification. Any
indemnification requested by the Indemnitee under Article VIII, Section 1 hereof
shall be made no later than ten (10) days after receipt of the written request
of the Indemnitee, unless it shall have been adjudicated by a court of final
determination that the Indemnitee did not act in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Any indemnification
requested by the Indemnitee under Article VIII, Section 2 hereof shall be made
no later than ten (10) days after receipt of the written request of the
Indemnitee, unless it shall have been adjudicated by a court of final
determination that the Indemnitee did not act in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, the Indemnitee shall have been finally adjudged to be liable to the
corporation by a court of competent jurisdiction due to willful misconduct or a


                                                                              12



culpable nature in the performance of the Indemnitee's duty to the corporation
unless and only to the extent that any court in which such proceeding was
brought shall determine upon application that despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnify for such expenses as such court
shall deem proper.

     Section 5. Advance Payment of Expenses. Subject to Article VIII, Section 4
above, the corporation may advance all expenses incurred by the Indemnitee in
connection with the investigation, defense, settlement or appeal of any
proceeding to which the Indemnitee is a party or is threatened to be made a
party by reason of the fact that the Indemnitee is or was an agent of the
corporation. The Indemnitee hereby undertakes to repay such amounts advanced
only if, and to the extent that, it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified by the corporation. The advances to
be made hereunder shall be paid by the corporation to or on behalf of the
Indemnitee within thirty (30) days following delivery of a written request
therefor by the Indemnitee to the corporation.

                                   ARTICLE IX.
                                   AMENDMENTS

     Except as otherwise provided in the Certificate of Incorporation, these
Bylaws may be altered, amended or repealed, or new Bylaws may be adopted, by the
holders of a majority of the outstanding voting shares or by the Board of
Directors, when such power is conferred upon the Board of Directors by the
Certificate of Incorporation, at any regular meeting of the stockholders or of
the Board of Directors or at any special meeting of the stockholders or of the
Board of Directors if notice of such alteration, amendment, repeal or adoption
of new Bylaws be contained in the notice of such special meeting. If the power
to adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the
Certificate of Incorporation, it shall not divest or limit the power of the
stockholders to adopt, amend or repeal Bylaws.


                                                                              13

EX-3.27

                                                                    EXHIBIT 3.27

                          CERTIFICATE OF INCORPORATION
                                       OF
                           TB WOOD'S ENTERPRISES, INC.

          FIRST: The name of the corporation is TB Wood's Enterprises, Inc. (the
"Corporation").

          SECOND: The registered office of the Corporation in the State Delaware
is located at 1209 Orange Street, City of Wilmington, County of New Castle,
State of Delaware 19801. The name of the registered agent of the Corporation at
such address is The Corporation Trust Company.

          THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware, provided that the Corporation's
activities shall be confined to the maintenance and management of its intangible
investments and the collection and distribution of the income from such
investments or from tangible property physically located outside Delaware, all
as defined in, and in such manner to qualify for exemption from income taxation
under Section 1902(b)(8) of Title 30 of the Delaware Code, or under the
corresponding provision of any subsequent law.

          FOURTH: The Corporation shall have authority to issue Three Thousand
(3,000) shares of common stock, having a par value of One Cent ($.01) per share.

          FIFTH: The Corporation shall indemnify directors and officers of the
Corporation to the fullest extent permitted by law.

          SIXTH: The directors of the Corporation shall locate no personal
liability to the Corporation or its stockholders for monetary damages for any
breach of fiduciary duty as a director; provided, however, that the directors of
the Corporation shall continue to be subject to liability (i) for any breach of
their duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the directors derived
an improper personal benefit. In discharging the duties of their respective
positions, the board of directors, committees of the board, individual officers
may, in considering the best interest of the Corporation, consider the effect of
any action upon employees, supplies and customers of the corporation,
communities in which offices or other establishments of the Corporation are
located, and all other pertinent factors. In addition, the personal liability of
directors shall further be limited or eliminated to the fullest extent permitted
by any future amendments of Delaware law.

          SEVENTH: The business and affairs of the Corporation shall be managed
by or under the direction of the board of directors, the number of members of
which shall be set forth in the bylaws of the Corporation. The directors need
not be elected by ballot unless required by the bylaws of the Corporation.



          EIGHTH: The directors of the Corporation shall have the power to make,
alter or amend the bylaws.

          NINTH: Meetings of the stockholders shall be held within the State of
Delaware. The books of the Corporation shall be kept in the State of Delaware at
such place or places as may be designated from time to time by the board of
directors in the bylaws of the Corporation.

          TENTH: The Corporation shall have no power and may not be authorized
by its stockholders or directors (i) to perform or omit to do any act that would
prevent the Corporation from qualifying as, inhibit the Corporation from
conducting business as, or cause the Corporation to lose its status as a
corporation exempt from the Delaware Corporation Income Tax under Section
1902(b)(8) of Title 30 of the Delaware Code, or under the corresponding
provision of any subsequent law, or (ii) to conduct any physical activities
outside of Delaware which could result in the Corporation being subject to tax
outside of Delaware.

          ELEVENTH: The name and mailing address of the incorporator is:

               A. David Vande Poele
               222 Delaware Avenue, 17th Floor
               Wilmington, DE 19801

          TWELFTH: The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereinafter prescribed by the laws of the State of Delaware. All rights
conferred are granted subject to this reservation.

          THIRTEENTH: The powers of the incorporator shall terminate upon
election of directors.

          I, THE UNDERSIGNED, being the incorporator, for the purpose of forming
a corporation under the laws of the State of Delaware do make, file and record
this Certificate of Incorporation, and, accordingly, have hereunto set my hand
this 27th day of September 1999.


                                        By: /s/ A. David Vande Poele
                                            ------------------------------------
                                            A. David Vande Poele


                                        2

EX-3.28

                                                                    EXHIBIT 3.28

                                     BYLAWS
                                       OF
                           TB WOOD'S ENTERPRISES, INC.

                             ADOPTED OCTOBER 1, 1999

                                    ARTICLE I
                                  STOCKHOLDERS

     SECTION 1. ANNUAL MEETING.

     An annual meeting of the stockholders, for the election of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such place, on such
date, and at such time as the Board of Directors shall each year fix, which date
shall be within thirteen months subsequent to the later date of incorporation or
the last annual meeting of shareholders.

     SECTION 2. SPECIAL MEETINGS.

     Special meetings of the stockholders, for any purpose or purposes
prescribed in the notice of the meeting, may be called by the Board of
Directors, the Chairperson or the President or as otherwise provided by law or
the Certificate of Incorporation and shall be held at such place within
Delaware, on such date, and at such time as they or he or she shall fix, and a
majority of the stockholders may call a special meeting in accordance with
Section 4 Article II of the Bylaws.

     SECTION 3. NOTICE OF MEETING.

     Written notice of the place, date and time of all meetings of the
stockholders shall be given, not less than ten nor more than sixty days before
the date on which the meeting is to be held, to each stockholder entitled to
vote at such meeting, except as otherwise provided herein or required by law
(meaning, here and hereinafter, as required from time to time by the Delaware
General Law of the Certificate of Incorporation of the Corporation.

     When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.

     SECTION 4. QUORUM.

     At any meeting of the stockholders, the holders of a majority of all of the
shares of the stock entitled to vote at the meeting, present in person or by
proxy, shall constitute a quorum for



all purposes, unless or except to the extent that the presence of a larger
number may be required by law.

     If a quorum shall fail to attend any meeting, the Chairperson of the
meeting or the holders of a majority of the shares of the stock entitled to vote
who are present, in person or by proxy, may adjourn the meeting to another place
within Delaware, date, or time.

     If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting a quorum, then except as otherwise required by law, those
present at such adjourned meeting shall constitute a quorum, and all matters
shall be determined by a majority of the votes cast at such meeting.

     SECTION 5. ORGANIZATION.

     The Chairperson of the Board or, in the absence of such Chairperson, the
President of the corporation or, in the President's absence, such a person as
may be chosen by the Board, or if not so chosen, as selected by older of a
majority of the shares entitled to vote who are present, in person or by proxy,
shall call to order any meeting of the stockholders and act as a Chairperson of
the meeting. In the absence of the Secretary of the Corporation, the Secretary
of the meeting shall be such person as the Chairperson of the meeting appoints.

     SECTION 6. CONDUCT OF BUSINESS.

     The Chairperson of any meeting of stockholders shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him or her in order.

     SECTION 7. PROXIES AND VOTING.

     At any meeting of the stockholders, every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing filed in
accordance with the procedure established for the meeting

     Each stockholder shall have one vote for every share of stock entitled to
vote which is registered in such stockholder's name on the record date for the
meeting, except as otherwise provided herein or required by law.

     All voting, including on the election of directors, but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or such stockholder's proxy, a
stock vote shall be taken. Every stock vote shall be taken by ballots, each of
which shall state the name of the stockholder or proxy voting and such other
information as may be required- under the procedure established for the meeting.
Every vote taken by ballots shall be counted by an inspector or inspectors
appointed by the Chairperson of the meeting.

     No proxy shall be voted on or after three (3) years from its date, unless
the proxy provides for a longer period.

     All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law, all other matters shall be determined by a
majority of the votes cast.


                                                                               2



     SECTION 8. STOCK LIST.

     A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in such
stockholder's name, shall be open to the examination of any such stockholder,
for any purpose germane to the meeting, during ordinary business hours for a
period of at least ten (10) days prior to the meeting, either at a place within
the city' where the meeting is to be held; which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting is
to be held.

     The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of such stockholder who
is present. This list shall presumptively determine the identity-of the-
stockholders-entitled-to vote at the meeting and the number of shares held by
each of them.

     SECTION 9. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING.

     Any action required to be taken at any annual or special meeting of
stockholders of the corporation, or any action which may be taken at any annual
or special' meeting of the stockholders, may be taken without a meeting, without
prior notice and without a vote if a consent in writing, setting forth, the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted.

                                   ARTICLE II
                               BOARD OF DIRECTORS

     SECTION 1. NUMBER AND TERM OF OFFICE.

     The number of directors who shall constitute the whole board shall be such
number as the Board of Directors shall at the time have designated, except that
in the absence of any such designation, such number shall be three (3), and, in
any event, the maximum number shall be three (3). Each director shall be elected
for term of one year and until such director's successor is elected and
qualified, except as otherwise provided herein or required by law.

     Whenever the authorized number of directors is increased between annual
meetings of the stockholders, a majority of the directors then in office shall
have the power to elect such new directors for the balance of a term and until
their successors are elected and qualified. Any decrease in the authorized
number of directors shall not become effective until the expiration of the term
of the directors then in office unless, at the time of such decrease, there
shall be vacancies on the board which are being eliminated by the decrease.

     SECTION 2. VACANCIES.

     If the office of any director becomes vacant by reason of death,
resignation, disqualification, removal or other cause, a majority of the
directors remaining in office, although less than a quorum, may elect a
successor for the unexpired term and until such director's successor is elected
and qualified.


                                                                               3



     SECTION 3. REGULAR MEETINGS.

     Regular meetings of the Board of Directors shall he held at such place of
places within Delaware, on such date or dates, and at such times as shall have
been established by the Board of Directors and publicized among all directors. A
notice of each regular meeting shall not be required.

     SECTION 4. SPECIAL MEETINGS.

     Special meetings of the Board of Directors may be called only by the
Chairperson, the President, or their respective delegates, a majority of the
directors or a majority of the stockholders and shall be held at such place
within Delaware, on such date, and at such time a the authorized person(s)
calling such meeting shall fix. Notice of the place, date and time of each such
special meeting shall be given each director by whom it is not waived by mailing
written notice not less than five days before the meeting or by telegraphing,
telecopying or sending by overnight courier the same not less than twenty-four
hours before the meeting. Unless otherwise indicated in the notice thereof, any
and all business may be transacted at a special meeting.

     SECTION 5. QUORUM.

     At any meeting of the Board of Directors, 50% of the total number of the
whole board (rounded up) shall constitute a quorum for all purposes. If a quorum
shall fail to attend any meeting, a majority of those present may adjourn the
meeting to any place within Delaware, date, or time, without further notice or
waiver thereof.

     SECTION 6. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE.

     Notwithstanding any provision of these bylaws to the contrary, members of
the Board of Directors, or of any committee thereof, may participate in a
meeting of such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and such participation shall constitute presence in
person at such meeting; provided that a quorum is physically present in
Delaware.

     SECTION 7. CHAIRPERSON OF THE BOARD.

     The Board of Directors shall elect, at its original meeting and each annual
meeting a Chairperson of the Board (the "Chairperson") who shall be a director
and who shall hold office until the nest annual meeting of the Board and until
such Chairperson's successor is elected and qualified or until such
Chairperson's earlier resignation or removal by act of the Board. The
Chairperson shall preside at meeting of the stockholders and the Board. In the
absence of the Chairperson, the President shall preside at meeting of the
stockholders and the Board, or in the President's absence, such person as
designated by the Board of Directors in accordance with these Bylaws.


                                                                               4



     SECTION 8. CONDUCT OF BUSINESS.

     At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.

     SECTION 9. COMPENSATION OF DIRECTORS.

     Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the
Board of Directors.

     SECTION 10. REMOVAL OF DIRECTORS.

     Any director of the corporation may be removed at any time, with or without
cause, by a majority vote of the stockholders.

                                   ARTICLE III
                                   COMMITTEES

     SECTION 1. COMMITTEES OF THE BOARD OF DIRECTORS.

     The Board of Directors, by vote of a majority of the whole Board, may from
time to time designate committees of the Board, with such lawfully delegable
powers and duties as it thereby confers, to serve at the' pleasure of the Board
and shall, for those committees and any others provided for herein, elect a
director or directors to serve as the member or members, designating, if it
desires, other directors as alternate members who may replace any absent or
disqualified member at any meeting of the committee. Any committee so designated
may exercise the power and authority of the Board of Directors to declare a
dividend or to authorize the issuance of stock if the resolution which
designates the committee or supplemental resolution of the Board of Directors
shall so provide. In the absence or disqualification of any member of any
committee and any alternate member in such member's place, the member or members
of the committee present at the meeting and not disqualified from voting,
whether or not such member or members constitute a quorum, may by unanimous vote
appoint another member of the Board-of Directors to act at the meeting in the
place of absent or disqualified member. The Board of Directors may, from t time
to time, suspend, alter, continue or terminate any committee or the powers and
functions thereof.

     SECTION 2. OFFICERS COMMITTEES.

     Subject to the approval of the Board, the Chairperson may appoint, or may
provide for the appointment of, committees consisting of officers or other
persons, with chairpersonships, vice chairpersonships and secretaryships and
such duties and powers as the Chairperson may, from time to time, designate and
prescribe. The Board or the Chairperson may, from time to


                                                                               5



time, suspend, alter, continue or terminate any of such committees or the powers
and functions thereof.

     SECTION 3. CONDUCT OF BUSINESS.

     Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third of the members shall constitute
a quorum unless the committee shall consist of one or two members, in which
event on member shall constitute a quorum; and all matters shall be determined
by a majority vote of the members present. Action may be taken by any committee
without a meeting if all members thereof consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of such
committee.

                                   ARTICLE IV
                                    OFFICERS

     SECTION 1. GENERALLY.

     The officers of the corporation shall consist of a President, a Secretary,
a Treasurer and such other officers, including, for example, Vice President,
Assistant Treasurers and Assistant Secretaries, as may from time to time be
appointed by the Board of Directors. Officers shall be elected by the Board of
Directors which shall consider that subject at its first meeting after every
annual meeting of stockholders. Each officer shall hold office until such
officer's successor is elected and qualified or until such officer's earlier
resignation or removal.

     One person may hold more than one of the offices specified in this section
and may have such other titles as the Board of Directors may determine.

     SECTION 2. PRESIDENT.

     The President shall be the chief executive officer of the corporation.
Subject to the provision of these bylaws and to the direction of the Board of
Directors, the President shall have the responsibility for the general
management and control of the business and affairs of the corporation and shall
perform all duties and have all powers which are commonly incident to the office
of Chief executive or which are delegated to the President by the Board of
Directors. The President shall have power to sign all stock certificates,
contracts and other instruments of the corporation which are authorized and
shall have general supervision and direction of all of the other officers,
employees and agents of the Corporation.

     SECTION 3. VICE PRESIDENT.

     There may be such number of Vice Presidents as the Board of Directors shall
appoint. Any such Vice President shall have such powers and duties as may be
delegated to the Vice President by the Board of Directors. A Vice President may
be designated by the Board of Directors to perform the duties and exercise the
powers of the President in the event of the President's absence or disability.
In the absence of the Chairperson and the President, one Vice


                                                                               6



President so designated by the Board of Directors shall preside at meeting of
the stockholders and the Board of Directors.

     SECTION 4. TREASURER/ASSISTANT TREASURER.

     The Treasurer shall have the responsibility for maintaining the financial
records of the corporation and shall have custody of all monies and securities
of the corporation. The Treasurer shall make such disbursements of the fund of
the corporation as are authorized and shall render from time to time an account
of all such transactions and of the financial condition of the corporation. The
Treasurer shall also perform such other duties as the Board of Directors may
from time to time prescribe. The Board of Directors may also elect an Assistant
Treasurer, if deemed necessary or appropriate, who shall have such powers and
ditties of the Treasurer, as determined by the Board of Directors.

     SECTION 5. SECRETARY/ASSISTANT SECRETARY.

     The Secretary shall issue all authorized notices for, and shall keep
minutes of, all meetings of the stockholders and the Board of Directors. The:
Secretary shall have charge of the corporate books and shall perform such other
duties as the Board of Director may from time to time prescribe. The Board of
Directors may also elect an Assistant Secretary, if deemed necessary or
appropriate, who shall have such powers and duties of the Secretary, as
determined by the Board of Directors.

     SECTION 6. DELEGATION OF AUTHORITY.

     The Board of Directors may from time to time delegate the powers or duties
of any officer to any other officers or agents, notwithstanding any provision
hereof.

     SECTION 7. REMOVAL.

     Any officer of the corporation may be removed at any time, with or without
cause, by the Board of Directors.

     SECTION 8. ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS.

     Unless otherwise directed by the Board of Directors, the President or any
Vice President, or their respective delegates, shall have power to vote and
otherwise act on behalf of the corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other corporation in which this corporation may hold securities and otherwise
exercise any and all rights and powers which this corporation may possess by
reason of its ownership of securities in such other corporation.

                                    ARTICLE V
                                      STOCK


                                                                               7



     SECTION 1. CERTIFICATES OF STOCK.

     Each stockholder shall be entitled to a certificate signed by, or in the
name of the corporation by, the President and the Secretary, or such other
officers as authorized by the Board, certifying the number of shares owned by
such stockholder.

     SECTION 2. TRANSFER OF STOCK.

     Transfers of stock shall be made only upon the transfer books of the
corporation kept at an office of the corporation or by transfer agents
designated to transfer shares of the stock of the corporation. Except where a
certificate is issued in accordance with Section 4 of the Article V, an
outstanding certificate for the number of shares involved shall be surrendered
for cancellation before a new certificate is issued thereof.

     SECTION 3. RECORD DATE.

     In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be more than sixty nor
less than ten days before the date of such meeting. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.

     In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors.

     In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
or the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.

     SECTION 4. LOST, STOLEN OR DESTROYED CERTIFICATES.

     In the event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.


                                                                               8



     SECTION 5. REGULATIONS.

     The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.

                                   ARTICLE VI
                               PURPOSES AND POWER

     SECTION 1. PURPOSES AND POWERS.

     The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware; provided that the Corporation's activities shall be confirmed
to the maintenance and management of its intangible investments and the
collection and distribution of the income from such investments or from tangible
property physically located outside Delaware, all as defined in, and in such
manner to qualify for exemption from income taxation under, Section 1920(b)(8)
of Title 30 of the Delaware Code, or under the corresponding provision of any
subsequent law; provided further that the corporation shall be empowered to
conduct such other activities as permitted by said Section 1902(b)(8) or the
corresponding provision of and subsequent law in such manner to qualify for
exemption from income taxation under said Section 1902(b)(8) or the
corresponding provision of any subsequent law. For purposes of this Section
"intangible investments" shall include, without limitation, investments in
stocks, bonds, notes and other debts obligations (including debt obligations of
affiliated corporations), patents, patent applications, trademarks, trade names
and similar types of intangible assets.

                                   ARTICLE VII
                                 INDEMNIFICATION

     SECTION 1. GENERAL.

     The Corporation shall indemnify and hold harmless, to the fullest extent
permitted by the Delaware General Corporation: Law as it presently exists or may
be hereafter amended from time to time, any person who was or is made or is
threatened to be' made a party or is otherwise involved in any threatened,
pending or completed action, suit arbitration, alternative dispute resolution
mechanism or proceeding, whether civil, criminal, administrative or
investigative ("Proceeding") by reason of the fact that such person, or a person
for whom such person is the legal representative, is or was

          (a) a director or officer of the Corporation or its subsidiaries, or

          (b) a director, officer or employee of the Corporation and is or was
serving at the request of the Corporation through designation by the Chief
Executive Officer as a director, officer, employee, agent or fiduciary of
another corporation or of a partnership, joint venture, trust, nonprofit entity
or other enterprise, including service with respect to employee benefit plans,


                                                                               9



against all liability and loss suffered and expenses (including attorneys'
fees), judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by such person or on such person's behalf in connection with
any such proceeding. However, the Corporation shall be required to indemnify a
person in connection with a Proceeding (or part thereof) initiated by such
person only if the Proceeding (or part thereof) was or is authorized by the
Board of Directors of the Corporation.

     SECTION 2. ADVANCEMENT OF EXPENSES.

     The Corporation shall pay the reasonable expenses (including attorneys'
fees) as and when incurred by a director or officer of the Corporation in
connection with any Proceeding described in Section 1 in advance of its final
disposition, PROVIDED, HOWEVER, that such payment shall be made only upon a
receipt of an undertaking by the director or officer to repay all expenses
(including attorneys' fees) advanced if it should be ultimately determined that
the director or officer is not entitled to be indemnified under this Article
or otherwise. Payment of such expenses (including attorneys' fees) incurred by
employees of the Corporation may be made by the Board of Directors in its
discretion upon such terms and conditions, if any, as it deems appropriate.

     SECTION 3. RIGHTS NOT EXCLUSIVE.

     The rights conferred on any person by this Article VII shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the Corporation's Certificate of Incorporation,
these By-laws, agreement, vote of stockholders or disinterested directors, or
otherwise. The indemnification and advancement of expenses provided by this
Article VII shall continue as to a person who has ceased to be a director,
officer or employee described in Section I and shall inure to the benefit of the
heirs, executors and administrators of such a person.

     SECTION 4. CLAIMS.

     Notwithstanding any other provision of this Article VII, if a claim by a
director, officer, or employee described in Section 1 for indemnification or
advancement of expenses under this Article VII is not paid in full within thirty
days after a written claim therefor has been received by the Corporation, the
claimant may file suit to recover the unpaid amount of such claim and, if
successful in whole or in part, shall be entitled to be paid in full all costs
and expenses (including attorneys' fees) of prosecuting such claim. In any such
action, the Corporation shall have the burden of proving that the claimant was
not entitled to the requested indemnification or advancement of expenses under
applicable law and this Article VII.

     SECTION 5. OTHER INDEMNIFICATION.

     The Corporation's obligation to indemnify or advance expenses hereunder to
a person who is or was serving at the request of the Corporation (as provided
for in Section 1) as a director, officer, employee, agent or fiduciary of any
other corporation, partnership, joint venture, trust; nonprofit entity, employee
benefit plan or other enterprise shall be reduced by any amount such person is
entitled to and actually receives as indemnification or advancement of


                                                                              10



expenses from such other corporation, partnership, joint venture, trust,
nonprofit entity, employee benefit plan or other enterprise.

     SECTION 6. AMENDMENT OR REPEAL.

     Any repeal or modification of the foregoing provisions' of this Article VII
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to or at the time of such repeal
or modification.

                                  ARTICLE VIII
                                     NOTICES

     SECTION 1. NOTICES.

     Except as otherwise specifically provided herein or required by laws, all
notices required to be given to any stockholder, director, officer, employee or
agent, shall be in writing and may in every instance be effectively given by
hand delivery to' the recipient thereof, by depositing such notice in the mails,
postage paid, by sending such notice by Federal Express or similar overnight
courier, by sending such notice by prepaid telegram or mailgram or by sending
such notice by telecopy or similar facsimile transmission. Any such notice shall
be addressed to such stockholder, director, officer, employee, or agent at his
or her last known address as the same appears on the books of the corporation.
The time when such notice is received, if hand delivered, or dispatched, if
delivered through the mails by overnight courier, by telegram or mailgram, or by
telecopy or similar facsimile shall be the time of the giving of the notice.

     SECTION 2. WAIVERS.

     A written waiver of any notice, signed by a stockholder, director, officer,
employee or agent, whether before or after the time of the event for which
notice is to be given, shall be deemed equivalent to the notice required to be
given to such stockholder, director, officer, employee or agent. Neither the
business nor the purpose of any meeting need be specified in such a waiver.

                                   ARTICLE IX
                                  MISCELLANEOUS

     SECTION 1. CORPORATE SEAL.

     The Board of Directors may provide a suitable seal, containing the name of
the' corporation, which seal shall be in the charge of the Secretary. Duplicates
of the seal may be kept and used by the Treasurer or Secretary or by an
Assistant Secretary or Assistant Treasurer.

     SECTION 2. RELIANCE UPON BOOKS, REPORTS AND RECORDS.

     Each director each member of any committee designated by the Board of
Directors, and each officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation, including


                                                                              11



reports made to the Corporation by any of its officers, by an independent
certified public accountant, or by an appraiser selected with reasonable care.

     SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be fixed
by the Board of Directors.

     SECTION 4. TIME PERIODS. In applying any provision of these bylaws which
require that an act be done or not done during a period of a specified number of
days prior to an event or that an act be done during a period of a specified
number of days prior to an event, calendar days shall be used, the day of the
doing of the act shall be excluded, and the day of the event shall be included.

                                    ARTICLE X
                                   AMENDMENTS

     SECTION 1. AMENDMENTS.

     These bylaws may be amended, suspended or repealed in a manner consistent
with law at any regular or special meeting of the Board of Directors by vote of
a majority of the entire board or at any stockholders meeting called and
maintained in accordance with Article I of these bylaws. Such amendment,
suspension or repeal may be evidenced by resolution or as the Board may
otherwise deem appropriate.

     The undersigned, Secretary of TB Wood's Enterprises, Inc., does hereby
certify that the foregoing is a true copy of the bylaws of TB Wood's
Enterprises, Inc. and that the same are in full force and effect as of the date
indicated below.


                                        /s/ Barry A. Crozier
                                        ----------------------------------------
                                        Secretary

Dated as of October 4, 1999


                                                                              12

EX-3.29

                                                                    EXHIBIT 3.29

- --------------------------------------------------------------------------------
  STATE OF TENNESSEE                                       For Office Use Only
        [SEAL]               ARTICLES OF ORGANIZATION
  DEPARTMENT OF STATE      (LIMITED LIABILITY COMPANY)

   Corporate Filings
312 Eighth Avenue North
 6th Floor, William R.
    Snodgrass Tower
  Nashville, TN 37243
- --------------------------------------------------------------------------------
THE UNDERSIGNED ACTING AS ORGANIZER(S) OF A LIMITED LIABILITY COMPANY UNDER THE
PROVISIONS OF THE TENNESSEE LIMITED LIABILITY COMPANY ACT, SECTION 48-205-101,
ADOPTS THE FOLLOWING ARTICLES OF ORGANIZATION.
- --------------------------------------------------------------------------------
1.   THE NAME OF THE LIMITED LIABILITY COMPANY IS:

     Plant Engineering Consultants, Inc.
- --------------------------------------------------------------------------------
     (NOTE: PURSUANT TO THE PROVISION OF SECTION 48-207-101, EACH LIMITED
     LIABILITY COMPANY NAMED MUST CONTAIN THE WORDS "LIMITED LIABILITY COMPANY"
     OR THE ABBREVIATION "LLC" OR "L.L.C.")
- --------------------------------------------------------------------------------
2.   THE NAME AND COMPLETE ADDRESS OF THE LIMITED LIABILITY COMPANY'S INITIAL
     REGISTERED AGENT AND OFFICE LOCATED IN THE STATE OF TENNESSEE IS:

          Alexander W. MacGregor
          521 Airport Road
          Chattanooga, TN 37421   Hamilton (County)
- --------------------------------------------------------------------------------
3.   LIST THE NAME AND COMPLETE ADDRESS OF EACH ORGANIZER OF THIS LIMITED
     LIABILITY COMPANY:

          William T. Fejes, Jr.
          440 North Fifth Avenue
          Chambersburg, PA  17201
- --------------------------------------------------------------------------------
4.   THE LIMITED LIABILITY COMPANY WILL BE: (NOTE: PLEASE MARK APPLICABLE BOX)

     [ ] BOARD MANAGED   [X] MEMBER MANAGED
- --------------------------------------------------------------------------------
5.   NUMBER OF MEMBERS AT THE DATE OF FILING 1.
- --------------------------------------------------------------------------------
6.   IF THE DOCUMENT IS NOT TO BE EFFECTIVE UPON FILING BY THE SECRETARY OF
     STATE, THE DELAYED EFFECTIVE DATE AND TIME IS:

     DATE December 31, 2004   TIME 11:59 p.m.   (NOT TO EXCEED 90 DAYS.)
- --------------------------------------------------------------------------------
7.   THE COMPLETE ADDRESS OF THE LIMITED LIABILITY COMPANY'S PRINCIPAL EXECUTIVE
     OFFICE IS: 521 Airport Road, Chattanooga, TN 37421
- --------------------------------------------------------------------------------
8.   PERIOD OF DURATION: Perpetual
- --------------------------------------------------------------------------------
9.   OTHER PROVISIONS:
- --------------------------------------------------------------------------------
10.  THIS COMPANY IS A NON-PROFIT LIMITED LIABILITY COMPANY (CHECK IF
     APPLICABLE) [ ]
- --------------------------------------------------------------------------------

         DECEMBER 22, 2004             /S/ WILLIAM T. FEJES, JR.
           SIGNATURE DATE              -----------------------------------------
                                       SIGNATURE (MANAGER OR MEMBER AUTHORIZED
                                       TO SIGN BY THE LIMITED LIABILITY COMPANY)

CEO OF MEMBER                          WILLIAM T. FEJES, JR.
SIGNER'S CAPACITY                      NAME (TYPED OR PRINTED)
- --------------------------------------------------------------------------------
SS-4249 (REV. 7/01) FILING FEE: $50 PER MEMBER (MINIMUM FEE = $300, MAXIMUM FEE
= $3,000) RDA 2458
- --------------------------------------------------------------------------------


                                       2

EX-3.30

                                                                    EXHIBIT 3.30

                               OPERATING AGREEMENT
                                       OF
                       PLANT ENGINEERING CONSULTANTS, LLC
                      A TENNESSEE LIMITED LIABILITY COMPANY

     THIS AGREEMENT, dated as of December 22, 2004, is executed by TB WOODS,
INCORPORATED, a Pennsylvania corporation (who shall be referred to as the sole
"Member").

     All terms used herein with initial capital letters are defined in Article
IX.

                                    ARTICLE I
                                  ORGANIZATION

          1.1 Formation. The Company has been organized as a Tennessee limited
liability company by the filing of Articles of Conversion effective December 31,
2004 (the "Articles") with the Tennessee Department of State under and pursuant
to the Act.

          1.2 Name. The name of the Company is Plant Engineering Consultants,
LLC and all Company business shall be conducted in that name or such other names
that comply with applicable law as the Member may select from time to time.

          1.3 Registered Office. The Company's current registered office in the
State of Tennessee is c/o CT Corporation System, __________________.

          1.4 Principal Office: Other Offices. The principal office of the
Company shall be located at such place (which need not be a place of business of
the Company) as the Members may designate from time to time. The Company may
have such other offices as the Members may designate from time to time.

          1.5 Term. The Company commenced on December 31, 2004 and shall
continue in existence until terminated pursuant to the terms of this Agreement.

          1.6 No State-Law Partnership. The Members intend that the Company not
be a partnership (including, without limitation, a limited partnership) or joint
venture, and that no Member be a partner or joint venturer of any other Member,
for any purposes other than federal and, to the extent permitted, state tax
purposes, and this Agreement shall not be construed to produce a contrary
result.

          1.7 Purposes and Activities. The Company is organized to engage in the
business of drive system manufacturing and to enter into any lawful transaction
and engage in any kind of lawful activity in which a limited liability company
may engage under the Act. The Company is authorized and empowered to do any and
all acts and things necessary, appropriate, advisable or convenient for the
furtherance and accomplishment of the purposes and business of the Company
described above.



                                   ARTICLE II
                      MEMBERSHIP, DISPOSITIONS OF INTERESTS

          2.1 Initial Members. The initial Member of the Company is TB Woods,
Incorporated.

          2.2 Additional Members. Additional Persons maybe admitted to the
Company as Members and Membership Interests may be created and issued to those
Persons and to existing Members at the direction of and on such terms and
conditions as may be determined by the Members. The terms of admission or
issuance must specify the voting and Profit Ratios applicable thereto and may
provide for the creation of different classes or groups of Members having
different rights; powers, and duties. The creation of any new class or group
shall be reflected in an amendment to this Agreement indicating the different
rights, powers, and duties. Any such admission is effective only after the new
Member has executed and delivered to the Members a document including the new
Member's notice address and its agreement to be bound by this Agreement.

          2.3 Information. In addition to the other rights specifically set
forth in this Agreement, each Member is entitled to all information to which
that Member is entitled to have access pursuant to Chapter 228-102 (Inspection
of Records by Members) of the Act under the circumstance Section and subject to
the conditions stated therein.

          2.4 Liability to Third Parties. No Member shall be liable for the
debts, obligations or liabilities of the Company, including liability arising
under a judgment, decree or order of a court

          2.5 No Certification. No Membership Interest in the Company shall be
represented by a separate certificate.

                                   ARTICLE III
                              CAPITAL CONTRIBUTIONS

          3.1 Initial Capital Contribution. The Members have made the Capital
Contributions to the Company as set forth on the books and records of the
Company.

          3.2 Additional Capital Contributions. Additional Capital Contributions
shall be required only upon the written approval of all Members. Each Member
shall contribute in cash to the Company the Member's Profit Ratio of all
required additional Capital Contributions. Unless a later date is specified in
any notice of a required additional Capital Contribution, additional Capital
Contributions shall be made within thirty (30) days after written notice of the
required amount is given.

          3.3 Failure to Contribute. If a Member (a "Defaulting Member") fails
to make any Additional Capital Contribution in full within the required time,
then a Member who has paid its Profit Ratio of the required Additional Capital
Contribution (a "Performing Member") may take any or all of the following
actions:


                                        2



          (a) Take any and all action (including litigation) on behalf of the
Company or in the Performing Member's own right to obtain payment of the
Defaulting Member's Additional Capital Contribution, together with interest
thereon at the Default Interest Rate from the date the Additional Capital
Contribution was due, all at the cost and expense of the Defaulting Member.

          (b) Make an advance to the Company in an amount up to the Additional
Capital Contribution that the Defaulting Member failed to make. Such advance
shall be treated as a loan to the Defaulting Member by the Performing Member (an
"Interim Loan"), payable on demand with interest at the Default Interest Rate
from the date such advance was made. If the Defaulting Member fails to repay the
interim Loan with interest within fifteen (15) days after a written demand for
payment, then the Performing Member may elect by written notice to the
Defaulting Member (a "Dilution Notice") to convert the Interim Loan and all
accrued interest thereon to an Additional Capital Contribution and dilute the
Profit Ratio of the Defaulting Member. If the performing Member elects to dilute
the Profit Ratio of the Defaulting Member, then the Profit Ratio of the Members
shall be adjusted so that they are in proportion to their total Additional
Capital Contributions to the Company. For purposes of determining the voting
tights of the Members, such adjustment shall be effective as of the date of the
Dilution Notice; for purposes of allocating income and loss, such adjustment
shall be effective as of the first day of the month immediately following the
date of the Dilution Notice. If a Defaulting Member does not cure its default
within six (6) Months of the date of the Dilution Notice, the reallocation of
the Profit Ratio shall be permanent and the Defaulting Member shall not be
permitted to subsequently cure the default and restore the prior Profit Ratio
without the express prior written consent of the Performing Member, which may be
granted or withheld in the discretion of the Performing Member.

          3.4 Return of Contributions. A Member is not entitled to the return of
any part of his or her Capital Contributions or to be paid interest in respect
of either his or her capital account or Capital Contributions.

          3.5 Advances by Members. If the Company does not have sufficient cash
to pay its obligations, any member(s) that may agree to do so with the Members'
consent may advance ail or part of the needed funds to or on behalf of the
Company. An advance described in this Section shall be a loan from the Member to
the Company, bear interest at the General Interest Rate from the date of the
advance until the date of payment, and shall not be a Capital Contribution.

          3.6 Capital Account. A capital account shall be established and
maintained for each Member in accordance with Code Section 704 and Treas. Reg.
Section 1.704-1 ("Capital Account"). On the transfer of all or part of a
Membership Interest, the Capital Account of the transferor that is attributable
to the transferred Membership Interest or part thereof shall carry over to the
transferee Member in accordance with the provisions of Treas. Reg. Section
1.704-1(b)(2)(iv)(1).


                                        3



                                   ARTICLE IV
                          ALLOCATIONS AND DISTRIBUTIONS

          4.1 Allocations.

          (a) Except as may be otherwise required by Code Section 704(c) and
Treas. Reg. Section 1.704-1(b)(2)(iv)(f)(4), all items of income, gain, loss,
deduction, and credit of the Company shall be allocated among the Members in
accordance with their Profit Ratios as set forth in Exhibit A.

          (b) All items of income, gain, loss,, deduction, and credit allocable
to any Membership Interest that may have been transferred shall be allocated
between the transferor and the transferee 'based on the portion of the calendar
year during which each was recognized as owning that Membership Interest,
without regard to the results of Company' operations during any particular
portion of that calendar year and without regard to whether cash distributions
were made to the transferor or the transferee during that calendar year;
provided, however, that this allocation must be made in accordance with a method
permissible under Section 706 of the Code and the, regulations thereunder

          4.2 Distributions.

          (a) From time to time (but at least once each calendar quarter) the
Members shall determine in their reasonable judgment to what extent (if any) the
Company's cash on hand exceeds its current and anticipated needs, including,
without limitation, for operating expenses, debt service, and a reasonable
contingency reserve. If such an excess exists, the Members may cause the Company
to distribute it to the Members. Distributions shall be made first in payment of
any outstanding advances from Members to the Company. Thereafter, distributions
shall be made to the Members in proportion to their Profit Ratios as set forth
in Exhibit A, provided that any distribution allocable to any Defaulting Member
shall be (i) paid to any Performing Member who has made an Interim Loan to the
Defaulting Member until such Interim Loan and all interest thereon have been
paid in full, or (ii) with the prior written consent of the Performing Member,
retained by the Company and applied in reduction of the Defaulting Member's
unpaid Additional Capital Contribution. No Member shall have a contractual right
to any distribution other than distributions pursuant to Article VIII.

          (b) From time to time the Members also may cause property of the
Company other than cash to be distributed to the Members, which distribution
must be made in accordance with their Profit Ratios as set forth in Exhibit A
and may be made subject to existing liabilities and obligations.


                                        4



                                    ARTICLE V
                             CONTROL AND MANAGEMENT

          5.1 Management by Members.

          (a) The powers of the Company shall be exercised by or under the
authority of, and the business and affairs of the Company shall be managed by,
the Members. All decisions of the Members shall be made by Members holding a
Required Interest.

          (b) The Members may from time to time appoint and remove Officers of
the Company. The President shall have the authority 'and responsibility
customarily held by the Chief Executive Officer of a Tennessee business
corporation and other officers shall have such authority and responsibility as
Members may from time to time determine. The Officers shall report to and serve
at the direction of the Members.

          (c) The Company shall pay the Officers a salary as approved from time
to time by all the Members.

          (d) Neither the Members nor the Officers may cause the Company to do
any of the following without the unanimous consent of all the Members:

               (i) amend the Articles;

               (ii) amend this Agreement;

               (iii) authorize a Member or other Person to do any act on behalf
     of the Company that contravenes, the Articles or a provision of this
     Agreement, including without limitation, any provision that expressly
     limits the purpose, business or affairs of the Company or the conduct
     thereof

               (iv) approve a merger or division in which the Company is a
     party;

               (v) sell, pledge, lease or encumber any assets of the Company,
     other than in the ordinary course of business;

               (vi) enter into any transactions with related parties;

               (vii) finance or borrow any amount;

               (viii) guarantee any debt; or

               (ix) take any other action for which the consent of or other vote
     of the Members is expressly provided by the provisions hereof.

          5.2 Meetings.

          (a) Unless otherwise required by law or provided in this Agreement,
Members holding a majority of the total number of votes of all Members shall
constitute a quorum for the


                                        5



transaction of business, of the Members, and the act of Members holding a
majority of the total votes present at a meeting at which quorum is present
shall be the act of the Members. A Member who is present at a meeting of the
Members at which action on any Company matter is taken shall be presumed to have
assented to the action unless his or her dissent shall be entered in the minutes
of the meeting or unless he or she shall file a written dissent to such action
with the Person acting as secretary of the meeting before the adjournment
thereof or shall deliver such dissent to the Company immediately after the
adjournment of the meeting.

          (b) Meeting of the Members may be held at such place or places as
shall be determined from time to dyne by resolution of the Members. Attendance
of a Member at a meeting shall constitute a waiver of notice of such meeting,
except where a Member attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not lawfully
called of convened.

          (c) Regular meeting of the Members shall be held at such times and
places as shall be designated from time to time by resolution of the Members.
Notice of such regular meetings shall not be required.

          (d) Special meetings of the Members may be called by any Member on at
least 24 hours notice to each other member. Such notice shall state the purpose
or purposes of, and the business to be transacted, at such meeting.

          5.3 Action by Written Consent or Telephone Conference. Any action
permitted or required by the Act or this Agreement to be taken at a meeting of
the Members or any committee designated by the Members may be taken without a
meeting if a consent in writing, setting forth the action to be taken, is signed
by a majority of the Members or members of such committee, as the case maybe,
with written notice thereof to all Members. Such consent shall have the same
force and effect as a vote of a majority of the Member votes at a meeting.
Subject to the requirements of the Act and this Agreement for notice of
meetings, Members, or members of any committee, may participate in and hold a
meeting of the Members or any committee, as the case may be, by means of a
conference telephone or similar communications equipment by means of which all
Persons participating in the meeting can hear each other, and participation in
such meeting shall constitute attendance and presence in Person at such meeting,
except where a Person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

          5.4 Conflicts of Interest. Each Member of the Company at any time and
from time to time may engage in and possess interests in other business ventures
of any and every 'type and description, 'independently or with others with no
obligation to offer to the Company or any other Member the right to participate
therein.

                                   ARTICLE VI
                                 INDEMNIFICATION

          6.1 Right to Indemnification. Subject to the limitations and
conditions as provided in this Article VI, each Person who was or is made a


                                        6



party or is threatened to be made a party to or is involved in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative (hereinafter a "Proceeding"), or
any appeal in such a Proceeding or any inquiry or investigation that could lead
to such a Proceeding, by reason of the fact that he or she, or a Person of whom
he or she is the legal representative, is or was a member of the Company or
while a member of the Company is or was serving at the request of the Company as
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another foreign or domestic limited liability company,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise, shall be indemnified by the Company to the
fullest extent permitted by the Act, as the same exist or may hereafter be
amended, against judgments, penalties (including excise and similar taxes and
punitive damages), fines, settlements, and reasonable expenses (including,
without limitation, attorneys' fees) actually incurred by such Person in
connection with such Proceeding, and indemnification under this Article VI shall
continue as to a Person who has ceased to serve in the capacity which initially
entitled such Person to indemnity hereunder. The rights granted pursuant to this
Article VI shall be deemed contract rights, and no amendment, modification or
repeal of this Article VI shall have the effect 'of limiting or denying any such
rights with respect to actions taken or Proceedings arising prior to any such
amendment, modification or repeal. It is expressly acknowledged that the
indemnification provided in this Article VI could involve indemnification for
negligence or under theories of strict liability but may not extend to any
matter which is the result of willful misconduct or recklessness.

          6.2 Advance Payment. The right to indemnification conferred in this
Article VI shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 6.1 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding, shall be
made only upon delivery to the Company of a written affirmation by such Person
of his or her good faith belief that he or she has met the standard of conduct
necessary for indemnification under this Article VI and a written undertaking,
by or on behalf of such Person, to repay all amounts so advanced if it Anil
ultimately be determined that such indemnified Person is not entitled to be
indemnified under this Article VI or otherwise.

          6.3 Indemnification of Officers, Employees and Agents. The Company, by
adoption of a resolution of the Members,' may indemnify and advance expenses to
an Officer, employee or agent of the Company to the same extent and subject to
the same conditions under which it may indemnify and advance expenses, to
Members under this Article VI; and, the Company may indemnify and advance
expenses to Persons who are not or were not Members, Officers, employees or
agents of the Company but who are or were serving at the request of the Company
as a director, officer, partner, venturer, proprietor, trustee, employee, agent
or similar functionary of another foreign or domestic limited liability company,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise against any liability asserted against him and
incurred by him in such a capacity or arising out of his status as such a Person
to the same extent that it may indemnify and advance expenses to Members under
this Article VI.


                                        7



          6.4 Appearance as a Witness. Notwithstanding any other provision of
this Article VI, the Company may pay or reimburse expenses incurred by a Member
in connection with his or her appearance as a witness or other participation in
a Proceeding at a time when he or she is not a named defendant or respondent in
the Proceeding.

          6.5 Nonexclusivity of Rights. The right to indemnification and the
advancement and payment of expenses conferred in this Article VI shell not be
exclusive of any other right which a Member or other Person indemnified pursuant
to Section 6.3 may have or hereafter acquire under any law (common or
statutory), provision of the Articles or this Agreement, or other agreement,
vote of Members or disinterested Members or otherwise.

          6.6 Insurance. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Member,
employee or agent of the Company or is or was serving at the request of the
Company as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any expense, liability
or loss, whether or not the Company would have the power to indemnify such
Person against such expense, liability or loss under this Article VI.

          6.7 Savings Clause. If this Article VI or any portion hereof shall be
invalidated on any ground by' any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Member or any other
Person indemnified pursuant to this Article VI as to costs, charges and expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative to the full extent permitted by any applicable
portion of this Article VI that shall not have been invalidated and to the
fullest extent permitted by applicable law.

          6.8 Limitation on Liability. No Member or Officer shall be personally
liable, as such, for any action taken unless: (i) such Member or Officer
breached or failed to perform the duties of his office; and (ii) the breach or
failure to perform constituted self-dealing, willful misconduct, or
recklessness. The foregoing shall not apply to any responsibility or liability
under a criminal statute or liability for the payment of taxes under Federal,
state or local law.

                                   ARTICLE VII

             BOOTS, RECORDS, REPORTS, BANKS ACCOUNTS AND TAX RETURNS

          7.1 Maintenance of Books. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members. The books of
account for the Company shall be maintained on an accrual basis in accordance
with generally accepted accounting principles, except that the capital accounts
of the Members shall be maintained as provided herein. December 31 shall be the
accounting and fiscal year end of the Company.

          7.2 Reports. The Company shall engage independent certified public
accountants to prepare annual financial statements of the Company, which shall
be furnished to


                                        8



all Members. The Company shall, in addition, furnish to all Members all
internally prepared interim financial statements which are from time to time
prepared by the Company.

          7.3 Accounts. The Members shall establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Members determine.
The Members may not commingle the Company's funds with the funds of any Member;
however, Company funds may be invested in a manner the same as or similar to the
Members' investment of their own funds or investments by their affiliates.

          7.4 Tax Returns. The Members shall cause to be prepared and filed on a
timely basis all necessary federal and state income tax returns for the Company.
Each Member shall furnish all pertinent information in his or her possession
relating to Company operations that is necessary to enable Company's income tax
returns to the prepared and filed.

                                  ARTICLE VIII
                    DISSOLUTION, LIQUIDATION AND TERMINATION

          8.1 Dissolution. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:

          (a) The mutual agreement of all Members; or

          (b) upon the occurrence of one of the events set forth in Section
48-245-101 of the Act.

          8.2 Liquidation and Termination. On dissolution of the Company, the
Members shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs o f
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Members.

          8.3 Distributions. On dissolution, Company property shall be
distributed among the Members in the following order of priority:

          (a) If the ratio of a Member's positive Capital Account balance to all
positive Capital Account balances exceeds the Member's Profit Ratio, to such
Member until all positive Capital Account balances are proportionate to the
Members' Profit Ratios; and

          (b) Thereafter to Members having positive Capital Account balances in
proportion to their Profit Ratios.

          All distributions in kind to the Members shall be made subject to the
liability of each distributee for costs, expenses, and liabilities theretofore
incurred or for which the Company has committed prior to the date of termination
and those costs, expenses, and liabilities shall be allocated to the distributee
pursuant to this Section. The distribution of cash or property


                                        9



to a Member in accordance with the provisions of this Section constitutes a
complete return to the Member of its Capital Contributions and a complete
distribution to the Member of its Membership Interest in all the Company's
property. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds.

          8.4 Articles of Termination. On completion of the distribution of
Company assets as provided herein, the Company is terminated, and the Members
(or such other Person or Persons as the Act may require or permit) shall file
Articles of Dissolution with the Tennessee Department of State, cancel any other
filings made pursuant to Article I, and take such other actions as may be
necessary to terminate the Company.

                                   ARTICLE IX
                                   DEFINITIONS

          9.1 Definitions. As used in this Agreement, the following terms have
the following meanings:

          "Act" means the Tennessee Limited Liability Company Act, T.C.A.
08-201401 et. seq., and any successor statute, as amended from time to time.

          "Additional Capital Contributions" means the Capital Contributions in
excess of the Initial Capital Contribution.

          "Agreement" means this Operating Agreement.

          "Articles" has the meaning given that term in Section 1.1.

          "Bankrupt" means, with respect to any Person, a Person (i) makes a
general assignment for the benefit of creditors; (ii) files a voluntary
bankruptcy petition; (iii) becomes the subject of an order for relief or is
declared insolvent in any federal or state bankruptcy or insolvency proceeding;
(iv) files a petition or answer seeking for the Person a reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any law; (v) files an answerer other pleading admitting or failing
to contest the material allegations of a petition filed against the 'Person in a
proceeding of the type described in subclauses (i) through (iv) of this clause
(a); or (vi) seeks, consents or acquiesces in the appointment of a trustee,
receiver or liquidator of the Person or of all or any substantial part of the
Person's property; or (b) against which a proceeding seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any law has been commenced and 120 days have expired without
dismissal thereof or with respect to which, without the Person's consent or
acquiescence, a trustee, receiver or liquidator of the Person or of all or any
substantial part of the Person's properties has been appointed and 90 days have
expired without the appointment's having been vacated or stayed, or 90 days have
expired after the date of expiration of a stay, if the appointment has not
previously been vacated.

          "Business Day" means any day other than a Saturday, a Sunday, or a
holiday on which national banking associations in the State of Tennessee are
closed.


                                       10



          "Capital Account" means the capital account maintained for each Member
as provided in Section 3.6.

          "Capital Contribution" means any contribution by a Member to the
capital of the Company.

          "Code" means the Internal Revenue Code of 1986 and any successor
statute, as amended from time to time.

          "Company" means Plant Engineering Consultants, LLC, a Tennessee
limited liability company.

          "Default Interest Rate" means a rate per annum equal to 3% plus a
varying rate per annum that is equal to the General Interest rate.

          "Dispose," "Disposed," "Disposing" or "Disposition" means a sale,
assignment, transfer, exchange, mortgage, pledge, grant of a security interest,
or other disposition or encumbrance (including, without limitation, by operation
of law), or the acts thereof.

          "General Interest Rate" means a rate per annum equal to a varying rate
per annum that is equal to the interest rate publicly quoted by the Company's
principal bank from time to time as its prime commercial or similar reference
interest rate, with adjustments in that varying rate to be made on the same date
as any change in that rate.

          "Initial Capital Contribution" means the Initial Capital Contributions
set forth on Exhibit A.

          "Member or Members" means TB Woods, Incorporated or any person
hereafter admitted as a member and who holds a Membership Interest at the time
of reference.

          "Membership Interest" means the interest of a Member in the Company,
including,, without limitation, rights to distributions (liquidating or
otherwise), allocations, information, and to consent or approve.

          "Officer" means Persons appointed as such by the Members, if holding
office at the time of reference.

          "Person" meant any individual, joint venture, association,
partnership, limited liability company, corporation, foundation, trust, estate
or other entity.

          "Proceeding" has the meaning given that term in Section 6.1.

          "Profit Ratios" are as set forth on Exhibit A.

          "Related Parties" means a parent, subsidiary, or entity under common
control or an entity owned or controlled by either of the Members.


                                       11



          "Required Interest" means one or more Members having among them more
than one-half of the Profit Ratios of all Members. Each member shall have one
vote for each one percent (1%) of Profit Ratio and shall have a fraction of a
vote for each fraction of one percent (1%) of Profit Ratio. For Example, a
Member having a Profit Ratio of 24.25% would have 24-1/4 votes.

          "TN BCA" memos the Tennessee Business Corporations Act, 48-11-101 et.
seq. and any successor statute, as amended from time to time.

          Other terms defined herein have the meanings so given them.

          9.2 Construction. Whenever the context requires, the gender of all
words in this Agreement includes the masculine, feminine, and neuter. All
references to Articles and Sections refer to articles and sections of this
Agreement, and all references to Exhibits are to Exhibits attached hereto, each
of which is made a part hereof for all purposes.

                                    ARTICLE X
                               GENERAL PROVISIONS

          10.1 Offset. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.

          10.2 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests or consents provided for or permitted to be
given under this Agreement must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested, or by
delivering that writing to the recipient in Person, by courier, or by facsimile
transmission; and a notice, request, or consent given under this Agreement is
effective on receipt. All must be sent to or made at the addresses given for
that Member on Exhibit A or in the instrument described in Section 2.2, or such
other address as that Member may specify by notice to the other Members. Any
notice, request, or consent to the Company or the Members must be given to each
of the Members at the principal residence of the Members, or by hand delivery to
the Members. Whenever any notice is required to be given by law, the Articles or
this Agreement, a written waiver thereof; signed by the Person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.

          10.3 Entire Agreement. This Agreement constitutes the entire agreement
of the Members and their affiliates relating to the Company and supersedes all
prior contracts or agreements with respect to the Company, whether oral or
written.

          10.4 Effect of Waiver or Consent. A waiver or consent, express or
implied, to or of any breach or default by any Person in the performance by that
Person of its obligations with respect to the Company is not a consent or waiver
to or of any other breach or default in the performance by that Person of the
same or any other obligations of that Person with respect to the Company.
Failure on the part of a Person to complain of any act of any Person or to
declare any Person in default with respect to the Company, irrespective of how
long that failure


                                       12



continues, does not constitute a waiver by that Person of its rights with
respect to that default until the applicable statute-of-limitations period has
run.

          10.5 Amendment or Modification. This Agreement may be amended or
modified from time to time only by a written instrument adopted by the Members
and executed and agreed to by Members holding a Required Interest; provided,
however, that (a) an amendment or modification reducing a Member's Profit Ratio
(other than to reflect changes otherwise provided by this Agreement) is
effective only with that Member's consent and (b) an amendment or modification
reducing the required Profit Ratio or other measure for any consent or vote in
this Agreement is effective only with the consent or vote of Members having the
Profit Ratio or other measure theretofore required.

          10.6 Binding Act. This Agreement is binding on and inures to the
benefit of the Members and their respective legal representatives, successors,
and assigns.

          10.7 Governing Laws; Severability. THIS AGREEMENT IS GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TENNESSEE. If any
provision of this Agreement or the application thereof to any Person or
circumstance is held invalid or unenforceable to any extent, the remainder of
this Agreement and the application of that provision to other Persons or
circumstances is not affected thereby and that provision shall be enforced to
the greatest extent permitted by law.

          10.8 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.

          10.9 No Third Party Benefit. The provisions hereof are solely for the
benefit of the Company and its Members and are not intended to, and shall not be
construed to, confer a right or benefit an any creditor of the Company or any
other Person.

          10.10 Waiver of Certain Rights. Each Member irrevocably waives any
right it may have to maintain any action for dissolution of the Company or for
partition of the property or assets of the Company.

          10.11 Indemnification. To the fullest extent permitted by law, each
Member shall indemnify the Company and each other Member and hold them harmless
from and against all losses, costs, liabilities, damages, and expenses
(including; without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of this Agreement.

          10.12 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.


                                       13



          IN WITNESS WHEREOF, the initial Members of this Company have executed
this Agreement as of the date first set forth above.

WITNESS/ATTEST:                         TB WOODS, INCORPORATED


Robert A. Fugate                        By: /s/ William T. Fejes, Jr.
- -------------------------------------       ------------------------------------
                                            William T. Fejes, Jr., President

EX-3.31

                                                                    EXHIBIT 3.31

                              AMENDED AND RESTATED
                            ARTICLES OF INCORPORATION
                                       OF
                            T.B. WOOD'S SONS COMPANY

          1. Name. The name of the Corporation is T.B. WOOD'S SONS COMPANY.

          2. Location. The location and post office address of the registered
office of the Corporation in this Commonwealth is 440 North Fifty Avenue,
Chambersburg, Pennsylvania 17201.

          3. Purpose. The Corporation is incorporated under the Business
Corporation Law of the Commonwealth of Pennsylvania and shall have unlimited
power to engage in and to do any lawful act concerning any or all lawful
business for which corporations may be incorporated under such Business
Corporation Law, including but not limited to manufacturing, processing and
research and development.

          4. Terms of Existence. The term for which the Corporation is to exist
is perpetual.

          5. Capital Stock. The aggregate number of shares of capital stock
which the Corporation shall have authority to issue is 2,500,000 shares of
Common Stock, par value $.10 per share.




               ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION

                              DSCB:15-1915 (Rev 90)

In compliance with the requirements of 15 Pa.C.S. Section 1815 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:

1. The name of the corporation is: T. B. Wood's Sons Company

2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registrar's office provider and the
county of venue is (the Department is hereby authorized to correct the following
information to connect to the records of the Department:

(a) 440 North Fifth Avenue, Chambersburg, PA 17201 Franklin (County)

(b) c/o: _______________________________________________________________________

For corporation represented by a commercial registered office provide, the
county in (b) shall be deemed the county in which the corporation is located for
venue and official publication purposes.

3. The statute by or under which it was incorporated is: Pennsylvania Business
Corporation Law

4. The date of its incorporation is: January 4, 1906

5. (Check, and if appropriate complete, one of the following):

[X]  The amendment shall be effective upon filing these Articles of Amendment in
     the Department of State.

[ ]  The amendment shall be effective on _______ at ____

6. (Check one of the following):

[ ]  The amendment was adopted by the shareholders (or members) pursuant to 15
     Pa.C.S Section 1914(a) and (b).

[X]  The amendment was adopted by the board of directors pursuant to 15 Pa.C.S.
     Section 1914(c).

7. (Check, and if appropriate complete, one of the following):


                                        2




[X]  The amendment adopted by the corporation, set forth in full, is a follows:
     The corporation's name shall be changed from T. B. Wood's Sons Company to
     TB Wood's Incorporated.

[ ]  The amendment adopted by the corporation is set forth in full in Exhibit
     A attached hereto and made a part hereto.

8. (Check if amendment restated the Articles):

[ ]  The restated Articles of Incorporation supersede the original Articles
     and all amendments thereto.

IN TESTIMONY WHEREOF, the undersigned corporation has caused these Articles of
Amendment to be signed by a duly authorized officer thereof this 12 day of June
1995.

                                        T. B. Wood's Sons Company

                                        ----------------------------------------
                                        (Name of Corporation)


                                        By: /s/ Jenny Hitarba
                                            ------------------------------------
                                            (Signature)

                                        TITLE: V.P. Finance
                                               ---------------------------------


                                        3

EX-3.32

                                                                    EXHIBIT 3.32

                                     BY-LAWS

                                       OF

                              T. B. WOOD'S SONS CO.

                          (A PENNSYLVANIA CORPORATION)

                             ADOPTED APRIL 3, 1980



                                INDEX TO BY-LAWS



                                                                            Page
                                                                            ----
                                                                         
ARTICLE I SHAREHOLDERS...................................................      1
   Section 1.01.   Annual Meetings.......................................      1
   Section 1.02.   Special Meetings......................................      1
   Section 1.03.   Organization..........................................      1
   Section 1.04.   Meetings by Telephone.................................      1

ARTICLE II DIRECTORS.....................................................      1
   Section 2.01.   Number, Election and Term of Office...................      2
   Section 2.02.   Regular Meetings; Notice..............................      2
   Section 2.03.   Annual Meeting of the Board...........................      2
   Section 2.04.   Special Meetings; Notice..............................      2
   Section 2.05.   Organization..........................................      2
   Section 2.06.   Meetings by Telephone.................................      3
   Section 2.07.   Presumption of Assent.................................      3
   Section 2.08.   Catastrophe...........................................      3
   Section 2.09.   Resignations..........................................      4
   Section 2.10.   Committees............................................      4

ARTICLE III OFFICERS AND EMPLOYEES.......................................      4
   Section 3.01.   Executive Officers....................................      4
   Section 3.02.   Additional Officers; Other Agents and Employees.......      4
   Section 3.03.   The Chairman..........................................      5
   Section 3.04.   The President.........................................      5
   Section 3.05.   The Vice Presidents...................................      5
   Section 3.06.   The Secretary and Assistant Secretaries...............      5
   Section 3.07.   The Treasurer and Assistant Treasurers................      6
   Section 3.08.   Vacancies.............................................      6
   Section 3.09.   Delegation of Duties..................................      6

ARTICLE IV SHARES OF CAPITAL STOCK.......................................      6
   Section 4.01.   Share Certificates....................................      6
   Section 4.02.   Transfer of Shares....................................      7
   Section 4.03.   Lost, Stolen, Destroyed or Mutilated Certificates.....      7




                                                                         
   Section 4.04.   Regulations Relating to Shares........................      7

ARTICLE V MISCELLANEOUS CORPORATE TRANSACTIONS AND DOCUMENTS.............      7
   Section 5.01.   Notes, Checks, etc....................................      7
   Section 5.02.   Execution of Instruments Generally....................      7
   Section 5.03.   Voting Securities Owned by Corporation................      8

ARTICLE VI GENERAL PROVISIONS............................................      8
   Section 6.01.   Offices...............................................      8
   Section 6.02.   Corporate Seal........................................      8
   Section 6.03.   Fiscal Year...........................................      8
   Section 6.04.   Financial Reports to Shareholders.....................      8

ARTICLE VII VALIDATION OF CERTAIN CONTRACTS..............................      8
   Section 7.01.   Validation of Certain Contracts.......................      8

ARTICLE VIII INDEMNIFICATION OF OFFICERS AND DIRECTORS...................      9
   Section 8.01.   Indemnification of Officers and Directors.............      9

ARTICLE IX AMENDMENTS....................................................      9
   Section 9.01.   Interpretation........................................      9
   Section 9.02.   Amendments............................................      9




                                       2


                            T. B. WOOD'S SONS COMPANY
                                     BY-LAWS

                                   ARTICLE I
                                  SHAREHOLDERS

          SECTION 1.01. Annual Meetings.

          Annual meetings of the shareholders shall be held on the second
Tuesday of March in each year if not a legal holiday, and if a legal holiday, at
10:00 o'clock a.m., at the principal business office of the Corporation, or at
such other date, time, and place as may be fixed by the Board of Directors.
Written notice of the annual meeting shall be given at least ten days prior to
the meeting to each shareholder entitled to vote thereat. Any business may be
transacted at the annual meeting irrespective of whether or not the notice
calling such meeting shall contain a reference thereto, except as otherwise
expressly required herein or by law.

          SECTION 1.02. SPECIAL MEETINGS.

          Special meetings of the shareholders may be called at any time, for
the purpose or purposes set forth in the call, by the President, the Board of
Directors, or the holders of at least one-fifth of all the shares outstanding
and entitled to vote thereat, by delivering a written request to the Secretary.
Special meetings shall be held at the registered office of the Corporation, or
at such other place as may be fixed by the Board of Directors. Written notice of
special meetings shall be given at least five days prior to the meeting to each
shareholder entitled to vote thereat. No business may be transacted at any
special meeting other than that stated in the notice of meeting and business
which is germane thereto.

          SECTION 1.03. ORGANIZATION.

          The Chairman of the Board, If one has been elected and is present, or
if not, the President, or in his absence a member of the Board or an-officer of
the corporation designated by the Board, shall preside, and the Secretary, or in
his absence any Assistant Secretary, shall take the minutes at all meetings of
the shareholders.

          SECTION 1.04. MEETINGS BY TELEPHONE.

          At the call of the Chairman of the Board or the President, one or more
of the shareholders may participate in any annual or special meeting of the
shareholders by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting are able to
hear each other. Participation in a meeting in this manner by a shareholder will
be considered to be attendance in person for all purposes under these By-laws.

                                   ARTICLE II
                                    DIRECTORS



          SECTION 2.01. NUMBER, ELECTION AND TERM OF OFFICE.

          The number of Directors which shall Constitute the full Board of
Directors shall be fixed by the Board of Directors but shall not be less than
the number required by the Pennsylvania Business Corporation Law. A full Board
of Directors shall be elected at each annual meeting of shareholders. Each
Director shall hold office from the time of his election, but shall be
responsible as a director from such time only if he consents to his election;
otherwise from the time he accepts office or attends his first meeting of the
Board. Each Director shall serve until the next annual meeting of shareholders,
and thereafter until his successor is duly elected and qualifies, or until his
earlier death, resignation or removal.

          SECTION 2.02. REGULAR MEETINGS; NOTICE.

          Regular meetings of the Board of Directors shall be held at such time
and place as shall be designated by the Board of Directors from time to time.
Notice of such regular meetings of the Board shall not be required to be given,
except as otherwise expressly required herein or by law, and except: that
whenever the time or place of regular meetings shall be initially fixed and then
changed, notice of such action shall be given promptly by telephone or otherwise
to each Director not participating in such action. Any business may be
transacted at any regular meeting.

          SECTION 2.03. ANNUAL MEETING OF THE BOARD.

          The regular meeting of the, Board of Directors in March of each year
shall be held immediately after and at the same place as the annual meeting of
the shareholders, but if the-annual meeting of the shareholders is held at a
different date and time, then the Board of Directors shall hold a regular
meeting immediately thereafter, and such Board of Directors meeting shall be the
annual organization meeting of the Directors-elect at which meeting the new
Board shall organize itself and elect the executive officers of the Corporation
for the ensuing year and may transact any other business.

          SECTION 2.04. SPECIAL MEETINGS; NOTICE.

          Special meetings of the Board may be called at any time by the Board
itself by vote at a meeting, or by the Chairman, the President or any two
Directors, to be held at such place and day and hour as shall be specified by
the person calling the meeting. Notice of every special meeting of the Board of
Directors, stating the place, day and hour thereof, shall be given to each
Director by mailed at least one week, or by being; sent by telegraph or given
personally by telephone at least 24 hours before the time at which the meeting
is to be held. Any business may be transacted at any special meeting.

          SECTION 2.05. ORGANIZATION.

          At all meetings of the Board of Directors, the presence of at least a
majority of the Directors at the time in office shall be necessary and
sufficient to constitute a quorum for the transaction of business. If a quorum
is not present at any meeting, the meeting may be adjourned from time to time by
a majority of the Directors present until a quorum as aforesaid


                                       2



shall be present; but notice of the time and place to which such meeting is
adjourned shall be given to any Directors not present either by being sent by
telegraph or given personally or by telephone at least 8 hours prior to the hour
of reconvening. Resolutions of the Board shall be adopted, and any action of the
Board at a meeting upon any matter shall be valid and effective, with the
affirmative vote of, at least a majority of, the Directors present at a meeting
duly convened. The Chairman of the Board, if one has been elected and is
present, or if not, the President; shall preside at each meeting of the Board.
In the absence of the President, the Directors present shall designate one of
their number or an officer of the Corporation to preside at the meeting. The
Secretary, or in his absence any Assistant Secretary, shall take the minutes at
all meetings of the Board of Directors. In the absence of the Secretary and an
Assistant Secretary, the presiding officer shall designate any person to take
the minutes of the meeting.

          SECTION 2.06. MEETINGS BY TELEPHONE.

          One or more of the Directors may participate in any regular or special
meeting of the Board of Directors or of a committee of the Board of Directors by
means of conference telephone or similar communications equipment by means of
which all persons participating in, the meeting are able to hear each other.
Participation in a meeting in this manner by a Director will be considered to be
attendance in person for all purposes under these By-Laws.

          SECTION 2.07. PRESUMPTION OF ASSENT.

          Minutes of each meeting of the Board shall be made available to each
Director at or before the next succeeding meeting. Each Director shall be
presumed to have assented to such minutes and agreed to the action taken thereat
unless his objection thereto shall be made to the Secretary within two days
after such meeting.

          SECTION 2.08. CATASTROPHE.

          Notwithstanding any other provisions of law, the Articles or these
By-Laws, during any emergency period caused by a national catastrophe or local
disaster, a majority of the surviving members (or the sole survivor) of the
Board of Directors who have not been rendered incapable of acting because of
incapacity or the difficulty of communication or transportation to the place of
meeting shall constitute a quorum for the sole purpose of electing directors to
fill such emergency vacancies; and a majority of the directors present at such a
meeting may act to fill such vacancies. Directors so elected shall serve until
such absent directors are able to attend meetings or until the shareholders act
to elect directors for such purpose. During such an emergency period, if the
Board is unable to or fails to meet, any action appropriate to the circumstances
may be taken by such officers of the Corporation as may be present and able.
Questions as to the existence of a national catastrophe or local disaster and
the number of surviving members capable of acting shall be conclusively
determined at the time by the Board of Directors or the officers so acting.


                                       3



          SECTION 2.09. RESIGNATIONS.

          Any Director may resign by submitting to the Chairman of the Board, if
one has been elected, or to the President or the Secretary, his resignation,
which shall become effective upon its receipt by such officer or as otherwise
specified therein.

          SECTION 2.10. COMMITTEES.

          Standing or temporary committees may be appointed from its own number
by the Board of Directors from time to time and the Board may from time to time
invest committees with such power and authority, subject to such conditions, as
it may see fit. An Executive Committee may be appointed by a majority of the
full Board; it shall have all the powers and exercise all the authority of the
Board in the management of the business and affairs of the Corporation except as
specially limited by the Board. The Board may designate one or more Directors as
alternate members of any committee to replace any absent or disqualified member
at any meeting; and in the event of such absence or disqualification, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
director to act at the meeting in the place of any such absent or disqualified
member. Any action taken by any committee shall be subject to alteration or
revocation by the Board of Directors; provided, however, that third parties
shall not be prejudiced by such alteration or revocation.

                                  ARTICLE III
                             OFFICERS AND EMPLOYEES.

          SECTION 3.01. EXECUTIVE OFFICERS.

          The Executive Officers of the Corporation shall be the President, a
Secretary and a Treasurer, and may include a Chairman of the Board and one or
more Vice Presidents as the Board may from time to time determine, all of whom
shall be elected by the Board of Directors. Any two or more offices may be held
by the same person. Each Executive Officer shall hold office until the next
succeeding annual meeting of the Board of Directors and thereafter until his
successor is duly elected and qualifies, or until his earlier death, resignation
or removal.

          SECTION 3.02. ADDITIONAL OFFICERS; OTHER AGENTS AND EMPLOYEES.

          The Board of Directors may from time to time appoint or hire such
additional officers, assistant officers, agents, employees and independent
contractors as the Board deems advisable; and the Board or the President shall
prescribe their duties, conditions of employment and compensation. Subject to
the power of the Board, the President may employ from time to time such other
agents, employees, and independent contractors as he may deem advisable for the
prompt and orderly transaction of the business of the Corporation, and he may
prescribe their duties and the conditions of their employment, fix their
compensation and dismiss them, without prejudice to their contract rights, if
any.


                                       4



          SECTION 3.03. THE CHAIRMAN.

          If there shall be a Chairman of the Board, he shall be elected from
among the Directors, shall preside at all meetings of the shareholders and of
the Board, and shall have such other powers and duties as from time to time may
be prescribed by the Board.

          SECTION 3.04. THE PRESIDENT.

          The President shall be the chief executive officer of the Corporation.
Subject to the control of the Board of Directors, the President shall have
general policy supervision of and general management and executive powers over
all the property, business, operations and affairs of the Corporation, and shall
see that the policies and programs adopted or approved by the Board are carried
out. The President shall exercise such further powers and duties as from time to
time may be prescribed in these By-Laws or by the Board of Directors.

          SECTION 3.05. THE VICE PRESIDENTS.

          The Vice Presidents may be given by resolution of the Board general
executive powers, subject to the control of the President, concerning one or
more or all segments of the operations of the Corporation. The Vice Presidents
shall exercise such further powers and duties as from time to time may be
prescribed in these By-Laws or by the Board of Directors or by the President.

          SECTION 3.06. THE SECRETARY AND ASSISTANT SECRETARIES.

          It shall be the duty of the Secretary (a) to keep or cause to be kept
at the registered office of the Corporation an original or duplicate record of
the proceedings of the shareholders and the Board of Directors, and a copy of
the Articles and of the By-Laws; (b) to attend to the giving of notices of the
Corporation as may be required by law or these By-Laws; (c) to be custodian of
the corporate records and of the seal of the Corporation and see that the seal
is affixed to such documents as may be necessary or advisable; (d) to have
charge of and keep at the registered office of the Corporation, or cause to be
kept at the office of a transfer agent or registrar within the Commonwealth of
Pennsylvania, the stock books of the Corporation, and an original or duplicate
share register, giving the names of the shareholders in alphabetical order, and
showing their respective addresses, the number and classes of shares held by
each, the number and date of certificates issued for the shares, and the date of
cancellation of every certificate surrendered for cancellation; and (e) to
exercise all powers and duties incident to the office of Secretary, and such
other powers and duties as may be prescribed by the Board of Directors or by the
President from time to time. The Secretary by virtue of his office may be an
Assistant Treasurer. The Assistant Secretaries shall assist the Secretary in the
performance of his duties and shall also exercise such further powers and duties
as from time to time may be assigned to them by the Board of Directors, the
President or the Secretary. At the direction of the Secretary or in his absence
or disability, an Assistant Secretary shall perform the duties of the Secretary


                                       5



          SECTION 3.07. THE TREASURER AND ASSISTANT TREASURERS.

          The Treasurer shall (a) have custody of the Corporation's contracts,
insurance policies, leases, deeds and other business records; (b) see that the
lists, books, reports, statements, tax returns, certificates and other documents
and records required by law are properly prepared, kept and filed; (c) be the
principal officer in charge of tax and financial matters, budgeting and
accounting of the Corporation; (d) have charge and custody of and be responsible
for the corporate funds, securities and investments; (e) receive and give
receipts for checks, notes, obligations, funds and securities of the
Corporation, and deposit monies and other valuable effects in the name and to
the credit of the Corporation, in such depositories as shall be designated by
the Board of Directors; (f) subject to the provisions of these By-Laws, cause to
be disbursed the funds of the Corporation by payment in cash or by checks or
drafts upon the authorized depositories of the Corporation, and cause to be
taken and preserved proper vouchers for such disbursements; (g) render to the
President and the Board of Directors whenever they may require it an account of
all his transactions as Treasurer, and reports as to the financial position and
operations of the Corporation; (h) cause to be kept appropriate, complete and
accurate books or records of account of all its business and transactions; and
(i) exercise all powers and duties incident to the office of Treasurer, and such
other duties as may be prescribed by the Board of Directors or by the President
from time to time. The Treasurer by virtue of his office may be an Assistant
Secretary. The Assistant Treasurers shall assist the Treasurer in the
performance of his duties and shall also exercise such further powers and duties
as from time to time may be assigned to them by the Board of Directors, the
President or the Treasurer. At the direction of the Treasurer or in his absence
or disability, an Assistant Treasurer shall perform the duties of the Treasurer.

          SECTION 3.08. VACANCIES.

          Vacancy in any office or position by reason of death, resignation,
removal, disqualification, disability or other cause, shall be filled in the
manner provided in this Article III for regular election or appointment to such
office.

          SECTION 3.09. DELEGATION OF DUTIES.

          The Board of Directors may in its discretion delegate for the time
being the powers and duties, or any of them, of any officer to any other person
whom it may select.

                                   ARTICLE IV
                             SHARES OF CAPITAL STOCK

          SECTION 4.01. SHARE CERTIFICATES.

          Every holder of fully-paid stock of the Corporation shall be entitled
to a certificates, to be in such form as the Board of Directors may from time to
time prescribe, and signed (in facsimile or otherwise, as permitted by law) by
the President or a Vice President and the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer, which shall represent and certify
the number of shares of stock owned by such holder. The Board may authorize the
issuance of certificates for fractional shares or, in lieu thereof, scrip or
other


                                       6



evidence of ownership, which may (or may not) as determined by the Board entitle
the holder thereof to voting, dividends or other rights of shareholders.

          SECTION 4.02. TRANSFER OF SHARES.

          Transfers of shares of stock of the Corporation shall be made on the
books of the Corporation shall be made on the books of the Corporation only upon
surrender to the Corporation of the certificate or certificates for such shares
properly endorsed, by the shareholder or by his assignee, agent or legal
representative, who shall furnish proper evidence of assignment, authority or
legal succession, or by the agent of one of the foregoing thereunto duly
authorized by an instrument duly executed and filed with the Corporation, in
accordance with regular commercial practice.

          SECTION 4.03. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES.

          New certificates for shares of stock may be issued to replace
certificates lost, stolen, destroyed or mutilated upon such conditions as the
Board of Directors may from time to time determine.

          SECTION 4.04. REGULATIONS RELATING TO SHARES.

          The Board of Directors shall have power and authority to make all such
rules and regulations not inconsistent with these By-Laws as it may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the Corporation.

                                   ARTICLE V
               MISCELLANEOUS CORPORATE TRANSACTIONS AND DOCUMENTS

          SECTION 5.01. NOTES, CHECKS, ETC.

          All notes, bonds, drafts, acceptances, checks, endorsements (other
than for deposit), guarantees, and all evidences of indebtedness of the
Corporation whatsoever, shall be signed by such officers or agents of the
Corporation, subject to such requirements as to countersignature or other
conditions, as the Board of Directors from time to time may determine. Facsimile
signatures on checks may be used if authorized by the Board of Directors.

          SECTION 5.02. EXECUTION OF INSTRUMENTS GENERALLY.

          Except as provided in Article V, Section 1, all deeds, mortgages,
contracts and other instruments requiring execution by the Corporation may be
signed by the President, any Vice President or the Treasurer; and authority to
sign any such contracts or instruments, which may be general or confined to
specific instances, may be conferred by the Board of Directors upon any other
person or persons. Any person having authority to sign on behalf of the
Corporation may delegate, from time to time, by instrument tin writing, all or
any part of such authority to any person or persons if authorized so to do by
the Board of Directors.


                                       7



          SECTION 5.03. VOTING SECURITIES OWNED BY CORPORATION.

          Securities having voting power in any other corporation owned by this
Corporation shall be voted by the President, unless the Board confers authority
to vote with respect thereto, which may be general or confined to specific
investments, upon some other person. Any person authorized to vote securities
shall have the power to appoint proxies, with general power of substitution.

                                   ARTICLE VI
                               GENERAL PROVISIONS

          SECTION 6.01. OFFICES.

          The principal business office of the Corporation shall be at 440 North
Fifth Avenue, Chambersburg, Pennsylvania 17201. The Corporation may also have
offices at such other places within or without the Commonwealth of Pennsylvania
as the business of the Corporation may require.

          SECTION 6.02. CORPORATE SEAL.

          The Board of Directors shall prescribe the form of a suitable
corporate seal, which shall contain the full name of the Corporation and the
year and state of incorporation.

          SECTION 6.03. FISCAL YEAR.

          The fiscal year of the Corporation shall be the calendar year.

          SECTION 6.04. FINANCIAL REPORTS TO SHAREHOLDERS.

          The Board shall have discretion to determine whether financial reports
shall be sent to shareholders, what such reports shall contain, and whether they
shall be audited or accompanied by the report of an independent or certified
public accountant.

                                  ARTICLE VII
                         VALIDATION OF CERTAIN CONTRACTS

          SECTION 7.01.

          No contract or other transaction between the Corporation and another
person shall be invalidated or otherwise adversely affected by the fact that any
one or more shareholders, directors or officers of the Corporation --

          (a) is pecuniarily or otherwise interested in, or is a shareholder,
director, officer, or member of, such other person, or

          (b) is a party to, or is in any other way pecuniarily or otherwise
interested in, the contract or other transaction, or


                                       8



          (c) is in any way connected with any person pecuniarily or otherwise
interested in such contract or other transaction,

          provided the fact of such interest shall be disclosed or known to the
Board of Directors or the shareholders, as the case may be; and in any action of
the shareholders, as the case may be; and in any action of the shareholders or
of the Board of Directors of the Corporation authorizing or approving any such
contract or other transaction, any and every shareholder or director may be
counted in determining the existence of a quorum, and in determining the
effectiveness of action taken, with like force and effect as though he were not
so interested, or were not such a shareholder, director, member or officer, or
were not such a party, or were not so connected. Such director, shareholder or
officer shall not be liable to account to the Corporation for any profit
realized by him from or through any such contract or transaction approved or
authorized as aforesaid. As used herein, the term "person" includes a
corporation, partnership, firm, association or other legal entity.

                                  ARTICLE VIII
                    INDEMNIFICATION OF OFFICERS AND DIRECTORS

          SECTION 8.01.

          Directors and officers of the Corporation shall be indemnified as of
right to the fullest extent now or hereafter permitted by law in connection with
any actual or threatened civil, criminal, administrative or investigative
action, suit or proceeding (whether brought by or in the name of the Corporation
of otherwise) arising out of their service to the Corporation or to another
organization at the Corporation's request. Persons who are not directors or
officers of the Corporation may be similarly indemnified in respect of such
service to the extent authorized at any time by the Board of Directors. The
Corporation may maintain insurance to protect itself any such director, officer
or other person against any liability cost or expense incurred in connection
with any such action, suit or proceeding.

                                   ARTICLE IX
                                   AMENDMENTS

          SECTION 9.01. INTERPRETATION.

          (a) The authority to interpret and construe these By-Laws shall be
vested in the Board of Directors of the Corporation.

          (b) The masculine gender is used for convenience only and shall refer
both to the masculine and feminine except where the context of these By-Laws
otherwise require.

          SECTION 9.02. AMENDMENTS.

          These By-Laws may be amended, altered and repealed, and new By-Laws
may be adopted, by the shareholders or the Board of Directors of the Corporation
at any regular or special meeting. No provision of these By-Laws shall vest any
property or contract right in any shareholder.


                                       9

EX-4.15

                                                                    EXHIBIT 4.15

                                  $105,000,000

                          ALTRA INDUSTRIAL MOTION, INC.

                        9% SENIOR SECURED NOTES DUE 2011

                          REGISTRATION RIGHTS AGREEMENT

                                  April 5, 2007

JEFFERIES & COMPANY, INC.
520 Madison Avenue, 12th Floor
New York, NY 10022

Ladies and Gentlemen:

     ALTRA INDUSTRIAL MOTION, INC., a Delaware corporation (the "Company"), is
issuing and selling to Jefferies & Company, Inc. (the "Initial Purchaser"), upon
the terms set forth in the Purchase Agreement dated April 3, 2007, by and among
the Company, the Initial Purchaser and the subsidiary guarantors named therein
(the "Purchase Agreement"), $105,000,000 aggregate principal amount of 9% Senior
Secured Notes due 2011 issued by the Company (the "Notes") pursuant to the
Indenture (as defined below) which the Company previously issued $165,000,000
aggregate principal amount of 9% senior secured notes due 2011. As an inducement
to the Initial Purchaser to enter into the Purchase Agreement, the Company and
the subsidiary guarantors listed in the signature pages hereto agree with the
Initial Purchaser, for the benefit of the Holders (as defined below) of the
Notes (including, without limitation, the Initial Purchaser), as follows:

1. DEFINITIONS

     Capitalized terms that are used herein without definition and are defined
in the Purchase Agreement shall have the respective meanings ascribed to them in
the Purchase Agreement. As used in this Agreement, the following terms shall
have the following meanings:

     ADDITIONAL INTEREST: See Section 4(a).

     ADVICE: See Section 6(w).

     AGREEMENT: This Registration Rights Agreement, dated as of the Closing
Date, between the Company and the Initial Purchaser.

     APPLICABLE PERIOD: See Section 2(e).

     BOARD: See Section 11(n).



     BLACKOUT PERIODS: See Section 11(n).

     BUSINESS DAY: A day that is not a Saturday, a Sunday or a day on which
banking institutions in the City of New York are authorized or required by law
or executive order to be closed.

     CLOSING DATE: April 5, 2007.

     COLLATERAL AGREEMENTS: Shall have the meaning set forth in the Indenture.

     COMPANY: See the introductory paragraph to this Agreement.

     EFFECTIVENESS DATE: The 210th day after the Closing Date.

     EFFECTIVENESS PERIOD: See Section 3(a).

     EVENT DATE: See Section 4(b).

     EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.

     EXCHANGE NOTES: 9% Senior Secured Notes due 2011 of the Company, identical
in all material respects to the Notes, including the guarantees endorsed
thereon, except for references to series and restrictive legends and references
to this Agreement.

     EXCHANGE OFFER: See Section 2(a).

     EXCHANGE REGISTRATION STATEMENT: See Section 2(a).

     FILING DATE: The 45th day after the Closing Date.

     HOLDER: Any registered holder of Registrable Notes.

     INDEMNIFIED PARTY: See Section 8(c).

     INDEMNIFYING PARTY: See Section 8(c).

     INDENTURE: The Indenture, dated as of November 30, 2004, among the Company,
the Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as
trustee, pursuant to which the Notes are being issued, as supplemented by the
First Supplemental Indenture dated February 7, 2006, among the Company, the
Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as trustee,
and as further supplemented by the Second Supplemental Indenture dated February
8, 2006, among the Company, the Subsidiary Guarantors and The Bank of New York
Trust Company, N.A., as trustee, and as further supplemented by the Third
Supplemental Indenture dated April 24, 2006, among the Company, the Subsidiary
Guarantors and The Bank of New York Trust Company, N.A., as trustee, and as
further supplemented by the Fourth Supplemental Indenture dated March 21, 2007,
among the Company, the Subsidiary Guarantors and The Bank of New York Trust
Company, N.A., as trustee, and as further supplemented by the Fifth Supplemental
Indenture dated as of the Closing Date, among the


                                        2



Company, the Subsidiary Guarantors and The Bank of New York Trust Company, N.A.,
as trustee, and as further supplemented from time to time in accordance with the
terms hereof.

     INITIAL PURCHASER: See the introductory paragraph to this Agreement.

     INITIAL SHELF REGISTRATION: See Section 3(a).

     INSPECTORS: See Section 6(o).

     LIEN: Shall have the meaning set forth in the Indenture.

     LOSSES: See Section 8(a).

     MAXIMUM CONTRIBUTION AMOUNT: See Section 8(d).

     NASD: National Association of Securities Dealers, Inc.

     NOTES: See the introductory paragraph to this Agreement.

     PARTICIPATING BROKER-DEALER: See Section 2(e).

     PERSON: An individual, trustee, corporation, partnership, limited liability
company, joint stock company, trust, unincorporated association, union, business
association, firm, government or agency or political subdivision thereof, or
other legal entity.

     PRIVATE EXCHANGE: See Section 2(f).

     PRIVATE EXCHANGE NOTES: See Section 2(f).

     PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Notes covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

     PURCHASE AGREEMENT: See the introductory paragraph to this Agreement.

     RECORDS: See Section 6(o).

     REGISTRABLE NOTES: (i) Notes, (ii) Private Exchange Notes and (iii)
Exchange Notes received in the Exchange Offer, in each case, that may not be
sold without restriction under federal or state securities laws.

     REGISTRATION STATEMENT: Any registration statement of the Company and the
Subsidiary Guarantors filed with the SEC under the Securities Act (including,
but not limited to, the Exchange Registration Statement, the Shelf Registration
and any subsequent Shelf Registration)


                                        3



that covers any of the Registrable Notes pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.

     RULE 144: Rule 144 promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer or such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.

     RULE 144A: Rule 144A promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.

     RULE 415: Rule 415 promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.

     RULE 430A: Rule 430A promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.

     SEC: The Securities and Exchange Commission.

     SECURITIES: The Notes, the Exchange Notes and the Private Exchange Notes.

     SECURITIES ACT: The Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

     SHELF NOTICE: See Section 2(j).

     SHELF REGISTRATION: See Section 3(b).

     SUBSEQUENT SHELF REGISTRATION: See Section 3(b).

     SUBSIDIARY GUARANTOR: Each subsidiary of the Company that guarantees the
obligations of the Company under the Notes and the Indenture.

     TIA: The Trust Indenture Act of 1939, as amended.

     TRUSTEE: The trustee under the Indenture and, if applicable, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).

     UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in which
securities of the Company are sold to an underwriter for reoffering to the
public.

2. EXCHANGE OFFER

     (a)  Unless the Exchange Offer would not be permitted by applicable laws or
          a policy of the SEC, the Company shall (and shall cause each
          Subsidiary Guarantor to) (i)


                                        4



          use commercially reasonable efforts to prepare and file with the SEC
          promptly after the date hereof and by the Filing Date, a registration
          statement (the "Exchange Registration Statement") on an appropriate
          form under the Securities Act with respect to an offer (the "Exchange
          Offer") to the Holders of Notes to issue and deliver to such Holders,
          in exchange for the Notes, a like principal amount of Exchange Notes,
          (ii) use commercially reasonable efforts to cause the Exchange
          Registration Statement to become effective as promptly as practicable
          after the filing thereof and on or before the Effectiveness Date,
          (iii) use its best efforts to keep the Exchange Registration Statement
          effective until the consummation of the Exchange Offer in accordance
          with its terms, and (iv) commence the Exchange Offer and use its best
          efforts to issue, on or prior to 30 Business Days after the date on
          which the Exchange Registration Statement is declared effective,
          Exchange Notes in exchange for all Notes tendered prior thereto in the
          Exchange Offer. The Exchange Offer shall not be subject to any
          conditions, other than that the Exchange Offer does not violate
          applicable law or any applicable interpretation of the staff of the
          SEC.

     (b)  The Exchange Notes shall be issued under, and entitled to the benefits
          of, (i) the Indenture or a trust indenture that is identical to the
          Indenture (other than such changes as are necessary to comply with any
          requirements of the SEC to effect or maintain the qualifications
          thereof under the TIA) and (ii) the Collateral Agreements.

     (c)  Interest on the Exchange Notes and Private Exchange Notes will accrue
          (i) from the later of (A) the last interest payment date on which
          interest was paid on the Notes surrendered in exchange therefor, or
          (B) if the Notes are surrendered for exchange on a date in a period
          which includes the record date for an interest payment date to occur
          on or after the date of such exchange and as to which interest was
          paid, the date of such interest payment date; or (ii) if no interest
          has been paid on the Notes, from the Closing Date. Each Exchange Note
          and Private Exchange Note shall bear interest at the rate set forth
          thereon; provided, that interest with respect to the -------- period
          prior to the issuance thereof shall accrue at the rate or rates borne
          by the Notes from time to time during such period.

     (d)  The Company may require each Holder as a condition to participation in
          the Exchange Offer to represent (i) that any Exchange Notes received
          by it will be acquired in the ordinary course of its business, (ii)
          that at the time of the commencement and consummation of the Exchange
          Offer such Holder has not entered into any arrangement or
          understanding with any Person to participate in the distribution
          (within the meaning of the Securities Act) of the Exchange Notes in
          violation of the provisions of the Securities Act, (iii) that if such
          Holder is an "affiliate" of the Company within the meaning of Rule 405
          of the Securities Act, it will comply with the registration and
          prospectus delivery requirements of the Securities Act to the extent
          applicable to it, (iv) if such Holder is not a broker-dealer, that it
          is not engaged in, and does not intend to engage in, the distribution
          of the Notes and (v) if such Holder is a Participating Broker-Dealer
          (as defined


                                        5



          below), that it will deliver a Prospectus in connection with any
          resale of the Exchange Notes.

     (e)  The Company shall (and shall cause each Subsidiary Guarantor to)
          include within the Prospectus contained in the Exchange Registration
          Statement a section entitled "Plan of Distribution" reasonably
          acceptable to the Initial Purchaser which shall contain a summary
          statement of the positions taken or policies made by the staff of the
          SEC with respect to the potential "underwriter" status of any
          broker-dealer that is the beneficial owner (as defined in Rule 13d-3
          under the Exchange Act) of Exchange Notes received by such
          broker-dealer in the Exchange Offer for its own account in exchange
          for Notes that were acquired by it as a result of market-making or
          other trading activity (a "Participating Broker-Dealer"), whether such
          positions or policies have been publicly disseminated by the staff of
          the SEC or such positions or policies, in the judgment of the Initial
          Purchaser, represent the prevailing views of the staff of the SEC.
          Such "Plan of Distribution" section shall also allow, to the extent
          permitted by applicable policies and regulations of the SEC, the use
          of the Prospectus by all Persons subject to the prospectus delivery
          requirements of the Securities Act, including, to the extent so
          permitted, all Participating Broker-Dealers, and include a statement
          describing the manner in which Participating Broker-Dealers may resell
          the Exchange Notes. The Company shall use its best efforts to keep the
          Exchange Registration Statement effective and to amend and supplement
          the Prospectus contained therein, in order to permit such Prospectus
          to be lawfully delivered by all Persons subject to the prospectus
          delivery requirements of the Securities Act for such period of time as
          such Persons must comply with such requirements in order to resell the
          Exchange Notes; provided that such period shall not exceed the lesser
          of 180 days and the date on which all persons subject to the
          prospectus delivery requirements of the Securities Act have sold all
          Exchange Notes held by them (the "Applicable Period").

     (f)  If, upon consummation of the Exchange Offer, the Initial Purchaser
          hold any Notes acquired by them and having the status of an unsold
          allotment in the initial distribution, the Company (upon the written
          request from the Initial Purchaser) shall, simultaneously with the
          delivery of the Exchange Notes in the Exchange Offer, issue and
          deliver to the Initial Purchaser, in exchange (the "Private Exchange")
          for the Notes held by the Initial Purchaser, a like principal amount
          of Notes that are identical to the Exchange Notes except for the
          existence of restrictions on transfer thereof under the Securities Act
          and securities laws of the several states of the United States (the
          "Private Exchange Notes") (and which are issued pursuant to the same
          indenture as the Exchange Notes). The Private Exchange Notes shall
          bear the same CUSIP number as the Exchange Notes.

     (g)  In connection with the Exchange Offer, the Company shall (and shall
          cause each Subsidiary Guarantor to):

          (i)  mail to each Holder a copy of the Prospectus forming part of the
               Exchange Registration Statement, together with an appropriate
               letter of transmittal


                                        6



               that is an exhibit to the Exchange Registration Statement, and
               any related documents;

          (ii) keep the Exchange Offer open for not less than 20 Business Days
               after the date notice thereof is mailed to the Holders (or longer
               if required by applicable law);

          (iii) utilize the services of a depository for the Exchange Offer with
               an address in the Borough of Manhattan, the City of New York,
               which may be the Trustee or an affiliate thereof;

          (iv) permit Holders to withdraw tendered Registrable Notes at any time
               prior to the close of business, New York time, on the last
               Business Day on which the Exchange Offer shall remain open; and

          (v)  otherwise comply in all material respects with all applicable
               laws.

     (h)  As soon as practicable after the close of the Exchange Offer or the
          Private Exchange, as the case may be, the Company shall (and shall
          cause each Subsidiary Guarantor to):

          (i)  accept for exchange all Registrable Notes validly tendered
               pursuant to the Exchange Offer or the Private Exchange, as the
               case may be, and not validly withdrawn;

          (ii) deliver to the Trustee for cancellation all Registrable Notes so
               accepted for exchange; and

          (iii) cause the Trustee to authenticate and deliver promptly to each
               Holder tendering such Registrable Notes, Exchange Notes or
               Private Exchange Notes, as the case may be, equal in principal
               amount to the Notes of such Holder so accepted for exchange.

     (i)  The Exchange Notes and the Private Exchange Notes may be issued under
          (i) the Indenture or (ii) an indenture identical to the Indenture
          (other than such changes as are necessary to comply with any
          requirements of the SEC to effect or maintain the qualification
          thereof under the TIA), which in either event will provide that the
          Exchange Notes will not be subject to the transfer restrictions set
          forth in the Indenture, that the Private Exchange Notes will be
          subject to the transfer restrictions set forth in the Indenture, and
          that the Exchange Notes, the Private Exchange Notes and the Notes, if
          any, will be deemed one class of security (subject to the provisions
          of the Indenture) and entitled to participate in all the security
          granted by the Company pursuant to the Collateral Agreements and in
          any Subsidiary Guarantee (as such terms are defined in the Indenture)
          on an equal and ratable basis.

     (j)  If: (i) prior to the consummation of the Exchange Offer, the Holders
          of a majority in aggregate principal amount of Registrable Notes
          determines in its or their


                                        7



          reasonable judgment that (A) the Exchange Notes would not, upon
          receipt, be tradeable by the Holders thereof without restriction under
          the Securities Act and the Exchange Act and without material
          restrictions under applicable Blue Sky or state securities laws, or
          (B) the interests of the Holders under this Agreement, taken as a
          whole, would be materially adversely affected by the consummation of
          the Exchange Offer; (ii) applicable interpretations of the staff of
          the SEC would not permit the consummation of the Exchange Offer prior
          to the Effectiveness Date; (iii) subsequent to the consummation of the
          Private Exchange, any Holder of Private Exchange Notes so requests;
          (iv) the Exchange Offer is not consummated within 30 Business Days
          from the date the Exchange Registration Statement was declared
          effective; or (v) in the case of (A) any Holder not permitted by
          applicable law or SEC policy to participate in the Exchange Offer, (B)
          any Holder participating in the Exchange Offer that receives Exchange
          Notes that may not be sold without restriction under state and federal
          securities laws (other than due solely to the status of such Holder as
          an affiliate of the Company within the meaning of the Securities Act)
          or (C) any broker-dealer that holds Notes acquired directly from the
          Company or any of its affiliates and, in each such case contemplated
          by this clause (v), such Holder notifies the Company within six months
          of consummation of the Exchange Offer, then the Company shall promptly
          (and in any event within five Business Days) deliver to the Holders
          (or in the case of an occurrence of any event described in clause (v)
          of this Section 2(j), to any such Holder) and the Trustee notice
          thereof (the "Shelf Notice") and shall as promptly as possible
          thereafter (but in no event more than 45 days after delivery of the
          Shelf Notice) file an Initial Shelf Registration pursuant to Section
          3.

3. SHELF REGISTRATION

     If a Shelf Notice is delivered pursuant to Section 2(j), then this Section
3 shall apply to all Registrable Notes. Otherwise, upon consummation of the
Exchange Offer in accordance with Section 2, the provisions of Section 3 shall
apply solely with respect to (i) Notes held by any Holder thereof not permitted
to participate in the Exchange Offer, (ii) Notes held by any broker-dealer that
acquired such Notes directly from the Company or any of its affiliates and (iii)
Exchange Notes that are not freely tradeable as contemplated by Section 2(j)(v)
hereof, provided in each case that the relevant Holder has duly notified the
Company within six months of the Exchange Offer as required by Section 2(j)(v).

     (a)  Initial Shelf Registration. The Company shall (and shall cause each
          Subsidiary Guarantor to), as promptly as practicable, file with the
          SEC a Registration Statement for an offering to be made on a
          continuous basis pursuant to Rule 415 covering all of the Registrable
          Notes (the "Initial Shelf Registration"). If the Company (and any
          Subsidiary Guarantor) has not yet filed an Exchange Registration
          Statement, the Company shall (and shall cause each Subsidiary
          Guarantor to) file with the SEC the Initial Shelf Registration on or
          prior to the Filing Date and shall use its best efforts to cause such
          Initial Shelf Registration to be declared effective under the
          Securities Act on or prior to the Effectiveness Date. Otherwise, the
          Company shall (and shall cause each Subsidiary Guarantor


                                        8



          to) use its best efforts to file with the SEC the Initial Shelf
          Registration within 30 days of the delivery of the Shelf Notice and
          shall use its best efforts to cause such Shelf Registration to be
          declared effective under the Securities Act as promptly as practicable
          thereafter (but in no event more than 45 days after delivery of the
          Shelf Notice). The Initial Shelf Registration shall be on Form S-1 or
          another appropriate form permitting registration of such Registrable
          Notes for resale by Holders in the manner or manners reasonably
          designated by them (including, without limitation, one or more
          underwritten offerings). The Company and Subsidiary Guarantors shall
          not permit any securities other than the Registrable Notes to be
          included in any Shelf Registration. The Company shall (and shall cause
          each Subsidiary Guarantor to) use its best efforts to keep the Initial
          Shelf Registration continuously effective under the Securities Act
          until the date which is 24 months from the Closing Date (subject to
          extension pursuant to the last sentence of Section 6(w) (the
          "Effectiveness Period"), or such shorter period ending when (i) all
          Registrable Notes covered by the Initial Shelf Registration have been
          sold in the manner set forth and as contemplated in the Initial Shelf
          Registration, (ii) a Subsequent Shelf Registration covering all of the
          Registrable Notes covered by and not sold under the Initial Shelf
          Registration or an earlier Subsequent Shelf Registration has been
          declared effective under the Securities Act or (iii) there cease to be
          any outstanding Registrable Notes.

     (b)  Subsequent Shelf Registrations. If the Initial Shelf Registration or
          any Subsequent Shelf Registration (as defined below) ceases to be
          effective for any reason at any time during the Effectiveness Period
          (other than because of the sale of all of the securities registered
          thereunder), the Company shall (and shall cause each Subsidiary
          Guarantor to) use its best efforts to obtain the prompt withdrawal of
          any order suspending the effectiveness thereof, and in any event shall
          within 30 days of such cessation of effectiveness amend such Shelf
          Registration in a manner to obtain the withdrawal of the order
          suspending the effectiveness thereof, or file (and cause each
          Subsidiary Guarantor to file) an additional "shelf" Registration
          Statement pursuant to Rule 415 covering all of the Registrable Notes
          (a "Subsequent Shelf Registration"). If a Subsequent Shelf
          Registration is filed, the Company shall (and shall cause each
          Subsidiary Guarantor to) use its best efforts to cause the Subsequent
          Shelf Registration to be declared effective as soon as practicable
          after such filing and to keep such Subsequent Shelf Registration
          continuously effective for a period equal to the number of days in the
          Effectiveness Period less the aggregate number of days during which
          the Initial Shelf Registration or any Subsequent Shelf Registration
          was previously continuously effective. As used herein the term "Shelf
          Registration" means the Initial Shelf Registration and any Subsequent
          Shelf Registrations

     (c)  Supplements and Amendments. The Company shall promptly supplement and
          amend any Shelf Registration if required by the rules, regulations or
          instructions applicable to the registration form used for such Shelf
          Registration or if required by the Securities Act.


                                        9



     (d)  Provision of Information. No Holder of Registrable Notes shall be
          entitled to include any of its Registrable Notes in any Shelf
          Registration pursuant to this Agreement unless such Holder furnishes
          to the Company and the Trustee in writing, within 20 days after
          receipt of a written request therefor, such information as the Company
          and the Trustee after conferring with counsel with regard to
          information relating to Holders that would be required by the SEC to
          be included in such Shelf Registration or Prospectus included therein,
          may reasonably request for inclusion in any Shelf Registration or
          Prospectus included therein, and no such Holder shall be entitled to
          Additional Interest pursuant to Section 4 hereof unless and until such
          Holder shall have provided such information.

4. ADDITIONAL INTEREST

     (a)  The Company and each Subsidiary Guarantor acknowledges and agrees that
          the Holders of Registrable Notes will suffer damages if the Company or
          any Subsidiary Guarantor fails to fulfill its material obligations
          under Section 2 or Section 3 hereof and that it would not be feasible
          to ascertain the extent of such damages with precision. Accordingly,
          the Company and the Subsidiary Guarantors agree to pay additional cash
          interest on the Notes ("Additional Interest") under the circumstances
          and to the extent set forth below (each of which shall be given
          independent effect):

          (i)  if (A) neither the Exchange Registration Statement nor the
               Initial Shelf Registration has been filed on or prior to the
               Filing Date or (B) notwithstanding that the Exchange Offer has or
               will be consummated, the Company is required to file a Shelf
               Registration Statement and such Shelf Registration Statement in
               not filed on or prior to the date required under Section 3 of
               this Registration Rights Agreement, then Additional Interest
               shall accrue on the Notes over and above any stated interest at a
               rate of 0.25% per annum of the principal amount of such Notes for
               the first 90 days immediately following the Filing Date, such
               Additional Interest rate increasing by an additional 0.25% per
               annum at the beginning of each subsequent 90-day period;

          (ii) if (A) neither the Exchange Registration Statement nor the
               Initial Shelf Registration is declared effective on or prior to
               the Effectiveness Date or (B) notwithstanding that the Exchange
               Offer has or will be consummated, the Company is required to file
               a Shelf Registration Statement and such Shelf Registration
               Statement is not declared effective by the SEC on or prior to the
               90th day following the date such Shelf Registration Statement was
               filed, then, commencing on the day after either such required
               effective date, Additional Interest shall accrue on the Notes
               over and above any stated interest at a rate of 0.25% per annum
               of the principal amount of such Notes for the first 90 days
               immediately following the Effectiveness Date, such Additional
               Interest rate increasing by an additional 0.25% per annum at the
               beginning of each subsequent 90-day period;


                                       10



          (iii) if (A) the Company (and any Subsidiary Guarantor) has not
               exchanged Exchange Notes for all Notes validly tendered in
               accordance with the terms of the Exchange Offer on or prior to
               the 30th Business Day after the Effectiveness Date or (B) if
               applicable, a Shelf Registration has been declared effective and
               such Shelf Registration ceases to be effective at any time prior
               to the second anniversary of the Closing Date (other than such
               time as all Notes have been disposed of thereunder) and is not
               declared effective again within 30 days, then Additional Interest
               shall accrue on the Notes, over and above any stated interest, at
               a rate of 0.25% per annum of the principal amount of such Notes
               for the first 90 days commencing on (x) the 31st Business Day
               after the Effectiveness Date, in the case of (A) above, or (y)
               the day such Shelf Registration ceases to be effective in the
               case of (B) above, such Additional Interest rate increasing by an
               additional 0.25% per annum at the beginning of each such
               subsequent 90-day period;

          provided, however, that Additional Interest will not accrue under more
          than one of the foregoing clauses (i), (ii) or (iii) at any one time;
          provided further, that the maximum Additional Interest rate on the
          Notes may not exceed at any one time in the aggregate 1.00% per annum;
          and provided further, that (1) upon the filing of the Exchange
          Registration Statement or Initial Shelf Registration (in the case of
          (i) above), (2) upon the effectiveness of the Exchange Registration
          Statement or Initial Shelf Registration (in the case of (ii) above),
          or (3) upon the exchange of Exchange Notes for all Notes tendered (in
          the case of (iii)(A) above), or upon the effectiveness of a Shelf
          Registration which had ceased to remain effective (in the case of
          (iii)(B) above), Additional Interest on the Notes as a result of such
          clause (or the relevant subclause thereof), as the case may be, shall
          cease to accrue.

     (b)  The Company shall notify the Trustee within three Business Days after
          each and every date on which an event occurs in respect of which
          Additional Interest is required to be paid (an "Event Date"). Any
          amounts of Additional Interest due pursuant to clause (a)(i), (a)(ii)
          or (a)(iii) of this Section 4 will be payable in cash, on the dates
          and in the manner provided in the Indenture and whether or not any
          cash interest would then be payable on such date, commencing with the
          first such semi-annual date occurring after any such Additional
          Interest commences to accrue. The amount of Additional Interest will
          be determined by multiplying the applicable Additional Interest rate
          by the principal amount of the Notes, multiplied by a fraction, the
          numerator of which is the number of days such Additional Interest rate
          was applicable during such period (determined on the basis of a
          360-day year comprised of twelve 30-day months and, in the case of a
          partial month, the actual number of days elapsed), and the denominator
          of which is 360.

5. HOLD-BACK AGREEMENTS

     The Company agrees that it will not effect any public or private sale or
distribution (including a sale pursuant to Regulation D under the Securities
Act) of any securities the same as or similar to those covered by a Registration
Statement filed pursuant to Section 2 or 3 hereof


                                       11



(other than Additional Notes (as defined in the Indenture) issued under the
Indenture), or any securities convertible into or exchangeable or exercisable
for such securities, during the 10 days prior to, and during the 90-day period
beginning on, the effective date of any Registration Statement filed pursuant to
Sections 2 and 3 hereof unless the Holders of a majority of the aggregate
principal amount of the Registrable Notes to be included in such Registration
Statement consent, if the managing underwriter thereof (if any) so requests in
writing.

6. REGISTRATION PROCEDURES

     In connection with the filing of any Registration Statement pursuant to
Sections 2 or 3 hereof, the Company shall (and shall cause each Subsidiary
Guarantor to) effect such registrations to permit the sale of such securities
covered thereby in accordance with the intended method or methods of disposition
thereof, and pursuant thereto and in connection with any Registration Statement
filed by the Company hereunder, the Company shall (and shall cause each
Subsidiary Guarantor to):

     (a)  Prepare and file with the SEC as soon as practicable after the date
          hereof but in any event on or prior to the Filing Date, the Exchange
          Registration Statement or if the Exchange Registration Statement is
          not filed because of the circumstances contemplated by Section 2(j), a
          Shelf Registration as prescribed by Section 3, and use its
          commercially reasonable efforts to cause each such Registration
          Statement to become effective and remain effective as provided herein;
          provided that, if (1) a Shelf Registration is filed pursuant to
          Section 3 or (2) a Prospectus contained in an Exchange Registration
          Statement filed pursuant to Section 2 is required to be delivered
          under the Securities Act by any Participating Broker-Dealer who seeks
          to sell Exchange Notes during the Applicable Period relating thereto,
          before filing any Registration Statement or Prospectus or any
          amendments or supplements thereto the Company shall (and shall cause
          each Subsidiary Guarantor to), if requested, furnish to and afford the
          Holders of the Registrable Notes to be registered pursuant to such
          Shelf Registration Statement, each Participating Broker-Dealer, the
          managing underwriters, if any, and each of their respective counsel, a
          reasonable opportunity to review copies of all such documents
          (including copies of any documents to be incorporated by reference
          therein and all exhibits thereto) proposed to be filed (in each case
          at least five Business Days prior to such filing). The Company and
          each Subsidiary Guarantor shall not file any such Registration
          Statement or Prospectus or any amendments or supplements thereto in
          respect of which the Holders must provide information for the
          inclusion therein without the Holders being afforded an opportunity to
          review such documentation if the Holders of a majority in aggregate
          principal amount of the Registrable Notes covered by such Registration
          Statement, or any such Participating Broker-Dealer, as the case may
          be, the managing underwriters, if any, or any of their respective
          counsel shall reasonably object in writing on a timely basis. A Holder
          shall be deemed to have reasonably objected to such filing if such
          Registration Statement, amendment, Prospectus or supplement, as
          applicable, as proposed to be filed, contains an untrue statement of a
          material fact or omits to state any material fact necessary to make
          the statements therein not


                                       12



          misleading or fails to comply with the applicable requirements of the
          Securities Act.

     (b)  Provide an indenture trustee for the Registrable Notes, the Exchange
          Notes or the Private Exchange Notes, as the case may be, and cause the
          Indenture (or other indenture relating to the Registrable Notes) to be
          qualified under the TIA not later than the effective date of the first
          Registration Statement; and in connection therewith, to effect such
          changes to such indenture as may be required for such indenture to be
          so qualified in accordance with the terms of the TIA; and execute, and
          use its best efforts to cause such trustee to execute, all documents
          as may be required to effect such changes, and all other forms and
          documents required to be filed with the SEC to enable such indenture
          to be so qualified in a timely manner.

     (c)  Prepare and file with the SEC such pre-effective amendments and
          post-effective amendments to each Shelf Registration or Exchange
          Registration Statement, as the case may be, as may be necessary to
          keep such Registration Statement continuously effective for the
          Effectiveness Period or the Applicable Period, as the case may be;
          cause the related Prospectus to be supplemented by any Prospectus
          supplement required by applicable law, and as so supplemented to be
          filed pursuant to Rule 424 (or any similar provisions then in force)
          promulgated under the Securities Act; and comply with the provisions
          of the Securities Act and the Exchange Act applicable to them with
          respect to the disposition of all securities covered by such
          Registration Statement as so amended or in such Prospectus as so
          supplemented and with respect to the subsequent resale of any
          securities being sold by a Participating Broker-Dealer covered by any
          such Prospectus. The Company and each Subsidiary Guarantor shall not,
          during the Applicable Period, voluntarily take any action that would
          result in selling Holders of the Registrable Notes covered by a
          Registration Statement or Participating Broker-Dealers seeking to sell
          Exchange Notes not being able to sell such Registrable Notes or such
          Exchange Notes during that period, unless such action is required by
          applicable law, rule or regulation or permitted by this Agreement.

     (d)  Furnish to such selling Holders and Participating Broker-Dealers who
          so request in writing (i) upon the Company's receipt, a copy of the
          order of the SEC declaring such Registration Statement and any post
          effective amendment thereto effective, (ii) such reasonable number of
          copies of such Registration Statement and of each amendment and
          supplement thereto (in each case including any documents incorporated
          therein by reference and all exhibits), (iii) such reasonable number
          of copies of the Prospectus included in such Registration Statement
          (including each preliminary Prospectus) and each amendment and
          supplement thereto, and such reasonable number of copies of the final
          Prospectus as filed by the Company and each Subsidiary Guarantor
          pursuant to Rule 424(b) under the Securities Act, in conformity with
          the requirements of the Securities Act and each amendment and
          supplement thereto, and (iv) such other documents (including any
          amendments required to be filed pursuant to clause (c) of this
          Section), as any such Person may reasonably request in writing. The
          Company and the Subsidiary Guarantors hereby consent to the use of the
          Prospectus by each


                                       13



          of the selling Holders of Registrable Notes or each such Participating
          Broker-Dealer, as the case may be, and the underwriters or agents, if
          any, and dealers, if any, in connection with the offering and sale of
          the Registrable Notes covered by, or the sale by Participating
          Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and
          any amendment or supplement thereto.

     (e)  If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
          Prospectus contained in an Exchange Registration Statement filed
          pursuant to Section 2 is required to be delivered under the Securities
          Act by any Participating Broker-Dealer who seeks to sell Exchange
          Notes during the Applicable Period relating thereto, the Company shall
          notify in writing the selling Holders of Registrable Notes, or each
          such Participating Broker-Dealer, as the case may be, the managing
          underwriters, if any, and each of their respective counsel promptly
          (but in any event within two Business Days) (i) when a Prospectus or
          any Prospectus supplement or post-effective amendment has been filed,
          and, with respect to a Registration Statement or any post-effective
          amendment, when the same has become effective (including in such
          notice a written statement that any Holder may, upon request, obtain,
          without charge, one conformed copy of such Registration Statement or
          post-effective amendment including financial statements and schedules,
          documents incorporated or deemed to be incorporated by reference and
          exhibits), (ii) of the issuance by the SEC of any stop order
          suspending the effectiveness of a Registration Statement or of any
          order preventing or suspending the use of any Prospectus or the
          initiation of any proceedings for that purpose, (iii) if at any time
          when a Prospectus is required by the Securities Act to be delivered in
          connection with sales of the Registrable Notes the representations and
          warranties of the Company and any Subsidiary Guarantor contained in
          any agreement (including any underwriting agreement) contemplated by
          Section 6(n) hereof cease to be true and correct, (iv) of the receipt
          by the Company or any Subsidiary Guarantor of any notification with
          respect to the suspension of the qualification or exemption from
          qualification of a Registration Statement or any of the Registrable
          Notes or the Exchange Notes to be sold by any Participating
          Broker-Dealer for offer or sale in any jurisdiction, or the initiation
          or threatening of any proceeding for such purpose, (v) of the
          happening of any event, the existence of any condition or any
          information becoming known that makes any statement made in such
          Registration Statement or related Prospectus or any document
          incorporated or deemed to be incorporated therein by reference untrue
          in any material respect or that requires the making of any changes in,
          or amendments or supplements to, such Registration Statement,
          Prospectus or documents so that, in the case of the Registration
          Statement and the Prospectus, it will not contain any untrue statement
          of a material fact or omit to state any material fact required to be
          stated therein or necessary to make the statements therein, in light
          of the circumstances under which they were made, not misleading, (vi)
          of any reasonable determination by the Company or any Subsidiary
          Guarantor that a post-effective amendment to a Registration Statement
          would be appropriate and (vii) of any request by the SEC for
          amendments to the Registration Statement or supplements to the
          Prospectus or for additional information relating thereto.


                                       14



     (f)  Use its best efforts to prevent the issuance of any order suspending
          the effectiveness of a Registration Statement or of any order
          preventing or suspending the use of a Prospectus or suspending the
          qualification (or exemption from qualification) of any of the
          Registrable Notes or the Exchange Notes to be sold by any
          Participating Broker-Dealer, for sale in any jurisdiction, and, if any
          such order is issued, to use its best efforts to obtain the withdrawal
          of any such order at the earliest possible date.

     (g)  If (A) a Shelf Registration is filed pursuant to Section 3, (B) a
          Prospectus contained in an Exchange Registration Statement filed
          pursuant to Section 2 is required to be delivered under the Securities
          Act by any Participating Broker-Dealer who seeks to sell Exchange
          Notes during the Applicable Period or (C) reasonably requested in
          writing by the managing underwriters, if any, or the Holders of a
          majority in aggregate principal amount of the Registrable Notes being
          sold in connection with an underwritten offering, (i) promptly
          incorporate in a Prospectus supplement or post-effective amendment
          such information or revisions to information therein relating to such
          underwriters or selling Holders as the managing underwriters, if any,
          or such Holders or any of their respective counsel reasonably request
          in writing to be included or made therein and (ii) make all required
          filings of such Prospectus supplement or such post-effective amendment
          as soon as practicable after the Company has received notification of
          the matters to be incorporated in such Prospectus supplements or
          post-effective amendment.

     (h)  Prior to any public offering of Registrable Notes or any delivery of a
          Prospectus contained in the Exchange Registration Statement by any
          Participating Broker-Dealer who seeks to sell Exchange Notes during
          the Applicable Period, use its best efforts to register or qualify,
          and to cooperate with the selling Holders of Registrable Notes or each
          such Participating Broker-Dealer, as the case may be, the
          underwriters, if any, and their respective counsel in connection with
          the registration or qualification (or exemption from such registration
          or qualification) of such Registrable Notes or Exchange Notes, as the
          case may be, for offer and sale under the securities or Blue Sky laws
          of such jurisdictions within the United States as any selling Holder,
          Participating Broker-Dealer or any managing underwriter or
          underwriters, if any, reasonably request in writing; provided that
          where Exchange Notes held by Participating Broker-Dealers or
          Registrable Notes are offered other than through an underwritten
          offering, the Company and each Subsidiary Guarantor agree to cause its
          counsel to perform Blue Sky investigations and file any registrations
          and qualifications required to be filed pursuant to this Section 6(h),
          keep each such registration or qualification (or exemption therefrom)
          effective during the period such Registration Statement is required to
          be kept effective and do any and all other acts or things reasonably
          necessary or advisable to enable the disposition in such jurisdictions
          of the Exchange Notes held by Participating Broker-Dealers or the
          Registrable Notes covered by the applicable Registration Statement;
          provided that neither the Company nor any Subsidiary Guarantor shall
          be required to (A) qualify generally to do business in any
          jurisdiction where it is not then so qualified, (B) take any


                                       15



          action that would subject it to general service of process in any such
          jurisdiction where it is not then so subject or (C) subject itself to
          taxation in any such jurisdiction where it is not then so subject.

     (i)  If (A) a Shelf Registration is filed pursuant to Section 3 or (B) a
          Prospectus contained in an Exchange Registration Statement filed
          pursuant to Section 2 is requested to be delivered under the
          Securities Act by any Participating Broker-Dealer who seeks to sell
          Exchange Notes during the Applicable Period, cooperate with the
          selling Holders of Registrable Notes and the managing underwriter or
          underwriters, if any, to facilitate the timely preparation and
          delivery of certificates representing Registrable Notes to be sold,
          which certificates shall not bear any restrictive legends and shall be
          in a form eligible for deposit with The Depository Trust Company, and
          enable such Registrable Notes to be in such denominations and
          registered in such names as the managing underwriter or underwriters,
          if any, or Holders may reasonably request.

     (j)  Use its commercially reasonable efforts to cause the Registrable Notes
          covered by any Registration Statement to be registered with or
          approved by such governmental agencies or authorities as may be
          necessary to enable the seller or sellers thereof or the underwriter,
          if any, to consummate the disposition of such Registrable Notes,
          except as may be required solely as a consequence of the nature of
          such selling Holder's business, in which case the Company shall (and
          shall cause each Subsidiary Guarantor to) cooperate in all reasonable
          respects with the filing of such Registration Statement and the
          granting of such approvals; provided that neither the Company nor any
          existing Subsidiary Guarantor shall be required to (A) qualify
          generally to do business in any jurisdiction where it is not then so
          qualified, (B) take any action that would subject it to general
          service of process in any jurisdiction where it is not then so subject
          or (C) subject itself to taxation in any such jurisdiction where it is
          not then so subject.

     (k)  If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
          Prospectus contained in an Exchange Registration Statement filed
          pursuant to Section 2 is required to be delivered under the Securities
          Act by any Participating Broker-Dealer who seeks to sell Exchange
          Notes during the Applicable Period, upon the occurrence of any event
          contemplated by paragraph 6(e)(2)(v) or 6(e)(2)(vi) hereof, as
          promptly as practicable, prepare and file with the SEC, at the expense
          of the Company and the Subsidiary Guarantors, a supplement or
          post-effective amendment to the Registration Statement or a supplement
          to the related Prospectus or any document incorporated or deemed to be
          incorporated therein by reference, or file any other required document
          so that, as thereafter delivered to the purchasers of the Registrable
          Notes being sold thereunder or to the purchasers of the Exchange Notes
          to whom such Prospectus will be delivered by a Participating
          Broker-Dealer, such Prospectus will not contain an untrue statement of
          a material fact or omit to state a material fact required to be stated
          therein or necessary to make the statements therein, in light of the
          circumstances under which they were made, not misleading, and, if SEC
          review is required, use its best


                                       16



          efforts to cause such post-effective amendment to be declared
          effective as soon as possible.

     (l)  Use its best efforts to cause the Registrable Notes covered by a
          Registration Statement to be rated with such appropriate rating
          agencies, if so requested in writing by the Holders of a majority in
          aggregate principal amount of the Registrable Notes covered by such
          Registration Statement or the managing underwriter or underwriters, if
          any.

     (m)  Prior to the initial issuance of the Exchange Notes, (i) provide the
          Trustee with one or more certificates for the Registrable Notes in a
          form eligible for deposit with The Depository Trust Company and (ii)
          provide a CUSIP number for the Exchange Notes.

     (n)  If a Shelf Registration is filed pursuant to Section 3, and the
          Registrable Notes are being offered in an Underwritten Offering, enter
          into such agreements (including an underwriting agreement in form,
          scope and substance as is customary in underwritten offerings of debt
          securities similar to the Notes, as may be appropriate in the
          circumstances) and take all such other actions in connection therewith
          (including those reasonably requested in writing by the managing
          underwriters, if any, or the Holders of a majority in aggregate
          principal amount of the Registrable Notes being sold) in order to
          expedite or facilitate the registration or the disposition of such
          Registrable Notes, and in such connection, whether or not an
          underwriting agreement is entered into and whether or not the
          registration is an Underwritten Registration, (i) make such
          representations and warranties to the Holders and the underwriters, if
          any, with respect to the business of the Company and its subsidiaries
          as then conducted, and the Registration Statement, Prospectus and
          documents, if any, incorporated or deemed to be incorporated by
          reference therein, in each case, in form, substance and scope as are
          customarily made by issuers to underwriters in underwritten offerings
          of debt securities similar to the Notes, as may be appropriate in the
          circumstances, and confirm the same if and when reasonably required;
          (ii) obtain an opinion of counsel to the Company and the Subsidiary
          Guarantors and updates thereof (which counsel and opinions (in form,
          scope and substance) shall be reasonably satisfactory to the managing
          underwriters, if any, and the Holders of a majority in aggregate
          principal amount of the Registrable Notes being sold), addressed to
          each selling Holder and each of the underwriters, if any, covering the
          matters customarily covered in opinions of counsel to the Company and
          the Subsidiary Guarantors requested in underwritten offerings of debt
          securities similar to the Notes, as may be appropriate in the
          circumstances; (iii) obtain "cold comfort" letters and updates thereof
          (which letters and updates (in form, scope and substance) shall be
          reasonably satisfactory to the managing underwriters) from the
          independent certified public accountants of the Company and the
          Subsidiary Guarantors (and, if necessary, any other independent
          certified public accountants of any subsidiary of the Company or of
          any business acquired by the Company for which financial statements
          and financial data are, or are required to be, included in the
          Registration Statement), addressed to each of the underwriters, such
          letters to be


                                       17



          in customary form and covering matters of the type customarily covered
          in "cold comfort" letters in connection with underwritten offerings of
          debt securities similar to the Notes, as may be appropriate in the
          circumstances, and such other matters as reasonably requested in
          writing by the underwriters; and (iv) deliver such documents and
          certificates as may be reasonably requested in writing by the Holders
          of a majority in aggregate principal amount of the Registrable Notes
          being sold and the managing underwriters, if any, to evidence the
          continued validity of the representations and warranties of the
          Company and its subsidiaries made pursuant to clause (i) above and to
          evidence compliance with any conditions contained in the underwriting
          agreement or other similar agreement entered into by the Company or
          any Subsidiary Guarantor.

     (o)  If (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
          Prospectus contained in an Exchange Registration Statement filed
          pursuant to Section 2 is required to be delivered under the Securities
          Act by any Participating Broker-Dealer who seeks to sell Exchange
          Notes during the Applicable Period, make available for inspection by
          any selling Holder of such Registrable Notes being sold, or each such
          Participating Broker-Dealer, as the case may be, any underwriter
          participating in any such disposition of Registrable Notes, if any,
          and any attorney, accountant or other agent retained by any such
          selling Holder or each such Participating Broker-Dealer, as the case
          may be, or underwriter (collectively, the "Inspectors"), at the
          offices where normally kept, during reasonable business hours, all
          financial and other records and pertinent corporate documents of the
          Company and its subsidiaries (collectively, the "Records") as shall be
          reasonably necessary to enable them to exercise any applicable due
          diligence responsibilities, and cause the officers, directors and
          employees of the Company and its subsidiaries to supply all
          information reasonably requested in writing by any such Inspector in
          connection with such Registration Statement. Each Inspector shall
          agree in writing that it will keep the Records confidential and not
          disclose any of the Records unless (i) the disclosure of such Records
          is necessary to avoid or correct a misstatement or omission in such
          Registration Statement, (ii) the release of such Records is ordered
          pursuant to a subpoena or other order from a court of competent
          jurisdiction, (iii) the information in such Records is public or has
          been made generally available to the public other than as a result of
          a disclosure or failure to safeguard by such Inspector or (iv)
          disclosure of such information is, in the reasonable written opinion
          of counsel for any Inspector, necessary or advisable in connection
          with any action, claim, suit or proceeding, directly or indirectly,
          involving or potentially involving such Inspector and arising out of,
          based upon, related to, or involving this Agreement, or any
          transaction contemplated hereby or arising hereunder. Each selling
          Holder of such Registrable Notes and each such Participating
          Broker-Dealer will be required to agree that information obtained by
          it as a result of such inspections shall be deemed confidential and
          shall not be used by it as the basis for any market transactions in
          the securities of the Company unless and until such is made generally
          available to the public. Each Inspector, each selling Holder of such
          Registrable Notes and each such Participating Broker-Dealer will be
          required to further agree that it will, upon learning that disclosure
          of such Records is sought


                                       18



          in a court of competent jurisdiction, give notice to the Company and,
          to the extent practicable, use its best efforts to allow the Company,
          at its expense, to undertake appropriate action to prevent disclosure
          of the Records deemed confidential at its expense.

     (p)  Comply with all applicable rules and regulations of the SEC and make
          generally available to the security holders of the Company with regard
          to any applicable Registration Statement earning statements satisfying
          the provisions of Section 11(a) of the Securities Act and Rule 158
          thereunder (or any similar rule promulgated under the Securities Act)
          no later than 45 days after the end of any 12-month period (or 90 days
          after the end of any 12-month period if such period is a fiscal year)
          (i) commencing at the end of any fiscal quarter in which Registrable
          Notes are sold to underwriters in a firm commitment or best efforts
          underwritten offering and (ii) if not sold to underwriters in such an
          offering, commencing on the first day of the first fiscal quarter of
          the Company after the effective date of a Registration Statement,
          which statements shall cover said 12-month periods.

     (q)  Upon consummation of an Exchange Offer or Private Exchange, obtain an
          opinion of counsel to the Company and the Subsidiary Guarantors (in
          form, scope and substance reasonably satisfactory to the Initial
          Purchaser), addressed to the Trustee for the benefit of all Holders
          participating in the Exchange Offer or Private Exchange, as the case
          may be, to the effect that (i) the Company and the Subsidiary
          Guarantors have duly authorized, executed and delivered the Exchange
          Notes or the Private Exchange Notes, as the case may be, and the
          Indenture, (ii) the Exchange Notes or the Private Exchange Notes, as
          the case may be, and the Indenture constitute legal, valid and binding
          obligations of the Company and the Subsidiary Guarantors, enforceable
          against the Company and the Subsidiary Guarantors in accordance with
          their respective terms, except as such enforcement may be subject to
          customary United States and foreign exceptions and (iii) all
          obligations of the Company and the Subsidiary Guarantors under the
          Exchange Notes or the Private Exchange Notes, as the case may be, and
          the Indenture are secured by Liens on the assets securing the
          obligations of the Company and the Subsidiary Guarantors under the
          Notes, Indenture and Collateral Agreements to the extent and as
          discussed in the Registration Statement.

     (r)  If the Exchange Offer or a Private Exchange is to be consummated, upon
          delivery of the Registrable Notes by the Holders to the Company and
          the Subsidiary Guarantors (or to such other Person as directed by the
          Company and the Subsidiary Guarantors) in exchange for the Exchange
          Notes or the Private Exchange Notes, as the case may be, the Company
          and the Subsidiary Guarantors shall mark, or caused to be marked, on
          such Registrable Notes that the Exchange Notes or the Private Exchange
          Notes, as the case may be, are being issued as substitute evidence of
          the indebtedness originally evidenced by the Registrable Notes;
          provided that in no event shall such Registrable Notes be marked as
          paid or otherwise satisfied.


                                       19



     (s)  Cooperate with each seller of Registrable Notes covered by any
          Registration Statement and each underwriter, if any, participating in
          the disposition of such Registrable Notes and their respective counsel
          in connection with any filings required to be made with the NASD.

     (t)  Use its best efforts to cause all Securities covered by a Registration
          Statement to be listed on each securities exchange, if any, on which
          similar debt securities issued by the Company are then listed.

     (u)  Use its best efforts to take such other steps as may be reasonably
          necessary to effect the registration of the Registrable Notes covered
          by a Registration Statement contemplated hereby.

     (v)  The Company may require each seller of Registrable Notes or
          Participating Broker-Dealer as to which any registration is being
          effected to furnish to the Company such information regarding such
          seller or Participating Broker-Dealer and the distribution of such
          Registrable Notes as the Company may, from time to time, reasonably
          request in writing. The Company may exclude from such registration the
          Registrable Notes of any seller who fails to furnish such information
          within a reasonable time (which time in no event shall exceed 45 days,
          subject to Section 3(d) hereof) after receiving such request. Each
          seller of Registrable Notes or Participating Broker-Dealer as to which
          any registration is being effected agrees to furnish promptly to the
          Company all information required to be disclosed in order to make the
          information previously furnished by such seller not materially
          misleading.

     (w)  Each Holder of Registrable Notes and each Participating Broker-Dealer
          agrees by acquisition of such Registrable Notes or Exchange Notes to
          be sold by such Participating Broker-Dealer, as the case may be, that,
          upon receipt of any notice from the Company of the happening of any
          event of the kind described in Section 6(e)(2)(ii), 6(e)(2)(iii),
          6(e)(2)(iv), 6(e)(2)(v), or 6(e)(2)(vi), such Holder will forthwith
          discontinue disposition of such Registrable Notes covered by a
          Registration Statement and such Participating Broker-Dealer will
          forthwith discontinue disposition of such Exchange Notes pursuant to
          any Prospectus and, in each case, forthwith discontinue dissemination
          of such Prospectus until such Holder's or Participating
          Broker-Dealer's receipt of the copies of the supplemented or amended
          Prospectus contemplated by Section 6(k), or until it is advised in
          writing (the "Advice") by the Company and the Subsidiary Guarantors
          that the use of the applicable Prospectus may be resumed, and has
          received copies of any amendments or supplements thereto and, if so
          directed by the Company and the Subsidiary Guarantors, such Holder or
          Participating Broker-Dealer, as the case may be, will deliver to the
          Company all copies, other than permanent file copies, then in such
          Holder's or Participating Broker-Dealer's possession, of the
          Prospectus covering such Registrable Notes current at the time of the
          receipt of such notice. In the event the Company and the Subsidiary
          Guarantors shall give any such notice, the Applicable Period shall be
          extended by the number of days during such periods from and including
          the date of the giving of such notice to


                                       20



          and including the date when each Participating Broker-Dealer shall
          have received (x) the copies of the supplemented or amended Prospectus
          contemplated by Section 6(k) or (y) the Advice.

7. REGISTRATION EXPENSES

     (a)  All fees and expenses incident to the performance of or compliance
          with this Agreement by the Company and the Subsidiary Guarantors shall
          be borne by the Company and the Subsidiary Guarantors, whether or not
          the Exchange Offer or a Shelf Registration is filed or becomes
          effective, including, without limitation, (i) all registration and
          filing fees, including, without limitation, (A) fees with respect to
          filings required to be made with the NASD in connection with any
          Underwritten Offering and (B) fees and expenses of compliance with
          state securities or Blue Sky laws as provided in Section 6(h) hereof
          (including, without limitation, reasonable fees and disbursements of
          counsel in connection with Blue Sky qualifications of the Registrable
          Notes or Exchange Notes and determination of the eligibility of the
          Registrable Notes or Exchange Notes for investment under the laws of
          such jurisdictions (x) where the Holders are located, in the case of
          the Exchange Notes, or (y) as provided in Section 6(h), in the case of
          Registrable Notes or Exchange Notes to be sold by a Participating
          Broker-Dealer during the Applicable Period)), (ii) printing expenses,
          including, without limitation, expenses of printing Prospectuses if
          the printing of Prospectuses is requested by the managing underwriter
          or underwriters, if any, or by the Holders of a majority in aggregate
          principal amount of the Registrable Notes included in any Registration
          Statement or by any Participating Broker-Dealer during the Applicable
          Period, as the case may be, (iii) messenger, telephone and delivery
          expenses incurred in connection with the performance of their
          obligations hereunder, (iv) fees and disbursements of counsel for the
          Company, the Subsidiary Guarantors and, subject to Section 7(b), the
          Holders, (v) fees and disbursements of all independent certified
          public accountants referred to in Section 6 (including, without
          limitation, the expenses of any special audit and "cold comfort"
          letters required by or incident to such performance), (vi) rating
          agency fees and the fees and expenses incurred in connection with the
          listing of the Securities to be registered on any securities exchange,
          (vii) Securities Act liability insurance, if the Company and the
          Subsidiary Guarantors desire such insurance, (viii) fees and expenses
          of all other Persons retained by the Company and the Subsidiary
          Guarantors, (ix) fees and expenses of any "qualified independent
          underwriter" or other independent appraiser participating in an
          offering pursuant to Section 3 of Schedule E to the By-laws of the
          NASD, but only where the need for such a "qualified independent
          underwriter" arises due to a relationship with the Company and the
          Subsidiary Guarantors, (x) internal expenses of the Company and the
          Subsidiary Guarantors (including, without limitation, all salaries and
          expenses of officers and employees of the Company or the Subsidiary
          Guarantors performing legal or accounting duties), (xi) the expense of
          any annual audit, (xii) the fees and expenses of the Trustee and
          (xiii) the expenses relating to printing, word processing and
          distributing all Registration Statements, underwriting agreements,
          securities sales


                                       21



          agreements, indentures and any other documents necessary in order to
          comply with this Agreement.

     (b)  The Company and the Subsidiary Guarantors shall reimburse the Holders
          for the reasonable fees and disbursements of not more than one counsel
          chosen by the Holders of a majority in aggregate principal amount of
          the Registrable Notes to be included in any Registration Statement.
          The Company and the Subsidiary Guarantors shall pay all documentary,
          stamp, transfer or other transactional taxes attributable to the
          issuance or delivery of the Exchange Notes or Private Exchange Notes
          in exchange for the Notes; provided that the Company shall not be
          required to pay taxes payable in respect of any transfer involved in
          the issuance or delivery of any Exchange Note or Private Exchange Note
          in a name other than that of the Holder of the Note in respect of
          which such Exchange Note or Private Exchange Note is being issued. The
          Company and the Subsidiary Guarantors shall reimburse the Holders for
          fees and expenses (including reasonable fees and expenses of counsel
          to the Holders) relating to any enforcement of any rights of the
          Holders under this Agreement.

8. INDEMNIFICATION

     (a)  Indemnification by the Company and the Subsidiary Guarantors. The
          Company and the Subsidiary Guarantors jointly and severally agree to
          indemnify and hold harmless each Holder of Registrable Notes, Exchange
          Notes or Private Exchange Notes and each Participating Broker-Dealer
          selling Exchange Notes during the Applicable Period, each Person, if
          any, who controls each such Holder (within the meaning of Section 15
          of the Securities Act or Section 20(a) of the Exchange Act) and the
          officers, directors and partners of each such Holder, Participating
          Broker-Dealer and controlling person, to the fullest extent lawful,
          from and against any and all losses, claims, damages, liabilities,
          costs (including, without limitation, reasonable costs of preparation
          and reasonable attorneys' fees as provided in this Section 8) and
          expenses (including, without limitation, reasonable costs and expenses
          incurred in connection with investigating, preparing, pursuing or
          defending against any of the foregoing) (collectively, "Losses"), as
          incurred, directly or indirectly caused by, related to, based upon,
          arising out of or in connection with any untrue or alleged untrue
          statement of a material fact contained in any Registration Statement,
          Prospectus or form of prospectus, or in any amendment or supplement
          thereto, or in any preliminary prospectus, or any omission or alleged
          omission to state therein a material fact required to be stated
          therein or necessary to make the statements therein, in light of the
          circumstances under which they were made, not misleading, but only to
          the extent, that such Losses are finally judicially determined by a
          court of competent jurisdiction in a final, unappealable order, except
          insofar as such Losses are solely based upon information relating to
          such Holder or Participating Broker-Dealer and furnished in writing to
          the Company and the Subsidiary Guarantors (or reviewed and approved in
          writing) by such Holder or Participating Broker-Dealer or their
          counsel expressly for use therein; provided, however, that the Company
          and the Subsidiary Guarantors will not be liable to any Indemnified
          Party (as defined


                                       22



          below) under this Section 8 to the extent Losses were solely caused by
          an untrue statement or omission or alleged untrue statement or
          omission that was contained or made in any preliminary prospectus and
          corrected in the Prospectus or any amendment or supplement thereto if
          (i) the Prospectus does not contain any other untrue statement or
          omission or alleged untrue statement or omission of a material fact
          that was the subject matter of the related proceeding, (ii) any such
          Losses resulted from an action, claim or suit by any Person who
          purchased Registrable Notes or Exchange Notes which are the subject
          thereof from such Indemnified Party and (iii) it is established in the
          related proceeding that such Indemnified Party failed to deliver or
          provide a copy of the Prospectus (as amended or supplemented) to such
          Person with or prior to the confirmation of the sale of such
          Registrable Notes or Exchange Notes sold to such Person if required by
          applicable law, unless such failure to deliver or provide a copy of
          the Prospectus (as amended or supplemented) was a result of
          noncompliance by the Company with Section 6 of this Agreement. The
          Company and the Subsidiary Guarantors also agree to indemnify
          underwriters, selling brokers, dealer managers and similar securities
          industry professionals participating in the distribution, their
          officers, directors, agents and employees and each Person who controls
          such Persons (within the meaning of Section 5 of the Securities Act or
          Section 20(a) of the Exchange Act) to the same extent as provided
          above with respect to the indemnification of the Holders or the
          Participating Broker-Dealer.

     (b)  Indemnification by Holder. In connection with any Registration
          Statement, Prospectus or form of prospectus, any amendment or
          supplement thereto, or any preliminary prospectus in which a Holder is
          participating, such Holder shall furnish to the Company and the
          Subsidiary Guarantors in writing such information as the Company and
          the Subsidiary Guarantors reasonably request for use in connection
          with any Registration Statement, Prospectus or form of prospectus, any
          amendment or supplement thereto, or any preliminary prospectus and
          shall indemnify and hold harmless the Company, the Subsidiary
          Guarantors, their respective directors and each Person, if any, who
          controls the Company and the Subsidiary Guarantors (within the meaning
          of Section 15 of the Securities Act and Section 20(a) of the Exchange
          Act), and the directors, officers and partners of such controlling
          persons, to the fullest extent lawful, from and against all Losses
          arising out of or based upon any untrue or alleged untrue statement of
          a material fact contained in any Registration Statement, Prospectus or
          form of prospectus or in any amendment or supplement thereto or in any
          preliminary prospectus, or any omission or alleged omission to state
          therein a material fact required to be stated therein or necessary to
          make the statements therein, in the light of the circumstances under
          which they were made, not misleading to the extent, but only to the
          extent, that such losses are finally judicially determined by a court
          of competent jurisdiction in a final, unappealable order to have
          resulted solely from an untrue statement or alleged untrue statement
          of a material fact or omission or alleged omission of a material fact
          contained in or omitted from any information so furnished in writing
          by such Holder to the Company and the Subsidiary Guarantors expressly
          for use therein. Notwithstanding the foregoing, in no event


                                       23



          shall the liability of any selling Holder be greater in amount than
          such Holder's Maximum Contribution Amount (as defined below).

     (c)  Conduct of Indemnification Proceedings. If any proceeding shall be
          brought or asserted against any Person entitled to indemnity hereunder
          (an "Indemnified Party"), such Indemnified Party shall promptly notify
          the party or parties from which such indemnity is sought (the
          "Indemnifying Party" or "Indemnifying Parties", as applicable) in
          writing; provided, that the failure to so notify the Indemnifying
          Parties shall not relieve the Indemnifying Parties from any obligation
          or liability except to the extent (but only to the extent) that it
          shall be finally determined by a court of competent jurisdiction
          (which determination is not subject to appeal) that the Indemnifying
          Parties have been prejudiced materially by such failure.

     The Indemnifying Party shall have the right, exercisable by giving written
notice to an Indemnified Party, within 20 Business Days after receipt of written
notice from such Indemnified Party of such proceeding, to assume, at its
expense, the defense of any such proceeding, provided, that an Indemnified Party
shall have the right to employ separate counsel in any such proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or parties unless: (1) the
Indemnifying Party has agreed to pay such fees and expenses; or (2) the
Indemnifying Party shall have failed promptly to assume the defense of such
proceeding or shall have failed to employ counsel reasonably satisfactory to
such Indemnified Party; or (3) the named parties to any such proceeding
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party or any of its affiliates or controlling persons, and such
Indemnified Party shall have been advised by counsel that there may be one or
more defenses available to such Indemnified Party that are in addition to, or in
conflict with, those defenses available to the Indemnifying Party or such
affiliate or controlling person (in which case, if such Indemnified Party
notifies the Indemnifying Parties in writing that it elects to employ separate
counsel at the expense of the Indemnifying Parties, the Indemnifying Parties
shall not have the right to assume the defense and the reasonable fees and
expenses of such counsel shall be at the expense of the Indemnifying Party; it
being understood, however, that, the Indemnifying Party shall not, in connection
with any one such proceeding or separate but substantially similar or related
proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such Indemnified Party).

     No Indemnifying Party shall be liable for any settlement of any such
proceeding effected without its written consent, which shall not be unreasonably
withheld, but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such proceeding, each Indemnifying Party
jointly and severally agrees, subject to the exceptions and limitations set
forth above, to indemnify and hold harmless each Indemnified Party from and
against any and all Losses by reason of such settlement or judgment. The
Indemnifying Party shall not consent to the entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to each Indemnified Party of a release, in form and
substance reasonably satisfactory to the Indemnified Party, from all liability
in respect


                                       24



of such proceeding for which such Indemnified Party would be entitled to
indemnification hereunder (whether or not any Indemnified Party is a party
thereto).

     (d)  Contribution. If the indemnification provided for in this Section 8 is
          unavailable to an Indemnified Party or is insufficient to hold such
          Indemnified Party harmless for any Losses in respect of which this
          Section 8 would otherwise apply by its terms (other than by reason of
          exceptions provided in this Section 8), then each applicable
          Indemnifying Party, in lieu of indemnifying such Indemnified Party,
          shall have a joint and several obligation to contribute to the amount
          paid or payable by such Indemnified Party as a result of such Losses,
          in such proportion as is appropriate to reflect the relative fault of
          the Indemnifying Party, on the one hand, and such Indemnified Party,
          on the other hand, in connection with the actions, statements or
          omissions that resulted in such Losses as well as any other relevant
          equitable considerations. The relative fault of such Indemnifying
          Party, on the one hand, and Indemnified Party, on the other hand,
          shall be determined by reference to, among other things, whether any
          untrue or alleged untrue statement of a material fact or omission or
          alleged omission to state a material fact relates to information
          supplied by such Indemnifying Party or Indemnified Party, and the
          parties' relative intent, knowledge, access to information and
          opportunity to correct or prevent any such statement or omission. The
          amount paid or payable by an Indemnified Party as a result of any
          Losses shall be deemed to include any legal or other fees or expenses
          incurred by such party in connection with any proceeding, to the
          extent such party would have been indemnified for such fees or
          expenses if the indemnification provided for in Section 8(a) or 8(b)
          was available to such party.

     The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8(d), a selling Holder shall not
be required to contribute, in the aggregate, any amount in excess of such
Holder's Maximum Contribution Amount. A selling Holder's "Maximum Contribution
Amount" shall equal the excess of (i) the aggregate proceeds received by such
Holder pursuant to the sale of such Registrable Notes or Exchange Notes over
(ii) the aggregate amount of damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of the
Registrable Securities held by each Holder hereunder and not joint. The
Company's and Subsidiary Guarantors' obligations to contribute pursuant to this
Section 8(d) are joint and several.

     The indemnity and contribution agreements contained in this Section 8 are
in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.


                                       25



9. RULES 144 AND 144A

     The Company covenants that it shall (a) file the reports required to be
filed by it (if so required) under the Securities Act and the Exchange Act in a
timely manner and, if at any time the Company is not required to file such
reports, it will, upon the written request of any Holder of Registrable Notes,
make publicly available other information necessary to permit sales pursuant to
Rule 144 and 144A and (b) take such further action as any Holder may reasonably
request in writing, all to the extent required from time to time to enable such
Holder to sell Registrable Notes without registration under the Securities Act
pursuant to the exemptions provided by Rule 144 and Rule 144A. Upon the request
of any Holder, the Company shall deliver to such Holder a written statement as
to whether it has complied with such information and requirements.

10. UNDERWRITTEN REGISTRATIONS OF REGISTRABLE NOTES

     If any of the Registrable Notes covered by any Shelf Registration is to be
sold in an underwritten offering, the investment banker or investment bankers
and manager or managers that will manage the offering will be selected by the
Holders of a majority in aggregate principal amount of such Registrable Notes
included in such offering; provided, however, that such investment banker or
investment bankers and manager or managers must be reasonably acceptable to the
Company.

     No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.

11. MISCELLANEOUS

     (a)  Remedies. In the event of a breach by either the Company or any of the
          Subsidiary Guarantors of any of their respective obligations under
          this Agreement, each Holder, in addition to being entitled to exercise
          all rights provided herein, in the Indenture or, in the case of the
          Initial Purchaser, in the Purchase Agreement, or granted by law,
          including recovery of damages, will be entitled to specific
          performance of its rights under this Agreement. The Company and the
          Subsidiary Guarantors agree that monetary damages would not be
          adequate compensation for any loss incurred by reason of a breach by
          either the Company or any of the Subsidiary Guarantors of any of the
          provisions of this Agreement and hereby further agree that, in the
          event of any action for specific performance in respect of such
          breach, the Company shall (and shall cause each Subsidiary Guarantor
          to) waive the defense that a remedy at law would be adequate.

     (b)  No Inconsistent Agreements. The Company and each of the Subsidiary
          Guarantors have not entered, as of the date hereof, and the Company
          and each of


                                       26



          the Subsidiary Guarantors shall not enter, after the date of this
          Agreement, into any agreement with respect to any of its securities
          that is inconsistent with the rights granted to the Holders of
          Securities in this Agreement or otherwise conflicts with the
          provisions hereof. The Company and each of the Subsidiary Guarantors
          have not entered and will not enter into any agreement with respect to
          any of its securities that will grant to any Person piggy-back rights
          with respect to a Registration Statement.

     (c)  Adjustments Affecting Registrable Notes. The Company shall not,
          directly or indirectly, take any action with respect to the
          Registrable Notes as a class that would adversely affect the ability
          of the Holders to include such Registrable Notes in a registration
          undertaken pursuant to this Agreement.

     (d)  Amendments and Waivers. The provisions of this Agreement may not be
          amended, modified or supplemented, and waivers or consents to
          departures from the provisions hereof may not be given, otherwise than
          with the prior written consent of the Holders of not less than a
          majority in aggregate principal amount of the then outstanding
          Registrable Notes in circumstances that would adversely affect any
          Holders of Registrable Notes; provided, however, that Section 8 and
          this Section 11(d) may not be amended, modified or supplemented
          without the prior written consent of each Holder. Notwithstanding the
          foregoing, a waiver or consent to depart from the provisions hereof
          with respect to a matter that relates exclusively to the rights of
          Holders of Registrable Notes whose securities are being tendered
          pursuant to the Exchange Offer or sold pursuant to a Notes
          Registration Statement and that does not directly or indirectly
          affect, impair, limit or compromise the rights of other Holders of
          Registrable Notes may be given by Holders of at least a majority in
          aggregate principal amount of the Registrable Notes being tendered or
          being sold by such Holders pursuant to such Notes Registration
          Statement.

     (e)  Notices. All notices and other communications provided for or
          permitted hereunder shall be made in writing by hand delivery,
          registered first-class mail, next-day air courier or telecopier:

          (i)  if to a Holder of Securities or to any Participating
               Broker-Dealer, at the most current address of such Holder or
               Participating Broker-Dealer, as the case may be, set forth on the
               records of the registrar of the Notes, with a copy in like manner
               to the Initial Purchaser as follows:

                    Jefferies & Company, Inc.
                    520 Madison Avenue, 12th Floor
                    New York, NY 10022
                    Facsimile No.: (212) 284-2424
                    Attention: Josh Targoff, Esq.


                                       27



               with a copy to:

                    Proskauer Rose LLP
                    1585 Broadway
                    New York, New York 10036
                    Facsimile No.: (212) 969-2900
                    Attention: Julie M. Allen, Esq.

          (ii) if to the Initial Purchaser, at the address specified in Section
               11(e)(i);

          (iii) if to the Company or any Subsidiary Guarantor, as follows:

                    Altra Industrial Motion, Inc.
                    14 Hayward Street
                    Quincy, Massachusetts 02171
                    Facsimile No. (617) 689-6202
                    Attention: Michael L. Hurt

               with a copy to:

                    Weil Gotshal & Manges, LLP
                    767 Fifth Avenue
                    New York, NY 10153
                    Facsimile No. (212) 310-8007
                    Attention: Matthew Bloch, Esq.

     All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days after
being deposited in the United States mail, postage prepaid, if mailed; one
Business Day after being timely delivered to a next-day air courier guaranteeing
overnight delivery; and when receipt is acknowledged by the addressee, if
telecopied.

     Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.

     (f)  Successors and Assigns. This Agreement shall inure to the benefit of
          and be binding upon the successors and assigns of each of the parties
          hereto, including, without limitation and without the need for an
          express assignment, subsequent Holders of Securities.

     (g)  Counterparts. This Agreement may be executed in any number of
          counterparts and by the parties hereto in separate counterparts, each
          of which when so executed shall be deemed to be an original and all of
          which taken together shall constitute one and the same agreement.

     (h)  Headings. The headings in this Agreement are for convenience of
          reference only and shall not limit or otherwise affect the meaning
          hereof.


                                       28



     (i)  Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
          ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
          PRINCIPLES OF CONFLICT OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS
          TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
          OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
          THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY
          SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
          AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITS AND IN RESPECT OF ITS
          PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
          COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
          EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY
          OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
          ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY
          CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
          COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY
          IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
          UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE
          AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
          OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
          THE COMPANY AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30
          DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY
          HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
          COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN
          ANY OTHER JURISDICTION.

     (j)  Severability. If any term, provision, covenant or restriction of this
          Agreement is held by a court of competent jurisdiction to be invalid,
          illegal, void or unenforceable, the remainder of the terms,
          provisions, covenants and restrictions set forth herein shall remain
          in full force and effect and shall in no way be affected, impaired or
          invalidated, and the parties hereto shall use their best efforts to
          find and employ an alternative means to achieve the same or
          substantially the same result as that contemplated by such term,
          provision, covenant or restriction. It is hereby stipulated and
          declared to be the intention of the parties that they would have
          executed the remaining terms, provisions, covenants and restrictions
          without including any of such that may be hereafter declared invalid,
          illegal, void or unenforceable.

     (k)  Securities Held by the Company or Its Affiliates. Whenever the consent
          or approval of Holders of a specified percentage of Securities is
          required hereunder, Securities held by the Company or its affiliates
          (as such term is defined in Rule


                                       29



          405 under the Securities Act) shall not be counted in determining
          whether such consent or approval was given by the Holders of such
          required percentage.

     (l)  Third Party Beneficiaries. Holders and Participating Broker-Dealers
          are intended third party beneficiaries of this Agreement and this
          Agreement may be enforced by such Persons.

     (m)  Entire Agreement. This Agreement, together with the Purchase
          Agreement, the Indenture and the Collateral Agreements, is intended by
          the parties as a final and exclusive statement of the agreement and
          understanding of the parties hereto in respect of the subject matter
          contained herein and therein and any and all prior oral or written
          agreements, representations, or warranties, contracts, understanding,
          correspondence, conversations and memoranda between the Initial
          Purchaser on the one hand and the Company and the Subsidiary
          Guarantors on the other, or between or among any agents,
          representatives, parents, subsidiaries, affiliates, predecessors in
          interest or successors in interest with respect to the subject matter
          hereof and thereof are merged herein and replaced hereby.

     (n)  Blackout Period.

          (i)  Notwithstanding anything herein to the contrary, the Company may
               suspend the filing, effectiveness or use of any Registration
               Statement (and therefore suspend sales thereunder) for certain
               periods ("Blackout Periods") if the majority of the Company's
               board of directors (the "Board") determines in good faith that
               the offer or sale of Registrable Securities thereunder would (A)
               materially impede, delay or interfere with any material pending
               or proposed financing, acquisition, corporate reorganization or
               other similar transaction involving the Company for which the
               Board has authorized negotiations; or (B) require disclosure of
               material nonpublic information which, if disclosed at such time,
               would be materially harmful to the Company's interests.

          (ii) The cumulative Blackout Periods in any 12-month period commencing
               on the Closing Date may not exceed an aggregate of 90 days during
               any 12-month period. The Company may exercise its rights pursuant
               to this Section 11(n) twice during any 12-month period, and then
               only as to separate events.


                                       30



     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                                        ALTRA INDUSTRIAL MOTION, INC.


                                        By: /s/ David Wall
                                            ------------------------------------
                                        Name: David Wall
                                              ----------------------------------
                                        Title: Chief Financial Officer
                                               ---------------------------------

                                        AMERICAN ENTERPRISES MPT CORP.
                                        AMERICAN ENTERPRISES MPT HOLDINGS, LLC
                                        AMERIDRIVES INTERNATIONAL, LLC
                                        BOSTON GEAR LLC
                                        FORMSPRAG LLC
                                        INERTIA DYNAMICS LLC
                                        KILIAN MANUFACTURING CORPORATION
                                        NUTTALL GEAR LLC
                                        WARNER ELECTRIC INTERNATIONAL HOLDING,
                                        INC.
                                        WARNER ELECTRIC LLC
                                        WARNER ELECTRIC TECHNOLOGY LLC


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Name: Michael L. Hurt
                                        Title: Chief Executive Officer


                                       31



                                        TB WOOD'S CORPORATION


                                        By: /s/ William T. Fejes, Jr.
                                            ------------------------------------
                                        Name: William T. Fejes, Jr.
                                              ----------------------------------
                                        Title: President, CEO and Director
                                               ---------------------------------


                                        PLANT ENGINEERING CONSULTANTS, LLC


                                        By: /s/ William T. Fejes, Jr.
                                            ------------------------------------
                                        Name: William T. Fejes, Jr.
                                              ----------------------------------
                                        Title: President
                                               ---------------------------------


                                        TB WOOD'S ENTERPRISES, INC.


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: President
                                               ---------------------------------


                                        TB WOOD'S INCORPORATED


                                        By: /s/ William T. Fejes, Jr.
                                            ------------------------------------
                                        Name: William T. Fejes, Jr.
                                              ----------------------------------
                                        Title: President, CEO and Director
                                               ---------------------------------

                                                   REGISTRATION RIGHTS AGREEMENT



ACCEPTED AND AGREED TO:

JEFFERIES & COMPANY, INC.


By: /s/ Craig Zaph
    ---------------------------------
Name: Craig Zaph
      -------------------------------
Title: MD
       ------------------------------

                                                   REGISTRATION RIGHTS AGREEMENT

EX-5.1

                                                                     EXHIBIT 5.1

                     [Weil, Gotshal & Manges LLP letterhead]

                                  May 7, 2007

Altra Industrial Motion, Inc.
American Enterprises MPT Corp.
American Enterprises MPT Holdings, LLC
Ameridrives International, LLC
Boston Gear LLC
Formsprag LLC
Inertia Dynamics, LLC
Kilian Manufacturing Corporation
Nuttall Gear L L C
Plant Engineering Consultants, LLC
TB Wood's Corporation
TB Wood's Enterprises, Inc.
TB Wood's Incorporated
Warner Electric LLC
Warner Electric Technology LLC
Warner Electric International Holding, Inc.
   c/o Altra Industrial Motion, Inc.
   14 Hayward Street
   Quincy, Massachusetts 02171

Ladies and Gentlemen:

          We have acted as counsel to Altra Industrial Motion, Inc., a Delaware
corporation (the "COMPANY"), the guarantors listed on Schedule I hereto
organized under the laws of the State of Delaware (the "DELAWARE GUARANTORS"),
the guarantors listed on Schedule I hereto not organized under the laws of the
State of Delaware (the "NON-DELAWARE GUARANTORS" and together with the Delaware
Guarantors, the "GUARANTORS"), in connection with the preparation and filing
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, of a Registration Statement on Form S-4 (the "REGISTRATION STATEMENT"),
with respect to the issuance by the Company of $105,000,000 aggregate principal
amount of 9% Senior Secured Notes due 2011 (the "NOTES") under an Indenture,
dated as of November 30,



May 7, 2007
Page 2


2004, as amended by the First Supplemental Indenture, dated as of February 7,
2006, the Second Supplemental Indenture, dated February 8, 2006, the Third
Supplemental Indenture, dated April 24, 2006, the Fourth Supplemental Indenture,
dated March 21, 2007 and the Fifth Supplemental Indenture, dated April 5, 2007
(the "INDENTURE"), among the Company, the Guarantors and The Bank of New York,
as trustee (the "TRUSTEE"). The Notes are to be unconditionally guaranteed on a
senior secured basis by each of the Guarantors pursuant to guarantees contained
in the Indenture (the "GUARANTEES").

          In so acting, we have examined originals or copies (certified or
otherwise identified to our satisfaction) of the Registration Statement, the
Indenture, the form of Note and Guarantees set forth in the Indenture and such
corporate and limited liability company records, agreements, documents and other
instruments, and such certificates or comparable documents of public officials
and of officers and representatives of the Company and Guarantors and have made
such inquiries of such officers and representatives, as we have deemed relevant
and necessary as a basis for the opinions hereinafter set forth.

          In such examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. As to all questions
of fact material to these opinions that have not been independently established,
we have relied upon certificates or comparable documents of officers and
representatives of the Company and Guarantors. We have also assumed (i) the
valid existence and good standing of each Non-Delaware Guarantor and the
Trustee, (ii) that each Non-Delaware Guarantor and the Trustee has the requisite
limited liability company or corporate power and authority to enter into and
perform its obligations under the Indenture and (iii) the due authorization,
execution and delivery by each Non-Delaware Guarantor of its respective
Guarantee. In addition, we have assumed that the Notes and each Guarantee will
be executed and delivered by an authorized officer of the Company or respective
Guarantor, as the case may be, substantially in the form examined by us.

          Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:

          1. The execution, delivery and performance of the Notes by the Company
have been duly authorized by all necessary corporate action on the part of the
Company. The Notes, when duly and validly executed and delivered by or on behalf
of the Company in accordance with the terms of the Indenture and as contemplated
by the Registration Statement and duly authenticated by the Trustee, will
constitute the legal, valid and binding obligations of the Company entitled to
the benefit of the Indenture, and



May 7, 2007
Page 3


enforceable against the Company in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).

          2. The execution, delivery and performance by each Delaware Guarantor
of its Guarantee of the Notes have been duly authorized by all necessary
corporate or limited liability company action, as applicable, on the part of
such Delaware Guarantor. The Guarantees of each of the Guarantors, when duly and
validly executed and delivered by or on behalf of such Guarantors in accordance
with the terms of the Indenture and as contemplated by the Registration
Statement, and duly authenticated by the Trustee, will constitute the legal,
valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).

          The opinions expressed herein are limited to the corporate and limited
liability company laws of State of Delaware, the laws of the State of and New
York and the federal laws of the United States. We express no opinion as to the
effect on the matters covered by this letter of the laws of any other
jurisdiction.

          The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. Such opinions may not be used
or relied upon by any other person, nor may this letter or any copies hereof be
furnished to a third party, filed with a governmental agency, quoted, cited or
otherwise referred to without our prior written consent.

          We hereby consent to the use of this letter as an exhibit to the
Registration Statement and to any and all references to our firm in the
Prospectus which is a part of the Registration Statement.


                                        Very truly yours,

                                        /s/ Weil, Gotshal & Manges LLP


                                   SCHEDULE I



GUARANTOR                                     JURISDICTION OF INCORPORATION
- ---------                                     -----------------------------
                                           
American Enterprises MPT Corp.                           Delaware
American Enterprises MPT Holdings, LLC                   Delaware
Ameridrives International, LLC                           Delaware
Boston Gear LLC                                          Delaware
Formsprag LLC                                            Delaware
Inertia Dynamics, LLC                                    Delaware
Kilian Manufacturing Corporation                         Delaware
Nuttall Gear L L C                                       Delaware
Plant Engineering Consultants, LLC                      Tennessee
TB Wood's Corporation                                    Delaware
TB Wood's Enterprises, Inc.                              Delaware
TB Wood's Incorporated                                 Pennsylvania
Warner Electric International Holding, Inc.              Delaware
Warner Electric LLC                                      Delaware
Warner Electric Technology LLC                           Delaware

EX-5.2

                                                                     EXHIBIT 5.2

                                                   May 7, 2007

Plant Engineering Consultants, LLC
c/o Altra Industrial Motion, Inc.
14 Hayward Street
Quincy, Massachusetts 02171

Ladies and Gentlemen:

     We have acted as special Tennessee counsel to Plant Engineering
Consultants, LLC, a Tennessee limited liability company (the "Tennessee
Guarantor"), in connection with the proposed issuance by Altra Industrial
Motion, Inc., a Delaware corporation (the "Issuer"), of up to $105,000,000
aggregate principal amount of 9% Senior Secured Notes due 2011 (the "Exchange
Notes") and the issuance by the Guarantors of their Guarantees (the "Exchange
Guarantees") with respect to the Exchange Notes in exchange for a like principal
amount of the Issuer's outstanding 9% Senior Secured Notes due 2011 and their
related Guarantees (the "Exchange Offer"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings herein as defined in the
Indenture (as hereinafter defined).

     We understand the Exchange Notes and the Exchange Guarantees will be issued
under an Indenture, dated as of November 30, 2004, as amended by the First
Supplemental Indenture, dated as of February 7, 2006, the Second Supplemental
Indenture, dated February 8, 2006, the Third Supplemental Indenture, dated April
24, 2006, the Fourth Supplemental Indenture, dated March 21, 2007 and the Fifth
Supplemental Indenture, dated April 5, 2007 (collectively, the "Indenture"),
among the Issuer, the Guarantors named therein and The Bank of New York Trust
Company, N.A., as trustee. The terms of the Exchange Guarantees are contained in
Article Ten of the Indenture and the applicable Supplemental Indentures. This
Opinion is furnished in accordance with the requirements of Item 601(b)(5) of
Regulation S-K under the Securities Act of 1933, as amended (the "Securities
Act").

     In rendering the opinions set forth herein, we have examined and relied on
originals or copies, certified or otherwise identified to our satisfaction, of
the following:

     (a) the Indenture;

     (b) the Exchange Guarantees (contained in Article Ten of the Indenture);

     (c) a certified copy of the Articles of Organization of the Tennessee
Guarantor, as filed with the Tennessee Secretary of State on December 30, 2004,
and a copy of the Operating Agreement of the Tennessee Guarantor, dated as of
December 22, 2004 (the "Operating Agreement");

     (d) a copy of certain resolutions of the sole member of the
Tennessee Guarantor adopted on April 5, 2007;



     (e) a Certificate of Existence from the Tennessee Secretary of State, dated
May 3, 2007, attesting to the "good standing" of the Tennessee Guarantor in such
jurisdiction.

     In addition, we have examined such other documents, agreements, and
certificates as we have deemed necessary or appropriate as a basis for the
opinion set forth below.

                                   ASSUMPTIONS

     In our examination we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies, and the authenticity of the
originals of such copies. We assume that the Operating Agreement in the form
reviewed by us is the Operating Agreement of the Tennessee Guarantor as
currently in effect and that the Operating Agreement has not been amended,
modified or terminated. As to any facts material to this opinion which we did
not independently establish or verify, we have relied upon statements and
representations of the Tennessee Guarantor and its officers and other
representatives and of public officials, and have assumed that such matters
remain true and correct through the date hereof. We have further assumed that
the Indenture is the valid and binding obligation of each party thereto other
than the Tennessee Guarantor, enforceable against such other parties in
accordance with its terms.

     We understand that you are separately receiving an opinion of Weil, Gotshal
& Manges, LLP with respect to the execution, delivery and performance of the
Exchange Notes by the Issuer. We express no opinion regarding that opinion or
the matters addressed therein, and all of such matters are assumed herein
without considering the effect of any assumptions, limitations, or
qualifications contained in that opinion.

     Members of this Firm are admitted to practice in the State of Tennessee and
certain members of the Firm are admitted to practice in the State of New York.
Our opinions herein relating to the laws of the State of New York are given by
such members on behalf of the Firm. We express no opinion as to the laws of any
jurisdiction other than the laws of the State of Tennessee and the laws of the
State of New York.

     Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:

     1. The execution, delivery and performance of the Exchange Guarantee by the
Tennessee Guarantor have been duly authorized by all necessary limited liability
company action on the part of the Tennessee Guarantor.

     2. The Exchange Guarantee of the Tennessee Guarantor, when duly and validly
executed and delivered on behalf of the Tennessee Guarantor in accordance with
the terms of the Indenture and as contemplated by the Registration Statement (as
hereinafter defined) and duly authenticated by the Trustee, will constitute the
valid and binding obligation of the Tennessee Guarantor.



                                 QUALIFICATIONS

          The opinions expressed above are subject to the following
qualifications:

     (i) Enforcement may be limited by applicable bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium or similar laws affecting
creditor's rights generally.

     (ii) No opinion is expressed on (a) the laws, statutes and ordinances,
administrative decisions, rules and regulations and other legal requirements of
counties, towns, municipalities and political subdivisions of Tennessee or New
York, or (b) any law or regulation concerning securities, taxation, labor,
employee benefits, environmental protection, antitrust or unfair competition.

     (iii) We express no opinion as to whether a subsidiary may guarantee or
otherwise become liable for indebtedness incurred by its parent, except to the
extent such subsidiary may be determined to


have benefited from the incurrence of such indebtedness by its parent, or
whether such benefit may be measured other than by the extent to which the
proceeds of the indebtedness incurred by the parent are directly or indirectly
made available to such subsidiary for its corporate purposes. For purposes of
our opinion, we have assumed the Tennessee Guarantor will benefit from
the extension of credit to the Issuer, to the extent necessary to make the
Exchange Guarantee a valid limited liability company act of the Tennessee
Guarantor.

     (iv) With respect to our opinion in Paragraph 2 above, we express no
opinion with respect to actions to occur pursuant to the Indenture or the
Exchange Guarantee after the date hereof.

     We hereby consent to the filing of this opinion, or copies thereof, as an
exhibit to the Registration Statement on Form S-4 (the "Registration Statement")
filed by the Issuer with the Securities and Exchange Commission (the
"Commission") relating to the Exchange Offer and to the use of our name therein
and in the related prospectus under the caption "Legal Matters." In giving this
consent, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission thereunder.

     This opinion is given as of the date hereof, and we disclaim any obligation
to update this opinion letter after the date hereof. This opinion is rendered
only to the addressee and is solely for its benefit in connection with the above
transactions. This opinion may not be relied upon by the addressee for any other
purpose, or quoted to or relied upon by any other person, firm, corporation, or
other entity for any purpose without our prior written consent.

                                        Very truly yours,

                                        /s/ Waller Lasden Dortch & Davis, LLP
                                        ---------------------------------------

EX-5.3

                                                                     EXHIBIT 5.3


(DECHERT LLP LOGO)                                   Cira Centre
                                                     2929 Arch Street
                                                     Philadelphia, PA 19104-2808
                                                     +1 215 994 4000 Main
                                                     +1 215 994 2222 Fax
                                                     www.dechert.com



May 7, 2007

Altra Industrial Motion, Inc. and the Guarantors (as defined herein)
14 Hayward Street
Quincy, MA 02171

Re: Altra Industrial Motion, Inc. Registration Statement on Form S-4

Ladies and Gentlemen:

We have acted as special Pennsylvania counsel to Altra Industrial Motion, Inc.,
a Delaware corporation (the "Company"), and several of its wholly owned direct
and indirect subsidiaries in connection with the Registration Statement on Form
S-4 (the "Registration Statement") filed by the Company and the other
registrants named therein (the "Guarantors"), including TB Wood's Incorporated,
a Pennsylvania corporation ("TBWI"), with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), in connection with the proposed issuance by the Company of $105,000,000
aggregate principal amount of 9% Senior Secured Notes due 2011 (the "Exchange
Notes") and the proposed issuance by the Guarantors of guarantees (each, an
"Exchange Guarantee") with respect to the Exchange Notes. The Exchange Notes and
the Exchange Guarantees are to be issued under an Indenture, dated as of
November 30, 2005 (as amended and supplemented on February 7, 2006, February 8,
2006, April 24, 2006 and April 5, 2007, the "Indenture"), among the Company, the
Guarantors and The Bank of New York Trust Company, N.A., as trustee and
collateral agent. As contemplated by a registration rights agreement, dated
April 5, 2007, among the Company, the Guarantors and Jefferies & Company, Inc.,
the Exchange Notes and the Exchange Guarantees are to be issued pursuant to an
exchange offer (the "Exchange Offer") in exchange for a like principal amount of
the Company's outstanding 9% Senior Secured Notes due 2011 (the "Notes") issued
on April 5, 2007 pursuant to Rule 144A and Regulation S under the Securities
Act.

In rendering the opinion set forth herein, we have examined and relied on
originals or copies of the following documents:

     (a)  the Registration Statement;

     (b)  the Indenture;

     (c)  the form of the Exchange Notes to be delivered by the Company; and

     (d)  the form of the Exchange Guarantees to be delivered by the Guarantors.

In our capacity as special Pennsylvania counsel, we also have examined originals
or copies, certified or otherwise identified to our satisfaction, of such
records of the Company and such

U.S. Austin Boston Charlotte Harrisburg Hartford New York Newport Beach Palo
Alto Philadelphia Princeton San Francisco Washington DC EUROPE Brussels London
Luxembourg Munich Paris



(DECHERT LLP LOGO)                                 Altra Industrial Motion, Inc.
                                                   May 7, 2007
                                                   Page 2


agreements, certificates and receipts of public officials, certificates of
officers or other representatives of the Company and others, and such other
documents as we have deemed necessary or appropriate as a basis for the opinion
set forth below.

In our examination we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies. In making such
examination and rendering the opinion below, we have assumed (i) that all
natural persons have the legal capacity to enter into and perform their
obligations under the Indenture, the Exchange Notes and the Exchange Guarantees
(collectively, the "Transaction Documents"), (ii) that the parties thereto have
the power and authority to enter into and perform all obligations under the
Transaction Documents, (iii) that the Transaction Documents have been duly
authorized, executed and delivered by the parties thereto (except the
authorization of the Exchange Guarantee to be issued by TBWI) and (iv) the
validity and enforceability of the Transaction Documents against each of the
parties thereto (except the validity of the Exchange Guarantee to be issued by
TBWI). As to all questions of fact, we have relied, to the extent we deem
proper, upon the representations and warranties of the Company and the
Guarantors, certificates or comparable documents of officers of the Company and
the Guarantors and certificates of public officials.

Our opinion set forth herein is based on our consideration of only those
statutes, rules, regulations and judicial decisions that, in our experience, are
normally applicable to, or normally relevant in connection with, transactions of
the type contemplated in the Transaction Documents, but without having made any
special investigation as to the applicability of any specific law, rule or
regulation.

The opinion expressed herein is limited to the laws of the Commonwealth of
Pennsylvania. The opinion expressed herein is based on laws in effect on the
date hereof, which laws are subject to change with possible retroactive effect,
and we expressly disclaim any obligation to advise you of any changes therein.

The opinion set forth below is subject to the following further qualifications,
assumptions and limitations:

          a)   We have assumed that the execution and delivery by the Company
               and the Guarantors of each of the Transaction Documents and the
               performance by the Company and the Guarantors of the obligations
               thereunder do not and will not violate, conflict with or
               constitute a default under any agreement or instrument to which
               the Company or the Guarantors or any of their respective
               properties is subject;

          b)   We do not express any opinion as to (i) the compliance or
               noncompliance of any party to the Transaction Documents with any
               state, federal or other laws or regulations applicable to it or
               them or (ii) provisions related to releases or waivers of legal
               or equitable rights, discharges of defenses, or reimbursement or


                                        2



(DECHERT LLP LOGO)                                 Altra Industrial Motion, Inc.
                                                   May 7, 2007
                                                   Page 3


               indemnification in circumstances in which the person seeking
               reimbursement or indemnification has breached its duties under
               the applicable Transaction Document, or otherwise, or itself has
               been negligent, or which violate public policy; and

          c)   We have assumed that the Commission will have declared the
               Registration Statement to be effective under the Securities Act,
               and such effectiveness under the Securities Act will not have
               been terminated or rescinded.

Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that (i) the
execution, delivery and performance by TBWI of its Exchange Guarantee of the
Exchange Notes, in the form examined by us, have been duly authorized by all
necessary corporate action by TBWI and (ii) the Exchange Guarantee of TBWI, when
duly and validly executed and delivered by or on behalf of TBWI in accordance
with the terms of the Indenture and as contemplated in the Registration
Statement and duly authenticated by the Trustee, will constitute a valid and
binding obligation of TBWI.

Our opinion set forth above is subject to the effect of (i) any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally and (ii) any fraudulent
transfer, preference or similar law.

We hereby consent to the filing of this opinion letter as Exhibit 5.3 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus included in the Registration Statement. In granting
such consent, we do not thereby admit that we are included in the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission.

Very truly yours,


/s/ Dechert LLP

Dechert LLP


                                        3

EX-10.32

                                                                   Exhibit 10.32

     Supplement No. 1 (this "Supplement") dated as of April 5, 2007, to the
Security Agreement dated as of November 30, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the "Security Agreement")
by each of the parties listed as "Grantors" on the signature pages thereto and
those additional entities that thereafter become grantors thereunder
(collectively, jointly and severally, "Grantors" and each individually
"Grantor"), and WELLS FARGO FOOTHILL, INC., in its capacity as Agent for the
Lender Group and the Bank Product Providers (together with its successors and
assigns in such capacity, "Agent").

                                   WITNESSETH:

     WHEREAS, pursuant to that certain Credit Agreement dated of November 30,
2004 (as amended, restated, supplemented or otherwise modified from time to
time, including all exhibits and schedules thereto, the "Credit Agreement")
among Altra Industrial Motion, Inc., 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, capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Security Agreement and/or
the Credit Agreement;

     WHEREAS, Grantors have entered into the Security Agreement in order to
induce the Lender Group to make certain financial accommodations to Borrowers;
and

     WHEREAS, pursuant to Section 5.16 of the Credit Agreement, new direct or
indirect Restricted Subsidiaries of Borrowers and the other Grantors, must
execute and deliver to Agent certain Loan Documents, including the Security
Agreement, and the execution of the Security Agreement by the undersigned new
Grantor or Grantors (collectively, the "New Grantors") may be accomplished by
the execution of this Supplement in favor of Agent, for the benefit of the
Lender Group and the Bank Product Providers.

     NOW, THEREFORE, for and in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each New Grantor hereby agrees as follows:

     1. In accordance with Section 24 of the Security Agreement, each New
Grantor, by its signature below, becomes a "Grantor" under the Security
Agreement with the same force and effect as if originally named therein as a
"Grantor" and each New Grantor hereby (a) agrees to all of the terms and
provisions of the Security Agreement applicable to it as a "Grantor" thereunder
and (b) represents and warrants that the representations and warranties made by
it as a "Grantor" thereunder are true and correct on and as of the date hereof.
In furtherance of the foregoing, each New Grantor, as security for the payment
and performance in full of the Secured Obligations, does hereby grant, assign,
and pledge to Agent, for the benefit of the Lender Group and the Bank Product
Providers, a security interest in and security title to the assets of such New
Grantor of the type described in Section 2 of the Security Agreement to secure
the full and prompt payment of the Secured Obligations, including, without
limitation, any interest thereon, plus reasonable attorneys' fees and expenses
if the Secured Obligations represented by the Security Agreement are collected
by law, through an attorney-at-law, or under advice therefrom to the extent such
fees and expenses are required to be paid by the Borrowers under the Credit
Agreement. Schedule 1, "Copyrights," Schedule 2, "Intellectual Property
Licenses," Schedule 3, "Patents," Schedule 4, "Pledged Companies," Schedule 5,
"Trademarks," Schedule 6, "Commercial Tort Claims," Schedule 7, "Owned Real
Property," and Schedule 8, "List of Uniform Commercial Code Filing
Jurisdictions," attached hereto supplement Schedule 1, Schedule 2, Schedule 3,
Schedule 4, Schedule 5, Schedule 6, Schedule 7, and Schedule 8, respectively, to
the Security Agreement and shall be deemed a part thereof for all purposes of
the Security Agreement. Each reference to a "Grantor" in the Security



Agreement shall be deemed to include each New Grantor. The Security Agreement is
incorporated herein by reference.

     2. Each New Grantor represents and warrants to Agent, the Lender Group and
the Bank Product Providers that this Supplement has been duly executed and
delivered by such New Grantor and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other similar laws affecting creditors'
rights generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).

     3. This Supplement may be executed in multiple 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. Delivery of a counterpart
hereof by facsimile transmission or by e-mail transmission shall be as effective
as delivery of a manually executed counterpart hereof.

     4. Except as expressly supplemented hereby, the Security Agreement shall
remain in full force and effect.

     5. Notwithstanding anything to the contrary contained herein, this
Supplement shall not be effective until the Joinder Effective Time (as defined
in that certain Fifth Amendment to, and Consent and Waiver under, Credit
Agreement and Joinder to Loan Documents dated as of the date hereof among the
Borrowers, the New Loan Parties (as defined therein), the Lenders and Agent), at
which time this Supplement shall be effective immediately without any further
action.

     6. This Supplement shall be construed in accordance with and governed by
the laws of the State of New York, without regard to the conflict of laws
principles thereof.

                            [SIGNATURE PAGES FOLLOW]



     IN WITNESS WHEREOF, each New Grantor and Agent have duly executed this
Supplement to the Security Agreement as of the day and year first above written.

                                        NEW GRANTORS:

                                        TB WOOD'S INCORPORATED,
                                        a Pennsylvania corporation, as a New
                                        Grantor


                                        By:  /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name:    Joseph C. Horvath
                                              ----------------------------------
                                        Title:   VP, CFO and Corporate Secretary
                                               ---------------------------------


                                        PLANT ENGINEERING CONSULTANTS, LLC,
                                        a Tennessee limited liability company,
                                        as a New Grantor


                                        By:  /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name:    Joseph C. Horvath
                                              ----------------------------------
                                        Title:   Treasurer and Secretary
                                               ---------------------------------


                                        TB WOOD'S ENTERPRISES, INC.,
                                        a Delaware corporation, as a New Grantor


                                        By:  /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name:    Joseph C. Horvath
                                              ----------------------------------
                                        Title:   President and Treasurer
                                               ---------------------------------


                                        TB WOOD'S CORPORATION,
                                        a Delaware corporation, as a New Grantor


                                        By:  /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name:    Joseph C. Horvath
                                              ----------------------------------
                                        Title:   VP, CFO and Corporate Secretary
                                               ---------------------------------

              [SIGNATURE PAGE OF SUPPLEMENT TO SECURITY AGREEMENT]



                                        AGENT:

                                        WELLS FARGO FOOTHILL, INC.,
                                        a California corporation, as Agent


                                        By:  /s/ Vincent J. Egan, Jr.
                                            ------------------------------------
                                        Name:    Vincent J. Egan, Jr.
                                              ----------------------------------
                                        Title:   VP
                                               ---------------------------------

              [SIGNATURE PAGE OF SUPPLEMENT TO SECURITY AGREEMENT]

EX-10.33

                                                                   EXHIBIT 10.33

     Supplement No. 2 (this "Supplement") dated as of April 5, 2007, to the
Security Agreement dated as of November 30, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the "Security Agreement")
among Altra Industrial Motion, Inc., a Delaware corporation ("Company"), each of
the parties listed as "Grantors" on the signature pages thereto and those
additional entities that thereafter become grantors thereunder (collectively,
jointly and severally, "Grantors" and each individually "Grantor"), and THE BANK
OF NEW YORK COMPANY, N.A., in its capacity as Collateral Agent for the Holders
(together with its successors and assigns in such capacity, "Collateral Agent").

                                   WITNESSETH:

     WHEREAS, pursuant to that certain Indenture dated of November 30, 2004 (as
amended, restated, supplemented or otherwise modified from time to time,
including all exhibits and schedules thereto, the "Indenture") among Company,
each of the Guarantors named therein ("Guarantors"), and the Bank of New York
Trust Company, N.A., as Trustee and Collateral Agent, Company has issued to the
Holders its 9% Senior Secured Notes Due 2011, and may issue from time to time
additional notes in connection with the provisions of the Indenture (as same may
be amended and restated, supplemented or otherwise modified from time to time,
collectively, the "Notes") from time to time pursuant to the terms and
conditions thereof;

     WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Security Agreement and/or
the Indenture;

     WHEREAS, the New Grantors (as hereinafter defined) have entered into this
Supplement in order to induce the Purchasers to purchase additional notes in the
aggregate principal amount of $105,000,000; and

     WHEREAS, pursuant to Section 4.15 of the Indenture, new Domestic Restricted
Subsidiaries of Company, must execute and deliver to Collateral Agent certain
amendments to the Collateral Agreements, including the Security Agreement, and
the execution and delivery of such amendment thereof by the undersigned new
Grantor or Grantors (collectively, the "New Grantors") may be accomplished by
the execution and delivery of this Supplement in favor of Collateral Agent, for
the benefit of the Trustee, Collateral Agent and the Holders.

     NOW, THEREFORE, for and in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each New Grantor hereby agrees as follows:

     1. In accordance with Section 24 of the Security Agreement, each New
Grantor, by its signature below, becomes a "Grantor" under the Security
Agreement with the same force and effect as if originally named therein as a
"Grantor" and each New Grantor hereby (a) agrees to all of the terms and
provisions of the Security Agreement applicable to it as a "Grantor" thereunder
and (b) represents and warrants that the representations and warranties made by
it as a "Grantor" thereunder are true and correct on and as of the date hereof.
In furtherance of the foregoing, each New Grantor, as security for the payment
and performance in full of the Secured Obligations, does hereby grant, assign,
and pledge to Collateral Agent, for the benefit of the Trustee, Collateral Agent
and the Holders, a security interest in and security title to the assets of such
New Grantor of the type described in Section 2 of the Security Agreement to
secure the full and prompt payment of the Secured Obligations, including,
without limitation, any interest thereon, plus reasonable attorneys' fees and
expenses if the Secured Obligations represented by the Security Agreement are
collected by law, through an attorney-at-law, or under advice therefrom to the
extent such fees and expenses are required to be paid by the Borrowers under the
Credit Agreement. Schedule 1, "Copyrights," Schedule 2, "Intellectual Property
Licenses," Schedule 3, "Patents," Schedule 4, "Pledged Companies," Schedule 5,
"Trademarks," Schedule 6, "Commercial Tort Claims," Schedule 7, "Owned Real
Property," and Schedule 8, "List of Uniform Commercial Code Filing
Jurisdictions," attached hereto supplement Schedule 1, Schedule 2, Schedule 3,
Schedule 4, Schedule 5,



Schedule 6, Schedule 7, and Schedule 8, respectively, to the Security Agreement
and shall be deemed a part thereof for all purposes of the Security Agreement.
Each reference to a "Grantor" in the Security Agreement shall be deemed to
include each New Grantor. The Security Agreement is incorporated herein by
reference.

     2. Each New Grantor represents and warrants to the Trustee, Collateral
Agent and the Holders that this Supplement has been duly executed and delivered
by such New Grantor and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws affecting creditors' rights generally
and general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).

     3. This Supplement may be executed in multiple 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. Delivery of a counterpart
hereof by facsimile transmission or by e-mail transmission shall be as effective
as delivery of a manually executed counterpart hereof.

     4. Except as expressly supplemented hereby, the Security Agreement shall
remain in full force and effect.

     5. Notwithstanding anything to the contrary contained herein, this
Supplement shall not be effective until the execution and delivery of the Fifth
Supplemental Indenture dated as of the date hereof, entered into by the Company,
the Guarantors signatory thereto, the New Guarantors (as defined therein), and
the Trustee, at which time this Supplement shall be effective immediately
without any further action.

     6. This Supplement shall be construed in accordance with and governed by
the laws of the State of New York, without regard to the conflict of laws
principles thereof.

                            [SIGNATURE PAGES FOLLOW]


                                        2



     IN WITNESS WHEREOF, each New Grantor and Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.

                                        NEW GRANTORS:

                                        TB WOOD'S INCORPORATED,
                                        a Pennsylvania corporation, as a New
                                        Grantor


                                        By: /s/ William T. Fejes, Jr.
                                            ------------------------------------
                                        Name: William T. Fejes, Jr.
                                              ----------------------------------
                                        Title: President, CEO and Director
                                               ---------------------------------


                                        PLANT ENGINEERING CONSULTANTS, LLC,
                                        a Tennessee limited liability company,
                                        as a New Grantor


                                        By: /s/ William T. Fejes, Jr.
                                            ------------------------------------
                                        Name:  William T. Fejes, Jr.
                                               ---------------------------------
                                        Title: President
                                               ---------------------------------


                                        TB WOOD'S ENTERPRISES, INC.,
                                        a Delaware corporation, as a New Grantor

                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name:Joseph C. Horvath
                                             -----------------------------------
                                        Title:President and Treasurer
                                              ----------------------------------


                                        TB WOOD'S CORPORATION,
                                        a Delaware corporation, as a New Grantor


                                        By: /s/ William T. Fejes, Jr.
                                            ------------------------------------
                                        Name: William T. Fejes, Jr.
                                              ----------------------------------
                                        Title: President, CEO and Director
                                               ---------------------------------


                                        COLLATERAL AGENT:

                                        THE BANK OF NEW YORK TRUST COMPANY,
                                        N.A., as Collateral Agent


                                        By:  /s/ Sandee Parks
                                             ----------------------------------
                                        Name: Sandee Parks
                                              ----------------------------------
                                        Title: Vice President
                                               ---------------------------------

              [SIGNATURE PAGE OF SUPPLEMENT TO SECURITY AGREEMENT]



                                   SCHEDULE 1

                                   COPYRIGHTS

     None.


                                        i



                                   SCHEDULE 2

                         INTELLECTUAL PROPERTY LICENSES

     Trademark Licenses:

     1.   Agreement between T.B. Wood's Sons Company and Nabeya Kogyo Co., Ltd.,
          dated April 8, 1986.

     2.   Agreement between T.B. Wood's Sons Company and Daido-Sprag Ltd., dated
          December 13, 1994.

     3.   Agreement between T.B. Wood's Incorporated and Daido Precision Ltd.,
          dated April 1, 2000.

     4.   License Agreement between Plant Engineering Consultants, Inc. and TB
          Wood's Enterprises, Inc. dated January 1, 2000.

     5.   License Agreement between Societe Industrielle de Transmissions d/b/a
          Texrope and T.B. Wood's Sons Company dated July 1, 1972.

     6.   Addendum Number 1 to the License Agreement between TB Wood's Sons
          company and Societe Industrielle de Transmissions d/b/a Texrope, dated
          June 18, 1982.


                                       ii



                                   SCHEDULE 3

                                     PATENTS



                                                                REGISTRATION   REGISTRATION
        GRANTOR             COUNTRY             PATENT               NO.           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



                                       iii



                                   SCHEDULE 4

                                PLEDGED COMPANIES



                                                          NUMBER OF         CLASS OF     PERCENTAGE OF  CERTIFICATE  PERCENTAGE OF
     NAME OF PLEDGOR        NAME OF PLEDGED COMPANY      SHARES/UNITS      INTERESTS      CLASS OWNED       NOS.     CLASS PLEDGED
     ---------------      ---------------------------  ---------------  ---------------  -------------  -----------  -------------
                                                                                                   
Altra Industrial Motion,  TB Wood's Corporation             1,000            common           100%          C-1           100%
Inc.

TB Wood's Corporation     TB Wood's Incorporated          1,125,000          common           100%           2            100%

TB Wood's Incorporated    Plant Engineering            100% membership  LLC  membership       100%          n/a           100%
                          Consultants, LLC                 interest        interests

TB Wood's Incorporated    TB Wood's Enterprises, Inc.       3,000            common           100%           2            100%

TB Wood's Incorporated    Industrial Blaju, S.A. de         50,000           common           100%           1             65%
                          C.V.

TB Wood's Incorporated    T.B. Wood's Canada Ltd.           5,255            common           100%          1014           65%

TB Wood's Incorporated    Berges Electronic GmBH                                              100%                         65%



                                       iv



                                   SCHEDULE 5

                                   TRADEMARKS



                                                     APPLICATION/
                                                     REGISTRATION
     GRANTOR           COUNTRY           MARK             NO.        APP/REG DATE
     -------        -------------   --------------   -------------   ------------
                                                         
TB Wood's           United States   ALL-PRO          75/290,731/     5/12/1997/
Enterprises, Inc.                                    2,165,737       6/16/1998
TB Wood's           United States   BRAKETRON        73/254,657/     3/19/1980/
Enterprises, Inc.                                    1,164,393       8/11/1981
TB Wood's           United States   DECK             73/581,633/     2/7/1986/
Enterprises, Inc.                   (stylized)       1,409,209       9/16/1986
TB Wood's           United States   DISC-O-TORQUE    72/285,224/     11/20/1967/
Enterprises, Inc.                                    859,264         10/29/1968
TB Wood's           Mexico          DURA-FLEX        267,615/        6/9/1997/
Enterprises, Inc.                                    552,086         6/26/1997
TB Wood's           United States   DURA-FLEX        73/158,649/     2/13/1978/
Enterprises, Inc.                                    1,116,828       4/24/1979
TB Wood's           United States   E-FLOW           75/280,015/     4/23/1997/
Enterprises, Inc.                                    2,169,361       6/30/1998
TB Wood's           United States   E-trAC           73/491,494/     7/24/1984/
Enterprises, Inc.                   (Stylized)       1,333,061       4/30/1985
TB Wood's           United States   E-TROL+PLUS      75/273,178/     4/11/1997/
Enterprises, Inc.                                    2,156,683       5/12/1998
TB Wood's           United States   FIRST IN         73/526,310/     3/11/1985/
Enterprises, Inc.                   COUPLINGS        1,361,466       9/24/1985
TB Wood's           Canada          FORMFLEX         352,690/
Enterprises, Inc.                                    215,307         8/23/1991
TB Wood's           United States   FORM-FLEX        75/273,175/     4/11/1997/
Enterprises, Inc.                                    2,152,362       4/21/1998



                                       v





                                                      APPLICATION/
                                                     REGISTRATION
     GRANTOR           COUNTRY           MARK             NO.        APP/REG DATE
     -------        -------------   --------------   -------------   ------------
                                                         
TB Wood's           United States   IMD              75/272,935/     4/11/1997/
Enterprises, Inc.                                    2,261,432       7/13/1999
TB Wood's           United States   NLS              75/273,181/     4/11/1997/
Enterprises, Inc.                                    2,152,366       4/21/1998
TB Wood's           Canada          PDA-TRAC         1,210,875/      3/24/2004/
Enterprises, Inc.                                    TMA669,532      8/9/2006
TB Wood's           Mexico          PDA-TRAC         862222/         4/21/2004/
Enterprises, Inc.                                    862222          4/21/2004
TB Wood's           United States   PDA-TRAC         78/329,999      11/19/2003/
Enterprises, Inc.                                    2,986,366       8/16/2005
TB Wood's           United States   PETRO-TRAC       78/052,072/     3/8/2001/
Enterprises, Inc.                                    2,641,082       10/22/2002
TB Wood's           United States   POOLE            75/251,697/     2/28/1997/
Enterprises, Inc.                                    2,191,918       9/29/1998
TB Wood's           Mexico          QT POWER CHAIN   573133/         10/20/2002/
Enterprises, Inc.                                    818826          1/26/2004
TB Wood's           United States   QT POWER CHAIN   76/403,299/     5/2/2002/
Enterprises, Inc.                                    2,723,745       6/10/2003
TB Wood's           United States   ROTO-CAM         72/285,223/     11/20/1967/
Enterprises, Inc.                                    859,263         10/29/1968
TB Wood's           United States   ROTO-CONE        72/015,359/     9/10/1956/
Enterprises, Inc.                                    676,279         3/31/1959
TB Wood's           Canada          SPEEDLIGN        1,223,603/      7/14/2004/
Enterprises, Inc.                                    TMA665,131      5/29/2006
TB Wood's           Mexico          SPEEDLIGN        666,531/        7/14/04/
Enterprises, Inc.                                    896,028         8/23/05
TB Wood's           United States   SPEEDLIGN        78/350,700/     1/12/2004/
Enterprises, Inc.                                    2,991,827       9/6/2005
TB Wood's           United States   S-TRAC           75/272,936/     4/11/1997/
Enterprises, Inc.                                    2,257,668       6/29/1999



                                       vi





                                                      APPLICATION/
                                                     REGISTRATION
     GRANTOR           COUNTRY           MARK             NO.        APP/REG DATE
     -------        -------------   --------------   -------------   ------------
                                                         
TB Wood's           United States   SUPERSTART       74/104,389/     10/9/1990/
Enterprises, Inc.                                    1,686,040       5/12/1992
TB Wood's           United States   SURE GRIP        71/640,418/     1/6/1953/
Enterprises, Inc.                   (stylized)       645,415         5/14/1957
TB Wood's           Great Britain   SUREFLEX         B998,327/       9/13/1993
Enterprises, Inc.                                    B998,327
TB Wood's           Australia       SURE-FLEX        B375,472/       5/13/1982/
Enterprises, Inc.                                    B375,472        5/13/1989
TB Wood's           Canada          SURE-FLEX        645,519/        11/23/1989/
Enterprises, Inc.                                    380,915         3/1/1991
TB Wood's           Japan           SURE-FLEX        40,343/1982/    5/12/1982/
Enterprises, Inc.                                    1,923,250       12/24/1986
TB Wood's           Switzerland     SURE-FLEX        405,626/        9/14/1992/
Enterprises, Inc.                                    405,626         9/14/1992
TB Wood's           United States   SURE-FLEX        72/043,720/     1/9/1958/
Enterprises, Inc.                   (stylized)       668,649         10/21/1958
TB Wood's           Japan           SUREFLEX         7-700836/       1/13/1995/
Enterprises, Inc.                   and Katakana     1,740,974       1/23/1995
TB Wood's           United States   SURE-GRIP        71/575,508/     3/15/1949/
Enterprises, Inc.                                    646,423         6/4/1957
TB Wood's           United States   SURE-GRIP        73/136,699/     8/8/1977/
Enterprises, Inc.                                    1,109,150       12/19/1978
TB Wood's           United States   TRUETUBE         75/273,177/     4/11/1997/
Enterprises, Inc.                                    2,152,364       4/21/1998
TB Wood's           United States   ULTRACON         72/300,318/     6/13/1968/
Enterprises, Inc.                                    862,655         12/31/1968
TB Wood's           United States   ULTRACON II      75/273,179/     4/11/1997/
Enterprises, Inc.                                    2,150,835       4/14/1998
TB Wood's           United States   ULTRA-HELIX      75/559,570/     9/25/1998/
Enterprises, Inc.                                    2,351,349       5/23/2000



                                      vii





                                                      APPLICATION/
                                                     REGISTRATION
     GRANTOR           COUNTRY           MARK             NO.        APP/REG DATE
     -------        -------------   --------------   -------------   ------------
                                                         
TB Wood's           United States   ULTRA-V          73/001,734/     10/9/1973/
Enterprises, Inc.                                    1,001,969       1/21/1975
TB Wood's           United States   ULTRA-V          73/003,203/     10/10/1973/
Enterprises, Inc.                                    1,001,970       1/21/1975
TB Wood's           United States   U-TROL           73/104,511/     10/26/1976/
Enterprises, Inc.                                    1,070,167       7/26/1977
TB Wood's           United States   VAR-A-CONE       75/273,180/     4/11/1997/
Enterprises, Inc.                                    2,152,365       4/21/1998
TB Wood's           United States   W TB WOOD'S      75/107,136/     5/20/1996/
Enterprises, Inc.                   (and design)     2,059,245       5/6/1997
TB Wood's           Canada          WIN-TRAC         1,210,868/      3/24/2004/
Enterprises, Inc.                                    TMA664,172      5/12/2006
TB Wood's           Community       WIN-TRAC         3.828.019/      5/20/2004/
Enterprises, Inc.   Trademark                        3.828.019       11/15/2005
TB Wood's           Mexico          WIN-TRAC         653047          4/21/2004
Enterprises, Inc.
TB Wood's           United States   WIN-TRAC         78/306,778/     9/29/2003/
Enterprises, Inc.                                    2,961,309       6/7/2005
TB Wood's           Mexico          WOOD'S WORK      573134/         10/30/2002/
Enterprises, Inc.                                    904275          11/30/2002
TB Wood's           United States   WOOD'S@WORK      76/402,992/     5/2/2002/
Enterprises, Inc.                                    2,801,090       12/30/2003
TB Wood's Sons      Germany         FORM-FLEX        D 36648 7W2/    9/22/1983/
Company                                              1,053,953       9/23/1983
TB Wood's Sons      Germany         SUREFLEX         W24959/         4/5/1973/
Company                                              926 107         12/17/1974
TB Wood's           Argentina       DURA-FLEX        2,066,443/      1/23/1997/
Incorporated                                         1,783,301       3/27/2000
TB Wood's           Community       DURA-FLEX        507.277         2/7/1997
Incorporated        Trademark



                                      viii





                                                      APPLICATION/
                                                     REGISTRATION
     GRANTOR           COUNTRY           MARK             NO.        APP/REG DATE
     -------        -------------   --------------   -------------   ------------
                                                         
TB Wood's           Japan           DURA-FLEX        27318/97/       3/17/1997/
Incorporated                                         4,166,483       7/10/1998
TB Wood's           Malaysia        DURA-FLEX        97/01971        2/19/1997
Incorporated
TB Wood's           Taiwan          DURA-FLEX        (86)5713/       2/1/1997/
Incorporated                                         807300          7/1/1998
TB Wood's           Japan           FORMFLEX         41,517/85/      8/19/1987/
Incorporated                                         1,975,830       8/19/1997
TB Wood's           Venezuela       PETRO-TRAC       2001-016447/    9/7/2001/
Incorporated                                         P-245856        8/22/2003
TB Wood's           Canada          QT POWER CHAIN   1,157,003/      10/25/2002/
Incorporated                                         TMA623,038      10/20/2004
TB Wood's           France          SPEEDLIGN        717,131/        6/19/1974/
Incorporated                                         1,286,266       6/19/1974
TB Wood's           Germany         SPEEDLIGN        935,511/
Incorporated                                         935,511         6/10/1974
TB Wood's           Great Britain   SPEEDLIGN        99999/
Incorporated                                         1,029,397       5/13/1974
TB Wood's           Singapore       SUREFLEX         2556/82/        5/21/1982/
Incorporated                                         T82/02556B      5/21/1982
TB Wood's           Benelux         SURE-FLEX        0316801/        10/20/1972/
Incorporated                                         0316801         10/20/1972
TB Wood's           Brazil          SURE-FLEX        810,942,631/    8/23/1982/
Incorporated                                         810,942,631     3/19/1995
TB Wood's           France          SURE-FLEX        02 3 196 347/   11/27/2002/
Incorporated                                         02 3 196 347    11/27/2002
TB Wood's           Italy           SURE-FLEX        MI2003002784/   9/25/1992/
Incorporated                                         654849          9/25/1974
TB Wood's           Canada          WOOD'S@WORK      1,157,004/      10/25/2002/
Incorporated                                         TMA626,975      11/29/2004



                                       ix



                                   SCHEDULE 6

                             COMMERCIAL TORT CLAIMS

     None.


                                       x



                                   SCHEDULE 7

                               OWNED REAL PROPERTY

TB WOOD'S INCORPORATED

Main offices, warehouse Mechanical Division manufacturing plant:
440 North Fifth Street
Chambersburg, PA 17201

Electronics Division Offices and manufacturing plant
3181 Black Gap Road
Chambersburg, PA 17201

801 E. Industrial Ave.
Mt. Pleasant, Michigan 48858

2000 Clovis Baker Road
San Marcos, TX 78666

Houser Road
Greene, PA


                                       xi



                                   SCHEDULE 8

              LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS



         Grantor                     Jurisdictions
         -------                     -------------
                                  
TB Wood's Corporation                Delaware

TB Wood's Incorporated               Pennsylvania

Plant Engineering Consultants, LLC   Tennessee

TB Wood's Enterprises, Inc.          Delaware



                                      xii

EX-10.34

                                                                   Exhibit 10.34

                FIFTH AMENDMENT TO, AND CONSENT AND WAIVER UNDER,
                 CREDIT AGREEMENT AND JOINDER TO LOAN DOCUMENTS

     THIS FIFTH AMENDMENT TO, AND CONSENT AND WAIVER UNDER, CREDIT AGREEMENT AND
JOINDER TO LOAN DOCUMENTS (this "Fifth Amendment") is made and entered into as
of April 5, 2007, by and among Altra Industrial Motion, Inc., a Delaware
corporation, as Administrative Borrower ("Administrative Borrower") for the
Borrowers (as defined below), each of the New Loan Parties (as defined below)
listed on the signatory pages hereof, the lenders listed on the signatory pages
hereof (the "Lenders"), and Wells Fargo Foothill, Inc., a California
corporation, in its capacity as the arranger and administrative agent for the
Lenders ("Agent").

                                   WITNESSETH:

     WHEREAS, each of Administrative Borrower, Warner Electric LLC, a Delaware
limited liability company, Kilian Manufacturing Corporation, a Delaware
corporation, Warner Electric Technology LLC, a Delaware limited liability
company, Formsprag LLC, a Delaware limited liability company, Boston Gear LLC, a
Delaware limited liability company, Nuttall Gear L L C, a Delaware limited
liability company, and Ameridrives International L.P., a Delaware limited
partnership (each, a "Borrower" and, collectively, the "Borrowers"), have
entered into a Credit Agreement dated as of November 30, 2004 (as amended as of
December 30, 2004, January 14, 2005, January 31, 2005, and February 16, 2007,
and as may be further amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement"), with the Lenders and Agent;

     WHEREAS, on February 17, 2007, Holdings, and its wholly owned subsidiary
Forest Acquisition Corporation ("FAC"), entered into an Agreement and Plan of
Merger (the "Merger Agreement") with TB Wood's Corporation ("TB Wood's"),
pursuant to which FAC agreed to purchase shares of common stock of TB Wood's for
$24.80 per share;

     WHEREAS, in the Merger Agreement, FAC agreed to make a cash tender offer of
$24.80 per share for all outstanding shares of TB Wood's common stock;

     WHEREAS, FAC commenced the tender offer (the "Tender Offer") on March 5,
2007;

     WHEREAS, FAC acquired greater than 90% of the outstanding shares of TB
Wood's common stock in the Tender Offer, and FAC and TB Wood's will
substantially simultaneously herewith effect a statutory "short-form" merger
pursuant to which FAC will be merged with and into TB Wood's (the "Merger") and
TB Wood's will become a wholly-owned subsidiary of Administrative Borrower;

     WHEREAS, upon consummation of the Merger and TB Wood's becoming a
wholly-owned subsidiary of Administrative Borrower (the "Joinder Effective
Time"), TB Wood's and each of its domestic subsidiaries (collectively, the "New
Loan Parties") will become Guarantors under the Loan Documents;



     WHEREAS, Administrative Borrower intends to issue $105,000,000 aggregate
principal amount of 9% Senior Secured Notes due 2011 (the "Additional Notes")
under a supplement (the "Indenture Supplement") to the Indenture, pursuant to
which Administrative Borrower has previously issued $165,000,000 aggregate
principal amount of senior secured notes;

     WHEREAS, the Notes (including the Additional Notes) will be guaranteed by
the New Loan Parties and secured by the assets of the New Loan Parties, subject
to the Intercreditor Agreement;

     WHEREAS, Holdings and Administrative Borrower intend to fund the purchase
price of the acquisition of the common stock of TB Wood's through the net
proceeds of the issuance of the Additional Notes, together with cash on hand and
borrowings under the Credit Agreement;

     WHEREAS, absent a consent and waiver from the Lenders and Agent, the
issuance of the Additional Notes would violate Section 6.1 of the Credit
Agreement and the consummation of the acquisition of TB Wood's contemplated by
the Merger Agreement would violate Section 6.3 and Section 6.12 of the Credit
Agreement;

     WHEREAS, Borrowers have requested that the Lenders and Agent consent to the
issuance of the Additional Notes and the consummation of the acquisition of TB
Wood's contemplated by the Merger Agreement; and

     WHEREAS, Borrowers, the Lenders and Agent wish to amend the Credit
Agreement, as provided herein;

     NOW, THEREFORE, in consideration of the agreements and provisions herein
contained, the parties hereto do hereby agree as follows:

SECTION 1. DEFINITIONS. Any capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement.

SECTION 2. CONSENTS AND WAIVERS. Subject to the satisfaction of the conditions
set forth in Section 6 herein, the Lenders and Agent hereby (a) consent to, and
waive the application of Section 6.1 of the Credit Agreement solely with respect
to, the issuance of the Additional Notes in an aggregate principal amount not to
exceed $105,000,000, (b) consent to, and waive the application of Section 6.3
and Section 6.12 of the Credit Agreement solely with respect to, the
consummation of the acquisition of TB Wood's contemplated by the Merger
Agreement, (c) consent to, and waive the application of Section 6.14 of the
Credit Agreement solely with respect to, the use of proceeds of Borrowings under
the Credit Agreement to partially finance the Merger, (d) subject to compliance
with Section 7.03 hereof, waive the application of Section 5.15 of the Credit
Agreement solely with respect to the Securities Accounts and Deposit Accounts of
the New Loan Parties, and (e) waive the application of Section 5.16 of the
Credit Agreement solely with respect to the pledge by TB Wood's Incorporated of
the Stock of TB Wood's (India) Private Ltd..


                                       2



SECTION 3. AMENDMENTS TO CREDIT AGREEMENT. Subject to the satisfaction of the
conditions set forth in Section 6 herein, the Credit Agreement is hereby
amended, effective as of the Effective Date (as defined below), as follows:

     3.01 AMENDMENT TO SECTION 2.6(B). Section 2.6(b) of the Credit Agreement is
hereby amended by deleting the words "2.00% per annum" therein and inserting
"1.50% per annum" in lieu thereof.

     3.02 AMENDMENT TO SECTION 3.3. Section 3.3 of the Credit Agreement is
hereby amended by deleting the words "the fifth anniversary of the date hereof"
therein and inserting "the sixth anniversary of the date hereof" in lieu
thereof.

     3.03 AMENDMENTS TO SECTION 6.1. Section 6.1 of the Credit Agreement is
hereby amended as follows:

          (a) Section 6.1(g) of the Credit Agreement is hereby amended by
deleting it in its entirety and inserting the following in lieu thereof:

          "(g) Indebtedness represented by any notes issued pursuant to the
          Indenture, including any Senior Notes (or any other evidence of
          indebtedness for borrowed money under the Senior Notes or the
          Indenture) in an aggregate principal amount not to exceed $275,000,000
          at any one time outstanding and any Refinancing Indebtedness in
          respect thereof (whether in whole or in part);"

          (b) The word "and" at the end of clause (p) is hereby deleted.

          (c) Clause (q) is hereby re-titled clause (t).

          (d) The following new clauses (q), (r) and (s) are hereby added as
follows:

          "(q) Indebtedness under the TB Wood's Refinanced Standalone Facility
          and any Refinancing Indebtedness in respect thereof (whether in whole
          or in part);

          (r) Indebtedness represented by any notes issued pursuant to the
          Unsecured Indenture, including any Unsecured Notes (or any other
          evidence of indebtedness for borrowed money under the Unsecured Notes
          or the Unsecured Indenture) in an aggregate principal amount not to
          exceed L21,450,000 at any one time outstanding and any Refinancing
          Indebtedness in respect thereof (whether in whole or in part);

          (s) Indebtedness represented by the IRB Bonds in an aggregate
          principal amount not to exceed $5,300,000 and any Refinancing
          Indebtedness in respect thereof (whether in whole or in part); and"

     3.04 AMENDMENTS TO SECTION 6.7. Section 6.7(a) of the Credit Agreement is
hereby amended by (a) re-titling clause (iv) as clause (v) and (b) adding the
following new clause (iv): "(iv) Borrowers and their Restricted Subsidiaries may
pay and prepay the Indebtedness under the


                                       3



TB Wood's Refinanced Standalone Facility in accordance with the terms of the TB
Wood's Refinanced Standalone Facility,".

     3.05 AMENDMENT TO SECTION 6.16. Section 6.16 of the Credit Agreement is
hereby amended by deleting it in its entirety and inserting the following in
lieu thereof:

     "6.16 FINANCIAL COVENANTS.

          (A) FIXED CHARGE COVERAGE RATIO. Fail to maintain or achieve a Fixed
Charge Coverage Ratio, measured on a fiscal quarter-end basis, of at least the
required amount set forth in the following table for the "Applicable Period" set
forth opposite thereto; provided, however, that, with respect to any "Applicable
Period", if daily average Excess Availability was at least $12,500,000 during
the 30 day period immediately preceding the applicable date of determination and
on the applicable date of determination, then the foregoing covenant shall not
apply for such applicable period:



Applicable Ratio             Applicable Period
- ----------------             -----------------
                
    1.20:1.00             For the 4 quarter period
                           ending March 31, 2007

    1.20:1.00             For the 4 quarter period
                   ending each fiscal quarter thereafter


          (B) CAPITAL EXPENDITURES. Make Capital Expenditures in any fiscal year
in excess of the amount set forth in the following table for the applicable
period:



Applicable Amount                   Applicable Period
- -----------------                   -----------------
                 
   $25,750,000                      fiscal year 2007

   $20,000,000                      fiscal year 2008

   $21,250,000                      fiscal year 2009

   $22,500,000      fiscal year 2010 and each fiscal year thereafter


     provided, however, that up to 75% of the difference between the amount of
     Capital Expenditure that may be made in any fiscal year and the amount of
     Capital Expenditures actually made in such fiscal year, may be made in the
     immediately succeeding fiscal year; provided further, however, that with
     respect to any Permitted Acquisitions, the "Applicable Amount" for the
     "Applicable Period" in which such Permitted Acquisition is consummated
     shall be increased by an amount equal to the product of (a) 1.25 times (b)
     the average amount per year of Capital Expenditures made by such acquired
     Person during the immediately preceding three (3) year period."


                                       4



     3.06 AMENDMENT TO SECTION 11. Section 11 of the Credit Agreement is hereby
amended by replacing the words "Morrison & Foerster LLP, 1290 Avenue of the
Americas, 40th Floor, New York, NY 10104-0050, Attn: Mark B. Joachim, Esq., Fax
No.: (212) 468-7900" with the following: "Moses & Singer, The Chrysler Building,
405 Lexington Avenue, New York, NY 10174-1299, Attn.: Howard L. Siegel, Esq.,
Fax No.: (212) 554-7700."

     3.07 AMENDMENTS TO SCHEDULE 1.1. Schedule 1.1 of the Credit Agreement is
hereby amended as follows:

          (a) The words "1.25 percentage points" in the definition of "Base Rate
Margin" contained therein are hereby deleted and the words "0.25 percentage
points" are hereby inserted in lieu thereof.

          (b) The definition of "Borrowing Base" is hereby amended by deleting
the words "Eligible Real Property and Equipment Book Value" and inserting
"Eligible Equipment Book Value" in lieu thereof.

          (c) The definition of "Eligible Real Property" is hereby deleted in
its entirety.

          (d) The definition of "Eligible Real Property and Equipment Book
Value" is hereby deleted in its entirety and the following definition shall be
inserted in lieu thereof:

          "Eligible Equipment Book Value" means the net book value of the
          Eligible Equipment, such value to be as determined from time to time
          by a qualified appraisal company selected by Agent, net of all related
          costs and expenses.

          (e) The words "2.50 percentage points" in the definition of "LIBOR
Rate Margin" contained therein are hereby deleted and the words "1.75 percentage
points" are hereby inserted in lieu thereof.

          (f) The definition of "Permitted Liens" is hereby amended by (i)
deleting "and" at the end of clause (r) thereof, (ii) re-titling clause (s) as
clause (t) and replacing the words "under clause (a) through (r) of this
definition" in such re-titled clause (t) with the words "under clause (a)
through (s) of this definition", and (iii) inserting the following new clause
(s): "(s) Liens securing the TB Wood's Refinanced Standalone Credit Facility."

          (g) The following new definitions are hereby added in proper
alphabetical order:

          "IRB Bonds" means those certain variable rate demand revenue bonds
          issued by TB Wood's Incorporated under the authority of the industrial
          development corporations of the City of San Marcos, Texas and the City
          of Chattanooga, Tennessee in an aggregate principal amount of
          $5,300,000, as the same may be amended, restated, supplemented or
          modified from time to time.

          "TB Wood's Refinanced Standalone Credit Facility" means that certain
          Credit Agreement dated as of April 5, 2007 among TB Wood's
          Corporation, the subsidiaries of TB Wood's Corporation party thereto,
          Wells Fargo Foothill, Inc., as agent thereunder and the lenders party
          thereto, as the same may be amended,


                                       5



          restated, supplemented or modified from time to time, together with
          the related "Loan Documents" (as defined thereunder).

          "Unsecured Indenture" means the Indenture dated as of February 8,
          2006, by and among Parent, the domestic subsidiaries of Parent party
          thereto and The Bank of New York, as trustee, pursuant to which Parent
          has issued the Unsecured Notes.

          "Unsecured Notes" means the 11-1/4% Senior Notes due 2013 issued by
          Parent under the Unsecured Indenture.

SECTION 4. JOINDERS. Subject to the satisfaction of the conditions set forth in
Section 6 herein, the parties agree that, as of the Joinder Effective Time, each
New Loan Party shall become a party to the following documents (the "Joined Loan
Documents") as follows:

     4.01 SECURITY AGREEMENT

     A. By execution of this Fifth Amendment and a Supplement to the Security
Agreement in the form of Annex 1 thereto, each New Loan Party will, as of the
Joinder Effective Time immediately and without any further action, become a
party to the Security Agreement (as amended by this Fifth Amendment), and each
New Loan Party will be deemed to be a "Grantor" for all purposes under the
Security Agreement as of the Joinder Effective Time.

     B. As of the Joinder Effective Time, each New Loan Party shall assume all
the rights and obligations of a Grantor under and as defined in the Security
Agreement in the same manner as if such New Loan Party were an original
signatory to the Security Agreement.

     C. As a Grantor, as of the Joinder Effective Time, each New Loan Party
shall be bound by the provisions of the Security Agreement and shall perform in
accordance with its terms all the obligations which by the terms of the Security
Agreement are required to be performed by it as a Grantor to the same extent as
if originally a party thereto.

     4.02 GUARANTY

     A. By execution of this Fifth Amendment, each New Loan Party will, as of
the Joinder Effective Time immediately and without any further action, become a
party to the Guaranty as a "Guarantor" for all purposes thereunder.

     B. As of the Joinder Effective Time, each New Loan Party shall assume all
the rights and obligations of a Guarantor under the Guaranty in the same manner
as if such New Loan Party were an original signatory to the Guaranty.

     C. As a party to the Guaranty, as of the Joinder Effective Time, each New
Loan Party shall be bound by the provisions of the Guaranty and shall perform in
accordance with its terms all the obligations which by the terms of the Guaranty
are required to be performed by it as a Guarantor to the same extent as if
originally a party thereto.

     4.03 INTERCOMPANY SUBORDINATION AGREEMENT


                                       6



     A. By execution of this Fifth Amendment, each New Loan Party will, as of
the Joinder Effective Time immediately and without any further action, become a
party to the Intercompany Subordination Agreement, and each New Loan Party will
be deemed to be a "Subordinating Creditor" for all purposes under the
Intercompany Subordination Agreement as of the Joinder Effective Time.

     B. As of the Joinder Effective Time, each New Loan Party shall assume all
the rights and obligations of a Subordinating Creditor under and as defined in
the Intercompany Subordination Agreement and shall perform in accordance with
its terms all the obligations which by the terms of the Intercompany
Subordination Agreement are required to be performed by it as a Subordinating
Creditor to the same extent as if originally a party thereto.

     C. As a Subordinating Creditor, as of the Joinder Effective Time, each New
Loan Party shall be bound by the provisions of the Intercompany Subordination
Agreement and shall perform in accordance with its terms all the obligations
which by the terms of the Intercompany Subordination Agreement are required to
be performed by it as a Subordinating Creditor to the same extent as if
originally a party thereto.

SECTION 5. REPRESENTATIONS AND WARRANTIES. In order to induce Agent and the
Lenders to enter into this Fifth Amendment, Administrative Borrower, for itself
and on behalf of all of the other Borrowers, and, as applicable, each New Loan
Party, hereby represents and warrants that:

          5.01 NO DEFAULT. At and as of the date of this Fifth Amendment, after
giving effect to this Fifth Amendment, no Default or Event of Default has
occurred and is continuing.

          5.02 REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. At and as of the
date of this Fifth Amendment, each of the representations and warranties
contained in the Credit Agreement and the other Loan Documents is true and
correct in all material respects (except to the extent that such representations
and warranties relate solely to an earlier date).

          5.03 CORPORATE POWER, ETC. Administrative Borrower (a) has all
requisite corporate power and authority to execute and deliver this Fifth
Amendment and to consummate the transactions contemplated hereby for itself and
on behalf of all of the other Borrowers and (b) has taken all action, corporate
or otherwise, necessary to authorize the execution and delivery of this Fifth
Amendment and the consummation of the transactions contemplated hereby for
itself and on behalf of all of the other Borrowers. Administrative Borrower is
entering into this Fifth Amendment on behalf of all of the other Borrowers in
accordance with Sections 14.1 and 16.9 of the Credit Agreement. Each New Loan
Party (a) has all requisite corporate power and authority to execute and deliver
this Fifth Amendment and to consummate the transactions contemplated hereby and
(b) has taken all action, corporate or otherwise, necessary to authorize the
execution and delivery of this Fifth Amendment and the consummation of the
transactions contemplated hereby.

          5.04 NO CONFLICT. The execution, delivery and performance by
Administrative Borrower and the New Loan Parties of this Fifth Amendment will
not (a) violate any provision of federal, state, or local law or regulation
applicable to any Borrower or any New Loan Party, the Governing Documents of any
Borrower or any New Loan Party, or any order, judgment, or


                                       7



decree of any court or other Governmental Authority binding on any Borrower or
any New Loan Party, (b) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of any Borrower or any New Loan Party, (c) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of any Borrower or any New Loan Party, other than Permitted
Liens, or (d) require any unobtained approval or consent of any Person under any
material contractual obligation of any Borrower or any New Loan Party.

          5.05 BINDING EFFECT. This Fifth Amendment has been duly executed and
delivered by Administrative Borrower (on behalf of itself and all of the other
Borrowers) and the New Loan Parties and constitutes the legal, valid and binding
obligation of Administrative Borrower (on behalf of itself and all of the other
Borrowers) and the New Loan Parties, enforceable against Administrative Borrower
(on behalf of itself and all of the other Borrowers) and the New Loan Parties in
accordance with its terms, except as such enforceability may be limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, relating to or affecting the enforcement of
creditors' rights generally, and (b) the application of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).

SECTION 6. CONDITIONS. This Fifth Amendment shall be effective as of April 5,
2007 (the "Effective Date") upon the fulfillment of all of the following
conditions precedent set forth in this Section 6:

     6.01 EXECUTION OF THE FIFTH AMENDMENT. Each of the parties hereto shall
have executed a counterpart of this Fifth Amendment and shall have delivered
(including by way of telefacsimile or electronic mail) the same to Agent.

     6.02 EXECUTION OF SUPPLEMENT TO SECURITY AGREEMENT. Each New Loan Party and
Agent shall have executed an original counterpart of a Supplement to the
Security Agreement in the form of Annex 1 to the Security Agreement, pursuant to
which each New Loan Party shall, effective as of the Joinder Effective Time
immediately and without any further action, grant, assign and pledge to Agent,
for the benefit of the Lender Group and the Bank Product Providers, a continuing
security interest in all of such New Loan Party's assets, and shall have
delivered (including by way of telefacsimile or electronic mail) the same to
Agent.

     6.03 EXECUTION OF PLEDGED INTERESTS ADDENDUM TO SECURITY AGREEMENT. (a)
Administrative Borrower shall have executed a Pledged Interests Addendum in the
form of Exhibit C to the Security Agreement, pursuant to which 100% of the Stock
of each New Loan Party owned by Administrative Borrower shall become part of the
Pledged Interests (as defined in the Security Agreement), and shall have
delivered (including by way of telefacsimile or electronic mail) the same to
Agent, and (b) TB Wood's Corporation and TB Wood's Incorporated shall have
executed a Pledged Interests Addendum in the form of Exhibit C to the Security
Agreement, pursuant to which 100% of the Stock of each New Loan Party owned by
TB Wood's Corporation and TB Wood's Incorporated shall become part of the
Pledged Interests (as defined in the Security Agreement), and shall have
delivered (including by way of telefacsimile or electronic mail) the same to
Agent.


                                       8



     6.04 GOVERNING DOCUMENTS. Agent shall have received copies of each New Loan
Party's Governing Documents, as amended, modified, or supplemented to the
Closing Date, in the case of the charter documents, certified by the Secretary
of State of the applicable state of organization, and in the case of the
by-laws, certified by the Secretary of such New Loan Party.

     6.05 SCHEDULES. Administrative Borrower shall have delivered to Agent
updates, as applicable, to (a) any and all Schedules to the Credit Agreement
(including Schedules 4.5, 4.7(a), 4.7(b), 4.7(c), 4.7(d), 4.8(b) and 4.8(c)),
and (b) any and all Schedules to the Security Agreement (including Schedules 1,
2, 3, 4, 5, 6, 7 and 8), each in form and substance satisfactory to Agent.

     6.06 INCUMBENCY CERTIFICATE. Agent shall have received a certificate of an
officer of each New Loan Party as to (a) the incumbency and signatures of the
officers of such New Loan Party authorized to execute any document in connection
with the transactions contemplated by this Fifth Amendment; and (b) the executed
resolutions of the Board of Directors evidencing the adoption and subsistence of
resolutions (i) approving the terms of, and the transactions contemplated by,
the Loan Documents to which it is a party and resolving that it execute the Loan
Documents to which it is a party, (ii) authorizing a specified person or persons
to execute the Loan Documents to which it is a party on its behalf, and (iii)
authorizing a specified person or persons, on its behalf, to sign and/or
dispatch all documents and notices (including any document, notice or other
agreement to be delivered thereunder or in connection therewith) to be signed
and/or dispatched by it under or in connection with the Loan Documents to which
it is a party. Such certificates shall state that the statements set forth
therein have not been amended, modified, revoked or rescinded as of the date of
such certificate.

     6.07 GOOD STANDING CERTIFICATES. Agent shall have received a certificate of
status with respect to each New Loan Party, each dated within 10 days of the
Effective Date, such certificate to be issued by the appropriate officer of the
jurisdiction of organization of such New Loan Party, which certificate shall
indicate that such New Loan Party is in good standing in such jurisdiction
(together with a bringdown certificate dated within 1 day of the Effective
Date). Agent shall have received a certificate of status with respect to each
New Loan Party, each dated within 10 days of the Effective Date, such
certificate to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such New Loan Party) in which its
failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificate shall indicate that such New Loan Party is in good
standing in such jurisdictions.

     6.08 OPINIONS OF COUNSEL. Agent shall have received opinions of counsel to
Borrowers and each New Loan Party, each in form and substance satisfactory to
Agent.

     6.09 INTELLECTUAL PROPERTY SECURITY AGREEMENTS. Each New Loan Party and
Agent shall have executed an original counterpart of a Patent Security Agreement
and Trademark Security Agreement (as each term is defined in the Security
Agreement) in the form of Exhibit B and Exhibit D, respectively, to the Security
Agreement, and shall have delivered (including by way of telefacsimile or
electronic mail) the same to Agent (such Patent Security Agreement and Trademark
Security Agreement to be effective as of the Joinder Effective Time immediately
and without any further action).


                                       9



     6.10 AUTHORIZATIONS. Agent shall have received a copy of any other
authorization, consent, approval or other document, opinion or assurance which
is necessary in connection with the entry into and performance of the
transactions contemplated by any Loan Document or for the validity and
enforceability of any Loan Document.

     6.11 CONSUMMATION OF TENDER OFFER. Agent shall have received satisfactory
evidence that FAC has acquired at least 66.6% of the outstanding shares of TB
Wood's pursuant to the Tender Offer and such shares have been validly tendered
and not withdrawn.

     6.12 INDENTURE AND MERGER DOCUMENTS. Agent shall have received fully
executed copies of (a) the Indenture Supplement, the Merger Agreement and all
amendments, exhibits and schedules thereto, (b) any and all security documents
in favor of the Collateral Agent (as defined in the Intercreditor Agreement)
with respect to the assets of the New Loan Parties, and (c) all other material
agreements, documents, and instruments (including evidence of the consummation
of the Merger) related to the documents delivered pursuant to clauses (a) and
(b) above, in each case to the extent that such agreements, documents and
instruments have been executed as of the date hereof (the agreements, documents
and instruments required to be delivered pursuant to clauses (a), (b) and (c),
collectively, the "Transaction Documents").

     6.13 TB WOOD'S STANDALONE CREDIT FACILITY. Agent shall have received
satisfactory evidence that the Loan and Security Agreement dated as of January
7, 2005 by and among Manufacturers and Traders Trust Company, as collateral
agent and funding agent, PNC Bank, National Association, as Administrative
Agent, TB Wood's Incorporated, Plant Engineering Consultants, LLC and TB Wood's
Enterprises, Inc., as Borrowers, and TB Wood's Corporation and T.B. Wood's
Canada Ltd., as guarantors, shall have been refinanced such that all obligations
and commitments thereunder shall have been terminated or otherwise provided for
in a manner reasonably satisfactory to Agent and Wells Fargo Foothill, Inc., as
agent and sole lender, shall have entered into a Credit Agreement dated as of
the date hereof (the "Refinanced TB Wood's Standalone Credit Facility") with TB
Wood's Incorporated, Plant Engineering Consultants, LLC and TB Wood's
Enterprises, Inc., and TB Wood's Corporation., as borrowers.

     6.14 AMENDED AND RESTATED INTERCREDITOR AGREEMENT. Collateral Agent (as
defined in the Intercreditor Agreement), Agent, Wells Fargo Foothill, Inc., in
its capacity as agent under the Refinanced TB Wood's Standalone Credit Facility,
and each of the Loan Parties shall have executed an Amended and Restated
Intercreditor Agreement in form and substance satisfactory to Agent and shall
have delivered (including by way of telefacsimile or electronic mail) the same
to Agent.

     6.15 AMENDED AND RESTATED FEE LETTER. Borrowers and Agent shall have
executed a counterpart of the Amended and Restated Fee Letter dated as of the
date hereof in form and substance satisfactory to Agent and shall have delivered
(including by way of telefacsimile or electronic mail) the same to Agent;
Borrowers shall have paid all fees required to be paid by Borrowers on the date
hereof pursuant to such Amended and Restated Fee Letter.

     6.16 REPRESENTATIONS AND WARRANTIES. As of the Effective Date, the
representations and warranties set forth in Section 5 hereof shall be true and
correct.


                                       10



     6.17 COMPLIANCE WITH TERMS. Borrowers shall have complied in all respects
with the terms hereof and of any other agreement, document, instrument or other
writing to be delivered by Borrowers in connection herewith.

SECTION 7. COVENANTS.

     7.01 LOAN DOCUMENT OBLIGATIONS. Each New Loan Party covenants that it will
perform all covenants required to be performed by it as party to each of the
Joined Loan Documents.

     7.02 TRANSACTION DOCUMENTS. Administrative Borrower shall deliver to Agent
promptly after execution thereof all other Transaction Documents not previously
delivered to Agent pursuant to Section 6.1.

     7.03 CONTROL AGREEMENTS. Administrative Borrower shall deliver to Agent on
or prior to June 5, 2007, Control Agreements with respect to each Securities
Account and Deposit Account of the New Loan Parties, each in form and substance
reasonably satisfactory to Agent (it being understood and agreed that Wells
Fargo Foothill, Inc., in its capacity as agent under the TB Wood's Refinanced
Standalone Credit Facility, will have a first priority security interest in such
collateral, Agent, on behalf of itself, the Lenders and the Bank Product
Providers, will have a second priority security interest in such collateral and
Collateral Agent (as defined in the Intercreditor Agreement), on behalf of
itself, the Trustee and the Noteholders (as defined in the Intercreditor
Agreement), will have a third priority security interest in such collateral).

     7.04 MORTGAGES. Administrative Borrower shall deliver to Agent the
documents, instruments and agreements required by, and in accordance with,
Section 5.17 of the Credit Agreement with respect to the following Real Property
Collateral owned by the New Loan Parties (it being understood and agreed that
Wells Fargo Foothill, Inc., in its capacity as agent under the TB Wood's
Refinanced Standalone Credit Facility, will have a first priority security
interest in such collateral, Agent, on behalf of itself, the Lenders and the
Bank Product Providers, will have a second priority security interest in such
collateral and Collateral Agent (as defined in the Intercreditor Agreement), on
behalf of itself, the Trustee and the Noteholders (as defined in the
Intercreditor Agreement), will have a third priority security interest in such
collateral): Chambersburg, Pennsylvania; Mt. Pleasant, Michigan; Scotland,
Pennsylvania; Chattanooga, Tennessee; and San Marcos, Texas.

     7.05 INSURANCE CERTIFICATES. Administrative Borrower shall deliver to Agent
on or prior to April 15, 2007, updated insurance certificates required pursuant
to Section 5.8 of the Credit Agreement covering the New Loan Parties, each in
form and substance reasonably satisfactory to Agent.

     7.06 FURTHER ASSURANCES. Each New Loan Party and the other Loan Parties
shall execute and deliver, or cause to be executed and delivered, to Agent such
documents and agreements, and shall take or cause to be taken such actions, as
Agent may, from time to time, reasonably request to carry out the terms and
conditions of this Fifth Amendment and the transactions contemplated hereby.
Each New Loan Party and the other Loan Parties hereby


                                       11



authorize Agent to file, as agent for the Lenders, Uniform Commercial Code
financing statements that Agent deems necessary to reflect the terms of this
Fifth Amendment.

SECTION 8. MISCELLANEOUS.

     8.01 CONTINUING EFFECT. Except as specifically provided herein, the Credit
Agreement and the other Loan Documents shall remain in full force and effect in
accordance with their respective terms and are hereby ratified and confirmed in
all respects.

     8.02 NO WAIVER. This Fifth Amendment is limited as specified and the
execution, delivery and effectiveness of this Fifth Amendment shall not operate
as a modification, acceptance or waiver of any provision of the Credit Agreement
or any other Loan Document, except as specifically set forth herein.

     8.03 REFERENCES.

          (a) From and after the Effective Date, the Credit Agreement, the other
Loan Documents and all agreements, instruments and documents executed and
delivered in connection with any of the foregoing shall each be deemed amended
hereby to the extent necessary, if any, to give effect to the provisions of this
Fifth Amendment.

          (b) From and after the Effective Date, (i) all references in the
Credit Agreement to "this Agreement", "hereto", "hereof", "hereunder" or words
of like import referring to the Credit Agreement shall mean the Credit Agreement
as amended hereby and (ii) all references in the Credit Agreement, the other
Loan Documents or any other agreement, instrument or document executed and
delivered in connection therewith to "Credit Agreement", "thereto", "thereof",
"thereunder" or words of like import referring to the Credit Agreement shall
mean the Credit Agreement as amended hereby.

     8.04 GOVERNING LAW. THIS FIFTH AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     8.05 SEVERABILITY. The provisions of this Fifth Amendment are severable,
and if any clause or provision shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision in this Fifth Amendment in any
jurisdiction.

     8.06 COUNTERPARTS. This Fifth Amendment may be executed in any number of
counterparts, each of which counterparts when executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. Delivery of an executed counterpart of this Fifth Amendment by
telefacsimile or electronic mail shall be equally effective as delivery of a
manually executed counterpart. A complete set of counterparts shall be lodged
with Administrative Borrower and Agent.


                                       12



          8.07 HEADINGS. Section headings in this Fifth Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Fifth Amendment for any other purpose.

          8.08 BINDING EFFECT; ASSIGNMENT. This Fifth Amendment shall be binding
upon and inure to the benefit of the Loan Parties (including the New Loan
Parties), the Lenders and Agent and their respective successors and assigns;
provided, however, that the rights and obligations of Loan Parties (including
the New Loan Parties) under this Fifth Amendment shall not be assigned or
delegated without the prior written consent of Agent.

          8.09 EXPENSES. Borrowers agree to pay Agent for all reasonable
expenses, including reasonable fees of attorneys and paralegals for Agent,
incurred by Agent in connection with the preparation, negotiation and execution
of this Fifth Amendment and any document required to be furnished herewith
pursuant to the terms of the Credit Agreement and the Fee Letter.

                           [Signature pages to follow]


                                       13



     IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

                                        ALTRA INDUSTRIAL MOTION, INC.,
                                        a Delaware corporation, as
                                        Administrative Borrower on behalf of
                                        itself and all other Borrowers


                                        By:  /s/ Michael L. Hurt
                                            ------------------------------------
                                        Name:    Michael L. Hurt
                                              ----------------------------------
                                        Title:   Chief Executive Officer
                                               ---------------------------------

                       [SIGNATURE PAGE OF FIFTH AMENDMENT]



                                        TB WOOD'S INCORPORATED,
                                        a Pennsylvania corporation, as a New
                                        Loan Party


                                        By:  /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name:    Joseph C. Horvath
                                              ----------------------------------
                                        Title:   VP, CFO and Corporate Secretary
                                               ---------------------------------


                                        PLANT ENGINEERING CONSULTANTS, LLC,
                                        a Tennessee limited liability company,
                                        as a New Loan Party


                                        By:  /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name:    Joseph C. Horvath
                                              ----------------------------------
                                        Title:   Treasurer and Secretary
                                               ---------------------------------


                                        TB WOOD'S ENTERPRISES, INC.,
                                        a Delaware corporation, as a New
                                        Loan Party


                                        By:  /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name:    Joseph C. Horvath
                                              ----------------------------------
                                        Title:   President and Treasurer
                                               ---------------------------------


                                        TB WOOD'S CORPORATION,
                                        a Delaware corporation, as a New Loan
                                        Party


                                        By:  /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name:    Joseph C. Horvath
                                              ----------------------------------
                                        Title:   VP, CFO and Corporate Secretary
                                               ---------------------------------

                       [SIGNATURE PAGE OF FIFTH AMENDMENT]



                                        WELLS FARGO FOOTHILL, INC.,
                                        a California corporation, as Agent and
                                        Lender


                                        By: /s/ Vincent J. Egan, Jr.
                                            ------------------------------------
                                        Name:   Vincent J. Egan, Jr.
                                              ----------------------------------
                                        Title:  VP
                                               ---------------------------------

                       [SIGNATURE PAGE OF FIFTH AMENDMENT]

EX-10.35

                                                                   EXHIBIT 10.35

================================================================================

                                CREDIT AGREEMENT

                                  BY AND AMONG

                             TB WOOD'S CORPORATION.

                                   AS PARENT,

                                       AND

              EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

                                  AS BORROWERS,

                     THE LENDERS THAT ARE SIGNATORIES HERETO

                                 AS THE LENDERS,

                                       AND

                           WELLS FARGO FOOTHILL, INC.

                    AS THE ARRANGER AND ADMINISTRATIVE AGENT

                            DATED AS OF APRIL 5, 2007

================================================================================



                                CREDIT AGREEMENT

          THIS CREDIT AGREEMENT (this "Agreement"), is entered into as of April
5, 2007, by and among the lenders identified on the signature pages hereof (such
lenders, together with their respective successors and permitted assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), and WELLS FARGO FOOTHILL, INC., a California corporation, as the
arranger and administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, "Agent"), and TB WOOD'S
CORPORATION, a Delaware corporation ("Parent"), and each of Parent's
Subsidiaries identified on the signature pages hereof (Parent and such
Subsidiaries are referred to hereinafter each individually as a "Borrower", and
individually and collectively, jointly and severally, as the "Borrowers").

                                    RECITALS

          WHEREAS, on February 17, 2007, Altra Holdings, Inc. ("Altra Holdings")
and its wholly owned subsidiary Forest Acquisition Corporation ("FAC"), entered
into an Agreement and Plan of Merger (the "Merger Agreement") with Parent,
pursuant to which FAC agreed to purchase shares of common stock of Parent for
$24.80 per share;

          WHEREAS, in the Merger Agreement, FAC agreed to make a cash tender
offer of $24.80 per share for all outstanding shares of TB Wood's common stock;

          WHEREAS, FAC commenced the tender offer (the "Tender Offer") on March
5, 2007;

          WHEREAS, FAC will acquire greater than 90% of the outstanding shares
of Parent's common stock in the Tender Offer, and FAC and Parent will, after the
execution of this Agreement, effect a statutory "short-form" merger pursuant to
which FAC will be merged with and into Parent (the "Merger") and Parent will
become a wholly-owned subsidiary of Altra Industrial Motion, Inc. ("Altra
Industrial"), which is a wholly owned subsidiary of Altra Holdings;

          WHEREAS, Altra Industrial will issue $105,000,000 aggregate principal
amount of 9% Senior Secured Notes due 2011 (the "Additional Notes") under a
supplement (the "Indenture Supplement") to the Indenture dated as of November
30, 2004 (the "Indenture"), by and among Altra Industrial, the subsidiaries of
Altra Industrial party thereto and the Trustee, pursuant to which Altra
Industrial has previously issued $165,000,000 aggregate principal amount of
senior secured notes;

          WHEREAS, Altra Holdings and Altra Industrial will fund the purchase
price of the acquisition of the common stock of Parent through the net proceeds
of the issuance of the Additional Notes, together with cash on hand and
borrowings under the Altra Senior Credit Agreement; and

          WHEREAS, this Agreement is being entered into in connection with the
refinancing of the indebtedness incurred under that certain Loan and Security
Agreement dated as of January 7, 2005, by and among the Borrowers, TB Wood's
Canada Ltd., Manufacturers and Traders Trust Company, as collateral agent and
funding agent, PNC Bank, National Association, as administrative agent, and the
lenders party thereto, as amended, restated or otherwise modified to date (the
"M&T Facility").

          The parties agree as follows:

1.   DEFINITIONS AND CONSTRUCTION.

     1.1 DEFINITIONS. Capitalized terms used in this Agreement shall have the
meanings specified therefor on Schedule 1.1.



     1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. In the event of any change in GAAP
that occurs after the date of this Agreement that would affect the calculation
or application of the financial or other covenants contained herein, Agent and
Borrowers agree to negotiate to amend such financial or other covenants (or the
definitions used therein) to eliminate the effect of such change and no Event of
Default shall be deemed to exist solely as a result of such change in GAAP
during the period prior to the effectiveness of such amendment; provided,. that
such financial or other covenants shall continue to be calculated in the manner
provided immediately prior to such change until such amendment has been executed
by Borrowers and the Required Lenders. When used herein, the term "financial
statements" shall include the notes and schedules thereto, if any. Whenever the
term "Borrowers" or the term "Parent" is used in respect of a financial covenant
or a related definition, it shall be understood to mean Borrowers and their
Subsidiaries or Parent and its Subsidiaries, as applicable, on a consolidated
basis unless the context clearly requires otherwise.

     1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein, provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 shall govern.

     1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, and the terms
"includes" and "including" are not limiting. The words "hereof," "herein,"
"hereby," "hereunder," and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document, as the case may
be, as a whole and not to any particular provision of this Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Agreement unless otherwise specified.
Any reference in this Agreement or in the other Loan Documents to any agreement,
instrument, or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to the satisfaction, payment or repayment in full of the
Obligations shall mean the repayment in full in cash (or cash collateralization
or the provision of other security in accordance with the terms hereof) of all
Obligations other than contingent indemnification Obligations. Any reference
herein to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in the other Loan
Documents shall be satisfied by the transmission of a Record.

     1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.

2.   LOAN AND TERMS OF PAYMENT.

     2.1  INTENTIONALLY OMITTED.

     2.2  TERM LOANS

          (a) TERM LOAN A. Subject to the terms and conditions of this
Agreement, on the Closing Date each Lender with a Commitment agrees (severally,
not jointly or jointly and severally) to make term loans (collectively, "Term
Loan A") to Borrowers in an amount equal to such Lender's Pro Rata Share of the
Term Loan A Amount. The principal of the Term Loan A shall be repaid in monthly
installments of $125,000, payable on the first day of each month (or, if such
first day is not a Business Day, the next succeeding Business Day) commencing on
May 1, 2007 through the date of determination as provided in the immediately
succeeding sentence. The outstanding unpaid principal balance and all accrued
and unpaid interest on the Term Loan A shall be due and payable on the earliest
of (i) the Maturity Date, (ii) the date of


                                        2



the acceleration of the Term Loan A in accordance with the terms hereof, and
(iii) the date of termination of this Agreement pursuant to Section 8.1(c). All
principal of, interest on, and other amounts payable in respect of the Term Loan
A shall constitute Obligations. Once any portion of the Term Loan A has been
paid or prepaid, it may not be reborrowed.

          (b) TERM LOAN B. Subject to the terms and conditions of this
Agreement, on the Closing Date each Lender with a Commitment agrees (severally,
not jointly or jointly and severally) to make term loans (collectively, "Term
Loan B", and together with Term Loan A, the "Term Loans") to Borrowers in an
amount equal to such Lender's Pro Rata Share of the Term Loan B Amount. The
outstanding unpaid principal balance and all accrued and unpaid interest on the
Term Loan B shall be due and payable on the earliest of (i) the Maturity Date,
(ii) the date of the acceleration of the Term Loan B in accordance with the
terms hereof, and (iii) the date of termination of this Agreement pursuant to
Section 8.1(c). All principal of, interest on, and other amounts payable in
respect of the Term Loan B shall constitute Obligations. Once any portion of the
Term Loan B has been paid or prepaid, it may not be reborrowed.

     2.3 BORROWING PROCEDURES. The Term Loans shall be made by an irrevocable
request by an Authorized Person delivered to Agent no later than 7:00 a.m.
(California time) on the Closing Date. Each Lender shall make the amount of such
Lender's Pro Rata Share of the Term Loans available to Agent in immediately
available funds, to Agent's Account, not later than 10:00 a.m. (California time)
on the Closing Date. After Agent's receipt of the proceeds of the Term Loans,
Agent shall make the proceeds thereof available to Administrative Borrower on
the Closing Date by transferring immediately available funds equal to such
proceeds received by Agent to the Designated Account; provided, however, that
Agent shall not request any Lender to make, and no Lender shall have the
obligation to make, the Term Loans if Agent shall have actual knowledge that one
or more of the applicable conditions precedent set forth in Section 3.1 will not
be satisfied on the Closing Date unless such condition has been waived.

     2.4  PAYMENTS.

          (a)  PAYMENTS BY BORROWERS.

               (i) Except as otherwise expressly provided herein, all payments
by Borrowers shall be made to Agent's Account for the account of the Lender
Group and shall be made in immediately available funds, no later than 11:00 a.m.
(California time) on the date specified herein. Any payment received by Agent
later than 11:00 a.m. (California time), shall be deemed to have been received
on the following Business Day and any applicable interest or fee shall continue
to accrue until such following Business Day.

               (ii) Unless Agent receives notice from Administrative Borrower
prior to the date on which any payment is due to the Lenders that Borrowers will
not make such payment in full as and when required, Agent may assume that
Borrowers have made (or will make) such payment in full to Agent on such date in
immediately available funds and Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent Borrowers
do not make such payment in full to Agent on the date when due, each Lender
severally shall repay to Agent on demand such amount distributed to such Lender,
together with interest thereon at the Defaulting Lender Rate for each day from
the date such amount is distributed to such Lender until the date repaid.

          (b)  APPORTIONMENT AND APPLICATION.

               (i) Except as otherwise provided in the Loan Documents (including
agreements between Agent and individual Lenders), aggregate principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Obligations to which such payments relate
held by each Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect to any
agreements between Agent and individual Lenders) shall


                                        3



be apportioned ratably among the Lenders having a Pro Rata Share of the
Obligation to which a particular fee relates. Except as provided in Section
2.4(b)(iii), all payments shall be remitted to Agent and all such payments, and
all proceeds of Collateral received by Agent, shall be applied as follows:

                    (A) first, ratably to pay any Lender Group Expenses then due
to Agent or any of the Lenders under the Loan Documents until paid in full,

                    (B) second, ratably to pay any fees or premiums then due to
Agent (for its separate account, after giving effect to any agreements between
Agent and individual Lenders) or any of the Lenders under the Loan Documents
until paid in full,

                    (C) third, ratably to pay interest due in respect of the LC
Obligations and the Term Loans until paid in full,

                    (D) fourth, ratably to pay all principal amounts then due
and payable (other than as a result of an acceleration thereof) with respect to
the LC Obligations and the Term Loans until paid in full,

                    (E) fifth, if an Event of Default has occurred and is
continuing, ratably to pay the outstanding principal balance of the LC
Obligations and the Term Loans until paid in full,

                    (F) sixth, if an Event of Default has occurred and is
continuing, ratably to pay any other Obligations, and

                    (G) seventh, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.

               (ii) Agent promptly shall distribute to each Lender, pursuant to
the applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive.

               (iii) In each instance, so long as no Event of Default has
occurred and is continuing, this Section 2.4(b) shall not apply to any payment
made by Borrowers to Agent and specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any provision of
this Agreement.

               (iv) For purposes of the foregoing, "paid in full" means payment
of all amounts owing under the Loan Documents according to the terms thereof,
including loan fees, service fees, professional fees, interest (and specifically
including interest accrued after the commencement of any Insolvency Proceeding),
default interest, interest on interest, and expense reimbursements, whether or
not any of the foregoing would be or is allowed or disallowed in whole or in
part in any Insolvency Proceeding.

               (v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any other Loan
Document, it is the intention of the parties hereto that such priority
provisions in such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of this Section 2.4 shall control and govern.


                                        4



          (c) VOLUNTARY PREPAYMENTS. Borrowers have the option, at any time,
upon not less than 10 days prior written notice to Agent, to prepay all or any
portion of the LC Obligations and the Term Loans, subject to the payment of the
Applicable Prepayment Premium if any such voluntary prepayment results in a
termination of this Agreement pursuant to Section 3.5.

          (d)  MANDATORY PREPAYMENTS.

               (i) If, as of the last day of any month, (A) the sum of (x) the
aggregate outstanding principal balance of the Term Loans on such date, plus (y)
the aggregate outstanding principal balance of the LC Obligations on such date,
plus (z) the Letter of Credit Usage on such date exceeds (B) the Borrowing Base
(such excess being referred to as the "Limiter Excess"), then Borrowers shall,
within 3 Business Days thereafter, prepay, without penalty or premium, the
outstanding principal amount of the Obligations in accordance with Section
2.4(e) in an aggregate amount equal to the Limiter Excess.

               (ii) Immediately upon the receipt by any Loan Party of the
proceeds of any voluntary or involuntary sale or disposition by any Loan Party
of property or assets constituting Collateral (including casualty losses or
condemnations but excluding sales or dispositions which qualify as Permitted
Dispositions (other than clause (l) of the definition of Permitted
Dispositions)), Borrowers shall prepay the outstanding principal amount of the
Obligations in accordance with Section 2.4(e) in an amount equal to 100% of the
Net Cash Proceeds (including condemnation awards and payments in lieu thereof)
received by such Person in connection with such sales or dispositions; provided
that, so long as (A) no Default or Event of Default shall have occurred and is
continuing, (B) Administrative Borrower shall have given Agent prior written
notice of Borrowers' intention to apply such monies to the costs of replacement
of the properties or assets that are the subject of such sale or disposition or
the cost of purchase or construction of other assets useful in the business of
Loan Parties, (C) the monies are held in a cash collateral account in which
Agent has a perfected first-priority security interest, and (D) the applicable
Loan Party completes such replacement, purchase, or construction within 180 days
after the initial receipt of such monies, Loan Parties shall have the option to
apply such monies to the costs of replacement of the property or assets that are
the subject of such sale or disposition or the costs of purchase or construction
of other assets useful in the business of Loan Parties unless and to the extent
that such applicable period shall have expired without such replacement,
purchase or construction being made or completed, in which case, any amounts
remaining in the cash collateral account shall be paid to Agent and applied in
accordance with Section 2.4(e). Nothing contained in this Section 2.4(d)(ii)
shall permit Loan Parties to sell or otherwise dispose of any property or assets
other than in accordance with Section 6.4.

               (iii) Immediately upon the receipt by any Loan Party of any
Extraordinary Receipts with respect to Collateral, Borrowers shall prepay the
outstanding principal amount of the Obligations in accordance with Section
2.4(e) in an amount equal to 100% of such Extraordinary Receipts, net of any
reasonable expenses incurred in collecting such Extraordinary Receipts.

               (iv) Immediately upon the issuance or incurrence by any Loan
Party of any Indebtedness (other than Indebtedness permitted under Section 6.1)
or the issuance by any Loan Party of any shares of Loan Parties' Stock (other
than in the event that any Loan Party forms a Subsidiary in accordance with the
terms hereof, the issuance by such Subsidiary of Stock to any such Loan Party),
Borrowers shall prepay the outstanding principal amount of the Obligations in
accordance with Section 2.4(e) in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such issuance or incurrence.
The provisions of this Section 2.4(d)(iv) shall not be deemed to be implied
consent to any such issuance or incurrence otherwise prohibited by the terms and
conditions of this Agreement.

          (e) APPLICATION OF PAYMENTS. Each prepayment pursuant to Section
2.4(d) shall be applied ratably to the outstanding principal amount of the LC
Obligations and the Term Loans until paid in full. Each such prepayment of Term
Loan A shall be applied against the remaining installments of principal of Term
Loan A in the inverse order of maturity.


                                        5



     2.5  INTENTIONALLY OMITTED.

     2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.

          (a) INTEREST RATES. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof as follows: (i) if the relevant Obligation is a LIBOR Rate Loan,
at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and (ii)
otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.

          The foregoing notwithstanding, at no time shall any portion of the
Obligations bear interest on the Daily Balance thereof at a per annum rate less
than 3.75%. To the extent that interest accrued hereunder at the rate set forth
herein would be less than the foregoing minimum daily rate, the interest rate
chargeable hereunder for such day automatically shall be deemed increased to the
minimum rate.

          (b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the ratable
benefit of the Lenders, subject to any agreements between Agent and individual
Lenders), a Letter of Credit fee (in addition to the charges, commissions, fees,
and costs set forth in Section 2.12(e)) which shall accrue at a rate equal to
1.50% per annum times the Daily Balance of the undrawn amount of all outstanding
Letters of Credit.

          (c) DEFAULT RATE. Upon the occurrence and during the continuation of
an Event of Default, but solely at the election of Agent or the Required
Lenders,

               (i) all Obligations (except for undrawn Letters of Credit) that
have been charged to the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum rate equal to 2 percentage
points above the per annum rate otherwise applicable hereunder, and

               (ii) the Letter of Credit fee provided for above shall be
increased to 2 percentage points above the per annum rate otherwise applicable
hereunder.

          (d) PAYMENT. Except as provided to the contrary in Section 2.11 or
Section 2.13(a), interest, Letter of Credit fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
(or, if such first day is not a Business Day, the next succeeding Business Day)
during the term hereof. Borrowers hereby authorize Agent, from time to time,
without prior notice to Borrowers (except as otherwise specifically provided in
any Loan Document), to charge all interest and fees (when due and payable), all
Lender Group Expenses (as and when incurred), all charges, commissions, fees,
and costs provided for in Section 2.12(e) (as and when accrued or incurred), all
fees and costs provided for in Section 2.11 (as and when accrued or incurred),
and all other payments as and when due and payable under any Loan Document to
Borrowers' Loan Account, which amounts thereafter shall constitute Obligations
hereunder and shall accrue interest at the rate then applicable to Base Rate
Loans hereunder. Any interest not paid when due shall be compounded by being
charged to the Loan Account and shall thereafter constitute Obligations
hereunder and shall accrue interest at the rate then applicable to Base Rate
Loans hereunder.

          (e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.

          (f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event shall
the interest rate or rates payable under this Agreement, plus any other amounts
paid in connection herewith, exceed the highest rate permissible under any law
that a court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that,


                                        6



anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrowers in excess of such legal maximum, whenever received,
shall be applied to reduce the principal balance of the Obligations to the
extent of such excess.

     2.7  CASH MANAGEMENT.

          (a) Subject to Section 3.6(b), Borrowers shall and shall cause each of
their Restricted Subsidiaries to (i) establish and maintain cash management
services of a type and on terms reasonably satisfactory to Agent at one or more
of the banks set forth on Schedule 2.7(a) (each a "Cash Management Bank"), and
shall request in writing and otherwise take such reasonable steps to ensure that
all of their and their Restricted Subsidiaries' Account Debtors forward payment
of the amounts owed by them directly to such Cash Management Bank, and (ii)
deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all of their Collections
(including those sent directly by their Account Debtors to Borrowers or their
Restricted Subsidiaries) into a bank account in Agent's name (a "Cash Management
Account") at one of the Cash Management Banks.

          (b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrowers, in form and substance reasonably
acceptable to Agent. Each such Cash Management Agreement shall provide, among
other things, that (i) the Cash Management Bank will comply with any
instructions (each, a "Cash Disposition Instruction"), originated by Agent
directing the disposition of the funds in such Cash Management Account without
further consent by a Borrower or its Restricted Subsidiary, as applicable, (ii)
the Cash Management Bank has no rights of setoff or recoupment or any other
claim against the applicable Cash Management Account, other than for payment of
its service fees and other charges directly related to the administration of
such Cash Management Account and for returned checks or other items of payment,
(iii) at any time after which the Agent so instructs such Cash Management Bank
(a "Cash Sweep Instruction"), it immediately will forward by daily sweep all
amounts in the applicable Cash Management Account to the Agent's Account until
such time (if any) as Agent notifies it that the Cash Sweep Instruction is
terminated pursuant to the last sentence of this Section 2.7(b); and (iv) if
clause (iii) is not applicable, then Agent shall direct the Cash Management bank
to immediately transfer all such amounts to Borrowers' Designated Account. Agent
may issue a Cash Sweep Instruction or Cash Disposition Instruction only on or
after any date that: an Event of Default shall have occurred and be continuing.

          (c) So long as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may amend Schedule 2.7(a) to add or replace
a Cash Management Bank or Cash Management Account; provided, however, that (i)
such prospective Cash Management Bank shall be reasonably satisfactory to Agent,
and (ii) prior to the time of the opening of such Cash Management Account, a
Borrower or its Restricted Subsidiary, as applicable, and such prospective Cash
Management Bank shall have executed and delivered to Agent a Cash Management
Agreement. Borrowers (or their Restricted Subsidiaries, as applicable) shall
close any of their Cash Management Accounts (and establish replacement cash
management accounts in accordance with the foregoing sentence) promptly and in
any event within 45 days of notice from Agent that the creditworthiness of any
Cash Management Bank is no longer acceptable in Agent's reasonable judgment, or
as promptly as practicable and in any event within 75 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Agent's liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.

          (d) Subject to Section 3.6(b), the Cash Management Accounts shall be
cash collateral accounts subject to Control Agreements.

          (e) Notwithstanding anything to the contrary contained herein, Agent
acknowledges that the Cash Management Accounts may contain from time to time
Trust Funds (as defined below), which, by law,


                                        7



Borrowers and their Subsidiaries are required to collect and remit from time to
time but which, pending such remittance, shall be contained or held in the Cash
Management Accounts. Upon Agent's delivery of a Cash Sweep Instruction, Cash
Disposition Instruction or any other exercise of control by Agent under a
Control Agreement or a Cash Management Agreement, Agent agrees to notify
Borrowers and their Subsidiaries of such exercise (which notice may be by
delivery of a copy of such Cash Sweep Instruction, if any). Upon receipt of such
notice, Borrowers and their Subsidiaries shall send written notice to Agent
certifying the type and amount of any Trust Funds contained or held in the Cash
Management Accounts. Within 3 Business Days after receipt of such notice by
Agent, Agent shall remit the amount of the Trust Funds to Borrowers and their
Subsidiaries for payment to the appropriate Person; provided, that, during such
3 Business Day period, Agent shall have the right to ask for further
clarification, verification or other supporting documentation with respect to
any such type or amount certified by Borrowers or their Subsidiaries as
constituting Trust Funds and Agent shall not be required to remit the amount of
such Trust Funds so certified unless and until Agent is reasonably satisfied as
to such clarification, verification or other supporting documentation. For the
purposes of this Agreement, "Trust Funds" means all funds held by Borrowers and
their Subsidiaries, as a fiduciary, all taxes required to be collected or
withheld (including, without limitation, federal and state withholding taxes
(including the employer's share thereof), taxes owing to any governmental unit
thereof, sales, use and excise taxes, customs duties, import duties and
independent customs brokers' charges), other taxes for which Borrowers and their
Subsidiaries may become liable, and accrued and unpaid employee compensation
(including salaries, wages, benefits and expense reimbursements).

     2.8 CREDITING PAYMENTS. The receipt of any payment item by Agent (whether
from transfers to Agent by the Cash Management Banks pursuant to the Cash
Management Agreements or otherwise) shall not be considered a payment on account
unless such payment item is a wire transfer of immediately available federal
funds made to the Agent's Account or unless and until such payment item is
honored when presented for payment. Should any payment item not be honored when
presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.

     2.9 DESIGNATED ACCOUNT. Administrative Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Term Loans.

     2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent shall
maintain an account on its books in the name of Borrowers (the "Loan Account")
on which Borrowers will be charged with the LC Obligations and the Term Loans
made by Agent to Borrowers or for Borrowers' account, and with all other payment
Obligations hereunder or under the other Loan Documents, including, accrued
interest, fees and expenses, and Lender Group Expenses. In accordance with
Section 2.8, the Loan Account will be credited with all payments received by
Agent from Borrowers or for Borrowers' account, including all amounts received
in the Agent's Account from any Cash Management Bank. In accordance with Section
2.6(d), Agent shall render statements regarding the Loan Account to
Administrative Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements, absent manifest error, shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrowers and the Lender Group unless, within 30 days after receipt thereof by
Administrative Borrower, Administrative Borrower shall deliver to Agent written
objection thereto describing the error or errors contained in any such
statements.

     2.11 FEES. Borrowers shall pay to Agent, as and when due and payable under
the terms of the Fee Letter, the fees set forth in the Fee Letter.


                                        8



     2.12 LETTERS OF CREDIT.

          (a) Subject to the terms and conditions of this Agreement, the Issuing
Lender agrees to issue letters of credit for the account of Borrowers (each, an
"L/C") or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C Undertaking") solely with respect to
the Existing Letters of Credit. Notwithstanding anything to the contrary
contained herein, in no event shall Issuing Lender or any other Lender be
required to issue any L/C or L/C Undertaking (or otherwise advance any credit in
respect thereof) after the Closing Date other than with respect to the Existing
Letters of Credit, and once any portion of the LC Obligations has been paid or
prepaid it may not be reborrowed. If Issuing Lender is obligated to advance
funds under a Letter of Credit, Borrowers immediately shall reimburse such L/C
Disbursement to Issuing Lender upon receiving written or telephonic notice of
such L/C Disbursement by paying to Agent an amount equal to such L/C
Disbursement not later than 11:00 a.m., California time, on the date that such
L/C Disbursement is made, provided, that Administrative Borrower has received
written or telephonic notice of such L/C Disbursement prior to 10:00 a.m.,
California time, on such date, or, if such notice has not been received by
Administrative Borrower prior to such time on such date, then not later than
11:00 a.m., California time, on the Business Day immediately following the day
that Administrative Borrower receives such notice, pursuant to the foregoing,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Obligation hereunder (an "LC Obligation"
and, collectively, the "LC Obligations") and, thereafter, shall bear interest at
the rate then applicable to Base Rate Loans under Section 2.6 (subject to
conversion to LIBOR Rate Loans in accordance with Section 2.13). To the extent
an L/C Disbursement is deemed to be an LC Obligation hereunder, Borrowers'
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting LC Obligation. Promptly following receipt by Agent of any
payment from Borrowers pursuant to this paragraph, Agent shall distribute such
payment to the Issuing Lender or, to the extent that Lenders have made payments
pursuant to Section 2.12(c) to reimburse the Issuing Lender, then to such
Lenders and the Issuing Lender as their interests may appear.

          (b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender agrees to fund its Pro Rata Share of
any LC Obligation deemed made pursuant to the foregoing subsection on the same
terms and conditions as if Borrowers had requested such LC Obligation and Agent
shall promptly pay to Issuing Lender the amounts so received by it from the
Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter of
Credit increasing the amount thereof) and without any further action on the part
of the Issuing Lender or the Lenders, the Issuing Lender shall be deemed to have
granted to each Lender, and each Lender shall be deemed to have purchased, a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share
of the Risk Participation Liability of such Letter of Credit, and each such
Lender agrees to pay to Agent, for the account of the Issuing Lender, such
Lender's Pro Rata Share of any payments made by the Issuing Lender under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender hereby absolutely and unconditionally agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of each L/C
Disbursement made by the Issuing Lender and not reimbursed by Borrowers on the
date due as provided in clause (a) of this Section, or of any reimbursement
payment required to be refunded to Borrowers for any reason. Each Lender
acknowledges and agrees that its obligation to deliver to Agent, for the account
of the Issuing Lender, an amount equal to its respective Pro Rata Share of each
L/C Disbursement made by the Issuing Lender pursuant to this Section 2.12(b)
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3 hereof. If any
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of each L/C Disbursement made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, such Lender shall be deemed
to be a Defaulting Lender and Agent (for the account of the Issuing Lender)
shall be entitled to recover such amount on demand from such Lender together
with interest thereon at the Defaulting Lender Rate until paid in full.

          (c) Each Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group


                                        9



arising out of or in connection with any Letter of Credit; provided, however,
that no Borrower shall be obligated hereunder to indemnify for any loss, cost,
expense, or liability to the extent that it is caused by the gross negligence or
willful misconduct of the Issuing Lender or any other member of the Lender
Group. Each Borrower agrees to be bound by the Underlying Issuer's regulations
and interpretations of any Underlying Letter of Credit or by Issuing Lender's
interpretations of any L/C issued by Issuing Lender to or for such Borrower's
account, even though this interpretation may be different from such Borrower's
own, and each Borrower understands and agrees that the Lender Group shall not be
liable for any error, negligence, or mistake, whether of omission or commission,
in following Borrowers' instructions or those contained in the Letter of Credit
or any modifications, amendments, or supplements thereto. Each Borrower
understands that the L/C Undertakings may require Issuing Lender to indemnify
the Underlying Issuer for certain costs or liabilities arising out of claims by
Borrowers against such Underlying Issuer. Each Borrower hereby agrees to
indemnify, save, defend, and hold the Lender Group harmless with respect to any
loss, cost, expense (including reasonable attorneys fees), or liability incurred
by the Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group. Each
Borrower hereby acknowledges and agrees that neither the Lender Group nor the
Issuing Lender shall be responsible for delays, errors, or omissions resulting
from the malfunction of equipment in connection with any Letter of Credit.

          (d) Each Borrower hereby authorizes and directs any Underlying Issuer
to deliver to the Issuing Lender all instruments, documents, and other writings
and property received by such Underlying Issuer pursuant to such Underlying
Letter of Credit and to accept and rely upon the Issuing Lender's instructions
with respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.

          (e) Any and all issuance charges, commissions, fees, and costs
incurred by the Issuing Lender relating to Underlying Letters of Credit shall be
Lender Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.

          (f) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):

               (i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued hereunder, or

               (ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of Credit or
any Letter of Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by


                                       10



Agent of any amount due pursuant to this Section, as set forth in a certificate
setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest or demonstrable error, be final and conclusive and binding
on all of the parties hereto.

     2.13 LIBOR OPTION.

          (a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have the option
(the "LIBOR Option") to have interest on all or a portion of the Term Loans or
LC Obligations be charged at a rate of interest based upon the LIBOR Rate.
Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last
day of the Interest Period applicable thereto (provided, however, that, subject
to the following clauses (ii) and (iii), in the case of any Interest Period
greater than 3 months in duration, interest shall be payable at 3 month
intervals after the commencement of the applicable Interest Period and on the
last day of such Interest Period), (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof have
elected to accelerate the maturity of all or any portion of the Obligations, or
(iii) termination of this Agreement pursuant to the terms hereof. On the last
day of each applicable Interest Period, unless Administrative Borrower properly
has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrowers no
longer shall have the option to request that Obligations bear interest at a rate
based upon the LIBOR Rate and Agent shall have the right to convert the interest
rate on all outstanding LIBOR Rate Loans to the rate then applicable to Base
Rate Loans hereunder.

          (b) LIBOR ELECTION.

               (i) Administrative Borrower may, at any time and from time to
time, so long as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Agent prior to 11:00 a.m. (California
time) at least 3 Business Days prior to the commencement of the proposed
Interest Period (the "LIBOR Deadline"). Notice of Administrative Borrower's
election of the LIBOR Option for a permitted portion of the Obligations and an
Interest Period pursuant to this Section shall be made by delivery to Agent of a
LIBOR Notice received by Agent before the LIBOR Deadline, or by telephonic
notice received by Agent before the LIBOR Deadline (to be confirmed by delivery
to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m. (California
time) on the same day). Promptly upon its receipt of each such LIBOR Notice,
Agent shall provide a copy thereof to each of the Lenders.

               (ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against any loss,
cost, or expense incurred by Agent or any Lender as a result of (A) the payment
of any principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (B) the conversion of any LIBOR Rate Loan other than on the last day
of the Interest Period applicable thereto, or (C) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall, with respect to Agent or
any Lender, be deemed to equal the amount determined by Agent or such Lender to
be the excess, if any, of (1) the amount of interest that would have accrued on
the principal amount of such LIBOR Rate Loan had such event not occurred, at the
LIBOR Rate that would have been applicable thereto, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period therefor), minus (2) the amount of interest
that would accrue on such principal amount for such period at the interest rate
which Agent or such Lender would be offered were it to be offered, at the
commencement of such period, Dollar deposits of a comparable amount and period
in the London interbank market. A certificate of Agent or a Lender delivered to
Administrative Borrower setting forth any amount or amounts that Agent or such
Lender is entitled to receive pursuant to this Section 2.13 shall be conclusive
absent manifest error unless the Administrative


                                       11



Borrower shall object in writing within seven (7) Business Days of receipt
thereof, specifying the basis for such objection in detail.

               (iii) Borrowers shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the LIBOR Option for LIBOR
Rate Loans of at least $1,000,000 and integral multiples of $500,000 in excess
thereof.

          (c) PREPAYMENTS. Borrowers may prepay LIBOR Rate Loans or convert such
Loans to Base Rate Loans at any time; provided, however, that in the event that
LIBOR Rate Loans are so prepaid or converted on any date that is not the last
day of the Interest Period applicable thereto, including as a result of any
automatic prepayment through the required application by Agent of proceeds of
Borrowers' and their respective Restricted Subsidiaries' Collections in
accordance with Section 2.4(b) or for any other reason, including early
termination of the term of this Agreement or acceleration of all or any portion
of the Obligations pursuant to the terms hereof, each Borrower shall indemnify,
defend, and hold Agent and the Lenders and their Participants harmless against
any and all Funding Losses in accordance with clause (b)(ii) above.

          (d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.

               (i) The LIBOR Rate may be adjusted by Agent with respect to any
Lender on a prospective basis to take into account any additional or increased
costs to such Lender of maintaining or obtaining any eurodollar deposits or
increased costs, in each case, due to changes in applicable law occurring
subsequent to the commencement of the then applicable Interest Period, including
changes in tax laws (except changes of general applicability in tax laws
relating to taxes based on income, profits, receipts or capital) and changes in
the reserve requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor), excluding the Reserve Percentage, which
additional or increased costs would increase the cost of funding loans bearing
interest at the LIBOR Rate. In any such event, the affected Lender shall give
Administrative Borrower and Agent notice of such a determination and adjustment
and Agent promptly shall transmit the notice to each other Lender and, upon its
receipt of the notice from the affected Lender, Administrative Borrower may, by
notice to such affected Lender (y) require such Lender to furnish to
Administrative Borrower a statement setting forth the basis for adjusting such
LIBOR Rate and the method for determining the amount of such adjustment
accompanied by a certificate of such Lender stating that it is charging such
similar increased costs to similarly situated borrowers, or (z) repay the LIBOR
Rate Loans with respect to which such adjustment is made (together with any
amounts due under clause (b)(ii) above).

               (ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date hereof,
in the reasonable opinion of any Lender, make it unlawful or impractical for
such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such
Lender shall give notice of such changed circumstances to Agent and
Administrative Borrower and Agent promptly shall transmit the notice to each
other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be deemed to be
the last day of the Interest Period of such LIBOR Rate Loans, and interest upon
the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate
then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to
elect the LIBOR Option until such Lender determines that it would no longer be
unlawful or impractical to do so.

          (e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.


                                       12



     2.14 CAPITAL REQUIREMENTS. If, after the date hereof, either (i) the
adoption of or change in any law, rule, regulation or guideline regarding
capital requirements for banks or bank holding companies, or any change in the
interpretation or application thereof by any Governmental Authority charged with
the administration thereof, or (ii) compliance by any Lender or its parent bank
holding company with any guideline, request or directive of any such entity
regarding capital adequacy (whether or not having the force of law), has the
effect of reducing the return on such Lender's or such holding company's capital
as a consequence of such Lender's Commitments hereunder to a level below that
which such Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration such Lender's or such
holding company's then existing policies with respect to capital adequacy and
assuming the full utilization of such entity's capital) by any amount deemed in
good faith by such Lender to be material and the result is an increase in the
cost to any Lender of funding or maintaining any LC Obligations or Term Loans to
Borrowers, then such Lender may notify Administrative Borrower and Agent
thereof. Following receipt of such notice, Borrowers agree to pay such Lender on
demand the amount of such reduction of return of capital as and when such
reduction is determined, payable within 90 days after presentation by such
Lender of a statement in the amount and setting forth in reasonable detail such
Lender's calculation thereof and the assumptions upon which such calculation was
based (which statement shall be deemed true and correct absent manifest error).
In determining such amount, such Lender may use any reasonable averaging and
attribution methods.

     2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.

          (a) Each Borrower is accepting joint and several liability hereunder
and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Lender Group under this Agreement, for the
mutual benefit, directly and indirectly, of each Borrower and in consideration
of the undertakings of the other Borrowers to accept joint and several liability
for the Obligations.

          (b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.15), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
obligations of each Borrower without preferences or distinction among them.

          (c) If and to the extent that any Borrower shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Borrowers will make such payment with respect to, or perform, such
Obligation.

          (d) The Obligations of each Borrower under the provisions of this
Section 2.15 constitute the absolute and unconditional, full recourse
Obligations of each Borrower enforceable against each Borrower to the full
extent of its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.

          (e) Except as otherwise expressly provided in this Agreement, each
Borrower hereby waives notice of acceptance of its joint and several liability,
notice of any advances made under or pursuant to this Agreement, notice of the
occurrence of any Default, Event of Default, or of any demand for any payment
under this Agreement, notice of any action at any time taken or omitted by Agent
or Lenders under or in respect of any of the Obligations, any requirement of
diligence or to mitigate damages and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every kind in
connection with this Agreement (except as otherwise provided in this Agreement).
Each Borrower hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Obligations, the
acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Agent or Lenders at any time or times in respect of any default by any Borrower
in the performance or satisfaction of any term, covenant, condition or provision
of


                                       13



this Agreement, and the taking, addition, substitution or release, in whole or
in part, at any time or times, of any security for any of the Obligations or the
addition, substitution or release, in whole or in part, of any Borrower. Without
limiting the generality of the foregoing, each Borrower assents to any other
action or delay in acting or failure to act on the part of any Agent or Lender
with respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
Section 2.15 afford grounds for terminating, discharging or relieving any
Borrower, in whole or in part, from any of its Obligations under this Section
2.15, it being the intention of each Borrower that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of each Borrower under
this Section 2.15 shall not be discharged except by performance and then only to
the extent of such performance. The Obligations of each Borrower under this
Section 2.15 shall not be diminished or rendered unenforceable by any winding
up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Borrower or any Agent or Lender.

          (f) Each Borrower represents and warrants to Agent and Lenders that
such Borrower is currently informed of the financial condition of Borrowers and
of all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants to Agent and Lenders that such Borrower has read and understands
the terms and conditions of the Loan Documents. Each Borrower hereby covenants
that such Borrower will continue to keep informed of Borrowers' financial
condition, the financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.

          (g) Each Borrower waives all rights and defenses arising out of an
election of remedies by Agent or any Lender, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed Agent's or such Lender's rights of
subrogation and reimbursement against such Borrower by the operation of Section
580(d) of the California Code of Civil Procedure or otherwise.

          (h) Each Borrower waives all rights and defenses that such Borrower
may have because the Obligations are secured by Real Property. This means, among
other things:

          (i) Agent and Lenders may collect from such Borrower without first
foreclosing on any Collateral pledged by Borrowers.

               (ii) If Agent or any Lender forecloses on any Real Property
Collateral pledged by Borrowers:

                    (A) The amount of the Obligations may be reduced only by the
price for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.

                    (B) Agent and Lenders may collect from such Borrower even if
Agent or Lenders, by foreclosing on the Real Property Collateral, has destroyed
any right such Borrower may have to collect from the other Borrowers.

This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.

          (i) The provisions of this Section 2.15 are made for the benefit of
Agent, Lenders and their respective successors and assigns, and may be enforced
by it or them from time to time against any or all Borrowers as often as
occasion therefor may arise and without requirement on the part of any such
Agent, Lender, successor or assign first to marshal any of its or their claims
or to exercise any of its or their rights against any Borrower or to exhaust any
remedies available to it or them against any Borrower or to resort to


                                       14



any other source or means of obtaining payment of any of the Obligations
hereunder or to elect any other remedy. The provisions of this Section 2.15
shall remain in effect until all of the Obligations shall have been paid in full
or otherwise fully satisfied. If at any time, any payment, or any part thereof,
made in respect of any of the Obligations, is rescinded or must otherwise be
restored or returned by any Agent or Lender upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of this Section
2.15 will forthwith be reinstated in effect, as though such payment had not been
made.

          (j) Each Borrower hereby agrees that it will not enforce any of its
rights of contribution or subrogation against any other Borrower with respect to
any liability incurred by it hereunder or under any of the other Loan Documents,
any payments made by it to Agent or Lenders with respect to any of the
Obligations or any collateral security therefor until such time as all of the
Obligations have been paid in full in cash. Any claim which any Borrower may
have against any other Borrower with respect to any payments to any Agent or
Lender hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Borrower therefor.

          (k) Each Borrower hereby agrees that, after the occurrence and during
the continuance of any Default or Event of Default, the payment of any amounts
due with respect to the indebtedness owing by any Borrower to any other Borrower
is hereby subordinated to the prior payment in full in cash of the Obligations.
Each Borrower hereby agrees that after the occurrence and during the continuance
of any Default or Event of Default, such Borrower will not demand, sue for or
otherwise attempt to collect any indebtedness of any other Borrower owing to
such Borrower until the Obligations shall have been paid in full in cash. If,
notwithstanding the foregoing sentence, such Borrower shall collect, enforce or
receive any amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by such Borrower as trustee for Agent, and such
Borrower shall deliver any such amounts to Agent for application to the
Obligations in accordance with Section 2.4(b).

3. CONDITIONS; TERM OF AGREEMENT.

     3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The obligation
of each Lender to make its initial extension of credit provided for hereunder,
is subject to the fulfillment, to the satisfaction of Agent and each Lender of
each of the conditions precedent set forth on Schedule 3.1 (the making of such
initial extension of credit by a Lender being conclusively deemed to be its
satisfaction or waiver of the conditions precedent).

     3.2 INTENTIONALLY OMITTED.

     3.3 TERM. This Agreement shall continue in full force and effect for a term
ending on November 30, 2010 (the "Maturity Date"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.

     3.4 EFFECT OF TERMINATION. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to outstanding Letters of Credit) immediately shall become due and
payable without notice or demand and Borrowers agree to either (i) provide cash
collateral to be held by Agent for the benefit of those Lenders in an amount
equal to 105% of the Letter of Credit Usage, or (ii) cause the original Letters
of Credit to be returned to the Issuing Lender). No termination of this
Agreement, however, shall relieve or discharge Borrowers or their respective
Restricted Subsidiaries of their duties, Obligations, or covenants hereunder or
under any other Loan Document and the Agent's Liens in


                                       15



the Collateral shall remain in effect until all Obligations have been paid in
full and the Lender Group's obligations to provide additional credit hereunder
have been terminated. When this Agreement has been terminated and all of the
Obligations have been paid in full and the Lender Group's obligations to provide
additional credit under the Loan Documents have been terminated irrevocably,
Agent will, at Borrowers' sole expense, execute and deliver any termination
statements, lien releases, mortgage releases, re-assignments of trademarks,
discharges of security interests, and other similar discharge or release
documents (and, if applicable, in recordable form) as are reasonably necessary
to release, as of record, the Agent's Liens and all notices of security
interests and liens previously filed by Agent with respect to the Obligations.

     3.5 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at any time
upon 30 days prior written notice by Administrative Borrower to Agent, to
terminate this Agreement by paying to Agent, in cash, the Obligations (including
either (i) providing cash collateral to be held by Agent for the benefit of
those Lenders in an amount equal to 105% of the Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender), in
full, together with any Applicable Prepayment Premium. If Administrative
Borrower has sent a notice of termination pursuant to the provisions of this
Section, then, absent an agreement to the contrary contained in any Loan
Document, the Commitments shall terminate and Borrowers shall be obligated to
repay the Obligations (including either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders in an amount equal to 105% of the
Letter of Credit Usage, or (ii) causing the original Letters of Credit to be
returned to the Issuing Lender), in full, together with any Applicable
Prepayment Premium, on the date set forth as the date of termination of this
Agreement in such notice.

     3.6 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to maintain
the LC Obligations and the Term Loans (or otherwise extend credit hereunder) is
subject to the fulfillment, on or before the date applicable thereto, of each of
the conditions subsequent set forth below (the failure by Borrowers to so
perform or cause to be performed constituting an Event of Default):

          (a) within 30 days after the Closing Date (or such longer period as
agreed to by Agent in its sole discretion), Borrowers shall have delivered to
Agent certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 5.8, the form and substance of
which shall be reasonably satisfactory to Agent and its counsel;

          (b) within 60 days after the Closing Date (or such longer period as
agreed to by Agent in its sole discretion), Borrowers shall deliver to Agent
Cash Management Agreements and Control Agreements, in form and substance
reasonably satisfactory to Agent;

          (c) within 90 days after the Closing Date (or such longer period as
agreed to by Agent in its sole discretion), Borrowers shall use their
commercially reasonable efforts to deliver to Agent Collateral Access Agreements
with respect to any leased location at which books and records are located or
Collateral in excess of $500,000 is located;

          (d) within 10 Business Days after the Closing Date (or such longer
period as agreed to by Agent in its sole discretion), Borrowers shall deliver to
Agent (i) any certificates representing shares of Stock pledged under the
Security Agreement, as well as Stock powers with respect thereto endorsed in
blank, to the extent not delivered prior to the Closing Date, (ii) the original
notes issued under the M&T Facility, marked cancelled: and (iii) an affidavit of
lost indemnity in form and substance reasonably satisfactory to Agent with
respect to any certificates representing shares of Stock pledged under the
Security Agreement but not delivered to Agent on the Closing Date or pursuant to
clause (i) above;

          (e) on or prior to April 15, 2007 (or such longer period as agreed to
by Agent in its sole discretion), Agent shall have received a certificate of
insurance, together with the endorsements thereto, as are required by Section
5.8, the form and substance of which shall be satisfactory to Agent;


                                       16



          (f) within 90 days after the Closing Date, the following conditions
shall have been satisfied with respect to all Real Property Collateral (other
than the Real Property Collateral located in the State of New York): (a) Agent
shall have been granted a first priority Mortgage on such Real Property
Collateral; (b) Agent shall have received mortgagee title insurance policies (or
marked commitments to issue the same) for such Real Property Collateral issued
by a title insurance company reasonably satisfactory to Agent in an amount
reasonably satisfactory to Agent assuring Agent that the Mortgage on such Real
Property Collateral is a valid and enforceable first priority mortgage Lien on
such Real Property Collateral free and clear of all defects and encumbrances
except Permitted Liens, and such mortgagee title insurance policies (or marked
commitments to issue the same) otherwise shall be in form and substance
reasonably satisfactory to Agent; (c) Borrowers and their Subsidiaries shall
have paid to said title insurance company all expenses and premiums of said
title insurance company in connection with the issuance of such mortgagee title
insurance policies (or marked commitments to issue the same) and in addition
shall, to the extent required, have paid all recording costs, stamp taxes,
mortgage taxes, intangibles taxes and other fees and costs (including reasonable
attorneys fees and expenses) incurred in connection therewith; and (d) Agent
shall have received such other documentation and opinions of counsel, in form
and substance reasonably satisfactory to Agent, in connection with the grant of
such Mortgage as Agent shall request in its Permitted Discretion, including,
without limitation, surveys (or existing surveys and survey affidavits that are
(x) sufficient to have the "matters that would be shown on a survey" exception
deleted from the mortgagee policy of title insurance and (y) reasonably
satisfactory to Agent), financing statements and fixture filings; and

          (g) within 10 days after the Closing Date (or such longer period as
agreed to by Agent in its sole discretion), Borrowers shall deliver to Agent the
Governing Documents, as amended, modified, or supplemented to the Closing Date,
for TB Wood's Incorporated certified by the Secretary of State of the
jurisdiction of organization of such Person, which certificate shall indicate
that such Person is in good standing in such jurisdiction.

4. REPRESENTATIONS AND WARRANTIES.

          In order to induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
date hereof, and shall be true, correct, and complete, in all material respects,
as of the Closing Date (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:

     4.1 NO ENCUMBRANCES. Borrowers and their respective Restricted Subsidiaries
have good and indefeasible title to, or a valid leasehold interest in, their
material personal property assets and good and marketable title to, or a valid
leasehold interest in, their Real Property, in each case, free and clear of
Liens except for Permitted Liens.

     4.2 ELIGIBLE ACCOUNTS. As to each Account that is identified by a Borrower
as an Eligible Account in a borrowing base report submitted to Agent, such
Account is (a) a bona fide existing payment obligation of the applicable Account
Debtors created by the sale and delivery of Inventory or the rendition of
services to such Account Debtors in the ordinary course of Borrowers' business,
(b) owed to Borrowers without any known defenses, disputes, offsets,
counterclaims, or rights of cancellation, and (c) not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in the definition of
Eligible Accounts.

     4.3 ELIGIBLE INVENTORY.

          (a) As to each item of Inventory that is identified by a Borrower as
Eligible Raw Materials Inventory in a borrowing base report submitted to Agent,
such Inventory is not excluded as ineligible by virtue of one or more of the
excluding criteria set forth in the definition of Eligible Raw Materials
Inventory.


                                       17



          (b) As to each item of Inventory that is identified by a Borrower as
Finished Goods Inventory in a borrowing base report submitted to Agent, such
Inventory is (a) to such Borrower's knowledge, of good and merchantable quality,
free from known defects, and (b) not excluded as ineligible by virtue of one or
more of the excluding criteria set forth in the definition of Eligible Finished
Goods Inventory.

     4.4 EQUIPMENT. Each material item of Equipment of Borrowers and their
respective Restricted Subsidiaries is used or held for use in their business
and, to such owner's knowledge, is in good working order, ordinary wear and tear
and damage by casualty excepted.

     4.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and Equipment (other
than (i) vehicles, (ii) Equipment out for repair, (iii) Equipment and Inventory
in transit between locations identified on Schedule 4.5(b), (iv) dies, tools,
patterns, molds and similar items maintained with customers in the ordinary
course of business, and (v) items of de minimus value) of Borrowers and their
respective Restricted Subsidiaries are not stored with a bailee, warehouseman,
or similar party (except as identified on Schedule 4.5(a), as such Schedule
shall be required to be updated pursuant to the immediately succeeding sentence)
and are located only at the locations identified on Schedule 4.5(b) (as such
Schedule shall be required to be updated pursuant to the immediately succeeding
sentence). Administrative Borrower shall be required to update Schedules 4.5(a)
and Schedule 4.5(b) simultaneously with the delivery of quarterly financial
statements required pursuant to Section 5.3; provided, that such Schedules shall
be required to be updated only with respect to Equipment or Inventory having an
aggregate value of $250,000 or greater.

     4.6 INVENTORY RECORDS. Each Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its and its
Restricted Subsidiaries' Inventory and the book value thereof.

     4.7 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.

          (a) The jurisdiction of organization of Borrowers and each of their
respective Restricted Subsidiaries is set forth on Schedule 4.7(a).

          (b) The chief executive office of Borrowers and each of their
respective Restricted Subsidiaries is located at the address indicated on
Schedule 4.7(b) (as such Schedule may be updated pursuant to Section 5.9).

          (c) Borrowers' and each of their respective Restricted Subsidiaries'
organizational identification numbers, if any, are identified on Schedule
4.7(c).

          (d) As of the Closing Date, Borrowers and their respective Restricted
Subsidiaries do not hold any commercial tort claims, except as set forth on
Schedule 4.7(d).

     4.8 DUE ORGANIZATION AND QUALIFICATION; RESTRICTED SUBSIDIARIES.

          (a) Each Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of their organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to result in a Material Adverse Change.

          (b) Set forth on Schedule 4.8(b) is a complete and accurate
description of the authorized capital Stock of each Borrower and their
respective Restricted Subsidiaries, by class, and, as of the Closing Date, a
description of the number of shares of each such class that are issued and
outstanding. Other than as described on Schedule 4.8(b), as of the Closing Date,
there are no subscriptions, options, warrants, or calls relating to any shares
of each Borrower's or any of their respective Restricted Subsidiaries' capital
Stock, including any right of conversion or exchange under any outstanding
security or other instrument. None of


                                       18



Borrowers or any of their respective Restricted Subsidiaries is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.

          (c) Set forth on Schedule 4.8(c) is a complete and accurate list of
each Borrower's direct and indirect Restricted Subsidiaries, showing, as of the
Closing Date, the number and the percentage of the outstanding shares of each
class of common and preferred Stock authorized for each of such Restricted
Subsidiaries owned directly or indirectly by the applicable Borrower. All of the
outstanding capital Stock of each such Restricted Subsidiary has been validly
issued and is fully paid and non-assessable.

     4.9 DUE AUTHORIZATION; NO CONFLICT.

          (a) The execution, delivery, and performance by each Borrower of this
Agreement, the other Loan Documents and the Acquisition Documents to which each
is a party have been duly authorized by all necessary action on the part of such
Borrower.

          (b) (i) The execution, delivery, and performance by each Borrower of
this Agreement and the other Loan Documents to which it is a party do not (A)
violate any material provision of federal, state, or local law or regulation
applicable to any Borrower, the Governing Documents of any Borrower, or any
material order, judgment, or decree of any court or other Governmental Authority
binding on any Borrower, (B) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of any Borrower, (C) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
any Borrower, other than Permitted Liens, or (D) require any approval or consent
of any Person under any material contractual obligation of any Borrower, other
than consents or approvals that have been obtained and that are still in force
and effect; and (ii) the execution, delivery, and performance by each Borrower
of the Acquisition Documents to which it is a party do not (A) violate any
provision of federal, state, or local law or regulation applicable to any
Borrower, the Governing Documents of any Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on any Borrower, (B)
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any contractual obligation of any Borrower, (C)
result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of any Borrower, other than Permitted
Liens, or (D) require any approval or consent of any Person under any
contractual obligation of any Borrower, other than consents or approvals that
have been obtained and that are still in force and effect, which, in each of
cases (A), (B), (C) and (D) of this clause (ii), could reasonably be expected to
result in a Material Adverse Change.

          (c) (i) Other than the filing of financing statements, and the
recordation of the Mortgages, the execution, delivery, and performance by each
Borrower of this Agreement and the other Loan Documents to which it is a party
do not require any registration with, consent, or approval of, or notice to, or
other action with or by, any Governmental Authority, other than consents or
approvals that have been obtained and that are still in force and effect; and
(ii) other than the filing of financing statements, and the recordation of the
Mortgages, the execution, delivery, and performance by each Borrower of the
Acquisition Documents to which it is a party do not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than consents or approvals that have been obtained
and that are still in force and effect and other than those items which could
not reasonably be expected to result in a Material Adverse Change.

          (d) (i) This Agreement and the other Loan Documents to which each
Borrower is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by such Borrower will be the legally valid and
binding obligations of such Borrower, enforceable against such Borrower in
accordance with their respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally; and (ii)
the Acquisition Documents to which each Borrower is a party, and all other


                                       19


documents contemplated hereby and thereby, when executed and delivered by such
Borrower will be the legally valid and binding obligations of such Borrower,
enforceable against such Borrower in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally and except to the extent that the lack of such
enforceability could not reasonably be expected to result in a Material Adverse
Change.

          (e) The Agent's Liens in the Collateral are validly created,
perfected, and first priority Liens to the extent provided for in the other Loan
Documents, subject only to Permitted Liens.

          (f) The execution, delivery, and performance by each Guarantor of the
Loan Documents to which it is a party have been duly authorized by all necessary
action on the part of such Guarantor.

          (g) The execution, delivery, and performance by each Guarantor of the
Loan Documents to which it is a party do not (i) violate any material provision
of federal, state, or local law or regulation applicable to such Guarantor, the
Governing Documents of such Guarantor, or any material order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
such Guarantor, (iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any properties or assets of such Guarantor,
other than Permitted Liens, or (iv) require any approval or consent of any
Person under any material contractual obligation of such Guarantor, other than
consents or approvals that have been obtained and that are still in force and
effect.

          (h) Other than the filing of financing statements and the recordation
of the Mortgages, the execution, delivery, and performance by each Guarantor of
the Loan Documents to which such Guarantor is a party do not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority, other than consents or approvals that have
been obtained and that are still in force and effect.

          (i) The Loan Documents to which each Guarantor is a party, and all
other documents contemplated hereby and thereby, when executed and delivered by
such Guarantor will be the legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.

     4.10 LITIGATION. Other than those matters disclosed on Schedule 4.10, there
are no actions, suits, or proceedings pending or, to the knowledge of each
Borrower, threatened against any Borrower or any of its Restricted Subsidiaries
that (a) if adversely determined, could result in a Material Adverse Change or
(b) relate to this Agreement or any other Loan Documents or any transaction
contemplated hereby or thereby.

     4.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrowers and their respective Restricted Subsidiaries that have been delivered
by Borrowers to the Lender Group have been prepared in accordance with GAAP
(except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and present fairly in
all material respects, Borrowers' and their respective Restricted Subsidiaries'
financial condition as of the date thereof and results of operations for the
period then ended. There has not been a Material Adverse Change with respect to
Borrowers and their respective Restricted Subsidiaries since December 31, 2006.

     4.12 FRAUDULENT TRANSFER.

          (a) Borrowers, together with their Restricted Subsidiaries, taken as a
whole, are Solvent.


                                       20



          (b) No transfer of property is being made by any Borrower or any of
its Restricted Subsidiaries and no obligation is being incurred by any Borrower
or any of its Restricted Subsidiaries in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrowers or any
of their respective Restricted Subsidiaries.

     4.13 EMPLOYEE COMPLIANCE.

          (a) Set forth on Schedule 4.13(a) is a complete and accurate list of
all Plans that meet the definition of an "employee pension benefit plan" under
Section 3(2) of ERISA and that are currently maintained or contributed to by any
Borrower, any of their respective Restricted Subsidiaries or any of their
respective ERISA Affiliates as of the Closing Date.

          (b) each Borrower, their respective Restricted Subsidiaries, and their
respective ERISA Affiliates are in compliance in all material respects with all
applicable provisions and requirements of ERISA and the regulations and
published interpretations thereunder with respect to each Plan, and have
performed all their obligations in all material respects under each Plan.

          (c) No ERISA Event has occurred or is reasonably expected to occur.

          (d) All liabilities under each Plan are (i) funded to at least the
minimum level required by law or, if higher, to the level required by the terms
governing the Plans, (ii) insured with a reputable insurance company, (iii)
provided for or recognized in the financial statements most recently delivered
to Agent pursuant to Section 5.3 hereof to the extent required by GAAP or (iv)
estimated in the formal notes to the financial statements most recently
delivered to Agent pursuant to Section 5.3 hereof to the extent required by
GAAP.

          (e) To the best knowledge of each Borrower, there are no circumstances
which may give rise to a material liability in relation to any Plan which is not
funded, insured, provided for, recognized or estimated in the manner described
in subsection (d) above.

     4.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 4.14 or
disclosed in the Phase I Environmental Site Assessment prepared by URS, and
except for matters that would not reasonably be expected to result in the
Borrowers or any of their respective Restricted Subsidiaries incurring material
liability, (a) to Borrowers' knowledge, none of Borrowers' or their respective
Restricted Subsidiaries' properties or assets has ever been used by Borrowers,
any of their respective Restricted Subsidiaries, or by previous owners or
operators in the disposal of, or to produce, store, handle, treat, release, or
transport, any Hazardous Materials, where such use, production, storage,
handling, treatment, release or transport was in violation, in any material
respect, of any applicable Environmental Law, (b) to Borrowers' knowledge, none
of Borrowers' nor any of their respective Restricted Subsidiaries' properties is
or has ever been designated or identified pursuant to any environmental
protection statute as a site requiring investigation or remediation due to the
disposal or release of Hazardous Materials, (c) none of Borrowers nor any of
their respective Restricted Subsidiaries have received notice that a Lien
arising under any Environmental Law has attached to any revenues of any Borrower
or any of its Restricted Subsidiaries or to any Real Property owned or operated
by Borrowers or any of their respective Restricted Subsidiaries, and (d) none of
Borrowers nor any of their respective Restricted Subsidiaries have received a
summons, citation, notice, or directive from the United States Environmental
Protection Agency or any other federal or state governmental agency
("Environmental Claim") concerning any action or omission by any Borrower or any
of its Restricted Subsidiaries resulting in the releasing or disposing of
Hazardous Materials into the environment other than Environmental Claims that
would not reasonably be expected to result in a Material Adverse Change, and
there are no material Environmental Claims currently pending against Borrowers
or any of their respective Restricted Subsidiaries.


                                       21



     4.15 INTELLECTUAL PROPERTY. Except for the matters which could not
reasonably be expected to result in a Material Adverse Change, each Borrower and
each of their respective Restricted Subsidiaries owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are necessary to the conduct of its business as currently conducted.

     4.16 LEASES. Except for the matters which could not reasonably be expected
to result in a Material Adverse Change, Borrowers and their respective
Restricted Subsidiaries enjoy peaceful and undisturbed possession under all
leases material to their business and to which they are parties or under which
they are operating and all of such material leases are valid and subsisting and
no material default by Borrowers or their respective Restricted Subsidiaries
exists under any of them except for payments which are the subject of a
Permitted Protest.

     4.17 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. As of the Closing Date, set
forth on Schedule 4.17 is a listing of all of Borrowers' and their respective
Restricted Subsidiaries' Deposit Accounts and Securities Accounts, including,
with respect to each bank or securities intermediary (a) the name and address of
such Person, and (b) the account numbers of the Deposit Accounts or Securities
Accounts maintained with such Person.

     4.18 COMPLETE DISCLOSURE. All factual information furnished by or on behalf
of Borrowers or their respective Restricted Subsidiaries with respect to
Borrowers or such Restricted Subsidiaries in writing to Agent or any Lender for
purposes of or in connection with this Agreement and the other Loan Documents
is, when taken as a whole with all other furnished information, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (when taken as a whole with all other furnished
information) not misleading in any material respect at such time in light of the
circumstances under which such information was provided. On the Closing Date,
the Projections received by Agent pursuant to clause (t) of Schedule 3.1
represent, and as of the date on which any other Projections are delivered to
Agent, such additional Projections represent Borrowers' good faith estimate of
their and their respective Restricted Subsidiaries' future performance for the
periods covered thereby (it being understood that the Projections are subject to
significant uncertainties and contingencies, many of which are beyond control
and that no assurance is or can be given that the Projections will be realized
and that actual results may vary from such Projections and such variances may be
material).

     4.19 INDEBTEDNESS. Set forth on Schedule 4.19 is a true and complete list
of all Indebtedness of each Borrower and each of their respective Restricted
Subsidiaries outstanding immediately prior to the Closing Date that is to remain
outstanding after the Closing Date and such Schedule accurately reflects the
aggregate principal amount of such Indebtedness and describes the principal
terms thereof.

     4.20 MATERIAL CONTRACTS. Except for matters which, either individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Change, each Material Contract (a) is in full force and effect and is
binding upon and enforceable against each Person that is a party thereto in
accordance with its terms, (b) has not been otherwise amended or modified
(except as not otherwise prohibited hereby), and (c) is not in default due to
the action of any Borrower or any of its Restricted Subsidiaries.

5.   AFFIRMATIVE COVENANTS.

          Each Borrower covenants and agrees that, until termination of all of
the Commitments and payment in full of the Obligations, Borrowers shall and
shall cause each of their respective Restricted Subsidiaries to do all of the
following:

     5.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain


                                       22



information as from time to time reasonably may be requested by Agent. Borrowers
also shall keep a reporting system that shows all additions, sales, claims,
returns, and allowances with respect to their and their respective Restricted
Subsidiaries' sales.

     5.2 COLLATERAL REPORTING. Provide Agent with each of the reports set forth
on Schedule 5.2 at the times specified therein. In addition, each Borrower
agrees to cooperate fully with Agent to facilitate and implement, where
appropriate, a system of electronic collateral reporting in order to provide
electronic reporting of each of the items set forth above.

     5.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent each of
the financial statements, reports, or other items set forth on Schedule 5.3 at
the time specified herein. In addition, Parent agrees that no Restricted
Subsidiary of Parent will have a fiscal year different from that of Parent.

     5.4 INTENTIONALLY OMITTED.

     5.5 INSPECTION. Subject to any specific limitations set forth in any other
Loan Document, permit Agent and each of its duly authorized representatives or
agents to visit any of its properties and inspect any of its assets or books and
records, to examine and make copies of its books and records, and to discuss its
affairs, finances, and accounts with, and to be advised as to the same by, its
officers and employees at such reasonable times and intervals as Agent may
designate and, so long as no Default or Event of Default exists, with reasonable
prior notice to Administrative Borrower.

     5.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of their
properties which are necessary or useful in the proper conduct to their business
in good working order and condition, ordinary wear, tear, and casualty excepted
(and except where the failure to do so could not be expected to result in a
Material Adverse Change), and comply at all times with the provisions of all
material leases to which it is a party as lessee (except where the failure to do
so could not reasonably be expected to result in a Material Adverse Change), so
as to prevent any loss or forfeiture thereof or thereunder.

     5.7 TAXES. Cause all material assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against Borrowers, their respective Restricted Subsidiaries, or any of their
respective assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrowers
will and will cause their respective Restricted Subsidiaries to make timely
payment or deposit of all tax payments and withholding taxes required of them by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof reasonably satisfactory to Agent indicating that the
applicable Borrower or applicable Restricted Subsidiary has made such payments
or deposits (except to the extent the subject of a Permitted Protest).

     5.8 INSURANCE.

          (a) At Borrowers' expense, maintain insurance respecting their and
their respective Restricted Subsidiaries' assets wherever located, covering loss
or damage by fire, theft, explosion, and all other hazards and risks as
ordinarily are insured against by other Persons engaged in the same or similar
businesses and in the same geographic area. Borrowers also shall maintain
business interruption, public liability, and product liability insurance, as
well as insurance against larceny, embezzlement, and criminal misappropriation.
All such policies of insurance shall be in such amounts and with such insurance
companies as are reasonably satisfactory to Agent. Borrowers shall deliver
copies of all such policies (other than directors and officers policies) to
Agent with an endorsement naming Agent as the sole loss payee (under a
reasonably satisfactory lender's loss payable endorsement) or additional
insured, as appropriate. Each policy of insurance or


                                       23



endorsement shall contain a clause requiring the insurer to give not less than
30 days prior written notice to Agent in the event of cancellation of the policy
for any reason whatsoever.

          (b) Administrative Borrower shall give Agent prompt notice of any loss
exceeding $500,000 covered by such insurance. So long as no Event of Default has
occurred and is continuing, Borrowers shall have the exclusive right to adjust
any losses payable under any such insurance policies which are less than
$500,000. Following the occurrence and during the continuation of an Event of
Default, or in the case of any losses payable under such insurance exceeding
$500,000, Agent shall have the exclusive right to adjust any losses payable
under any such insurance policies, without any liability to Borrowers whatsoever
in respect of such adjustments. Any monies received as payment for any loss
under any insurance policy mentioned above (other than liability insurance
policies) or as payment of any award or compensation for condemnation or taking
by eminent domain, shall be paid over to Agent to be applied in accordance with
Section 2.4(d).

          (c) Borrowers will not, and will not suffer or permit their respective
Restricted Subsidiaries to, take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 5.8, unless Agent is included thereon as an additional insured or loss
payee under a lender's loss payable endorsement. Administrative Borrower
promptly shall notify Agent whenever such separate insurance is taken out,
specifying the insurer thereunder and full particulars as to the policies
evidencing the same, and copies of such policies promptly shall be provided to
Agent.

     5.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep Borrowers' and their
respective Restricted Subsidiaries' Inventory and Equipment (other than (i)
vehicles, (ii) Equipment out for repair, (iii) Equipment and Inventory in
transit between locations identified on Schedule 4.5(b), (iv) items stored with
a bailee, warehouseman, or similar party to the extent disclosed on Schedule
4.5(a), (v) dies, tools, patterns, molds and similar items maintained with
customers in the ordinary course of business, (vi) Inventory that has been
consigned in an aggregate amount not to exceed $500,000 at any time, and (vii)
items of de minimus value) only at the locations identified on Schedule 4.5(b)
and their chief executive offices only at the locations identified on Schedule
4.7(b); provided, however, that Administrative Borrower may amend Schedule
4.5(b) or Schedule 4.7(b) so long as (A) with respect to Schedule 4.5(b), such
amendment occurs by written notice to Agent in accordance with the last sentence
of Section 4.5, and with respect to Schedule 4.7(b), such amendment occurs by
written notice to Agent not less than 30 days prior to the date on which such
chief executive office is relocated, (B) such new location is within the
continental United States, and (C) at the time of such written notification, the
applicable Borrower or Restricted Subsidiary (x) with respect to any location at
which books and records (other than prior years' historical records) are
maintained or Inventory and/or Equipment having an aggregate value of $2,000,000
or greater is maintained, obtains a Collateral Access Agreement with respect
thereto and (y) with respect to any other location, uses its commercially
reasonable efforts to provide Agent a Collateral Access Agreement with respect
thereto.

     5.10 COMPLIANCE WITH LAWS. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change.

     5.11 LEASES. Except for matters which could not reasonably be expected to
result in a Material Adverse Change, pay when due all rents and other amounts
payable under any material leases to which any Borrower or any of its Restricted
Subsidiaries is a party or by which any Borrower's or any of their respective
Restricted Subsidiaries' properties and assets are bound, unless such payments
are the subject of a Permitted Protest.

     5.12 EXISTENCE. Except as permitted by Section 6.3 and Section 6.4, at all
times preserve and keep in full force and effect each Borrower's and each of
their respective Restricted Subsidiaries' valid existence and, except to the
extent failure to do so could not reasonably be expected to result in a Material
Adverse


                                       24



Change, good standing and any rights, franchises, permits, licenses,
authorizations, approvals, entitlements and accreditations material to their
businesses.

     5.13 ENVIRONMENTAL.

          (a) Keep any property either owned or operated by any Borrower or any
of its Restricted Subsidiaries free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent reasonable documentation of such
compliance which Agent reasonably requests, provided that, so long as no Default
or Event of Default shall have occurred and be continuing, Agent shall not make
such a request more than once per any consecutive 12-month period, (c) promptly
notify Agent of any release of a Hazardous Material in any reportable quantity
from or onto property owned or operated by any Borrower or any of its Restricted
Subsidiaries and take any Remedial Actions required to abate said release or
otherwise to come into material compliance with applicable Environmental Law,
and (d) promptly, but in any event within 10 Business Days of its receipt
thereof, provide Agent with written notice of any of the following: (i) notice
that an Environmental Lien has been filed against any of the real or personal
property of any Borrower or any of its Restricted Subsidiaries, (ii)
commencement of any Environmental Action or notice that an Environmental Action
will be filed against any Borrower or any of its Restricted Subsidiaries which
Environmental Action could reasonably be expected to result in any Borrower or
any of its Restricted Subsidiaries incurring material liability under
Environmental Laws, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.

     5.14 INTENTIONALLY OMITTED.

     5.15 CONTROL AGREEMENTS. Subject to Section 3.6(b), take all reasonable
steps in order for Agent to obtain control in accordance with Sections 8-106,
9-104, 9-105, 9-106, and 9-107 of the Code with respect to (subject to the
proviso contained in Section 6.12) all of its Securities Accounts, Deposit
Accounts, electronic chattel paper, investment property, and letter of credit
rights.

     5.16 FORMATION OF SUBSIDIARIES. At the time that any Borrower or any
Guarantor forms any direct or indirect Subsidiary or acquires any direct or
indirect Subsidiary after the Closing Date and such Subsidiary is a Restricted
Subsidiary, such Borrower or such Guarantor shall (a) cause such new Restricted
Subsidiary to provide to Agent a joinder to this Agreement or the Guaranty, as
applicable, and the Security Agreement, together with such other security
documents (including Mortgages with respect to any Real Property of such new
Restricted Subsidiary, subject to Section 5.17), as well as appropriate
financing statements (and with respect to all property subject to a Mortgage,
fixture filings), all in form and substance reasonably satisfactory to Agent
(including being sufficient to grant Agent a first priority Lien (subject to
Permitted Liens) in and to the assets of such newly formed or acquired
Restricted Subsidiary), (b) provide to Agent a pledge agreement and appropriate
certificates and powers or financing statements, hypothecating all of the direct
or beneficial ownership interest in such new Restricted Subsidiary, in form and
substance reasonably satisfactory to Agent, and (c) provide to Agent all other
documentation, including one or more opinions of counsel reasonably satisfactory
to Agent, which in its opinion is appropriate with respect to the execution and
delivery of the applicable documentation referred to above (including policies
of title insurance or other documentation with respect to all property subject
to a Mortgage). Notwithstanding the foregoing, if a Subsidiary that is so formed
or acquired is a Controlled Foreign Corporation, then clause (a) of the
immediately preceding sentence shall not be applicable and, with respect to
clause (b) of the immediately preceding sentence, such pledge shall be limited
to 65% of the voting power of all classes of capital Stock of such Subsidiary
entitled to vote. Any document, agreement, or instrument executed or issued
pursuant to this Section 5.16 shall be a Loan Document. Notwithstanding the
foregoing, Agent and Lenders shall not be obligated to consent to any such
formation or acquisition of a Subsidiary unless such formation or acquisition is
otherwise expressly permitted hereunder.


                                       25



     5.17 REAL PROPERTY. Upon the acquisition of any fee interest in Real
Property with a purchase price or Fair Market Value in excess of $500,000 (other
than Real Property located in the State of New York or in any other state having
substantially similar real estate mortgage taxes), promptly notify Agent of the
acquisition of such Real Property and within 60 days (or such longer time as
Agent, in its reasonable discretion, may agree) thereafter: (a) grant Agent a
first priority Mortgage on such Real Property; (b) deliver mortgagee title
insurance policies (or marked commitments to issue the same) for such Real
Property issued by a title insurance company reasonably satisfactory to Agent in
an amount reasonably satisfactory to Agent assuring Agent that the Mortgage on
such Real Property Collateral is a valid and enforceable first priority mortgage
Lien on such Real Property Collateral free and clear of all defects and
encumbrances except Permitted Liens, and such mortgagee title insurance policies
(or marked commitments to issue the same) otherwise shall be in form and
substance reasonably satisfactory to Agent; (c) Borrowers and their Subsidiaries
shall pay to said title insurance company all expenses and premiums of said
title insurance company in connection with the issuance of such mortgagee title
insurance policies (or marked commitments to issue the same) and in addition
shall, to the extent required, pay all recording costs, stamp taxes, mortgage
taxes, intangibles taxes and other fees and costs (including reasonable
attorneys fees and expenses) incurred in connection therewith; and (d) execute
and/or deliver to Agent such other documentation and opinions of counsel, in
form and substance reasonably satisfactory to Agent, in connection with the
grant of such Mortgage as Agent shall request in its Permitted Discretion,
including, without limitation, surveys (or existing surveys and survey
affidavits that are (x) sufficient to have the "matters that would be shown on a
survey" exception deleted from the mortgagee policy of title insurance and (y)
reasonably satisfactory to Agent), financing statements and fixture filings.

     5.18 ERISA COMPLIANCE

          (a) Each Borrower shall do, and shall cause each of their respective
Restricted Subsidiaries and ERISA Affiliates to do, each of the following: (i)
maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the IRC and each other applicable federal or state law;
(ii) cause each Qualified Plan to maintain its qualified status under Section
401(a) of the IRC; (iii) make all required contributions to each Plan; (iv)
ensure that all liabilities under each Plan are (A) funded to at least the
minimum level required by law or, if higher, to the level required by the terms
governing such Plan; (B) insured with a reputable insurance company; or (C)
provided for or recognized in the financial statements most recently delivered
to Agent under Section 5.3 (to the extent required by GAAP); and (v) ensure that
the contributions or premium payments to or in respect of each Plan are and
continue to be promptly paid at no less than the rates required under the rules
of such Plan and in accordance with the most recent actuarial advice received in
relation to such Plan and applicable law.

          (b) Deliver to Agent such certifications or other evidence of
compliance with the provisions of Section 4.13 as Agent may from time to time
reasonably request.

          (c) Promptly notify Agent of each of the following ERISA events
affecting any Borrower, any of their respective Restricted Subsidiaries or any
ERISA Affiliates (but in no event more than ten (10) days after such event),
together with a copy of each notice with respect to such event that may be
required to be filed with a Governmental Authority and each notice delivered by
a Governmental Authority to any Borrower, any of their respective Restricted
Subsidiaries or any ERISA Affiliates with respect to such event:

               (i) an ERISA Event;

               (ii) the adoption of any new Pension Plan by any Borrower, any of
their respective Restricted Subsidiaries or any ERISA Affiliates; or


                                       26



               (iii) except as required under the terms of any collective
bargaining agreement, the adoption of any amendment to a Pension Plan, if such
amendment will result in a material increase in benefits or unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA).

          (d) Promptly deliver to Agent, upon request, copies of (i) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed
by any Borrower, any of their respective Restricted Subsidiaries or any ERISA
Affiliates with the Internal Revenue Service with respect to each Pension Plan;
(ii) all notices received by any Borrower, any of their respective Restricted
Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer
Plan sponsor concerning an ERISA Event; and (iii) such other documents or
governmental reports or filings relating to any Plan as Agent shall reasonably
request.

     5.19 PAYMENT OF SENIOR SUBORDINATED NOTES Upon issuance of the Additional
Notes, Borrowers shall use a portion of the proceeds thereof to prepay all of
the outstanding senior subordinated notes issued pursuant to that certain
Securities Purchase Agreement dated as of October 20, 2005, among Parent and the
other parties thereto.

6.   NEGATIVE COVENANTS.

          Borrowers covenant and agree that, until termination of all of the
Commitments and payment in full of the Obligations, Borrowers will not and will
not permit any of their respective Restricted Subsidiaries to do any of the
following:

     6.1 INDEBTEDNESS. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:

          (a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,

          (b) Indebtedness set forth on Schedule 4.19,

          (c) Permitted Purchase Money Indebtedness,

          (d) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b) and (c) of this Section 6.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) such refinancings,
renewals, or extensions do not result in an increase in the principal amount of
the Indebtedness so refinanced, renewed, or extended, (ii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions, that, taken as a whole, are materially more burdensome
or restrictive to the applicable Borrower, (iii) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that are
at least as favorable to the Lender Group, taken as a whole, as those that were
applicable to the refinanced, renewed, or extended Indebtedness, and (iv) the
Indebtedness that is refinanced, renewed, or extended is not recourse to any
Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended or as otherwise permitted pursuant to Section 6.1,

          (e) endorsement of instruments or other payment items for deposit,

          (f) Indebtedness consisting of Permitted Investments,

          (g) Guarantees by a Loan Party of the obligations under the Altra
Senior Credit Agreement, the Indenture Documents and the Unsecured Note
Documents,


                                       27



          (h) Hedge Agreements entered into in the ordinary course of business
and not for speculative purposes;

          (i) Indebtedness of a Loan Party to another Loan Party and any
Refinancing Indebtedness in respect thereof (whether in whole or in part) so
long as such Indebtedness is subject to the Intercompany Subordination
Agreement;

          (j) Guarantees by a Loan Party of Indebtedness incurred by another
Loan Party so long as the incurrence of such Indebtedness is otherwise permitted
by the terms hereof;

          (k) intentionally omitted;

          (l) Indebtedness (other than for borrowed money) solely to the extent
subject to Permitted Liens;

          (m) intentionally omitted;

          (n) Indebtedness consisting of promissory notes issued by any Borrower
or any Restricted Subsidiary to current or former directors, officers, employees
and consultants, their respective estates, spouses or former spouses to finance
the purchase or redemption of Stock permitted hereby;

          (o) Indebtedness consisting of obligations of any Borrower or any
Restricted Subsidiary under deferred compensation, adjustment of purchase price,
earn outs, indemnification or other similar arrangements incurred by such Person
in connection with the Acquisition Transactions and Permitted Dispositions;

          (p) cash management obligations and other Indebtedness in respect of
netting services, overdraft protections and similar arrangements, in each case
in connection with cash management and Deposit Accounts and incurred in the
ordinary course of business; and

          (q) additional Indebtedness of Borrowers and their Restricted
Subsidiaries in an aggregate principal amount not to exceed $5,000,000 at any
time outstanding solely to the extent that such Indebtedness consists of either
(i) Purchase Money Indebtedness or (ii) Indebtedness that is subordinated to the
Obligations on terms reasonably satisfactory to Agent.

     6.2 LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 6.1 and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness and
proceeds thereof or additions or accessions thereto).

     6.3 RESTRICTIONS ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation, reorganization, or recapitalization, or liquidate, wind up, or
dissolve itself (or suffer any liquidation or dissolution), except that:

          (a) any Borrower or any Restricted Subsidiary may merge with (i) any
Borrower (including a merger, the purpose of which is to reorganize such
Borrower into a new jurisdiction), or (ii) any one or more other Restricted
Subsidiaries; provided that a Borrower shall be the continuing or surviving
Person or the continuing or surviving Person shall expressly assume the
obligations of such Borrower in a manner reasonably acceptable to Agent;


                                       28



          (b) any Borrower or Restricted Subsidiary may liquidate or dissolve or
change its legal form so long as its assets are transferred to (i) in the case
of a Borrower, to another Borrower and (ii) in the case of a Restricted
Subsidiary, to a Loan Party or any other Restricted Subsidiary;

          (c) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, any Borrower or Restricted Subsidiary may
merge with any other Person in order to effect an Investment permitted pursuant
to Section 6.12; provided that the continuing or surviving Person shall be a
Restricted Subsidiary, which together with each of its Restricted Subsidiaries,
shall have complied with the requirements of Section 5.16;

          (d) the Borrowers and the Restricted Subsidiaries may consummate the
Acquisition Transactions; and

          (e) so long as no Event of Default exists or would result therefrom, a
merger, consolidation, reorganization, recapitalization, liquidation, windup or
dissolution, the sole purpose of which is to effect a Disposition permitted
pursuant to Section 6.4.

     6.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of (collectively, a
"Disposition") any of the assets of any Borrower or any of its Restricted
Subsidiaries.

     6.5 CHANGE NAME. Change any Borrower's or any of their respective
Restricted Subsidiaries' name, organizational identification number,
jurisdiction of organization, or organizational identity; provided, however,
that any Borrower or any of its Restricted Subsidiaries may change its name upon
at least 10 days prior written notice by Parent or Administrative Borrower to
Agent of such change so long as, (a) at the time of such written notification,
such Borrower or such Restricted Subsidiary provides any financing statements
necessary to perfect and continue perfected the Agent's Liens and (b)
immediately after such name change, Administrative Borrower provides Agent with
evidence of such name change (including copies of any related public filings).

     6.6 NATURE OF BUSINESS. Engage in any material line of business
substantially different from those lines of business conducted by Borrowers and
the Restricted Subsidiaries on the Closing Date other than any businesses
reasonably related or ancillary thereto.

     6.7 PREPAYMENTS AND AMENDMENTS. Except in connection with a refinancing
permitted by Section 6.1,

          (a) optionally prepay, redeem, defease, purchase, or otherwise acquire
any Indebtedness of any Borrower or any Restricted Subsidiary of a Borrower,
except (i) Purchase Money Indebtedness and (ii) the Obligations in accordance
with this Agreement;

          (b) make any payment on account of Indebtedness that has been
contractually subordinated in right of payment if such payment is not permitted
at such time under the subordination terms and conditions, or

          (c) directly or indirectly, amend, modify, alter, increase, or change
any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning the Senior Notes or the
Altra Senior Credit Agreement in a manner materially adverse to the interests of
the Lender Group other than to consummate a Refinancing Indebtedness in respect
thereof.

     6.8  INTENTIONALLY OMITTED.

     6.9  INTENTIONALLY OMITTED.


                                       29



     6.10 INTENTIONALLY OMITTED.

     6.11 FISCAL YEAR. Modify or change its fiscal year.

     6.12 INVESTMENTS. Except for Permitted Investments, directly or indirectly,
make or acquire any Investment, or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Borrowers and their respective Restricted Subsidiaries shall not have Permitted
Investments (other than in the Cash Management Accounts) in Deposit Accounts or
Securities Accounts in an aggregate amount in excess of $50,000 (exclusive of
Trust Funds) at any one time unless the applicable Borrower or the applicable
Restricted Subsidiary, and the applicable securities intermediary or bank have
entered into Control Agreements governing such Permitted Investments in order to
perfect (and further establish) the Agent's Liens in such Permitted Investments.
Subject to the foregoing proviso, Borrowers shall not and shall not permit their
respective Restricted Subsidiaries to establish or maintain any Deposit Account
or Securities Account unless Agent shall have received a Control Agreement in
respect of such Deposit Account or Securities Account.

     6.13 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of any Borrower except for
transactions that (a) are in the ordinary course of Borrowers' business, (b) are
upon fair and reasonable terms and (c) are no less favorable to Borrowers or
their respective Restricted Subsidiaries, as applicable, than would be obtained
in an arm's length transaction with a non-Affiliate; provided, however, that if
any such transaction involves aggregate payments or other property with a Fair
Market Value in excess of $2,500,000, it shall be approved by a majority of the
members of the Board of Directors of Parent (including a majority of the
disinterested members thereof), such approval to be evidenced by board
resolutions stating that the Parent's Board of Directors has determined that
such transactions comply with the foregoing provisions, and if any such
transaction involves an aggregate Fair Market Value of more than $5,000,000,
Parent will, prior to the consummation thereof, obtain a favorable opinion as to
the fairness of the financial terms of such transactions or series of related
transactions to the applicable Loan Party, from an Independent Financial Advisor
and file the same with Agent; provided, further, however, that such restrictions
shall not apply to:

          (a) transactions exclusively between or among Parent and its
Subsidiaries permitted hereby;

          (b) reasonable fees and compensation paid to, and indemnity provided
for directors, officers, employees and consultants to Parent and its
Subsidiaries;

          (c) intentionally omitted;

          (d) transactions otherwise expressly permitted by this Agreement;

          (e) any Investment permitted pursuant to Section 6.12;

          (f) any sale of the Stock of any Loan Party in exchange for equity
contributions from Parent;

          (g) any merger or other transaction with an Affiliate solely for the
purpose of reincorporating a Loan Party in another jurisdiction or creating a
holding company, to the extent otherwise permitted by this Agreement;

          (h) any employment, stock option, stock repurchase, employee benefit
compensation, business expense reimbursement, severance, termination or other
employment-related agreements, arrangements or plans entered into in good faith
by a Loan Party in the ordinary course of business;


                                       30



          (i) sales or purchases of inventory, other products or services to or
from any Affiliate of the Borrowers entered into in the ordinary course of
business on terms no less favorable to the Borrowers and its Subsidiaries than
those that could be obtained at the time of such sale or purchase in
arm's-length dealings with a Person who is not an Affiliate; and

          (j) any agreement in effect as of the Closing Date or any transaction
contemplated thereby and any amendment thereto so long as any such amendment or
replacement agreement is not more disadvantageous to Borrowers or the Restricted
Subsidiaries in any material respect than the original agreement as in effect on
the Closing Date.

     6.14 USE OF PROCEEDS. Use the proceeds of the Term Loans for any purpose
other than (a) on the Closing Date, to refinance the M&T Facility, and to pay
transactional fees, costs, and expenses incurred in connection with this
Agreement, the other Loan Documents, and the transactions contemplated hereby
and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, to finance ongoing working capital, capital expenditure, and general
corporate needs of Borrowers, and for its lawful and permitted purposes.

     6.15 INTENTIONALLY OMITTED.

     6.16 FINANCIAL COVENANTS.

          (a) FIXED CHARGE COVERAGE RATIO. Fail to maintain or achieve a Fixed
Charge Coverage Ratio, measured on a fiscal quarter-end basis, of at least the
required amount set forth in the following table for the "Applicable Period" set
forth opposite thereto:



Applicable Ratio             Applicable Period
- ----------------   -------------------------------------
                
    1.00:1.00             For the 4 quarter period
                           ending March 31, 2007

    1.00:1.00             For the 4 quarter period
                   ending each fiscal quarter thereafter


          (b) CAPITAL EXPENDITURES. Make Capital Expenditures in any fiscal year
in excess of the amount set forth in the following table for the applicable
period:



Applicable Amount                   Applicable Period
- -----------------   ------------------------------------------------
                 
    $9,750,000                      fiscal year 2007
    $5,625,000                      fiscal year 2008
    $6,000,000                      fiscal year 2009
    $6,375,000      fiscal year 2010 and each fiscal year thereafter


provided, however, that up to 75% of the difference between the amount of
Capital Expenditure that may be made in any fiscal year and the amount of
Capital Expenditures actually made in such fiscal year, may be made in the
immediately succeeding fiscal year.


                                       31



     6.17 ACQUISITION DOCUMENTS. Amend, modify or waive in any way materially
adverse to the Lender Group, any term or provision of the Acquisition Documents.

     6.18 INTENTIONALLY OMITTED.

     6.19 GOVERNING DOCUMENTS. Amend, modify or waive in any way materially
adverse to the Lender Group, any term or provision of any Governing Document of
any Borrower or Guarantor.

     6.20 REAL PROPERTY COLLATERAL. Without in any manner limiting Section 6.2,
execute and deliver a mortgage with respect to any Real Property located in the
State of New York or any other Real Property for which Borrowers and their
Restricted Subsidiaries are not required to grant a Mortgage pursuant to Section
5.17, except (a) in favor of Agent or (b) if the Agent has been, or will
simultaneously be, granted a first priority mortgage with respect thereto, in
favor of (i) Wells Fargo Foothill, Inc., in its capacity as agent under the
Altra Senior Credit Agreement, as a second priority mortgage to the extent
permitted by the Intercreditor Agreement and (ii) the Trustee as a third
priority mortgage to the extent permitted by the Intercreditor Agreement.

7.   EVENTS OF DEFAULT.

          Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:

     7.1 If Borrowers fail to pay when due and payable, or when declared due and
payable, (a) all or any portion of the Obligations consisting of interest, fees,
or charges due the Lender Group, reimbursement of Lender Group Expenses, or
other amounts (other than any portion thereof constituting principal)
constituting Obligations (including any portion thereof that accrues after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding), and
such failure continues for a period of 3 Business Days, or (b) all or any
portion of the principal of the Obligations);

     7.2 If any Borrower or any of its Restricted Subsidiaries

          (a) fails to perform or observe any covenant or other agreement
contained in any of Sections 5.5, 5.8, 5.12 (as to existence), and 6.1 through
6.20 of this Agreement or Section 6 of the Security Agreement;

          (b) fails to perform or observe any covenant or other agreement
contained in any of Sections 2.7, 5.2, and 5.3 of this Agreement and such
failure continues for a period of 3 Business Days after written notice thereof
is given to Administrative Borrower by Agent;

          (c) fails to perform or observe any covenant or other agreement
contained in any of Sections 5.6, 5.7, 5.9, 5.15, 5.16, and 5.17 of this
Agreement and such failure continues for a period of 10 Business Days after
written notice thereof is given to Administrative Borrower by Agent; or

          (d) fails to perform or observe any covenant or other agreement
contained in this Agreement, or in any of the other Loan Documents; in each
case, other than any such covenant or agreement that is the subject of another
provision of this Section 7 (in which event such other provision of this Section
7 shall govern), and such failure continues for a period of 20 Business Days
after written notice thereof is given to Administrative Borrower by Agent;

     7.3 If any of any Borrower's or any of its Restricted Subsidiaries' assets
with an individual fair market value of $750,000 or more or assets with an
aggregate fair market value of $2,000,000 or more is


                                       32



attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any third Person and the same is not discharged
before the earlier of 30 days after the date it first arises or 5 days prior to
the date on which such property or asset is subject to forfeiture by such
Borrower or the applicable Restricted Subsidiary;

     7.4 If an Insolvency Proceeding is commenced by any Borrower or any of its
Restricted Subsidiaries;

     7.5 If an Insolvency Proceeding is commenced against any Borrower or any of
its Restricted Subsidiaries, and any of the following events occur: (a) the
applicable Borrower or Restricted Subsidiary consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof, (d) an interim trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate all
or any substantial portion of the business of, any Borrower or any such
Restricted Subsidiary, or (e) an order for relief shall have been issued or
entered therein;

     7.6 If any Borrower or any of its Restricted Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;

     7.7 If one or more judgments, orders, or awards involving an individual
amount of $750,000 or more or an aggregate amount of $2,000,000, or more (except
to the extent fully covered by insurance pursuant to which the insurer has
accepted liability therefor in writing) shall be entered or filed against any
Borrower or any of its Restricted Subsidiaries or with respect to any of their
respective assets, and the same is not released, discharged, bonded against, or
stayed pending appeal before 30 days after the date it first arises;

     7.8 If there is a default in one or more agreements to which any Borrower
or any of its Restricted Subsidiaries is a party with one or more third Persons
relative to Indebtedness of any Borrower or any of its Restricted Subsidiaries
involving an aggregate amount of $2,000,000 or more, and (a) such default (i)
occurs at the final maturity of the obligations thereunder, or (ii) results in a
right by such third Person(s), irrespective of whether exercised, to accelerate
the maturity of the applicable Borrower's or Restricted Subsidiary's obligations
thereunder, or (b) or any such Indebtedness obligations shall be required to be
prepaid or redeemed (other than by a regularly scheduled required prepayment or
redemption), prior to the stated maturity thereof;

     7.9 If any warranty, representation, statement, or Record made herein or in
any other Loan Document or delivered to Agent or any Lender in connection with
this Agreement or any other Loan Document proves to be untrue in any material
respect as of the date of issuance or making or deemed making thereof;

     7.10 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor or any such Guarantor
becomes the subject of an Insolvency Proceeding;

     7.11 If the Security Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby, except as permitted under this Agreement;

     7.12 Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by any Borrower or any of its Restricted Subsidiaries, or a proceeding
shall be commenced by any Borrower or any of its Restricted Subsidiaries, or by
any Governmental Authority having jurisdiction over any Borrower or any of its
Restricted Subsidiaries,


                                       33



seeking to establish the invalidity or unenforceability thereof, or any Borrower
or any of its Restricted Subsidiaries shall deny that it has any liability or
obligation purported to be created under any Loan Document;

     7.13 If any Change of Control shall have occurred;

     7.14 If (a) there shall occur and be continuing any "Event of Default" (or
any comparable term) under, and as defined in any Indenture Document or under
the Altra Senior Credit Agreement, (b) any of the Obligations for any reason
shall cease to be "TB Wood's Credit Agreement Secured Obligations" (or any
comparable terms) under, and as defined in the Intercreditor Agreement, (c) any
Indebtedness other than the Obligations shall constitute "TB Wood's Credit
Agreement Senior Obligations" (or any comparable term) under, and as defined in,
any Intercreditor Agreement or any other document evidencing or governing any
Indebtedness that has been contractually subordinated in right of payment to the
Obligations, except as expressly permitted by this Agreement, (d) any holder of
any Senior Note shall fail to perform or comply with any of the subordination
provisions of the documents evidencing or governing such Indebtedness, or (e)
the subordination provisions of the Intercreditor Agreement shall, in whole or
in part, terminate, cease to be effective or cease to be legally valid, binding
and enforceable against any holder of such Indebtedness; or

     7.15 If there occurs one or more ERISA Events which results in or otherwise
is associated with liability of any Borrower, any of its Restricted
Subsidiaries, or any of their respective ERISA Affiliates in excess of
$2,000,000 in the aggregate during the term of this Agreement.

8.   THE LENDER GROUP'S RIGHTS AND REMEDIES.

     8.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the continuation,
of an Event of Default, the Required Lenders (at their election but without
notice of their election and without demand) may authorize and instruct Agent to
do any one or more of the following on behalf of the Lender Group (and Agent,
acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lender Group), all of which are authorized by Borrowers:

          (a) Declare all or any portion of the Obligations, whether evidenced
by this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;

          (b) Cease or restrict advancing money or extending credit to or for
the benefit of Borrowers under this Agreement, under any of the Loan Documents,
or under any other agreement between Borrowers and the Lender Group;

          (c) Terminate this Agreement and any of the other Loan Documents as to
any future liability or obligation of the Lender Group, but without affecting
any of the Agent's Liens in the Collateral and without affecting the
Obligations; and

          (d) The Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 7.4 or Section 7.5, in addition to the remedies
set forth above, without any notice to Borrowers or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Borrowers.

     8.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all


                                       34



other rights and remedies not inconsistent herewith as provided under the Code,
by law, or in equity. No exercise by the Lender Group of one right or remedy
shall be deemed an election, and no waiver by the Lender Group of any Event of
Default shall be deemed a continuing waiver. No delay by the Lender Group shall
constitute a waiver, election, or acquiescence by it.

9.   TAXES AND EXPENSES.

          If any Borrower or any of its Restricted Subsidiaries fails to pay any
monies (whether taxes, assessments, insurance premiums, or, in the case of
leased properties or assets, rents or other amounts payable under such leases)
due to third Persons, or fails to make any deposits or furnish any required
proof of payment or deposit, all as required under the terms of this Agreement,
then, Agent, in its sole discretion and without prior notice to such Person, may
do any or all of the following: (a) except for payments which are the subject of
a Permitted Protest, make payment of the same or any part thereof, or (b) in the
case of the failure to comply with Section 5.8 hereof, obtain and maintain
insurance policies of the type described in Section 5.8 and take any action with
respect to such policies as Agent deems prudent in its Permitted Discretion. Any
such amounts paid by Agent shall constitute Lender Group Expenses and any such
payments shall not constitute an agreement by the Lender Group to make similar
payments in the future or a waiver by the Lender Group of any Event of Default
under this Agreement. Except in connection with payments made by Agent pursuant
to clause (a) above, Agent need not inquire as to, or contest the validity of,
any such expense, tax, or Lien and the receipt of the usual official notice for
the payment thereof shall be conclusive evidence that the same was validly due
and owing.

10.  WAIVERS; INDEMNIFICATION.

     10.1 DEMAND; PROTEST; ETC. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any Borrower may in any way be liable.

     10.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Each Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.

     10.3 INDEMNIFICATION. Each Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons, and each Participant
(each, an "Indemnified Person") harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, fines, costs, penalties and damages,
and all reasonable fees and disbursements of attorneys, experts and consultants
and other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Borrowers' and their
respective Restricted Subsidiaries' compliance with the terms of the Loan
Documents, (b) with respect to any investigation, litigation, or proceeding
related to this Agreement, any other Loan Document, or the use of the proceeds
of the credit provided hereunder (irrespective of whether any Indemnified Person
is a party thereto), or any act, omission, event, or circumstance in any manner
related thereto, and (c) in connection with or arising out of any presence or
release of Hazardous Materials at, on, under, to or from any assets or
properties owned, leased or operated by any Borrower or any of its Subsidiaries
or any Environmental Actions, Environmental Liabilities and Costs or Remedial
Actions related in any way to any such assets or properties of


                                       35



any Borrower or any of its Subsidiaries (all the foregoing, collectively, the
"Indemnified Liabilities") provided, however, that any claim with respect to
taxes should be governed solely by Section 15.11. The foregoing to the contrary
notwithstanding, Borrowers shall have no obligation to any Indemnified Person
under this Section 10.3 with respect to any Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person. This provision
shall survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.

11.  NOTICES.

          Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Parent, Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:

          If to Parent or Administrative   TB WOOD'S CORPORATION.
          Borrower:
                                           440 North Fifth Street
                                           Chambersburg, PA 17201
                                           Attn: Joseph C. Horvath
                                           Fax No.: 717-264-6420


          with copies to:                  GENSTAR CAPITAL, L.P.

                                           Four Embarcadero Center
                                           Suite 1900
                                           San Francisco, CA 94111
                                           Attn: Darren J. Gold
                                           Fax No.: (415) 834-2383

                                           and


                                           WEIL, GOTSHAL & MANGES LLP
                                           200 Crescent Court, Suite 300
                                           Dallas, Texas 75201
                                           Attn: Angela L. Fontana, Esq.
                                           Fax No.: (214) 746-7777


                                       36



          If to Agent:                     WELLS FARGO FOOTHILL, INC.
                                           One Boston Place
                                           Boston, Massachusetts 02108
                                           Attn: Business Finance Manager
                                           Fax No.: (617) 523-5839


          with copies to:                  MOSES & SINGER LLP
                                           The Chrysler Building
                                           405 Lexington Avenue
                                           New York, New York 10174-1299
                                           Attn: Howard L. Siegel, Esq.
                                           Fax No.: (212) 554-7700

          Agent and Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 11,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail or, where permitted by law, transmitted by telefacsimile or
any other method set forth above.

12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

          (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

          (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE,
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT
THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(B).

          (c) EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH BORROWER AND EACH
MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH


                                       37



LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

13.  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

     13.1 ASSIGNMENTS AND PARTICIPATIONS.

          (a) Any Lender may assign and delegate to one or more assignees (each
an "Assignee") that are Eligible Transferees all, or any ratable part of all, of
the Obligations, the Commitments and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000; provided, however, that Borrowers and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Administrative Borrower and Agent by such Lender
and the Assignee, (ii) such Lender and its Assignee have delivered to
Administrative Borrower and Agent an Assignment and Acceptance, and (iii) the
assigning Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $3,500. Anything contained herein to the
contrary notwithstanding, the payment of any fees shall not be required and the
Assignee need not be an Eligible Transferee if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of the assigning
Lender.

          (b) From and after the date that Agent notifies the assigning Lender
(with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee and
the satisfaction of the other conditions in Section 13.1(a), (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 10.3 hereof) and be released from any future obligations
under this Agreement (and in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement and the other Loan Documents, such Lender shall cease to be
a party hereto and thereto), and such assignment shall effect a novation between
Borrowers and the Assignee; provided, however, that nothing contained herein
shall release any assigning Lender from obligations that survive the termination
of this Agreement, including such assigning Lender's obligations under Article
16 and Section 16.7 of this Agreement.

          (c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (v) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are


                                       38


reasonably incidental thereto, and (vi) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

          (d) Immediately upon Agent's receipt of the required processing fee
payment and the fully executed Assignment and Acceptance and the satisfaction of
the other conditions in Section 13.1(a), this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.

          (e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons (a "Participant") participating
interests in all or any portion of its Obligations, the Commitment, and the
other rights and interests of that Lender (the "Originating Lender") hereunder
and under the other Loan Documents; provided, however, that (i) the Originating
Lender shall remain a "Lender" for all purposes of this Agreement and the other
Loan Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a "Lender" hereunder or under
the other Loan Documents and the Originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no
Originating Lender shall transfer or grant any participating interest under
which the Participant has the right to approve any amendment to, or any consent
or waiver with respect to, this Agreement or any other Loan Document, except to
the extent such amendment to, or consent or waiver with respect to this
Agreement or of any other Loan Document would (A) extend the final maturity date
of the Obligations hereunder in which such Participant is participating, (B)
reduce the interest rate applicable to the Obligations hereunder in which such
Participant is participating, (C) release all or substantially all of the
Collateral or guaranties (except to the extent expressly provided herein or in
any of the Loan Documents) supporting the Obligations hereunder in which such
Participant is participating, (D) postpone the payment of, or reduce the amount
of, the interest or fees payable to such Participant through such Lender, or (E)
change the amount or due dates of scheduled principal repayments or prepayments
or premiums, and (v) all amounts payable by Borrowers hereunder shall be
determined as if such Lender had not sold such participation, except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement. The rights of any Participant
only shall be derivative through the Originating Lender with whom such
Participant participates and no Participant shall have any rights under this
Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, Borrowers, the Collections of Borrowers or their respective
Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.

          (f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may, subject to the provisions of
Section 16.7, disclose all documents and information which it now or hereafter
may have relating to Borrowers and their respective Restricted Subsidiaries and
their respective businesses.

          (g) Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Bank or U.S.
Treasury Regulation 31 CFR Section 203.24, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.


                                       39



          (h) Agent (on behalf of Borrowers) shall maintain, or cause to be
maintained, a register (the "Register") on which it enters the name of a Lender
as the registered owner of each Obligation held by such Lender. Other than in
connection with an assignment by a Lender of all or any portion of its
Commitment to an Affiliate of such Lender (i) a Registered Loan may be assigned
or sold in whole or in part only by registration of such assignment or sale on
the Register and (ii) any assignment or sale of all or part of such Registered
Loan may be effected only by registration of such assignment or sale on the
Register, together with the surrender of any note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such note, if any, whereupon, at the request of
the designated assignee(s) or transferee(s), one or more new notes in the same
aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s). Prior to the registration of assignment or sale of any Registered
Loan, Borrowers shall treat the Person in whose name such Loan is registered as
the owner thereof for the purpose of receiving all payments thereon and for all
other purposes, notwithstanding notice to the contrary. In the case of any
assignment by a Lender of all or any portion of its Commitment to an Affiliate
of such Lender, and which assignment is not recorded in the Register, the
assigning Lender, on behalf of Borrowers, shall maintain a register comparable
to the Register.

          13.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations. A Lender may assign this Agreement
and the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 13.1 hereof and, except as expressly required pursuant to
Section 13.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.

14.  AMENDMENTS; WAIVERS.

     14.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers or any of their respective Restricted Subsidiaries
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and Administrative Borrower (on behalf of all Loan Parties) and then
any such waiver or consent shall be effective, but only in the specific instance
and for the specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all of the
Lenders affected thereby and Administrative Borrower (on behalf of all Loan
Parties), do any of the following:

          (a) increase or extend any Commitment of any Lender,

          (b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,

          (c) reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,

          (d) change the Pro Rata Share that is required to take any action
hereunder,

          (e) amend or modify this Section or any provision of this Agreement
providing for consent or other action by all Lenders,

          (f) other than as permitted by Section 15.12, release Agent's Lien in
and to any of the Collateral,

          (g) change the definition of "Required Lenders" or "Pro Rata Share",


                                       40



          (h) contractually subordinate any of the Agent's Liens,

          (i) release any Borrower or any Guarantor from any obligation for the
payment of money, or

          (j) amend any of the provisions of Section 15.

and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent or Issuing Lender, as applicable, affect
the rights or duties of Agent or Issuing Lender, as applicable, under this
Agreement or any other Loan Document. The foregoing notwithstanding, any
amendment, modification, waiver, consent, termination, or release of, or with
respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.

          14.2 REPLACEMENT OF HOLDOUT LENDER.

          (a) If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders, and
a Lender ("Holdout Lender") fails to give its consent, authorization, or
agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to
the Holdout Lender, may permanently replace the Holdout Lender with one or more
substitute Lenders (each, a "Replacement Lender"), and the Holdout Lender shall
have no right to refuse to be replaced hereunder. Such notice to replace the
Holdout Lender shall specify an effective date for such replacement, which date
shall not be later than 15 Business Days after the date such notice is given.

          (b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 13.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of LC Obligations, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.

     14.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrowers or any of
their respective Restricted Subsidiaries of any provision of this Agreement.
Agent's and each Lender's rights under this Agreement and the other Loan
Documents will be cumulative and not exclusive of any other right or remedy that
Agent or any Lender may have.

15.  AGENT; THE LENDER GROUP.

     15.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby designates
and appoints WFF as its representative under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes Agent to execute and
deliver each of the other Loan Documents on its behalf and to take such other
action on its behalf under the provisions of this Agreement and each other Loan
Document and to


                                       41



exercise such powers and perform such duties as are expressly delegated to Agent
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Agent agrees to act as such on the
express conditions contained in this Section 15. The provisions of this Section
15 (other than the proviso to Section 15.11(a)) are solely for the benefit of
Agent, and the Lenders, and Borrowers and their respective Restricted
Subsidiaries shall have no rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that WFF is
merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with the Loan Documents and its customary
business practices, ledgers and records reflecting the status of the
Obligations, the Collateral, the Collections of Borrowers and their respective
Restricted Subsidiaries, and related matters, (b) execute or file any and all
financing or similar statements or notices, amendments, renewals, supplements,
documents, instruments, proofs of claim, notices and other written agreements
with respect to the Loan Documents, (c) make extensions of credit, for itself or
on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive,
apply, and distribute the Collections of Borrowers and their respective
Restricted Subsidiaries as provided in the Loan Documents, (e) open and maintain
such bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections of Borrowers and their
respective Restricted Subsidiaries, (f) perform, exercise, and enforce any and
all other rights and remedies of the Lender Group with respect to the Loan
Parties, the Obligations, the Collateral, the Collections of Borrowers and their
respective Restricted Subsidiaries, or otherwise related to any of same as
provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses
as Agent may deem necessary or appropriate for the performance and fulfillment
of its functions and powers pursuant to the Loan Documents.

     15.2 DELEGATION OF DUTIES. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

     15.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the books and records or properties of Borrowers or the
books or records or properties of any of Borrowers' Subsidiaries or Affiliates.


                                       42



     15.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrowers or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice of legal counsel and until such advice is received, Agent shall act, or
refrain from acting, as it deems reasonably advisable. If Agent so requests, it
shall first be indemnified to its reasonable satisfaction by the Lenders against
any and all liability and expense that may be incurred by it by reason of taking
or continuing to take any such action. Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the requisite
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.

     15.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 15.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 8; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.

     15.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their respective Subsidiaries or Affiliates, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person party to a Loan Document, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrowers. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers and
any other Person party to a Loan Document. Except for notices, reports, and
other documents expressly herein required to be furnished to the Lenders by
Agent, Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of
Borrowers and any other Person party to a Loan Document that may come into the
possession of any of the Agent-Related Persons.

     15.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and


                                       43



expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to this Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
the Collections of Borrowers and their respective Restricted Subsidiaries
received by Agent to reimburse Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses from the Collections of Borrowers and
their respective Restricted Subsidiaries received by Agent, each Lender hereby
agrees that it is and shall be obligated to pay to or reimburse Agent for the
amount of such Lender's Pro Rata Share thereof. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers
and without limiting the obligation of Borrowers to do so), according to their
Pro Rata Shares, from and against any and all Indemnified Liabilities; provided,
however, that no Lender shall be liable for the payment to any Agent-Related
Person of any portion of such Indemnified Liabilities resulting solely from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse Agent upon demand for such Lender's Pro
Rata Share of any costs or out of pocket expenses (including reasonable
attorneys, accountants, advisors, and consultants fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein or therein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrowers. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.

     15.8 AGENT IN INDIVIDUAL CAPACITY. WFF and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
respective Subsidiaries and Affiliates and any other Person party to any Loan
Documents as though WFF were not Agent hereunder, and, in each case, without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding Borrowers or their respective
Affiliates and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrowers or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver Agent will use its reasonable best
efforts to obtain), Agent shall not be under any obligation to provide such
information to them. The terms "Lender" and "Lenders" include WFF in its
individual capacity.

     15.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 15 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.


                                       44



     15.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their respective Subsidiaries and Affiliates and any other Person
party to any Loan Documents as though such Lender were not a Lender hereunder
without notice to or consent of the other members of the Lender Group. The other
members of the Lender Group acknowledge that, pursuant to such activities, such
Lender and its respective Affiliates may receive information regarding Borrowers
or their Affiliates and any other Person party to any Loan Documents that is
subject to confidentiality obligations in favor of Borrowers or such other
Person and that prohibit the disclosure of such information to the Lenders, and
the Lenders acknowledge that, in such circumstances (and in the absence of a
waiver of such confidentiality obligations, which waiver such Lender will use
its reasonable best efforts to obtain), such Lender shall not be under any
obligation to provide such information to them.

     15.11 WITHHOLDING TAXES.

          (a) All payments made by any Borrower hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense.
In addition, except as provided in this Section, all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future Taxes, and in the event any deduction or withholding of Taxes is
required, each Borrower shall comply with the penultimate sentence of this
Section 15.11(a). "Taxes" shall mean, any taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding (i) any tax imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein measured by or based on the net income, capital, receipts or profits of
any Lender, (ii) franchise or similar taxes, (iii) any non-United States taxes
imposed by the jurisdictions under the laws of which the Lender or Agent, as the
case may be, is organized, conducts business or has a present or former
connection (other than by reason of the transactions contemplated hereby or by
the other Loan Documents), or any political subdivision thereof, in effect on
the Closing Date (or, in the case of (A) an Assignee, the date of the Assignment
and Acceptance, (B) a successor Lender, the date such successor Lender becomes a
Lender hereunder and (C) a successor Agent, the date of the appointment of such
Agent) applicable to such Lender or Agent, as the case may be, but not excluding
any United States withholding tax payable with respect to interest arising under
any Loan Document as a result of any change in such laws occurring after the
Closing Date (or the date of such Assignment and Acceptance, the date such
successor Lender becomes a Lender or the date of the appointment of such Agent),
(iv) any taxes that are attributable to such Lender's or Agent's failure to
comply with the requirements of Section 15.11(b) and (v) all liabilities,
penalties and interest with respect to any of the forgoing excluded taxes) and
all interest, penalties or similar liabilities with respect thereto. If any
Taxes are so levied or imposed, each Borrower agrees to pay the full amount of
such Taxes and such additional amounts as may be necessary so that every payment
of all amounts due under this Agreement, any note, or Loan Document, including
any amount paid pursuant to this Section 15.11(a) after withholding or deduction
for or on account of any Taxes, will not be less than the amount provided for
herein; provided, however, that Borrowers shall not be required to increase any
such amounts if the increase in such amount payable results from Agent's or such
Lender's own willful misconduct or gross negligence (as finally determined by a
court of competent jurisdiction). Each Borrower will furnish to Agent as
promptly as is commercially reasonable after the date the payment of any Tax is
due pursuant to applicable law certified copies of any tax receipts provided by
the taxing authority evidencing such payment by any Borrower.

          (b) (i) Each Lender, Assignee, successor Lender, Agent or successor
Agent that is not a "United States person" within the meaning of Section
7701(a)(30) of the IRC (each, a "Foreign Lender") shall deliver to the
Administrative Borrower and Agent, on or prior to the date which is fifteen (15)
Business Days after the Closing Date (or upon accepting an assignment of an
interest herein), two duly signed, properly completed copies of either IRS Form
W-8BEN or any successor thereto (relating to such Foreign Lender and entitling
it to an exemption from, or reduction of, United States withholding tax on all
payments to be made to such Foreign Lender by a Borrower or any other Loan Party
pursuant to this Agreement or any other Loan


                                       45



Document) or IRS Form W-8ECI or any successor thereto (relating to all payments
to be made to such Foreign Lender by a Borrower or any other Loan Party pursuant
to this Agreement or any other Loan Document) or such other evidence reasonably
satisfactory to Administrative Borrower and Agent that such Foreign Lender is
entitled to an exemption from, or reduction of, United States withholding tax,
including any exemption pursuant to Section 881(c) of the IRC, and in the case
of a Foreign Lender claiming such an exemption under Section 881(c) of the IRC,
a certificate that establishes in writing to the Administrative Borrower and the
Administrative Agent that such Foreign Lender is not (i) a "bank" as defined in
Section 881(c)(3)(A) of the IRC, (ii) a 10-percent shareholder within the
meaning of Section 871(h)(3)(B) of the IRC, or (iii) a Controlled Foreign
Corporation related to a Borrower with the meaning of Section 864(d) of the IRC.
Thereafter and from time to time, each such Foreign Lender shall (A) within a
commercially reasonable period submit to the Administrative Borrower and Agent
such additional duly and properly completed and signed copies of one or more of
such forms or certificates (or such successor forms or certificates as shall be
adopted from time to time by the relevant United States taxing authorities) as
may then be available under then current United States laws and regulations to
avoid, or such evidence as is reasonably satisfactory to the Administrative
Borrower and Agent of any available exemption from, or reduction of, United
States withholding taxes in respect of all payments to be made to such Foreign
Lender by a Borrower or other Loan Party pursuant to this Agreement, or any
other Loan Document, in each case, (1) on or before the date that any such form,
certificate or other evidence expires or becomes obsolete, (2) after the
occurrence of any event requiring a change in the most recent form, certificate
or evidence previously delivered by it to the Administrative Borrower and Agent
and (3) from time to time thereafter if reasonably requested by the
Administrative Borrower or the Administrative Agent, and (B) within a
commercially reasonable period notify the Administrative Borrower and Agent of
any change in circumstances which would modify or render invalid any claimed
exemption or reduction.

               (ii) The Borrowers shall not be required to pay any additional
amount or any indemnity payment to (A) any Foreign Lender with respect to any
taxes required to be deducted or withheld solely on the basis of the
information, certificates or statements of exemption such Lender transmits
pursuant to this Section 15.11(b) or (B) any Lender if such Lender shall have
failed to satisfy the foregoing provisions of this Section 15.11(b).

          (c) If a Lender claims an exemption from withholding tax in a
jurisdiction other than the United States, Lender agrees with and in favor of
Agent and Borrowers, to deliver to Agent any such form or forms, as may be
required under the laws of such jurisdiction as a condition to exemption from,
or reduction of, foreign withholding or backup withholding tax before receiving
its first payment under this Agreement and at any other time reasonably
requested by Agent or Administrative Borrower.

Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.

          (d) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (b)
or (c) of this Section 15.11 are not delivered to Agent, then Agent may withhold
from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.

          (e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender due to a
failure on the part of the Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent, as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section 15.11, together with all costs and expenses (including
attorneys fees and


                                       46



expenses). The obligation of the Lenders under this subsection shall survive the
payment of all Obligations and the resignation or replacement of Agent.

          (f) Each Lender agrees that, upon the occurrence of any event giving
rise to the operation of Section 15.11(a) with respect to such Lender, it will,
if requested by the Administrative Borrower, use reasonable efforts (subject to
overall policy considerations of such Lender) 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 cause such Lender and its lending office(s) to suffer no economic, legal or
regulatory disadvantage, and provided, further, that nothing in this Section
shall affect or postpone any of the obligations of the Borrowers or the rights
of any Lender pursuant to Section 15.11(a). In determining whether designating
another lending office would cause such Lender or its lending office(s) to
suffer economic disadvantage, such Lender shall disregard any economic
disadvantage that the Administrative Borrower agrees, in form and substance
reasonably satisfactory to such Lender, to indemnify and hold such Lender
harmless therefrom. If, after such reasonable efforts by such Lender, such
Lender does not so designate a different one of its lending offices so as to
avoid the consequences of such event, then the Administrative Borrower may, at
its sole expense and effort, upon notice to such Lender and the Agent, require
such Lender to assign and delegate, without recourse, all its interests, rights
and obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment, and which assignee shall be reasonably acceptable to Agent). A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling such Borrower to require such assignment and delegation
cease to apply.

     15.12 COLLATERAL MATTERS.

          (a) The Lenders hereby irrevocably authorize Agent, at its option and
in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrowers
of all non-contingent Obligations, (ii) constituting property being sold or
disposed of if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under Section 6.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which none of any Borrower or any of its
Restricted Subsidiaries owned any interest at the time the Agent's Lien was
granted nor at any time thereafter, or (iv) constituting property leased to a
Borrower or any of its Restricted Subsidiaries under a lease that has expired or
is terminated in a transaction permitted under this Agreement. Except as
provided above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders, or (z)
otherwise, the Required Lenders. Upon request by Agent or Administrative
Borrower at any time, the Lenders will confirm in writing Agent's authority to
release any such Liens on particular types or items of Collateral pursuant to
this Section 15.12; provided, however, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent's opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrowers in respect of) all
interests retained by Borrowers or any of their respective Restricted
Subsidiaries, including, the proceeds of any sale, all of which shall continue
to constitute part of the Collateral.

          (b) Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by Borrowers or any of their
respective Restricted Subsidiaries or is cared for, protected, or insured or has
been encumbered, or that the Agent's Liens have been properly or sufficiently or
lawfully created, perfected, protected, or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent pursuant to any of
the Loan Documents, it


                                       47



being understood and agreed that in respect of the Collateral, or any act,
omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.

     15.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.

          (a) Each of the Lenders agrees that it shall not, without the express
written consent of Agent, set off against the Obligations, any amounts owing by
such Lender to Borrowers or any of their respective Restricted Subsidiaries or
any deposit accounts of Borrowers or any of their respective Restricted
Subsidiaries now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so in
writing by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.

          (b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (A) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (B) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that to the extent that such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.

     15.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver possession or control of such Collateral to Agent or in
accordance with Agent's instructions.

     15.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by Agent to
the Lenders shall be made by bank wire transfer of immediately available funds
pursuant to such wire transfer instructions as each party may designate for
itself by written notice to Agent. Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium, fees, or interest of the Obligations.

     15.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.


                                       48



     15.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS BY
LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to this Agreement,
each Lender:

          (a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by or at the
request of Agent, and Agent shall so furnish each Lender with such Reports,

          (b) expressly agrees and acknowledges that neither the Borrowers nor
the Agent (i) make any representation or warranty as to the accuracy of any
Report, and (ii) shall be liable for any information contained in any Report,

          (c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrowers
and their respective Restricted Subsidiaries and will rely significantly upon
the books and records of Borrowers and their respective Restricted Subsidiaries,
as well as on representations of Borrowers' and their respective Restricted
Subsidiaries' personnel,

          (d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their respective Restricted Subsidiaries and
their operations, assets, and existing and contemplated business plans in a
confidential manner in accordance with Section 16.7, and

          (e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or fail to take or any conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrowers, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.

In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers and their respective Restricted Subsidiaries to
Agent that has not been contemporaneously provided by Borrowers and their
respective Restricted Subsidiaries to such Lender, and, upon receipt of such
request, Agent promptly shall provide a copy of same to such Lender, (y) to the
extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from Borrowers and their respective
Restricted Subsidiaries, any Lender may, from time to time, reasonably request
Agent to exercise such right as specified in such Lender's notice to Agent,
whereupon Agent promptly shall request of the applicable Person the additional
reports or information reasonably specified by such Lender, and, upon receipt
thereof from the applicable Person, Agent promptly shall provide a copy of same
to such Lender, and (z) any time that Agent renders to Administrative Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.

     15.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their Commitments. Nothing
contained herein shall confer upon any Lender any interest in, or subject any
Lender to any liability for, or in respect of, the business, assets, profits,
losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its


                                       49



Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender. Except as provided in Section
15.7, no member of the Lender Group shall have any liability for the acts of any
other member of the Lender Group. No Lender shall be responsible to any Borrower
or any other Person for any failure by any other Lender to fulfill its
obligations to make credit available hereunder, nor to advance for it or on its
behalf in connection with its Commitment, nor to take any other action on its
behalf hereunder or in connection with the financing contemplated herein.

16.  GENERAL PROVISIONS.

     16.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
when executed by each Borrower, Agent, and each Lender whose signature is
provided for on the signature pages hereof.

     16.2 SECTION HEADINGS. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

     16.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrowers,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.

     16.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

     16.5 COUNTERPARTS; ELECTRONIC EXECUTION. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.

     16.6 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or payment
of the Obligations by any Borrower or any Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or such Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.

     16.7 CONFIDENTIALITY. Agent and Lenders each individually (and not jointly
or jointly and severally) agree that material, non-public information regarding
Borrowers and their respective Subsidiaries, their operations, assets, and
existing and contemplated business plans shall be treated by Agent and the


                                       50



Lenders in a confidential manner, and shall not be disclosed by Agent and the
Lenders to Persons who are not parties to this Agreement, except: (a) to
attorneys for and other advisors, accountants, auditors, and consultants to any
member of the Lender Group for matters in connection with this Agreement, (b) to
Subsidiaries and Affiliates of any member of the Lender Group, provided that any
such Subsidiary or Affiliate shall have agreed to receive such information
hereunder subject to the terms of this Section 16.7, (c) as may be required by
statute, decision, or judicial or administrative order, rule, or regulation, (d)
as may be agreed to in advance by Parent or Administrative Borrower or its
Subsidiaries or as requested or required by any Governmental Authority pursuant
to any subpoena or other legal process, (e) as to any such information that is
or becomes generally available to the public (other than as a result of
prohibited disclosure by Agent or the Lenders or their respective Affiliates and
Subsidiaries), (f) in connection with any assignment, prospective assignment,
sale, prospective sale, participation or prospective participations, or pledge
or prospective pledge of any Lender's interest under this Agreement, provided
that any such assignee, prospective assignee, purchaser, prospective purchaser,
participant, prospective participant, pledgee, or prospective pledgee shall have
agreed in writing to receive such information hereunder and keep it confidential
subject to the terms of this Section, and (g) in connection with any litigation
or other adversary proceeding involving parties hereto which such litigation or
adversary proceeding involves claims related to the rights or duties of such
parties under this Agreement or the other Loan Documents. The provisions of this
Section 16.7 shall survive for 2 years after the payment in full of the
Obligations.

     16.8 INTEGRATION. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

     16.9 TB WOOD'S CORPORATION AS AGENT FOR BORROWERS. Each Borrower hereby
irrevocably appoints TB Wood's Corporation as the borrowing agent and
attorney-in-fact for all Borrowers (the "Administrative Borrower") which
appointment shall remain in full force and effect unless and until Agent shall
have received prior written notice signed by each Borrower that such appointment
has been revoked and that another Loan Party has been appointed Administrative
Borrower. Each Borrower hereby irrevocably appoints and authorizes the
Administrative Borrower (a) to provide Agent with all notices with respect to
Term Loans and Letters of Credit obtained for the benefit of any Borrower and
all other notices and instructions under this Agreement and (b) to take such
action as the Administrative Borrower deems appropriate on its behalf to obtain
Term Loans and Letters of Credit and to exercise such other powers as are
reasonably necessary to carry out the purposes of this Agreement. It is
understood that the handling of the Loan Account and Collateral in a combined
fashion, as more fully set forth herein, is done solely as an accommodation to
Borrowers in order to utilize the collective borrowing powers of Borrowers in
the most efficient and economical manner and at their request, and that Lender
Group shall not incur liability to any Borrower as a result hereof. Each
Borrower expects to derive benefit, directly or indirectly, from the handling of
the Loan Account and the Collateral in a combined fashion since the successful
operation of each Borrower is dependent on the continued successful performance
of the integrated group. To induce the Lender Group to do so, and in
consideration thereof, each Borrower hereby jointly and severally agrees to
indemnify each member of the Lender Group and hold each member of the Lender
Group harmless against any and all liability, expense, loss or claim of damage
or injury, made against the Lender Group by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the Loan
Account and Collateral as herein provided, (b) the Lender Group's relying on any
instructions of the Administrative Borrower, or (c) any other action taken by
the Lender Group hereunder or under the other Loan Documents, except that
Borrowers will have no liability to the relevant Agent-Related Person or
Lender-Related Person under this Section 16.9 with respect to any liability that
has been finally determined by a court of competent jurisdiction to have
resulted solely from the gross negligence or willful misconduct of such
Agent-Related Person or Lender-Related Person, as the case may be.

                          [Signature pages to follow.]


                                       51



          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.

                                        TB WOOD'S CORPORATION,
                                        a Delaware corporation, as Parent and
                                        a Borrower


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------


                                        TB WOOD'S INCORPORATED,
                                        a Pennsylvania corporation, as a
                                        Borrower


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------


                                        PLANT ENGINEERING CONSULTANTS, LLC,
                                        a Tennessee limited liability company,
                                        as a Borrower


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: Treasurer and Secretary
                                               ---------------------------------


                                        TB WOOD'S ENTERPRISES, INC.,
                                        a Delaware corporation, as a Borrower


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: President and Treasurer
                                               ---------------------------------

                      [SIGNATURE PAGE OF CREDIT AGREEMENT]



                                        WELLS FARGO FOOTHILL, INC.,
                                        a California corporation, as Agent and
                                        as a Lender


                                        By: /s/ Vincent J. Egan, Jr.
                                            ------------------------------------
                                        Name: Vincent J. Egan, Jr.
                                              ----------------------------------
                                        Title: VP
                                               ---------------------------------

                      [SIGNATURE PAGE OF CREDIT AGREEMENT]


                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
1.  DEFINITIONS AND CONSTRUCTION.........................................     1
    1.1   Definitions....................................................     1
    1.2   Accounting Terms...............................................     2
    1.3   Code...........................................................     2
    1.4   Construction...................................................     2
    1.5   Schedules and Exhibits.........................................     2

2.  LOAN AND TERMS OF PAYMENT............................................     2
    2.1   Intentionally Omitted..........................................     2
    2.2   Term Loans.....................................................     2
    2.3   Borrowing Procedures...........................................     3
    2.4   Payments.......................................................     3
    2.5   Intentionally Omitted..........................................     6
    2.6   Interest Rates and Letter of Credit Fee: Rates, Payments,
          and Calculations...............................................     6
    2.7   Cash Management................................................     7
    2.8   Crediting Payments.............................................     8
    2.9   Designated Account.............................................     8
    2.10  Maintenance of Loan Account; Statements of Obligations.........     8
    2.11  Fees...........................................................     8
    2.12  Letters of Credit..............................................     9
    2.13  LIBOR Option...................................................    11
    2.14  Capital Requirements...........................................    12
    2.15  Joint and Several Liability of Borrowers.......................    13

3.  CONDITIONS; TERM OF AGREEMENT........................................    15
    3.1   Conditions Precedent to the Initial Extension of Credit........    15
    3.2   Intentionally Omitted..........................................    15
    3.3   Term...........................................................    15
    3.4   Effect of Termination..........................................    15
    3.5   Early Termination by Borrowers.................................    16
    3.6   Conditions Subsequent to the Initial Extension of Credit.......    16

4.  REPRESENTATIONS AND WARRANTIES.......................................    17
    4.1   No Encumbrances................................................    17
    4.2   Eligible Accounts..............................................    17
    4.3   Eligible Inventory.............................................    17



                                       -i-



                                TABLE OF CONTENTS
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
    4.4   Equipment......................................................    17
    4.5   Location of Inventory and Equipment............................    17
    4.6   Inventory Records..............................................    17
    4.7   State of Incorporation; Location of Chief Executive Office;
          Organizational Identification Number; Commercial Tort Claims...    17
    4.8   Due Organization and Qualification; Restricted Subsidiaries....    18
    4.9   Due Authorization; No Conflict.................................    18
    4.10  Litigation.....................................................    20
    4.11  No Material Adverse Change.....................................    20
    4.12  Fraudulent Transfer............................................    20
    4.13  Employee Compliance............................................    20
    4.14  Environmental Condition........................................    21
    4.15  Intellectual Property..........................................    21
    4.16  Leases.........................................................    21
    4.17  Deposit Accounts and Securities Accounts.......................    21
    4.18  Complete Disclosure............................................    21
    4.19  Indebtedness...................................................    22
    4.20  Material Contracts.............................................    22

5.  AFFIRMATIVE COVENANTS................................................    22
    5.1   Accounting System..............................................    22
    5.2   Collateral Reporting...........................................    22
    5.3   Financial Statements, Reports, Certificates....................    22
    5.4   Intentionally Omitted..........................................    22
    5.5   Inspection.....................................................    22
    5.6   Maintenance of Properties......................................    23
    5.7   Taxes..........................................................    23
    5.8   Insurance......................................................    23
    5.9   Location of Inventory and Equipment............................    24
    5.10  Compliance with Laws...........................................    24
    5.11  Leases.........................................................    24
    5.12  Existence......................................................    24
    5.13  Environmental..................................................    24
    5.14  Intentionally Omitted..........................................    25



                                      -ii-



                                TABLE OF CONTENTS
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
    5.15  Control Agreements.............................................    25
    5.16  Formation of Subsidiaries......................................    25
    5.17  Real Property..................................................    25
    5.18  ERISA Compliance...............................................    26
    5.19  Payment of Senior Subordinated Notes...........................    26

6.  NEGATIVE COVENANTS...................................................    27
    6.1   Indebtedness...................................................    27
    6.2   Liens..........................................................    28
    6.3   Restrictions on Fundamental Changes............................    28
    6.4   Disposal of Assets.............................................    29
    6.5   Change Name....................................................    29
    6.6   Nature of Business.............................................    29
    6.7   Prepayments and Amendments.....................................    29
    6.8   Intentionally Omitted..........................................    29
    6.9   Intentionally Omitted..........................................    29
    6.10  Intentionally Omitted..........................................    29
    6.11  Fiscal Year....................................................    29
    6.12  Investments....................................................    29
    6.13  Transactions with Affiliates...................................    30
    6.14  Use of Proceeds................................................    30
    6.15  Intentionally Omitted..........................................    31
    6.16  Financial Covenants............................................    31
    6.17  Acquisition Documents..........................................    31
    6.18  Intentionally omitted..........................................    31
    6.19  Governing Documents............................................    31
    6.20  Real Property Collateral.......................................    31

7.  EVENTS OF DEFAULT....................................................    32

8.  THE LENDER GROUP'S RIGHTS AND REMEDIES...............................    34
    8.1   Rights and Remedies............................................    34
    8.2   Remedies Cumulative............................................    34

9.  TAXES AND EXPENSES...................................................    34

10. WAIVERS; INDEMNIFICATION.............................................    35
    10.1  Demand; Protest; etc...........................................    35



                                      -iii-



                                TABLE OF CONTENTS
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
    10.2  The Lender Group's Liability for Collateral....................    35
    10.3  Indemnification................................................    35

11. NOTICES..............................................................    36

12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER...........................    37

13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS...........................    37
    13.1  Assignments and Participations.................................    37
    13.2  Successors.....................................................    39

14. AMENDMENTS; WAIVERS..................................................    40
    14.1  Amendments and Waivers.........................................    40
    14.2  Replacement of Holdout Lender..................................    40
    14.3  No Waivers; Cumulative Remedies................................    41

15. AGENT; THE LENDER GROUP..............................................    41
    15.1  Appointment and Authorization of Agent.........................    41
    15.2  Delegation of Duties...........................................    42
    15.3  Liability of Agent.............................................    42
    15.4  Reliance by Agent..............................................    42
    15.5  Notice of Default or Event of Default..........................    42
    15.6  Credit Decision................................................    43
    15.7  Costs and Expenses; Indemnification............................    43
    15.8  Agent in Individual Capacity...................................    44
    15.9  Successor Agent................................................    44
    15.10 Lender in Individual Capacity..................................    44
    15.11 Withholding Taxes..............................................    44
    15.12 Collateral Matters.............................................    47
    15.13 Restrictions on Actions by Lenders; Sharing of Payments........    47
    15.14 Agency for Perfection..........................................    48
    15.15 Payments by Agent to the Lenders...............................    48
    15.16 Concerning the Collateral and Related Loan Documents...........    48
    15.17 Field Audits and Examination Reports; Confidentiality;
          Disclaimers by Lenders; Other Reports and Information..........    48
    15.18 Several Obligations; No Liability..............................    49

16. GENERAL PROVISIONS...................................................    49
    16.1  Effectiveness..................................................    49



                                      -iv-



                                TABLE OF CONTENTS
                                   (continued)



                                                                            Page
                                                                            ----
                                                                         
    16.2  Section Headings...............................................    49
    16.3  Interpretation.................................................    49
    16.4  Severability of Provisions.....................................    50
    16.5  Counterparts; Electronic Execution.............................    50
    16.6  Revival and Reinstatement of Obligations.......................    50
    16.7  Confidentiality................................................    50
    16.8  Integration....................................................    51
    16.9  TB Wood's Corporation as Agent for Borrowers...................    51



                                       -v-



                             EXHIBITS AND SCHEDULES

Exhibit A-1        Form of Assignment and Acceptance
Exhibit B-1        Form of Borrowing Base Certificate
Exhibit C-1        Form of Compliance Certificate
Exhibit L-1        Form of LIBOR Notice

Schedule A-1       Agent's Account
Schedule C-1       Commitments
Schedule D-1       Designated Account
Schedule P-1       Permitted Liens
Schedule P-2       Permitted Investments
Schedule R-1       Real Property Collateral
Schedule 1.1       Definitions
Schedule 2.7(a)    Cash Management Banks
Schedule 2.12      Existing Letters of Credit
Schedule 3.1       Conditions Precedent
Schedule 4.5(a)    Inventory and Equipment Stored with Bailees or Warehousemen
Schedule 4.5(b)    Locations of Inventory and Equipment
Schedule 4.7(a)    States of Organization
Schedule 4.7(b)    Chief Executive Offices
Schedule 4.7(c)    Organizational Identification Numbers
Schedule 4.7(d)    Commercial Tort Claims
Schedule 4.8(b)    Capitalization of Borrowers
Schedule 4.8(c)    Capitalization of Borrowers' Restricted Subsidiaries
Schedule 4.10      Litigation
Schedule 4.13(a)   ERISA Plans
Schedule 4.14      Environmental Matters
Schedule 4.17      Deposit Accounts and Securities Accounts
Schedule 4.19      Permitted Indebtedness
Schedule 5.2       Collateral Reporting
Schedule 5.3       Financial Statements, Reports, Certificates



                                  SCHEDULE 1.1

As used in the Agreement, the following terms shall have the following
definitions:

          "Account" means an account (as that term is defined in the Code).

          "Account Debtor" means any Person who is obligated on an Account,
chattel paper, or a general intangible.

          "Acquisition Documents" means the Merger Agreement and the other
documents, instruments and agreements executed and delivered in connection with
the Acquisition Transactions, or otherwise relating thereto.

          "Acquisition Transactions" means the transactions contemplated by the
Tender Offer and the Merger Agreement.

          "Additional Notes" has the meaning specified therefor in the recitals
to the Agreement.

          "Administrative Borrower" has the meaning specified therefor in
Section 16.9.

          "Affiliate" means, as applied to any Person, any other Person who
controls, is controlled by, or is under common control with, such Person. For
purposes of this definition, "control" means the possession, directly or
indirectly through one or more intermediaries, of the power to direct the
management and policies of a Person, whether through the ownership of Stock, by
contract, or otherwise; provided, however, that, for purposes of the definition
of Eligible Accounts and Section 6.13 hereof: (a) any Person which owns directly
or indirectly 10% or more of the Stock having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed an Affiliate of such
Person, (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such Person, and (c) each partnership or joint venture in
which a Person is a general partner or joint venturer shall be deemed an
Affiliate of such Person.

          "Agent" has the meaning specified therefor in the preamble to the
Agreement.

          "Agent-Related Persons" means Agent, together with its Affiliates,
officers, directors, employees, attorneys, and agents.

          "Agent's Account" means the Deposit Account of Agent identified on
Schedule A-1.

          "Agent's Liens" means the Liens granted by Borrowers and their
respective Restricted Subsidiaries to Agent under the Loan Documents.

          "Agreement" means the Credit Agreement to which this Schedule 1.1 is
attached.

          "Altra Holdings" has the meaning specified therefor in the recitals to
the Agreement.

          "Altra Industrial" has the meaning specified therefor in the recitals
to the Agreement.

          "Altra Senior Credit Agreement" means that certain Credit Agreement
dated as of November 30, 2004 among Altra Industrial, the Subsidiaries of Altra
Industrial party thereto, Wells



Fargo Foothill, Inc., as agent, and the lenders party thereto, as the same may
be amended, restated, supplemented or modified from time to time.

          "Applicable Prepayment Premium" has the meaning specified therefore in
the Fee Letter.

          "Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business, consistent with past practice), assignment or other transfer of:

          (a) any Stock of any Borrower or any of its Restricted Subsidiaries;
or

          (b) any other property or assets of any Borrower or any of its
Restricted Subsidiaries other than in the ordinary course of business,
consistent with past practice;

          provided, that Asset Sales shall not include:

          (1) a transaction or series of related transactions for which the
applicable Loan Party received aggregate consideration of less than $2,500,000;

          (2) a transaction included in the definition of Permitted Investment;

          (3) the sale of Cash Equivalents;

          (4) the creation of a Permitted Lien (but not the sale or other
disposition of the property subject to such Lien); and

          (5) a transfer from a Loan Party to another Loan Party.

          "Assignee" has the meaning specified therefor in Section 13.1(a).

          "Assignment and Acceptance" means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.

          "Authorized Person" means any officer or employee of Administrative
Borrower.

          "Bankruptcy Code" means title 11 of the United States Code, as in
effect from time to time.

          "Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/100%), to be the rate at which Dollar deposits (for delivery on the
first day of the requested Interest Period) are offered to major banks in the
London interbank market 2 Business Days prior to the commencement of the
requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a
conversion of a Base Rate Loan to a LIBOR Rate Loan) by Administrative Borrower
in accordance with the Agreement, which determination shall be conclusive in the
absence of manifest error.

          "Base Rate" means, the rate of interest announced, from time to time,
within Wells Fargo at its principal office in San Francisco as its "prime rate",
with the understanding that the "prime rate" is one of Wells Fargo's base rates
(not necessarily the lowest of such rates) and serves as


                                        2



the basis upon which effective rates of interest are calculated for those loans
making reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Wells Fargo may designate.

          "Base Rate Loan" means the portion of the Obligations that bears
interest at a rate determined by reference to the Base Rate.

          "Base Rate Margin" means 0.25 percentage points.

          "Board of Directors" means the board of directors (or comparable
managers or other equivalents) of any Borrower or any of its Restricted
Subsidiaries or any committee thereof duly authorized to act on behalf of the
board of directors (or comparable managers or other equivalents).

          "Borrower" and "Borrowers" have the respective meanings specified
therefor in the preamble to the Agreement.

          "Borrowing Base" means, as of any date of determination, the result
of:

          (a) 85% of the amount of Eligible Accounts, less the amount, if any,
of the Dilution Reserve, plus

          (b) 65% of the net book value of Eligible Inventory, plus

          (c) 50% of the Eligible Equipment Book Value.

          "Borrowing Base Certificate" means a certificate in the form of
Exhibit B-1.

          "Business Day" means any day that is not a Saturday, Sunday, or other
day on which banks are authorized or required to close in the state of New York,
except that, if a determination of a Business Day shall relate to a LIBOR Rate
Loan, the term "Business Day" also shall exclude any day on which banks are
closed for dealings in Dollar deposits in the London interbank market.

          "Capital Expenditures" means, with respect to any Person for any
period, the aggregate of all expenditures by such Person and its Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed.

          "Capitalized Lease Obligation" means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.

          "Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

          "Cash Disposition Instruction" has the meaning specified therefor in
Section 2.7(b).

          "Cash Equivalents" means (a) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of


                                        3



creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States, any state
thereof or the District of Columbia or the United States branch of a foreign
bank having at the date of acquisition thereof combined capital and surplus of
not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that satisfies the criteria described in clause (d) above, or (ii) any other
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, (f)
repurchase obligations of any commercial bank satisfying the requirements of
clause (d) of this definition or recognized securities dealer having combined
capital and surplus of net less than $250,000,000, provided that such repurchase
obligations have a term of not more than seven (7) days and are securities that
otherwise satisfy the criteria in clause (a) or (d) above, and (g) Investments
in money market funds substantially all of whose assets are invested in the
types of assets described in clauses (a) through (f) above.

          "Cash Management Account" has the meaning specified therefor in
Section 2.7(a).

          "Cash Management Agreements" means those certain cash management
agreements, in form and substance reasonably satisfactory to Agent, each of
which is among a Borrower or one of its Restricted Subsidiaries, Agent, and one
of the Cash Management Banks.

          "Cash Management Bank" has the meaning specified therefor in Section
2.7(a).

          "Cash Sweep Instruction" has the meaning specified therefor in Section
2.7(b).

          "Change of Control" means that (a) after consummation of the Merger,
Altra Industrial fails to own or control, directly or indirectly, 100% of the
Stock of Parent having the right to vote for the election of members of the
Board of Directors thereof or (b) except for transactions permitted under
Section 6.3 or Section 6.4, any Borrower fails to own or control, directly or
indirectly, 100% of the Stock of each of its Subsidiaries that are Borrowers or
Restricted Subsidiaries (after giving effect to the Acquisition Transactions)
having the right to vote for the election of members of the Board of Directors
thereof.

          "Closing Date" means the date of the making of the Term Loans
hereunder or the date on which Agent sends Administrative Borrower a written
notice that each of the conditions precedent set forth in Section 3.1 either
have been satisfied or have been waived.

          "Code" means the New York Uniform Commercial Code, as in effect from
time to time.

          "Collateral" means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by Borrowers or any of their respective
Restricted Subsidiaries in or upon which a Lien is granted under any of the Loan
Documents.

          "Collateral Access Agreement" means a landlord waiver, bailee letter,
or acknowledgement agreement of any lessor, warehouseman, processor, consignee,
or other Person in possession of, having a Lien upon, or having rights or
interests in Borrower's or any of their respective Restricted Subsidiaries'
books and records, Equipment or Inventory, in each case, in form and substance
reasonably satisfactory to Agent.

          "Collateral Cushion" means, as of any date of determination, the
excess, if any, of (a) Borrowing Base over (b) the sum of (i) the aggregate
outstanding principal balance of the Term Loans


                                        4



on such date, plus (ii) the aggregate outstanding principal balance of the LC
Obligations on such date, plus (iii) the Letter of Credit Usage on such date.

          "Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).

          "Commitment" means, with respect to each Lender, its Commitment, and,
with respect to all Lenders, their Commitments, in each case as such Dollar
amounts are set forth beside such Lender's name under the applicable heading on
Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder, as such amounts may be reduced or increased from time
to time pursuant to assignments made in accordance with the provisions of
Section 13.1.

          "Compliance Certificate" means a certificate substantially in the form
of Exhibit C-1 delivered by the chief financial officer, controller, treasurer,
vice president of finance or another officer performing comparable duties to
those typically granted to any of the foregoing of Parent to Agent.

          "Consolidated EBITDA" means, with respect to any fiscal period, the
sum (without duplication) of:

          (a) Consolidated Net Income; and

          (b) to the extent Consolidated Net Income has been reduced thereby:

               (i) all income taxes paid or accrued in accordance with GAAP for
               such period;

               (ii) Interest Expense and interest attributable to write-offs of
               deferred financing costs;

               (iii) non-cash non-recurring charges;

               (iv) cash non-recurring charges in an aggregate amount not to
               exceed $1,000,000 in any fiscal year; and

               (v) Consolidated Non-cash Charges less any non-cash items
               increasing Consolidated Net Income for such period;

          all as determined on a consolidated basis in accordance with GAAP.

          "Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of Parent and its Subsidiaries for such period on a
consolidated basis, determined in accordance with GAAP; provided, that there
shall be excluded therefrom (to the extent otherwise included therein):

          (a) gains from Asset Sales and extraordinary gains, in each case
together with any provision for taxes on such gains;

          (b) the net income (but not loss) of any Subsidiary of Parent to the
extent that the declaration of dividends or similar distributions by that
Subsidiary of that income is restricted by contract, operation of law or
otherwise;


                                        5



          (c) the net income (but not loss) of any Person, other than a Borrower
or a Restricted Subsidiary of any Borrower, except to the extent of cash
dividends or distributions paid to any Borrower or any of its Restricted
Subsidiaries by such Person;

          (d) any restoration to income of any material contingency reserve,
except to the extent that provision for such reserve was made out of
Consolidated Net Income accrued at any time following the Closing Date;

          (e) income or loss attributable to discontinued operations (including
without limitation, operations disposed of during such period whether or not
such operations were classified or discontinued);

          (f) all gains realized on or because of the purchase or other
acquisition by any Borrower, or any of their respective Restricted Subsidiaries
of any securities of such Person or any of its Restricted Subsidiaries;

          (g) the cumulative effect of a change in accounting principles; and

          (h) in the case of a successor to Parent by consolidation or merger or
as a transferee of the Parent's assets, any earnings of the successor
corporation prior to such consolidations, merger or transfer of assets.

          "Consolidated Non-cash Charges" mean, with respect to any Person, for
any period, the aggregate depreciation, amortization and other non-cash items
and expenses of such Person and its consolidated Subsidiaries to the extent they
reduce Consolidated Net Income of such Person for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge that requires an
accrual of or a reserve for cash charges for any future period).

          "Control Agreement" means a control agreement, in form and substance
reasonably satisfactory to Agent, executed and delivered by a Borrower or one of
their respective Restricted Subsidiaries, Agent, and the applicable securities
intermediary (with respect to a Securities Account) or bank (with respect to a
Deposit Account).

          "Controlled Foreign Corporation" means "controlled foreign
corporation" as defined in the IRC.

          "Copyright Security Agreement" has the meaning specified therefor in
the Security Agreement.

          "Daily Balance" means, as of any date of determination and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.

          "Default" means an event, condition, or default that, with the giving
of notice, the passage of time, or both, would be an Event of Default.

          "Defaulting Lender" means any Lender that fails to make any extension
of credit that it is required to make hereunder on the date that it is required
to do so hereunder.

          "Defaulting Lender Rate" means (a) for the first 3 days from and after
the date the relevant payment is due, the Base Rate, and (b) thereafter, the
interest rate then applicable to Base Rate Loans (inclusive of the Base Rate
Margin applicable thereto).


                                        6



          "Deposit Account" means any deposit account (as that term is defined
in the Code).

          "Designated Account" means the Deposit Account of Administrative
Borrower identified on Schedule D-1.

          "Designated Account Bank" has the meaning specified therefor in
Schedule D-1.

          "Dilution" means, as of any date of determination, a percentage, based
upon the experience of the immediately prior 180 consecutive days, that is the
result of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to
Borrowers' Accounts during such period, by (b) Borrowers' billings with respect
to Accounts during such period.

          "Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by 1 percentage
point for each percentage point by which Dilution is in excess of 5.0%.

          "Disposition" has the meaning specified therefor in Section 6.4.

          "Dollars" or "$" means United States dollars.

          "EBITDA" means, with respect to any fiscal period and any Person, such
Person's and its Subsidiaries' consolidated net earnings (or loss), minus
extraordinary gains and interest income, plus interest expense, income taxes,
and depreciation and amortization for such period, in each case, as determined
in accordance with GAAP.

          "Eligible Accounts" means those Accounts created by a Borrower in the
ordinary course of its business, that arise out of its sale of goods or
rendition of services, and that are not excluded as ineligible by virtue of one
or more of the excluding criteria set forth below; provided, however, that such
criteria may be revised from time to time by Agent in Agent's Permitted
Discretion to address the results of any audit performed by Agent from time to
time after the Closing Date; provided, further, however, that Agent shall use
commercially reasonable efforts to notify Administrative Borrower at or before
the time such eligibility criteria are revised. In determining the amount to be
included, Eligible Accounts shall be calculated net of customer deposits and
unapplied cash. Eligible Accounts shall not include the following:

          (a) Accounts that the Account Debtor (i) has failed to pay within 90
days (or, with respect to Accounts with selling terms of more than 60 days, 105
days) after the original invoice date, (ii) are more than 60 days after the due
date, or (iii) Accounts with selling terms of more than 120 days,

          (b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,

          (c) Accounts with respect to which the Account Debtor is an Affiliate
of any Borrower or an employee or agent of any Borrower or any Affiliate of any
Borrower,

          (d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,

          (e) Accounts that are not payable in Dollars,


                                        7



          (f) Accounts with respect to which the Account Debtor either (i) does
not maintain its chief executive office in the United States, or (ii) is not
organized under the laws of the United States or any state thereof, or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(x) the Account is supported by an irrevocable letter of credit reasonably
satisfactory to Agent (as to form, substance, and issuer or domestic confirming
bank) that has been delivered to Agent and is directly drawable by Agent, or (y)
the Account is covered by credit insurance in form, substance, and amount, and
by an insurer, reasonably satisfactory to Agent,

          (g) Accounts with respect to which the Account Debtor is the United
States or any department, agency, or instrumentality of the United States or any
state of the United States (exclusive, however, of Accounts with respect to
which the applicable Borrower has complied, to the reasonable satisfaction of
Agent, with the Assignment of Claims Act, 31 USC Section 3727, or any similar
state or local law, if applicable),

          (h) Accounts with respect to which the Account Debtor claims a credit
from any Borrower, has or has asserted a right of setoff, or has disputed its
obligation to pay all or any portion of the Account, to the extent of such
claim, right of setoff, or dispute,

          (i) Accounts with respect to an Account Debtor whose total obligations
owing to Borrowers exceed 10% (such percentage, as applied to a particular
Account Debtor, being subject to reduction by Agent in its Permitted Discretion
if the creditworthiness of such Account Debtor deteriorates) of all Eligible
Accounts, to the extent of the obligations owing by such Account Debtor in
excess of such percentage; provided, however, that as to the following Account
Debtor, a percentage limitation of 20% (in lieu of 10%) shall apply for purposes
hereof: Motion Industries; provided, further, however, that, in each case, the
amount of Eligible Accounts that are excluded because they exceed the foregoing
percentage shall be determined by Agent based on all of the otherwise Eligible
Accounts prior to giving effect to any eliminations based upon the foregoing
concentration limit,

          (j) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, or as to which a Borrower has received
written notice of an imminent Insolvency Proceeding of such Account Debtor,

          (k) Accounts with respect to which the Account Debtor is located in a
state or jurisdiction (e.g., New Jersey, Minnesota, and West Virginia) that
requires, as a condition to access to the courts of such jurisdiction, that a
creditor qualify to transact business, file a business activities report or
other report or form, or take one or more other actions, unless the applicable
Borrower has so qualified, filed such reports or forms, or taken such actions
(and, in each case, paid any required fees or other charges), except to the
extent that the applicable Borrower may qualify subsequently as a foreign entity
authorized to transact business in such state or jurisdiction and gain access to
such courts, without incurring any cost or penalty viewed by Agent, in its
Permitted Discretion, to be significant in amount, and such later qualification
cures any access to such courts to enforce payment of such Account,

          (l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,

          (m) Accounts that are not subject to a valid and perfected first
priority Agent's Lien,


                                        8



          (n) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or

          (o) Accounts that represent the right to receive progress payments or
other advance billings that are due prior to the completion of performance by
the applicable Borrower of the subject contract for goods or services.

          "Eligible Equipment" means the Equipment of Borrowers located at the
locations identified on Schedules 4.5(a) and 4.5(b) hereto, as such schedules
may be amended or supplemented from time to time in accordance with the
Agreement.

          "Eligible Equipment Book Value" means the net book value of the
Eligible Equipment, such value to be as determined from time to time by a
qualified appraisal company selected by Agent, net of all related costs and
expenses.

          "Eligible Finished Goods Inventory" means Inventory of Borrowers
consisting of first quality finished goods held for sale in the ordinary course
of Borrowers' business and that is not excluded as ineligible by virtue of one
or more of the excluding criteria set forth below; provided, however, that such
criteria may be revised from time to time by Agent in Agent's Permitted
Discretion to address the results of any audit or appraisal performed by Agent
from time to time after the Closing Date; provided, further, however, that Agent
shall use commercially reasonable efforts to notify Administrative Borrower at
or before the time such eligibility criteria are revised. In determining the
amount to be so included, Inventory shall be valued (unless otherwise agreed to
by Agent in its sole discretion) at the lower of cost computed on a first-in
first-out basis in accordance with GAAP or market value on a basis consistent
with Borrowers' historical accounting practices. An item of Inventory shall not
be included in Eligible Finished Goods Inventory if:

          (a) a Borrower does not have good, valid, and marketable title
thereto,

          (b) it is not located at one of the locations in the continental
United States set forth on Schedules 4.5(a) and 4.5(b), as such schedules may be
amended from time to time in accordance with the Agreement (or in-transit from
one such location to another such location),

          (c) it is not subject to a valid and perfected first priority Agent's
Lien,

          (d) it consists of goods returned or rejected by a Borrower's
customers, or

          (e) it consists of goods that are obsolete or slow moving,
work-in-process, raw materials, or goods that constitute spare parts, packaging
and shipping materials, supplies used or consumed in a Borrower's business, bill
and hold goods, defective goods, "seconds," or Inventory acquired on
consignment.

          "Eligible Inventory" means, collectively, Eligible Finished Goods
Inventory and Eligible Raw Materials Inventory.

          "Eligible Raw Materials Inventory" means Inventory of Borrowers
consisting of first quality raw materials to be used in Borrowers' production
process and that is not excluded as ineligible by virtue of one or more of the
excluding criteria set forth below; provided, however, that such criteria may be
revised from time to time by Agent in Agent's Permitted Discretion to address
the results of any audit or appraisal performed by Agent from time to time after
the Closing Date; provided, further, however, that Agent shall use commercially
reasonable efforts to notify Administrative Borrower at or before the time such
eligibility criteria are revised. In determining the


                                        9



amount to be so included, Inventory shall be valued (unless otherwise agreed to
by Agent in its sole discretion) at the lower of cost computed on a first-in
first-out basis in accordance with GAAP or market value on a basis consistent
with Borrowers' historical accounting practices. An item of Inventory shall not
be included in Eligible Raw Materials Inventory if:

          (a) a Borrower does not have good, valid, and marketable title
thereto,

          (b) it is not located at one of the locations in the continental
United States set forth on Schedules 4.5(a) and 4.5(b), as such schedules may be
amended or supplemented from time to time in accordance with the Agreement (or
in-transit from one such location to another such location),

          (c) it is not subject to a valid and perfected first priority Agent's
Lien, or

          (d) it consists of goods that are obsolete or slow moving,
work-in-process, finished goods, or goods that constitute spare parts, packaging
and shipping materials, supplies used or consumed in a Borrower's business, bill
and hold goods, defective goods, "seconds," or Inventory acquired on
consignment.

          "Eligible Transferee" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender, (e) so
long as no Event of Default has occurred and is continuing, any other Person
approved by Agent and Administrative Borrower (which approval of Administrative
Borrower shall not be unreasonably withheld, delayed, or conditioned), and (f)
during the continuation of an Event of Default, any other Person approved by
Agent.

          "Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding or judgment from any Governmental Authority, or any
third party alleging violations of Environmental Laws or releases of Hazardous
Materials in violation of Environmental Laws from (a) any assets, properties, or
businesses of any Borrower, any of their respective Subsidiaries, or any of
their predecessors in interest, (b) from adjoining properties or businesses, or
(c) from or onto any facilities which received Hazardous Materials generated by
any Borrower, any of their respective Subsidiaries, or any of their predecessors
in interest.

          "Environmental Claim" has the meaning specified therefore in Section
4.14.

          "Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect and in each case as amended, or any binding
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, in each case, to the extent
binding on any Borrower or any of their respective Subsidiaries, relating to the
environment, or the effect of the environment on employee health, in each case
as amended from time to time.


                                       10



          "Environmental Liabilities" means all liabilities, monetary
obligations, losses, damages, punitive damages, consequential damages, treble
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.

          "Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities.

          "Equipment" means equipment (as that term is defined in the Code).

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, from time to time, and the regulations promulgated thereunder.

          "ERISA Affiliate" means each business or entity which is a member of a
"controlled group of corporations", under "common control" or an "affiliated
service group" with any Borrower or any of its Restricted Subsidiaries within
the meaning of Section 414(b), (c) or (m) of the IRC, required to be aggregated
with any Borrower or any of its Restricted Subsidiaries under Section 414(o) of
the IRC, or is under "common control" with any Borrower or any of its Restricted
Subsidiaries, within the meaning of Section 4001(a)(14) of ERISA.

          "ERISA Event" means (a) a reportable event as defined in Section 4043
of ERISA and the regulations issued under such Section with respect to a Pension
Plan, excluding, however, such events as to which the PBGC by regulation has
waived the requirement of Section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event; (b) a withdrawal by any Borrower, any of
their respective Restricted Subsidiaries, or any ERISA Affiliate from a Pension
Plan or the termination of any Pension Plan resulting in liability under
Sections 4063 or 4064 of ERISA; (c) the withdrawal of any Borrower, any of their
respective Restricted Subsidiaries, or ERISA Affiliate in a complete or partial
withdrawal (within the meaning of Section 4203 and 4205 of ERISA) from any
Multiemployer Plan if there is any potential liability therefor, or the receipt
by any Borrower, any of their respective Restricted Subsidiaries, or ERISA
Affiliate of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA; (d) the filing of a notice
of intent to terminate, the treatment of a plan amendment as a termination under
Section 4041(c) of ERISA, or the treatment of a plan amendment as a termination
under Section 4041(e) of ERISA, or the commencement of proceedings by the PBGC
to terminate a Pension Plan; (e) the imposition of liability on any Borrower,
any of their respective Restricted Subsidiaries, or any ERISA Affiliate pursuant
to Sections 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA; (f) the failure by any Borrower, any of their respective
Restricted Subsidiaries, or any ERISA Affiliate to make any required
contribution to a Pension Plan, or the failure to meet the minimum funding
standard of Section 412 of the IRC with respect to any Pension Plan (whether or
not waived in accordance with Section 412(d) of the IRC) or the failure to make
by its due date a required installment under Section 412(m) of the IRC with
respect to any Pension Plan or the failure to make any required contribution to
a Multiemployer Plan; (g) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; (h) the imposition of any material liability under Title IV
of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon any Borrower, any of their respective Restricted Subsidiaries or any
ERISA Affiliate; (i) an application for a funding waiver under Section 303 of
ERISA or an extension of any amortization period pursuant to Section 412 of the
IRC with respect to any Pension Plan; (j) the occurrence of a non-exempt
prohibited transaction under Sections 406 or 407 of ERISA for which any
Borrower, or any of their respective Restricted Subsidiaries, may be directly or
indirectly liable and which is reasonably expected to result in a material
liability to any


                                       11



Borrower or any of its Restricted Subsidiaries; (k) the occurrence of an act or
omission which could give rise to the imposition on any Borrower, any of their
respective Restricted Subsidiaries, or any ERISA Affiliate of material fines,
material penalties, material taxes or material related charges under Chapter 43
of the IRC or under Sections 409, 502(c), (i) or (1) or 4071 of ERISA; (l) the
assertion of a material claim (other than routine claims for benefits) against
any Plan or the assets thereof, or against any Borrower or any of its Restricted
Subsidiaries in connection with any such Plan; (m) receipt from the Internal
Revenue Service of notice of the failure of any Qualified Plan to qualify under
Section 401(a) of the IRC, or the failure of any trust forming part of any
Qualified Plan to fail to qualify for exemption from taxation under Section
501(a) of the IRC; or (n) the imposition of any lien on any of the rights,
properties or assets of any Borrower, any of their respective Restricted
Subsidiaries, or any ERISA Affiliate, in either case pursuant to Section 302(f)
of ERISA or Title IV of ERISA or to the penalty or excise tax provisions of the
IRC or to Section 401(a)(29) or 412(n) of the IRC.

          "Event of Default" has the meaning specified therefor in Section 7.

          "Exchange Act" means the Securities Exchange Act of 1934, as in effect
from time to time.

          "Existing Letters of Credit" means the Letters of Credit set forth on
Schedule 2.12 hereto.

          "Extraordinary Receipts" means any cash received by Parent or any of
its Subsidiaries not in the ordinary course of business, including (a) foreign,
United States, state or local tax refunds, (b) pension plan reversions, (c)
proceeds of insurance (including key man life insurance and business
interruption insurance, but excluding any casualty insurance), (d) judgments,
proceeds of settlements or other consideration of any kind in connection with
any cause of action, (e) indemnity payments, and (f) any purchase price
adjustment received in connection with any purchase agreement.

          "FAC" has the meaning specified therefor in the recitals to the
Agreement.

          "Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair Market
Value shall be determined by the Board of Directors of a Loan Party acting
reasonably and in good faith, and shall be evidenced by a resolution of such
Loan Party's Board of Directors.

          "Fee Letter" means that certain fee letter between Borrowers and
Agent, in form and substance reasonably satisfactory to Agent.

          "Fixed Charges" means with respect to Parent and its Subsidiaries for
any period, the sum, without duplication, of (a) Interest Expense, (b) principal
payments required to be paid during such period in respect of Indebtedness, and
(c) all federal, state, and local income taxes accrued for such period.

          "Fixed Charge Coverage Ratio" means, with respect to Parent and its
Subsidiaries for any period, the ratio of (a) Consolidated EBITDA for such
period minus Capital Expenditures made (to the extent not already incurred in a
prior period) or incurred during such period, to (b) Fixed Charges for such
period.

          "Foreign Lender" has the meaning specified therefore in Section
15.11(b)(i).

          "Funding Losses" has the meaning specified therefor in Section
2.13(b)(ii).


                                       12



          "GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.

          "Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.

          "Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.

          "Guarantors" means each Restricted Subsidiary of Parent that is not a
Borrower and each other Subsidiary of Parent that executes a joinder to the
Guaranty after the Closing Date in accordance with Section 5.16; and "Guarantor"
means any one of them.

          "Guaranty" means that certain general continuing guaranty executed and
delivered by each Guarantor in favor of Agent for the benefit of the Lender
Group, in form and substance satisfactory to Agent.

          "Hazardous Materials" means (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable Environmental Laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity," (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

          "Hedge Agreement" means any and all agreements, or documents now
existing or hereafter entered into by a Borrower or any of their respective
Restricted Subsidiaries that provide for an interest rate, credit, commodity or
equity swap, cap, floor, collar, forward foreign exchange transaction, currency
swap, cross currency rate swap, currency option, or any combination of, or
option with respect to, these or similar transactions, for the purpose of
hedging a Borrower's or any of their respective Restricted Subsidiaries'
exposure to fluctuations in interest or exchange rates, loan, credit exchange,
security or currency valuations or commodity prices.

          "Holdout Lender" has the meaning specified therefor in Section
14.2(a).

          "Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, (c) all obligations as a lessee under Capital Leases, (d)
all obligations or liabilities of others secured by a Lien on any asset of a
Person or its Subsidiaries, irrespective of whether such obligation or liability
is assumed (with the amount of such Indebtedness being the lesser of the
Indebtedness secured thereby or the book value of the assets constituting
security therefor), (e) all obligations to pay the deferred purchase price of
assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices), (f) all obligations
owing under Hedge Agreements, and (g) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person that
constitutes Indebtedness under any of clauses (a) through (f) above.


                                       13



          "Indenture" has the meaning specified therefor in the recitals to the
Agreement.

          "Indenture Documents" means the Indenture, the Indenture Supplement,
the Senior Notes, the Collateral Agreements (as defined in the Indenture), and
all other documents, instruments and agreements executed or delivered by any of
the Parent and its Subsidiaries in connection therewith.

          "Indenture Supplement" has the meaning specified therefor in the
recitals to the Agreement.

          "Indemnified Liabilities" has the meaning specified therefor in
Section 10.3.

          "Indemnified Person" has the meaning specified therefor in Section
10.3.

          "Independent Financial Advisor" means a nationally-recognized
accounting, appraisal or investment banking firm: (i) that does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in Parent; and (ii) that, in the judgment of the
Board of Directors of Parent, is otherwise independent and qualified to perform
the task for which it is to be engaged.

          "Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief and including the appointment of a trustee, receiver, administrative
receiver, administrator or similar officer.

          "Intercompany Subordination Agreement" means a subordination agreement
executed and delivered by Borrowers, each of their respective Restricted
Subsidiaries and Agent, the form and substance of which is reasonably
satisfactory to Agent.

          "Intercreditor Agreement" means the Intercreditor Agreement dated as
of November 30, 2004, as amended and restated as of the date hereof, among WFF,
in its capacity as agent hereunder, WFF, in its capacity as agent under the
Altra Senior Credit Agreement, and Trustee, as amended, modified, supplemented
or restated from time to time.

          "Interest Expense" means, for any period, the aggregate of the
interest expense of Parent and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, and including,
without duplication, (a) all amortization or accretion of original issue
discount; (b) the interest component of Capitalized Lease Obligations paid,
accrued and/or scheduled to be paid or accrued by Parent and its Restricted
Subsidiaries during such period; and (c) net cash costs under all Interest Swap
Obligations (including amortization of fees).

          "Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, 3 or 6 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with


                                       14



respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, 3 or 6 months
after the date on which the Interest Period began, as applicable, and (e)
Borrowers (or Administrative Borrower on behalf thereof) may not elect an
Interest Period which will end after the Maturity Date.

          "Interest Swap Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.

          "Inventory" means inventory (as that term is defined in the Code).

          "Investment" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers, directors, employees and consultants
of such Person made in the ordinary course of business, and (b) extensions of
trade credit arising in the ordinary course of business consistent with past
practice), purchases or other acquisitions of Indebtedness, Stock, or all or
substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.

          "IRC" means the Internal Revenue Code of 1986, as in effect from time
to time, and the regulations promulgated thereunder.

          "Issuing Lender" means WFF or any other Lender that, at the request of
Administrative Borrower and with the consent of Agent (not to be unreasonably
withheld, conditioned or delayed), agrees, in such Lender's sole discretion, to
become an Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings
pursuant to Section 2.12 with respect to the Existing Letters of Credit.

          "L/C" has the meaning specified therefor in Section 2.12(a).

          "L/C Disbursement" means a payment made by the Issuing Lender pursuant
to a Letter of Credit.

          "LC Obligations" has the meaning specified therefor in Section
2.12(a).

          "L/C Undertaking" has the meaning specified therefor in Section
2.12(a).

          "Lender" and "Lenders" have the respective meanings set forth in the
preamble to the Agreement, and shall include any other Person made a party to
the Agreement in accordance with the provisions of Section 13.1.

          "Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.

          "Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by any Borrower or any of its
Restricted Subsidiaries under any of the Loan Documents that are paid, advanced,
or incurred by the Lender Group, (b) fees or


                                       15



charges paid or incurred by Agent in connection with the Lender Group's
transactions with any Borrower or any of its Restricted Subsidiaries, including,
fees or charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation, and
UCC searches and including searches with the patent and trademark office, the
copyright office, or the department of motor vehicles), filing, recording,
publication, appraisal (including periodic collateral appraisals or business
valuations to the extent of the fees and charges (and up to the amount of any
limitation) contained in the Agreement), real estate surveys, real estate title
policies and endorsements, and environmental audits, (c) costs and expenses
incurred by Agent in the disbursement of funds to Borrowers or other members of
the Lender Group (by wire transfer or otherwise), (d) charges paid or incurred
by Agent resulting from the dishonor of checks, (e) reasonable costs and
expenses paid or incurred by the Lender Group to correct any default or enforce
any provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof, irrespective of
whether a sale is consummated, (f) audit fees and expenses of Agent related to
any inspections or audits to the extent of the fees and charges (and up to the
amount of any limitation) contained in the Agreement, (g) reasonable costs and
expenses of third party claims or any other suit paid or incurred by the Lender
Group in enforcing or defending the Loan Documents or in connection with the
transactions contemplated by the Loan Documents or the Lender Group's
relationship with any Borrower or any of its Restricted Subsidiaries, (h)
Agent's and each Lender's reasonable costs and expenses (including attorneys
fees) incurred in advising, structuring, drafting, reviewing, administering,
syndicating, or amending the Loan Documents, and (i) Agent's and each Lender's
reasonable costs and expenses (including attorneys, accountants, consultants,
and other advisors fees and expenses) incurred in terminating, enforcing
(including attorneys, accountants, consultants, and other advisors fees and
expenses incurred in connection with a "workout," a "restructuring," or an
Insolvency Proceeding concerning any Borrower or any of its Restricted
Subsidiaries or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.

          "Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, officers, directors, employees,
attorneys, and agents.

          "Letter of Credit" means an L/C or an L/C Undertaking, as the context
requires.

          "Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.

          "LIBOR Deadline" has the meaning specified therefor in Section
2.13(b)(i).

          "LIBOR Notice" means a written notice in the form of Exhibit L-1.

          "LIBOR Option" has the meaning specified therefor in Section 2.13(a).

          "LIBOR Rate" means, for each Interest Period for each LIBOR Rate Loan,
the rate per annum determined by Agent (rounded upwards, if necessary, to the
next 1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.

          "LIBOR Rate Loan" means each portion of an Obligation that bears
interest at a rate determined by reference to the LIBOR Rate.

          "LIBOR Rate Margin" means 1.75 percentage points.


                                       16



          "Lien" means, with respect to any asset, any mortgage, lien (statutory
or other), charge, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, conditional sale or trust
receipt, or other security interest in, on or of such asset to secure or provide
for the payment of any obligation of any Person, whether arising by contract,
operation of law or otherwise, and also includes reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions and encumbrances affecting Real Property.

          "Limiter Excess" has the meaning specified therefor in Section
2.4(d)(i).

          "Loan Account" has the meaning specified therefor in Section 2.10.

          "Loan Documents" means the Agreement, the Cash Management Agreements,
the Copyright Security Agreement, the Control Agreements, the Fee Letter, the
Guaranty, the Intercompany Subordination Agreement, the Intercreditor Agreement,
the Letters of Credit, the Mortgages, the Patent Security Agreement, the
Security Agreement, the Trademark Security Agreement, executed by any Loan Party
in connection with the Agreement, and any other agreement entered into, now or
in the future, by any Loan Party and the Lender Group in connection with the
Agreement.

          "Loan Parties" means, collectively, Borrowers and Guarantors, and
"Loan Party" means any one of them.

          "M&T Facility" has the meaning specified therefor in the recitals to
the Agreement.

          "Material Adverse Change" means (a) a material adverse change in the
business, operations, assets, liabilities or condition (financial or otherwise)
of Borrowers and their Restricted Subsidiaries, taken as a whole, (b) a material
impairment of a Borrower's or any of its Restricted Subsidiaries' ability to
perform its obligations under the Loan Documents to which it is a party or of
the Lender Group's ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
the Agent's Liens with respect to the Collateral as a result of an action or
failure to act on the part of a Borrower or a Restricted Subsidiary of a
Borrower.

          "Material Contract" means, with respect to any Person, any contract or
agreement, whether entered into as of the Closing Date or after the Closing
Date, if the breach of any such contract or agreement or the failure of any such
contract or agreement to be in full force and effect could be reasonably
expected to result in a Material Adverse Change.

          "Maturity Date" has the meaning specified therefor in Section 3.3.

          "Merger" has the meaning specified therefor in the recitals to the
Agreement.

          "Merger Agreement" has the meaning specified therefor in the recitals
to the Agreement.

          "Moody's" has the meaning specified therefore in the definition of
Cash Equivalents.

          "Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
any Borrower or any of its Restricted Subsidiaries in favor of Agent, in form
and substance reasonably satisfactory to Agent, that encumber the Real Property
Collateral.


                                       17



          "Multiemployer Plan" means a "multiemployer plan" (within the meaning
of Section 3(37) of ERISA) to which any Borrower, any of its Restricted
Subsidiaries, or any ERISA Affiliate makes, is making, is obligated, or within
the last six years has been obligated, to make contributions.

          "Net Cash Proceeds" means (a) with respect to the sale or issuance by
any Person of any shares of its Stock, the aggregate amount of cash received
(directly or indirectly) from time to time (whether as initial consideration or
through the payment or disposition of deferred consideration) by or on behalf of
such Person in connection therewith, after deducting therefrom only (i) costs
and expenses related thereto incurred by such Person in connection therewith
(including, without limitation, legal, accounting and investment banking fees,
and underwriting discounts and commissions), (ii) transfer taxes paid by such
Person in connection therewith and (iii) net income taxes to be paid in
connection therewith (after taking into account any tax credits or deductions
and any tax sharing arrangements), and (b) with respect to any sale or
disposition by any Person thereof of property or assets, the amount of
Collections received (directly or indirectly) from time to time (whether as
initial consideration or through the payment of deferred consideration) by or on
behalf of such Person in connection therewith after deducting therefrom only (i)
the amount of any Indebtedness secured by any Permitted Lien on any asset (other
than (A) Indebtedness owing to Agent or any Lender under the Agreement or the
other Loan Documents and (B) Indebtedness assumed by the purchaser of such
asset) which is required to be, and is, repaid in connection with such
disposition, (ii) reasonable expenses related thereto incurred by such Person in
connection therewith, and (iii) taxes paid or payable to any taxing authorities
by such Person in connection therewith, in each case to the extent, but only to
the extent, that the amounts so deducted are, at the time of receipt of such
cash, actually paid or payable to a Person that is not an Affiliate and are
properly attributable to such transaction.

          "Obligations" means all loans, Term Loans, LC Obligations, debts,
principal, interest (including any interest that accrues after the commencement
of an Insolvency Proceeding regardless of whether allowed or allowable in whole
or in part as a claim in any such Insolvency Proceeding), contingent
reimbursement obligations with respect to outstanding Letters of Credit,
premiums, liabilities (including all amounts charged to Borrowers' Loan Account
pursuant hereto), obligations (including indemnification obligations), fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that accrue after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
guaranties, covenants, and duties of any kind and description owing by Borrowers
to the Lender Group pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all Lender Group Expenses that
Borrowers are required to pay or reimburse by the Loan Documents, by law, or
otherwise. Any reference in the Agreement or in the Loan Documents to the
Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.

          "Originating Lender" has the meaning specified therefor in Section
13.1(e).

          "Parent" has the meaning specified therefor in the preamble to the
Agreement.

          "Participant" has the meaning specified therefor in Section 13.1(e).

          "Patent Security Agreement" has the meaning specified therefore in the
Security Agreement.


                                       18



          "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

          "Pension Plan" means an employee pension benefit plan (as defined in
Section 3(2) of ERISA) other than a Multiemployer Plan (a) that is or has within
the last six years maintained or sponsored by any Borrower, any of its
Restricted Subsidiaries, or any ERISA Affiliate or to which any Borrower, any of
its Restricted Subsidiaries, or any ERISA Affiliate has within the last six
years made, or was obligated to make, contributions, and (b) that is or was
subject to Section 412 of the IRC, Section 302 of ERISA or Title IV of ERISA.

          "Permitted Discretion" means a determination made in the exercise of
reasonable (from the perspective of a secured asset-based lender) business
judgment.

          "Permitted Dispositions" means:

          (a) Disposition of assets that are substantially worn, damaged, or
obsolete in the ordinary course of business,

          (b) sales of Inventory in the ordinary course of business including
intercompany sales at transfer prices, prescribed by the IRC,

          (c) the use or transfer of money or Cash Equivalents,

          (d) the licensing of patents, trademarks, copyrights, and other
intellectual property rights in the ordinary course of business,

          (e) the transfer of assets from any Loan Party to another Loan Party,

          (f) Dispositions permitted by Sections 6.3 and 6.12 and Liens
permitted by Section 6.2,

          (g) leases, subleases, licenses or sublicenses of property in the
ordinary course of business and which do not materially interfere with the
business of any Borrower or any of the Restricted Subsidiaries,

          (h) the transfer of assets (i) among the Borrowers and the Restricted
Subsidiaries and (ii) from the Borrowers and the Restricted Subsidiaries to
Unrestricted Subsidiaries, provided that any sale, transfer or disposition
pursuant to this clause (ii) for a cash price less than the Fair Market Value of
such assets shall be deemed to be an Investment subject to Section 6.12;

          (i) Disposition of property to the extent that (i) such property is
exchanged for credit against the purchase price of similar replacement property
or (ii) the proceeds of such Disposition are promptly applied to the purchase
price of such replacement property;

          (j) Dispositions of accounts receivable that are not Eligible Accounts
in connection with the collection or compromise thereof;

          (k) subject to Section 2.4(d) and Section 5.8 of the Agreement,
transfers of property arising directly from condemnation and casualty events;
and

          (l) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Dispositions not otherwise permitted in
clauses (a) through (k) so long as (i) after giving effect thereto, the Fair
Market Value of the assets so disposed would not exceed $5,000,000 in


                                       19



the aggregate during the term of the Agreement, (ii) Administrative Borrower
shall have given Agent at least five (5) days prior written notice of its intent
to make a Disposition subject to this clause (l), such notice to describe the
assets that Borrowers intend to dispose of, and (iii) 100% of the net book value
of the proceeds from such Dispositions shall be used to pay any outstanding LC
Obligations and Term Loans in accordance with Section 2.4(d)(ii).

          "Permitted Investments" means:

          (a) Investments in cash and Cash Equivalents,

          (b) Investments in negotiable instruments for collection,

          (c) advances made in connection with purchases of goods or services in
the ordinary course of business,

          (d) Investments received in settlement of amounts due to any Borrower
or any Restricted Subsidiary effected in the ordinary course of business or
owing to any Borrower or any Restricted Subsidiary as a result of Insolvency
Proceedings involving an Account Debtor, supplier or in respect of any other
Investment or upon the foreclosure or enforcement of any Lien in favor of a
Borrower or a Restricted Subsidiary;

          (e) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Investments by any Loan Party in a newly
created Restricted Subsidiary that is or immediately after such Investment will
be a Guarantor;

          (f) Investments among Borrowers and the Restricted Subsidiaries;

          (g) Investments in the Senior Notes, the Unsecured Notes and under the
Altra Senior Credit Agreement;

          (h) Hedge Agreements entered into in the ordinary course of Loan
Parties' businesses and otherwise permitted under the Agreement;

          (i) Investments consisting of consideration received by a Loan Party
as a result of a Permitted Disposition;

          (j) Investments existing on the Closing Date and disclosed in Schedule
P-2 hereto and any modification, replacement, renewal or extension thereof;
provided that the amount of the original Investment is not increased by the
terms of such Investment and such modification, replacement, renewal or
extension is otherwise permitted by Section 6.12;

          (k) Investments consisting of Indebtedness, Liens, fundamental
changes, Dispositions, and Capital Expenditures permitted under Sections 6.1,
6.2, 6.3, 6.4, and 6.16(b), respectively;

          (l) the Acquisition Transactions;

          (m) Guarantees by Borrowers or any Restricted Subsidiary of leases
(other than Capital Lease Obligations) or of other obligations that do not
constitute Indebtedness, in each case entered into in the ordinary course of
business;

          (n) loans and advances to employees, officers and directors of Parent
or any of its Subsidiaries, in the ordinary course of business, consistent with
past practice, for bona fide business


                                       20



purposes and in accordance with applicable laws, in an aggregate amount not to
exceed $500,000 at any time outstanding;

          (o) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Investments in any Unrestricted Subsidiary
by any Loan Party, provided that (i) the aggregate amount of such Investments at
any time outstanding does not exceed $10,000,000 (valued at cost at the time of
making thereof, which for purposes of Dispositions pursuant to clause (h)(ii) of
the definition of Permitted Dispositions shall be deemed to be the amount by
which the Fair Market Value exceeds the price received in cash, net of return of
return of capital, dividends, principal or similar amounts) and (ii) after
giving effect to each such Investment, Borrowers shall have a Collateral Cushion
of at least $2,500,000;

          (p) loans and advances to Parent and the distribution or declaration
or payment of dividends on Parent's Stock to Altra Industrial, and

          (q) other Investments that (net of any cash repayment of or return on
such Investments theretofore received) do not exceed $2,500,000 in any fiscal
year so long as (i) no Default or Event of Default has occurred and is
continuing or would result therefrom and (ii) after giving effect to each such
Investment, Borrowers shall have a Collateral Cushion of not less than
$2,500,000.

          "Permitted Liens" means:

          (a) Liens held by Agent or Lenders to secure the Obligations,

          (b) Liens for unpaid taxes, assessments, or other governmental charges
or levies that either (i) are not yet delinquent, or (ii) do not constitute an
Event of Default and for which the underlying taxes, assessments, charges or
levies are the subject of Permitted Protests,

          (c) Liens set forth on Schedule P-1,

          (d) judgment Liens that do not constitute an Event of Default under
Section 7.7 of the Agreement,

          (e) the interests of lessors, sublessors or licensors under operating
leases,

          (f) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as such Lien attaches only to the asset purchased
or acquired and the proceeds thereof,

          (g) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers or other
similar Liens imposed by operation of law or pursuant to customary reservations
or retentions of title, incurred in the ordinary course of business and not in
connection with the borrowing of money, and which Liens either (i) are for sums
not yet delinquent, or (ii) are the subject of Permitted Protests,

          (h) Liens on cash, securities or similar instruments deposited (or
Liens securing any letter of credit issued in respect of) (i) worker's
compensation, unemployment insurance, and other types of social security, or
similar obligations, (ii) the making or entering into of bids, tenders, leases,
statutory obligations, contracts and similar obligations incurred in the
ordinary course of business and not in connection with the borrowing of money,
or (iii) performance, return of money, surety or appeal or similar bonds in
connection with obtaining such bonds in the ordinary course of business,


                                       21



          (i) with respect to any Real Property, easements, rights of way, title
defects and irregularities, and zoning and other applicable municipal or
governmental restrictions that (i) do not materially interfere with or impair
the use or operation thereof and (ii) are not Environmental Liens,

          (j) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of any Borrower or
any of its Restricted Subsidiaries, including rights of offset and setoff,

          (k) Liens securing Hedge Agreements relating to Indebtedness otherwise
permitted under the Agreement,

          (l) intentionally omitted,

          (m) Liens securing the obligations under (i) the Altra Senior Credit
Agreement and (ii) the Indenture and the Indenture Documents,

          (n) Liens securing the reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof to the
extent such letters of credit are permitted to be incurred hereunder,

          (o) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations solely in respect of bankers'
acceptances issued or created for the account of such Person in the ordinary
course of business to facilitate the purchase, shipment or storage of such
inventory or other goods,

          (p) Liens on property consisting of a definitive agreement to dispose
of such property in a Permitted Disposition,

          (q) Liens that are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance of Indebtedness or (ii) relating to pooled deposit or sweep
accounts of any Borrower or any Restricted Subsidiary to permit satisfaction of
overdraft or similar obligations, in each case incurred in the ordinary course
of business,

          (r) leases, subleases, licenses or sublicenses granted by any Borrower
or the Restricted Subsidiaries to third parties in the ordinary course of
business and not interfering in any material respect with the ordinary course of
the business of the Borrower and the Restricted Subsidiaries, and

          (s) Liens securing Refinancing Indebtedness which is incurred to
refinance any Indebtedness which has been secured by a Lien that is a Permitted
Lien under clause (a) through (r) of this definition, provided, however, that
(x) if there is any Refinancing Indebtedness in respect of the Indebtedness
evidenced by the Senior Notes (or any Refinancing Indebtedness in respect
thereof), any Lien permitted under this clause (s) shall only be permitted if
such Lien is subordinated upon substantially the same terms and conditions as
the Intercreditor Agreement, (y) such Liens are no less favorable to the Lender
Group than the Liens in respect of the Indebtedness being refinanced, and (z)
such Liens do not extend to or cover any property or assets of any Loan Party
not securing the Indebtedness so refinanced.

          "Permitted Protest" means the right of any Borrower or any of its
Restricted Subsidiaries to protest any Lien (other than any Lien that secures
the Obligations), taxes (other than payroll taxes or taxes that are the subject
of a United States federal tax lien), rental payment, or other obligation,
provided that (a) a reserve with respect to such obligation is established on
any Borrower's


                                       22



or any of their respective Restricted Subsidiaries' books and records in such
amount as is required under GAAP, (b) any such protest is instituted promptly
and prosecuted diligently by any Borrower or the Restricted Subsidiaries, as
applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability or
validity of any of the Agent's Liens.

          "Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness in an aggregate principal amount
outstanding at any one time not in excess of $5,000,000.

          "Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.

          "Plan" means (a) an employee benefit plan (as defined in Section 3(3)
of ERISA) other than a Multiemployer Plan which is or was within the last six
years maintained or sponsored by any Borrower or any of its Restricted
Subsidiaries or to which any Borrower or any of its Restricted Subsidiaries has
within the last six years made, or was obligated to make, contributions, (b) a
Pension Plan, or (c) a Qualified Plan.

          "Projections" means Borrowers' forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent, unless otherwise noted therein, with Parent's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.

          "Pro Rata Share" means, as of any date of determination:

          (a) with respect to a Lender's obligation to make the Term Loans and
right to receive payments of principal, interest, fees, costs, and expenses with
respect thereto, (i) prior to the making of the Term Loans, the percentage
obtained by dividing (y) such Lender's Commitment, by (z) the aggregate amount
of all Lenders' Commitments, and (ii) from and after the making of the Term
Loans, the percentage obtained by dividing (y) the principal amount of such
Lender's portion of the Term Loans by (z) the principal amount of the Term
Loans,

          (b) with respect to a Lender's obligation to participate in Letters of
Credit, to reimburse the Issuing Lender, and right to receive payments of fees
with respect thereto, the percentage obtained by dividing (y) such Lender's
Commitment, by (z) the aggregate Commitments of all Lenders, and

          (c) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 15.7), the
percentage obtained by dividing (i) such Lender's Commitment, by (ii) the
aggregate amount of Commitments of all Lenders; provided, however, that in the
event the Commitments have been terminated or reduced to zero, Pro Rata Share
under this clause shall be the percentage obtained by dividing (A) the
outstanding principal amount of such Lender's Term Loans and LC Outstandings
plus such Lender's ratable portion of the Risk Participation Liability with
respect to outstanding Letters of Credit, by (B) the outstanding principal
amount of all Term Loans and LC Outstandings plus the aggregate amount of the
Risk Participation Liability with respect to outstanding Letters of Credit.

          "Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 180 days after, the


                                       23



acquisition of any fixed assets for the purpose of financing all or any part of
the acquisition cost thereof.

          "Qualified Cash" means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of Borrowers and their Restricted
Subsidiaries that is in Deposit Accounts or in Securities Accounts, or any
combination thereof, and which such Deposit Accounts or Securities Accounts are
the subject of Control Agreements and are maintained by branch offices of the
banks or securities intermediaries located within the United States.

          "Qualified Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) other than a Multiemployer Plan (a) that is or was within the
last six years maintained or sponsored by any Borrower, any of its Restricted
Subsidiaries or any ERISA Affiliate or to which any Borrower, any of its
Restricted Subsidiaries or any ERISA Affiliate has within the last six years
made or was obligated to make, contributions, and (b) that is intended to be
tax-qualified under Section 401(a) of the IRC.

          "Real Property" means any fee estates in real property now owned or
hereafter acquired by any Borrower or any of its Restricted Subsidiaries,
together with all buildings, structures and the improvements thereto and all
licenses, easements and appurtenances relating thereto, wherever located..

          "Real Property Collateral" means the Real Property identified on
Schedule R-1 (as such Schedule may be amended or supplemented from time to time)
and any Real Property hereafter acquired by any Borrower or any of its
Restricted Subsidiaries.

          "Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.

          "Refinancing Indebtedness" means any Indebtedness of any Loan Party
issued in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease, repay, prepay, redeem, retire or refund
other Indebtedness of Borrower or any of its Restricted Subsidiaries; provided,
that, other than with respect to the Obligations:

               (a) the principal amount (or accreted value, if applicable) of
such Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness extended, refinanced, renewed,
replaced, defeased, repaid, prepaid, redeemed, retired or refunded (plus all
accrued interest on such Indebtedness and the amount of all fees, expenses,
premiums and defeasance costs incurred in connection therewith);

               (b) such Refinancing Indebtedness has a final maturity date no
earlier than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased, repaid,
prepaid, redeemed, retired or refunded;

               (c) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased, repaid, prepaid, redeemed, retired or refunded is
subordinated in right of payment to the Obligations, such Refinancing
Indebtedness is subordinated in right of payment to the Obligations on terms at
least as favorable to the Lender Group as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased, repaid, prepaid, redeemed, retired or refunded; and

               (d) such Indebtedness is recourse solely to the Loan Parties
which are obligated on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.


                                       24



          "Register" has the meaning specified therefor in Section 13.1(h).

          "Remedial Action" means all actions required by Governmental Authority
or Environmental Law taken in response to a violation of Environmental Laws to
(a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or
in any way address Hazardous Materials in the indoor or outdoor environment, (b)
prevent or minimize a release or threatened release of Hazardous Materials so
they do not migrate or endanger or threaten to endanger public health or welfare
or the indoor or outdoor environment, (c) restore or reclaim natural resources
or the environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.

          "Replacement Lender" has the meaning specified therefor in Section
14.2(a).

          "Report" has the meaning specified therefor in Section 15.17.

          "Required Lenders" means, at any time, Lenders whose aggregate Pro
Rata Shares (calculated under clause (c) of the definition of Pro Rata Shares)
exceed 50%.

          "Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.

          "Restricted Subsidiary" means any Subsidiary of Parent (including any
Subsidiary formed or acquired after the Closing Date that is organized under the
laws of a jurisdiction of the United States of America or any state, territory
or subdivision thereof) other than the Unrestricted Subsidiaries.

          "Risk Participation Liability" means, as to each Letter of Credit, all
reimbursement obligations of Borrowers to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrowers,
whether by the making of an LC Obligation or otherwise, and (c) all accrued and
unpaid interest, fees, and reasonable expenses payable with respect thereto.

          "S&P" has the meaning specified therefore in the definition of Cash
Equivalents.

          "SEC" means the United States Securities and Exchange Commission and
any successor thereto.

          "Securities Account" means a "securities account" (as that term is
defined in the Code).

          "Security Agreement" means a security agreement, in form and substance
reasonably satisfactory to Agent, executed and delivered by Borrowers and
Guarantors to Agent.

          "Senior Notes" means the $270,000,000 aggregate principal amount of 9%
Senior Secured Notes due 2011 issued by Altra Industrial as described in the
Indenture (as amended by the Indenture Supplement).


                                       25



          "Solvent" means, with respect to any Person on a particular date,
that, such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).

          "Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).

          "Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns more than 50% of the shares of Stock having (without regard to any
contingency) ordinary voting power to elect a majority of the board of directors
(or appoint other comparable managers) of such corporation, partnership, limited
liability company, or other entity.

          "Taxes" has the meaning specified therefor in Section 15.11.

          "Tender Offer" has the meaning specified therefor in the recitals to
the Agreement.

          "Term Loan A" has the meaning set forth in Section 2.2(a).

          "Term Loan A Amount" means $6,805,000.

          "Term Loan B" has the meaning set forth in Section 2.2(b).

          "Term Loan B Amount" means $6,220,384.79.

          "Term Loans" has the meaning set forth in Section 2.2(b).

          "Trademark Security Agreement" has the meaning specified therefor in
the Security Agreement.

          "Trustee" means the Bank of New York, N.A. in its capacity as Trustee
and Collateral Agent under the Indenture.

          "Trust Funds" has the meaning specified therefor in Section 2.7(e).

          "Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued one or more of the Existing Letters of
Credit for the benefit of Borrowers.

          "Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.

          "United States" means the United States of America.

          "Unrestricted Subsidiary" means any Subsidiary of Parent that is
organized under the laws of a jurisdiction other than the United States of
America or any state, territory or subdivision thereof.

          "Unsecured Indenture" means the Indenture dated as of February 8,
2006, by and among Altra Industrial, the domestic subsidiaries of Altra
Industrial party thereto and The Bank of New York, as trustee, pursuant to which
Altra Industrial has issued the Unsecured Notes.


                                       26



          "Unsecured Notes" means the 11-1/4% Senior Notes due 2013 issued by
Altra Industrial under the Unsecured Indenture.

          "Unsecured Note Documents" means the Unsecured Indenture, the
Unsecured Notes, and all other documents, instruments and agreements executed or
delivered by any of Altra Industrial and its Subsidiaries in connection
therewith.

          "Voidable Transfer" has the meaning specified therefor in Section
16.6.

          "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:

               (a) the sum of the products obtained by multiplying (i) the
amount of each then remaining installment, sinking fund, serial maturity or
other required payments of principal, including payment at final maturity, in
respect of the Indebtedness, by (ii) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of such
payment; by

               (b) the then outstanding principal amount of such Indebtedness.

          "Wells Fargo" means Wells Fargo Bank, National Association, a national
banking association.

          "WFF" means Wells Fargo Foothill, Inc., a California corporation.


                                       27



                                                    MOSES & SINGER DRAFT--4/3/07

                                  SCHEDULE 3.1

     The obligation of each Lender to make its initial extension of credit
provided for in the Agreement is subject to the fulfillment, to the reasonable
satisfaction of Agent and each Lender (the making of such initial extension of
credit by any Lender being conclusively deemed to be its satisfaction or waiver
of the following), of each of the following conditions precedent:

          (a) the Closing Date shall occur on or before April 5, 2007;

          (b) Agent shall have received each of the following documents, in form
and substance reasonably satisfactory to Agent, duly executed, and each such
document shall be in full force and effect:

               (i) a disbursement letter or funds flow statement regarding the
extensions of credit to be made on the Closing Date, the form and substance of
which is reasonably satisfactory to Agent,

               (ii) the Fee Letter,

               (iii) the Intercompany Subordination Agreement,

               (iv) the Intercreditor Agreement,

               (v) the Patent Security Agreement,

               (vi) the Security Agreement, together with all certificates
representing the shares of Stock pledged thereunder except as provided in
Section 3.6(d), as well as Stock powers with respect thereto endorsed in blank,
and

               (vii) the Trademark Security Agreement.

          (c) Agent shall have received a certificate from Parent's Secretary
attesting that there exists no suit, action, investigation, or proceeding
(judicial or administrative) pending or, to Parent's knowledge, threatened
against any Loan Party or any of their respective Subsidiaries, which could
reasonably be expected to result in a Material Adverse Change;

          (d) Agent shall have received a certificate from the Secretary of each
Borrower (i) attesting to the resolutions of such Borrower's Board of Directors
authorizing (x) its execution, delivery, and performance of this Agreement and
the other Loan Documents to which such Borrower is a party, (y) authorizing
specific officers of such Borrower to execute the same and (ii) attesting to the
incumbency and signatures of such specific officers of such Borrower;

          (e) Agent shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;

          (f) Agent shall have received a certificate of status with respect to
each Borrower, dated within 30 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing in such jurisdiction (together with a bringdown certificate dated
within 1 day of the Closing Date);



          (g) Agent shall have received certificates of status with respect to
each Borrower, each dated within 30 days of the Closing Date, such certificates
to be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;

          (h) intentionally omitted;

          (i) Agent shall have received an opinion or opinions of Borrowers'
counsel in form and substance reasonably satisfactory to Agent;

          (j) intentionally omitted;

          (k) Agent shall have completed its business, legal and collateral due
diligence, the results of which shall be satisfactory to Agent;

          (l) Agent shall have received completed reference checks with respect
to Borrowers' senior management, and any required Patriot Act compliance, the
results of which are reasonably satisfactory to Agent in its sole discretion;

          (m) Agent shall have received a set of Projections for the 2 year
period following the Closing Date (on a month-by-month basis for the first year
and on a year by year basis for each year thereafter), in form and substance
(including as to scope and underlying assumptions) satisfactory to Agent;

          (n) Borrowers shall have paid all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;

          (o) Agent shall have received Uniform Commercial Code, tax lien and
litigation searches, the results of which shall be reasonably satisfactory to
Agent;

          (p) Agent and its counsel shall be satisfied with the corporate
structure of Parent and its Subsidiaries;

          (q) Borrowers and each of their respective Subsidiaries shall have
received all licenses, approvals or evidence of other actions required by any
Governmental Authority in connection with the execution and delivery by
Borrowers or their respective Subsidiaries of the Loan Documents or with the
consummation of the transactions contemplated thereby that are required by law
to be held or received;

          (r) Agent shall have received evidence (reasonably satisfactory to
Agent) of the payment of the indebtedness under the M&T Facility, and
termination of any and all security interests related thereto; and

          (s) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.


                                       -2-



                                  SCHEDULE 5.2

     Provide Agent (and if so requested by Agent, with copies for each Lender)
with each of the documents set forth below at the following times in form
satisfactory to Agent:

                              
Monthly                               (a) an Account roll-forward with
                                 supporting details supplied from sales
                                 journals, collection journals, credit registers
                                 and any other records, and

                                      (b) Inventory system/perpetual reports
                                 specifying the cost and the wholesale market
                                 value of Borrowers' and their Subsidiaries'
                                 Inventory, by category, with additional detail
                                 showing additions to and deletions therefrom
                                 (delivered electronically in an acceptable
                                 format, if Borrowers have implemented
                                 electronic reporting).

Monthly (not later                    (c) a Borrowing Base Certificate,
than the 15th day of
each month)                           (d) a detailed aging, by total, of
                                 Borrowers' Accounts, together with a
                                 reconciliation and supporting documentation for
                                 any reconciling items noted (delivered
                                 electronically in an acceptable format, if
                                 Borrowers have implemented electronic
                                 reporting),

                                      (e) a detailed calculation of those
                                 Accounts that are not eligible for the
                                 Borrowing Base, if Borrowers have not
                                 implemented electronic reporting,

                                      (f) a detailed Inventory system/perpetual
                                 report together with a reconciliation to
                                 Borrowers' general ledger accounts (delivered
                                 electronically in an acceptable format, if
                                 Borrowers have implemented electronic
                                 reporting),

                                      (g) a detailed calculation of Inventory
                                 categories that are not eligible for the
                                 Borrowing Base, if Borrowers have not
                                 implemented electronic reporting,

                                      (h) a summary aging, by vendor, of
                                 Borrowers' and their respective Restricted
                                 Subsidiaries' accounts payable and any book
                                 overdrafts (delivered electronically in an
                                 acceptable format, if Borrowers have
                                 implemented electronic reporting) and an aging,
                                 by vendor, of any held checks,

                                      (i) a detailed report regarding Borrowers'
                                 and their respective Restricted Subsidiaries'
                                 cash and Cash Equivalents, including an
                                 indication of which amounts constitute
                                 Qualified Cash,

                                      (j) a monthly Account roll-forward, in a
                                 format acceptable to Agent in its discretion,
                                 tied to the beginning and ending account
                                 receivable balances of Borrowers' general
                                 ledgers,

                                      (k) proof of payment of Borrowers' and
                                 their respective Restricted Subsidiaries'
                                 applicable taxes, and

                                      (l) a detailed summary of Loan Parties'
                                 fixed assets reflecting the book value of Loan
                                 Parties' Real Property and Equipment.





                              
Monthly (no later                     (m) a reconciliation of Accounts, trade
than the 30th day of             accounts payable, and Inventory of Borrowers'
each month)                      and their respective Restricted Subsidiaries'
                                 general ledger accounts to their monthly
                                 financial statements including any book
                                 reserves related to each category.

Quarterly                             (n) a report regarding Borrowers' and
                                 their respective Restricted Subsidiaries'
                                 accrued, but unpaid, ad valorem taxes.

Annually                              (o) a detailed list of Borrowers' and
                                 their respective Restricted Subsidiaries'
                                 customers, with address and contact
                                 information.

Promptly, and in any                  (p) if (i) any Borrower consigns any
event within 5 days              Inventory or sells any Inventory on bill and
after occurrence                 hold, sale or return, sale on approval, or
thereof                          other conditional terms of sale, (ii) such
                                 Inventory is included in the Borrowing Base
                                 immediately prior to the time of such
                                 consignment or sale, and (iii) the aggregate
                                 amount of such Inventory satisfying clauses (i)
                                 and (ii) above, after giving effect to any such
                                 consignment or sale, exceeds $100,000, then
                                 Administrative Borrower shall deliver notice
                                 thereof to Agent describing the Inventory so
                                 consigned or sold and shall deliver to Agent a
                                 pro forma Borrowing Base Certificate reflecting
                                 the reduction in the Borrowing Base resulting
                                 from such consignment or sale (unless Agent
                                 determines, in its Permitted Discretion, that
                                 such Inventory shall remain in the Borrowing
                                 Base), and

                                      (q) if (i) any Borrower or Restricted
                                 Subsidiary stores any Inventory or Equipment
                                 with a bailee, warehouseman or similar party,
                                 (ii) such Inventory or Equipment is included in
                                 the Borrowing Base immediately prior to the
                                 time of such storage with a bailee,
                                 warehouseman or similar party, and (iii) the
                                 aggregate amount of such Inventory and/or
                                 Equipment satisfying clauses (i) and (ii)
                                 above, after giving effect to any such storage
                                 with a bailee, warehouseman or similar party,
                                 exceeds $100,000, then Administrative Borrower
                                 shall deliver notice thereof to Agent
                                 describing the Inventory or Equipment so stored
                                 with a bailee, warehouseman or similar party
                                 and shall deliver to Agent a pro forma
                                 Borrowing Base Certificate reflecting the
                                 reduction in the Borrowing Base resulting from
                                 such storage with a bailee, warehouseman or
                                 similar party (unless Agent determines, in its
                                 Permitted Discretion, that such Inventory or
                                 Equipment shall remain in the Borrowing Base).

Upon request by Agent                 (r) such other reports as to the
                                 Collateral or the financial condition of
                                 Borrowers and their respective Restricted
                                 Subsidiaries, as Agent may reasonably request.





                                                    MOSES & SINGER DRAFT--4/3/07

                                  SCHEDULE 5.3

     Deliver to Agent, with copies to each Lender, each of the financial
statements, reports, or other items set forth set forth below at the following
times in form satisfactory to Agent:

                              
Monthly (not later than 30       (a) an unaudited consolidated and consolidating
days after the end of each       balance sheet, income statement, and statement
month)                           of cash flow covering Parent's and its
                                 Subsidiaries' operations during the prior
                                 month, and

                                 (b) a Compliance Certificate.

Quarterly (not later than 60     (c) an unaudited consolidated and consolidating
days after the end of each       balance sheet, income statement, and statement
fiscal quarter of Parent)        of cash flow covering Parent's and its
                                 Subsidiaries' operations during the prior
                                 fiscal quarter and during the period commencing
                                 on the first day of the applicable fiscal year
                                 and ending on the last day of the prior
                                 quarter,

                                 (d) a Compliance Certificate, and

                                 (e) to the extent not delivered pursuant to
                                 clause (i) or (j) below, copies of Material
                                 Contracts entered into since the delivery of
                                 the previous Compliance Certificate, together
                                 with any material amendments to any existing
                                 Material Contracts entered into since the
                                 delivery of the previous Compliance
                                 Certificate.

Annually (not later than 90      (f) consolidated and consolidating financial
days after the end of each of    statements of Parent and its Subsidiaries for
Parent's fiscal years)           each such fiscal year, certified by the chief
                                 financial officer of Parent to have been
                                 prepared in accordance with GAAP (such
                                 financial statements to include a balance
                                 sheet, income statement, and statement of cash
                                 flow and, if prepared, such accountants' letter
                                 to management), and

                                 (g) a Compliance Certificate.

Annually (not later than 15      (h) copies of Borrowers' Projections, in form
days after the start of each     and substance (including as to scope and
of Parent's fiscal years)        underlying assumptions) satisfactory to Agent,
                                 in its Permitted Discretion, for the
                                 forthcoming fiscal year, quarter by quarter,
                                 certified by the chief financial officer of
                                 Parent as being such officer's good faith
                                 estimate of the financial performance of
                                 Borrowers during the period covered thereby.

If and when filed by any         (i) Form 10-Q quarterly reports, Form 10-K
Borrower,                        annual reports, and Form 8-K current reports,





                              
                                 (j) any other filings made by any Borrower with
                                 the SEC (and, to the extent not included in any
                                 such filings, Borrowers shall promptly provide
                                 Agent with true and complete copies of any and
                                 all material documents delivered to any Person
                                 pursuant to, or in connection with, the
                                 Acquisition Documents and the Indenture
                                 Documents), and

                                 (k) any other information that is provided by
                                 any Borrower to its shareholders generally.

Promptly, but in any event       (l) notice of such event or condition and a
within 5 days after any          statement of the curative action that Borrowers
Borrower or any of its           propose to take with respect thereto.
Subsidiaries has knowledge of
any event or condition that
constitutes a Default or an
Event of Default,

Promptly after the               (m) notice of all actions, suits, or
commencement thereof, but in     proceedings brought by or against Parent, any
any event within 5 days after    Borrower or any of their respective Restricted
the service of process with      Subsidiaries before any Governmental Authority
respect thereto on Parent, any   which reasonably could be expected to result in
Borrower or any of their         a Material Adverse Change.
respective Restricted
Subsidiaries,

upon the request of Agent,       (n) any other information reasonably requested
                                 relating to the financial condition of
                                 Borrowers or their respective Restricted
                                 Subsidiaries.

EX-10.36

EXHIBIT 10.36 SECURITY AGREEMENT This SECURITY AGREEMENT (this "Agreement") is made this 5th day of April, 2007, among Grantors listed on the signature pages hereof and those additional entities that hereafter become parties hereto by executing the form of Supplement attached hereto as Annex 1 (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 even date herewith (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 is willing to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof; WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group in connection with the transactions contemplated by the Credit Agreement and the other Loan Documents; and WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement and the other Loan Documents and to induce the Lender Group to make and extend the financial accommodations to Borrowers as provided for in the Credit Agreement, Grantors have agreed to grant a continuing security interest in and to the Collateral in order to secure the prompt and complete payment, observance and performance of, among other things, (a) the obligations of Grantors arising from this Agreement, the Credit Agreement, and the other Loan Documents, including, without limitation, the Guaranty, and (b) all Obligations of Borrowers (including, without limitation, any interest, fees or expenses that accrue after the filing of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any Insolvency Proceeding), plus reasonable attorneys fees and expenses if the obligations represented thereunder are collected by law, through an attorney-at-law, or under advice therefrom, to the extent such fees and expenses are required to be paid by Borrowers under the Credit Agreement (clauses (a) and (b) being hereinafter referred to as the "Secured Obligations"), by the granting of the security interests contemplated by this Agreement. NOW, THEREFORE, for and in consideration of the recitals made above and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Defined Terms. All capitalized terms used herein (including, without limitation, in the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Credit Agreement. In addition to those terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the following meanings: (a) "Agent" has the meaning set forth in the preamble hereto. (b) "Agreement" has the meaning set forth in the preamble hereto. (c) "Books" has the meaning set forth in Section 2. (d) "Chattel Paper" has the meaning set forth in Section 2. (e) "Code" means the New York Uniform Commercial Code, as in effect from time to time; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to Agent's Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term "Code" shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies. (f) "Collateral" has the meaning set forth in Section 2. (g) "Commercial Tort Claims" has the meaning set forth in Section 2. (h) "Copyrights" means all of the following now owned or hereafter adopted or acquired by a Grantor: copyrights and copyright registrations, including, without limitation, the copyright registrations and recordings thereof and all applications in connection therewith listed on Schedule 1 attached hereto and made a part hereof, and (i) all restorations, reversions, renewals or extensions thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements thereof, (iii) the right to sue for past, present and future infringements thereof, and (iv) all of each Grantor's rights corresponding thereto throughout the world. (i) "Copyright Security Agreement" means each Copyright Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group, in substantially the form of Exhibit A attached hereto. (j) "Credit Agreement" has the meaning set forth in the recitals hereto. (k) "General Intangibles" has the meaning set forth in Section 2. (l) "Grantor" and "Grantors" have the meanings set forth in the preamble hereto. (m) "Intellectual Property" means any and all Intellectual Property Licenses, Patents, Copyrights, Trademarks, the goodwill associated with such Trademarks, trade secrets and customer lists. (n) "Intellectual Property Licenses" means any grant of a right to use any patent, trademark, copyright or other intellectual property, including software license agreements with any other party, whether the applicable Grantor is a licensee or licensor with respect to such rights, including, without limitation, the license agreements listed on Schedule 2 attached hereto and made a part hereof. (o) "Investment Related Property" means (i) investment property (as that term is defined in the Code), and (ii) all of the following regardless of whether classified as investment property under the Code: all Pledged Interests, Pledged Operating Agreements, and Pledged Partnership Agreements. (p) "Lenders" has the meaning set forth in the recitals hereto. (q) "Negotiable Collateral" has the meaning set forth in Section 2. (r) "Parent" has the meaning set forth in the recitals hereto. 2 (s) "Patents" means all of the following now owned or hereafter adopted or acquired by a Grantor: patents and patent applications, including, without limitation, the patents and patent applications listed on Schedule 3 attached hereto and made a part hereof, and (i) all reissues, continuations, continuations-in-part, substitutes, extensions or renewals thereof, and improvements thereon, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements thereof, (iii) the right to sue for past, present and future infringements thereof, and (iv) all of each Grantor's rights corresponding thereto throughout the world. (t) "Patent Security Agreement" means each Patent Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group, in substantially the form of Exhibit B attached hereto. (u) "Pledged Companies" means each Person listed on Schedule 4 hereto as a "Pledged Company," together with each other Person, all or a portion of whose Stock is acquired or otherwise owned by a Grantor after the Closing Date. (v) "Pledged Interests" means all of each Grantor's right, title and interest in and to all of the Stock now or hereafter owned by such Grantor, regardless of class or designation, including, without limitation, in each of the Pledged Companies, and all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, including, without limitation, any certificates representing the Stock, the right to request after the occurrence and during the continuation of an Event of Default that such Stock be registered in the name of Agent or any of its nominees, the right to receive any certificates representing any of the Stock and the right to require that such certificates be delivered to Agent together with undated powers or assignments of investment securities with respect thereto, duly endorsed in blank by such Grantor, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof and of all dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing. (w) "Pledged Interests Addendum" means a Pledged Interests Addendum substantially in the form of Exhibit C to this Agreement. (x) "Pledged Operating Agreements" means all of each Grantor's rights, powers, and remedies under the limited liability company operating agreements of the Pledged Companies that are limited liability companies, if any. (y) "Pledged Partnership Agreements" means all of each Grantor's rights, powers, and remedies under the partnership agreements of each of the Pledged Companies that are partnerships, if any. (z) "Proceeds" has the meaning set forth in Section 2. (aa) "Records" means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form. (bb) "Secured Obligations" has the meaning set forth in the recitals hereto. (cc) "Security Interest" has the meaning set forth in Section 2. (dd) "Supporting Obligations" has the meaning set forth in Section 2. 3 (ee) "Trademarks" means all of the following now owned or hereafter adopted or acquired by a Grantor: trademarks, trade names, registered trademarks, trademark applications, service marks, registered service marks and service mark applications, including, without limitation, the trade names, registered trademarks, trademark applications, registered service marks and service mark applications listed on Schedule 5 attached hereto and made a part hereof, and (i) all extensions, modifications and renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, (iv) the goodwill of each Grantor's business symbolized by the foregoing, and (v) all of each Grantor's rights corresponding thereto throughout the world. (ff) "Trademark Security Agreement" means each Trademark Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group, in substantially the form of Exhibit D attached hereto. (gg) "URL" means "uniform resource locator," an internet web address. 2. Grant of Security. Each Grantor hereby unconditionally grants, assigns and pledges to Agent (and its agents and designees), for the benefit of the Lender Group, a continuing security interest in (hereinafter referred to as the "Security Interest") all of such Grantor's right, title, and interest in and to the following personal property, whether now owned or hereafter acquired or arising and wherever located (the "Collateral"): (a) all of such Grantor's Accounts; (b) all of such Grantor's books and records (including all of its Records indicating, summarizing, or evidencing its assets (including the Collateral) or liabilities, all of its Records relating to its business operations or financial condition, and all of its goods or General Intangibles related to such information) ("Books"); (c) all of such Grantor's chattel paper (as that term is defined in the Code) and, in any event, including, without limitation, tangible chattel paper and electronic chattel paper ("Chattel Paper"); (d) all of such Grantor's interest with respect to any Deposit Account; (e) all of such Grantor's Equipment and fixtures; (f) all of such Grantor's general intangibles (as that term is defined in the Code) and, in any event, including, without limitation, payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill (including the goodwill associated with any Trademark, Patent, or Copyright), Patents, Trademarks (provided that no security interest shall be granted in United States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law), Copyrights, URLs and domain names, industrial designs, other industrial or Intellectual Property or rights therein or applications therefor, whether under license or otherwise, rights in programs, programming materials, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, including Intellectual Property Licenses, infringement claims, rights in computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, pension plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refund claims, uncertificated securities, and any other personal property other than Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property, Negotiable Collateral, and oil, gas, or other minerals before extraction ("General Intangibles"); 4 (g) all of such Grantor's Inventory; (h) all of such Grantor's Investment Related Property; (i) all of such Grantor's letters of credit, letter of credit rights, instruments, promissory notes, drafts, and documents (as such terms may be defined in the Code) ("Negotiable Collateral"); (j) all of such Grantor's rights in respect of supporting obligations (as such term is defined in the Code), including letters of credit and guaranties issued in support of Accounts, Chattel Paper, documents, General Intangibles, instruments, or Investment Related Property ("Supporting Obligations"); (k) all of such Grantor's interest with respect to any commercial tort claims (as that term is defined in the Code), including, without limitation those commercial tort claims listed on Schedule 6 attached hereto ("Commercial Tort Claims"); (l) all of such Grantor's Real Property; (m) all of such Grantor's money, Cash Equivalents, or other assets of such Grantor that now or hereafter come into the possession, custody, or control of Agent (or its agent or designee) or any other member of the Lender Group; and (n) all of the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance or commercial tort claims covering or relating to any or all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations, Commercial Tort Claims, Real Property, money, or other tangible or intangible property resulting from the sale, lease, license, exchange, collection, or other disposition of any of the foregoing, the proceeds of any award in condemnation with respect to any of the property of Grantors, any rebates or refunds, whether for taxes or otherwise, and all proceeds of any such proceeds, or any portion thereof or interest therein, and the proceeds thereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insured or not insured, and, to the extent not otherwise included, any indemnity, warranty, or guaranty payable by reason of loss or damage to, or otherwise with respect to any of the foregoing Collateral (the "Proceeds"). Without limiting the generality of the foregoing, the term "Proceeds" includes whatever is receivable or received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, proceeds of any indemnity or guaranty payable to any Grantor or Agent from time to time with respect to any of the Investment Related Property. Notwithstanding the foregoing, "Collateral" shall not include (a) any rights or interests in any lease, license, contract, or agreement (including Pledged Operating Agreements and Pledged Partnership Agreements), as such, if under the terms of such lease, license, contract, or agreement (including Pledged Operating Agreements and Pledged Partnership Agreements), or applicable law with respect thereto, the valid grant of a security interest or lien therein to Agent is prohibited and such prohibition has not been or is not waived or the consent of the other party to such lease, license, contract, or agreement (including Pledged Operating Agreements and Pledged Partnership Agreements) has not been or is not otherwise obtained or under applicable law such prohibition cannot be waived; provided, that the foregoing exclusion shall in no way be (i) construed to apply if any such prohibition would be rendered ineffective under the Code or other applicable law (including the Bankruptcy Code) or principles of equity, (ii) construed so as to limit, impair or otherwise affect Agent's unconditional continuing security interests in and liens upon any rights or interests of Grantors in or to the proceeds thereof, including monies due or to become due under any such lease, license, contract, or agreement (including Pledged Operating Agreements and Pledged Partnership Agreements) (including any Accounts), or (iii) construed to apply at such time as the condition causing such prohibition shall be remedied and, to the extent severable, "Collateral" shall include any portion of such lease, license, contract, or agreement 5 (including Pledged Operating Agreements and Pledged Partnership Agreements) that does not result in such prohibition; (b) any of the outstanding capital Stock of any Controlled Foreign Corporation in excess of 65% of the voting power of all classes of capital stock of such Controlled Foreign Corporation entitled to vote; or (c) any of the outstanding capital Stock of TB Wood's (India) Private Limited. 3. Security for Obligations. This Agreement and the Security Interest created hereby secures the payment and performance of all the Secured Obligations, whether now existing or arising hereafter. Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Obligations and would be owed by Grantors, or any of them, to Agent, the Lender Group, or any of them, but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any Grantor. 4. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each of the Grantors shall remain liable under the contracts and agreements included in the Collateral, including, without limitation, the Pledged Operating Agreements and the Pledged Partnership Agreements, to perform all of the duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Agent or any other member of the Lender Group of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under such contracts and agreements included in the Collateral until such Grantor no longer has any interest therein, and (c) none of the members of the Lender Group shall have any obligation or liability under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall any of the members of the Lender Group be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. Until an Event of Default shall occur and be continuing, except as otherwise provided in this Agreement, the Credit Agreement, or any other Loan Document, Grantors shall have the right to possession and enjoyment of the Collateral for the purpose of conducting the ordinary course of their respective businesses, subject to and upon the terms hereof and of the Credit Agreement and the other Loan Documents. Without limiting the generality of the foregoing, it is the intention of the parties hereto that record and beneficial ownership of the Pledged Interests, including, without limitation, all voting, consensual, and dividend rights, shall remain with the applicable Grantor until the occurrence of an Event of Default and until Agent shall notify the applicable Grantor of Agent's exercise of voting, consensual, and/or dividend rights with respect to the Pledged Interests pursuant to Section 15 hereof. 5. Representations and Warranties. Each Grantor hereby represents and warrants as follows: (a) The exact legal name of each of the Grantors is set forth on the signature pages of this Agreement or a written notice provided to Agent pursuant to Section 6.5 of the Credit Agreement. (b) Schedule 7 attached hereto sets forth all Real Property owned by Grantors as of the Closing Date. (c) Such Grantor is the sole legal and beneficial owner, or, to such Grantor's knowledge, a licensee, of all Intellectual Property owned or purported to be owned by such Grantor or licensed to such Grantor that are material to the conduct of its business. As of the Closing Date, (i) such Grantor has no ownership interest in, or title to, any Copyrights, Patents or Trademarks that are registered or the subject of pending applications for registrations, except as set forth on Schedules 1(a), 3(a) and 5(a), respectively, attached hereto; (ii) such Grantor has no ownership interest in, or title to, any Copyrights, Patents or Trademarks that are material to such Grantor's business and that are not registered or the subject of pending applications for registrations, except as set forth in Schedules 1(b), 3(b) and 5(b), respectively, attached hereto; and (iii) such Grantor is not a party to any Intellectual Property Licenses that are material to such Grantor's business, except as set forth on Schedule 2, attached hereto. This Agreement is effective to create a valid and continuing Lien on such Grantor's Copyrights, Patents and Trademarks, and all of its rights and interests in and to any Intellectual Property Licenses. To the extent that the Security Interest in and to such Grantor's Patents, Trademarks and Copyrights can be perfected by filing the following documents, upon the filing of the 6 Copyright Security Agreement with the United States Copyright Office and filing of the Patent Security Agreement and the Trademark Security Agreement with the United States Patent and Trademark Office, and the filing of appropriate financing statements in the jurisdictions listed on Schedule 8 hereto, all action necessary to perfect the Security Interest in and to such Grantor's Patents, Trademarks, and Copyrights, will have been taken and such perfected Security Interests will be enforceable as such as against any and all creditors of and purchasers from any Grantor. (d) This Agreement creates a valid security interest in the Collateral of such Grantors, to the extent a security interest therein can be created under the Code, securing the payment and performance of the Secured Obligations. To the extent a security interest in the Collateral can be perfected by the filing of a financing statement under the Code, all filings and other actions necessary to perfect such security interest as of the Closing Date have been duly taken or will have been taken upon the filing of financing statements listing such Grantor, as a debtor, and Agent, as secured party, in the jurisdictions listed next to such Grantor's name on Schedule 8 attached hereto. Upon the making of such filings, Agent shall have a first priority perfected security interest in the Collateral (subject to Permitted Liens) of such Grantor to the extent such security interest can be perfected by the filing of a financing statement under the Code. (e) Except for the Security Interest created hereby, (i) subject to Section 6.3 and Section 6.4 of the Credit Agreement, such Grantor is and will at all times be the sole holder of record and the legal and beneficial owner, free and clear of all Liens other than Permitted Liens, of the Pledged Interests indicated on Schedule 4 hereto (as supplemented or modified by any Pledged Interests Addendum or any Supplement to this Agreement) as being owned by such Grantor and, when acquired by such Grantor, any Pledged Interests acquired after the Closing Date; (ii) all of the Pledged Interests are duly authorized, validly issued, fully paid and nonassessable and the Pledged Interests constitute or will constitute the percentage of the issued and outstanding Stock of the Pledged Companies of such Grantor identified on Schedule 4 hereto as supplemented or modified by any Pledged Interests Addendum or any Supplement to this Agreement; (iii) such Grantor has the right and requisite authority to pledge the Investment Related Property constituting Collateral pledged by such Grantor to Agent as provided herein; (iv) all actions necessary to perfect, establish the first priority of (subject to Permitted Liens) Agent's Liens in the Investment Related Property constituting Collateral, and the proceeds thereof, have been duly taken, (A) upon the execution and delivery of this Agreement, (B) upon the taking of possession by Agent (or its agent or designee) of any certificates constituting the Pledged Interests, to the extent such Pledged Interests are represented by certificates, together with undated powers endorsed in blank by such Grantor, (C) upon the filing of financing statements in the applicable jurisdiction set forth on Schedule 8 attached hereto for such Grantor with respect to the Pledged Interests of such Grantor that are not represented by certificates, and (D) with respect to any Securities Accounts, upon the delivery of Control Agreements with respect thereto; and (v) such Grantor has delivered to and deposited with Agent (or, with respect to any Pledged Interests created after the Closing Date, will deliver and deposit in accordance with Sections 6(a) and 8 hereof) all certificates representing the Pledged Interests owned by such Grantor to the extent such Pledged Interests constitute Collateral and are represented by certificates, and undated powers endorsed in blank with respect to such certificates. (f) No consent, approval, authorization, or other order or other action by, and no notice to or filing with, any Governmental Authority or any other Person is required (i) for the grant of a Security Interest by such Grantor in and to the Collateral pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by such Grantor, or (ii) for the exercise by Agent of the voting or other rights provided for in this Agreement with respect to the Investment Related Property constituting Collateral or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with such disposition of Investment Related Property by laws affecting the offering and sale of securities generally. (g) [intentionally omitted] (h) Such Grantor has made in good faith and in accordance with the procedures and regulations of the United States Copyright Office and the United States Patent and Trademark Office, as 7 applicable, all payments, filings and recordations necessary to protect and maintain its interest in the Copyrights, Patents and Trademarks utilized and identified on Schedules 1(a), 3(a) and 5(a) in the United States in a manner sufficient to claim in the public record such Grantor's ownership thereof, including (i) making all necessary registration, maintenance, and renewal fee payments; and (ii) filing all necessary documents, including all applications for registration of such Copyrights, Patents and Trademarks, in each case, except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Change. (i) [intentionally omitted] (j) [intentionally omitted] (k) No claim has been made in writing and is continuing or, to such Grantor's knowledge, threatened in any written communication directed toward any Grantor that the use by such Grantor of any Intellectual Property does or may violate the Intellectual Property of any Person, except to the extent the same could not reasonably be expected to have a Material Adverse Change. To such Grantor's knowledge, there is currently no infringement or unauthorized use of any item of Intellectual Property contained on Schedules 1, 3 or 5, except to the extent the same could not reasonably be expected to have a Material Adverse Change. 6. Covenants. Each Grantor, jointly and severally, covenants and agrees with Agent and the Lender Group that from and after the date of this Agreement and until the date of termination of this Agreement in accordance with Section 22 hereof: (a) Possession or Control of Collateral. In the event that any Collateral, including Proceeds, is evidenced by or consists of Negotiable Collateral, Investment Related Property, Chattel Paper, or Deposit Accounts, and if and to the extent that perfection or priority of Agent's Security Interest is dependent on possession or control, such Grantor, immediately upon the request of Agent and in accordance with Section 8 hereof, shall execute such other documents and instruments as shall be reasonably requested by Agent or endorse and deliver physical possession of such Negotiable Collateral, Investment Related Property, or Chattel Paper, together with such undated powers endorsed in blank as shall be requested by Agent (or its agent or designee), or grant control of such Deposit Account, as applicable, to Agent (or its agent or designee). Such Grantor hereby acknowledges and agrees that any such agent or designee of Agent shall be deemed to be a "secured party" with respect to such Collateral for all purposes. (b) Chattel Paper. (i) Such Grantor shall take all commercially reasonable steps necessary to grant Agent control of all electronic Chattel Paper in accordance with the Code and all "transferable records" as that term is defined in Section 16 of the Uniform Electronic Transaction Act and Section 201 of the federal Electronic Signatures in Global and National Commerce Act as in effect in any relevant jurisdiction; (ii) If such Grantor retains possession of any Chattel Paper or instruments (which retention of possession shall be subject to the extent permitted hereby and by the Credit Agreement), promptly upon the request of Agent, such Chattel Paper and instruments shall be marked with the following legend: "This writing and the obligations evidenced or secured hereby are subject to the Security Interest of Wells Fargo Foothill, Inc., as Agent for the benefit of the Lender Group, pursuant to the Security Agreement dated as of April 5, 2007". 8 (c) Control Agreements. (i) Except to the extent otherwise permitted by the Credit Agreement, such Grantor shall obtain an authenticated Control Agreement from each bank holding a Deposit Account for such Grantor. (ii) Except to the extent otherwise permitted by the Credit Agreement, such Grantor shall obtain authenticated Control Agreements from each issuer of uncertificated securities, securities intermediary, or commodities intermediary issuing or holding any financial assets or commodities to or for any Grantor. (d) Letter of Credit Rights. If such Grantor is or becomes the beneficiary of a letter of credit with a value in excess of $100,000, such Grantor shall (i) if the value is in excess of $1,000,000, promptly (and in any event within 10 Business Days after becoming a beneficiary) and (ii) if the value is not in excess of $1,000,000, simultaneously with the delivery of quarterly financial statements required pursuant to Section 5.3 of the Credit Agreement, notify Agent thereof and, upon the request by Agent, enter into a tri-party agreement with Agent and the issuer and/or confirmation bank with respect to letter-of-credit rights (as that term is defined in the Code) assigning such letter-of-credit rights to Agent and directing all payments thereunder to Agent's Account, all in form and substance reasonably satisfactory to Agent. (e) Commercial Tort Claims. Such Grantor shall (i) if the value is in excess of $1,000,000, promptly (and in any event within 10 Business Days thereafter) and (ii) if the value is not in excess of $1,000,000, simultaneously with the delivery of quarterly financial statements required pursuant to Section 5.3 of the Credit Agreement, notify Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim with a value in excess of $100,000 after the date hereof against any third party and, upon request of Agent, promptly amend Schedule 6 to this Agreement, authorize the filing of additional financing statements or amendments to existing financing statements and do such other acts or things deemed necessary by Agent to give Agent a first priority, perfected security interest (subject to Permitted Liens) in any such Commercial Tort Claim. (f) [intentionally omitted]. (g) Intellectual Property. (i) Upon the reasonable written request of Agent, in order to facilitate filings with the United States Patent and Trademark Office and the United States Copyright Office, such Grantor shall execute and deliver to Agent one or more Copyright Security Agreements, Trademark Security Agreements, and/or Patent Security Agreements to evidence Agent's Lien on such Grantor's Patents, Trademarks, and/or Copyrights, and the General Intangibles of such Grantor relating thereto or represented thereby. (ii) Such Grantor shall have the duty, to the extent material to the operation of such Grantor's business, (A) to reasonably investigate any third party infringement, or misappropriation of any Intellectual Property within a reasonable amount of time after such Grantor becomes aware of such infringement or misappropriation and, if determined by such Grantor to be reasonably necessary to protect such Grantor's rights in such Intellectual Property, take appropriate reasonable action to abate such infringement or misappropriation, (B) to prosecute diligently any trademark application or service mark application that is part of the Trademarks pending as of the date hereof or hereafter until the termination of this Agreement (other than applications that are deemed by such Grantor in its reasonable business judgment to no longer be necessary to the conduct of such Grantor's business), (C) to prosecute diligently any patent application that is part of the Patents pending as of the date hereof or hereafter until the termination of this Agreement (other than applications that are deemed by such Grantor in its reasonable business judgment to no longer be necessary to the conduct of such Grantor's business), and (D) to take reasonable and necessary action to preserve and maintain all of such Grantor's Trademarks, Patents, Copyrights, Intellectual Property 9 Licenses, and its rights therein, including the filing of applications for renewal, affidavits of use, and affidavits of incontestability. Any expenses incurred in connection with the foregoing shall be borne by the appropriate Grantor (other than Trademarks, Patents, Copyrights or Intellectual Property Licenses that are deemed by such Grantor in its reasonable business judgment to be no longer necessary in the conduct of such Grantor's business). Such Grantor further agrees not to abandon any Trademark, Patent, Copyright, or Intellectual Property License that is material to the operation of such Grantor's business without the prior written consent of Agent. (iii) Such Grantor acknowledges and agrees that the Lender Group shall have no duties with respect to the Trademarks, Patents, Copyrights, or Intellectual Property Licenses. Without limiting the generality of this Section 6(g), such Grantor acknowledges and agrees that no member of the Lender Group shall be under any obligation to take any steps necessary to preserve rights in the Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any other Person, but Agent may do so at its option from and after the occurrence and during the continuance of an Event of Default and all expenses incurred by Agent and Lenders in connection therewith (including, without limitation, reasonable fees and expenses of attorneys and other professionals), to the extent required to be paid under the Credit Agreement, shall be for the sole account of Borrowers and shall be chargeable to the Loan Account. (iv) With respect to the Intellectual Property that a Grantor determines, in its reasonable business judgment, is material to the conduct of Grantor's business, such Grantor agrees to take such steps as are reasonably necessary, including making all necessary payments and filings in connection with registration, maintenance, and renewal of Copyrights, Trademarks and Patents in the United States Copyright Office, the United States Patent and Trademark Office, any other relevant government agencies in foreign jurisdictions that Grantor in its reasonable business judgment deems material to its business, to maintain each such Intellectual Property. Such Grantor hereby agrees to take corresponding steps with respect to each new or acquired Intellectual Property to which it or any of its Subsidiaries is now or later becomes the sole owner or licensee of all rights, title and interest that such Grantor determines, in its reasonable business judgment, are material to the conduct of its businesses. Any expenses incurred in connection with such activities shall be borne solely by such Grantor. (v) On each date on which the Compliance Certificate is delivered by Administrative Borrower pursuant to Section 5.3 of the Credit Agreement, such Grantor shall provide Agent with a written report of all new Copyrights, Patents and Trademarks that are registered or the subject of pending applications for registrations, which were acquired or filed by such Grantor during the prior period. In the case of such registrations or applications therefor which were acquired by such Grantor, such Grantor shall file the necessary documents with the appropriate filing office identifying such Grantor as the owner thereof. In each of the foregoing cases, such Grantor shall cause to be prepared, executed, and delivered to Agent supplemental schedules to the applicable Loan Documents to identify such Copyright, Patent and Trademark registrations and applications therefor as being subject to the security interests created thereunder. (vi) Upon such a Grantor's receipt from the United States Copyright Office of written notice of registration of any Copyright(s), such Grantor shall promptly (but in no event later than 30 days following such receipt) notify Agent of such registration by delivering, or causing to be delivered to Agent, via overnight courier, electronic mail or telefacsimile at the addresses designated in the Credit Agreement, documentation reasonably sufficient for Agent to perfect Agent's Liens on such Copyright(s). (h) Investment Related Property. (i) Subject to Section 5.16 of the Credit Agreement, if such Grantor shall receive or become entitled to receive any Pledged Interests after the Closing Date, it shall (i) if the value is in excess of $1,000,000, promptly (and in any event within 10 Business Days thereafter) and (ii) if the value is not in excess of $1,000,000, simultaneously with the delivery of quarterly financial statements required 10 pursuant to Section 5.3 of the Credit Agreement, deliver to Agent a duly executed Pledged Interests Addendum identifying such Pledged Interests. (ii) All sums of money and property paid or distributed in respect of the Investment Related Property which are received by such Grantor shall be held by such Grantor in trust for the benefit of Agent segregated from such Grantor's other property. (iii) Such Grantor shall promptly deliver to Agent a copy of each material notice or other material communication received by it in respect of any Pledged Interests. (iv) After an Event of Default has occurred and is continuing, such Grantor agrees that it will cooperate with Agent in obtaining all necessary approvals and making all necessary filings under federal, state, local, or foreign law in connection with the Security Interest on the Investment Related Property or any sale or transfer thereof. (v) As to all limited liability company or partnership interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement, such Grantor hereby represents, warrants and covenants that the Pledged Interests issued pursuant to any such agreement (A) are not and shall not be dealt in or traded on securities exchanges or in securities markets, (B) do not and will not constitute investment company securities, and (C) are not and will not be held by such Pledgor in a securities account. (i) [intentionally omitted]. (j) Transfers and Other Liens. Such Grantor shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, except as expressly permitted by the Credit Agreement, or (ii) create or permit to exist any Lien upon or with respect to any of its Collateral, except for Permitted Liens. The inclusion of Proceeds in the Collateral shall not be deemed to constitute Agent's consent to any sale or other disposition of any of the Collateral except as expressly permitted in this Agreement or the other Loan Documents. (k) Other Actions as to Any and All Collateral. Subject to Section 5.16 of the Credit Agreement, such Grantor shall (i) if the value is in excess of $1,000,000, promptly (and in any event within 10 Business Days thereafter) and (ii) if the value is not in excess of $1,000,000, simultaneously with the delivery of quarterly financial statements required pursuant to Section 5.3 of the Credit Agreement, notify Agent in writing upon (i) acquiring or otherwise obtaining any Collateral (other than Intellectual Property, which are governed by Sections 6(g)(v)) after the date hereof consisting of Investment Related Property, Chattel Paper (electronic, tangible or otherwise), documents (as defined in the Code), promissory notes (as defined in the Code), or instruments (as defined in the Code) or (ii) any amount payable under or in connection with any of the Collateral being or becoming evidenced after the date hereof by any Chattel Paper, documents, promissory notes or instruments, and, upon the request of Agent and in accordance with Section 8 hereof, promptly execute such other documents and instruments, or if applicable, deliver such Chattel Paper, documents, promissory notes, instruments, or certificates evidencing any Investment Related Property in accordance with Section 6 hereof and do such other acts or things deemed necessary by Agent to protect Agent's Security Interest therein. 7. Relation to Other Security Documents. The provisions of this Agreement shall be read and construed with the other Loan Documents referred to below in the manner so indicated. (a) Credit Agreement. In the event of any conflict between any provision in this Agreement and a provision in the Credit Agreement, such provision of the Credit Agreement shall control. (b) Patent, Trademark, Copyright Security Agreements. The provisions of the Copyright Security Agreements, Trademark Security Agreements, and Patent Security Agreements are supplemental to 11 the provisions of this Agreement, and nothing contained in the Copyright Security Agreements, Trademark Security Agreements, or the Patent Security Agreements shall limit any of the rights or remedies of Agent hereunder. 8. Further Assurances. (a) Each Grantor agrees that from time to time, at its own expense, such Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that Agent may reasonably request, in order to perfect and protect any Security Interest granted or purported to be granted hereby or to enable Agent to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral. (b) Each Grantor hereby authorizes the filing of such financing or continuation statements, or amendments thereto, and such Grantor will execute and deliver to Agent such other instruments or notices, as may be necessary or as Agent may reasonably request, in order to perfect and preserve the Security Interest granted or purported to be granted hereby. (c) Each Grantor hereby authorizes Agent to file, transmit, or communicate, as applicable, financing statements and amendments describing the Collateral as "all personal property of debtor" or "all assets of debtor" or words of similar effect, in order to perfect Agent's security interest in the Collateral without such Grantor's signature. (d) Each Grantor acknowledges that, prior to the termination of this Agreement, it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement filed in connection with this Agreement without the prior written consent of Agent, subject to such Grantor's rights under Section 9-509(d)(2) of the Code. 9. Agent's Right to Perform Contracts. Upon the occurrence and during the continuance of an Event of Default, Agent (or its designee) may proceed to perform any and all of the obligations of any Grantor contained in any contract, lease, or other agreement and exercise any and all rights of any Grantor therein contained as fully as such Grantor itself could, subject to the terms of such contract, lease or other agreement. 10. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, at such time as an Event of Default has occurred and is continuing under the Credit Agreement, to take any action and to execute any instrument which Agent may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation: (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in connection with the Accounts or any other Collateral of such Grantor; (b) to receive and open all mail addressed to such Grantor and to notify postal authorities to change the address for the delivery of mail to such Grantor to that of Agent; (c) to receive, indorse, and collect any drafts or other instruments, documents, Negotiable Collateral or Chattel Paper; (d) to file any claims or take any action or institute any proceedings which Agent may deem necessary or desirable for the collection of any of the Collateral of such Grantor or otherwise to enforce the rights of Agent with respect to any of the Collateral; 12 (e) to repair, alter, or supply goods, if any, necessary to fulfill in whole or in part the purchase order of any Person obligated to such Grantor in respect of any Account of such Grantor; (f) to use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial designs, Copyrights, advertising matter or other industrial or intellectual property rights, in advertising for sale and selling Inventory and other Collateral and to collect any amounts due under Accounts, contracts or Negotiable Collateral of such Grantor; and (g) Agent, on behalf of the Lender Group, shall have the right, but shall not be obligated, to bring suit in its own name to enforce the Trademarks, Patents, Copyrights and Intellectual Property Licenses and, if Agent shall commence any such suit, the appropriate Grantor shall, at the request of Agent, do any and all lawful acts and execute any and all proper documents reasonably required by Agent in aid of such enforcement. To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable until this Agreement is terminated. 11. Agent May Perform. If any Grantor fails to perform any agreement contained herein, Agent may itself perform, or cause performance of, such agreement, and the reasonable expenses of Agent incurred in connection therewith shall be payable, jointly and severally, by Grantors. 12. Agent's Duties. The powers conferred on Agent hereunder are solely to protect Agent's interest in the Collateral, for the benefit of the Lender Group, and shall not impose any duty upon Agent to exercise any such powers. Except for the safe custody of any Collateral in its actual possession and the accounting for moneys actually received by it hereunder, Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its actual possession if such Collateral is accorded treatment substantially equal to that which Agent accords its own property. 13. Collection of Accounts, General Intangibles and Negotiable Collateral. At any time upon the occurrence and during the continuation of an Event of Default, Agent or Agent's designee may (a) notify Account Debtors of any Grantor that such Grantor's Accounts, General Intangibles, Chattel Paper or Negotiable Collateral have been assigned to Agent, for the benefit of the Lender Group, or that Agent has a security interest therein, and (b) collect such Grantor's Accounts, General Intangibles and Negotiable Collateral directly, and any collection costs and expenses shall constitute part of such Grantor's Secured Obligations under the Loan Documents. 14. Disposition of Pledged Interests by Agent. None of the Pledged Interests existing as of the date of this Agreement are, and none of the Pledged Interests hereafter acquired on the date of acquisition thereof will be, registered or qualified under the various federal or state securities laws of the United States and disposition thereof after an Event of Default may be restricted to one or more private (instead of public) sales in view of the lack of such registration. Each Grantor understands that in connection with such disposition, Agent may approach only a restricted number of potential purchasers and further understands that a sale under such circumstances may yield a lower price for the Pledged Interests than if the Pledged Interests were registered and qualified pursuant to federal and state securities laws and sold on the open market. Each Grantor, therefore, agrees that: (a) if Agent shall, pursuant to the terms of this Agreement, sell or cause the Pledged Interests or any portion thereof to be sold at a private sale, Agent shall have the right to rely upon the advice and opinion of any nationally recognized brokerage or investment firm (but shall not be obligated to seek such advice and the failure to do so shall not be considered in determining the commercial reasonableness of such action) as to the best manner in which to offer the Pledged Interest for sale and as to the best price 13 reasonably obtainable at the private sale thereof; and (b) such reliance shall be conclusive evidence that Agent has handled the disposition in a commercially reasonable manner. 15. Voting Rights. (a) Upon the occurrence and during the continuation of an Event of Default, (i) Agent may, at its option, and with prior notice (unless such Event of Default is an Event of Default specified in Section 7.4 or 7.5 of the Credit Agreement, in which case no such notice need be given) to each Grantor, and in addition to all rights and remedies available to Agent under any other agreement, at law, in equity, or otherwise, exercise all voting rights, and all other ownership or consensual rights in respect of the Pledged Interests owned by such Grantor, but under no circumstances is Agent obligated by the terms of this Agreement to exercise such rights, and (ii) if Agent duly exercises its right to vote any of such Pledged Interests, each Grantor hereby appoints Agent such Grantor's true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any manner Agent deems advisable for or against all matters submitted or which may be submitted to a vote of shareholders, partners or members, as the case may be. The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable. (b) For so long as any Grantor shall have the right to vote the Pledged Interests owned by it, such Grantor covenants and agrees that it will not, without the prior written consent of Agent, vote or take any consensual action with respect to such Pledged Interests which would materially and adversely affect the rights of Agent and the other members of the Lender Group or that would result in any violation of any provision of the Credit Agreement or any other Loan Document. 16. Remedies. Upon the occurrence and during the continuance of an Event of Default: (a) Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and remedies of a secured party on default under the Code or any other applicable law. Without limiting the generality of the foregoing, each Grantor expressly agrees that, in any such event, Agent, without demand of performance or other demand, advertisement or notice of any kind (except a notice specified below of time and place of public or private sale) to or upon any of Grantors or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code or any other applicable law), may take immediate possession of all or any portion of the Collateral and (i) require Grantors to, and each Grantor hereby agrees that it will at its own expense and upon request of Agent forthwith, assemble all or part of the Collateral as directed by Agent and make it available to Agent at one or more locations where such Grantor regularly maintains Inventory, and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of Agent's offices or elsewhere, for cash, on credit, and upon such other terms as Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least 10 days notice (or such longer notice period as may be required by law) to any of Grantors of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification and specifically such notice shall constitute a reasonable "authenticated notification of disposition" within the meaning of Section 9-611 of the Code. Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (b) Agent is hereby granted a non-exclusive license or other right to use, without liability for royalties or any other charge, each Grantor's labels, Patents, Copyrights, rights of use of any name, trade secrets, trade names, Trademarks, service marks and advertising matter, URLs, domain names, industrial designs, other industrial or intellectual property or any property of a similar nature, whether owned or licensable by any Grantor or with respect to which any Grantor has sublicensable rights under license, sublicense, or other agreements, as it pertains to the Collateral, in preparing for sale, advertising for sale and 14 selling any Collateral, and each Grantor's rights under all licenses and all franchise agreements shall inure to the benefit of Agent; provided, however, that Agent may exercise the foregoing only upon the occurrence and during the continuance of an Event of Default. (c) Any cash held by Agent as Collateral and all cash proceeds received by Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied against the Secured Obligations in the order set forth in the Credit Agreement. In the event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in full, each Grantor shall remain jointly and severally liable for any such deficiency. (d) Agent shall have the right to seek the appointment of a receiver for the properties and assets of each Grantor and hereby waives the right to have a bond or other security posted by Agent. 17. Remedies Cumulative. Each right, power, and remedy of Agent as provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Agent, of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by Agent of any or all such other rights, powers, or remedies. 18. Marshaling. Agent shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of Agent's rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws. 19. Indemnity and Expenses. (a) Each Grantor agrees to indemnify, defend and hold harmless Agent and the other members of the Lender Group to the same extent and in the same manner as the indemnity made by the Borrowers pursuant to Section 10.3 of the Credit Agreement. This provision shall survive the termination of this Agreement and the Credit Agreement and the repayment of the Secured Obligations. (b) Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent, may charge to the Loan Account) all the Lender Group Expenses which Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the Collateral in accordance with this Agreement and the other Loan Documents, (iii) the exercise or enforcement of any of the rights of Agent hereunder or (iv) the failure by any of Grantors to perform or observe any of the provisions hereof. 20. Merger, Amendments; Etc. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no consent to any departure by any of Grantors herefrom, shall in any event be effective unless the same shall be in 15 writing and signed by Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any provision of this Agreement shall be effective unless the same shall be in writing and signed by Agent and each of Grantors to which such amendment applies. 21. Addresses for Notices. All notices and other communications provided for hereunder shall be given in the form, manner and delivered to Agent at its address specified in the Credit Agreement, and to any of the Grantors at their respective addresses specified in the Credit Agreement or Guaranty, as applicable, or, as to any party, at such other address as shall be designated by such party in a written notice to the other party. 22. Continuing Security Interest; Assignments under Credit Agreement. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the Obligations have been paid in full in cash in accordance with the provisions of the Credit Agreement and the Commitments have expired or have been terminated, (b) be binding upon each Grantor, and their respective successors and assigns, and (c) inure to the benefit of, and be enforceable by, Agent, and its successors, permitted transferees and permitted assigns. Without limiting the generality of the foregoing clause (c), any Lender may, in accordance with the provisions of the Credit Agreement, assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise. Upon payment in full in cash of the Obligations in accordance with the provisions of the Credit Agreement and the expiration or termination of the Commitments, the Security Interest granted hereby shall terminate and this Agreement and all rights to the Collateral shall revert to Grantors or any other Person entitled thereto. At such time, Agent will file, or authorize the filing of, appropriate termination statements to terminate such Security Interests, will return any Collateral in its possession to the applicable Grantor (or its designee) and will execute any documents and take such commercially reasonable actions as are reasonably requested by any Grantor to evidence such termination and release. No transfer or renewal, extension, assignment, or termination of this Agreement or of the Credit Agreement, any other Loan Document, or any other instrument or document executed and delivered by any Grantor to Agent nor any additional Term Loan, LC Obligation or other loans made by any Lender to Borrowers, nor the taking of further security, nor the retaking or re-delivery of the Collateral to Grantors, or any of them, by Agent, nor any other act of the Lender Group, or any of them, shall release any Grantor from any obligation, except a release or discharge executed in writing by Agent in accordance with the provisions of the Credit Agreement. Agent shall not by any act, delay, omission or otherwise, be deemed to have waived any of its rights or remedies hereunder, unless such waiver is in writing and signed by Agent and then only to the extent therein set forth. A waiver by Agent of any right or remedy on any occasion shall not be construed as a bar to the exercise of any such right or remedy which Agent would otherwise have had on any other occasion. 23. Governing Law. (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY 16 COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GRANTOR AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 23. (c) EACH GRANTOR AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH GRANTOR AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 24. New Subsidiaries. To the extent required by Section 5.16 of the Credit Agreement, any new direct or indirect Subsidiary (whether by acquisition or creation) of Borrowers or any other Grantor is required to enter into this Agreement by executing and delivering in favor of Agent a supplement to this Security Agreement in the form of Annex 1 attached hereto. Upon the execution and delivery of such supplement by such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Agreement shall not require the consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor hereunder. 25. Agent. Each reference herein to any right granted to, benefit conferred upon or power exercisable by the "Agent" shall be a reference to Agent, for the benefit of the Lender Group. 26. Miscellaneous. (a) This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis. (b) Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction. (c) Headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof. (d) The pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction of sentences shall conform thereto. 17 [SIGNATURE PAGES TO FOLLOW] 18 IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through their duly authorized officers, as of the day and year first above written. GRANTORS: TB WOOD'S INCORPORATED, a Pennsylvania corporation, as a Grantor By: /s/ Joseph C. Horvath ------------------------------------ Name: Joseph C. Horvath ---------------------------------- Title: VP, 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 and Treasurer --------------------------------- TB WOOD'S CORPORATION, a Delaware corporation, as a Grantor By: /s/ Joseph C. Horvath ------------------------------------ Name: Joseph C. Horvath ---------------------------------- Title: VP, CFO and Corporate Secretary --------------------------------- [SIGNATURE PAGE OF WFF - TB WOOD'S SECURITY AGREEMENT] AGENT: WELLS FARGO FOOTHILL, INC., a California corporation, as Agent By: /s/ Vincent J. Egan, Jr. ------------------------------------ Name: Vincent J. Egan, Jr. ---------------------------------- Title: VP --------------------------------- [SIGNATURE PAGE OF WFF - TB WOOD'S SECURITY AGREEMENT] SCHEDULE 1 COPYRIGHTS None. 1 SCHEDULE 2 INTELLECTUAL PROPERTY LICENSES Trademark Licenses: 1. Agreement between T.B. Wood's Sons Company and Nabeya Kogyo Co., Ltd., dated April 8, 1986. 2. Agreement between T.B. Wood's Sons Company and Daido-Sprag Ltd., dated December 13, 1994. 3. Agreement between T.B. Wood's Incorporated and Daido Precision Ltd., dated April 1, 2000. 4. License Agreement between Plant Engineering Consultants, Inc. and TB Wood's Enterprises, Inc. dated January 1, 2000. 5. License Agreement between Societe Industrielle de Transmissions d/b/a Texrope and T.B. Wood's Sons Company dated July 1, 1972. 6. Addendum Number 1 to the License Agreement between TB Wood's Sons company and Societe Industrielle de Transmissions d/b/a Texrope, dated June 18, 1982. 2 SCHEDULE 3 PATENTS

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

3 SCHEDULE 4 PLEDGED COMPANIES

NAME OF PLEDGOR NAME OF PLEDGED COMPANY NUMBER OF CLASS OF PERCENTAGE OF CERTIFICATE PERCENTAGE OF SHARES/UNITS INTERESTS CLASS OWNED NOS. CLASS PLEDGED - ----------------------------- --------------------------- --------------- -------------- -------------- ----------- -------------- Altra Industrial Motion, Inc. TB Wood's Corporation 1,000 common 100% C-1 100% TB Wood's Corporation TB Wood's Incorporated 1,125,000 common 100% 2 100% TB Wood's Incorporated Plant Engineering 100% membership LLC membership 100% n/a 100% Consultants, LLC interest interests TB Wood's Incorporated TB Wood's Enterprises, Inc. 3,000 common 100% 2 100% TB Wood's Incorporated Industrial Blaju, S.A. de 50,000 common 100% 1 65% C.V. TB Wood's Incorporated T.B. Wood's Canada Ltd. 5,255 common 100% 1014 65% TB Wood's Incorporated Berges Electronic GmBH 100% 65%

4 SCHEDULE 5 TRADEMARKS

APPLICATION/ GRANTOR COUNTRY MARK REGISTRATION NO. APP/REG DATE - ----------------------- -------------------- ---------------------- -------------------- -------------------- 5

APPLICATION/ GRANTOR COUNTRY MARK REGISTRATION NO. APP/REG DATE - ----------------------- -------------------- ---------------------- -------------------- -------------------- 6

APPLICATION/ GRANTOR COUNTRY MARK REGISTRATION NO. APP/REG DATE - ----------------------- -------------------- ---------------------- -------------------- -------------------- 7

APPLICATION/ GRANTOR COUNTRY MARK REGISTRATION NO. APP/REG DATE - ----------------------- -------------------- ---------------------- -------------------- -------------------- Incorporated 02 3 196 347 11/27/2002 TB Wood's Incorporated Italy SURE-FLEX MI2003002784/ 9/25/1992/ 654849 9/25/1974 TB Wood's Incorporated Canada WOOD'S@WORK 1,157,004/ 10/25/2002/ TMA626,975 11/29/2004

8 SCHEDULE 6 COMMERCIAL TORT CLAIMS None. SCHEDULE 7 OWNED REAL PROPERTY TB WOOD'S INCORPORATED Main offices, warehouse Mechanical Division manufacturing plant: 440 North Fifth Street Chambersburg, PA 17201 Electronics Division Offices and manufacturing plant 3181 Black Gap Road Chambersburg, PA 17201 801 E. Industrial Ave. Mt. Pleasant, Michigan 48858 2000 Clovis Baker Road San Marcos, TX 78666 Houser Road Greene, PA 10 SCHEDULE 8 LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS Grantor Jurisdictions TB Wood's Corporation Delaware TB Wood's Incorporated Pennsylvania Plant Engineering Consultants, LLC Tennessee TB Wood's Enterprises, Inc. Delaware 11 ANNEX 1 TO SECURITY AGREEMENT FORM OF SUPPLEMENT Supplement No. ____ (this "Supplement") dated as of _______________, 200_, to the Security Agreement dated as of April 5, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the "Security Agreement") by each of the parties listed as "Grantors" on the signature pages thereto and those additional entities that thereafter become grantors thereunder (collectively, jointly and severally, "Grantors" and each individually "Grantor"), and WELLS FARGO FOOTHILL, INC., in its capacity as 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, 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, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and/or the Credit Agreement; WHEREAS, Grantors have entered into the Security Agreement in order to induce the Lender Group to make certain financial accommodations to Borrowers; and WHEREAS, pursuant to Section 5.16 of the Credit Agreement, new direct or indirect Restricted Subsidiaries of Borrowers and the other Grantors, must execute and deliver to Agent certain Loan Documents, including the Security Agreement, and the execution of the Security Agreement by the undersigned new Grantor or Grantors (collectively, the "New Grantors") may be accomplished by the execution of this Supplement in favor of Agent, for the benefit of the Lender Group. NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each New Grantor hereby agrees as follows: 1. In accordance with Section 24 of the Security Agreement, each New Grantor, by its signature below, becomes a "Grantor" under the Security Agreement with the same force and effect as if originally named therein as a "Grantor" and each New Grantor hereby (a) agrees to all of the terms and provisions of the Security Agreement applicable to it as a "Grantor" thereunder and (b) represents and warrants that the representations and warranties made by it as a "Grantor" thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, each New Grantor, as security for the payment and performance in full of the Secured Obligations, does hereby grant, assign, and pledge to Agent, for the benefit of the Lender Group, a security interest in and security title to the assets of such New Grantor of the type described in Section 2 of the Security Agreement to secure the full and prompt payment of the Secured Obligations, including, without limitation, any interest thereon, plus reasonable attorneys' fees and expenses if the Secured Obligations represented by the Security Agreement are collected by law, through an attorney-at-law, or under advice therefrom to the extent such fees and expenses are required to be paid by the Borrowers under the Credit Agreement. Schedule 1, "Copyrights," Schedule 2, "Intellectual Property Licenses," Schedule 3, "Patents," Schedule 4, "Pledged Companies," Schedule 5, "Trademarks," Schedule 6, "Commercial Tort Claims," Schedule 7, "Owned Real Property," and Schedule 8, "List of Uniform Commercial Code Filing Jurisdictions," attached hereto supplement Schedule 1, Schedule 2, Schedule 3, Schedule 4, Schedule 5, Schedule 6, Schedule 7, and Schedule 8, respectively, to the Security Agreement and shall be deemed a part thereof for all purposes of the Security Agreement. Each reference to a "Grantor" in the Security Agreement shall be deemed to include each New Grantor. The Security Agreement is incorporated herein by reference. 2. Each New Grantor represents and warrants to Agent, the Lender Group that this Supplement has been duly executed and delivered by such New Grantor and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). 3. This Supplement may be executed in multiple 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. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission shall be as effective as delivery of a manually executed counterpart hereof. 4. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect. 5. This Supplement shall be construed in accordance with and governed by the laws of the State of New York, without regard to the conflict of laws principles thereof. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, each New Grantor and Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written. NEW GRANTORS: [NAME OF NEW GRANTOR] By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- [NAME OF NEW GRANTOR] By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- AGENT: WELLS FARGO FOOTHILL, INC., a California corporation, as Agent By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SIGNATURE PAGE OF SUPPLEMENT TO SECURITY AGREEMENT EXHIBIT A FORM OF COPYRIGHT SECURITY AGREEMENT This COPYRIGHT SECURITY AGREEMENT (this "Copyright Security Agreement") is made this ___ day of ___________, 2004, among 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 Agent for the Lender Group (together with its successors and assigns in such capacity, the "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 Parent's 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 the 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 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 Copyright 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, Grantors hereby agree 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 COPYRIGHT 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 "Copyright Collateral"): (a) all of such Grantor's Copyrights and rights in or to Copyright Intellectual Property Licenses to which it is a party including those referred to on Schedule I hereto; (b) all restorations, reversions, renewals or extensions of 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 Copyright. 3. SECURITY AGREEMENT. The security interests granted pursuant to this Copyright 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 Copyright 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 United States registered copyrights or applications therefor which become part of the Copyright Collateral under the Security Agreement. Notwithstanding the foregoing, no failure to so modify this Copyright 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 Copyright 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 Copyright Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above. GRANTORS: _______________________________________, a ____________ corporation, as a Grantor By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- _______________________________________, a ____________ corporation, as a Grantor By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- _______________________________________, a ____________ corporation, as a Grantor By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SIGNATURE PAGE OF COPYRIGHT SECURITY AGREEMENT AGENT: WELLS FARGO FOOTHILL, INC., a California corporation, as Agent By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SIGNATURE PAGE OF COPYRIGHT SECURITY AGREEMENT 2 SCHEDULE I TO COPYRIGHT SECURITY AGREEMENT COPYRIGHT REGISTRATIONS

GRANTOR COUNTRY COPYRIGHT REGISTRATION NO. REGISTRATION DATE - ------- ------- --------- ---------------- -----------------

COPYRIGHT SECURITY AGREEMENT EXHIBIT B FORM OF PATENT SECURITY AGREEMENT This PATENT SECURITY AGREEMENT (this "Patent Security Agreement") is made this ___ day of ___________, 2004, 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: ______________________________, a _________ corporation, as a Grantor By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ______________________________, a _________ corporation, as a Grantor By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ______________________________, a _________ corporation, as a Grantor By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SIGNATURE PAGE OF PATENT SECURITY AGREEMENT AGENT: WELLS FARGO FOOTHILL, INC., a California corporation, as Agent By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SIGNATURE PAGE OF PATENT SECURITY AGREEMENT SCHEDULE I TO PATENT SECURITY AGREEMENT PATENTS AND PATENT APPLICATIONS

GRANTOR COUNTRY PATENT REGISTRATION NO. REGISTRATION DATE - ------- ------- ------ ---------------- -----------------

EXHIBIT C PLEDGED INTERESTS ADDENDUM This Pledged Interests Addendum, dated as of _________ ___, 20___, is delivered pursuant to Section 6 of the Security Agreement referred to below. The undersigned hereby agrees that this Pledged Interests Addendum may be attached to that certain Security Agreement, dated as of April 5, 2007 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the "Security Agreement"), made by the undersigned, together with the other Grantors named therein, to Wells Fargo Foothill, Inc., as Agent. Initially capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Security Agreement and/or the Credit Agreement. The undersigned hereby agrees that the additional interests listed on this Pledged Interests Addendum as set forth below shall be and become part of the Pledged Interests pledged by the undersigned to the Agent in the Security Agreement and any pledged company set forth on this Pledged Interests Addendum as set forth below shall be and become a "Pledged Company" under the Security Agreement, each with the same force and effect as if originally named therein. The undersigned hereby certifies that the representations and warranties set forth in Section 5 of the Security Agreement of the undersigned are true and correct as to the Pledged Interests listed herein on and as of the date hereof. [______________________] By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SIGNATURE PAGE OF PLEDGED INTERESTS ADDENDUM

NAME OF PLEDGED NUMBER OF CLASS OF PERCENTAGE OF CERTIFICATE NAME OF PLEDGOR COMPANY SHARES/UNITS INTERESTS CLASS OWNED NOS. - --------------- --------------- ------------ --------- ------------- -----------

EXHIBIT D FORM OF TRADEMARK SECURITY AGREEMENT This TRADEMARK SECURITY AGREEMENT (this "Trademark Security Agreement") is made this ___ day of ___________, 2004, among 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 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 Parent's 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 the 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 Grantors shall have executed and delivered to Agent, for the benefit of 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 Lender Group, this Trademark 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 TRADEMARK 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 "Trademark Collateral"): (a) all of its Trademarks and rights in and to Trademark Intellectual Property Licenses to which it is a party including those referred to on Schedule I hereto; (b) all extensions, modifications and renewals of the foregoing; (c) all goodwill of the business connected with the use of, and symbolized by, each Trademark; and (d) all products and proceeds of the foregoing, including, without limitation, any claim by such Grantor against third parties for past, present or future (i) infringement or dilution of any Trademark, or (ii) injury to the goodwill associated with any Trademark. 3. SECURITY AGREEMENT. The security interests granted pursuant to this Trademark 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 Trademark 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 trademarks, registrations, or applications therefor (including, without limitation, extensions or renewals) which become part of the Trademark Collateral under the Security Agreement. Notwithstanding the foregoing, no failure to so modify this Trademark 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 Trademark 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 Trademark Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above. GRANTORS: ______________________________, a _________ corporation, as a Grantor By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ______________________________, a _________ corporation, as a Grantor By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ______________________________, a _________ corporation, as a Grantor By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SIGNATURE PAGE OF TRADEMARK SECURITY AGREEMENT AGENT: WELLS FARGO FOOTHILL, INC., a California corporation, as Agent By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SIGNATURE PAGE OF TRADEMARK SECURITY AGREEMENT SCHEDULE I to TRADEMARK SECURITY AGREEMENT TRADEMARK REGISTRATIONS/APPLICATIONS

APPLICATION/ GRANTOR COUNTRY MARK REGISTRATION NO. APP/REG DATE - ------- ------- ---- ---------------- ------------

EX-10.37 20 b65343s4exv10w37.txt EX-10.37 PATENT SECURITY AGREEMENT, DATED AS OF APRIL 5, 2007 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

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

EX-10.38 21 b65343s4exv10w38.txt EX-10.38 TRADEMARK SECURITY AGREEMENT, DATED AS OF APRIL 5, 2007 EXHIBIT 10.38 TRADEMARK SECURITY AGREEMENT This TRADEMARK SECURITY AGREEMENT (this "Trademark Security Agreement") is made this 5th day of April, 2007, among 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 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 Parent's 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 the 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 Grantors shall have executed and delivered to Agent, for the benefit of 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 Lender Group, this Trademark 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 TRADEMARK 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 "Trademark Collateral"): (a) all of its Trademarks and rights in and to Trademark Intellectual Property Licenses to which it is a party including those referred to on Schedule I hereto; (b) all extensions, modifications and renewals of the foregoing; (c) all goodwill of the business connected with the use of, and symbolized by, each Trademark; and (d) all products and proceeds of the foregoing, including, without limitation, any claim by such Grantor against third parties for past, present or future (i) infringement or dilution of any Trademark, or (ii) injury to the goodwill associated with any Trademark. 3. SECURITY AGREEMENT. The security interests granted pursuant to this Trademark 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 Trademark 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 trademarks, registrations, or applications therefor (including, without limitation, extensions or renewals) which become part of the Trademark Collateral under the Security Agreement. Notwithstanding the foregoing, no failure to so modify this Trademark 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 Trademark 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 Trademark 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 and 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 TRADEMARK SECURITY AGREEMENT] ACCEPTED AND AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN: WELLS FARGO FOOTHILL, INC., a California corporation, as Agent By: /s/ Vincent J. Egan, Jr. ------------------------------------ Name: Vincent J. Egan, Jr. ---------------------------------- Title: VP --------------------------------- [SIGNATURE PAGE OF WFF - TB WOOD'S TRADEMARK SECURITY AGREEMENT] Rider 10.38 SCHEDULE I TO TRADEMARK SECURITY AGREEMENT TRADEMARK REGISTRATIONS/APPLICATIONS SCHEDULE I to TRADEMARK SECURITY AGREEMENT TRADEMARK REGISTRATIONS/APPLICATIONS

APPLICATION/ GRANTOR COUNTRY MARK REGISTRATION NO. APP/REG DATE ------- ------- ---- ---------------- ------------ TB Wood's United States ALL-PRO 75/290,731/ 5/12/1997/ Enterprises, Inc. 2,165,737 6/16/1998 TB Wood's United States BRAKETRON 73/254,657/ 3/19/1980/ Enterprises, Inc. 1,164,393 8/11/1981 TB Wood's United States DECK 73/581,633/ 2/7/1986/ Enterprises, Inc. (stylized) 1,409,209 9/16/1986 TB Wood's United States DISC-O-TORQUE 72/285,224/ 11/20/1967/ Enterprises, Inc. 859,264 10/29/1968 TB Wood's United States DURA-FLEX 73/158,649/ 2/13/1978/ Enterprises, Inc. 1,116,828 4/24/1979 TB Wood's United States E-FLOW 75/280,015/ 4/23/1997/ Enterprises, Inc. 2,169,361 6/30/1998 TB Wood's United States E-trAC (Stylized) 73/491,494/ 7/24/1984/ Enterprises, Inc. 1,333,061 4/30/1985 TB Wood's United States E-TROL+PLUS 75/273,178/ 4/11/1997/ Enterprises, Inc. 2,156,683 5/12/1998 TB Wood's United States FIRST IN 73/526,310/ 3/11/1985/ Enterprises, Inc. COUPLINGS 1,361,466 9/24/1985 TB Wood's United States FORM-FLEX 75/273,175/ 4/11/1997/ Enterprises, Inc. 2,152,362 4/21/1998 TB Wood's United States IMD 75/272,935/ 4/11/1997/ Enterprises, Inc. 2,261,432 7/13/1999

APPLICATION/ GRANTOR COUNTRY MARK REGISTRATION NO. APP/REG DATE ------- ------- ---- ---------------- ------------ TB Wood's United States NLS 75/273,181/ 4/11/1997/ Enterprises, Inc. 2,152,366 4/21/1998 TB Wood's United States PDA-TRAC 78/329,999 11/19/2003/ Enterprises, Inc. 2,986,366 8/16/2005 TB Wood's United States PETRO-TRAC 78/052,072/ 3/8/2001/ Enterprises, Inc. 2,641,082 10/22/2002 TB Wood's United States POOLE 75/251,697/ 2/28/1997/ Enterprises, Inc. 2,191,918 9/29/1998 TB Wood's United States QT POWER CHAIN 76/403,299/ 5/2/2002/ Enterprises, Inc. 2,723,745 6/10/2003 TB Wood's United States ROTO-CAM 72/285,223/ 11/20/1967/ Enterprises, Inc. 859,263 10/29/1968 TB Wood's United States ROTO-CONE 72/015,359/ 9/10/1956/ Enterprises, Inc. 676,279 3/31/1959 TB Wood's United States SPEEDLIGN 78/350,700/ 1/12/2004/ Enterprises, Inc. 2,991,827 9/6/2005 TB Wood's United States S-TRAC 75/272,936/ 4/11/1997/ Enterprises, Inc. 2,257,668 6/29/1999 TB Wood's United States SUPERSTART 74/104,389/ 10/9/1990/ Enterprises, Inc. 1,686,040 5/12/1992 TB Wood's United States SURE GRIP 71/640,418/ 1/6/1953/ Enterprises, Inc. (stylized) 645,415 5/14/1957 TB Wood's United States SURE-FLEX 72/043,720/ 1/9/1958/ Enterprises, Inc. (stylized) 668,649 10/21/1958 TB Wood's United States SURE-GRIP 71/575,508/ 3/15/1949/ Enterprises, Inc. 646,423 6/4/1957 TB Wood's United States SURE-GRIP 73/136,699/ 8/8/1977/ Enterprises, Inc. 1,109,150 12/19/1978 TB Wood's United States TRUETUBE 75/273,177/ 4/11/1997/ Enterprises, Inc. 2,152,364 4/21/1998 TB Wood's United States ULTRACON 72/300,318/ 6/13/1968/ Enterprises, Inc. 862,655 12/31/1968

2

APPLICATION/ GRANTOR COUNTRY MARK REGISTRATION NO. APP/REG DATE ------- ------- ---- ---------------- ------------ TB Wood's United States ULTRACON II 75/273,179/ 4/11/1997/ Enterprises, Inc. 2,150,835 4/14/1998 TB Wood's United States ULTRA-HELIX 75/559,570/ 9/25/1998/ Enterprises, Inc. 2,351,349 5/23/2000 TB Wood's United States ULTRA-V 73/001,734/ 10/9/1973/ Enterprises, Inc. 1,001,969 1/21/1975 TB Wood's United States ULTRA-V 73/003,203/ 10/10/1973/ Enterprises, Inc. 1,001,970 1/21/1975 TB Wood's United States U-TROL 73/104,511/ 10/26/1976/ Enterprises, Inc. 1,070,167 7/26/1977 TB Wood's United States VAR-A-CONE 75/273,180/ 4/11/1997/ Enterprises, Inc. 2,152,365 4/21/1998 TB Wood's United States W TB WOOD'S (and 75/107,136/ 5/20/1996/ Enterprises, Inc. design) 2,059,245 5/6/1997 TB Wood's United States WIN-TRAC 78/306,778/ 9/29/2003/ Enterprises, Inc. 2,961,309 6/7/2005 TB Wood's United States WOOD'S@WORK 76/402,992/ 5/2/2002/ Enterprises, Inc. 2,801,090 12/30/2003

3 EX-10.39 22 b65343s4exv10w39.txt EX-10.39 AMENDED AND RESTATED INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT EXHIBIT 10.39 ================================================================================ AMENDED AND RESTATED INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT among WELLS FARGO FOOTHILL, INC., as TB Wood's Agent, WELLS FARGO FOOTHILL, INC., as Senior Agent, THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee and Collateral Agent, ALTRA INDUSTRIAL MOTION, INC., and certain of its SUBSIDIARIES, as Borrowers and Guarantors TB WOOD'S CORPORATION, and certain of its SUBSIDIARIES, as TB Wood's Credit Parties Dated as of November 30, 2004 Amended and Restated as of April 5, 2007 ================================================================================ AMENDED AND RESTATED INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT THIS AMENDED AND RESTATED INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT dated as of April 5, 2007 (this "Agreement") is made by and among WELLS FARGO FOOTHILL, INC., as agent (the "Original TB Wood's Agent") under and pursuant to the TB Wood's Credit Agreement (as hereinafter defined), WELLS FARGO FOOTHILL, INC., as senior agent (the "Original Senior Agent") under and pursuant to the Credit Agreement (as hereinafter defined), THE BANK OF NEW YORK TRUST COMPANY, N.A. ("BNY"), in its capacity as collateral agent under the Indenture Loan Documents (as hereinafter defined) (in such capacity, the "Collateral Agent"), BNY as Trustee under the Indenture Loan Documents (in such capacity, the "Trustee"), Altra Industrial Motion, Inc., a Delaware corporation ("Parent" ), those certain subsidiaries of Parent identified as Borrowers on the signature pages hereto (collectively with Parent, the "Borrowers") those certain subsidiaries of Parent identified as Guarantors on the signature pages hereto (collectively with Parent, the "Guarantors"), and the TB Wood's Credit Parties (as defined below) (this Agreement amends and restates the Intercreditor and Lien Subordination Agreement dated as of November 30, 2004 (the "Original Intercreditor Agreement"), among the Original Senior Agent, the Collateral Agent and the Borrowers and Guarantors). RECITALS A. Borrowers, Guarantors, Collateral Agent, and Trustee have entered into an Indenture, dated as of November 30, 2004 (the "Indenture"), pursuant to which the Borrowers incurred indebtedness for certain notes (such notes, together with all other notes issued after November 30, 2004 and exchange notes issued in exchange therefore, the "Notes") in an aggregate principal amount at maturity of $165,000,000 under the Indenture which, together with the Additional Notes (as defined below), interest, premiums, fees, costs and expenses (including, without limitation, attorneys fees and disbursements and including interest accrued after the initiation of any Insolvency Proceeding, whether or not allowed or allowable in any Insolvency Proceeding) and the other Secured Obligations (as defined in the Indenture Security Agreement (defined below)) are referred to herein as the "Indenture Secured Obligations". The repayment of the Indenture Secured Obligations is secured by security interests in and liens on the assets and properties (the "Collateral"; it being understood and agreed by the Parties that "Collateral" for purposes of this Agreement includes, without limitation, the TB Wood's Collateral) described in the Security Agreement dated as of November 30, 2004 (the "Indenture Security Agreement") made by the Borrowers and the Guarantors in favor of the Collateral Agent for the benefit of the Collateral Agent, the Trustee, and the Noteholders, the Trademark Security Agreement, dated as of November 30, 2004, made by the Borrowers and Guarantors in favor of the Collateral Agent for the benefit of the Collateral Agent, the Trustee, and the Noteholders (the "Indenture Trademark Security 1 Agreements"), the Copyright Security Agreement, entered into from time to time, made by the Borrowers and Guarantors in favor of the Collateral Agent for the benefit of the Collateral Agent, the Trustee, and the Noteholders (the "Indenture Copyright Security Agreements"), the Patent Security Agreement, dated as of November 30, 2004, made by the Borrowers and Guarantors in favor of the Collateral Agent for the benefit of the Collateral Agent, the Trustee, and the Noteholders (the "Indenture Patent Security Agreements"), and certain real property mortgages (made from time to time, in each case, by a Borrower or a Guarantor in favor of the Collateral Agent for the benefit of the Collateral Agent, the Trustee, and the Noteholders, each an "Indenture Mortgage" and, together with the Indenture, the Indenture Security Agreement, the Indenture Trademark Security Agreement, Indenture Copyright Security Agreement, Indenture Patent Security Agreement, and all Control Agreements (as defined in the Indenture Security Agreement), and the other Note Documents (as defined in the Indenture Security Agreement) executed and delivered in connection therewith, the "Indenture Agreements"). B. Parent, the Borrowers, the Original Senior Agent and the lenders a party thereto have entered into a Credit Agreement dated as of November 30, 2004 (the "Original Credit Agreement") and the Guarantors, the Senior Lenders and the Original Senior Agent have entered into those certain guarantees (the "Guarantees") pursuant to which the Senior Lenders agreed, upon the terms and conditions stated therein, to make loans and advances to and to issue letters of credit on account of the Borrowers up to the principal amount of $30,000,000, together with the fees, interest, expenses and other obligations due under the Original Credit Agreement. The repayment of the Obligations (as that term is defined in the Original Credit Agreement) is secured by first priority security interests in and liens on the Collateral described in the Security Agreement dated as of November 30, 2004 (the "Senior Security Agreement") made by the Borrowers and the Guarantors in favor of the Original Senior Agent for the benefit of the Original Senior Agent, the Senior Lenders and the Bank Product Providers (as defined in the Credit Agreement), the Trademark Security Agreement, dated as of November 30, 2004, made by the Borrowers and the Guarantors in favor of the Original Senior Agent for the benefit of the Original Senior Agent, the Senior Lenders and the Bank Product Providers (the "Senior Trademark Security Agreements"), the Copyright Security Agreement, entered into from time to time, made by the Borrowers and the Guarantors in favor of the Original Senior Agent for the benefit of the Original Senior Agent, the Senior Lenders and the Bank Product Providers (the "Senior Copyright Security Agreements"), the Patent Security Agreement, dated as of November 30, 2004, made by the Borrowers and the Guarantors in favor of the Original Senior Agent for the benefit of the Original Senior Agent, the Senior Lenders and the Bank Product Providers (the "Senior Patent Security Agreements"), and certain real property mortgages (made from time to time, in each case, by a Borrower or a Guarantor in favor of the Original Senior Agent for the benefit of the Original Senior Agent, the Senior Lenders and the Bank Product Providers, each a "Senior Mortgage" and, together with the Credit Agreement, the Guarantees, the Senior Security Agreement, the Senior Trademark Security Agreement, Senior Copyright 2 Security Agreement, Senior Patent Security Agreement, and all Control Agreements (as defined in the Credit Agreement) and the other Loan Documents (as defined in the Credit Agreement) executed and delivered in connection therewith, the "Senior Agreements"). C. TB Wood's Corporation ("TB Wood's"), the subsidiaries of TB Wood's party thereto (collectively with TB Wood's, the "TB Wood's Credit Parties"), the Original TB Wood's Agent and the lenders a party thereto have entered into a Credit Agreement dated as of the date hereof (the "Original TB Wood's Credit Agreement") pursuant to which the TB Wood's Lenders agreed, upon the terms and conditions stated therein, to make loans and advances to and to issue letters of credit on account of the TB Wood's Credit Parties up to the principal amount of $19,557,916.32, together with the fees, interest, expenses and other obligations due under the Original TB Wood's Credit Agreement. The repayment of the Obligations (as that term is defined in the Original TB Wood's Credit Agreement) is secured by first priority security interests in and liens on the collateral (the "TB Wood's Collateral") described in the Security Agreement dated as of the date hereof (the "TB Wood's Security Agreement") made by the TB Wood's Credit Parties in favor of the Original TB Wood's Agent for the benefit of the Original TB Wood's Agent and the TB Wood's Lenders, the Trademark Security Agreement, dated as of the date hereof, made by the TB Wood's Credit Parties in favor of the Original TB Wood's Agent for the benefit of the Original TB Wood's Agent and the TB Wood's Lenders (the "TB Wood's Trademark Security Agreements"), the Copyright Security Agreement, entered into from time to time, made by the TB Wood's Credit Parties in favor of the Original TB Wood's Agent for the benefit of the Original TB Wood's Agent and the Senior Lenders (the "TB Wood's Copyright Security Agreements"), the Patent Security Agreement, dated as of the date hereof, made by the TB Wood's Credit Parties in favor of the Original TB Wood's Agent for the benefit of the Original TB Wood's Agent and the TB Wood's Lenders (the "TB Wood's Patent Security Agreements"), and certain real property mortgages (made from time to time, in each case, by a TB Wood's Credit Party in favor of the Original TB Wood's Agent for the benefit of the Original TB Wood's Agent and the TB Wood's Lenders, each a "TB Wood's Mortgage" and, together with the TB Wood's Credit Agreement, the TB Wood's Security Agreement, the TB Wood's Trademark Security Agreement, the TB Wood's Copyright Security Agreement, the TB Wood's Patent Security Agreement, and all Control Agreements (as defined in the TB Wood's Credit Agreement) and the other Loan Documents (as defined in the TB Wood's Credit Agreement) executed and delivered in connection therewith, the "TB Wood's Agreements"). D. In connection with the acquisition by Parent of the shares of stock of TB Wood's, Parent intends to issue additional Notes (the "Additional Notes") in an aggregate principal amount at maturity of $105,000,000 under the Indenture. E. One of the conditions of the Original Credit Agreement was that the priority of the security interests in and liens on the Collateral to secure the Credit Agreement Secured Obligations (as hereinafter defined) be senior to the security interests 3 in and liens on the Collateral to secure the Indenture Secured Obligations, in the manner and to the extent provided in this Agreement. One of the conditions of the Original TB Wood's Credit Agreement is that the priority of the security interests in and liens on the TB Wood's Collateral to secure the TB Wood's Credit Agreement Secured Obligations (as hereinafter defined) be senior to the security interests in and liens on the TB Wood's Collateral to secure the Credit Agreement Secured Obligations and the Indenture Secured Obligations, in the manner and to the extent provided in this Agreement. F. The Senior Agent and the Collateral Agent entered into the Original Intercreditor Agreement concerning the respective rights of the Senior Agent and the Collateral Agent with respect to the priority of their respective security interests in and liens on the Collateral. The TB Wood's Agent, Senior Agent and the Collateral Agent (at the request of the TB Wood's Agent and the Senior Agent) desire to amend and restate the Original Intercreditor Agreement solely to clarify the respective rights of the TB Wood's Agent, Senior Agent and the Collateral Agent with respect to the priority of their respective security interests in and liens on the TB Wood's Collateral (this Agreement is not intended to alter in any manner the respective rights of the Senior Agent and the Collateral Agent with respect to the priority of their respective rights and interests in the Collateral (including the TB Wood's Collateral) as set forth in the Original Intercreditor Agreement. G. The terms of the Indenture permitted the Borrowers and the Guarantors to enter into the Original Credit Agreement, subject to compliance with certain conditions, and in connection therewith authorized and directed the Collateral Agent to enter into the Original Intercreditor Agreement. The terms of the Credit Agreement and the Indenture permit the Borrowers and the Guarantors to enter into the TB Wood's Credit Agreement, subject to compliance with certain conditions, and in connection therewith authorize and/or direct the Senior Agent and Collateral Agent to enter into this Agreement. H. In order to induce the TB Wood's Agent to extend credit to the TB Wood's Credit Parties and for purposes of certain conditions precedent and covenants of the Original TB Wood's Credit Agreement, the TB Wood's Agent, the Senior Agent and the Collateral Agent hereby agree to amend and restate the Original Intercreditor Agreement as follows: ARTICLE I. DEFINITIONS Section 1.01 Terms Defined Above and in the Recitals. As used in this Agreement, the following terms shall have the respective meanings indicated in the opening paragraph hereof and in the above Recitals: "Additional Notes" "Agreement" 4 "BNY" "Borrower" "Collateral" "Collateral Agent" "Guarantees" "Guarantors" "Indenture" "Indenture Agreements" "Indenture Copyright Security Agreement" "Indenture Patent Security Agreement" "Indenture Secured Obligations" "Indenture Security Agreement" "Indenture Trademark Security Agreement" "Original Credit Agreement" "Original Intercreditor Agreement" "Original Senior Agent" "Original TB Wood's Agent" "Original TB Wood's Credit Agreement" "Parent" "Senior Agreements" "Senior Copyright Security Agreement" "Senior Patent Security Agreement" "Senior Security Agreement" "Senior Trademark Security Agreement" "TB Wood's" "TB Wood's Agreements" "TB Wood's Collateral" "TB Wood's Copyright Security Agreement" "TB Wood's Credit Parties" "TB Wood's Mortgages" "TB Wood's Patent Security Agreements" "TB Wood's Security Agreements" "TB Wood's Trademark Security Agreements" "Trustee" Section 1.02 Credit Agreement Definitions. All capitalized terms which are used but not defined herein shall have the same meaning as in the Original Credit Agreement, as in effect on the date hereof. Section 1.03 Other Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: "Capital Stock" means (a) in the case of a corporation, corporate stock, (b) in the case of an association or business entity, any and all shares, interests, 5 participations, rights or other equivalents (however designated) of corporate stock, (c) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and (d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of property of, the issuing Person. "Cash Collateral" means any Collateral consisting of cash or cash equivalents, any security entitlement (as defined in the UCC) and any financial assets (as defined in the UCC). "Control Collateral" means any Collateral consisting of a certificated security (as defined in the UCC), investment property (as defined in the UCC), a deposit account (as defined in the UCC and any other Collateral as to which a Lien may be perfected through possession or control by the secured party, or any agent therefor. "Credit Agreement" means any Credit Agreement (as defined in the Indenture), including one or more credit facilities (including the Original Credit Agreement), in each case, as amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, including (a) any agreement extending the maturity of, consolidating, otherwise restructuring (including adding Subsidiaries or affiliates of the Borrowers or any other Persons as parties thereto) or refinancing all or any portion of the Obligations or Commitments as those terms are defined in the Original Credit Agreement, (b) any New Credit Facility and (c) any other agreement that itself is a Credit Agreement hereunder) and whether by the same or any other agent, lender, group of lenders or institutional investors and whether or not increasing the amount of indebtedness that may be incurred thereunder. "Credit Agreement Secured Obligations" means all Obligations and all other amounts owing or due under the terms of any Credit Agreement and the other Senior Loan Documents, including any and all amounts payable under or in respect of the Senior Loan Documents, as amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, including principal, premium, interest, fees, attorneys' fees, costs, charges, expenses, reimbursement obligations, any obligation to post cash collateral in respect of letters of credit or indemnities in respect thereof, indemnities, guarantees, and all other amounts payable thereunder or in respect thereof (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding relating to any Borrower, any Guarantor or any other Person irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in any Insolvency Proceeding). "Discharge of Credit Agreement Secured Obligations" means payment in full in cash (or in the case of Letters of Credit and Bank Product Obligations, the cash collateralization as required by the Senior Loan Documents) of the Credit Agreement Secured Obligations (other than Credit Agreement Secured Obligations consisting solely of contingent indemnification obligations under the Senior Loan Documents) after or 6 concurrently with termination of all commitments to extend credit under any Credit Agreement. "Discharge of TB Wood's Credit Agreement Secured Obligations" means payment in full in cash (or in the case of Letters of Credit, the cash collateralization as required by the TB Wood's Loan Documents) of the TB Wood's Credit Agreement Secured Obligations (other than TB Wood's Credit Agreement Secured Obligations consisting solely of contingent indemnification obligations under the TB Wood's Loan Documents) after or concurrently with termination of all commitments to extend credit under the TB Wood's Credit Agreement. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Exercise Any Secured Creditor Remedies" or "Exercise of Secured Creditor Remedies" means (a) the taking of any action to enforce or realize upon any Lien, including the institution of any foreclosure proceedings or the noticing of any public or private sale or other disposition pursuant to Article 9 of the applicable Uniform Commercial Code, (b) the exercise of any right or remedy provided to a secured creditor or otherwise on account of a Lien under the Senior Loan Documents, the Indenture Loan Documents, applicable law, in an Insolvency Proceeding or otherwise, including the election to retain Collateral in satisfaction of a Lien, (c) the taking of any action or the exercise of any right or remedy in respect of the collection on, set off against, marshaling of, or foreclosure on the Collateral or the Proceeds of Collateral, (d) the sale, lease, license, or other disposition of all or any portion of the Collateral, by private or public sale, other disposition or any other means permissible under applicable law, (e) the solicitation of bids from third parties to conduct the liquidation of all or a material portion of Collateral to the extent undertaken and being diligently pursued in good faith to consummate the sale of such Collateral within a commercially reasonable time, (f) the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers or other third parties for the purposes of valuing, marketing, promoting and selling the Collateral to the extent undertaken and being diligently pursued in good faith to consummate the sale of such Collateral within a commercially reasonable time, and (g) the exercise of any other enforcement right relating to the Collateral (including the exercise of any voting rights relating to any Capital Stock and including any right of recoupment or set-off) whether under the Senior Loan Documents, the Indenture Loan Documents, applicable law, in an Insolvency Proceeding or otherwise. "Indenture Loan Documents" shall mean the Indenture, the Notes, the Indenture Agreements, and such other agreements, instruments and certificates as defined or referred to in the Indenture. 7 "Insolvency Proceeding" means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief. "Lien" means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, irrespective of whether (a) such interest is based on the common law, statute, or contract, (b) such interest is recorded or perfected, and (c) such interest is contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances. Without limiting the generality of the foregoing, the term "Lien" includes the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and also includes reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Real Property. "Lien Priority" means with respect to any Lien of the TB Wood's Agent, the Senior Agent or the Collateral Agent in the Collateral, the order of priority of such Lien as specified in Section 2.01. "Loan Documents" means the TB Wood's Loan Documents, the Senior Loan Documents and the Indenture Loan Documents, as applicable. "Maximum Priority Debt Amount" means, as of any date of determination, the principal amount (including the undrawn amount of all letters of credit) of Credit Agreement Secured Obligations as of such date up to, but not in excess of, $30,000,000, (a) minus the amount of all permanent commitment reductions made from and after the date hereof under the effective Credit Agreement, but to be reinstated at the time of entering into any New Credit Facility, and (b) plus any interest, fees, Lender Group Expenses and indemnities payable under the Senior Loan Documents or in respect thereof (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding relating to any Borrower, any Guarantor or any other Person irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in any such Insolvency Proceeding). "Maximum Priority TB Wood's Debt Amount" means, as of any date of determination, the principal amount (including the undrawn amount of all letters of credit) of TB Wood's Credit Agreement Secured Obligations as of such date up to, but not in excess of, $19,557,916.32, (a) minus the amount of all permanent commitment reductions made from and after the date hereof under the effective TB Wood's Credit Agreement, and (b) plus any interest, fees, Lender Group Expenses and indemnities payable under the TB Wood's Loan Documents or in respect thereof (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding 8 relating to any TB Wood's Credit Party or any other Person irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in any such Insolvency Proceeding). "New Credit Facility" means one or more debt facilities entered into by any Borrower or any of its Subsidiaries following a Discharge of Credit Agreement Secured Obligations under the then effective Credit Agreement, providing for revolving credit loans or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time; provided that such debt facility qualifies as a Credit Agreement (as defined in the Indenture). "Noteholders" means each of the holders of the Notes. "Party" means TB Wood's Agent, Senior Agent and Collateral Agent. "Payment Collateral" means all accounts, instruments, chattel paper, letters of credit, deposit accounts, securities accounts, and payment intangibles, together with all supporting obligations (as those terms are defined in the UCC), in each case composing a portion of the Collateral. "Person" means any natural person, corporation, limited liability company, limited partnership, general partnership, limited liability partnership, joint venture, trust, land trust, business trust, or other organization, irrespective of whether such organization is a legal entity, and shall include a government and any agency or political subdivision thereof. "Proceeds" means (i) all "proceeds" as defined in Article 9 of the UCC with respect to the Collateral, and (ii) whatever is recoverable or recovered when Collateral is sold, exchanged, collected, or disposed of, whether voluntarily or involuntarily. "Recovery" has the meaning set forth in Section 5.03. "Senior Agent" means the Original Senior Agent, together with all successors, assigns, transferees, participants, replacement or refinancing lenders, of the Original Senior Agent, including any Person designated as an Agent under any Credit Agreement; provided, that for purposes of this Agreement, the Collateral Agent and the TB Wood's Agent, prior to the termination of the Original Credit Agreement and the TB Wood's Credit Agreement, respectively, shall be entitled to deal only with the Original Senior Agent until such time as the Original Senior Agent shall have assigned or otherwise transfer to another Agent thereof all of its rights and obligations hereunder to such other Agent pursuant to a written document which has been provided by the Original Senior Agent or a designee to the Collateral Agent and the TB Wood's Agent and until receipt thereof, Collateral Agent and the TB Wood's Agent shall not be liable for any such dealings (including the turning over of any Collateral or proceeds thereof to 9 the Original Senior Agent at a time when any other Agent and not the Original Senior Agent was entitled thereto). "Senior Lenders" means the lenders from time to time party to a Credit Agreement. "Senior Loan Documents" means any Credit Agreement and the other Loan Documents (as such term is defined in the Original Credit Agreement), or any other security, collateral, ancillary or other document entered into in connection with or related to any agreement that is a Credit Agreement, as such documents may be amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, in accordance with this Agreement. "Standstill Notice" means a written notice from or on behalf of Senior Agent to the Collateral Agent stating that an Event of Default has occurred and stating that such written notice is a "Standstill Notice". "Standstill Period" has the meaning set forth in Section 2.03. "TB Wood's Agent" means the Original TB Wood's Agent, together with all successors, assigns, transferees, participants, replacement or refinancing lenders, of the Original TB Wood's Agent, including any Person designated as an Agent under the TB Wood's Credit Agreement; provided, that for purposes of this Agreement, the Senior Agent and the Collateral Agent, prior to the termination of the Original TB Wood's Credit Agreement, shall be entitled to deal only with the Original TB Wood's Agent until such time as the Original TB Wood's Agent shall have assigned or otherwise transfer to another Agent thereof all of its rights and obligations hereunder to such other Agent pursuant to a written document which has been provided by the Original TB Wood's Agent or a designee to the Senior Agent and the Collateral Agent and until receipt thereof, Senior Agent and Collateral Agent shall not be liable for any such dealings (including the turning over of any Collateral or proceeds thereof to the Original TB Wood's Agent at a time when any other Agent and not the Original TB Wood's Agent was entitled thereto). "TB Wood's Credit Agreement" means the TB Wood's Credit Agreement, as amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, including any agreement extending the maturity of, consolidating, otherwise restructuring (including adding Subsidiaries or affiliates of the TB Wood's Credit Parties or any other Persons as parties thereto) or refinancing all or any portion of the Obligations or Commitments as those terms are defined in the Original TB Wood's Credit Agreement, whether by the same or any other agent, lender, group of lenders or institutional investors and whether or not increasing the amount of indebtedness that may be incurred thereunder. 10 "TB Wood's Credit Agreement Secured Obligations" means all Obligations and all other amounts owing or due under the terms of the TB Wood's Credit Agreement and the other TB Wood's Loan Documents, including any and all amounts payable under or in respect of the TB Wood's Loan Documents, as amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, including principal, premium, interest, fees, attorneys' fees, costs, charges, expenses, reimbursement obligations, any obligation to post cash collateral in respect of letters of credit or indemnities in respect thereof, indemnities, guarantees, and all other amounts payable thereunder or in respect thereof (including, in each case, all amounts accruing on or after the commencement of any Insolvency Proceeding relating to any TB Wood's Credit Party or any other Person irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in any Insolvency Proceeding). "TB Wood's Lenders" means the lenders from time to time party to the TB Wood's Credit Agreement. "TB Wood's Loan Documents" means the TB Wood's Credit Agreement and the other Loan Documents (as such term is defined in the Original TB Wood's Credit Agreement), or any other security, collateral, ancillary or other document entered into in connection with or related to the TB Wood's Credit Agreement, as such documents may be amended, restated, modified, renewed, refunded, replaced, or refinanced in whole or in part from time to time, in accordance with this Agreement. "UCC" means the Uniform Commercial Code as from time to time in effect in the State of New York Rules of Construction. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term "including" is not limiting, and the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Article, section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to any Person shall be construed to include such Person's successors and assigns. 11 ARTICLE II. LIEN PRIORITY Section 2.01 Agreement to Subordinate. Notwithstanding the date, time, method, manner or order of grant, attachment, or perfection of any Liens granted to the Collateral Agent, the Trustee, or the Noteholders in respect of all or any portion of the Collateral, or of any Liens granted to the Senior Agent or any Senior Lender in respect of all or any portion of the Collateral, or of any Liens granted to the TB Wood's Agent or any TB Wood's Lender in respect of all or any portion of the TB Wood's Collateral, or the order or time of filing or recordation of any document or instrument for perfecting the Liens in favor of TB Wood's Agent (or any TB Wood's Lender), Senior Agent (or any Senior Lender) or the Collateral Agent (or the Trustee or any Noteholder) in any Collateral or any provision of the applicable Uniform Commercial Code, any other applicable law, the Indenture Loan Documents, the Senior Loan Documents, the TB Wood's Loan Documents or any other circumstance whatsoever, the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, the Senior Agent, on behalf of itself, the Senior Lenders and the Bank Product Providers, and the TB Wood's Agent, on behalf of itself and the TB Wood's Lenders, hereby agree that: (a) (i) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of the Collateral Agent, the Trustee, or any Noteholder that secures all or any portion of the Indenture Secured Obligations, shall in all respects be junior and subordinate to all Liens granted to the Senior Agent and the Senior Lenders in the Collateral to secure all or any portion of the Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority Debt Amount, and (ii) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of the Senior Agent or any Senior Lender that secures all or any portion of the Credit Agreement Secured Obligations in excess of the Maximum Priority Debt Amount, shall in all respects be junior and subordinate to all Liens granted to the Collateral Agent, the Trustee or any Noteholder in the Collateral to secure all or any portion of the Indenture Secured Obligations, and (b) (i) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of the Senior Agent (or any Senior Lender) that secures all or any portion of the Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority Debt Amount, shall in all respects be senior and prior to all Liens granted to the Collateral Agent (or the Trustee or any Noteholder) in the Collateral to secure all or any portion of the Indenture Secured Obligations, and (ii) any Lien in respect of all or any portion of the Collateral now or hereafter held by or on behalf of the Collateral Agent, the Trustee, or any Noteholder that secures all or any portion of the Indenture Secured Obligations, shall in all respects be senior and prior to all Liens granted to the Senior Agent and the Senior Lenders in the Collateral to secure all or any 12 portion of the Credit Agreement Secured Obligations in excess of the Maximum Priority Debt Amount, (c) (i) any Lien in respect of all or any portion of the TB Wood's Collateral now or hereafter held by or on behalf of the Collateral Agent, the Trustee, or any Noteholder that secures all or any portion of the Indenture Secured Obligations, shall in all respects be junior and subordinate to all Liens granted to the TB Wood's Agent and the TB Wood's Lenders in the TB Wood's Collateral to secure all or any portion of the TB Wood's Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority TB Wood's Debt Amount, and (ii) any Lien in respect of all or any portion of the TB Wood's Collateral now or hereafter held by or on behalf of the TB Wood's Agent or any TB Wood's Lender that secures all or any portion of the TB Wood's Credit Agreement Secured Obligations in excess of the Maximum Priority TB Wood's Debt Amount, shall in all respects be junior and subordinate to all Liens granted to the Collateral Agent, the Trustee or any Noteholder in the TB Wood's Collateral to secure all or any portion of the Indenture Secured Obligations. (d) (i) any Lien in respect of all or any portion of the TB Wood's Collateral now or hereafter held by or on behalf of the TB Wood's Agent (or any TB Wood's Lender) that secures all or any portion of the TB Wood's Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority TB Wood's Debt Amount, shall in all respects be senior and prior to all Liens granted to the Collateral Agent (or the Trustee or any Noteholder) in the TB Wood's Collateral to secure all or any portion of the Indenture Secured Obligations, and (ii) any Lien in respect of all or any portion of the TB Wood's Collateral now or hereafter held by or on behalf of the Collateral Agent, the Trustee, or any Noteholder that secures all or any portion of the Indenture Secured Obligations, shall in all respects be senior and prior to all Liens granted to the TB Wood's Agent and the TB Wood's Lenders in the TB Wood's Collateral to secure all or any portion of the TB Wood's Credit Agreement Secured Obligations in excess of the Maximum Priority TB Wood's Debt Amount. (e) (i) any Lien in respect of all or any portion of the TB Wood's Collateral now or hereafter held by or on behalf of the Senior Agent or any Senior Lender that secures all or any portion of the Credit Agreement Secured Obligations, shall in all respects be junior and subordinate to all Liens granted to the TB Wood's Agent and the TB Wood's Lenders in the TB Wood's Collateral to secure all or any portion of the TB Wood's Credit Agreement Secured Obligations and (ii) any Lien in respect of all or any portion of the TB Wood's Collateral now or hereafter held by or on behalf of the TB Wood's Agent (or any TB Wood's Lender) that secures all or any portion of the TB Wood's Credit Agreement Secured Obligations, shall in all respects be senior and prior to all Liens granted to the Senior Agent (or any Senior Lender) in the TB Wood's Collateral to secure all or any portion of the Credit Agreement Secured Obligations. 13 The Collateral Agent, for and on behalf of itself, the Trustee and the Noteholders, acknowledges and agrees that, concurrently herewith, the Senior Agent, for the benefit of itself and the Senior Lenders, has been granted Liens upon all of the Collateral in which the Collateral Agent has been granted Liens and the Collateral Agent hereby consents thereto. The Senior Agent acknowledges and agrees that the Collateral Agent, for the benefit of itself, the Trustee, and the Noteholders, has been granted Liens upon all of the Collateral and the Senior Agent hereby consents thereto. The subordination of Liens (up to the Maximum Priority Debt Amount) by the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders in favor of the Senior Agent and the Senior Lenders herein shall not be deemed to subordinate the Collateral Agent's Liens to the Liens of any other Person. The subordination of Liens (in excess of the Maximum Priority Debt Amount) in favor of the Collateral Agent, for the benefit of itself, the Trustee and the Noteholders herein shall not be deemed to subordinate the Senior Agent's Liens to the Liens of any other Person. Each of the Senior Agent, on behalf of itself and the Senior Lenders, and the Collateral Agent, for and on behalf of itself, the Trustee and the Noteholders, acknowledges and agrees that, concurrently herewith, the TB Wood's Agent, for the benefit of itself and the TB Wood's Lenders, has been granted Liens upon the TB Wood's Collateral and the Senior Agent and the Collateral Agent hereby consent thereto. The TB Wood's Agent acknowledges and agrees that each of the Senior Agent, on behalf of itself and the Senior Lenders, and the Collateral Agent, for the benefit of itself, the Trustee, and the Noteholders, has been granted Liens upon the TB Wood's Collateral and the TB Wood's Agent hereby consents thereto. The subordination of Liens (up to the Maximum Priority TB Wood's Debt Amount) by the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders in favor of the TB Wood's Agent and the TB Wood's Lenders herein shall not be deemed to subordinate the Collateral Agent's Liens to the Liens of any other Person. The subordination of Liens (in excess of the Maximum Priority TB Wood's Debt Amount) in favor of the Collateral Agent, for the benefit of itself, the Trustee and the Noteholders herein shall not be deemed to subordinate the TB Wood's Agent's Liens to the Liens of any other Person. Section 2.02 Waiver of Right to Contest Liens. The Collateral Agent agrees, on behalf of itself, the Trustee, and the Noteholders, that it and they shall not (and hereby waives, on behalf of itself and the Noteholders any right to) take any action to contest or challenge (or assist or support any other Person in contesting or challenging), directly or indirectly, whether or not in any proceeding (including in any Insolvency Proceeding), the validity, priority, enforceability, or perfection of the Liens of the Senior Agent in respect of the Collateral or the validity, priority, enforceability, or perfection of the Liens of the TB Wood's Agent in respect of the TB Wood's Collateral . The Collateral Agent, for itself, the Trustee, and on behalf of the Noteholders, agrees that neither the Collateral Agent nor the Trustee will take any action that would hinder any exercise of remedies undertaken by the Senior Agent under the Senior Loan Documents or the exercise of remedies undertaken by the TB Wood's Agent under the TB Wood's Loan Documents, 14 including any public or private sale, lease, exchange, transfer, or other disposition of the Collateral, whether by foreclosure or otherwise. The Collateral Agent, for itself, the Trustee, and on behalf of the Noteholders, hereby waives any and all rights it, the Trustee, or the Noteholders may have as a junior lien creditor or otherwise to contest, protest, object to, interfere with the manner in which (a) the Senior Agent seeks to enforce the Liens in any portion of the Collateral (it being understood and agreed that the terms of this Agreement shall govern with respect to the Collateral even if any portion of the Liens securing the Credit Agreement Secured Obligations are avoided, disallowed, set aside, or otherwise invalidated in any judicial proceeding or otherwise) or (b) the TB Wood's Agent seeks to enforce the Liens in any portion of the TB Wood's Collateral (it being understood and agreed that the terms of this Agreement shall govern with respect to the TB Wood's Collateral even if any portion of the Liens securing the TB Wood's Credit Agreement Secured Obligations are avoided, disallowed, set aside, or otherwise invalidated in any judicial proceeding or otherwise). The Senior Agent, for itself and the Senior Lenders, agrees that it shall not (and hereby waives any right to) take any action to contest or challenge (or assist or support any other Person in contesting or challenging), directly or indirectly, whether or not in any proceeding (including in any Insolvency Proceeding), the validity, priority, enforceability, or perfection of the Liens of the Collateral Agent in respect of the Collateral or the validity, priority, enforceability, or perfection of the Liens of the TB Wood's Agent in respect of the TB Wood's Collateral. Following the Discharge of Credit Agreement Secured Obligations, the Senior Agent, on behalf of itself and the Senior Lenders, agrees that it will not take any action that would hinder any exercise of remedies undertaken by the Collateral Agent, the Trustee, or any Noteholder under the Indenture Loan Documents, including any public or private sale, lease, exchange, transfer, or other disposition of the Collateral, whether by foreclosure or otherwise. Following the Discharge of Credit Agreement Secured Obligations, the Senior Agent, on behalf of itself and the Senior Lenders, hereby waives any and all rights it may have as a junior lien creditor or otherwise to contest, protest, object to, interfere with the manner in which the Collateral Agent, the Trustee or any Noteholder seeks to enforce the Liens in any portion of the Collateral (it being understood and agreed that the terms of this Agreement shall govern with respect to the Collateral even if any portion of the Liens securing the Indenture Secured Obligations are avoided, disallowed, set aside, or otherwise invalidated in any judicial proceeding or otherwise). Following the Discharge of TB Wood's Credit Agreement Secured Obligations, the TB Wood's Agent, on behalf of itself and the TB Wood's Lenders, agrees that it will not take any action that would hinder any exercise of remedies undertaken by the Collateral Agent, the Trustee, or any Noteholder under the Indenture Loan Documents or by the Senior Agent or Senior Lenders under the Senior Loan Documents, including any public or private sale, lease, exchange, transfer, or other disposition of the Collateral, whether by foreclosure or otherwise. Following the Discharge of TB Wood's Credit Agreement Secured Obligations, the TB Wood's Agent, on behalf of itself and the TB Wood's Lenders, hereby waives any and all rights it may have as a junior lien creditor or otherwise to contest, protest, object to, interfere with the manner in which the Senior Agent, any Senior Lenders, Collateral Agent, the Trustee or any Noteholder seeks to enforce the 15 Liens in any portion of the Collateral (it being understood and agreed that the terms of this Agreement shall govern with respect to the TB Wood's Collateral even if any portion of the Liens securing the Indenture Secured Obligations or the Credit Agreement Secured Obligations are avoided, disallowed, set aside, or otherwise invalidated in any judicial proceeding or otherwise) Section 2.03 Remedies Standstill. At any time after the occurrence and during the continuation of an Event of Default under any of the Loan Documents, the Senior Agent may send a Standstill Notice to the Collateral Agent. The Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that from and after the date of its receipt of any Standstill Notice, neither the Collateral Agent nor the Trustee will Exercise Any Secured Creditor Remedies (other than its rights under Section 2.04(d)) unless and until (a) the Senior Agent has expressly waived or acknowledged the cure of the applicable Event of Default in writing or the Discharge of the Credit Agreement Secured Obligations shall have occurred, or (b) 120 days shall have elapsed from the date of the Collateral Agent's receipt of such Standstill Notice. From and after the earlier to occur of (i) the Collateral Agent's receipt of such waiver or cure notice, or (ii) the elapsing of such 120th day period, any of the Collateral Agent, the Trustee, or any Noteholder may commence to Exercise Any Secured Creditor Remedies (subject to the provisions of this Agreement, including the immediately succeeding sentence, Section 4.02 hereof and except with respect to any such Collateral as to which the Senior Agent is diligently effecting the collection, foreclosure, sale or other realization upon or disposition of). Notwithstanding any other provision in this Agreement, none of the Collateral Agent, the Trustee or any Noteholder may Exercise Any Secured Creditor Remedies prior to the Discharge of Credit Agreement Secured Obligations (x) with respect to any item of Collateral so long as Senior Agent has commenced and is diligently pursuing its Exercise of Secured Creditor Remedies in respect of such items of Collateral, and (y) without first providing Senior Agent at least 5 Business Days' prior written notice. The Senior Agent may only send three (3) Standstill Notices following the date hereof (it being understood and agreed as clarification to the foregoing that no more than three (3) Standstill Notices may be provided whether delivered hereunder or under any corresponding provision of any other agreement similar hereto that may be delivered pursuant to Section 7.17 hereof) and no more than one (1) Standstill Notice may be given by the Senior Agent in any consecutive 365-day period. The time period during which the Collateral Agent is not permitted to Exercise any Secured Creditor Remedies under this section is referred to herein as the "Standstill Period". Section 2.04 Exercise of Rights. (a) No Other Restrictions. Except as expressly set forth in this Agreement, each of the Collateral Agent, the Trustee, the Noteholders, the Senior Agent, the Senior Lenders, the TB Wood's Agent and the TB Wood's Lenders shall have any and all rights and remedies it may have as a creditor under applicable law, including the rights to exercise all rights and remedies in foreclosure or otherwise with respect to any 16 of the Collateral; provided, however, that any such exercise by the Collateral Agent, the Trustee or the Noteholders, and any collection or sale of all or any portion of the Collateral by the Collateral Agent, the Trustee or the Noteholders, shall be subject to the Liens of the Senior Agent on the Collateral to the extent provided in Section 2.01 and to the provisions of this Agreement including Section 4.02 hereof. In exercising rights and remedies with respect to the Collateral, the Senior Agent may enforce the provisions of the Senior Loan Documents and exercise remedies thereunder, all in such order and in such manner as it may determine in the exercise of its sole discretion. Such exercise and enforcement shall include the sale, lease, license, or other disposition of all or any portion of the Collateral by private or public sale or any other means permissible under applicable law or any agreement; provided, that the Senior Agent agrees to provide copies of any notices that it is required under applicable law to deliver to Parent, any Borrower or any Guarantor to the Collateral Agent and the TB Wood's Agent; provided further, that the failure to provide any such copies to the Collateral Agent or TB Wood's Agent shall not impair any of the Senior Agent's rights hereunder. In exercising rights and remedies with respect to the Collateral, the Collateral Agent may enforce the provisions of the Indenture Security Documents and exercise remedies thereunder, all in such order and in such manner as it may determine in the exercise of its sole discretion. Such exercise and enforcement shall include the sale, lease, license, or other disposition of all or any portion of the Collateral by private or public sale or any other means permissible under applicable law or any agreement; provided, that the Collateral Agent agrees to provide copies of any notices that it is required under applicable law to deliver to Parent, any Borrower or any Guarantor to the Senior Agent and the TB Wood's Agent; provided further, that the failure to provide any such copies to the Senior Agent or TB Wood's Agent shall not impair any of the Collateral Agent's rights hereunder. In exercising rights and remedies with respect to the TB Wood's Collateral, the TB Wood's Agent may enforce the provisions of the TB Wood's Loan Documents and exercise remedies thereunder, all in such order and in such manner as it may determine in the exercise of its sole discretion. Such exercise and enforcement shall include the sale, lease, license, or other disposition of all or any portion of the TB Wood's Collateral by private or public sale or any other means permissible under applicable law or any agreement; provided, that the TB Wood's Agent agrees to provide copies of any notices that it is required under applicable law to deliver to any TB Wood's Credit Party to the Senior Agent and the Collateral Agent; provided further, that the failure to provide any such copies to the Senior Agent or the Collateral Agent shall not impair any of the TB Wood's Agent's rights hereunder. (b) Release of Liens. (i) (A) In the event of any such private or public sale by Senior Agent or any Senior Lender, Collateral Agent agrees, on behalf of itself, the Trustee, and the Noteholders, that such sale will be free and clear of the Liens securing the Indenture Secured Obligations and, if the sale or other disposition includes the Equity Interests in any Borrower or any Guarantor, agrees to release the entities whose Equity Interests are sold from all Indenture Secured Obligations so long as Senior Agent and Senior Lenders also release the entities whose Equity Interests are sold from 17 all Credit Agreement Secured Obligations. In furtherance thereof, Collateral Agent agrees that it will execute any and all Lien releases or other documents reasonably requested by Senior Agent in connection therewith, so long as the proceeds from such sale or other disposition of the Collateral are applied in accordance with the terms of this Agreement. (B) In the event of any such private or public sale by TB Wood's Agent or any TB Wood's Lender, Collateral Agent agrees, on behalf of itself, the Trustee, and the Noteholders, and Senior Agent agrees, on behalf of itself and the Senior Lenders, that such sale will be free and clear of the Liens securing the Indenture Secured Obligations and the Credit Agreement Secured Obligations, as applicable, and, if the sale or other disposition includes the Equity Interests in any TB Wood's Credit Party, agrees to release the entities whose Equity Interests are sold from all Indenture Secured Obligations and the Credit Agreement Secured Obligations, as applicable, so long as TB Wood's Agent and TB Wood's Lenders also release the entities whose Equity Interests are sold from all TB Wood's Credit Agreement Secured Obligations. In furtherance thereof, each of Collateral Agent and Senior Agent agrees that it will execute any and all Lien releases or other documents reasonably requested by TB Wood's Agent in connection therewith, so long as the proceeds from such sale or other disposition of the TB Wood's Collateral are applied in accordance with the terms of this Agreement. (ii) (A) If and to the extent that the Senior Agent or its designee releases any of its Liens on any Collateral in connection with the sale, lease, exchange, transfer or other disposition of the Collateral in accordance with the terms of this Agreement, the Liens, if any, of the Collateral Agent, for itself or for the benefit of the Trustee and the Noteholders, on such Collateral shall be automatically, unconditionally and simultaneously released and the Collateral Agent, for itself and for each of the Trustee and the Noteholders, promptly shall execute and deliver to the Senior Agent such termination statements, releases and other documents as the Senior Agent may request to effectively confirm such release in respect of such payments. Notwithstanding the foregoing, the obligation of the Collateral Agent to release its Lien on such Collateral shall arise only if such sale, lease, exchange, transfer or other disposition of the Collateral is effected in connection with an exercise of remedies or is permitted by (or permitted pursuant to a waiver of or consent to a transaction otherwise prohibited by) the Senior Loan Documents and the terms hereof. (B) If and to the extent that the TB Wood's Agent or its designee releases any of its Liens on any TB Wood's Collateral in connection with the sale, lease, exchange, transfer or other disposition of the TB Wood's Collateral in accordance with the terms of this Agreement, the Liens, if any, of the Collateral Agent, for itself or for the benefit of the Trustee and the Noteholders, and the Liens, if any, of the Senior Agent, for itself or for the benefit of the Senior Lenders on such TB Wood's Collateral shall be automatically, unconditionally and simultaneously released and the Collateral Agent, for itself and for each of the Trustee and the Noteholders, and the Senior Agent, for itself or for the benefit of the Senior Lenders, promptly shall execute and deliver to the TB Wood's Agent such termination statements, releases and other documents as the TB Wood's Agent may request to effectively confirm such release in respect of such payments. Notwithstanding the foregoing, the 18 obligation of the Collateral Agent and Senior Agent to release its Lien on such TB Wood's Collateral shall arise only if such sale, lease, exchange, transfer or other disposition of the TB Wood's Collateral is effected in connection with an exercise of remedies or is permitted by (or permitted pursuant to a waiver of or consent to a transaction otherwise prohibited by) the TB Wood's Loan Documents and the terms hereof. (iii) In the event of any private or public sale by Collateral Agent permitted by the terms of this Agreement, Senior Agent agrees, on behalf of itself and the Lender Group, that such sale will be free and clear of the Liens securing the Senior Secured Obligations and, if the sale or other disposition includes the Equity Interests in any Borrower or any Guarantor, agrees to release the entities whose Equity Interests are sold from all Senior Secured Obligations so long as Collateral Agent, the Trustee and the Noteholders also release the entities whose Equity Interests are sold from all Indenture Secured Obligations. In furtherance thereof, Senior Agent agrees that it will execute any and all Lien releases or other documents reasonably requested by Collateral Agent in connection therewith, so long as the proceeds from such sale or other disposition of the Collateral are applied in accordance with the terms of this Agreement. (iv) If and to the extent that the Collateral Agent or its designee releases any of its Liens on any Collateral in connection with the sale, lease, exchange, transfer or other disposition of the Collateral in accordance with the terms of this Agreement, the Liens, if any, of the Senior Agent, for itself or for the benefit of the Lender Group, on such Collateral shall be automatically, unconditionally and simultaneously released and the Senior Agent, for itself and for the Lender Group, promptly shall execute and deliver to the Collateral Agent such termination statements, releases and other documents as the Collateral Agent may request to effectively confirm such release in respect of such payments. Notwithstanding the foregoing, the obligation of the Senior Agent to release its Lien on such Collateral shall arise only if such sale, lease, exchange, transfer or other disposition of the Collateral is effected in connection with an exercise of remedies or is permitted by (or permitted pursuant to a waiver of or consent to a transaction otherwise prohibited by) the Indenture Documents and the terms hereof. (c) Except as provided in Section 3.01, the Collateral Agent, the Trustee and the Noteholders may exercise, and nothing herein shall constitute a waiver of, any right it may have at law or equity to receive notice of, or to commence or join with any creditor in commencing any Insolvency Proceeding or to join or participate in, any action or proceeding or other activity described in Section 3.01; provided, however, that exercise of any such right by the Collateral Agent shall be subject to all of the terms and conditions of this Agreement, including the obligation to turn over (x) Collateral and Proceeds to the Senior Agent for application to the Credit Agreement Secured Obligations as provided in Section 4.02 or (y) TB Wood's Collateral and Proceeds 19 thereof to the TB Wood's Agent for application to the TB Wood's Credit Agreement Secured Obligations as provided in Section 4.02. (d) The Collateral Agent may make such demands or file such claims in respect of the Indenture Secured Obligations as may be necessary to prevent the waiver or bar of such claims under applicable statutes of limitations or other statutes, court orders or rules of procedure (including, without limitation, the filing of any proofs of claim in any Insolvency Proceeding), but except as provided in this Section 2.04 or otherwise in this Agreement, the Collateral Agent shall not take any actions restricted by this Agreement until the Discharge of Credit Agreement Secured Obligations shall have occurred. (e) Following the Discharge of Credit Agreement Secured Obligations, the other provisions of this Section 2.04 shall apply to the Collateral Agent, for the benefit of itself, the Trustee and the Noteholders as if it were the Senior Agent and the Senior Agent was the Collateral Agent, mutatis mutandis. ARTICLE III. ACTIONS OF THE PARTIES Section 3.01 Limitation on Certain Actions. Notwithstanding any other provision hereof, during any Standstill Period prior to the date that the Discharge of Credit Agreement Secured Obligations occurs, the Collateral Agent will not: (a) commence receivership or foreclosure proceedings against any Borrower, any Guarantor, or any Collateral; (b) make demands or file claims in respect of the Indenture Secured Obligations except as permitted under Section 2.04(d) hereof; (c) sell, collect, transfer or dispose of any Collateral or Proceeds; or (d) notify third party account debtors to make payment directly to it or any of its agents or other Persons acting on its behalf. Section 3.02 Agent for Perfection. Each of the Senior Agent, on behalf of itself and the Senior Lenders, the TB Wood's Agent, on behalf of itself and the TB Wood's Lenders, and the Collateral Agent, for and on behalf of itself, the Trustee, and each Noteholder, as applicable, agree to hold all Control Collateral and Cash Collateral that is part of the Collateral in its respective possession, custody, or control (or in the possession, custody, or control of agents or bailees for either, as applicable) as agent for the other solely for the purpose of perfecting the security interest granted to each in such Control Collateral or Cash Collateral subject to the terms and conditions of this Section 3.02. None of the Senior Agent, the Senior Lenders, the TB Wood's Agent, the TB 20 Wood's Lenders, the Collateral Agent, the Trustee, or the Noteholders, as applicable, shall have any obligation whatsoever to the others to assure that the Control Collateral is genuine or owned by any Borrower, any Guarantor or any other Person or to preserve rights or benefits of any Person. The duties or responsibilities of the Senior Agent, TB Wood's Agent and the Collateral Agent under this Section 3.02 are and shall be limited solely to holding or maintaining control of the Control Collateral and the Cash Collateral as agent for the other for purposes of perfecting the Lien held by the Collateral Agent, TB Wood's Agent or the Senior Agent, as applicable. The Senior Agent is not and shall not be deemed to be a fiduciary of any kind for the TB Wood's Agent, TB Wood's Lenders, Collateral Agent, the Trustee, the Noteholders or any other Person. The Collateral Agent is not and shall not be deemed to be a fiduciary of any kind for the TB Wood's Agent, TB Wood's Lenders, Senior Agent, any Senior Lender or any other Person. The TB Wood's Agent is not and shall not be deemed to be a fiduciary of any kind for the Senior Agent, Senior Lenders, Collateral Agent, the Trustee, the Noteholders or any other Person. In the event that (a) any of the Collateral Agent, the Trustee, or any Noteholder receives any Proceeds or Collateral in contravention of the Lien Priority, (b) the Senior Agent or any Senior Lender receives any Proceeds or Collateral in contravention of the Lien Priority, or (c) the TB Wood's Agent or any TB Wood's Lender receives any Proceeds or Collateral in contravention of the Lien Priority, it shall promptly pay over such Proceeds or Collateral to (i) in the case of clause (a), the Senior Agent or TB Wood's Agent, as applicable, (ii) in the case of clause (b), the Collateral Agent or TB Wood's Agent, as applicable, and (iii) in the case of clause (c), the Collateral Agent or Senior Agent, as applicable, in the same form as received with any necessary endorsements, for application in accordance with the provisions of Section 4.02 of this Agreement. ARTICLE IV. NOTICES AND APPLICATION OF PROCEEDS Section 4.01 Notices of Exercise. Concurrently with any exercise by the Collateral Agent of any of its rights and remedies under the Indenture Loan Documents following the occurrence of any default under the Indenture Loan Documents, the Collateral Agent shall give notice of such exercise to the Senior Agent and TB Wood's Agent and shall only exercise such rights or remedies in a manner consistent with the terms of this Agreement. Concurrently with any exercise by the Senior Agent of any of its rights and remedies under the Senior Loan Documents following the occurrence of any default under the Senior Loan Documents, the Senior Agent shall give notice of such exercise to the Collateral Agent and TB Wood's Agent and shall only exercise such rights or remedies in a manner consistent with the terms of this Agreement. Concurrently with any exercise by the TB Wood's Agent of any of its rights and remedies under the TB Wood's Loan Documents following the occurrence of any default under the TB Wood's Loan Documents, the TB Wood's Agent shall give notice of such exercise to the Collateral Agent and Senior Agent and shall only exercise such rights or remedies in a manner consistent with the terms of this Agreement. 21 Section 4.02 Application of Proceeds. (a) Revolving Nature of Credit Agreement Secured Obligations. As long as the Senior Agent is not exercising any of its remedies as a secured creditor under the Senior Loan Documents and including during any Standstill Period, the Senior Agent may apply any and all of the proceeds of the Collateral consisting of accounts receivable, other rights to payment or Cash Collateral in accordance with the provisions of the Senior Loan Documents, subject to the provisions of this Agreement, including Sections 3.02 and 4.02 hereof. The Collateral Agent, for and on behalf of itself, the Trustee, and the Noteholders, expressly acknowledges and agrees that (a) any such application of the proceeds of accounts receivable, other rights to payment or Cash Collateral or the release of any Lien by the Senior Agent upon any portion of the Collateral in connection with a Permitted Disposition (as that term is defined in the Credit Agreement) shall not be considered to be the exercise of remedies under this Agreement; and (b) all Proceeds or Cash Collateral received by Senior Agent in connection therewith may be applied, reversed, reapplied, credited or reborrowed, in whole or in part, as Credit Agreement Secured Obligations without reducing the Maximum Priority Debt Amount. (b) Turnover of Cash Collateral After Payment. Upon the Discharge of the Credit Agreement Secured Obligations, the Senior Agent shall deliver to the Collateral Agent or execute such documents as the Collateral Agent may reasonably request to cause the Collateral Agent to have control over any Cash Collateral or Control Collateral still in Senior Agent's or its designee's possession, custody or control in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct, to be applied by the Collateral Agent to the Indenture Secured Obligations. Upon the Discharge of the TB Wood's Credit Agreement Secured Obligations, the TB Wood's Agent shall deliver to the Senior Agent or execute such documents as the Senior Agent may reasonably request to cause the Senior Agent to have control over any Cash Collateral or Control Collateral still in TB Wood's Agent's or its designee's possession, custody or control in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct, to be applied in accordance with the terms hereof. Proceeds of any exercise by the Senior Agent or the Collateral Agent, as applicable, of any of their respective secured creditor rights or remedies under any of the Loan Documents, under applicable law, or otherwise with respect to any Collateral (other than TB Wood's Collateral until the Discharge of TB Wood's Credit Agreement Secured Obligations) or Proceeds, shall be (a) until the Discharge of the Credit Agreement Secured Obligations, retained by the Senior Agent or promptly turned over by the Collateral Agent, the Trustee, or any Noteholder, as the case may be, to the Senior Agent in the same form as received, with any necessary endorsements, (b) after the Discharge of the Credit Agreement Secured Obligations and until all Indenture Secured Obligations have been paid in full in cash, retained by the Collateral Agent or promptly turned over by the Senior Agent to the Collateral Agent in the same form as received, with any necessary endorsements, and (c) if there are any amounts still due or any obligations outstanding to the Senior Agent under the Senior 22 Loan Documents in excess of the Maximum Priority Debt Amount after the payment in full in cash of all Indenture Secured Obligations, shall be retained by the Senior Agent or promptly turned over by the Collateral Agent to the Senior Agent in the same form as received, with any necessary endorsements. Until the Discharge of TB Wood's Credit Agreement Secured Obligations, proceeds of any exercise by the TB Wood's Agent, Senior Agent or the Collateral Agent, as applicable, of any of their respective secured creditor rights or remedies under any of the Loan Documents, under applicable law, or otherwise with respect to any TB Wood's Collateral or Proceeds thereof, shall be (a) retained by the TB Wood's Agent or promptly turned over by the Senior Agent, Senior Lenders, Collateral Agent, the Trustee, or any Noteholder, as the case may be, to the TB Wood's Agent in the same form as received, with any necessary endorsements. (c) Application of Proceeds. (i) Except as set forth in clause (ii) below, the Senior Agent and the Collateral Agent hereby agree that all Collateral and all Proceeds received by either of them upon the Exercise Of Secured Creditor Remedies shall be applied, first, to the payment of costs and expenses of the Senior Agent or the Collateral Agent, as applicable, in connection with such exercise, second, to the payment of the Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority Debt Amount, third, to the payment of the Indenture Secured Obligations, and fourth, to the payment of any Credit Agreement Secured Obligations in excess of the Maximum Priority Debt Amount. In exercising remedies, whether as a secured creditor or otherwise, the Senior Agent shall have no obligation or liability to the Collateral Agent, the Trustee, or to any Noteholder and the Collateral Agent shall have no obligation or liability to the Senior Agent or any Senior Lender regarding the adequacy of any Proceeds or for any action or omission save and except solely an action or omission that breaches the express obligations undertaken by each Party under the terms of this Agreement. (ii) The TB Wood's Agent, the Senior Agent and the Collateral Agent hereby agree that all TB Wood's Collateral and all Proceeds thereof received by either of them prior to the Discharge of the TB Wood's Credit Agreement Secured Obligations upon the Exercise Of Secured Creditor Remedies shall be applied, first, to the payment of costs and expenses of the TB Wood's Agent, Senior Agent or the Collateral Agent, as applicable, in connection with such exercise, second, to the payment of the TB Wood's Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority TB Wood's Debt Amount, 23 third, to the payment of the Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority Debt Amount, fourth, to the payment of the Indenture Secured Obligations, fifth, to the payment of any TB Wood's Credit Agreement Secured Obligations in excess of the Maximum Priority TB Wood's Debt Amount, and sixth, to the payment of any Credit Agreement Secured Obligations in excess of the Maximum Priority Debt Amount. In exercising remedies, whether as a secured creditor or otherwise, (x) the TB Wood's Agent shall have no obligation or liability to the Senior Agent, the Senior Lenders, the Collateral Agent, the Trustee, or to any Noteholder, (y) the Senior Agent shall have no obligation or liability to the TB Wood's Agent, the TB Wood's Lenders, the Collateral Agent, the Trustee, or to any Noteholder and (z) the Collateral Agent shall have no obligation or liability to the TB Wood's Agent, the TB Wood's Lender, Senior Agent or any Senior Lender regarding the adequacy of any Proceeds or for any action or omission save and except solely an action or omission that breaches the express obligations undertaken by each Party under the terms of this Agreement. Section 4.03 Specific Performance. Each of the Senior Agent, the TB Wood's Agent and the Collateral Agent is hereby authorized to demand specific performance of this Agreement, whether or not any TB Wood's Credit Party, Borrower or any Guarantor shall have complied with any of the provisions of any of the Loan Documents, at any time when the other shall have failed to comply with any of the provisions of this Agreement applicable to it; provided, however, the remedy of specific performance shall not be available, and the asserting party shall be free to assert any and all legal defenses it may possess, if such remedy would result in, or otherwise constitute, a violation of the Employee Retirement Income Security Act of 1974, as amended. Each of the Senior Agent, the TB Wood's Agent and the Collateral Agent hereby irrevocably waives any defense based on the adequacy of a remedy at law, which might be asserted as a bar to such remedy of specific performance. ARTICLE V. INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS Section 5.01 Notice of Acceptance and Other Waivers. (a) All Credit Agreement Secured Obligations at any time made or incurred by any Borrower or any Guarantor shall be deemed to have been made or incurred in reliance upon this Agreement, and the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, and TB Wood's Agent, on behalf of itself and the TB Wood's Lenders, hereby waive (i) notice of acceptance, or proof of reliance, by the 24 Senior Agent of this Agreement, and (ii) notice of the existence, renewal, extension, accrual, creation, or non-payment of all or any part of the Credit Agreement Secured Obligations. Neither the Senior Agent, nor any Senior Lender, nor any of their respective affiliates, directors, officers, employees, or agents shall be liable for failure to demand, collect, or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral or to take any other action whatsoever with regard to the Collateral or any part thereof, except as specifically provided in this Agreement. If the Senior Agent honors (or fails to honor) a request by a Borrower for an extension of credit pursuant to the Credit Agreement or any of the Senior Loan Documents, whether Senior Agent has knowledge that the honoring of (or failure to honor) any such request would constitute a default under the terms of the Indenture or any Indenture Loan Document or an act, condition, or event that, with the giving of notice or the passage of time, or both, would constitute such a default, or if Senior Agent otherwise should exercise any of its contractual rights or remedies under the Senior Loan Documents (subject to the express terms and conditions hereof), Senior Agent shall not have any liability whatsoever to the TB Wood's Agent, any TB Wood's Lender, the Collateral Agent, the Trustee or any Noteholder as a result of such action, omission, or exercise (so long as any such exercise does not breach the express terms and provisions of this Agreement). The Senior Agent will be entitled to manage and supervise its loans and extensions of credit under the Credit Agreement and other Senior Loan Documents as the Senior Agent may, in its sole discretion, deem appropriate, and the Senior Agent may manage its loans and extensions of credit without regard to any rights or interests that the TB Wood's Agent, any TB Wood's Lender, the Collateral Agent, the Trustee, or any of the Noteholders have in the Collateral or otherwise except as otherwise expressly set forth in this Agreement. The Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, and the TB Wood's Agent, on behalf of itself and the TB Wood's Lenders, agree that the Senior Agent shall not incur any liability as a result of a sale, lease, license, or other disposition of the Collateral, or any part thereof, pursuant to the Senior Loan Documents conducted in accordance with mandatory provisions of applicable law. (b) All TB Wood's Credit Agreement Secured Obligations at any time made or incurred by any TB Wood's Credit Party shall be deemed to have been made or incurred in reliance upon this Agreement, and each of the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, and the Senior Agent, on behalf of itself and the Senior Lenders, hereby waives (i) notice of acceptance, or proof of reliance, by the TB Wood's Agent of this Agreement, and (ii) notice of the existence, renewal, extension, accrual, creation, or non-payment of all or any part of the TB Wood's Credit Agreement Secured Obligations. Neither the TB Wood's Agent, nor any TB Wood's Lender, nor any of their respective affiliates, directors, officers, employees, or agents shall be liable for failure to demand, collect, or realize upon any of the TB Wood's Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any TB Wood's Collateral or to take any other action whatsoever with regard to the TB Wood's Collateral or any part thereof, except as specifically provided in this Agreement. If the TB Wood's Agent honors (or fails to honor) a request by a TB Wood's Credit Party for 25 an extension of credit pursuant to the TB Wood's Credit Agreement or any of the TB Wood's Loan Documents, whether TB Wood's Agent has knowledge that the honoring of (or failure to honor) any such request would constitute a default under the terms of the Indenture, any Indenture Loan Document, the Credit Agreement, any Senior Loan Document or an act, condition, or event that, with the giving of notice or the passage of time, or both, would constitute such a default, or if TB Wood's Agent otherwise should exercise any of its contractual rights or remedies under the TB Wood's Loan Documents (subject to the express terms and conditions hereof), TB Wood's Agent shall not have any liability whatsoever to the Senior Agent, Senior Lenders, Collateral Agent, the Trustee or any Noteholder as a result of such action, omission, or exercise (so long as any such exercise does not breach the express terms and provisions of this Agreement). The TB Wood's Agent will be entitled to manage and supervise its loans and extensions of credit under the TB Wood's Credit Agreement and other TB Wood's Loan Documents as the TB Wood's Agent may, in its sole discretion, deem appropriate, and the TB Wood's Agent may manage its loans and extensions of credit without regard to any rights or interests that the Senior Agent, Senior Lenders, Collateral Agent, the Trustee, or any of the Noteholders have in the TB Wood's Collateral or otherwise except as otherwise expressly set forth in this Agreement. Each of the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, and the Senior Agent, on behalf of itself and the Senior Lenders, agrees that the TB Wood's Agent shall not incur any liability as a result of a sale, lease, license, or other disposition of the TB Wood's Collateral, or any part thereof, pursuant to the TB Wood's Loan Documents conducted in accordance with mandatory provisions of applicable law. (c) None of Collateral Agent, Trustee, or any of the Noteholders nor any of their affiliates, directors, officers, employees, or agents shall be liable for failure to demand, collect, or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral or to take any other action whatsoever with regard to the Collateral or any part thereof, except as specifically provided in this Agreement. If Collateral Agent, Trustee, or any of the Noteholders should exercise any of their contractual rights or remedies under the Indenture Agreements (subject to the express terms and conditions hereof), none of Collateral Agent, Trustee, or any of the Noteholders shall have any liability whatsoever to the Senior Agent as a result of such action, omission, or exercise (so long as any such exercise does not breach the express terms and provisions of this Agreement). The Collateral Agent, Trustee, and Noteholders will be entitled to manage and supervise the Parent's obligations under the Indenture Agreements as they may, in their sole discretion, deem appropriate, and they may manage such obligations without regard to any rights or interests that the Senior Agent or the TB Wood's Agent has in the Collateral or otherwise except as otherwise expressly set forth in this Agreement. Subject to Section 2.03, the Senior Agent and the TB Wood's Agent agree that none of the Collateral Agent, the Trustee, or the Noteholders shall incur any liability as a result of a sale, lease, license, or other disposition of the Collateral, or any part thereof, pursuant to the Indenture Agreements conducted in accordance with mandatory provisions of applicable law. 26 Section 5.02 Modifications to Senior Loan Documents and Indenture Agreements. (a) The Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, and the TB Wood's Agent, on behalf of itself and the TB Wood's Lenders, hereby agree that, without affecting the obligations of the TB Wood's Agent, the TB Wood's Lenders, the Collateral Agent, the Trustee and the Noteholders hereunder, the Senior Agent, on behalf of itself and the Senior Lenders, may, at any time and from time to time, in its sole discretion without the consent of or notice to the TB Wood's Agent, the TB Wood's Lenders, the Collateral Agent, the Trustee or any Noteholder (except to the extent such notice or consent is required pursuant to the express provisions of this Agreement), and without incurring any liability to the TB Wood's Agent, the TB Wood's Lenders, the Collateral Agent, the Trustee or any Noteholder or impairing or releasing the subordination provided for herein, amend, restate, supplement, replace, refinance, extend, consolidate, restructure, or otherwise modify the Credit Agreement or any of the Senior Loan Documents in any manner whatsoever, including, to (i) change the manner, place, time, or terms of payment or renew or alter, all or any of the Credit Agreement Secured Obligations or otherwise amend, restate, supplement, or otherwise modify in any manner, or grant any waiver or release with respect to, all or any part of the Credit Agreement Secured Obligations or any of the Senior Loan Documents, (ii) retain or obtain a Lien on any property of any Person to secure any of the Credit Agreement Secured Obligations, and in that connection to enter into any additional Senior Loan Documents, (iii) amend, or grant any waiver, compromise or release with respect to, or consent to any departure from, any guaranty or other obligations of any Person obligated in any manner under or in respect of the Credit Agreement Secured Obligations, (iv) release its Lien on any Collateral or other property, (v) exercise or refrain from exercising any rights against any Borrower, any Guarantor or any other Person, (vi) retain or obtain the primary or secondary obligation of any other Person with respect to any of the Credit Agreement Secured Obligations, and (vii) otherwise manage and supervise the Credit Agreement Secured Obligations as the Senior Agent shall deem appropriate. 27 (b) The Senior Agent, on behalf of itself and the Senior Lenders, and the TB Wood's Agent, on behalf of itself and the TB Wood's Lenders, hereby agree that Collateral Agent, on behalf of itself, the Trustee, and the Noteholders may, at any time and from time to time, in its sole discretion without the consent of or notice to the TB Wood's Agent or the Senior Agent (except to the extent such notice or consent is required pursuant to the express provisions of this Agreement), and without incurring any liability to the TB Wood's Agent or the Senior Agent or impairing or releasing the subordination provided for herein, amend, restate, supplement, replace, refinance, extend, consolidate, restructure, or otherwise modify the Indenture Agreements in any manner whatsoever, provided, however, that (x) in no event shall Collateral Agent, the Trustee, or any Noteholder obtain a Lien on any assets of any Borrower or any Guarantor not constituting Collateral unless (i) Senior Agent also obtains a Lien on such assets either before or at the same time as Collateral Agent, the Trustee or such Noteholder or (ii) Senior Agent declines in a writing to Collateral Agent to obtain a Lien on such assets or (y) in no event shall Collateral Agent, the Trustee, or any Noteholder obtain a Lien on any assets of any TB Wood's Credit Party not constituting TB Wood's Collateral unless (i) TB Wood's Agent also obtains a Lien on such assets either before or at the same time as Collateral Agent, the Trustee or such Noteholder or (ii) TB Wood's Agent declines in a writing to Collateral Agent to obtain a Lien on such assets. (c) Each of the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, and the Senior Agent, on behalf of itself and the Senior Lenders, hereby agrees that, without affecting the obligations of the Senior Agent, the Senior Lenders, the Collateral Agent, the Trustee and the Noteholders hereunder, the TB Wood's Agent, on behalf of itself and the TB Wood's Lenders, may, at any time and from time to time, in its sole discretion without the consent of or notice to the Senior Agent, the Senior Lenders, the Collateral Agent, the Trustee or any Noteholder (except to the extent such notice or consent is required pursuant to the express provisions of this Agreement), and without incurring any liability to the Senior Agent, the Senior Lenders, the Collateral Agent, the Trustee or any Noteholder or impairing or releasing the subordination provided for herein, amend, restate, supplement, replace, refinance, extend, consolidate, restructure, or otherwise modify the TB Wood's Credit Agreement or any of the TB Wood's Loan Documents in any manner whatsoever, including, to (i) change the manner, place, time, or terms of payment or renew or alter, all or any of the TB Wood's Credit Agreement Secured Obligations or otherwise amend, restate, supplement, or otherwise modify in any manner, or grant any waiver or release with respect to, all or any part of the TB Wood's Credit Agreement Secured Obligations or any of the TB Wood's Loan Documents, (ii) retain or obtain a Lien on any property of any Person to secure any of the TB Wood's Credit Agreement Secured Obligations, and 28 in that connection to enter into any additional TB Wood's Loan Documents, (iii) amend, or grant any waiver, compromise or release with respect to, or consent to any departure from, any guaranty or other obligations of any Person obligated in any manner under or in respect of the TB Wood's Credit Agreement Secured Obligations, (iv) release its Lien on any TB Wood's Collateral or other property, (v) exercise or refrain from exercising any rights against any TB Wood's Credit Party or any other Person, (vi) retain or obtain the primary or secondary obligation of any other Person with respect to any of the TB Wood's Credit Agreement Secured Obligations, and (vii) otherwise manage and supervise the TB Wood's Credit Agreement Secured Obligations as the TB Wood's Agent shall deem appropriate. (d) Notwithstanding anything to the contrary herein, this Section 5.02 shall not be construed to constitute a waiver by the Collateral Agent, the Trustee, or any Noteholder of any provision of the Indenture. Section 5.03 Reinstatement and Continuation of Agreement. (a) If Senior Agent is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of any Borrower, any Guarantor or any other Person any amount (a "Recovery"), then the Credit Agreement Secured Obligations shall be reinstated to the extent of such Recovery. If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of the parties hereto from such date of reinstatement. All rights, interests, agreements, and obligations of the TB Wood's Agent, the TB Wood's Lenders, the Collateral Agent, the Trustee, the Senior Agent, the Senior Lenders, and the Noteholders under this Agreement shall remain in full force and effect and shall continue irrespective of the commencement of, or any discharge, confirmation, conversion, or dismissal of any Insolvency Proceeding by or against any Borrower or any Guarantor or any other circumstance which otherwise might constitute a defense available to, or a discharge of any Borrower or any Guarantor in respect of the Credit Agreement Secured Obligations. No priority or right of the Senior Agent shall at any time be prejudiced or impaired in any way by any act or failure to act on the part of any Borrower or any Guarantor or by the noncompliance by any Person with the terms, 29 provisions, or covenants of the TB Wood's Credit Agreement, the Credit Agreement, the Indenture or any of the other Loan Documents, regardless of any knowledge thereof which the Senior Agent may have. (b) If TB Wood's Agent is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of any TB Wood's Credit Party or any other Person a Recovery, then the TB Wood's Credit Agreement Secured Obligations shall be reinstated to the extent of such Recovery. If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of the parties hereto from such date of reinstatement. All rights, interests, agreements, and obligations of the TB Wood's Agent, the TB Wood's Lenders, the Collateral Agent, the Trustee, the Senior Agent, the Senior Lenders, and the Noteholders under this Agreement shall remain in full force and effect and shall continue irrespective of the commencement of, or any discharge, confirmation, conversion, or dismissal of any Insolvency Proceeding by or against any TB Wood's Credit Party or any other circumstance which otherwise might constitute a defense available to, or a discharge of any TB Wood's Credit Party in respect of the TB Wood's Credit Agreement Secured Obligations. No priority or right of the TB Wood's Agent shall at any time be prejudiced or impaired in any way by any act or failure to act on the part of any TB Wood's Credit Party or by the noncompliance by any Person with the terms, provisions, or covenants of the TB Wood's Credit Agreement, the Credit Agreement, the Indenture or any of the other Loan Documents, regardless of any knowledge thereof which the TB Wood's Agent may have. (c) If Collateral Agent, the Trustee, or any Noteholder is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of any Borrower, any Guarantor or any other Person a Recovery, then the Indenture Secured Obligations shall be reinstated to the extent of such Recovery. No priority or right of the Collateral Agent, the Trustee, or any Noteholder shall at any time be prejudiced or impaired in any way by any act or failure to act on the part of any Borrower or any Guarantor or by the noncompliance by any Person with the terms, provisions, or covenants of the TB Wood's Credit Agreement, the Credit Agreement, the Indenture or any of the other Indenture Agreements, regardless of any knowledge thereof which the Collateral Agent, the Trustee, or any Noteholder may have. Section 5.04 New Credit Facility. At any time any Borrower or any of its Subsidiaries enters into a New Credit Facility (provided that the lender providing such New Credit Facility or its designee executes an acknowledgment, in substantially the form of Annex A), this Agreement shall be reinstated in full force and effect, and any prior termination thereof, if any, as a result of a prior Discharge of Credit Agreement Secured Obligations, shall not diminish, release, discharge, impair, or otherwise affect the obligations of the parties hereto (including the lender providing for the New Credit Facility) from such date of reinstatement. It is hereby agreed that the entering into of any 30 new Credit Agreement would not constitute an amendment, modification or supplement to any of the Indenture Loan Documents. ARTICLE VI. INSOLVENCY PROCEEDINGS Section 6.01 DIP Financing. If any Borrower or any Guarantor shall be subject to any Insolvency Proceeding and the Senior Agent shall desire, prior to the Discharge of Credit Agreement Secured Obligations, to permit the use of cash collateral or to permit any Borrower or any Guarantor to obtain financing under Section 363 or Section 364 of Title 11 of the United States Code or any similar provision under the law applicable to any Insolvency Proceeding ("DIP Financing") to be secured by all or any portion of the Collateral, then the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that it will raise no objection to such use of cash collateral or DIP Financing and will not request adequate protection or any other relief in connection with its or their interest in any such Collateral except to the extent specified in this Section 6.01. To the extent the Liens securing the Credit Agreement Secured Obligations are subordinated or pari passu with such DIP Financing, the Collateral Agent, for and on behalf of itself, the Trustee, and the Noteholders, hereby agrees that its Liens in the Collateral shall be subordinated to such DIP Financing (and all obligations relating thereto) upon the terms and conditions specified in this Agreement. Until the Discharge of Credit Agreement Secured Obligations has occurred, the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that none of them shall seek relief from the automatic stay or any other stay in any Insolvency Proceeding in respect of the Collateral and will not provide or offer to provide any DIP Financing secured by a Lien senior to or pari passu with the Liens securing the Credit Agreement Secured Obligations, in each case unless the Senior Agent otherwise has provided its express written consent. Section 6.02 No Contest. The Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that, prior to the Discharge of Credit Agreement Secured Obligations, none of them shall contest (or support any other Person contesting) (a) any request by the Senior Agent for adequate protection, or (b) any objection by the Senior Agent to any motion, relief, action, or proceeding based on Senior Agent claiming that their interests in the Collateral are not adequately protected or any other similar request under any law applicable to an Insolvency Proceeding. Notwithstanding the foregoing, in any Insolvency Proceeding, if the Senior Agent is granted adequate protection in the form of additional collateral in connection with any DIP Financing or use of cash collateral under Section 363 or Section 364 of Title 11 of the United States Code or any similar law applicable to any Insolvency Proceeding, then the Collateral Agent, on behalf of itself, the Trustee, or any of the Noteholders, may seek or request adequate protection in the form of a Lien on such additional collateral, which Lien hereby is and shall be deemed to be subordinated to the Liens securing the Credit Agreement Secured Obligations up to (but not in excess of) the Maximum Priority Debt Amount and such DIP Financing (and 31 all obligations relating thereto) on the same basis as the Lien Priority. In the event the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, seeks or requests adequate protection and such adequate protection is granted in the form of Liens in respect of additional collateral, then the Collateral Agent, on behalf of itself, the Trustee, and each of the Noteholders, agrees that the Senior Agent also shall be granted a senior Lien on such additional collateral as security for the Credit Agreement Secured Obligations (and for any such DIP Financing) and that any Lien on such additional collateral securing the Indenture Secured Obligations shall be subordinated to the Liens in respect of such additional collateral securing the Credit Agreement Secured Obligations and any such DIP Financing and any other Liens granted to the Senior Agent as adequate protection on the same basis as the other Liens securing the Indenture Secured Obligations are subordinated to the Credit Agreement Secured Obligations under this Agreement up to the Maximum Priority Debt Amount. Nothing contained herein shall prohibit or in any way limit the Senior Agent, prior to the Discharge of Credit Agreement Secured Obligations, from objecting in any Insolvency Proceeding or otherwise to any action taken by the Collateral Agent, the Trustee or any of the Noteholders, including the seeking by the Collateral Agent, the Trustee or any Noteholder of adequate protection or the asserting by the Collateral Agent, the Trustee or any Noteholder of any of its rights and remedies under the Indenture Loan Documents or otherwise. Section 6.03 Asset Sales. The Collateral Agent agrees, on behalf of itself, the Trustee, and the Noteholders, that it will not oppose any sale consented to by Senior Agent of Collateral pursuant to Section 363 or 365 of Title 11 of the United States Code (or any similar provision in any other applicable Bankruptcy Law) so long as the proceeds of such sale are applied in accordance with this Agreement. The Collateral Agent agrees, on behalf of itself, the Trustee, and the Noteholders, that it will not oppose any sale consented to by TB Wood's Agent of TB Wood's Collateral pursuant to Section 363 or 365 of Title 11 of the United States Code (or any similar provision in any other applicable Bankruptcy Law) so long as the proceeds of such sale are applied in accordance with this Agreement. Section 6.04 Enforceability. The provisions of this Agreement are intended to be and shall be enforceable under Section 510 of Title 11 of the United States Code. The Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that all distributions that the Collateral Agent, the Trustee, or any Noteholder receives in any Insolvency Proceeding on account of the Collateral or Proceeds shall be held in trust by such Person and turned over to the Senior Agent, on behalf of itself and the Senior Lenders, for application in accordance with Section 4.02 of this Agreement. The Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that all distributions that the Collateral Agent, the Trustee, or any Noteholder receives in any Insolvency Proceeding on account of the TB Wood's Collateral or Proceeds thereof shall be held in trust by such Person and turned over to the TB Wood's Agent, on behalf of itself and the TB Wood's Lenders, for application in accordance with Section 4.02 of this 32 Agreement. To the extent that any amounts received by the Collateral Agent, the Trustee, or any Noteholder are paid over in connection with this provision, the obligations owed by the Borrower to such Person will be deemed to be reinstated to the extent of the amounts so paid over. ARTICLE VII. MISCELLANEOUS Section 7.01 Rights of Subrogation. The Collateral Agent agrees that no payment or distribution to the Senior Agent pursuant to the provisions of this Agreement shall entitle the Collateral Agent, the Trustee, or any Noteholder to exercise any rights of subrogation in respect thereof until the Discharge of Credit Agreement Secured Obligations shall have occurred. Following the Discharge of Credit Agreement Secured Obligations, the Senior Agent agrees to execute such documents, agreements, and instruments as the Collateral Agent, the Trustee or any Noteholder may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the Credit Agreement Secured Obligations resulting from payments or distributions to the Senior Agent by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the Senior Agent are paid by such Person upon request for payment thereof. Each of the Senior Agent and the Collateral Agent agrees that no payment or distribution to the TB Wood's Agent pursuant to the provisions of this Agreement in respect of the TB Wood's Collateral shall entitle the Senior Agent, the Senior Lenders, the Collateral Agent, the Trustee, or any Noteholder to exercise any rights of subrogation in respect thereof until the Discharge of TB Wood's Credit Agreement Secured Obligations shall have occurred. Following the Discharge of TB Wood's Credit Agreement Secured Obligations, the TB Wood's Agent agrees to execute such documents, agreements, and instruments as the Senior Agent, the Senior Lenders, the Collateral Agent, the Trustee or any Noteholder may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the TB Wood's Credit Agreement Secured Obligations resulting from payments or distributions to the TB Wood's Agent by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the TB Wood's Agent are paid by such Person upon request for payment thereof. Section 7.02 Further Assurances. The Parties will, at their own expense and at any time and from time to time, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that either Party may reasonably request, in order to protect any right or interest granted or purported to be granted hereby or to enable the TB Wood's Agent, the Senior Agent or the Collateral Agent to exercise and enforce its rights and remedies hereunder; provided, however, that no Party shall be required to pay over any payment or distribution, execute any instruments or documents, or take any other action referred to in this Section 7.02 to the extent that such action would contravene any law, order or other legal requirement, 33 and in the event of a controversy or dispute, such Party may interplead any payment or distribution in any court of competent jurisdiction, without further responsibility in respect of such payment or distribution under this Section 7.02. Section 7.03 Representations. The Original Senior Agent represents and warrants to the TB Wood's Agent and the Collateral Agent that it has the requisite power and authority under the Original Credit Agreement to enter into, execute, deliver, and carry out the terms of this Agreement on behalf of itself and the Senior Lenders. The Collateral Agent represents and warrants to the TB Wood's Agent and the Senior Agent that it has the requisite power and authority under the Indenture to enter into, execute, deliver, and carry out the terms of this Agreement on behalf of itself, the Trustee, and the Noteholders. The Original TB Wood's Agent represents and warrants to the Collateral Agent and the Senior Agent that it has the requisite power and authority under the Original TB Wood's Credit Agreement to enter into, execute, deliver, and carry out the terms of this Agreement on behalf of itself and the TB Wood's Lenders. Section 7.04 Amendments. No amendment or waiver of any provision of this Agreement nor consent to any departure by any Party hereto shall be effective unless it is in a written agreement executed by the Collateral Agent, the TB Wood's Agent and the Senior Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 7.05 Addresses for Notices. All demands, notices and other communications provided for hereunder shall be in writing and, if to the Collateral Agent, mailed or sent by telecopy or delivered to it, addressed to it as follows: The Bank of New York Trust Company, N.A. 700 South Flower Street, Suite 500 Los Angeles, California 90017 Attention: Corporate Trust Department/Altra Industrial Motion, Inc. Telephone: 213-630-6176 Facsmile: 213-630-6298 With a copy to: Proskauer Rose LLP 1585 Broadway New York, NY Attention: Julie M. Allen, Esq. Facsmile: 212-969-2900 if to the Senior Agent, mailed, sent or delivered thereto, addressed to it as follows: Wells Fargo Foothill, Inc. One Boston Place 34 Boston, MA 02108 Attention: Business Finance Manager Facsimile: (617) 523-5839 With a copy to: Moses & Singer LLP The Chrysler Building 405 Lexington Avenue New York, NY 10174-1299 Attention: Howard L. Siegel, Esq. Facsimile: (212) 554-7700 if to the TB Wood's Agent, mailed, sent or delivered thereto, addressed to it as follows: Wells Fargo Foothill, Inc. One Boston Place Boston, MA 02108 Attention: Business Finance Manager Facsimile: (617) 523-5839 With a copy to: Moses & Singer LLP The Chrysler Building 405 Lexington Avenue New York, NY 10174-1299 Attention: Howard L. Siegel, Esq. Facsimile: (212) 554-7700 If to Parent or Administrative Borrower, mailed, sent or delivered thereto, addressed to it as follows: Altra Industrial Motion, Inc. 14 Hayward St. Quincy, Massachusetts 02171 Attention: Michael L. Hurt Facsimile: (617) 689-6202 With a copies to: Genstar Capital, L.P. Four Embarcadero Center, Suite 1900 San Francisco, CA 94111 Attention: Darren J. Gold 35 Facsimile: (415) 834-2383 and Weil, Gotshal & Manges LLP 200 Crescent Court, Suite 300 Dallas, Texas 75201 Attention: Angela L. Fontana, Esq. Facsimile: (214) 746-7777 or as to any party at such other address as shall be designated by such party in a written notice to the other parties complying as to delivery with the terms of this Section 7.05. All such demands, notices and other communications shall be effective, when mailed, two business days after deposit in the mails, postage prepaid, when sent by telecopy, when receipt is acknowledged by the receiving telecopy equipment (or at the opening of the next business day if receipt is after normal business hours), or when delivered, as the case may be, addressed as aforesaid. Section 7.06 No Waiver, Remedies. No failure on the part of any Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 7.07 Continuing Agreement, Transfer of Secured Obligations. This Agreement is a continuing agreement and shall (i) remain in full force and effect until the Discharge of the TB Wood's Credit Agreement Secured Obligations shall have occurred, the Discharge of the Credit Agreement Secured Obligations shall have occurred and the Indenture Secured Obligations shall have been paid in full, (ii) be binding upon the Parties and their successors and assigns, and (iii) inure to the benefit of and be enforceable by the Parties and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (iii), the TB Wood's Agent or any TB Wood's Lender, the Senior Agent or any Senior Lender, or the Collateral Agent, the Trustee, or any Noteholder may assign or otherwise transfer all or any portion of the TB Wood's Credit Agreement Secured Obligations, the Credit Agreement Secured Obligations or the Indenture Secured Obligations, as applicable, to any other Person (other than any Borrower, any Guarantor or any Affiliate of any Borrower or any Guarantor), and such other Person shall thereupon become vested with all the rights and obligations in respect thereof granted to the TB Wood's Agent or any TB Wood's Lender, the Senior Agent or any Senior Lender, or the Collateral Agent, the Trustee, or any Noteholder, as the case may be, herein or otherwise. Section 7.08 Information Concerning Financial Condition. 36 (a) Collateral Agent hereby assumes responsibility for keeping itself informed of the financial condition of the Borrowers and Guarantors and of all other circumstances bearing upon the risk of nonpayment of the Indenture Secured Obligations, and agrees that neither TB Wood's Agent nor Senior Agent has and shall have no duty to advise Collateral Agent of information known to TB Wood's Agent or Senior Agent regarding such condition or any such circumstances. In the event TB Wood's Agent or Senior Agent, in their sole discretion, undertake, at any time or from time to time, to provide any such information to Collateral Agent, neither TB Wood's Agent nor Senior Agent shall be under any obligation (i) to provide any such information to Collateral Agent on any subsequent occasion, (ii) to undertake any investigation, or (iii) to disclose any information which, pursuant to its commercial finance practices, TB Wood's Agent or Senior Agent, as applicable, wishes to maintain confidential. Collateral Agent acknowledges and agrees that neither TB Wood's Agent or Senior Agent has made any warranties or representations with respect to the legality, validity, enforceability, collectability or perfection of the TB Wood's Credit Agreement Secured Obligations, the Credit Agreement Secured Obligations or any liens or security interests held in connection therewith. (b) TB Wood's Agent hereby assumes responsibility for keeping itself informed of the financial condition of the Borrowers and Guarantors and of all other circumstances bearing upon the risk of nonpayment of the TB Wood's Credit Agreement Secured Obligations, and agrees that neither the Collateral Agent nor the Senior Agent has and shall have no duty to advise TB Wood's Agent of information known to Collateral Agent or the Senior Agent regarding such condition or any such circumstances. In the event Collateral Agent or Senior Agent, in their sole discretion, undertake, at any time or from time to time, to provide any such information to TB Wood's Agent, neither Collateral Agent nor Senior Agent, as applicable, shall be under any obligation (i) to provide any such information to TB Wood's Agent on any subsequent occasion, (ii) to undertake any investigation, or (iii) to disclose any information which, pursuant to its commercial finance practices, Collateral Agent or Senior Agent, as applicable, wishes to maintain confidential. TB Wood's Agent acknowledges and agrees that neither Collateral Agent nor Senior Agent has made any warranties or representations with respect to the legality, validity, enforceability, collectability or perfection of the Indenture Secured Obligations, the Credit Agreement Secured Obligations or any liens or security interests held in connection therewith. (c) Senior Agent hereby assumes responsibility for keeping itself informed of the financial condition of the Borrowers and Guarantors and of all other circumstances bearing upon the risk of nonpayment of the Credit Agreement Secured Obligations, and agrees that neither TB Wood's Agent nor Collateral Agent has and shall have no duty to advise Senior Agent of information known to TB Wood's Agent or Collateral Agent regarding such condition or any such circumstances. In the event TB Wood's Agent or Collateral Agent, in their sole discretion, undertake, at any time or from time to time, to provide any such information to Senior Agent, neither TB Wood's 37 Agent nor Collateral Agent shall be under any obligation (i) to provide any such information to Senior Agent on any subsequent occasion, (ii) to undertake any investigation, or (iii) to disclose any information which, pursuant to its commercial finance practices, TB Wood's Agent or Collateral Agent, as applicable, wishes to maintain confidential. Senior Agent acknowledges and agrees that neither TB Wood's Agent nor Collateral Agent has made any warranties or representations with respect to the legality, validity, enforceability, collectability or perfection of the TB Wood's Credit Agreement Secured Obligations, the Indenture Secured Obligations or any liens or security interests held in connection therewith. Section 7.09 Governing Law: Entire Agreement. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York except as otherwise preempted by applicable federal law. This Agreement constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof and supersedes any prior agreements, written or oral, with respect thereto. Section 7.10 Counterparts. This Agreement maybe executed in any number of counterparts, and it is not necessary that the signatures of all Parties be contained on any one counterpart hereof, each counterpart will be deemed to be an original, and all together shall constitute one and the same document. Section 7.11 No Third Party Beneficiary. This Agreement is solely for the benefit of the Parties (and their permitted assignees). No other Person (including Borrower, any Guarantor or any Affiliate of Borrower and any Subsidiary of Borrower or any Guarantor) shall be deemed to be a third party beneficiary of this Agreement. Section 7.12 Headings. The headings of the articles and sections of this Agreement are inserted for purposes of convenience only and shall not be construed to affect the meaning or construction of any of the provisions hereof Section 7.13 Severability. If any of the provisions in this Agreement shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement and shall not invalidate the Lien Priority or any other priority set forth in this Agreement. Section 7.14 Collateral Agent Status. Nothing in this Agreement shall be construed to operate as a waiver by the Collateral Agent, with respect to any Borrower, any Guarantor, the Trustee, or any Noteholder, of the benefit of any exculpatory rights, privileges, immunities, indemnities, or reliance rights contained in the Indenture or any of the other Indenture Loan Documents. For all purposes of this Agreement, the Collateral Agent may (a) rely in good faith, as to matters of fact, on any representation of fact believed by the Collateral Agent to be true (without any duty of investigation) and that is contained in a written certificate of any authorized representative of any Borrower or of the Senior Agent, any Senior Lender, the TB Wood's Agent, or any TB Wood's Lender, and (b) assume in good faith (without any duty of investigation), and rely upon, the 38 genuineness, due authority, validity, and accuracy of any certificate, instrument, notice, or other document believed by it in good faith to be genuine and presented by the proper person. Each Borrower, Senior Agent, each Senior Lender, TB Wood's Agent and each TB Wood's Lender expressly acknowledge that the subordination and related agreements set forth herein by the Collateral Agent are made solely in its capacity as Collateral Agent under the Indenture with respect to the Notes issued thereunder and the other Indenture Loan Documents and are not made by the Collateral Agent in its individual commercial capacity. Section 7.15 Acknowledgment. Each Borrower, each Guarantor and each TB Wood's Credit Party hereby acknowledges that it has received a copy of this Agreement and consents thereto, and agrees to recognize all rights granted thereby to the TB Wood's Agent, the Senior Agent and the Collateral Agent and will not do any act or perform any obligation which is not in accordance with the agreements set forth in this Agreement. Each Borrower, each Guarantor and each TB Wood's Credit Party further acknowledges and agrees that it is not an intended beneficiary or third party beneficiary under this Agreement. Section 7.16 VENUE; JURY TRIAL WAIVER. (a) THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE CITY OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT SENIOR AGENT'S OR TB WOOD'S AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SENIOR AGENT OR TB WOOD'S AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH PARTY HERETO WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 7.16. (b) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY HERETO REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL 39 COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. Section 7.17 Intercreditor Agreement. This Agreement amends and restates in its entirety the Original Intercreditor Agreement, but shall not be deemed a novation or termination of the Original Intercreditor Agreement. This Agreement is the Intercreditor Agreement referred to in the Indenture. If this Agreement or all or any portion of either Party's rights or obligations hereunder are assigned or otherwise transferred to any other Person, such other Person shall execute and deliver an agreement containing terms substantially identical to those contained in this Agreement. 40 IN WITNESS WHEREOF, the Senior Agent, the TB Wood's Agent, the Collateral Agent, each Borrower, each Guarantor and each TB Wood's Credit Party has caused this Agreement to be duly executed and delivered as of the date first above written. SENIOR AGENT AND TB WOOD'S AGENT: WELLS FARGO FOOTHILL, INC., a California corporation By: /s/ Vincent J. Egan, Jr. ------------------------------------ Name: Vincent J. Egan, Jr. ---------------------------------- Title: VP --------------------------------- [SIGNATURE PAGE OF AMENDED AND RESTATED INTERCREDITOR AGREEMENT] COLLATERAL AGENT AND TRUSTEE: THE BANK OF NEW YORK TRUST COMPANY, N.A., in its capacities as Collateral Agent and Trustee under the Indenture (and not individually) By: /s/ Sandee Parks ------------------------------------ Name: Sandee Parks ---------------------------------- Title: Vice President --------------------------------- [SIGNATURE PAGE OF AMENDED AND RESTATED INTERCREDITOR AGREEMENT] The undersigned, each a Borrower, Guarantor or TB Wood's Credit Party referred to in the foregoing Intercreditor Agreement, hereby agrees to comply with all of the terms and provisions of the Intercreditor Agreement in all respects. ALTRA INDUSTRIAL MOTION, INC., a Delaware corporation, as a Borrower By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- WARNER ELECTRIC LLC, a Delaware limited liability company, as a Borrower By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- KILIAN MANUFACTURING CORPORATION, a Delaware corporation, as a Borrower By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- WARNER ELECTRIC TECHNOLOGY LLC, a Delaware limited liability company, as a Borrower By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- FORMSPRAG LLC, a Delaware limited liability company, as a Borrower By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- BOSTON GEAR LLC, a Delaware limited liability company, as a Borrower By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- NUTTALL GEAR LLC, a Delaware limited liability company, as a Borrower By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- [SIGNATURE PAGE OF AMENDED AND RESTATED INTERCREDITOR AGREEMENT] AMERIDRIVES INTERNATIONAL, L.P., a Delaware limited partnership, as a Borrower By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- THE KILIAN COMPANY, a Delaware corporation, as a Guarantor By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- WARNER ELECTRIC INTERNATIONAL HOLDING, INC., a Delaware corporation, as a Guarantor By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- AMERICAN ENTERPRISES MPT CORP., a Delaware corporation, as a Guarantor By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- AMERICAN ENTERPRISES MPT, L.P., a Delaware limited partnership, as a Guarantor By: /s/ Michael L. Hurt ------------------------------------ Title: Chief Executive Officer --------------------------------- [SIGNATURE PAGE OF AMENDED AND RESTATED INTERCREDITOR AGREEMENT] TB WOOD'S INCORPORATED, a Pennsylvania corporation, as a TB Wood's Credit Party By: /s/ Joseph C. Horvath ------------------------------------ Title: VP, CFO and Corporate Secretary --------------------------------- PLANT ENGINEERING CONSULTANTS, LLC, a Tennessee limited liability company, as a TB Wood's Credit Party By: /s/ Joseph C. Horvath ------------------------------------ Title: Treasurer and Secretary --------------------------------- TB WOOD'S ENTERPRISES, INC., a Delaware corporation, as a TB Wood's Credit Party By: /s/ Joseph C. Horvath ------------------------------------ Title: President and Treasurer --------------------------------- TB WOOD'S CORPORATION, a Delaware corporation, as a TB Wood's Credit Party By: /s/ Joseph C. Horvath ------------------------------------ Title: VP, CFO and Corporate Secretary --------------------------------- [SIGNATURE PAGE OF AMENDED AND RESTATED INTERCREDITOR AGREEMENT] Annex A This ACKNOWLEDGMENT, dated as of _________ __, 20__, is delivered pursuant to Section 5.04 of the Amended and Restated Intercreditor and Lien Subordination Agreement (the "Intercreditor Agreement"), dated as of April 5, 2007 by Wells Fargo Foothill, Inc. (as Senior Agent and TB Wood's Agent) and The Bank Of New York, as Collateral Agent and Trustee, and acknowledged by Altra Industrial Motion, Inc., as a Borrower, certain of its Subsidiaries as Borrowers and Guarantors, and TB Wood's Corporation and certain of its Subsidiaries as TB Wood's Credit Parties. Capitalized terms used herein but not defined herein are used with the meanings given them in the Intercreditor Agreement. By executing and delivering this Acknowledgment, the undersigned, as provided in Section 5.04 of the Intercreditor Agreement, hereby becomes a party to the Intercreditor Agreement as Senior Agent, with the same force and effect as if originally named as the Original Senior Agent therein. IN WITNESS WHEREOF, the undersigned has caused this Acknowledgment to be duly executed and delivered as of the date first above written. [LENDER PROVIDING NEW CREDIT FACILITY] By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- EX-10.40 23 b65343s4exv10w40.txt EX-10.40 INTERCOMPANY SUBORDINATE AGREEMENT, DATED APRIL 5, 2007 EXHIBIT 10.40 INTERCOMPANY SUBORDINATION AGREEMENT THIS INTERCOMPANY SUBORDINATION AGREEMENT, made and entered into as of April 5, 2007 (this "Subordination Agreement"), by and among, TB Wood's Corporation, a Delaware corporation ("Parent"), TB Wood's Incorporated, a Pennsylvania corporation ("TBWI"), Plant Engineering Consultants, LLC, a Tennessee limited liability company ("Plant"), TB Wood's Enterprises, Inc., a Delaware corporation ("Enterprises", and together with Parent, TBWI and Plant, the "Subordinating Creditors" and each a "Subordinating Creditor"), and Wells Fargo Foothill, Inc., a California corporation, as the arranger and administrative agent (together with any successor(s) thereto in such capacity, the "Agent") under the Credit Agreement referenced below. Unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings assigned to such terms in the Credit Agreement, dated as of April 5, 2007 (as amended, modified, supplemented or restated from time to time, the "Credit Agreement"), by and among Borrowers, the lenders signatory thereto (the "Lenders") and Agent. WITNESSETH: WHEREAS, Borrowers or Guarantors or any of their respective Restricted Subsidiaries may have borrowed, or may desire to borrow, certain sums from a Subordinating Creditor as permitted by the Credit Agreement; WHEREAS, Borrowers desire to borrow certain sums from the Secured Parties (as defined herein) pursuant to the Credit Agreement; and WHEREAS, as a condition to entering into the Credit Agreement, each of the Subordinating Creditors agrees that any loan extended to Borrowers, Guarantors, or any of their respective Restricted Subsidiaries (each, an "Applicable Debtor" and, collectively, the "Applicable Debtors") will be subordinated to the Senior Debt (as defined herein), as more fully provided in this Subordination Agreement; NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Subordinating Creditors hereby agrees with the Secured Parties as follows: 1. Subordination. Subject to the terms hereof, each of the Subordinating Creditors hereby subordinates and defers, to the extent and in the manner set forth herein, the payment (including, without limitation, in any Insolvency Proceeding (as defined herein)) of any and all Indebtedness which may be now or hereafter owing by any Applicable Debtor to any such Subordinating Creditor (whether by reason of subrogation rights of such Subordinating Creditor or otherwise) as may be evidenced by any promissory notes and/or any other documents, instruments or agreements now or hereafter executed and delivered by any Applicable Debtor to any Subordinating Creditor (all such amounts, notes, documents, instruments, and agreements being hereinafter referred to as the "Subordinated Debt") to the prior Discharge of Senior Debt (as defined below). 1 "Bankruptcy Code" means the United States Bankruptcy Code, as in effect from time to time. "Discharge of Senior Debt" means payment and satisfaction in full in cash of any and all Senior Debt (as defined below) which may be now or hereafter owing to any Secured Party (as defined below) by any Applicable Debtor, including, with respect to amounts available to be drawn under outstanding letters of credit issued under the Credit Agreement or any other Loan Document (or indemnities issued pursuant thereto in respect of outstanding letters of credit), delivery of cash to be held as collateral for such letters of credit or backstop letters of credit in respect thereof in compliance with the terms of the Credit Agreement, in each case, after or concurrently with the termination of the Credit Agreement and the termination of all obligations and commitments to make loans, advances or otherwise extend credit thereunder. "Insolvency Proceeding" means any proceeding commenced by or against any Applicable Debtor under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief and including the appointment of a trustee, receiver, administrative receiver, administrator or similar officer. "Secured Party" means Agent or any member of the Lender Group. "Senior Debt", as used herein, shall mean any and all Obligations, including, without limitation, any and all now existing and future indebtedness, obligations or liabilities of the Applicable Debtors under the Credit Agreement to the Secured Parties, whether direct or indirect, absolute or contingent, secured or unsecured, arising under, or in connection with, the Credit Agreement or any other Loan Documents (including, without limitation, any guaranty executed in connection therewith) in favor of the Secured Parties, as each of the foregoing may be from time to time amended, modified, waived, supplemented, extended, renewed, deferred, refinanced, replaced, refunded or restated, in whole or in part, in accordance with the terms and conditions thereof, by operation of law or otherwise, including any and all expenses (including, without limitation, reasonable attorneys' fees and disbursements), premiums, fees and charges incurred in connection therewith and any interest thereon, including, without limitation, any post-petition interest accruing on such Senior Debt after any Applicable Debtor becomes subject to an Insolvency Proceeding (whether or not such interest is allowable or enforceable against such Applicable Debtor or recoverable against such Applicable Debtor or its bankruptcy estate), whether by means of an adequate protection payment or otherwise. For all purposes hereunder, Senior Debt shall also include all indebtedness, obligations and liabilities of the Applicable Debtors to repay any amounts previously paid by the Applicable Debtors pursuant to the Credit Agreement, which amounts have been returned to the Applicable Debtors or to a trustee by any Secured Party pursuant to Sections 547 or 548 of the Bankruptcy Code or otherwise under other applicable legislation. 2. Covenants. Without limiting any other provision of this Subordination Agreement, each of the Subordinating Creditors hereby covenants and agrees that, until such time as this Subordination Agreement is terminated as provided herein, such Subordinating Creditor will not, except to the extent expressly permitted by Sections 8, 9, and 10 hereof, assert 2 any right which it may have to setoff against the Subordinated Debt any amounts which are or may be owing by such Subordinating Creditor to any Applicable Debtor, and that until such time as this Subordination Agreement is terminated as provided herein, and except to the extent expressly permitted by Sections 8, 9, and 10 hereof, such Subordinating Creditor will not directly or indirectly: (a) demand or receive payment of; exchange, forgive, or modify; request or obtain collateral or security or guarantees for; or Commence Legal Action (as defined in Section 11 hereof) in respect of the Subordinated Debt, or (b) sell, assign, transfer, endorse, pledge, encumber or otherwise dispose of (whether by means of participation or otherwise) any portion of the Subordinated Debt or any interest therein to any Person without the prior written consent of the Agent, it being understood that each such assignee and transferee shall be bound in all respects by the terms and conditions of this Subordination Agreement. 3. Inducement. This Subordination Agreement is executed as an inducement to the Secured Parties to make loans or advances to Borrowers or otherwise to extend credit or financing accommodations to Borrowers, and to enter into the Loan Documents and to continue a financing arrangement with Borrowers and is executed in consideration of the Agent and Lenders entering into the Loan Documents and continuing such financing arrangement. 4. Continuing Agreement. This Subordination Agreement (a) may be terminated only upon the occurrence of the Discharge of Senior Debt, (b) is a continuing agreement of subordination, (c) shall be binding upon the Subordinating Creditors, the Applicable Debtors and their respective successors, transferees and assigns, and (d) shall inure to the benefit of the Secured Parties and be enforceable by the Agent, for the benefit of the Secured Parties, and each their respective successors, transferees and assigns, unless such successors, assignees and transferees are not parties to the Credit Agreement as permitted therein. Without limiting the generality of the foregoing, the Secured Parties may assign or otherwise transfer the Senior Debt to any other Person, and such other Person shall thereupon become vested with all the rights and benefits in respect thereof granted to the Secured Parties herein or otherwise, subject to Section 13.1 of the Credit Agreement. This Subordination Agreement shall continue to be effective (or, if previously terminated, reinstated), if at any time any payment of any of the Senior Debt is rescinded or must otherwise be returned by any Secured Party in connection with any Insolvency Proceeding or otherwise, all as though such payment had not been made. 5. Rights in Insolvency Proceedings. Each of the Subordinating Creditors hereby authorizes and empowers the Agent, for the benefit of the Lenders, in any Insolvency Proceeding to file a proof of claim on behalf of such Subordinating Creditor with respect to the Subordinated Debt (a) if such Subordinating Creditor fails to file such proof of claim prior to thirty (30) days before the expiration of the time period during which such claims must be submitted, or (b) if the Agent, in its Permitted Discretion, believes that any statements or assertions in a proof of claim filed by such Subordinating Creditor are not consistent with the terms and conditions hereof; provided, however, that any failure of the Agent to file such proof of claim shall not be deemed to be a waiver by the Agent or any Secured Party of any of the rights and benefits granted herein by such Subordinating Creditor. Each Subordinating Creditor shall provide the Agent with a copy of any proof of claim filed by such Subordinating Creditor in any Insolvency Proceeding. Each Subordinating Creditor hereby irrevocably grants the Agent the sole and exclusive authority and power in any Insolvency Proceeding, unless and until this Subordination Agreement is terminated in accordance with its terms: (a) to accept and receive any payment or 3 distribution which may be payable or deliverable at any time upon or in respect of the Subordinated Debt; and (b) to take such other action as may be necessary or advisable to effectuate the foregoing. Each Subordinating Creditor shall provide to the Agent all information and documents necessary to present claims or seek enforcement as described in the immediately preceding sentence. Each of the Subordinating Creditors hereby agrees that, while it shall retain the right to vote its claims and, except as otherwise provided in this Subordination Agreement, otherwise act in any Insolvency Proceeding relative to the related Applicable Debtor (including, without limitation, the right to vote to accept or reject any plan of partial or complete liquidation, reorganization, arrangement, composition, or extension), such Subordinating Creditor shall not: (i) take any action or vote in any way so as to directly or indirectly challenge or contest (A) the validity or the enforceability of the Credit Agreement, the other Loan Documents, or the liens and security interests granted to the Secured Parties with respect to the Senior Debt, (B) the rights and duties of the Secured Parties established in the Credit Agreement or any other Loan Documents, or (C) the validity or enforceability of this Subordination Agreement; (ii) seek, or acquiesce in any request, to dismiss any Insolvency Proceeding or to convert an Insolvency Proceeding under chapter 11 of the Bankruptcy Code to a case under chapter 7 of the Bankruptcy Code; (iii) seek, or acquiesce in any request for, the appointment of a trustee or examiner with expanded powers for the related Applicable Debtor; (iv) propose, vote in favor of or otherwise approve a plan of reorganization, arrangement or liquidation, or file any motion or pleading in support of any plan of reorganization, arrangement or liquidation, unless it provides for the Discharge of Senior Debt or unless the Secured Parties have approved of the treatment of their claims with respect to the Senior Debt under such plan; (v) object to the treatment under a plan of reorganization or arrangement of the Secured Parties' claims with respect to the Senior Debt; (vi) seek relief from the automatic stay of Section 362 of the Bankruptcy Code or any other stay in any Insolvency Proceeding in respect of any portion of the Collateral; or (vii) directly or indirectly oppose any relief requested or supported by the Secured Parties, including any sale or other disposition of property free and clear of the liens and security interests of the Subordinating Creditors under Section 363(f) of Title 11 of the United States Code or any other similar provision of applicable law. 6. No Liability. None of the Secured Parties shall in any event be liable for: (a) any failure to prove the Subordinated Debt; (b) any failure to exercise any rights with respect thereto; (c) any failure to collect any sums payable thereon; or (d) any impairment or nonpayment of the Subordinated Debt that results, directly or indirectly, from the exercise by the Secured Parties of any of their rights or remedies under this Subordination Agreement, the Credit Agreement, the other Loan Documents or under applicable law. 7. Subordination Rights Not Impaired by Acts or Omissions of the Applicable Debtors or Secured Parties. No right of the Secured Parties to enforce subordination as provided in this Subordination Agreement will at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Applicable Debtor or by any act or failure to act by any Secured Party, or by any noncompliance by the Subordinating Creditors or any agent thereof with the terms of this Subordination Agreement, regardless of any knowledge thereof with which any such Person may have or otherwise be charged. The Secured Parties may extend, renew, modify or amend any terms of the Senior Debt or any security therefor or guaranty thereof and grant any waiver, release or consent in respect of, or release, sell or exchange such security and otherwise deal freely with the Applicable Debtors and their respective Affiliates, all without 4 notice to or consent from the Subordinating Creditors and without in any way impairing or affecting this Subordination Agreement. 8. Payments to the Subordinating Creditors. Subject to Sections 9 and 10 of this Subordination Agreement, until this Subordination Agreement shall have been terminated in accordance with the terms and conditions hereof, the Applicable Debtors may make payment on, on account of or in respect of the Subordinated Debt. 9. No Payment to Subordinating Creditors When Senior Debt in Default. (a) No Applicable Debtor may pay the principal of, premium, if any, or interest on, or make any other payment in respect of, the Subordinated Debt if a Default or Event of Default on the Senior Debt shall have occurred and be continuing unless and until such Default or Event of Default shall have been cured or waived or shall have ceased to exist or a Discharge of Senior Debt shall have occurred. (b) If any payment or distribution of assets of any Applicable Debtor of any kind or character, whether in cash, property or securities (including, without limitation, any issuance of securities by such Applicable Debtor), is received by any Subordinating Creditor as a payment in respect of the Subordinated Debt at a time when such payment or distribution should not have been made in accordance with subsection (a) of this Section 9, such payment or distribution shall be received and held in trust for and shall be paid over immediately to the Agent or its representative (for the benefit of the Secured Parties) for application to the payment of the Senior Debt until the Discharge of Senior Debt shall have occurred. (c) The provisions of this Section 9 shall not apply to any payments with respect to which Section 10 would be applicable. 10. Subordinated Debt Subordinated to Prior Payment of All Senior Debt in Insolvency Proceeding. Upon any payment or distribution of assets of any Applicable Debtor of any kind, whether in cash, property or securities (including, without limitation, any issuance of securities by an Applicable Debtor), in connection with any Insolvency Proceeding: (a) the Secured Parties shall first be entitled to receive payment in full in cash of all Senior Debt before the Subordinating Creditors shall be entitled to receive any payment or other distribution of assets in respect of the Subordinated Debt; (b) any payment or distribution of assets of any Applicable Debtor of any kind or character, whether in cash, property or securities (including, without limitation, any issuance of securities by such Applicable Debtor) to which the Subordinating Creditors would be entitled except for the provisions of this Subordination Agreement will be paid by such Applicable Debtor, the liquidating trustee or agent or such other Person making such a payment or distribution directly to the Agent (for the benefit of the Secured Parties) to the extent necessary to effect the Discharge of Senior Debt; and (c) if, notwithstanding the foregoing, any payment or distribution of assets of any Applicable Debtor of any kind or character, whether in cash, property or securities (including, without limitation, any issuance of securities by such Applicable Debtor), is received 5 by a Subordinating Creditor as payment in respect of the Subordinated Debt before the occurrence of the Discharge of Senior Debt, such payment or distribution shall be received and held in trust for and shall be paid over immediately to the Agent or its representative (for the benefit of the Secured Parties) for application to the payment of the Senior Debt until the Discharge of Senior Debt has occurred. 11. No Enforcement or Commencement of Any Proceedings. Each of the Subordinating Creditors hereby agrees that, so long as any Senior Debt shall remain unpaid, or the Credit Agreement shall be in effect, such Subordinating Creditor will not (a) except to the extent expressly permitted by Sections 8, 9 and 10 of this Subordination Agreement, take, demand, receive or accept any payment of the Subordinated Debt, and the Applicable Debtors shall not give, make or permit any such payment, or (b) commence, prosecute, assert, participate in or bring, or join with any other creditor of the Applicable Debtors (other than the Agent) in commencing, prosecuting, asserting, participating in or bringing, any sort of action, suit or proceeding (including, without limitation, any Insolvency Proceeding) either at law or in equity for the enforcement, collection or realization on the whole, or any part of the Subordinated Debt or any collateral, security or guarantees (if any) which is security for the Subordinated Debt, or accelerate, demand or otherwise make due and payable prior to the original due date thereof any payment of the Subordinated Debt (except pursuant to a modification or amendment of the terms of such Subordinated Debt that is permitted under the Credit Agreement), (c) possess any assets of any Applicable Debtor pursuant to a legal action or other legal proceeding, or (d) send any notice to or otherwise seek to obtain payment directly from any account debtor of any Applicable Debtor (clauses (a) through (d) inclusive, collectively, "Commence Legal Action"). 12. Action Against. If the Subordinating Creditors, in violation of this Subordination Agreement, shall Commence Legal Action against an Applicable Debtor, such Applicable Debtor may interpose as a defense or dilatory plea the making of this Subordination Agreement, and the Secured Parties are hereby irrevocably authorized to intervene and to interpose such defense or plea in their names or in the name of the related Applicable Debtor. If the Subordinating Creditors shall attempt to enforce, collect or realize upon any Subordinated Debt or any collateral, security or guarantees (if any) securing the Subordinated Debt in violation of this Subordination Agreement, the Applicable Debtors may, by virtue of this Subordination Agreement, restrain any such enforcement, collection or realization, or upon failure to do so, the Secured Parties may restrain such enforcement, collection or realization, either in their own names or in the name of the Applicable Debtors. 13. Lien Subordination. Each Subordinating Creditor hereby confirms that, regardless of (a) the relative date, time, method, manner or order of grant, attachment or the perfection of any security interest or lien granted to any Secured Party or any Subordinating Creditor in respect of all or any portion of any collateral, (b) the order of filing or recordation of financing statements, mortgages or other security documents, (c) any provision of the Uniform Commercial Code, any other applicable law or anything in the Subordinated Loan Documents (as hereinafter defined) to the contrary, (d) whether the liens securing the Senior Debt are valid, enforceable, void, avoidable, subordinated, disputed, or allowed, or (e) any other circumstance whatsoever, the security interests and liens upon the Collateral granted or to be granted from time to time pursuant to the Credit Agreement and the other Loan Documents or any other agreements or instruments covering Senior Debt shall in all respects be first priority and senior 6 security interests and liens and any security interests and liens upon the Collateral granted or to be granted from time to time pursuant to the Subordinated Loan Documents or any other agreements or instruments covering the Subordinated Debt shall in all respects be junior and subordinate to such security interests and liens upon the Collateral granted pursuant to the terms of the Credit Agreement and the other Loan Documents. 14. Release of Liens. In the event of any private or public sale or other disposition of all or any portion of the Collateral by or with the consent of the Agent, on behalf of the Secured Parties, or as otherwise permitted by the Credit Agreement, at any time prior to the date upon which the Discharge of Senior Debt shall have occurred, each Subordinating Creditor agrees that such sale or disposition will be free and clear of the liens and security interests securing the Subordinated Debt (if any) of such Subordinating Creditor and, if the sale or other disposition includes Equity Interests (as defined below) in any Applicable Debtor, such Subordinating Creditor agrees to release the entities whose Equity Interests are sold from all Subordinated Debt so long as the Agent also releases the entities whose Equity Interests are sold or disposed of from all Senior Debt. In furtherance thereof, each Subordinating Creditor agrees that (a) the Agent is authorized to file any and all Uniform Commercial Code lien releases and/or terminations of the liens and security interests in respect of property of the Applicable Debtor held by such Subordinating Creditor in connection with such a sale or other disposition, and (b) it will execute any and all lien and security interest releases or other documents necessary to release liens on property of the Applicable Debtor reasonably requested by the Agent in connection therewith. For purposes hereof, "Equity Interests" means Capital Stock (as defined below) and all warrants, options, or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock), and "Capital Stock" means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited), and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of property of, the issuing Person. 15. Endorsement of Note; Other Documents. Each of the Subordinating Creditors agrees to mark all agreements, bonds, debentures, notes or other similar instruments relating to the Subordinated Debt (the "Subordinated Loan Documents") and all other evidences of, or instruments relating to, Subordinated Debt with a notation in substantially the following form: "THIS NOTE IS SUBJECT TO THE TERMS AND PROVISIONS OF THE SUBORDINATION AGREEMENT EXECUTED BY THE PAYEE AND THE OTHER PARTIES THERETO IN FAVOR OF WELLS FARGO FOOTHILL, INC. DATED AS OF APRIL 5, 2007," and to deliver proof of such notation to the Agent. If, upon the occurrence and during the continuation of an Event of Default, the Agent requires the possession of any of the Subordinated Loan Documents in order to present claims or seek enforcement against the Applicable Debtors for payment under the Subordinated Loan Documents in accordance with the provisions of this Subordination Agreement, the Subordinating Creditors agree, subject to the terms hereof, to 7 endorse and deliver such Subordinated Loan Documents to the Agent. The Subordinating Creditors and the Applicable Debtors will at their expense and at any time and from time to time promptly execute and deliver all further instruments and documents and take all further action that may be reasonably necessary to protect any right or interest of the Secured Parties granted hereunder or to enable the Secured Parties to exercise and enforce their rights and remedies hereunder. 16. Modifications to the Subordinated Loan Documents. Except as otherwise expressly permitted under the Credit Agreement or any other applicable Loan Document, none of the Subordinated Loan Documents shall be amended or otherwise modified without obtaining the prior written consent of the Agent, or as otherwise permitted under the Credit Agreement, so as to provide for (a) any increase in the rate of interest charged thereunder as in effect on the date hereof, (b) any increase in the principal amount or any installment due thereunder, (c) any reduction of the maturity date of any payment of principal or interest, (d) the granting or obtaining of any collateral security or obtaining any lien on any collateral or (e) any other amendment or modification which would result in a Material Adverse Change with respect to the operations of the Applicable Debtors, the Agent's security interests in the Collateral or the claims of the Secured Parties. 17. No Impairment of Applicable Debtors' Obligations. Subject to all of the Secured Parties' rights as provided in this Subordination Agreement, nothing contained in this Subordination Agreement shall impair, as between the Applicable Debtors, on the one hand, and the Subordinating Creditors, on the other hand, the obligation of the Applicable Debtors, which is unconditional and absolute, to pay the Subordinated Debt to the Subordinating Creditors as and when all or any portion thereof shall become due and payable in accordance with its terms or prevent the Subordinating Creditors, upon any default under the Subordinated Debt, from exercising all rights, powers and remedies otherwise provided therein or by applicable law. 18. Subrogation. Until the Discharge of Senior Debt shall have occurred and this Subordination Agreement is terminated as provided herein, the Subordinating Creditors shall not assert or be entitled to any subrogation rights. Subject to the immediately preceding sentence, if any payment or distribution to which any of the Subordinating Creditors would otherwise have been entitled (but for the provisions of this Subordination Agreement) shall have been turned over to the Agent or otherwise applied to the payment of the Senior Debt pursuant to the provisions of this Subordination Agreement, then such Subordinating Creditor shall be entitled to receive from the Agent any payments or distributions received by the Secured Parties in excess of the amount sufficient to effect the Discharge of Senior Debt, and upon such Discharge of Senior Debt shall be subrogated (without any representation by, or any recourse whatsoever to, the Secured Parties) to all rights of the Secured Parties to receive all further payments or distributions applicable to the Senior Debt or the Subordinated Debt until the Subordinated Debt shall have been paid in full. For purposes of the Subordinating Creditors' subrogation rights hereunder, payments to the Secured Parties with respect to the Senior Debt which the Subordinating Creditors would have been entitled to receive with respect to the Subordinated Debt but for the provisions of this Subordination Agreement shall not, as between the Applicable Debtors, their respective creditors (other than the Secured Parties) and the Subordinating Creditors, be deemed payments with respect to the Senior Debt. 8 19. Entire Agreement, etc. This Subordination Agreement embodies the whole agreement of the parties with respect to the subject matter hereof and may not be modified except in writing executed and delivered by the parties hereto. The failure of the Secured Parties, or any one of them, to exercise any right hereunder shall not be construed as a waiver of the right to exercise the same or any other rights at any other time and from time to time thereafter, and such rights shall be considered as cumulative rather than alternative. No knowledge of any breach or other non-observance by the Subordinating Creditors of the terms and provisions of this Subordination Agreement shall constitute a waiver, nor a waiver of any obligations to be performed by the Subordinating Creditors hereunder. 20. Notices. All notices and other communications hereunder shall be sent in accordance with the provisions of, and to the addresses set forth in, Section 11 of the Credit Agreement, and if to any Subordinating Creditor that is not a party to the Credit Agreement, to the address set forth for the Administrative Borrower in the Credit Agreement. 21. Construction. Except as otherwise expressly provided herein, the rules of interpretation set forth in Section 1.4 of the Credit Agreement shall apply mutatis mutandis to this Subordination Agreement. 22. CHOICE OF LAW; JURISDICTION; JURY TRIAL WAIVER; ETC. THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AGREES THAT ANY FEDERAL DISTRICT COURT IN THE STATE OF NEW YORK AND COUNTY OF NEW YORK OR ANY STATE COURT LOCATED IN NEW YORK COUNTY, NEW YORK SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE PARTIES HERETO PERTAINING DIRECTLY OR INDIRECTLY TO THIS SUBORDINATION AGREEMENT OR TO ANY MATTER ARISING HEREFROM. EACH OF THE PARTIES HERETO EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURT. EACH OF THE PARTIES HERETO WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY PROCEEDING IN ANY SUCH COURT OR THAT SUCH PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO A JURY TRIAL AS TO ANY DISPUTE UNDER THIS SUBORDINATION AGREEMENT. 23. Counterparts; Effectiveness. This Subordination Agreement and any amendments, waivers, consents or supplements may be executed in any number of counterparts (and by facsimile or other electronic transmission) and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. 24. Severability. Any provision of this Subordination Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions 9 hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 25. Section Headings. The section headings used in this Subordination Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. [Signature Pages to follow] 10 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Subordination Agreement effective as of the date first above written. SUBORDINATING CREDITORS: TB WOOD'S INCORPORATED, a Pennsylvania corporation, as a Subordinating Creditor By: /s/ Joseph C. Horvath ------------------------------------ Name: Joseph C. Horvath ---------------------------------- Title: VP, CFO and Corporate Secretary --------------------------------- PLANT ENGINEERING CONSULTANTS, LLC, a Tennessee limited liability company, as a Subordinating Creditor By: /s/ Joseph C. Horvath ------------------------------------ Name: Joseph C. Horvath ---------------------------------- Title: VP, CFO and Corporate Secretary --------------------------------- TB WOOD'S ENTERPRISES, INC., a Delaware corporation, as a Subordinating Creditor By: /s/ Joseph C. Horvath ------------------------------------ Name: Joseph C. Horvath ---------------------------------- Title: VP, CFO and Corporate Secretary --------------------------------- TB WOOD'S CORPORATION, a Delaware corporation, as a Subordinating Creditor By: /s/ Joseph C. Horvath ------------------------------------ Name: Joseph C. Horvath ---------------------------------- Title: VP, CFO and Corporate Secretary --------------------------------- [SIGNATURE PAGE TO INTERCOMPANY SUBORDINATION AGREEMENT] ACCEPTED AND AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN: WELLS FARGO FOOTHILL, INC., a California corporation, as Agent By: /s/ Vincent J. Egan, Jr. ------------------------------------ Name: Vincent J. Egan, Jr. ---------------------------------- Title: VP --------------------------------- [SIGNATURE PAGE OF INTERCOMPANY SUBORDINATION AGREEMENT] EX-10.41 24 b65343s4exv10w41.txt EX-10.41 PATENT SECURITY AGREEMENT, DATED AS OF APRIL 5, 2007 EXHIBIT 10.41 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 and the Bank Product Providers (together with its successors and assigns in such capacity, "Agent"). WITNESSETH: WHEREAS, pursuant to that certain Credit Agreement dated of November 30, 2004 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the "Credit Agreement") among Altra Industrial Motion, Inc., 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 and the Bank Product Providers, that certain Security Agreement dated as of November 30, 2004 (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 and the Bank Product Providers, 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 and the Bank Product Providers, 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 and the Bank Product Providers, 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: VP, 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: VP, CFO and Corporate Secretary --------------------------------- TB WOOD'S ENTERPRISES, INC., a Delaware corporation, as a Grantor By: /s/ Joseph C. Horvath ------------------------------------ Name: Joseph C. Horvath ---------------------------------- Title: VP, CFO and Corporate Secretary --------------------------------- TB WOOD'S CORPORATION, a Delaware corporation, as a Grantor By: /s/ Joseph C. Horvath ------------------------------------ Name: Joseph C. Horvath ---------------------------------- Title: VP, CFO and Corporate Secretary --------------------------------- SIGNATURE PAGE OF 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 PATENT SECURITY AGREEMENT SCHEDULE I TO PATENT SECURITY AGREEMENT PATENTS AND PATENT APPLICATIONS

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

EX-10.42 25 b65343s4exv10w42.txt EX-10.42 TRADEMARK SECURITY AGREEMENT DATED AS OF APRIL 5, 2007 EXHIBIT 10.42 TRADEMARK SECURITY AGREEMENT This TRADEMARK SECURITY AGREEMENT (this "Trademark Security Agreement") is made this 5th day of April, 2007, among 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 Agent for the Lender Group and the Bank Product Providers (together with its successors and assigns in such capacity, "Agent"). WITNESSETH: WHEREAS, pursuant to that certain Credit Agreement dated of November 30, 2004 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the "Credit Agreement") among Altra Industrial Motion, Inc., a Delaware corporation ("Parent"), each of Parent's 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 the 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 Grantors shall have executed and delivered to Agent, for the benefit of Lender Group and the Bank Product Providers, that certain Security Agreement dated as of November 30, 2004 (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 Lender Group and the Bank Product Providers, this Trademark 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 TRADEMARK COLLATERAL. Each Grantor hereby grants to Agent, for the benefit of the Lender Group and the Bank Product Providers, 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 "Trademark Collateral"): (a) all of its Trademarks and rights in and to Trademark Intellectual Property Licenses to which it is a party including those referred to on Schedule I hereto; (b) all extensions, modifications and renewals of the foregoing; (c) all goodwill of the business connected with the use of, and symbolized by, each Trademark; and (d) all products and proceeds of the foregoing, including, without limitation, any claim by such Grantor against third parties for past, present or future (i) infringement or dilution of any Trademark, or (ii) injury to the goodwill associated with any Trademark. 3. SECURITY AGREEMENT. The security interests granted pursuant to this Trademark Security Agreement are granted in conjunction with the security interests granted to Agent, for the benefit of the Lender Group and the Bank Product Providers, 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 Trademark 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 trademarks, registrations, or applications therefor (including, without limitation, extensions or renewals) which become part of the Trademark Collateral under the Security Agreement. Notwithstanding the foregoing, no failure to so modify this Trademark 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 Trademark 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 Trademark 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: VP, 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: VP, CFO and Corporate Secretary --------------------------------- TB WOOD'S ENTERPRISES, INC., a Delaware corporation, as a Grantor By: /s/ Joseph C. Horvath ------------------------------------ Name: Joseph C. Horvath ---------------------------------- Title: VP, CFO and Corporate Secretary --------------------------------- TB WOOD'S CORPORATION, a Delaware corporation, as a Grantor By: /s/ Joseph C. Horvath ------------------------------------ Name: Joseph C. Horvath ---------------------------------- Title: VP, CFO and Corporate Secretary --------------------------------- [SIGNATURE PAGE OF TRADEMARK 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 TRADEMARK SECURITY AGREEMENT SCHEDULE I to TRADEMARK SECURITY AGREEMENT TRADEMARK REGISTRATIONS/APPLICATIONS

APPLICATION/ GRANTOR COUNTRY MARK REGISTRATION NO. APP/REG DATE - --------------- ------- ---- ---------------- ------------ TB Wood's United States ALL-PRO 75/290,731/ 5/12/1997/ Enterprises, Inc. 2,165,737 6/16/1998 TB Wood's United States BRAKETRON 73/254,657/ 3/19/1980/ Enterprises, Inc. 1,164,393 8/11/1981 TB Wood's United States DECK 73/581,633/ 2/7/1986/ Enterprises, Inc. (stylized) 1,409,209 9/16/1986 TB Wood's United States DISC-O-TORQUE 72/285,224/ 11/20/1967/ Enterprises, Inc. 859,264 10/29/1968 TB Wood's Mexico DURA-FLEX 267,615/ 6/9/1997/ Enterprises, Inc. 552,086 6/26/1997 TB Wood's United States DURA-FLEX 73/158,649/ 2/13/1978/ Enterprises, Inc. 1,116,828 4/24/1979 TB Wood's United States E-FLOW 75/280,015/ 4/23/1997/ Enterprises, Inc. 2,169,361 6/30/1998 TB Wood's United States E-trAC 73/491,494/ 7/24/1984/ Enterprises, Inc. (Stylized) 1,333,061 4/30/1985 TB Wood's United States E-TROL+PLUS 75/273,178/ 4/11/1997/ Enterprises, Inc. 2,156,683 5/12/1998 TB Wood's United States FIRST IN 73/526,310/ 3/11/1985/ Enterprises, Inc. COUPLINGS 1,361,466 9/24/1985 TB Wood's Canada FORMFLEX 352,690/ Enterprises, Inc. 215,307 8/23/1991 TB Wood's United States FORM-FLEX 75/273,175/ 4/11/1997/ Enterprises, Inc. 2,152,362 4/21/1998 TB Wood's United States IMD 75/272,935/ 4/11/1997/ Enterprises, Inc. 2,261,432 7/13/1999 TB Wood's United States NLS 75/273,181/ 4/11/1997/ Enterprises, Inc. 2,152,366 4/21/1998 TB Wood's Canada PDA-TRAC 1,210,875/ 3/24/2004/ Enterprises, Inc. TMA669,532 8/9/2006 TB Wood's Mexico PDA-TRAC 862222/ 4/21/2004/ Enterprises, Inc. 862222 4/21/2004 TB Wood's United States PDA-TRAC 78/329,999 11/19/2003/ Enterprises, Inc. 2,986,366 8/16/2005 TB Wood's United States PETRO-TRAC 78/052,072/ 3/8/2001/ Enterprises, Inc. 2,641,082 10/22/2002 TB Wood's United States POOLE 75/251,697/ 2/28/1997/ Enterprises, Inc. 2,191,918 9/29/1998 TB Wood's Mexico QT POWER CHAIN 573133/ 10/20/2002/ Enterprises, Inc. 818826 1/26/2004 TB Wood's United States QT POWER CHAIN 76/403,299/ 5/2/2002/ Enterprises, Inc. 2,723,745 6/10/2003 TB Wood's United States ROTO-CAM 72/285,223/ 11/20/1967/ Enterprises, Inc. 859,263 10/29/1968 TB Wood's United States ROTO-CONE 72/015,359/ 9/10/1956/ Enterprises, Inc. 676,279 3/31/1959 TB Wood's Canada SPEEDLIGN 1,223,603/ 7/14/2004/ Enterprises, Inc. TMA665,131 5/29/2006 TB Wood's Mexico SPEEDLIGN 666,531/ 7/14/04/ Enterprises, Inc. 896,028 8/23/05 TB Wood's United States SPEEDLIGN 78/350,700/ 1/12/2004/ Enterprises, Inc. 2,991,827 9/6/2005 TB Wood's United States S-TRAC 75/272,936/ 4/11/1997/ Enterprises, Inc. 2,257,668 6/29/1999 TB Wood's United States SUPERSTART 74/104,389/ 10/9/1990/ Enterprises, Inc. 1,686,040 5/12/1992 TB Wood's United States SURE GRIP 71/640,418/ 1/6/1953/ Enterprises, Inc. (stylized) 645,415 5/14/1957 TB Wood's Great Britain SUREFLEX B998,327/ 9/13/1993 Enterprises, Inc. B998,327 TB Wood's Australia SURE-FLEX B375,472/ 5/13/1982/ Enterprises, Inc. B375,472 5/13/1989 TB Wood's Canada SURE-FLEX 645,519/ 11/23/1989/ Enterprises, Inc. 380,915 3/1/1991 TB Wood's Japan SURE-FLEX 40,343/1982/ 5/12/1982/ Enterprises, Inc. 1,923,250 12/24/1986 TB Wood's Switzerland SURE-FLEX 405,626/ 9/14/1992/ Enterprises, Inc. 405,626 9/14/1992 TB Wood's United States SURE-FLEX 72/043,720/ 1/9/1958/ Enterprises, Inc. (stylized) 668,649 10/21/1958 TB Wood's Japan SUREFLEX 7-700836/ 1/13/1995/ Enterprises, Inc. and Katakana 1,740,974 1/23/1995 TB Wood's United States SURE-GRIP 71/575,508/ 3/15/1949/ Enterprises, Inc. 646,423 6/4/1957 TB Wood's United States SURE-GRIP 73/136,699/ 8/8/1977/ Enterprises, Inc. 1,109,150 12/19/1978 TB Wood's United States TRUETUBE 75/273,177/ 4/11/1997/ Enterprises, Inc. 2,152,364 4/21/1998 TB Wood's United States ULTRACON 72/300,318/ 6/13/1968/ Enterprises, Inc. 862,655 12/31/1968 TB Wood's United States ULTRACON II 75/273,179/ 4/11/1997/ Enterprises, Inc. 2,150,835 4/14/1998 TB Wood's United States ULTRA-HELIX 75/559,570/ 9/25/1998/ Enterprises, Inc. 2,351,349 5/23/2000 TB Wood's United States ULTRA-V 73/001,734/ 10/9/1973/ Enterprises, Inc. 1,001,969 1/21/1975 TB Wood's United States ULTRA-V 73/003,203/ 10/10/1973/ Enterprises, Inc. 1,001,970 1/21/1975 TB Wood's United States U-TROL 73/104,511/ 10/26/1976/ Enterprises, Inc. 1,070,167 7/26/1977 TB Wood's United States VAR-A-CONE 75/273,180/ 4/11/1997/ Enterprises, Inc. 2,152,365 4/21/1998 TB Wood's United States W TB WOOD'S 75/107,136/ 5/20/1996/ Enterprises, Inc. (and design) 2,059,245 5/6/1997 TB Wood's Canada WIN-TRAC 1,210,868/ 3/24/2004/ Enterprises, Inc. TMA664,172 5/12/2006 TB Wood's Community WIN-TRAC 3.828.019/ 5/20/2004/ Enterprises, Inc. Trademark 3.828.019 11/15/2005 TB Wood's Mexico WIN-TRAC 653047 4/21/2004 Enterprises, Inc. TB Wood's United States WIN-TRAC 78/306,778/ 9/29/2003/ Enterprises, Inc. 2,961,309 6/7/2005 TB Wood's Mexico WOOD'S WORK 573134/ 10/30/2002/ Enterprises, Inc. 904275 11/30/2002 TB Wood's United States WOOD'S@WORK 76/402,992/ 5/2/2002/ Enterprises, Inc. 2,801,090 12/30/2003 TB Wood's Sons Germany FORM-FLEX D 36648 7W2/ 9/22/1983/ Company 1,053,953 9/23/1983 TB Wood's Sons Germany SUREFLEX W24959/ 4/5/1973/ Company 926 107 12/17/1974 TB Wood's Argentina DURA-FLEX 2,066,443/ 1/23/1997/ Incorporated 1,783,301 3/27/2000 TB Wood's Community DURA-FLEX 507.277 2/7/1997 Incorporated Trademark TB Wood's Japan DURA-FLEX 27318/97/ 3/17/1997/ Incorporated 4,166,483 7/10/1998 TB Wood's Malaysia DURA-FLEX 97/01971 2/19/1997 Incorporated TB Wood's Taiwan DURA-FLEX (86)5713/ 2/1/1997/ Incorporated 807300 7/1/1998 TB Wood's Japan FORMFLEX 41,517/85/ 8/19/1987/ Incorporated 1,975,830 8/19/1997 TB Wood's Venezuela PETRO-TRAC 2001-016447/ 9/7/2001/ Incorporated P-245856 8/22/2003 TB Wood's Canada QT POWER CHAIN 1,157,003/ 10/25/2002/ Incorporated TMA623,038 10/20/2004 TB Wood's France SPEEDLIGN 717,131/ 6/19/1974/ Incorporated 1,286,266 6/19/1974 TB Wood's Germany SPEEDLIGN 935,511/ Incorporated 935,511 6/10/1974 TB Wood's Great Britain SPEEDLIGN 99999/ Incorporated 1,029,397 5/13/1974 TB Wood's Singapore SUREFLEX 2556/82/ 5/21/1982/ Incorporated T82/02556B 5/21/1982 TB Wood's Benelux SURE-FLEX 0316801/ 10/20/1972/ Incorporated 0316801 10/20/1972 TB Wood's Brazil SURE-FLEX 810,942,631/ 8/23/1982/ Incorporated 810,942,631 3/19/1995 TB Wood's France SURE-FLEX 02 3 196 347/ 11/27/2002/ Incorporated 02 3 196 347 11/27/2002 TB Wood's Italy SURE-FLEX MI2003002784/ 9/25/1992/ Incorporated 654849 9/25/1974 TB Wood's Canada WOOD'S@WORK 1,157,004/ 10/25/2002/ Incorporated TMA626,975 11/29/2004

EX-10.43 26 b65343s4exv10w43.txt EX-10.43 PATENT SECURITY AGREEMENT, DATED AS OF APRIL 5, 2007 EXHIBIT 10.43 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 THE BANK OF NEW YORK TRUST COMPANY, N.A., in its capacity as Collateral Agent for itself, the Holders and the Trustee (together with its successors and assigns in such capacity, "Collateral Agent"). W I T N E S S E T H: WHEREAS, pursuant to that certain Indenture dated of November 30, 2004 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the "Indenture") among Altra Industrial Motion, Inc., a Delaware corporation ("Company"), each of the Guarantors named therein ("Guarantors"), The Bank of New York Trust Company, N.A., as Trustee (in such capacity, the "Trustee"), and Collateral Agent, Company has issued to the Holders its 9% Senior Secured Notes Due 2011, and may issue from time to time additional notes in connection with the provisions of the Indenture (as the same may be amended and restated, supplemented or otherwise modified from time to time, collectively, the "Notes"); WHEREAS, as a condition precedent to the initial purchase by the Holders of the Notes, Company and Guarantors (each in their respective capacity as a Grantor) executed and delivered to Collateral Agent, for the benefit of the Holders, Trustee and Collateral Agent, that certain Security Agreement dated as of November 30, 2004 (including all annexes, exhibits or schedules thereto, as from time to time amended and restated, supplemented or otherwise modified, the "Security Agreement"); WHEREAS, as a condition precedent to the purchase by the Holders of additional Notes in the aggregate principal amount of $105,000,000, the Grantors shall have executed and delivered to Collateral Agent, for the benefit of the Holders, Trustee and Collateral Agent, that certain Supplement No. 1 to Security Agreement dated as of the date hereof (including all annexes, exhibits or schedules thereto, the "Supplement"); and WHEREAS, pursuant to the Security Agreement, as modified by the Supplement, the Grantors are required to execute and deliver to Collateral Agent, for the benefit of the Trustee and the Holders, 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 Indenture. 2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby grants to Collateral Agent, for the benefit of the Trustee, the Collateral Agent and the Holders, 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 Collateral Agent, for the benefit of the Trustee, the Collateral Agent and the Holders, pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms that the rights and remedies of Collateral 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 Collateral 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 Collateral 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/ William T. Fejes, Jr. ------------------------------- Name: William T. Fejes, Jr. Title: President, CEO and Director PLANT ENGINEERING CONSULTANTS, LLC, a Tennessee limited liability company, as a Grantor By: /s/ William T. Fejes, Jr. ------------------------------- Name: William T. Fejes, Jr. Title: President TB WOOD'S ENTERPRISES, INC., a Delaware corporation, as a Grantor By: /s/ Joseph C. Horvath ------------------------------- Name: Joseph C. Horvath Title: President and Treasurer TB WOOD'S CORPORATION, a Delaware corporation, as a Grantor By: /s/ William T. Fejes, Jr. ------------------------------- Name: William T. Fejes, Jr. Title: President, CEO and Director COLLATERAL AGENT: THE BANK OF NEW YORK TRUST COMPANY, N.A., as Collateral Agent By: /s/ Sandee Parks ---------------------------------- Name: Sandee Parks ---------------------------------- Title: Vice President ---------------------------------- SIGNATURE PAGE OF PATENT SECURITY AGREEMENT SCHEDULE I TO PATENT SECURITY AGREEMENT PATENTS AND PATENT APPLICATIONS

REGISTRATION REGISTRATION GRANTOR COUNTRY PATENT NO. DATE ------- ------- ------ --- ---- TB Wood's United States Housing for Motor D343,387 1/18/1994 Incorporated Control Equipment TB Wood's United States Combination of a 5,465,804 11/14/1995 Incorporated Power Steering Pump and Air Conditioning Compressor in an Automotive Vehicle TB Wood's United States Shaft Mountable 5,304,101 4/19/1994 Incorporated Bushing and Hub for Industrial Power Transmissions TB Wood's United States Precision Winding 6,311,920 11/6/2001 Incorporated Method and Apparatus TB Wood's United States Flexible Coupling 5,611,732 3/18/1997 Incorporated with End Stress Relief Structure

EX-10.44 27 b65343s4exv10w44.txt EX-10.44 TRADEMARK SECURITY AGREEMENT DATED AS OF APRIL 5, 2007 EXHIBIT 10.44 TRADEMARK SECURITY AGREEMENT This TRADEMARK SECURITY AGREEMENT (this "Trademark 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 THE BANK OF NEW YORK TRUST COMPANY, N.A., in its capacity as Collateral Agent for itself, the Holders and the Trustee (together with its successors and assigns in such capacity, "Collateral Agent"). W I T N E S S E T H: WHEREAS, pursuant to that certain Indenture dated of November 30, 2004 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, including all exhibits and schedules thereto, the "Indenture") among Altra Industrial Motion, Inc., a Delaware corporation ("Company"), each of the Guarantors named therein ("Guarantors"), The Bank of New York Trust Company, N.A., as Trustee (in such capacity, the "Trustee"), and Collateral Agent, Company has issued to the Holders its 9% Senior Secured Notes Due 2011, and may issue from time to time additional notes in connection with the provisions of the Indenture (as the same may be amended and restated, supplemented or otherwise modified from time to time, collectively, the "Notes"); WHEREAS, as a condition precedent to the initial purchase by the Holders of the Notes, Company and Guarantors (each in their respective capacity as a Grantor) executed and delivered to Collateral Agent, for the benefit of the Holders, Trustee and Collateral Agent, that certain Security Agreement dated as of November 30, 2004 (including all annexes, exhibits or schedules thereto, as from time to time amended and restated, supplemented or otherwise modified, the "Security Agreement") WHEREAS, as a condition precedent to the purchase by the Holders of additional Notes in the aggregate principal amount of $105,000,000, the Grantors shall have executed and delivered to Collateral Agent, for the benefit of the Holders, Trustee and Collateral Agent, that certain Supplement No. 1 to Security Agreement dated as of the date hereof (including all annexes, exhibits or schedules thereto, the "Supplement"); and WHEREAS, pursuant to the Security Agreement, as modified by the Supplement, the Grantors are required to execute and deliver to Collateral Agent, for the benefit of the Trustee, the Collateral Agent and the Holders, this Trademark 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 Indenture. 2. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL. Each Grantor hereby grants to Collateral Agent, for the benefit of the Trustee and the Holders, 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 "Trademark Collateral"): (a) all of its Trademarks and rights in and to Trademark Intellectual Property Licenses to which it is a party including those referred to on Schedule I hereto; (b) all extensions, modifications and renewals of the foregoing; (c) all goodwill of the business connected with the use of, and symbolized by, each Trademark; and (d) all products and proceeds of the foregoing, including, without limitation, any claim by such Grantor against third parties for past, present or future (i) infringement or dilution of any Trademark, or (ii) injury to the goodwill associated with any Trademark. 3. SECURITY AGREEMENT. The security interests granted pursuant to this Trademark Security Agreement are granted in conjunction with the security interests granted to Collateral Agent, for the benefit of the Trustee, the Collateral Agent and the Holders, pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms that the rights and remedies of Collateral Agent with respect to the security interest in the Trademark 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 Collateral Agent unilaterally to modify this Agreement by amending Schedule I to include any trademarks, registrations, or applications therefor (including, without limitation, extensions or renewals) which become part of the Trademark Collateral under the Security Agreement. Notwithstanding the foregoing, no failure to so modify this Trademark 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 Trademark 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 Trademark 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/ William T. Fejes, Jr. -------------------------------- Name: William T. Fejes, Jr. Title: President, CEO and Director PLANT ENGINEERING CONSULTANTS, LLC, a Tennessee limited liability company, as a Grantor By: /s/ William T. Fejes, Jr. -------------------------------- Name: William T. Fejes, Jr. Title: President TB WOOD'S ENTERPRISES, INC., a Delaware corporation, as a Grantor By: /s/ Joseph C. Horvath -------------------------------- Name: Joseph C. Horvath Title: President and Treasurer TB WOOD'S CORPORATION, a Delaware corporation, as a Grantor By: /s/ William T. Fejes, Jr. -------------------------------- Name: William T. Fejes, Jr. Title: President, CEO and Director COLLATERAL AGENT: THE BANK OF NEW YORK TRUST COMPANY, N.A., as Collateral Agent By: /s/ Sandee Parks ----------------------------------- Name: Sandee Parks ----------------------------------- Title: Vice President ----------------------------------- SIGNATURE PAGE OF TRADEMARK SECURITY AGREEMENT SCHEDULE I to TRADEMARK SECURITY AGREEMENT TRADEMARK REGISTRATIONS/APPLICATIONS

APPLICATION/ GRANTOR REGISTRATION COUNTRY MARK NO. APP/REG DATE - -------------------------------------------------------------------------------- TB Wood's United States ALL-PRO 75/290,731/ 5/12/1997/ Enterprises, 2,165,737 6/16/1998 Inc. - -------------------------------------------------------------------------------- TB Wood's United States BRAKETRON 73/254,657/ 3/19/1980/ Enterprises, 1,164,393 8/11/1981 Inc. - -------------------------------------------------------------------------------- TB Wood's United States DECK 73/581,633/ 2/7/1986/ Enterprises, 1,409,209 9/16/1986 Inc. (stylized) - -------------------------------------------------------------------------------- TB Wood's United States DISC-O-TORQUE 72/285,224/ 11/20/1967/ Enterprises, 859,264 10/29/1968 Inc. - -------------------------------------------------------------------------------- TB Wood's United States DURA-FLEX 73/158,649/ 2/13/1978/ Enterprises, 1,116,828 4/24/1979 Inc. - -------------------------------------------------------------------------------- TB Wood's United States E-FLOW 75/280,015/ 4/23/1997/ Enterprises, 2,169,361 6/30/1998 Inc. - -------------------------------------------------------------------------------- TB Wood's United States E-trAC 73/491,494/ 7/24/1984/ Enterprises, (Stylized) 1,333,061 4/30/1985 Inc. - -------------------------------------------------------------------------------- TB Wood's United States E-TROL+PLUS 75/273,178/ 4/11/1997/ Enterprises, 2,156,683 5/12/1998 Inc. - --------------------------------------------------------------------------------

i

APPLICATION/ GRANTOR REGISTRATION COUNTRY MARK NO. APP/REG DATE - -------------------------------------------------------------------------------- TB Wood's United States FIRST IN 73/526,310/ 3/11/1985/ Enterprises, COUPLINGS 1,361,466 9/24/1985 Inc. - -------------------------------------------------------------------------------- TB Wood's United States FORM-FLEX 75/273,175/ 4/11/1997/ Enterprises, 2,152,362 4/21/1998 Inc. - -------------------------------------------------------------------------------- TB Wood's United States IMD 75/272,935/ 4/11/1997/ Enterprises, 2,261,432 7/13/1999 Inc. - -------------------------------------------------------------------------------- TB Wood's United States NLS 75/273,181/ 4/11/1997/ Enterprises, 2,152,366 4/21/1998 Inc. - -------------------------------------------------------------------------------- TB Wood's United States PDA-TRAC 78/329,999 11/19/2003/ Enterprises, 2,986,366 8/16/2005 Inc. - -------------------------------------------------------------------------------- TB Wood's United States PETRO-TRAC 78/052,072/ 3/8/2001/ Enterprises, 2,641,082 10/22/2002 Inc. - -------------------------------------------------------------------------------- TB Wood's United States POOLE 75/251,697/ 2/28/1997/ Enterprises, 2,191,918 9/29/1998 Inc. - -------------------------------------------------------------------------------- TB Wood's United States QT POWER CHAIN 76/403,299/ 5/2/2002/ Enterprises, 2,723,745 6/10/2003 Inc. - -------------------------------------------------------------------------------- TB Wood's United States ROTO-CAM 72/285,223/ 11/20/1967/ Enterprises, 859,263 10/29/1968 Inc. - -------------------------------------------------------------------------------- TB Wood's United States ROTO-CONE 72/015,359/ 9/10/1956/ Enterprises, 676,279 3/31/1959 Inc. - --------------------------------------------------------------------------------

ii

APPLICATION/ GRANTOR REGISTRATION COUNTRY MARK NO. APP/REG DATE - -------------------------------------------------------------------------------- TB Wood's United States SPEEDLIGN 78/350,700/ 1/12/2004/ Enterprises, 2,991,827 9/6/2005 Inc. - -------------------------------------------------------------------------------- TB Wood's United States S-TRAC 75/272,936/ 4/11/1997/ Enterprises, 2,257,668 6/29/1999 Inc. - -------------------------------------------------------------------------------- TB Wood's United States SUPERSTART 74/104,389/ 10/9/1990/ Enterprises, 1,686,040 5/12/1992 Inc. - -------------------------------------------------------------------------------- TB Wood's United States SURE GRIP 71/640,418/ 1/6/1953/ Enterprises, (stylized) 645,415 5/14/1957 Inc. - -------------------------------------------------------------------------------- TB Wood's United States SURE-FLEX 72/043,720/ 1/9/1958/ Enterprises, 668,649 10/21/1958 Inc. (stylized) - -------------------------------------------------------------------------------- TB Wood's United States SURE-GRIP 71/575,508/ 3/15/1949/ Enterprises, 646,423 6/4/1957 Inc. - -------------------------------------------------------------------------------- TB Wood's United States SURE-GRIP 73/136,699/ 8/8/1977/ Enterprises, 1,109,150 12/19/1978 Inc. - -------------------------------------------------------------------------------- TB Wood's United States TRUETUBE 75/273,177/ 4/11/1997/ Enterprises, 2,152,364 4/21/1998 Inc. - -------------------------------------------------------------------------------- TB Wood's United States ULTRACON 72/300,318/ 6/13/1968/ Enterprises, 862,655 12/31/1968 Inc. - -------------------------------------------------------------------------------- TB Wood's United States ULTRACON II 75/273,179/ 4/11/1997/ Enterprises, 2,150,835 4/14/1998 Inc. - --------------------------------------------------------------------------------

iii

APPLICATION/ GRANTOR REGISTRATION COUNTRY MARK NO. APP/REG DATE - -------------------------------------------------------------------------------- TB Wood's United States ULTRA-HELIX 75/559,570/ 9/25/1998/ Enterprises, 2,351,349 5/23/2000 Inc. - -------------------------------------------------------------------------------- TB Wood's United States ULTRA-V 73/001,734/ 10/9/1973/ Enterprises, 1,001,969 1/21/1975 Inc. - -------------------------------------------------------------------------------- TB Wood's United States ULTRA-V 73/003,203/ 10/10/1973/ Enterprises, 1,001,970 1/21/1975 Inc. - -------------------------------------------------------------------------------- TB Wood's United States U-TROL 73/104,511/ 10/26/1976/ Enterprises, 1,070,167 7/26/1977 Inc. - -------------------------------------------------------------------------------- TB Wood's United States VAR-A-CONE 75/273,180/ 4/11/1997/ Enterprises, 2,152,365 4/21/1998 Inc. - -------------------------------------------------------------------------------- TB Wood's United States W TB WOOD'S 75/107,136/ 5/20/1996/ Enterprises, (and design) 2,059,245 5/6/1997 Inc. - -------------------------------------------------------------------------------- TB Wood's United States WIN-TRAC 78/306,778/ 9/29/2003/ Enterprises, 2,961,309 6/7/2005 Inc. - -------------------------------------------------------------------------------- TB Wood's United States WOOD'S@WORK 76/402,992/ 5/2/2002/ Enterprises, 2,801,090 12/30/2003 Inc. - --------------------------------------------------------------------------------

iv EX-12.1 28 b65343s4exv12w1.txt EX-12.1 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES . . . EXHIBIT 12.1 ALTRA INDUSTRIAL MOTION RATIO OF EARNINGS TO FIXED CHARGES ($ IN 000'S)

PREDECESSOR ------------------------------------------------ PRO-FORMA FROM 11 MONTHS YEAR ENDED YEAR ENDED YEAR ENDED INCEPTION ENDED YEAR ENDED YEAR ENDED DEC. 31, DEC. 31, DEC. 31, DEC. 1-31, NOV. 30, DEC. 31, DEC. 31, 2006 2006 2005 2004 2004 2003 2002 ---------- ---------- ---------- ---------- --------- ---------- ---------- Net Income (loss) .................. $ 6,455 $10,363 $ 4,444 $(5,762) $ 6,895 $(9,306) $(108,223) ADJUSTMENTS TO NET LOSS: Cummulative effect of change in accounting principle - goodwill impairment .......... -- -- -- -- -- -- 83,412 Loss from discontinued operations ................... -- -- -- -- -- -- 700 Interest expense ................ 36,431 23,522 17,065 1,410 4,294 5,368 5,489 Interest component of operating rental expense ..... 528 528 344 56 440 488 472 Income taxes .................... 3,586 6,352 3,917 (221) 5,532 (1,658) 2,455 ------- ------- ------- ------- ------- ------- --------- EARNINGS ........................... $47,000 $40,765 $25,770 $(4,517) $17,161 $(5,108) (15,695) ======= ======= ======= ======= ======= ======= ========= Fixed charges Interest expense ................ $36,431 $23,522 $17,065 $ 1,410 $ 4,294 $ 5,368 $ 5,489 Interest component of operating rental expense ..... 528 528 344 56 440 488 472 ------- ------- ------- ------- ------- ------- --------- TOTAL FIXED CHARGES ................ $36,959 $24,050 $17,409 $ 1,466 $ 4,734 $ 5,856 5,961 ------- ------- ------- ------- ------- ------- --------- RATIO (1) (2) ...................... 1.27 1.70 1.48 -- 3.63 -- -- ------- ------- ------- ------- ------- ------- ---------

- ---------- (1) For purposes of calculating the ratio of earnings to fixed charges, earnings represent income before income taxes, discontinued operations, cumulative effect of change in accounting principle charges and fixed charges. Fixed charges represent interest expense and a portion of rental expense which we believe is representative of the interest component of rental expense. (2) Earnings were insufficient to cover fixed charges in the period December 1 to December 31, 2004, and each of the years ended December 31, 2003 and 2002 by $6.0 million, $11.0 million, and $21.7 million, respectively. EX-21.1 29 b65343s4exv21w1.txt EX-21.1 SUBSIDIARIES OF ALTRA INDUSTRIAL MOTION, INC. . . . EXHIBIT 21.1 SUBSIDIARIES OF ALTRA HOLDINGS, INC.

JURISDICTION OF NAME OF SUBSIDIARY ORGANIZATION - - Altra Industrial Motion, Inc. Delaware - American Enterprises MPT Corp. Delaware - Nuttall Gear LLC Delaware - American Enterprises MPT Holdings, LLC Delaware - Ameridrives International, LLC Delaware - Formsprag LLC Delaware - Warner Electric LLC Delaware - Warner Electric Technology LLC Delaware - Boston Gear LLC Delaware - Kilian Manufacturing Corporation Delaware - 3091780 Nova Scotia Company Nova Scotia, Canada - Kilian Canada, ULC Nova Scotia, Canada - TB Wood's Corporation Delaware - TB Wood's Incorporated Pennsylvania - TB Wood's Enterprises, Inc. Delaware - Plant Engineering Consultants, LLC Tennessee - T.B. Wood's Canada Ltd. Ontario, Canada - Industrial Blaju, S.A. de C.V. Mexico - Berges Electronic GmbH Germany - Berges Electronic S.r.L. Italy - TB Wood's (India) Private Ltd. India - Warner Electric International Holding, Inc. Delaware - Warner Electric (Holding) SAS France - Warner Electric Europe SAS France - Warner Electric Group GmbH Germany - Warner Electric Verwaltungs GmbH Germany - Stieber GmbH Germany - Warner Electric (Netherlands) Holding, B.V. Netherlands - Warner Electric Australia Pty. Ltd. Australia - Warner Shui Hing Limited, (HK) Hong Kong - Warner Electric (Singapore), Ltd. Singapore - Warner Electric (Taiwan) Ltd. Taiwan - Warner Electric (Thailand) Ltd. Thailand - Warner Electric UK Group Ltd. United Kingdom - Warner Electric UK Holding, Ltd. United Kingdom - Wichita Company Ltd. United Kingdom - Hay Hall Holdings Limited United Kingdom - The Hay Hall Group Limited United Kingdom - Matrix International, Ltd. United Kingdom - Matrix International GmbH Germany - Inertia Dynamics, LLC Delaware - Bibby Group Ltd. United Kingdom - Bibby Transmissions Ltd. United Kingdom - Bibby Turboflex SA South Africa - Turboflex Ltd. United Kingdom - Torsiflex Ltd. United Kingdom - Rathi Turboflex Pty Ltd India - Huco Power Transmission, Ltd. United Kingdom - Huco Engineering Industries Ltd. United Kingdom - Dynatork Air Motors Ltd. United Kingdom - Dynatork, Ltd. United Kingdom - Twiflex Ltd. United Kingdom - Saftek Ltd. United Kingdom

EX-23.1 30 b65343s4exv23w1.htm EX-23.1 CONSENT OF ERNST & YOUNG LLP

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

     We consent to the reference to our firm under the caption “Experts” and to the use of our report dated March 9, 2007, in the Registration Statement (Form S-4 No. 333-000000) and related Prospectus of Altra Industrial Motion, Inc. for the registration of the 9% Senior Secured Notes due 2011.

/s/ Ernst & Young LLP

Boston, Massachusetts
May 3, 2007

EX-23.2 31 b65343s4exv23w2.htm EX-23.2 CONSENT OF BDO STOY HAYWARD LLP

Exhibit 23.2

Consent of Independent Chartered Accounts

     We hereby consent to the use in the Prospectus constituting a part of this Registration Statement on Form S-4 filed by Altra Industrial Motion, Inc. on 8 May 2007 of our report dated 8 June 2006 relating to the consolidated financial statements of Hay Hall Holdings Limited, which are contained in that Prospectus.

     We also consent to the reference to us under the caption “Experts” in the Prospectus.

/s/ BDO Stoy Hayward LLP Birmingham, United Kingdom
May 08, 2007

EX-23.3 32 b65343s4exv23w3.htm EX-23.3 CONSENT OF GRANT THORNTON LLP

Exhibit 23.3

Consent of Independent Registered Public Accounting Firm

     We have issued our report dated March 1, 2007 accompanying the consolidated financial statements and schedules of TB Wood’s Corporation contained in the Registration Statement on Form S-4 and the related Prospectus of Altra Industrial Motion, Inc. We consent to the use of the aforementioned report in the Registration Statement and Prospectus of Altra Industrial Motion, Inc., and to the use of our name as it appears under the caption “Experts.”

/s/ GRANT THORNTON LLP Baltimore, Maryland
May 2, 2007

EX-25.1 33 b65343s4exv25w1.txt EX-25.1 STATEMENT OF ELIGIBLE OF TRUSTEE OF FORM T-1 EXHIBIT 25.1 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) [ ] ---------- THE BANK OF NEW YORK TRUST COMPANY, N.A. (Exact name of trustee as specified in its charter) 95-3571558 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 700 South Flower Street Suite 500 Los Angeles, California 90017 (Address of principal executive offices) (Zip code) ---------- Altra Industrial Motion, Inc. (Exact name of obligor as specified in its charter) Delaware 30-0283143 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) ADDITIONAL REGISTRANTS

STATE OR OTHER JURISDICTION OF INCORPORATION EXACT NAME OF REGISTRANT OR I.R.S. EMPLOYER AS SPECIFIED IN ITS CHARTER ORGANIZATION IDENTIFICATION NO. --------------------------- ------------- ------------------ American Enterprises MPT Corp. Delaware 52-2005169 American Enterprises MPT Holdings, LLC Delaware 52-2005171 Ameridrives International, LLC Delaware 52-1826102 Boston Gear LLC Delaware 11-3723980 Formsprag LLC Delaware 01-0712538 Inertia Dynamics, LLC Delaware 20-4221420 Kilian Manufacturing Corporation Delaware 06-0933715 Nuttall Gear L L C Delaware 54-1856788 TB Wood's Incorporated Pennsylvania 23-1232420 Plant Engineering Consultants, LLC Tennessee 62-1230818 TB Wood's Corporation Delaware 25-1771145 TB Wood's Enterprises, Inc. Delaware 51-0393505 Warner Electric LLC Delaware 54-1967089 Warner Electric Technology LLC Delaware 54-1967084 Warner Electric International Holding, Inc. Delaware 54-1967086

14 Hayward Street Quincy, Massachusetts 02171 (Address of principal executive offices) (Zip code) ---------- 9% Senior Secured Notes due 2011 (Title of the indenture securities) ================================================================================ -2- 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.

Name Address ---- ------------------------------- Comptroller of the Currency United States Department of the Treasury Washington, D.C. 20219 Federal Reserve Bank San Francisco, California 94105 Federal Deposit Insurance Corporation Washington, D.C. 20429

(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the articles of association of The Bank of New York Trust Company, N.A. (Exhibit 1 to Form T-1 filed with Registration Statement No. 333-121948). 2. A copy of certificate of authority of the trustee to commence business. (Exhibit 2 to Form T-1 filed with Registration Statement No. 333-121948). 3. A copy of the authorization of the trustee to exercise corporate trust powers. (Exhibit 3 to Form T-1 filed with Registration Statement No. 333-121948). 4. A copy of the existing by-laws of the trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 333-121948). -3- 6. The consent of the trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 333-121948). 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -4- SIGNATURE Pursuant to the requirements of the Act, the trustee, The Bank of New York Trust Company, N.A., a banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of Los Angeles, and State of California, on the 1st day of May, 2007. THE BANK OF NEW YORK TRUST COMPANY, N.A. By: /S/ MELONEE YOUNG ------------------------------------ Name: MELONEE YOUNG Title: VICE PRESIDENT -5- EXHIBIT 7 Consolidated Report of Condition of THE BANK OF NEW YORK TRUST COMPANY, N.A. of 700 South Flower Street, Suite 200, Los Angeles, CA 90017 At the close of business December 31, 2006, published in accordance with Federal regulatory authority instructions.

Dollar Amounts in Thousands ---------- ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin .......................... 10,020 Interest-bearing balances ......................... 0 Securities: Held-to-maturity securities ....................... 56 Available-for-sale securities ..................... 64,801 Federal funds sold and securities purchased under agreements to resell: Federal funds sold ................................ 49,900 Securities purchased under agreements to resell ... 40,000 Loans and lease financing receivables: Loans and leases held for sale .................... 0 Loans and leases, net of unearned income ......................... 0 LESS: Allowance for loan and lease losses ................................... 0 Loans and leases, net of unearned income and allowance ........................... 0 Trading assets ....................................... 0 Premises and fixed assets (including capitalized leases) ............................... 5,051 Other real estate owned .............................. 0 Investments in unconsolidated subsidiaries and associated companies ......................................... 0 Not applicable Intangible assets: Goodwill .......................................... 889,415 Other Intangible Assets ........................... 277,086 Other assets ......................................... 113,348 ---------- Total assets ......................................... $1,449,677 ==========

1 LIABILITIES Deposits: In domestic offices ............................... 2,517 Noninterest-bearing ............................... 2,517 Interest-bearing .................................. 0 Not applicable Federal funds purchased and securities sold under agreements to repurchase: Federal funds purchased ........................... 0 Securities sold under agreements to repurchase .... 0 Trading liabilities .................................. 0 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases) ........................................... 58,000 Not applicable Not applicable Subordinated notes and debentures .................... 0 Other liabilities .................................... 127,233 Total liabilities .................................... 187,750 Minority interest in consolidated subsidiaries ....... 0 EQUITY CAPITAL Perpetual preferred stock and related surplus ........ 0 Common stock ......................................... 1,000 Surplus (exclude all surplus related to preferred stock) ............................................ 1,121,520 Retained earnings .................................... 139,524 Accumulated other comprehensive income ............... -117 Other equity capital components ...................... 0 Total equity capital ................................. 1,261,927 ---------- Total liabilities, minority interest, and equity capital (sum of items 21, 22, and 28) ............. 1,449,677 ========== I, William J. Winkelmann, Vice President of the above-named bank do hereby declare that the Reports of Condition and Income (including the supporting schedules) for this report date have been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and are true to the best of my knowledge and belief. William J. Winkelmann ) Vice President We, the undersigned directors (trustees), attest to the correctness of the Report of Condition (including the supporting schedules) for this report date and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. Michael K. Klugman, President ) Michael F. McFadden, MD ) Directors (Trustees) Frank P. Sulzberger, Vice President ) 2 EX-99.1 34 b65343s4exv99w1.htm EX-99.1 FORM OF LETTER OF TRANSMITTAL

Exhibit 99.1

LETTER OF TRANSMITTAL

ALTRA INDUSTRIAL MOTION, INC.

OFFER TO EXCHANGE ALL OUTSTANDING

9% SENIOR SECURED NOTES DUE 2011
FOR NEWLY ISSUED
9% SENIOR SECURED NOTES DUE 2011
That Have Been Registered Under
the Securities Act of 1933

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _________, 2007
UNLESS EXTENDED (THE “EXPIRATION DATE”). WITHDRAWAL RIGHTS FOR ACCEPTANCES OF THE
EXCHANGE OFFER WILL EXPIRE AT THAT TIME, UNLESS THE EXPIRATION DATE IS EXTENDED.

The Exchange Agent for the Exchange Offer is:

The Bank of New York

By Registered or Certified Mail, by Hand or by Overnight Courier:

101 Barclay Street, 7 East
New York, New York 10286
Attention: Corporate Trust Operations

By Facsimile:
(212) 298-1915

By Telephone:
(212) 815-3687

     DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

     The undersigned acknowledges that he or she has received and reviewed the Prospectus dated                     , 2007 (the “Prospectus”) of Altra Industrial Motion, Inc. (the “Issuer”) and this Letter of Transmittal (the “Letter of Transmittal”), which together constitute the Issuer’s offer (the “Exchange Offer”) to exchange an aggregate principal amount of up to $105,000,000 of the Issuer’s newly issued 9% Senior Secured Notes due 2011 (the “Registered Notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of the Issuer’s outstanding 9% Senior Secured Notes due 2011 (the “Original Notes”) from the registered holders thereof, that have not been so registered. The terms of the Registered Notes are identical in all material respects to the terms of the Original Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Registered Notes are freely transferable by holders thereof (except as provided herein or in the Prospectus), are not subject to any covenant regarding registration under the Securities Act and are not subject to any covenant regarding additional interest payment provisions. Both the Original Notes and the Registered Notes are guaranteed on a senior secured basis by American Enterprises MPT Corp., American Enterprises MPT Holdings, LLC, Ameridrives International, LLC, Boston Gear LLC, Formsprag LLC, Inertia Dynamics, LLC, Kilian Manufacturing Corporation, Nuttall Gear L L C, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Corporation, TB Wood’s Enterprises, Inc., Warner Electric LLC, Warner Electric Technology LLC and Warner Electric International Holding, Inc. (collectively, the “Guarantors”).

     The undersigned has checked the appropriate boxes below and signed this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer.

     PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW. YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.

     List below the Original Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the certificate numbers and principal amounts of Original Notes should be listed on a separate signed schedule affixed hereto.

DESCRIPTION OF ORIGINAL NOTES TENDERED
Name(s) and Address(es) of Registered Holder(s)		Aggregate Principal
(Please fill in)	Certificate	Amount Represented	Principal Amount
	Number(s)*	by Original Notes	Tendered**
	Total

*	Need not be completed if Original Notes are being tendered by book-entry transfer.
**	Unless otherwise indicated, the holder will be deemed to have tendered the full aggregate principal amount represented by such Original Notes. See Instruction 2.

2

     This Letter of Transmittal is to be used either if certificates representing Original Notes are to be forwarded herewith or if delivery of Original Notes is to be made by book-entry transfer to an account maintained by the Exchange Agent at the Depository Trust Company (the “Book-Entry Transfer Facility”), pursuant to the procedures set forth in the Prospectus under the caption “The Exchange Offer—Procedures for Tendering.” DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

     Holders whose Original Notes are not immediately available or who cannot deliver their Original Notes and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date must tender their Original Notes according to the guaranteed delivery procedures set forth in the Prospectus under the caption “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery Procedures.”

o CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:

Name of Tendering Institution(s)

The Depository Trust Company Account Number

Transaction Code Number

     By crediting the Original Notes to the Exchange Agent’s account at the Book-Entry Transfer Facility’s Automated Tender Offer Program (“ATOP”) and by complying with applicable ATOP procedures with respect to the Exchange Offer, including transmitting to the Exchange Agent a computer-generated agent’s message in which the holder of the Original Notes acknowledges and agrees to be bound by the terms of, and makes the representations and warranties contained in, the Letter of Transmittal, the participant in the Book-Entry Transfer Facility confirms on behalf of itself and the beneficial owners of such Original Notes all provisions of this Letter of Transmittal (including all representations and warranties) applicable to it and such beneficial owner as fully as if it had completed the information required herein and executed and transmitted this Letter of Transmittal to the Exchange Agent.

o  CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:

Name of Registered Holder(s)

Window Ticket Number (if any)

Name of Eligible Institution that Guaranteed Delivery

Date of Execution of Notice of Guaranteed Delivery

     If Delivered by Book-Entry Transfer:

Account Number Transaction Code Number

o  CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO:

Name

Address

     If the undersigned is a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Registered Notes. If the undersigned is a participating broker-dealer

3

that will receive Registered Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of such Registered Notes. However, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. Any holder who is an “affiliate” of the Issuer within the meaning of the Securities Act or who has an arrangement or understanding with respect to the distribution of the Registered Notes to be acquired pursuant to the Exchange Offer, or any broker-dealer who purchased Original Notes from the Issuer to resell pursuant to Rule 144A under the Securities Act or any other available exemption under the Securities Act, must comply with the registration and prospectus delivery requirements under the Securities Act.

o  CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.

4

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

     1. Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Issuer the aggregate principal amount of Original Notes indicated above. Subject to, and effective upon, the acceptance for exchange of the Original Notes tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Issuer all right, title and interest in and to such Original Notes as are being tendered hereby.

     2. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Original Notes tendered hereby and that the Issuer will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by the Issuer. The undersigned hereby further represents that: (i) any Registered Notes acquired in exchange for Original Notes tendered hereby will have been acquired in the ordinary course of business of the undersigned; (ii) at the time of the commencement of the Exchange Offer, the undersigned has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the Registered Notes to be issued in the Exchange Offer in violation of the Securities Act; (iii) it is not an affiliate (as defined in Rule 405 under the Securities Act) of the Issuer; (iv) if the undersigned is a broker-dealer, the undersigned is not engaged in, and does not intend to engage in, a distribution of the Registered Notes; (v) if the undersigned is a participating broker-dealer that will receive Registered Notes for its own account in exchange for the Original Notes that were acquired as a result of market-making or other trading activities, that the undersigned will deliver a prospectus in connection with any resale of such Registered Notes; and (vi) the undersigned is not acting on behalf of any persons or entities who cannot truthfully make the foregoing representations.

     3. The undersigned also acknowledges that the Exchange Offer is being made in reliance on interpretations by the staff of the Securities and Exchange Commission (the “SEC”), as set forth in no-action letters issued to third parties, that the Registered Notes issued in exchange for the Original Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder that is an “affiliate” of the Issuer within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that: (i) such Registered Notes are acquired in the ordinary course of such holder’s business; (ii) at the time of the commencement of the Exchange Offer, such holder has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the Registered Notes to be issued in the Exchange Offer in violation of the Securities Act; (iii) such holder is not an affiliate (as defined in Rule 405 of the Securities Act) of the Issuer; (iv) if such holder is a broker-dealer, the holder is not engaged in, and does not intend to engage in, a distribution of the Registered Notes; (v) if such holder is a participating broker-dealer that will receive Registered Notes for its own account in exchange for the Original Notes that were acquired as a result of market-making or other trading activities, that such holder will deliver a prospectus in connection with any resale of such Registered Notes; and (vi) such holder is not acting on behalf of any persons or entities who could not truthfully make the foregoing representations. However, the SEC has not considered the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer as in other circumstances. If the undersigned is a participating broker-dealer that will receive Registered Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of such Registered Notes. However, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

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     4. The undersigned may, if, and only if, it would not receive freely tradable Registered Notes in the Exchange Offer or is not eligible to participate in the Exchange Offer, elect to have its Original Notes registered in the shelf registration described in the Registration Rights Agreement, dated as of April 5, 2007, among the Issuer and Jefferies & Company, Inc., as initial purchaser (the “Registration Rights Agreement”), filed as Exhibit 4.15 to the Registration Statement of the Issuer, Registration No. 333-     . Capitalized terms used in this paragraph 4 and not otherwise defined herein shall have the meanings given to them in the Registration Rights Agreement. Such election may be made by checking the box under “Special Registration Instructions” below. By making such election, the undersigned agrees, as a holder of Original Notes participating in a Shelf Registration, to comply with the Registration Rights Agreement and to indemnify and hold harmless the Issuer, its respective affiliates, directors, officers, representatives, employees, agents and each person, if any, who controls the Issuer, within the meaning of either Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from and against any and all losses, claims, damages, judgments, liabilities and expenses (including without limitation, the reasonable legal fees and other expenses actually incurred in connection with any suit, action or proceeding or any claim asserted) caused by, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) or Prospectus (as amended or supplemented if the Issuer shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by, arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading, but only with reference to information relating to such participant furnished to the Issuer in writing by such participant expressly for use in any Registration Statement or Prospectus, any amendment or supplement thereto, or any preliminary prospectus. Any such indemnification shall be governed by the terms and subject to the conditions set forth in the Registration Rights Agreement, including, without limitation, the provisions regarding notice, retention of counsel, contribution and payment of expenses set forth therein. The above summary of the indemnification provisions of the Registration Rights Agreement is not intended to be exhaustive and is qualified in its entirety by the Registration Rights Agreement.

     5. The undersigned will, upon request, execute and deliver any additional documents deemed by the Issuer to be necessary or desirable to complete the sale, assignment and transfer of the Original Notes tendered hereby. All authority conferred or agreed to be conferred in this Letter of Transmittal and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in the Prospectus under the caption “The Exchange Offer—Withdrawal Rights.” See Instruction 9.

     6. Unless otherwise indicated in the box entitled “Special Issuance Instructions” below, please issue the Registered Notes (and, if applicable, substitute certificates representing Original Notes for any Original Notes not exchanged) in the name of the undersigned or, in the case of a book-entry delivery of Original Notes, please credit the account indicated above maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated under the box entitled “Special Delivery Instructions” below, please send the Registered Notes (and, if applicable, substitute certificates representing Original Notes for any Original Notes not exchanged) to the undersigned at the address shown above in the box entitled “Description of Original Notes Tendered.”

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     THE UNDERSIGNED ACKNOWLEDGES THAT THE EXCHANGE OFFER IS SUBJECT TO THE MORE DETAILED TERMS SET FORTH IN THE PROSPECTUS AND, IN CASE OF ANY CONFLICT BETWEEN THE TERMS OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL, THE TERMS OF THE PROSPECTUS SHALL PREVAIL.

     THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED “DESCRIPTION OF ORIGINAL NOTES TENDERED” ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED THE ORIGINAL NOTES AS SET FORTH IN SUCH BOX ABOVE.

SPECIAL ISSUANCE INSTRUCTIONS		SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)		(See Instructions 3 and 4)
To be completed ONLY if certificates for Original Notes not exchanged and/or Registered Notes are to be issued in the name of someone other than the person or persons whose signature(s) appear(s) on this Letter of Transmittal below, or if Original Notes delivered by book-entry transfer which are not accepted for exchange are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than the account indicated above.		To be completed ONLY if certificates for Original Notes not exchanged and/or Registered Notes are to be sent to someone other than the person or persons whose signature(s) appear(s) on this Letter of Transmittal below or to such person or persons at an address other than shown in the box entitled “Description of Original Notes Tendered” on this Letter of Transmittal above.
Issue Registered Notes and/or Original Notes to:		Mail Registered Notes and/or Original Notes to:
Name(s)*		Name(s)*
	(Please type or print)		(Please type or print)
	(Please type or print)		(Please type or print)
	(Please type or print)		(Please type or print)
Address:		Address:
	(Zip Code)		(Zip Code)
(* Such person(s) must properly complete a Substitute Form W-9, a Form W-8BEN, a Form W-8ECI or a Form W-8IMY)		(* Such person(s) must properly complete a Substitute Form W-9, a Form W-8BEN, a Form W-8ECI or a Form W-8IMY)
Credit unexchanged Original Notes delivered by book-entry transfer to the Book-Entry Transfer Facility account set forth below.
(Book-Entry Transfer Facility Account Number, if applicable)

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SPECIAL REGISTRATION INSTRUCTIONS
(See Paragraph 4 above)

To be completed ONLY IF the undersigned (i) satisfies the conditions set forth in paragraph 4 above, (ii) elects to register its Original Notes in the shelf registration described in the Registration Rights Agreement, and (iii) agrees to comply with the Registration Rights Agreement and to indemnify certain entities and individuals as set forth in paragraph 4 above.

o      By checking this box the undersigned hereby (i) represents that it is entitled to have its Original Notes registered in a shelf registration in accordance with the Registration Rights Agreement, (ii) elects to have its Original Notes registered pursuant to the shelf registration described in the Registration Rights Agreement, and (iii) agrees to comply with the Registration Rights Agreement and to indemnify certain entities and individuals identified in, and to the extent provided in, paragraph 4 above.

IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR ORIGINAL NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

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PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.

PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)

X			, 2007
X			, 2007
X			, 2007
	Signature(s) of Holder(s)	Date

Area Code and Telephone Number

     If a holder is tendering any Original Notes, this Letter of Transmittal must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the Original Notes or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 3.

Name(s):

Capacity:

Address:

Telephone:

Employer Identification or Social Security Number:

SIGNATURE GUARANTEE
(if required by Instruction 3)

Signature(s) Guaranteed by an Eligible Institution:
	(Authorized Signature)
(Title)
(Name and Firm)
		, 2007
(Date)

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INSTRUCTIONS

1. Delivery of this Letter of Transmittal and Notes; Guaranteed Delivery Procedures.

     This Letter of Transmittal is to be completed by holders of Original Notes either if certificates are to be forwarded herewith or if tenders are to be made pursuant to the procedures for delivery by book-entry transfer set forth in the Prospectus under the caption “The Exchange Offer—Book—Entry Transfer.” Certificates for all physically tendered Original Notes, or Book-Entry Confirmation, as the case may be, as well as a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof), with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at the address set forth herein on or prior to 5:00 p.m., New York City time, on the Expiration Date, or the tendering holder must comply with the guaranteed delivery procedures set forth below. Original Notes tendered hereby must be in denominations or principal amount at maturity of $1,000 or any integral multiple thereof.

     Holders whose certificates for Original Notes are not immediately available or who cannot deliver their certificates and any other required documents to the Exchange Agent on or prior to 5:00 p.m., New York City time, on the Expiration Date, or who cannot complete the procedure for book-entry transfer on a timely basis, may tender their Original Notes pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery Procedures.” Pursuant to such procedures, (i) such tender must be made through an Eligible Institution (as defined below), (ii) on or prior to 5:00 p.m., New York City time, on the Expiration Date, the Exchange Agent must receive from such Eligible Institution, a written for facsimile copy of a properly completed and duly executed Letter of Transmittal and Notice of Guaranteed Delivery, substantially in the form provided by the Issuer, setting forth the name and address of the holder of Original Notes and the amount of Original Notes tendered, stating that the tender is being made thereby and guaranteeing that within three The New York Stock Exchange (“NYSE”) trading days after the date of execution of the Notice of Guaranteed Delivery, the Eligible Institution will deliver to the Exchange Agent the certificates for all certificated Original Notes being tendered, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, a written or facsimile copy of the Letter of Transmittal or a Book Entry Confirmation, as the case may be, and any other documents required by this Letter of Transmittal, and (iii) the certificates for all certificated Original Notes, in proper form for transfer, or Book-Entry Confirmation, as the case may be, and all other documents required by this Letter of Transmittal, must be received by the Exchange Agent within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery.

     THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE ORIGINAL NOTES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDERS, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT TO THE ISSUER.

     See “The Exchange Offer” section in the Prospectus.

2. Partial Tenders (not applicable to holders who tender by book-entry transfer).

     If less than all of the Original Notes evidenced by a submitted certificate are to be tendered, the tendering holder(s) should fill in the aggregate principal amount at maturity of Original Notes to be tendered in the box above entitled “Description of Original Notes Tendered” under “Principal Amount Tendered.” A reissued certificate representing the balance of nontendered Original Notes of a tendering holder who physically delivered Original Notes will be sent to such tendering holder, unless otherwise

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provided in the appropriate box on this Letter of Transmittal, promptly after the Expiration Date. All of the Original Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated.

3. Signatures on this Letter of Transmittal; Bond Powers and Endorsements; Guarantee of Signatures.

     If this Letter of Transmittal is signed by the registered holder of the Original Notes tendered hereby, the signature must correspond exactly with the name as written on the face of the certificates without any change whatsoever.

     If any tendered Original Notes are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal.

     If any tendered Original Notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of certificates.

     When this Letter of Transmittal is signed by the registered holder or holders of the Original Notes specified herein and tendered hereby, no endorsements of certificates or separate bond powers are required. If, however, the Registered Notes are to be issued, or any nontendered Original Notes are to be reissued, to a person other than the registered holder, then endorsements of any certificates transmitted hereby or separate bond powers are required. Signatures on such certificate(s) or bond powers must be guaranteed by an Eligible Institution.

     If this Letter of Transmittal is signed by a person other than the registered holder or holders of any certificate(s) specified herein, such certificates must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name or names of the registered holder or holders appear(s) on the certificate(s) and signatures on such certificates(s) or bond powers must be guaranteed by an Eligible Institution.

     If this Letter of Transmittal or any certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Issuer, proper evidence satisfactory to the Issuer of its authority to so act must be submitted with this Letter of Transmittal.

     Endorsements on certificates for Original Notes or signatures on bond powers required by this Instruction 3 must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Program or the Stock Exchange Medallion Program (each an “Eligible Institution” and collectively, “Eligible Institutions”).

     Signatures on the Letter of Transmittal need not be guaranteed by an Eligible Institution if (A) the Original Notes are tendered (i) by a registered holder of Original Notes (which term, for purposes of the Exchange Offer, includes any participant in the Book-Entry Transfer Facility system whose name appears on a security position listing as the holder of such Original Notes) who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on this Letter of Transmittal, or (ii) for the account of an Eligible Institution and (B) the box entitled “Special Registration Instructions” on this Letter of Transmittal has not been completed.

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4. Special Issuance and Delivery Instructions.

     Tendering holders of Original Notes should indicate in the applicable box the name and address to which Registered Notes issued pursuant to the Exchange Offer and/or substitute certificates evidencing Original Notes not exchanged are to be issued or sent, if different from the name or address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated and such person named must properly complete an IRS Substitute Form W-9, IRS Form W-8BEN, IRS Form W-8ECI or IRS Form W-8IMY, as applicable. Noteholders tendering Original Notes by book-entry transfer may request that Original Notes not exchanged be credited to such account maintained at the Book-Entry Transfer Facility as such noteholder may designate hereon. If no such instructions are given, such Original Notes not exchanged will be returned to the name and address of the person signing this Letter of Transmittal.

5. Transfer Taxes.

     Tendering holders of Original Notes will not be obligated to pay any transfer taxes in connection with a tender of their Original Notes for exchange unless a holder instructs the Issuer to register Registered Notes in the name of, or request that Original Notes not tendered or not accepted in the Exchange Offer be returned to, a person other than the registered tendering holder, in which event the registered tendering holder will be responsible for the payment of any applicable transfer tax. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed to such tendering holder and the Exchange Agent will retain possession of an amount of Registered Notes with a face amount equal to the amount of such transfer taxes due by such tendering holder pending receipt by the Exchange Agent of the amount of such taxes.

6. Waiver of Conditions.

     The Issuer reserves the absolute right to waive satisfaction of any or all conditions enumerated in the Prospectus.

7. No Conditional Tenders.

     No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders of Original Notes, by execution of this Letter of Transmittal, shall waive any right to receive notice of the acceptance of their Original Notes for exchange.

     Although the Issuer intends to notify holders of defects or irregularities with respect to tenders of Original Notes, neither the Issuer, the Exchange Agent nor any other person shall incur any liability for failure to give any such notice.

8. Mutilated, Lost, Stolen or Destroyed Original Notes.

     Any holder whose Original Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions.

9. Withdrawal of Tenders.

     Tenders of Original Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date.

     For a withdrawal of a tender of Original Notes to be effective, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth above prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Original Notes to be withdrawn (the “Depositor”), (ii) identify the

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specific Original Notes to be withdrawn (including the certificate number or numbers and principal amount of such Original Notes), (iii) be signed by the holder in the same manner as the original signature on this Letter of Transmittal by which such Original Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Exchange Agent to register the transfer of such Original Notes into the name of the person withdrawing the tender, and (iv) specify the name in which any such Original Notes are to be registered, if different from that of the Depositor. Any Original Notes so properly withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Original Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder as soon as practicable after withdrawal, rejection of tender, or termination of the Exchange Offer. Properly withdrawn Original Notes may be retendered by following the procedures described under “The Exchange Offer—Procedures for Tendering” at any time on or prior to 5:00 p.m., New York City time, on the Expiration Date.

     All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Original Notes will be determined by the Issuer in its sole discretion, which determination will be final and binding on all parties. The Issuer reserves the absolute right to reject any and all Original Notes not properly tendered or any Original Notes the Issuer’s acceptance of which would, in the opinion of counsel for the Issuer, be unlawful. The Issuer also reserves the right to waive any defects, irregularities, or conditions of tender as to particular Original Notes. The Issuer’s interpretation of the terms and conditions of the Exchange Offer (including the instructions of this Letter of Transmittal) will be final and binding on all parties.

10. Requests for Assistance or Additional Copies.

     Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus, this Letter of Transmittal and other related documents may be directed to the Exchange Agent, at the address and telephone number indicated above.

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IMPORTANT TAX INFORMATION

     Each prospective holder of Registered Notes to be issued pursuant to Special Issuance Instructions should complete the attached Substitute Form W-9. Under current federal income tax law, a holder of Registered Notes is required to provide the Issuer (as payor) with such holder’s correct taxpayer identification number (“TIN”) on Substitute Form W-9 or otherwise establish a basis for exemption from backup withholding to prevent any backup withholding on any payments received in respect of the Registered Notes. If a holder of Registered Notes is an individual, the TIN is such holder’s social security number. If the Issuer is not provided with the correct taxpayer identification number, a holder of Registered Notes may be subject to a $50 penalty imposed by the Internal Revenue Service. The Substitute Form W-9 need not be completed if the box entitled Special Issuance Instructions has not been completed.

     Certain holders of Registered Notes (including, among others, all corporations) are not subject to these backup withholding and reporting requirements. Exempt prospective holders of Registered Notes should indicate their exempt status on Substitute Form W-9. A foreign individual may qualify as an exempt recipient by submitting to the Issuer, through the Exchange Agent, the appropriate Internal Revenue Service Form W-8 (e.g., Form W-8BEN, Form W-8ECI or Form W-8IMY) properly completed and signed under penalty of perjury, attesting to the holder’s exempt status. The appropriate Form W-8 will be provided by the Exchange Agent upon request and is also available at the IRS website (http://www.irs.gov). See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions.

     If backup withholding applies, the Issuer is required to withhold 28% (or such other percentage that may be applicable to payments made after December 31, 2010) of any “reportable payment” made to the holder of Registered Notes or other payee. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service.

     Purpose of Substitute Form W-9

     To prevent backup withholding with respect to any payments received in respect of the Registered Notes, each prospective holder of Registered Notes to be issued pursuant to Special Issuance Instructions should provide the Issuer, through the Exchange Agent, with either: (i) such prospective holder’s correct TIN by completing the form below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such prospective holder is awaiting a TIN) and that (A) such prospective holder has not been notified by the Internal Revenue Service that he or she is subject to backup withholding as a result of a failure to report all interest or dividends or (B) the Internal Revenue Service has notified such prospective holder that he or she is no longer subject to backup withholding or (ii) an adequate basis for exemption.

     What Number to Give the Exchange Agent

     The prospective holder of Registered Notes to be issued pursuant to Special Issuance Instructions is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the prospective record owner of the Registered Notes. If the Registered Notes will be held in more than one name or are not held in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance regarding which number to report.

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Exhibit 99.1

PAYOR’S NAME: ALTRA INDUSTRIAL MOTION, INC.
	Part 1—PLEASE PROVIDE	Social security number(s) or
SUBSTITUTE FORM W-9 Department of the Treasury Internal Revenue Service Payor’s Request for Taxpayer Identification Number (TIN)	YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW.	Employer identification number(s) ___________________
	Part 2—Certification—Under penalties of perjury, I certify that: (1) the number shown on this form is my current taxpayer identification number (or I am waiting for a number to be issued to me); (2) I am not subject to backup withholding either because I am exempt from backup withholding, 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 the IRS has notified me that I am no longer subject to backup withholding; and (3) I am a U.S. person (including a resident alien).
	Certificate Instructions—You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you are subject to backup withholding you receive another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2).			Part 3 Awaiting TIN o
Signature _________________________________________________________			Date ____________________ , 2007

NOTE: FAILURE BY A PROSPECTIVE HOLDER OF REGISTERED NOTES TO BE ISSUED PURSUANT TO THE SPECIAL ISSUANCE INSTRUCTIONS ABOVE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 28% OF ALL PAYMENTS MADE TO YOU IN RESPECT OF THE REGISTERED NOTES DELIVERABLE TO YOU PURSUANT TO THE EXCHANGE 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 CERTIFICATION IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

          I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (b) I intend to mail or deliver such an application in the near future. I understand that if I do not provide a taxpayer identification number within sixty (60) days, 28% of all reportable payments made to me thereafter will be withheld until I provide such a number.

Signature Date , 2007 

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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. All “Section” references are to the Internal Revenue Code of 1986, as amended (the “Code”). “IRS” is the Internal Revenue Service.

For this type of account:			Give the SOCIAL SECURITY NUMBER of:
1.	An individual’s account		The individual
2.	Two or more individuals (joint account)		The actual owner of the account or, if combined funds, the first individual on the account(1)
3.	Custodian account of a minor (Uniform Gift to Minors Act)		The minor(2)
4.	a.	The usual revocable savings trust account (grantor is also trustee)	The grantor-trustee(1)
4.	b.	So-called trust account that is not a legal or valid trust under State law.	The actual owner(1)
5.	Sole proprietorship account or single-owner LLC		The owner(3)
6.	A valid trust, estate, or pension trust		The legal entity (4)
7.	Corporate account or LLC electing corporate status on Form 8832		The corporation
8.	Association, club, religious, charitable, educational, or other tax-exempt organization account.		The organization
9.	Partnership account or multimember LLC		The legal entity
10.	A broker or registered nominee		The broker or nominee
11.	Account with the Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments		The public entity
12.	Sole proprietorship or single owner LLC		The owner(3)

(1)	List first and circle the name of the person whose number you furnish. If only one person on a joint account has a Social Security Number, that person’s number must be furnished.
(2)	Circle the minor’s name and furnish the minor’s Social Security Number.
(3)	You must show your individual name. You may also enter your business name. You may use either your Social Security Number or your Employer Identification Number.
(4)	List first and circle the name of the legal trust, estate, or pension trust, (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)

NOTE: If no name is circled when there is more than one name listed, the number will be considered to be that of the first name listed.

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GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
(Continued)

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 (for individuals) or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the IRS and apply for a number. U.S. resident aliens who cannot obtain a Social Security Number must apply for an ITIN (Individual Taxpayer Identification Number) on Form W-7.

Payees Exempt from Backup Withholding

     Payees specifically exempted from backup withholding on ALL payments include the following:

• An organization exempt from tax under Section 501(a) of the Code, or an individual retirement plan or a custodial account under Section 403(b) (7) of the Code, if the account satisfies the requirements of Section 401(f) (2) of the Code.

• 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.

     Other payees that MAY BE EXEMPT from backup withholding include the following:

• A corporation.

• A financial institution.

• A dealer in securities or commodities required to register in the U.S., the District of Columbia or a possession of the U.S.

• A dealer in securities or commodities required to register in the U.S., the District of Columbia 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.

• A trust exempt from tax under Section 664 of the Code or a trust described in Section 4947 of the Code.

• An entity registered at all times during the tax year under the Investment Company Act of 1940.

• A foreign central bank of issue.

• A futures commission merchant registered with the Commodity Futures Trading Commission.

• A middleman known in the investment community as a nominee or custodian.

     With respect to interest payments, all payees listed above, except the futures commission merchant registered with the Commodity Futures Trading Commission, are exempt payees.

Payments Exempt from Backup Withholding

     Payment 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 U.S. and which have at least one nonresident alien partner.

• Payments of patronage dividends where the amount received is not paid in money.

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GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
(Continued)

• Payments made by certain foreign organizations.

• Section 404(k) payments made by an ESOP.

     Payments of interest not generally subject to backup withholding include the following:

• Payment 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.

• Payment of tax-exempt interest (including exempt interest dividends under Section 852 of the Code).

• Payment described in Section 6049(b) (5) to nonresident aliens.

• Payments on tax-free covenant bonds under Section 1451 of the Code

• Payments made by certain foreign organizations.• • Mortgage or student loan interest paid to you.

Exempt payees described above that are U.S. persons (including a U.S. resident alien individual) should file Form W-9 (or appropriate substitute form) to avoid possible erroneous backup withholding. ENTER YOUR NAME, ADDRESS, STATUS AND TAXPAYER IDENTIFICATION NUMBER, WRITE “EXEMPT” ON THE FACE OF PART 11 OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH THE PAYER A COMPLETED INTERNAL REVENUE FORM W-8BEN, W8ECI, W-8IMY or W-8EXP, AS APPLICABLE.

Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see Sections 6041, 6041A, 6042, 6044, 6045, 6049, and 6050A and 605ON of the Code and the regulations promulgated thereunder.

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 the 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 tax returns. Payers must generally withhold 28% (or such other percentage as may be applicable to payments made after December 31, 2010) 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. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.
(4)	Misuse of TINs. If the requester discloses or uses TINs in violation of Federal law, the register may be subject to civil and criminal penalties.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS.

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EX-99.2 35 b65343s4exv99w2.htm EX-99.2 FORM OF NOTICE OF GUARANTEED DELIVERY

Exhibit 99.2

NOTICE OF GUARANTEED DELIVERY

Altra Industrial Motion, Inc.
OFFER TO EXCHANGE ALL OUTSTANDING

9% SENIOR SECURED NOTES DUE 2011
FOR NEWLY ISSUED
9% SENIOR SECURED NOTES DUE 2011
That Have Been Registered Under
the Securities Act of 1933

     This Notice of Guaranteed Delivery or one substantially equivalent hereto must be used by registered holders of outstanding 9% Senior Secured Notes due 2011 (the “Original Notes”) of Altra Industrial Motion, Inc. (the “Issuer”), American Enterprises MPT Corp., American Enterprises MPT Holdings, LLC, Ameridrives International, LLC, Boston Gear LLC, Formsprag LLC, Inertia Dynamics, LLC, Kilian Manufacturing Corporation, Nuttall Gear L L C, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Corporation, TB Wood’s Enterprises, Inc., Warner Electric LLC, Warner Electric Technology LLC and Warner Electric International Holding, Inc. (collectively, the “Guarantors”) who wish to tender their Original Notes in exchange for a like principal amount of newly issued 9% Senior Secured Notes due 2011 of the Issuer registered under the Securities Act of 1933, as amended (the “Registered Notes”) pursuant to the exchange offer described in the Prospectus, dated           , 2007 (as the same may be amended or supplemented from time to time, the “Prospectus”), if the holder’s Original Notes are not immediately available or if such holder cannot deliver its Original Notes and Letter of Transmittal (and any other documents required by the Letter of Transmittal) to The Bank of New York (the “Exchange Agent”) prior to 5:00 p.m., New York City time, on           , 2007, or such later date and time to which the Exchange Offer may be extended (the “Expiration Date”). This Notice of Guaranteed Delivery or one substantially equivalent hereto may be delivered by hand or sent by facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight courier) or mail to the Exchange Agent, and must be received by the Exchange Agent prior to the Expiration Date. See “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery Procedures” in the Prospectus.

The Exchange Agent for the Exchange Offer is:

The Bank of New York

By Registered or Certified Mail, by Hand or by Overnight Courier:

101 Barclay Street, 7 East
New York, New York 10286
Attention: Corporate Trust Operations

By Facsimile:
(212) 298-1915

By Telephone:
(212) 815-3687

     DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

     This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an eligible institution (as defined in the Prospectus), such signature guarantee must appear in the applicable space provided on the Letter of Transmittal for Guarantee of Signatures.

Ladies and Gentlemen:

     The undersigned hereby tenders to the Issuers the principal amount of Original Notes indicated below, upon the terms and subject to the conditions contained in the Prospectus and the Letter of Transmittal, receipt of which is hereby acknowledged.

DESCRIPTION OF ORIGINAL NOTES TENDERED
		Name and Address of Registered	Certificate Number(s)	Principal Amount of
		Holder as it appears on the	for Original Notes	Original Notes
	Name of Tendering Holder	Original Notes (Please print)	Tendered	Tendered

PLEASE SIGN HERE

X		X
X		X
X		X
	Signature(s) of Holder(s)		Date

     Must be signed by the holder(s) of Original Notes as their name(s) appear(s) on certificates for Original Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below.

Please print name(s) and address(es)

Name(s):

Capacity:

Address(es):

o  The Depository Trust Company
(Check if Original Notes will be tendered by book-entry transfer)
Account Number:                                                                                                     

THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED

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THE FOLLOWING GUARANTEE MUST BE COMPLETED

GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)

     The undersigned, a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees to deliver to the Exchange Agent at its address set forth above, the certificates representing the Original Notes (or a confirmation of book-entry transfer of such Original Notes into the Exchange Agent’s account at The Depository Trust Company), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guaranteed, and any other documents required by the Letter of Transmittal within three New York Stock Exchange trading days after the date of execution of this Notice of Guaranteed Delivery.

Name of Firm:
	(Authorized Signature)

Address: Title:

	Name:
(Zip Code)		(Please type or print)
	Date:
(Area Code and Telephone No.)

NOTE: DO NOT SEND ORIGINAL NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. ORIGINAL NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

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EX-99.3 36 b65343s4exv99w3.htm EX-99.3 EXCHANGE AGENT AGREEMENT, BETWEEN ALTRA INDUSTRIAL MOTION, INC.

Exhibit 99.3

___________, 2007

EXCHANGE AGENT AGREEMENT

The Bank of New York
700 South Flower Street, Suite 500
Los Angeles, California 90017-4104
Attention: Corporate Trust Administration

Ladies and Gentlemen:

          Altra Industrial Motion, Inc., a Delaware corporation (the “Company”), American Enterprises MPT Corp., American Enterprises MPT Holdings, L.P., Ameridrives International, L.P., Boston Gear LLC, Formsprag LLC, Inertia Dynamics, LLC, The Kilian Company, Kilian Manufacturing Corporation, Nuttall Gear L L C, Plant Engineering Consultants, LLC, TB Wood’s Corporation, TB Wood’s Enterprises, TB Wood’s Incorporated, Warner Electric LLC, Warner Electric Technology LLC, and Warner Electric International Holding, Inc. (collectively, the “Guarantors”) propose to make an offer (the “Exchange Offer”) to exchange all of the Company’s outstanding 9% Senior Secured Notes due 2011 (the “Original Notes”) for an equal amount of 9% Senior Secured Notes due 2011 that have been registered under the Securities Act of 1933, as amended (the “Registered Notes”). The terms and conditions of the Exchange Offer as currently contemplated are set forth in a prospectus, dated   , 2007 (the “Prospectus”), proposed to be distributed to all record holders of the Original Notes. The Original Notes and the Registered Notes are collectively referred to herein as the “Securities”.

          The Company hereby appoints The Bank of New York to act as exchange agent (the “Exchange Agent”) in connection with the Exchange Offer. References hereinafter to “you” shall refer to The Bank of New York.

          The Exchange Offer is expected to be commenced by the Company on or about                     , 2007. The Letter of Transmittal accompanying the Prospectus (or in the case of book-entry securities, the Automated Tender Offer Program (“ATOP”) of the Book-Entry Transfer Facility (as defined below)) is to be used by the holders of the Original Notes to accept the Exchange Offer and contains instructions with respect to the delivery of certificates for Original Notes tendered in connection therewith.

          The Exchange Offer shall expire at 5:00 p.m., New York City time, on                     , 2007 or on such subsequent date or time to which the Company may extend the Exchange Offer (the “Expiration Date”). Subject to the terms and conditions set forth in the Prospectus, the Company expressly reserves the right to extend the

Exchange Offer from time to time and may extend the Exchange Offer by giving oral (promptly confirmed in writing) or written notice to you before 9:00 a.m., New York City time, on the business day following the previously scheduled Expiration Date.

          The Company expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Original Notes not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified in the Prospectus under the caption “The Exchange Offer — Conditions.” The Company will give oral (promptly confirmed in writing) or written notice of any amendment, termination or non-acceptance to you as promptly as practicable.

          In carrying out your duties as Exchange Agent, you are to act in accordance with the following instructions:

          1. You will perform such duties and only such duties as are specifically set forth in the section of the Prospectus captioned “The Exchange Offer” or as specifically set forth herein; provided, however, that in no way will your general duty to act in good faith be discharged by the foregoing.

          2. You will establish a book-entry account with respect to the Original Notes at The Depository Trust Company (the “Book-Entry Transfer Facility”) for purposes of the Exchange Offer within two business days after the date of the Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility’s systems may make book-entry delivery of the Original Notes by causing the Book-Entry Transfer Facility to transfer such Original Notes into your account in accordance with the Book-Entry Transfer Facility’s procedure for such transfer.

          3. You are to examine each of the Letters of Transmittal and certificates for Original Notes (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility) and any other documents delivered or mailed to you by or for holders of the Original Notes to ascertain whether: (i) the Letters of Transmittal and any such other documents are duly executed and properly completed in accordance with instructions set forth therein; and (ii) the Original Notes have otherwise been properly tendered. In each case where the Letter of Transmittal or any other document has been improperly completed or executed or any of the certificates for Original Notes are not in proper form for transfer or some other irregularity in connection with the acceptance of the Exchange Offer exists, you will endeavor to inform the presenters of the need for fulfillment of all requirements and to take any other action as may be reasonably necessary or advisable to cause such irregularity to be corrected.

          4. With the approval of the Chairman of the Board, Chief Executive Officer, President or Chief Financial Officer of the Company (such approval, if given orally, to be promptly confirmed in writing) or any other party designated in writing, by such an officer, you are authorized to waive any irregularities in connection with any tender of Original Notes pursuant to the Exchange Offer.

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          5. Tenders of Original Notes may be made only as set forth in the Letter of Transmittal and in the section of the Prospectus captioned “The Exchange Offer — Procedures for Tendering”, and Original Notes shall be considered properly tendered to you only when tendered in accordance with the procedures set forth therein.

          Notwithstanding the provisions of this Section 5, Original Notes which the Chairman of the Board, Chief Executive Officer, President or Chief Financial Officer of the Company shall approve as having been properly tendered shall be considered to be properly tendered (such approval, if given orally, shall be promptly confirmed in writing).

          6. You shall advise the Company with respect to any Original Notes received subsequent to the Expiration Date and accept the Company’s instructions with respect to disposition of such Original Notes.

          7. You shall accept tenders:

               (a) in cases where the Original Notes are registered in two or more names only if signed by all named holders;

               (b) in cases where the signing person (as indicated on the Letter of Transmittal) is acting in a fiduciary or a representative capacity only when proper evidence of his or her authority so to act is submitted; and

               (c) from persons other than the registered holder of Original Notes, provided that customary transfer requirements, including payment of any applicable transfer taxes, are fulfilled.

          You shall accept partial tenders of Original Notes where so indicated and as permitted in the Letter of Transmittal and deliver certificates for Original Notes to the registrar for split-up and return any untendered Original Notes to the holder (or such other person as may be designated in the Letter of Transmittal) as promptly as practicable after expiration or termination of the Exchange Offer.

          8. Upon satisfaction or waiver of all of the conditions to the Exchange Offer, the Company will notify you (such notice, if given orally, to be promptly confirmed in writing) of its acceptance, promptly after the Expiration Date, of all Original Notes properly tendered and you, on behalf of the Company, will exchange such Original Notes for Registered Notes and cause such Original Notes to be cancelled. Delivery of Registered Notes will be made on behalf of the Company by you at the rate of $1,000 principal amount of Registered Notes for each $1,000 principal amount of the corresponding series of Original Notes tendered promptly after notice (such notice if given orally, to be promptly confirmed in writing) of acceptance of said Original Notes by the Company; provided, however, that in all cases, Original Notes tendered pursuant to the Exchange Offer will be exchanged only after timely receipt by you of certificates

3

for such Original Notes (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility), a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) with any required signature guarantees and any other required documents. You shall issue Registered Notes only in denominations of $1,000 or any integral multiple thereof.

          9. Tenders pursuant to the Exchange Offer are irrevocable, except that, subject to the terms and upon the conditions set forth in the Prospectus and the Letter of Transmittal, Original Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date.

          10. The Company shall not be required to exchange any Original Notes tendered if any of the conditions set forth in the Exchange Offer are not met. Notice of any decision by the Company not to exchange any Original Notes tendered shall be given (if given orally, to be promptly confirmed in writing) by the Company to you.

          11. If, pursuant to the Exchange Offer, the Company does not accept for exchange all or part of the Original Notes tendered because of an invalid tender, the occurrence of certain other events set forth in the Prospectus under the caption “The Exchange Offer — Conditions” or otherwise, you shall as soon as practicable after the expiration or termination of the Exchange Offer return those certificates for unaccepted Original Notes (or effect appropriate book-entry transfer), together with any related required documents and the Letters of Transmittal relating thereto that are in your possession, to the persons who deposited them.

          12. All certificates for reissued Original Notes, unaccepted Original Notes or for Registered Notes shall be forwarded by first-class mail.

          13. You are not authorized to pay or offer to pay any concessions, commissions or solicitation fees to any broker, dealer, bank or other persons or to engage or utilize any person to solicit tenders.

          14. As Exchange Agent hereunder you:

               (a) shall not be liable for any action or omission to act unless the same constitutes your own gross negligence, willful misconduct or bad faith, and in no event shall you be liable to a securityholder, the Company or any third party for special, indirect or consequential damages or lost profits, arising in connection with this Agreement;

               (b) shall have no duties or obligations other than those specifically set forth herein or as may be subsequently agreed to in writing between you and the Company;

4

               (c) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any of the certificates or the Original Notes represented thereby deposited with you pursuant to the Exchange Offer, and will not be required to and will make no representation as to the validity, value or genuineness of the Exchange Offer;

               (d) shall not be obligated to take any legal action hereunder which might in your judgment involve any expense or liability, unless you shall have been furnished with indemnity satisfactory to you;

               (e) may conclusively rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telegram or other document or security delivered to you and believed by you to be genuine and to have been signed or presented by the proper person or persons;

               (f) may act upon any tender, statement, request, document, agreement, certificate or other instrument whatsoever not only as to its due execution and validity and effectiveness of its provisions, but also as to the truth and accuracy of any information contained therein, which you shall in good faith believe to be genuine or to have been signed or presented by the proper person or persons;

               (g) may conclusively rely on and shall be protected in acting upon written or oral instructions from any authorized officer of the Company;

               (h) may consult with counsel of your selection with respect to any questions relating to your duties and responsibilities and the advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by you hereunder in good faith and in accordance with the advice or opinion of such counsel;

               (i) shall in no event be responsible or liable for any failure or delay in the performance of your obligations under this Agreement arising out of or caused by, directly or indirectly, forces beyond your reasonable control, including without limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services; and

               (j) shall not advise any person tendering Original Notes pursuant to the Exchange Offer as to the wisdom of making such tender or as to the market value or decline or appreciation in market value of any Original Notes.

          15. You shall take such action as may from time to time be requested by the Company (and such other action as you may deem appropriate) to furnish copies of the Prospectus, Letter of Transmittal and the Notice of Guaranteed Delivery (as

5

defined in the Prospectus) or such other forms as may be approved from time to time by the Company, to all persons requesting such documents and to accept and comply with telephone requests for information relating to the Exchange Offer, provided that such information shall relate only to the procedures for accepting (or withdrawing from) the Exchange Offer. The Company will furnish you with copies of such documents on your request. All other requests for information relating to the Exchange Offer shall be directed to the Company, Attention: David Wall.

          16. You shall advise by facsimile transmission David Wall, the Chief Financial Officer of the Company (at the facsimile number (617) 689-6202), and such other person or persons as the Company may request, daily (and more frequently during the week immediately preceding the Expiration Date if requested) up to and including the Expiration Date, as to the number of Original Notes which have been tendered pursuant to the Exchange Offer and the items received by you pursuant to this Agreement, separately reporting and giving cumulative totals as to items properly received and items improperly received. In addition, you will also inform, and cooperate in making available to, the Company or any such other person or persons upon oral request made from time to time prior to the Expiration Date of such other information as they may reasonably request. Such cooperation shall include, without limitation, the granting by you to the Company and such person as the Company may request of access to those persons on your staff who are responsible for receiving tenders, in order to ensure that immediately prior to the Expiration Date the Company shall have received information in sufficient detail to enable it to decide whether to extend the Exchange Offer. You shall prepare a final list of all persons whose tenders were accepted, the aggregate principal amount of Original Notes tendered, the aggregate principal amount of Original Notes accepted and deliver said list to the Company.

          17. Letters of Transmittal and Notices of Guaranteed Delivery shall be stamped by you as to the date and, after the expiration of the Exchange Offer, the time, of receipt thereof and shall be preserved by you for a period of time at least equal to the period of time you preserve other records pertaining to the transfer of securities. You shall dispose of unused Letters of Transmittal and other surplus materials by returning them to the Company.

          18. You hereby expressly waive any lien, encumbrance or right of setoff whatsoever that you may have with respect to funds deposited with you for the payment of transfer taxes by reasons of amounts, if any, borrowed by the Company, or any of their subsidiaries or affiliates pursuant to any loan or credit agreement with you or for compensation owed to you hereunder.

          19. For services rendered as Exchange Agent hereunder, you shall be entitled to such compensation as shall be agreed in writing between the Company and you. The provisions of this section shall survive the termination of this Agreement.

6

          20. You hereby acknowledge receipt of the Prospectus and the Letter of Transmittal. Any inconsistency between this Agreement, on the one hand, and the Prospectus and the Letter of Transmittal (as they may be amended from time to time), on the other hand, shall be resolved in favor of the latter two documents, except with respect to your duties, liabilities and indemnification as Exchange Agent.

          21. The Company covenants and agrees to fully indemnify and hold you harmless against any and all loss, liability, and cost or expense, including reasonable attorneys’ fees and expenses, incurred without gross negligence or willful misconduct on your part, arising out of or in connection with any act, omission, delay or refusal made by you in reliance upon any signature, endorsement, assignment, certificate, order, request, notice, instruction or other instrument or document believed by you to be valid, genuine and sufficient and in accepting any tender or effecting any transfer of Original Notes believed by you in good faith to be authorized, and in delaying or refusing in good faith to accept any tenders or effect any transfer of Original Notes. In each case, the Company shall be notified by you, by letter or facsimile transmission, of the written assertion of a claim against you or of any other action commenced against you, promptly after you shall have received any such written assertion or shall have been served with a summons in connection therewith. The Company shall be entitled to participate at its own expense in the defense of any such claim or other action and, if the Company so elects, the Company shall assume the defense of any suit brought to enforce any such claim. In the event that the Company shall assume the defense of any such suit, the Company shall not be liable for the fees and expenses of any additional counsel thereafter retained by you, so long as the Company shall retain counsel satisfactory to you to defend such suit, and so long as you have not determined, in your reasonable judgment, that a conflict of interest exists between you and the Company. The provisions of this section shall survive the termination of this Agreement.

          22. You shall arrange to comply with all requirements under the tax laws of the United States, including those relating to missing Tax Identification Numbers, and shall file any appropriate reports with the Internal Revenue Service.

          23. You shall deliver or cause to be delivered, in a timely manner to each governmental authority to which any transfer taxes are payable in respect of the exchange of Original Notes, the Company’s check in the amount of all transfer taxes so payable; provided, however, that you shall reimburse the Company for amounts refunded to you in respect of your payment of any such transfer taxes, at such time as such refund is received by you.

          24. This Agreement and your appointment as Exchange Agent hereunder shall be construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such state, and without regard to conflicts of law principles, and shall inure to the benefit of, and the

7

obligations created hereby shall be binding upon, the successors and assigns of each of the parties hereto.

          25. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same agreement.

          26. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

          27. This Agreement shall not be deemed or construed to be modified, amended, rescinded, cancelled or waived, in whole or in part, except by a written instrument signed by a duly authorized representative of the party to be charged. This Agreement may not be modified orally.

          28. Unless otherwise provided herein, all notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party, addressed to it, at its address or telecopy number set forth below:

If to the Company:

Altra Industrial Motion, Inc.
14 Hayward Street
Quincy, Massachusetts 02171

Facsimile: (617) 689-6202
Attention: David Wall

with a copy to:

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153

Facsimile: (212) 310-8007
Attention: Matthew Bloch, Esq.

If to the Exchange Agent:

The Bank of New York
700 South Flower Street, Suite 500
Los Angeles, California 90017-4104

8

Facsimile: (213) 630-6298
Attention: Corporate Trust Administration

          29. Unless terminated earlier by the parties hereto, this Agreement shall terminate 90 days following the Expiration Date. Notwithstanding the foregoing, Sections 18 and 20 shall survive the termination of this Agreement. Upon any termination of this Agreement, you shall promptly deliver to the Company any certificates for Securities, funds or property then held by you as Exchange Agent under this Agreement.

          30. This Agreement shall be binding and effective as of the date hereof.

9

          Please acknowledge receipt of this Agreement and confirm the arrangements herein provided by signing and returning the enclosed copy.

ALTRA INDUSTRIAL MOTION, INC.
By:
	Name:	David Wall
	Title:	Chief Financial Officer

Accepted as of the date
first above written:

THE BANK OF NEW YORK, as Exchange Agent
By:
	Name:
	Title:

[EXCHANGE AGENT AGREEMENT]

10

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EX-10.37

                                                                   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



        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

EX-10.38

                                                                   EXHIBIT 10.38

                          TRADEMARK SECURITY AGREEMENT

     This TRADEMARK SECURITY AGREEMENT (this "Trademark Security Agreement")
is made this 5th day of April, 2007, among 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
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 Parent's 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 the 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 Grantors shall have executed and
delivered to Agent, for the benefit of 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 Lender Group, this Trademark
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 TRADEMARK 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 "Trademark
Collateral"):

          (a) all of its Trademarks and rights in and to Trademark Intellectual
Property Licenses to which it is a party including those referred to on Schedule
I hereto;

          (b) all extensions, modifications and renewals of the foregoing;

          (c) all goodwill of the business connected with the use of, and
symbolized by, each Trademark; and

          (d) all products and proceeds of the foregoing, including, without
limitation, any claim by such Grantor against third parties for past, present or
future (i) infringement or dilution of any Trademark, or (ii) injury to the
goodwill associated with any Trademark.



     3. SECURITY AGREEMENT. The security interests granted pursuant to this
Trademark 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 Trademark
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 trademarks,
registrations, or applications therefor (including, without limitation,
extensions or renewals) which become part of the Trademark Collateral under the
Security Agreement. Notwithstanding the foregoing, no failure to so modify this
Trademark 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 Trademark 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 Trademark 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 and 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 TRADEMARK SECURITY AGREEMENT]




                                        ACCEPTED AND AGREED TO
                                        AS OF THE DATE FIRST ABOVE WRITTEN:

                                        WELLS FARGO FOOTHILL, INC.,
                                        a California corporation, as Agent


                                        By: /s/ Vincent J. Egan, Jr.
                                            ------------------------------------
                                        Name: Vincent J. Egan, Jr.
                                              ----------------------------------
                                        Title: VP
                                               ---------------------------------

        [SIGNATURE PAGE OF WFF - TB WOOD'S TRADEMARK SECURITY AGREEMENT]


                                                                     Rider 10.38


                   SCHEDULE I TO TRADEMARK SECURITY AGREEMENT
                      TRADEMARK REGISTRATIONS/APPLICATIONS

                                   SCHEDULE I
                                       to
                          TRADEMARK SECURITY AGREEMENT

                      TRADEMARK REGISTRATIONS/APPLICATIONS




                                                             APPLICATION/
  GRANTOR                COUNTRY            MARK            REGISTRATION NO.     APP/REG DATE
  -------                -------            ----            ----------------     ------------
                                                                     
TB Wood's             United States      ALL-PRO              75/290,731/        5/12/1997/
Enterprises, Inc.                                             2,165,737          6/16/1998
TB Wood's             United States      BRAKETRON            73/254,657/        3/19/1980/
Enterprises, Inc.                                             1,164,393          8/11/1981
TB Wood's             United States      DECK                 73/581,633/        2/7/1986/
Enterprises, Inc.                        (stylized)           1,409,209          9/16/1986
TB Wood's             United States      DISC-O-TORQUE        72/285,224/        11/20/1967/
Enterprises, Inc.                                             859,264            10/29/1968
TB Wood's             United States      DURA-FLEX            73/158,649/        2/13/1978/
Enterprises, Inc.                                             1,116,828          4/24/1979
TB Wood's             United States      E-FLOW               75/280,015/        4/23/1997/
Enterprises, Inc.                                             2,169,361          6/30/1998
TB Wood's             United States      E-trAC (Stylized)    73/491,494/        7/24/1984/
Enterprises, Inc.                                             1,333,061          4/30/1985
TB Wood's             United States      E-TROL+PLUS          75/273,178/        4/11/1997/
Enterprises, Inc.                                             2,156,683          5/12/1998
TB Wood's             United States      FIRST IN             73/526,310/        3/11/1985/
Enterprises, Inc.                        COUPLINGS            1,361,466          9/24/1985
TB Wood's             United States      FORM-FLEX            75/273,175/        4/11/1997/
Enterprises, Inc.                                             2,152,362          4/21/1998
TB Wood's             United States      IMD                  75/272,935/        4/11/1997/
Enterprises, Inc.                                             2,261,432          7/13/1999




                                                             APPLICATION/
  GRANTOR                COUNTRY            MARK            REGISTRATION NO.     APP/REG DATE
  -------                -------            ----            ----------------     ------------
                                                                     
TB Wood's             United States      NLS                  75/273,181/        4/11/1997/
Enterprises, Inc.                                             2,152,366          4/21/1998
TB Wood's             United States      PDA-TRAC             78/329,999         11/19/2003/
Enterprises, Inc.                                             2,986,366          8/16/2005
TB Wood's             United States      PETRO-TRAC           78/052,072/        3/8/2001/
Enterprises, Inc.                                             2,641,082          10/22/2002
TB Wood's             United States      POOLE                75/251,697/        2/28/1997/
Enterprises, Inc.                                             2,191,918          9/29/1998
TB Wood's             United States      QT POWER CHAIN       76/403,299/        5/2/2002/
Enterprises, Inc.                                             2,723,745          6/10/2003
TB Wood's             United States      ROTO-CAM             72/285,223/        11/20/1967/
Enterprises, Inc.                                             859,263            10/29/1968
TB Wood's             United States      ROTO-CONE            72/015,359/        9/10/1956/
Enterprises, Inc.                                             676,279            3/31/1959
TB Wood's             United States      SPEEDLIGN            78/350,700/        1/12/2004/
Enterprises, Inc.                                             2,991,827          9/6/2005
TB Wood's             United States      S-TRAC               75/272,936/        4/11/1997/
Enterprises, Inc.                                             2,257,668          6/29/1999
TB Wood's             United States      SUPERSTART           74/104,389/        10/9/1990/
Enterprises, Inc.                                             1,686,040          5/12/1992
TB Wood's             United States      SURE GRIP            71/640,418/        1/6/1953/
Enterprises, Inc.                        (stylized)           645,415            5/14/1957
TB Wood's             United States      SURE-FLEX            72/043,720/        1/9/1958/
Enterprises, Inc.                        (stylized)           668,649            10/21/1958
TB Wood's             United States      SURE-GRIP            71/575,508/        3/15/1949/
Enterprises, Inc.                                             646,423            6/4/1957
TB Wood's             United States      SURE-GRIP            73/136,699/        8/8/1977/
Enterprises, Inc.                                             1,109,150          12/19/1978
TB Wood's             United States      TRUETUBE             75/273,177/        4/11/1997/
Enterprises, Inc.                                             2,152,364          4/21/1998
TB Wood's             United States      ULTRACON             72/300,318/        6/13/1968/
Enterprises, Inc.                                             862,655            12/31/1968



                                       2



                                                             APPLICATION/
  GRANTOR                COUNTRY            MARK            REGISTRATION NO.     APP/REG DATE
  -------                -------            ----            ----------------     ------------
                                                                     
TB Wood's             United States      ULTRACON II          75/273,179/        4/11/1997/
Enterprises, Inc.                                             2,150,835          4/14/1998
TB Wood's             United States      ULTRA-HELIX          75/559,570/        9/25/1998/
Enterprises, Inc.                                             2,351,349          5/23/2000
TB Wood's             United States      ULTRA-V              73/001,734/        10/9/1973/
Enterprises, Inc.                                             1,001,969          1/21/1975
TB Wood's             United States      ULTRA-V              73/003,203/        10/10/1973/
Enterprises, Inc.                                             1,001,970          1/21/1975
TB Wood's             United States      U-TROL               73/104,511/        10/26/1976/
Enterprises, Inc.                                             1,070,167          7/26/1977
TB Wood's             United States      VAR-A-CONE           75/273,180/        4/11/1997/
Enterprises, Inc.                                             2,152,365          4/21/1998
TB Wood's             United States      W TB WOOD'S (and     75/107,136/        5/20/1996/
Enterprises, Inc.                        design)              2,059,245          5/6/1997
TB Wood's             United States      WIN-TRAC             78/306,778/        9/29/2003/
Enterprises, Inc.                                             2,961,309          6/7/2005
TB Wood's             United States      WOOD'S@WORK          76/402,992/        5/2/2002/
Enterprises, Inc.                                             2,801,090          12/30/2003



                                       3

EX-10.39

                                                                   EXHIBIT 10.39

================================================================================

       AMENDED AND RESTATED INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT

                                      among

                           WELLS FARGO FOOTHILL, INC.,
                               as TB Wood's Agent,

                           WELLS FARGO FOOTHILL, INC.,
                                as Senior Agent,

                    THE BANK OF NEW YORK TRUST COMPANY, N.A.,
                        as Trustee and Collateral Agent,

                         ALTRA INDUSTRIAL MOTION, INC.,
                        and certain of its SUBSIDIARIES,
                           as Borrowers and Guarantors

                             TB WOOD'S CORPORATION,
                        and certain of its SUBSIDIARIES,
                           as TB Wood's Credit Parties

                          Dated as of November 30, 2004

                    Amended and Restated as of April 5, 2007

================================================================================



       AMENDED AND RESTATED INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT

     THIS AMENDED AND RESTATED INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT
dated as of April 5, 2007 (this "Agreement") is made by and among WELLS FARGO
FOOTHILL, INC., as agent (the "Original TB Wood's Agent") under and pursuant to
the TB Wood's Credit Agreement (as hereinafter defined), WELLS FARGO FOOTHILL,
INC., as senior agent (the "Original Senior Agent") under and pursuant to the
Credit Agreement (as hereinafter defined), THE BANK OF NEW YORK TRUST COMPANY,
N.A. ("BNY"), in its capacity as collateral agent under the Indenture Loan
Documents (as hereinafter defined) (in such capacity, the "Collateral Agent"),
BNY as Trustee under the Indenture Loan Documents (in such capacity, the
"Trustee"), Altra Industrial Motion, Inc., a Delaware corporation ("Parent" ),
those certain subsidiaries of Parent identified as Borrowers on the signature
pages hereto (collectively with Parent, the "Borrowers") those certain
subsidiaries of Parent identified as Guarantors on the signature pages hereto
(collectively with Parent, the "Guarantors"), and the TB Wood's Credit Parties
(as defined below) (this Agreement amends and restates the Intercreditor and
Lien Subordination Agreement dated as of November 30, 2004 (the "Original
Intercreditor Agreement"), among the Original Senior Agent, the Collateral Agent
and the Borrowers and Guarantors).

                                    RECITALS

     A. Borrowers, Guarantors, Collateral Agent, and Trustee have entered into
an Indenture, dated as of November 30, 2004 (the "Indenture"), pursuant to which
the Borrowers incurred indebtedness for certain notes (such notes, together with
all other notes issued after November 30, 2004 and exchange notes issued in
exchange therefore, the "Notes") in an aggregate principal amount at maturity of
$165,000,000 under the Indenture which, together with the Additional Notes (as
defined below), interest, premiums, fees, costs and expenses (including, without
limitation, attorneys fees and disbursements and including interest accrued
after the initiation of any Insolvency Proceeding, whether or not allowed or
allowable in any Insolvency Proceeding) and the other Secured Obligations (as
defined in the Indenture Security Agreement (defined below)) are referred to
herein as the "Indenture Secured Obligations". The repayment of the Indenture
Secured Obligations is secured by security interests in and liens on the assets
and properties (the "Collateral"; it being understood and agreed by the Parties
that "Collateral" for purposes of this Agreement includes, without limitation,
the TB Wood's Collateral) described in the Security Agreement dated as of
November 30, 2004 (the "Indenture Security Agreement") made by the Borrowers and
the Guarantors in favor of the Collateral Agent for the benefit of the
Collateral Agent, the Trustee, and the Noteholders, the Trademark Security
Agreement, dated as of November 30, 2004, made by the Borrowers and Guarantors
in favor of the Collateral Agent for the benefit of the Collateral Agent, the
Trustee, and the Noteholders (the "Indenture Trademark Security


                                        1



Agreements"), the Copyright Security Agreement, entered into from time to time,
made by the Borrowers and Guarantors in favor of the Collateral Agent for the
benefit of the Collateral Agent, the Trustee, and the Noteholders (the
"Indenture Copyright Security Agreements"), the Patent Security Agreement, dated
as of November 30, 2004, made by the Borrowers and Guarantors in favor of the
Collateral Agent for the benefit of the Collateral Agent, the Trustee, and the
Noteholders (the "Indenture Patent Security Agreements"), and certain real
property mortgages (made from time to time, in each case, by a Borrower or a
Guarantor in favor of the Collateral Agent for the benefit of the Collateral
Agent, the Trustee, and the Noteholders, each an "Indenture Mortgage" and,
together with the Indenture, the Indenture Security Agreement, the Indenture
Trademark Security Agreement, Indenture Copyright Security Agreement, Indenture
Patent Security Agreement, and all Control Agreements (as defined in the
Indenture Security Agreement), and the other Note Documents (as defined in the
Indenture Security Agreement) executed and delivered in connection therewith,
the "Indenture Agreements").

     B. Parent, the Borrowers, the Original Senior Agent and the lenders a party
thereto have entered into a Credit Agreement dated as of November 30, 2004 (the
"Original Credit Agreement") and the Guarantors, the Senior Lenders and the
Original Senior Agent have entered into those certain guarantees (the
"Guarantees") pursuant to which the Senior Lenders agreed, upon the terms and
conditions stated therein, to make loans and advances to and to issue letters of
credit on account of the Borrowers up to the principal amount of $30,000,000,
together with the fees, interest, expenses and other obligations due under the
Original Credit Agreement. The repayment of the Obligations (as that term is
defined in the Original Credit Agreement) is secured by first priority security
interests in and liens on the Collateral described in the Security Agreement
dated as of November 30, 2004 (the "Senior Security Agreement") made by the
Borrowers and the Guarantors in favor of the Original Senior Agent for the
benefit of the Original Senior Agent, the Senior Lenders and the Bank Product
Providers (as defined in the Credit Agreement), the Trademark Security
Agreement, dated as of November 30, 2004, made by the Borrowers and the
Guarantors in favor of the Original Senior Agent for the benefit of the Original
Senior Agent, the Senior Lenders and the Bank Product Providers (the "Senior
Trademark Security Agreements"), the Copyright Security Agreement, entered into
from time to time, made by the Borrowers and the Guarantors in favor of the
Original Senior Agent for the benefit of the Original Senior Agent, the Senior
Lenders and the Bank Product Providers (the "Senior Copyright Security
Agreements"), the Patent Security Agreement, dated as of November 30, 2004, made
by the Borrowers and the Guarantors in favor of the Original Senior Agent for
the benefit of the Original Senior Agent, the Senior Lenders and the Bank
Product Providers (the "Senior Patent Security Agreements"), and certain real
property mortgages (made from time to time, in each case, by a Borrower or a
Guarantor in favor of the Original Senior Agent for the benefit of the Original
Senior Agent, the Senior Lenders and the Bank Product Providers, each a "Senior
Mortgage" and, together with the Credit Agreement, the Guarantees, the Senior
Security Agreement, the Senior Trademark Security Agreement, Senior Copyright


                                        2



Security Agreement, Senior Patent Security Agreement, and all Control Agreements
(as defined in the Credit Agreement) and the other Loan Documents (as defined in
the Credit Agreement) executed and delivered in connection therewith, the
"Senior Agreements").

     C. TB Wood's Corporation ("TB Wood's"), the subsidiaries of TB Wood's party
thereto (collectively with TB Wood's, the "TB Wood's Credit Parties"), the
Original TB Wood's Agent and the lenders a party thereto have entered into a
Credit Agreement dated as of the date hereof (the "Original TB Wood's Credit
Agreement") pursuant to which the TB Wood's Lenders agreed, upon the terms and
conditions stated therein, to make loans and advances to and to issue letters of
credit on account of the TB Wood's Credit Parties up to the principal amount of
$19,557,916.32, together with the fees, interest, expenses and other obligations
due under the Original TB Wood's Credit Agreement. The repayment of the
Obligations (as that term is defined in the Original TB Wood's Credit Agreement)
is secured by first priority security interests in and liens on the collateral
(the "TB Wood's Collateral") described in the Security Agreement dated as of the
date hereof (the "TB Wood's Security Agreement") made by the TB Wood's Credit
Parties in favor of the Original TB Wood's Agent for the benefit of the Original
TB Wood's Agent and the TB Wood's Lenders, the Trademark Security Agreement,
dated as of the date hereof, made by the TB Wood's Credit Parties in favor of
the Original TB Wood's Agent for the benefit of the Original TB Wood's Agent and
the TB Wood's Lenders (the "TB Wood's Trademark Security Agreements"), the
Copyright Security Agreement, entered into from time to time, made by the TB
Wood's Credit Parties in favor of the Original TB Wood's Agent for the benefit
of the Original TB Wood's Agent and the Senior Lenders (the "TB Wood's Copyright
Security Agreements"), the Patent Security Agreement, dated as of the date
hereof, made by the TB Wood's Credit Parties in favor of the Original TB Wood's
Agent for the benefit of the Original TB Wood's Agent and the TB Wood's Lenders
(the "TB Wood's Patent Security Agreements"), and certain real property
mortgages (made from time to time, in each case, by a TB Wood's Credit Party in
favor of the Original TB Wood's Agent for the benefit of the Original TB Wood's
Agent and the TB Wood's Lenders, each a "TB Wood's Mortgage" and, together with
the TB Wood's Credit Agreement, the TB Wood's Security Agreement, the TB Wood's
Trademark Security Agreement, the TB Wood's Copyright Security Agreement, the TB
Wood's Patent Security Agreement, and all Control Agreements (as defined in the
TB Wood's Credit Agreement) and the other Loan Documents (as defined in the TB
Wood's Credit Agreement) executed and delivered in connection therewith, the "TB
Wood's Agreements").

     D. In connection with the acquisition by Parent of the shares of stock of
TB Wood's, Parent intends to issue additional Notes (the "Additional Notes") in
an aggregate principal amount at maturity of $105,000,000 under the Indenture.

     E. One of the conditions of the Original Credit Agreement was that the
priority of the security interests in and liens on the Collateral to secure the
Credit Agreement Secured Obligations (as hereinafter defined) be senior to the
security interests


                                        3



in and liens on the Collateral to secure the Indenture Secured Obligations, in
the manner and to the extent provided in this Agreement. One of the conditions
of the Original TB Wood's Credit Agreement is that the priority of the security
interests in and liens on the TB Wood's Collateral to secure the TB Wood's
Credit Agreement Secured Obligations (as hereinafter defined) be senior to the
security interests in and liens on the TB Wood's Collateral to secure the Credit
Agreement Secured Obligations and the Indenture Secured Obligations, in the
manner and to the extent provided in this Agreement.

     F. The Senior Agent and the Collateral Agent entered into the Original
Intercreditor Agreement concerning the respective rights of the Senior Agent and
the Collateral Agent with respect to the priority of their respective security
interests in and liens on the Collateral. The TB Wood's Agent, Senior Agent and
the Collateral Agent (at the request of the TB Wood's Agent and the Senior
Agent) desire to amend and restate the Original Intercreditor Agreement solely
to clarify the respective rights of the TB Wood's Agent, Senior Agent and the
Collateral Agent with respect to the priority of their respective security
interests in and liens on the TB Wood's Collateral (this Agreement is not
intended to alter in any manner the respective rights of the Senior Agent and
the Collateral Agent with respect to the priority of their respective rights and
interests in the Collateral (including the TB Wood's Collateral) as set forth in
the Original Intercreditor Agreement.

     G. The terms of the Indenture permitted the Borrowers and the Guarantors to
enter into the Original Credit Agreement, subject to compliance with certain
conditions, and in connection therewith authorized and directed the Collateral
Agent to enter into the Original Intercreditor Agreement. The terms of the
Credit Agreement and the Indenture permit the Borrowers and the Guarantors to
enter into the TB Wood's Credit Agreement, subject to compliance with certain
conditions, and in connection therewith authorize and/or direct the Senior Agent
and Collateral Agent to enter into this Agreement.

     H. In order to induce the TB Wood's Agent to extend credit to the TB Wood's
Credit Parties and for purposes of certain conditions precedent and covenants of
the Original TB Wood's Credit Agreement, the TB Wood's Agent, the Senior Agent
and the Collateral Agent hereby agree to amend and restate the Original
Intercreditor Agreement as follows:

                                   ARTICLE I.

                                   DEFINITIONS

     Section 1.01 Terms Defined Above and in the Recitals. As used in this
Agreement, the following terms shall have the respective meanings indicated in
the opening paragraph hereof and in the above Recitals:

          "Additional Notes"
          "Agreement"


                                        4



          "BNY"
          "Borrower"
          "Collateral"
          "Collateral Agent"
          "Guarantees"
          "Guarantors"
          "Indenture"
          "Indenture Agreements"
          "Indenture Copyright Security Agreement"
          "Indenture Patent Security Agreement"
          "Indenture Secured Obligations"
          "Indenture Security Agreement"
          "Indenture Trademark Security Agreement"
          "Original Credit Agreement"
          "Original Intercreditor Agreement"
          "Original Senior Agent"
          "Original TB Wood's Agent"
          "Original TB Wood's Credit Agreement"
          "Parent"
          "Senior Agreements"
          "Senior Copyright Security Agreement"
          "Senior Patent Security Agreement"
          "Senior Security Agreement"
          "Senior Trademark Security Agreement"
          "TB Wood's"
          "TB Wood's Agreements"
          "TB Wood's Collateral"
          "TB Wood's Copyright Security Agreement"
          "TB Wood's Credit Parties"
          "TB Wood's Mortgages"
          "TB Wood's Patent Security Agreements"
          "TB Wood's Security Agreements"
          "TB Wood's Trademark Security Agreements"
          "Trustee"

     Section 1.02 Credit Agreement Definitions. All capitalized terms which are
used but not defined herein shall have the same meaning as in the Original
Credit Agreement, as in effect on the date hereof.

     Section 1.03 Other Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:

          "Capital Stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests,


                                        5



participations, rights or other equivalents (however designated) of corporate
stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of property of, the issuing
Person.

          "Cash Collateral" means any Collateral consisting of cash or cash
equivalents, any security entitlement (as defined in the UCC) and any financial
assets (as defined in the UCC).

          "Control Collateral" means any Collateral consisting of a certificated
security (as defined in the UCC), investment property (as defined in the UCC), a
deposit account (as defined in the UCC and any other Collateral as to which a
Lien may be perfected through possession or control by the secured party, or any
agent therefor.

          "Credit Agreement" means any Credit Agreement (as defined in the
Indenture), including one or more credit facilities (including the Original
Credit Agreement), in each case, as amended, restated, modified, renewed,
refunded, replaced, or refinanced in whole or in part from time to time,
including (a) any agreement extending the maturity of, consolidating, otherwise
restructuring (including adding Subsidiaries or affiliates of the Borrowers or
any other Persons as parties thereto) or refinancing all or any portion of the
Obligations or Commitments as those terms are defined in the Original Credit
Agreement, (b) any New Credit Facility and (c) any other agreement that itself
is a Credit Agreement hereunder) and whether by the same or any other agent,
lender, group of lenders or institutional investors and whether or not
increasing the amount of indebtedness that may be incurred thereunder.

          "Credit Agreement Secured Obligations" means all Obligations and all
other amounts owing or due under the terms of any Credit Agreement and the other
Senior Loan Documents, including any and all amounts payable under or in respect
of the Senior Loan Documents, as amended, restated, modified, renewed, refunded,
replaced, or refinanced in whole or in part from time to time, including
principal, premium, interest, fees, attorneys' fees, costs, charges, expenses,
reimbursement obligations, any obligation to post cash collateral in respect of
letters of credit or indemnities in respect thereof, indemnities, guarantees,
and all other amounts payable thereunder or in respect thereof (including, in
each case, all amounts accruing on or after the commencement of any Insolvency
Proceeding relating to any Borrower, any Guarantor or any other Person
irrespective of whether a claim for all or any portion of such amounts is
allowable or allowed in any Insolvency Proceeding).

          "Discharge of Credit Agreement Secured Obligations" means payment in
full in cash (or in the case of Letters of Credit and Bank Product Obligations,
the cash collateralization as required by the Senior Loan Documents) of the
Credit Agreement Secured Obligations (other than Credit Agreement Secured
Obligations consisting solely of contingent indemnification obligations under
the Senior Loan Documents) after or


                                        6



concurrently with termination of all commitments to extend credit under any
Credit Agreement.

          "Discharge of TB Wood's Credit Agreement Secured Obligations" means
payment in full in cash (or in the case of Letters of Credit, the cash
collateralization as required by the TB Wood's Loan Documents) of the TB Wood's
Credit Agreement Secured Obligations (other than TB Wood's Credit Agreement
Secured Obligations consisting solely of contingent indemnification obligations
under the TB Wood's Loan Documents) after or concurrently with termination of
all commitments to extend credit under the TB Wood's Credit Agreement.

          "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

          "Exercise Any Secured Creditor Remedies" or "Exercise of Secured
Creditor Remedies" means (a) the taking of any action to enforce or realize upon
any Lien, including the institution of any foreclosure proceedings or the
noticing of any public or private sale or other disposition pursuant to Article
9 of the applicable Uniform Commercial Code, (b) the exercise of any right or
remedy provided to a secured creditor or otherwise on account of a Lien under
the Senior Loan Documents, the Indenture Loan Documents, applicable law, in an
Insolvency Proceeding or otherwise, including the election to retain Collateral
in satisfaction of a Lien, (c) the taking of any action or the exercise of any
right or remedy in respect of the collection on, set off against, marshaling of,
or foreclosure on the Collateral or the Proceeds of Collateral, (d) the sale,
lease, license, or other disposition of all or any portion of the Collateral, by
private or public sale, other disposition or any other means permissible under
applicable law, (e) the solicitation of bids from third parties to conduct the
liquidation of all or a material portion of Collateral to the extent undertaken
and being diligently pursued in good faith to consummate the sale of such
Collateral within a commercially reasonable time, (f) the engagement or
retention of sales brokers, marketing agents, investment bankers, accountants,
appraisers, auctioneers or other third parties for the purposes of valuing,
marketing, promoting and selling the Collateral to the extent undertaken and
being diligently pursued in good faith to consummate the sale of such Collateral
within a commercially reasonable time, and (g) the exercise of any other
enforcement right relating to the Collateral (including the exercise of any
voting rights relating to any Capital Stock and including any right of
recoupment or set-off) whether under the Senior Loan Documents, the Indenture
Loan Documents, applicable law, in an Insolvency Proceeding or otherwise.

          "Indenture Loan Documents" shall mean the Indenture, the Notes, the
Indenture Agreements, and such other agreements, instruments and certificates as
defined or referred to in the Indenture.


                                        7



          "Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.

          "Lien" means any interest in an asset securing an obligation owed to,
or a claim by, any Person other than the owner of the asset, irrespective of
whether (a) such interest is based on the common law, statute, or contract, (b)
such interest is recorded or perfected, and (c) such interest is contingent upon
the occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
the term "Lien" includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also includes
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.

          "Lien Priority" means with respect to any Lien of the TB Wood's Agent,
the Senior Agent or the Collateral Agent in the Collateral, the order of
priority of such Lien as specified in Section 2.01.

          "Loan Documents" means the TB Wood's Loan Documents, the Senior Loan
Documents and the Indenture Loan Documents, as applicable.

          "Maximum Priority Debt Amount" means, as of any date of determination,
the principal amount (including the undrawn amount of all letters of credit) of
Credit Agreement Secured Obligations as of such date up to, but not in excess
of, $30,000,000, (a) minus the amount of all permanent commitment reductions
made from and after the date hereof under the effective Credit Agreement, but to
be reinstated at the time of entering into any New Credit Facility, and (b) plus
any interest, fees, Lender Group Expenses and indemnities payable under the
Senior Loan Documents or in respect thereof (including, in each case, all
amounts accruing on or after the commencement of any Insolvency Proceeding
relating to any Borrower, any Guarantor or any other Person irrespective of
whether a claim for all or any portion of such amounts is allowable or allowed
in any such Insolvency Proceeding).

          "Maximum Priority TB Wood's Debt Amount" means, as of any date of
determination, the principal amount (including the undrawn amount of all letters
of credit) of TB Wood's Credit Agreement Secured Obligations as of such date up
to, but not in excess of, $19,557,916.32, (a) minus the amount of all permanent
commitment reductions made from and after the date hereof under the effective TB
Wood's Credit Agreement, and (b) plus any interest, fees, Lender Group Expenses
and indemnities payable under the TB Wood's Loan Documents or in respect thereof
(including, in each case, all amounts accruing on or after the commencement of
any Insolvency Proceeding


                                        8



relating to any TB Wood's Credit Party or any other Person irrespective of
whether a claim for all or any portion of such amounts is allowable or allowed
in any such Insolvency Proceeding).

          "New Credit Facility" means one or more debt facilities entered into
by any Borrower or any of its Subsidiaries following a Discharge of Credit
Agreement Secured Obligations under the then effective Credit Agreement,
providing for revolving credit loans or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced, or refinanced in whole
or in part from time to time; provided that such debt facility qualifies as a
Credit Agreement (as defined in the Indenture).

          "Noteholders" means each of the holders of the Notes.

          "Party" means TB Wood's Agent, Senior Agent and Collateral Agent.

          "Payment Collateral" means all accounts, instruments, chattel paper,
letters of credit, deposit accounts, securities accounts, and payment
intangibles, together with all supporting obligations (as those terms are
defined in the UCC), in each case composing a portion of the Collateral.

          "Person" means any natural person, corporation, limited liability
company, limited partnership, general partnership, limited liability
partnership, joint venture, trust, land trust, business trust, or other
organization, irrespective of whether such organization is a legal entity, and
shall include a government and any agency or political subdivision thereof.

          "Proceeds" means (i) all "proceeds" as defined in Article 9 of the UCC
with respect to the Collateral, and (ii) whatever is recoverable or recovered
when Collateral is sold, exchanged, collected, or disposed of, whether
voluntarily or involuntarily.

          "Recovery" has the meaning set forth in Section 5.03.

          "Senior Agent" means the Original Senior Agent, together with all
successors, assigns, transferees, participants, replacement or refinancing
lenders, of the Original Senior Agent, including any Person designated as an
Agent under any Credit Agreement; provided, that for purposes of this Agreement,
the Collateral Agent and the TB Wood's Agent, prior to the termination of the
Original Credit Agreement and the TB Wood's Credit Agreement, respectively,
shall be entitled to deal only with the Original Senior Agent until such time as
the Original Senior Agent shall have assigned or otherwise transfer to another
Agent thereof all of its rights and obligations hereunder to such other Agent
pursuant to a written document which has been provided by the Original Senior
Agent or a designee to the Collateral Agent and the TB Wood's Agent and until
receipt thereof, Collateral Agent and the TB Wood's Agent shall not be liable
for any such dealings (including the turning over of any Collateral or proceeds
thereof to


                                        9



the Original Senior Agent at a time when any other Agent and not the Original
Senior Agent was entitled thereto).

          "Senior Lenders" means the lenders from time to time party to a Credit
Agreement.

          "Senior Loan Documents" means any Credit Agreement and the other Loan
Documents (as such term is defined in the Original Credit Agreement), or any
other security, collateral, ancillary or other document entered into in
connection with or related to any agreement that is a Credit Agreement, as such
documents may be amended, restated, modified, renewed, refunded, replaced, or
refinanced in whole or in part from time to time, in accordance with this
Agreement.

          "Standstill Notice" means a written notice from or on behalf of Senior
Agent to the Collateral Agent stating that an Event of Default has occurred and
stating that such written notice is a "Standstill Notice".

          "Standstill Period" has the meaning set forth in Section 2.03.

          "TB Wood's Agent" means the Original TB Wood's Agent, together with
all successors, assigns, transferees, participants, replacement or refinancing
lenders, of the Original TB Wood's Agent, including any Person designated as an
Agent under the TB Wood's Credit Agreement; provided, that for purposes of this
Agreement, the Senior Agent and the Collateral Agent, prior to the termination
of the Original TB Wood's Credit Agreement, shall be entitled to deal only with
the Original TB Wood's Agent until such time as the Original TB Wood's Agent
shall have assigned or otherwise transfer to another Agent thereof all of its
rights and obligations hereunder to such other Agent pursuant to a written
document which has been provided by the Original TB Wood's Agent or a designee
to the Senior Agent and the Collateral Agent and until receipt thereof, Senior
Agent and Collateral Agent shall not be liable for any such dealings (including
the turning over of any Collateral or proceeds thereof to the Original TB Wood's
Agent at a time when any other Agent and not the Original TB Wood's Agent was
entitled thereto).

          "TB Wood's Credit Agreement" means the TB Wood's Credit Agreement, as
amended, restated, modified, renewed, refunded, replaced, or refinanced in whole
or in part from time to time, including any agreement extending the maturity of,
consolidating, otherwise restructuring (including adding Subsidiaries or
affiliates of the TB Wood's Credit Parties or any other Persons as parties
thereto) or refinancing all or any portion of the Obligations or Commitments as
those terms are defined in the Original TB Wood's Credit Agreement, whether by
the same or any other agent, lender, group of lenders or institutional investors
and whether or not increasing the amount of indebtedness that may be incurred
thereunder.


                                       10



          "TB Wood's Credit Agreement Secured Obligations" means all Obligations
and all other amounts owing or due under the terms of the TB Wood's Credit
Agreement and the other TB Wood's Loan Documents, including any and all amounts
payable under or in respect of the TB Wood's Loan Documents, as amended,
restated, modified, renewed, refunded, replaced, or refinanced in whole or in
part from time to time, including principal, premium, interest, fees, attorneys'
fees, costs, charges, expenses, reimbursement obligations, any obligation to
post cash collateral in respect of letters of credit or indemnities in respect
thereof, indemnities, guarantees, and all other amounts payable thereunder or in
respect thereof (including, in each case, all amounts accruing on or after the
commencement of any Insolvency Proceeding relating to any TB Wood's Credit Party
or any other Person irrespective of whether a claim for all or any portion of
such amounts is allowable or allowed in any Insolvency Proceeding).

          "TB Wood's Lenders" means the lenders from time to time party to the
TB Wood's Credit Agreement.

          "TB Wood's Loan Documents" means the TB Wood's Credit Agreement and
the other Loan Documents (as such term is defined in the Original TB Wood's
Credit Agreement), or any other security, collateral, ancillary or other
document entered into in connection with or related to the TB Wood's Credit
Agreement, as such documents may be amended, restated, modified, renewed,
refunded, replaced, or refinanced in whole or in part from time to time, in
accordance with this Agreement.

          "UCC" means the Uniform Commercial Code as from time to time in effect
in the State of New York

          Rules of Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Article, section,
subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns.


                                       11



                                   ARTICLE II.

                                  LIEN PRIORITY

     Section 2.01 Agreement to Subordinate. Notwithstanding the date, time,
method, manner or order of grant, attachment, or perfection of any Liens granted
to the Collateral Agent, the Trustee, or the Noteholders in respect of all or
any portion of the Collateral, or of any Liens granted to the Senior Agent or
any Senior Lender in respect of all or any portion of the Collateral, or of any
Liens granted to the TB Wood's Agent or any TB Wood's Lender in respect of all
or any portion of the TB Wood's Collateral, or the order or time of filing or
recordation of any document or instrument for perfecting the Liens in favor of
TB Wood's Agent (or any TB Wood's Lender), Senior Agent (or any Senior Lender)
or the Collateral Agent (or the Trustee or any Noteholder) in any Collateral or
any provision of the applicable Uniform Commercial Code, any other applicable
law, the Indenture Loan Documents, the Senior Loan Documents, the TB Wood's Loan
Documents or any other circumstance whatsoever, the Collateral Agent, on behalf
of itself, the Trustee, and the Noteholders, the Senior Agent, on behalf of
itself, the Senior Lenders and the Bank Product Providers, and the TB Wood's
Agent, on behalf of itself and the TB Wood's Lenders, hereby agree that:

          (a) (i) any Lien in respect of all or any portion of the Collateral
now or hereafter held by or on behalf of the Collateral Agent, the Trustee, or
any Noteholder that secures all or any portion of the Indenture Secured
Obligations, shall in all respects be junior and subordinate to all Liens
granted to the Senior Agent and the Senior Lenders in the Collateral to secure
all or any portion of the Credit Agreement Secured Obligations up to (but not in
excess of) the Maximum Priority Debt Amount, and (ii) any Lien in respect of all
or any portion of the Collateral now or hereafter held by or on behalf of the
Senior Agent or any Senior Lender that secures all or any portion of the Credit
Agreement Secured Obligations in excess of the Maximum Priority Debt Amount,
shall in all respects be junior and subordinate to all Liens granted to the
Collateral Agent, the Trustee or any Noteholder in the Collateral to secure all
or any portion of the Indenture Secured Obligations, and

          (b) (i) any Lien in respect of all or any portion of the Collateral
now or hereafter held by or on behalf of the Senior Agent (or any Senior Lender)
that secures all or any portion of the Credit Agreement Secured Obligations up
to (but not in excess of) the Maximum Priority Debt Amount, shall in all
respects be senior and prior to all Liens granted to the Collateral Agent (or
the Trustee or any Noteholder) in the Collateral to secure all or any portion of
the Indenture Secured Obligations, and (ii) any Lien in respect of all or any
portion of the Collateral now or hereafter held by or on behalf of the
Collateral Agent, the Trustee, or any Noteholder that secures all or any portion
of the Indenture Secured Obligations, shall in all respects be senior and prior
to all Liens granted to the Senior Agent and the Senior Lenders in the
Collateral to secure all or any


                                       12



portion of the Credit Agreement Secured Obligations in excess of the Maximum
Priority Debt Amount,

          (c) (i) any Lien in respect of all or any portion of the TB Wood's
Collateral now or hereafter held by or on behalf of the Collateral Agent, the
Trustee, or any Noteholder that secures all or any portion of the Indenture
Secured Obligations, shall in all respects be junior and subordinate to all
Liens granted to the TB Wood's Agent and the TB Wood's Lenders in the TB Wood's
Collateral to secure all or any portion of the TB Wood's Credit Agreement
Secured Obligations up to (but not in excess of) the Maximum Priority TB Wood's
Debt Amount, and (ii) any Lien in respect of all or any portion of the TB Wood's
Collateral now or hereafter held by or on behalf of the TB Wood's Agent or any
TB Wood's Lender that secures all or any portion of the TB Wood's Credit
Agreement Secured Obligations in excess of the Maximum Priority TB Wood's Debt
Amount, shall in all respects be junior and subordinate to all Liens granted to
the Collateral Agent, the Trustee or any Noteholder in the TB Wood's Collateral
to secure all or any portion of the Indenture Secured Obligations.

          (d) (i) any Lien in respect of all or any portion of the TB Wood's
Collateral now or hereafter held by or on behalf of the TB Wood's Agent (or any
TB Wood's Lender) that secures all or any portion of the TB Wood's Credit
Agreement Secured Obligations up to (but not in excess of) the Maximum Priority
TB Wood's Debt Amount, shall in all respects be senior and prior to all Liens
granted to the Collateral Agent (or the Trustee or any Noteholder) in the TB
Wood's Collateral to secure all or any portion of the Indenture Secured
Obligations, and (ii) any Lien in respect of all or any portion of the TB Wood's
Collateral now or hereafter held by or on behalf of the Collateral Agent, the
Trustee, or any Noteholder that secures all or any portion of the Indenture
Secured Obligations, shall in all respects be senior and prior to all Liens
granted to the TB Wood's Agent and the TB Wood's Lenders in the TB Wood's
Collateral to secure all or any portion of the TB Wood's Credit Agreement
Secured Obligations in excess of the Maximum Priority TB Wood's Debt Amount.

          (e) (i) any Lien in respect of all or any portion of the TB Wood's
Collateral now or hereafter held by or on behalf of the Senior Agent or any
Senior Lender that secures all or any portion of the Credit Agreement Secured
Obligations, shall in all respects be junior and subordinate to all Liens
granted to the TB Wood's Agent and the TB Wood's Lenders in the TB Wood's
Collateral to secure all or any portion of the TB Wood's Credit Agreement
Secured Obligations and (ii) any Lien in respect of all or any portion of the TB
Wood's Collateral now or hereafter held by or on behalf of the TB Wood's Agent
(or any TB Wood's Lender) that secures all or any portion of the TB Wood's
Credit Agreement Secured Obligations, shall in all respects be senior and prior
to all Liens granted to the Senior Agent (or any Senior Lender) in the TB Wood's
Collateral to secure all or any portion of the Credit Agreement Secured
Obligations.


                                       13



          The Collateral Agent, for and on behalf of itself, the Trustee and the
Noteholders, acknowledges and agrees that, concurrently herewith, the Senior
Agent, for the benefit of itself and the Senior Lenders, has been granted Liens
upon all of the Collateral in which the Collateral Agent has been granted Liens
and the Collateral Agent hereby consents thereto. The Senior Agent acknowledges
and agrees that the Collateral Agent, for the benefit of itself, the Trustee,
and the Noteholders, has been granted Liens upon all of the Collateral and the
Senior Agent hereby consents thereto. The subordination of Liens (up to the
Maximum Priority Debt Amount) by the Collateral Agent, on behalf of itself, the
Trustee, and the Noteholders in favor of the Senior Agent and the Senior Lenders
herein shall not be deemed to subordinate the Collateral Agent's Liens to the
Liens of any other Person. The subordination of Liens (in excess of the Maximum
Priority Debt Amount) in favor of the Collateral Agent, for the benefit of
itself, the Trustee and the Noteholders herein shall not be deemed to
subordinate the Senior Agent's Liens to the Liens of any other Person.

          Each of the Senior Agent, on behalf of itself and the Senior Lenders,
and the Collateral Agent, for and on behalf of itself, the Trustee and the
Noteholders, acknowledges and agrees that, concurrently herewith, the TB Wood's
Agent, for the benefit of itself and the TB Wood's Lenders, has been granted
Liens upon the TB Wood's Collateral and the Senior Agent and the Collateral
Agent hereby consent thereto. The TB Wood's Agent acknowledges and agrees that
each of the Senior Agent, on behalf of itself and the Senior Lenders, and the
Collateral Agent, for the benefit of itself, the Trustee, and the Noteholders,
has been granted Liens upon the TB Wood's Collateral and the TB Wood's Agent
hereby consents thereto. The subordination of Liens (up to the Maximum Priority
TB Wood's Debt Amount) by the Collateral Agent, on behalf of itself, the
Trustee, and the Noteholders in favor of the TB Wood's Agent and the TB Wood's
Lenders herein shall not be deemed to subordinate the Collateral Agent's Liens
to the Liens of any other Person. The subordination of Liens (in excess of the
Maximum Priority TB Wood's Debt Amount) in favor of the Collateral Agent, for
the benefit of itself, the Trustee and the Noteholders herein shall not be
deemed to subordinate the TB Wood's Agent's Liens to the Liens of any other
Person.

     Section 2.02 Waiver of Right to Contest Liens. The Collateral Agent agrees,
on behalf of itself, the Trustee, and the Noteholders, that it and they shall
not (and hereby waives, on behalf of itself and the Noteholders any right to)
take any action to contest or challenge (or assist or support any other Person
in contesting or challenging), directly or indirectly, whether or not in any
proceeding (including in any Insolvency Proceeding), the validity, priority,
enforceability, or perfection of the Liens of the Senior Agent in respect of the
Collateral or the validity, priority, enforceability, or perfection of the Liens
of the TB Wood's Agent in respect of the TB Wood's Collateral . The Collateral
Agent, for itself, the Trustee, and on behalf of the Noteholders, agrees that
neither the Collateral Agent nor the Trustee will take any action that would
hinder any exercise of remedies undertaken by the Senior Agent under the Senior
Loan Documents or the exercise of remedies undertaken by the TB Wood's Agent
under the TB Wood's Loan Documents,


                                       14



including any public or private sale, lease, exchange, transfer, or other
disposition of the Collateral, whether by foreclosure or otherwise. The
Collateral Agent, for itself, the Trustee, and on behalf of the Noteholders,
hereby waives any and all rights it, the Trustee, or the Noteholders may have as
a junior lien creditor or otherwise to contest, protest, object to, interfere
with the manner in which (a) the Senior Agent seeks to enforce the Liens in any
portion of the Collateral (it being understood and agreed that the terms of this
Agreement shall govern with respect to the Collateral even if any portion of the
Liens securing the Credit Agreement Secured Obligations are avoided, disallowed,
set aside, or otherwise invalidated in any judicial proceeding or otherwise) or
(b) the TB Wood's Agent seeks to enforce the Liens in any portion of the TB
Wood's Collateral (it being understood and agreed that the terms of this
Agreement shall govern with respect to the TB Wood's Collateral even if any
portion of the Liens securing the TB Wood's Credit Agreement Secured Obligations
are avoided, disallowed, set aside, or otherwise invalidated in any judicial
proceeding or otherwise). The Senior Agent, for itself and the Senior Lenders,
agrees that it shall not (and hereby waives any right to) take any action to
contest or challenge (or assist or support any other Person in contesting or
challenging), directly or indirectly, whether or not in any proceeding
(including in any Insolvency Proceeding), the validity, priority,
enforceability, or perfection of the Liens of the Collateral Agent in respect of
the Collateral or the validity, priority, enforceability, or perfection of the
Liens of the TB Wood's Agent in respect of the TB Wood's Collateral. Following
the Discharge of Credit Agreement Secured Obligations, the Senior Agent, on
behalf of itself and the Senior Lenders, agrees that it will not take any action
that would hinder any exercise of remedies undertaken by the Collateral Agent,
the Trustee, or any Noteholder under the Indenture Loan Documents, including any
public or private sale, lease, exchange, transfer, or other disposition of the
Collateral, whether by foreclosure or otherwise. Following the Discharge of
Credit Agreement Secured Obligations, the Senior Agent, on behalf of itself and
the Senior Lenders, hereby waives any and all rights it may have as a junior
lien creditor or otherwise to contest, protest, object to, interfere with the
manner in which the Collateral Agent, the Trustee or any Noteholder seeks to
enforce the Liens in any portion of the Collateral (it being understood and
agreed that the terms of this Agreement shall govern with respect to the
Collateral even if any portion of the Liens securing the Indenture Secured
Obligations are avoided, disallowed, set aside, or otherwise invalidated in any
judicial proceeding or otherwise). Following the Discharge of TB Wood's Credit
Agreement Secured Obligations, the TB Wood's Agent, on behalf of itself and the
TB Wood's Lenders, agrees that it will not take any action that would hinder any
exercise of remedies undertaken by the Collateral Agent, the Trustee, or any
Noteholder under the Indenture Loan Documents or by the Senior Agent or Senior
Lenders under the Senior Loan Documents, including any public or private sale,
lease, exchange, transfer, or other disposition of the Collateral, whether by
foreclosure or otherwise. Following the Discharge of TB Wood's Credit Agreement
Secured Obligations, the TB Wood's Agent, on behalf of itself and the TB Wood's
Lenders, hereby waives any and all rights it may have as a junior lien creditor
or otherwise to contest, protest, object to, interfere with the manner in which
the Senior Agent, any Senior Lenders, Collateral Agent, the Trustee or any
Noteholder seeks to enforce the


                                       15



Liens in any portion of the Collateral (it being understood and agreed that the
terms of this Agreement shall govern with respect to the TB Wood's Collateral
even if any portion of the Liens securing the Indenture Secured Obligations or
the Credit Agreement Secured Obligations are avoided, disallowed, set aside, or
otherwise invalidated in any judicial proceeding or otherwise)

     Section 2.03 Remedies Standstill. At any time after the occurrence and
during the continuation of an Event of Default under any of the Loan Documents,
the Senior Agent may send a Standstill Notice to the Collateral Agent. The
Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees
that from and after the date of its receipt of any Standstill Notice, neither
the Collateral Agent nor the Trustee will Exercise Any Secured Creditor Remedies
(other than its rights under Section 2.04(d)) unless and until (a) the Senior
Agent has expressly waived or acknowledged the cure of the applicable Event of
Default in writing or the Discharge of the Credit Agreement Secured Obligations
shall have occurred, or (b) 120 days shall have elapsed from the date of the
Collateral Agent's receipt of such Standstill Notice. From and after the earlier
to occur of (i) the Collateral Agent's receipt of such waiver or cure notice, or
(ii) the elapsing of such 120th day period, any of the Collateral Agent, the
Trustee, or any Noteholder may commence to Exercise Any Secured Creditor
Remedies (subject to the provisions of this Agreement, including the immediately
succeeding sentence, Section 4.02 hereof and except with respect to any such
Collateral as to which the Senior Agent is diligently effecting the collection,
foreclosure, sale or other realization upon or disposition of). Notwithstanding
any other provision in this Agreement, none of the Collateral Agent, the Trustee
or any Noteholder may Exercise Any Secured Creditor Remedies prior to the
Discharge of Credit Agreement Secured Obligations (x) with respect to any item
of Collateral so long as Senior Agent has commenced and is diligently pursuing
its Exercise of Secured Creditor Remedies in respect of such items of
Collateral, and (y) without first providing Senior Agent at least 5 Business
Days' prior written notice. The Senior Agent may only send three (3) Standstill
Notices following the date hereof (it being understood and agreed as
clarification to the foregoing that no more than three (3) Standstill Notices
may be provided whether delivered hereunder or under any corresponding provision
of any other agreement similar hereto that may be delivered pursuant to Section
7.17 hereof) and no more than one (1) Standstill Notice may be given by the
Senior Agent in any consecutive 365-day period. The time period during which the
Collateral Agent is not permitted to Exercise any Secured Creditor Remedies
under this section is referred to herein as the "Standstill Period".

     Section 2.04 Exercise of Rights.

          (a) No Other Restrictions. Except as expressly set forth in this
Agreement, each of the Collateral Agent, the Trustee, the Noteholders, the
Senior Agent, the Senior Lenders, the TB Wood's Agent and the TB Wood's Lenders
shall have any and all rights and remedies it may have as a creditor under
applicable law, including the rights to exercise all rights and remedies in
foreclosure or otherwise with respect to any


                                       16



of the Collateral; provided, however, that any such exercise by the Collateral
Agent, the Trustee or the Noteholders, and any collection or sale of all or any
portion of the Collateral by the Collateral Agent, the Trustee or the
Noteholders, shall be subject to the Liens of the Senior Agent on the Collateral
to the extent provided in Section 2.01 and to the provisions of this Agreement
including Section 4.02 hereof. In exercising rights and remedies with respect to
the Collateral, the Senior Agent may enforce the provisions of the Senior Loan
Documents and exercise remedies thereunder, all in such order and in such manner
as it may determine in the exercise of its sole discretion. Such exercise and
enforcement shall include the sale, lease, license, or other disposition of all
or any portion of the Collateral by private or public sale or any other means
permissible under applicable law or any agreement; provided, that the Senior
Agent agrees to provide copies of any notices that it is required under
applicable law to deliver to Parent, any Borrower or any Guarantor to the
Collateral Agent and the TB Wood's Agent; provided further, that the failure to
provide any such copies to the Collateral Agent or TB Wood's Agent shall not
impair any of the Senior Agent's rights hereunder. In exercising rights and
remedies with respect to the Collateral, the Collateral Agent may enforce the
provisions of the Indenture Security Documents and exercise remedies thereunder,
all in such order and in such manner as it may determine in the exercise of its
sole discretion. Such exercise and enforcement shall include the sale, lease,
license, or other disposition of all or any portion of the Collateral by private
or public sale or any other means permissible under applicable law or any
agreement; provided, that the Collateral Agent agrees to provide copies of any
notices that it is required under applicable law to deliver to Parent, any
Borrower or any Guarantor to the Senior Agent and the TB Wood's Agent; provided
further, that the failure to provide any such copies to the Senior Agent or TB
Wood's Agent shall not impair any of the Collateral Agent's rights hereunder. In
exercising rights and remedies with respect to the TB Wood's Collateral, the TB
Wood's Agent may enforce the provisions of the TB Wood's Loan Documents and
exercise remedies thereunder, all in such order and in such manner as it may
determine in the exercise of its sole discretion. Such exercise and enforcement
shall include the sale, lease, license, or other disposition of all or any
portion of the TB Wood's Collateral by private or public sale or any other means
permissible under applicable law or any agreement; provided, that the TB Wood's
Agent agrees to provide copies of any notices that it is required under
applicable law to deliver to any TB Wood's Credit Party to the Senior Agent and
the Collateral Agent; provided further, that the failure to provide any such
copies to the Senior Agent or the Collateral Agent shall not impair any of the
TB Wood's Agent's rights hereunder.

          (b) Release of Liens. (i) (A) In the event of any such private or
public sale by Senior Agent or any Senior Lender, Collateral Agent agrees, on
behalf of itself, the Trustee, and the Noteholders, that such sale will be free
and clear of the Liens securing the Indenture Secured Obligations and, if the
sale or other disposition includes the Equity Interests in any Borrower or any
Guarantor, agrees to release the entities whose Equity Interests are sold from
all Indenture Secured Obligations so long as Senior Agent and Senior Lenders
also release the entities whose Equity Interests are sold from


                                       17



all Credit Agreement Secured Obligations. In furtherance thereof, Collateral
Agent agrees that it will execute any and all Lien releases or other documents
reasonably requested by Senior Agent in connection therewith, so long as the
proceeds from such sale or other disposition of the Collateral are applied in
accordance with the terms of this Agreement. (B) In the event of any such
private or public sale by TB Wood's Agent or any TB Wood's Lender, Collateral
Agent agrees, on behalf of itself, the Trustee, and the Noteholders, and Senior
Agent agrees, on behalf of itself and the Senior Lenders, that such sale will be
free and clear of the Liens securing the Indenture Secured Obligations and the
Credit Agreement Secured Obligations, as applicable, and, if the sale or other
disposition includes the Equity Interests in any TB Wood's Credit Party, agrees
to release the entities whose Equity Interests are sold from all Indenture
Secured Obligations and the Credit Agreement Secured Obligations, as applicable,
so long as TB Wood's Agent and TB Wood's Lenders also release the entities whose
Equity Interests are sold from all TB Wood's Credit Agreement Secured
Obligations. In furtherance thereof, each of Collateral Agent and Senior Agent
agrees that it will execute any and all Lien releases or other documents
reasonably requested by TB Wood's Agent in connection therewith, so long as the
proceeds from such sale or other disposition of the TB Wood's Collateral are
applied in accordance with the terms of this Agreement.

          (ii) (A) If and to the extent that the Senior Agent or its designee
releases any of its Liens on any Collateral in connection with the sale, lease,
exchange, transfer or other disposition of the Collateral in accordance with the
terms of this Agreement, the Liens, if any, of the Collateral Agent, for itself
or for the benefit of the Trustee and the Noteholders, on such Collateral shall
be automatically, unconditionally and simultaneously released and the Collateral
Agent, for itself and for each of the Trustee and the Noteholders, promptly
shall execute and deliver to the Senior Agent such termination statements,
releases and other documents as the Senior Agent may request to effectively
confirm such release in respect of such payments. Notwithstanding the foregoing,
the obligation of the Collateral Agent to release its Lien on such Collateral
shall arise only if such sale, lease, exchange, transfer or other disposition of
the Collateral is effected in connection with an exercise of remedies or is
permitted by (or permitted pursuant to a waiver of or consent to a transaction
otherwise prohibited by) the Senior Loan Documents and the terms hereof. (B) If
and to the extent that the TB Wood's Agent or its designee releases any of its
Liens on any TB Wood's Collateral in connection with the sale, lease, exchange,
transfer or other disposition of the TB Wood's Collateral in accordance with the
terms of this Agreement, the Liens, if any, of the Collateral Agent, for itself
or for the benefit of the Trustee and the Noteholders, and the Liens, if any, of
the Senior Agent, for itself or for the benefit of the Senior Lenders on such TB
Wood's Collateral shall be automatically, unconditionally and simultaneously
released and the Collateral Agent, for itself and for each of the Trustee and
the Noteholders, and the Senior Agent, for itself or for the benefit of the
Senior Lenders, promptly shall execute and deliver to the TB Wood's Agent such
termination statements, releases and other documents as the TB Wood's Agent may
request to effectively confirm such release in respect of such payments.
Notwithstanding the foregoing, the


                                       18



obligation of the Collateral Agent and Senior Agent to release its Lien on such
TB Wood's Collateral shall arise only if such sale, lease, exchange, transfer or
other disposition of the TB Wood's Collateral is effected in connection with an
exercise of remedies or is permitted by (or permitted pursuant to a waiver of or
consent to a transaction otherwise prohibited by) the TB Wood's Loan Documents
and the terms hereof.

          (iii) In the event of any private or public sale by Collateral Agent
permitted by the terms of this Agreement, Senior Agent agrees, on behalf of
itself and the Lender Group, that such sale will be free and clear of the Liens
securing the Senior Secured Obligations and, if the sale or other disposition
includes the Equity Interests in any Borrower or any Guarantor, agrees to
release the entities whose Equity Interests are sold from all Senior Secured
Obligations so long as Collateral Agent, the Trustee and the Noteholders also
release the entities whose Equity Interests are sold from all Indenture Secured
Obligations. In furtherance thereof, Senior Agent agrees that it will execute
any and all Lien releases or other documents reasonably requested by Collateral
Agent in connection therewith, so long as the proceeds from such sale or other
disposition of the Collateral are applied in accordance with the terms of this
Agreement.

          (iv) If and to the extent that the Collateral Agent or its designee
releases any of its Liens on any Collateral in connection with the sale, lease,
exchange, transfer or other disposition of the Collateral in accordance with the
terms of this Agreement, the Liens, if any, of the Senior Agent, for itself or
for the benefit of the Lender Group, on such Collateral shall be automatically,
unconditionally and simultaneously released and the Senior Agent, for itself and
for the Lender Group, promptly shall execute and deliver to the Collateral Agent
such termination statements, releases and other documents as the Collateral
Agent may request to effectively confirm such release in respect of such
payments. Notwithstanding the foregoing, the obligation of the Senior Agent to
release its Lien on such Collateral shall arise only if such sale, lease,
exchange, transfer or other disposition of the Collateral is effected in
connection with an exercise of remedies or is permitted by (or permitted
pursuant to a waiver of or consent to a transaction otherwise prohibited by) the
Indenture Documents and the terms hereof.

          (c) Except as provided in Section 3.01, the Collateral Agent, the
Trustee and the Noteholders may exercise, and nothing herein shall constitute a
waiver of, any right it may have at law or equity to receive notice of, or to
commence or join with any creditor in commencing any Insolvency Proceeding or to
join or participate in, any action or proceeding or other activity described in
Section 3.01; provided, however, that exercise of any such right by the
Collateral Agent shall be subject to all of the terms and conditions of this
Agreement, including the obligation to turn over (x) Collateral and Proceeds to
the Senior Agent for application to the Credit Agreement Secured Obligations as
provided in Section 4.02 or (y) TB Wood's Collateral and Proceeds


                                       19



thereof to the TB Wood's Agent for application to the TB Wood's Credit Agreement
Secured Obligations as provided in Section 4.02.

          (d) The Collateral Agent may make such demands or file such claims in
respect of the Indenture Secured Obligations as may be necessary to prevent the
waiver or bar of such claims under applicable statutes of limitations or other
statutes, court orders or rules of procedure (including, without limitation, the
filing of any proofs of claim in any Insolvency Proceeding), but except as
provided in this Section 2.04 or otherwise in this Agreement, the Collateral
Agent shall not take any actions restricted by this Agreement until the
Discharge of Credit Agreement Secured Obligations shall have occurred.

          (e) Following the Discharge of Credit Agreement Secured Obligations,
the other provisions of this Section 2.04 shall apply to the Collateral Agent,
for the benefit of itself, the Trustee and the Noteholders as if it were the
Senior Agent and the Senior Agent was the Collateral Agent, mutatis mutandis.

                                  ARTICLE III.

                             ACTIONS OF THE PARTIES

     Section 3.01 Limitation on Certain Actions. Notwithstanding any other
provision hereof, during any Standstill Period prior to the date that the
Discharge of Credit Agreement Secured Obligations occurs, the Collateral Agent
will not:

          (a) commence receivership or foreclosure proceedings against any
Borrower, any Guarantor, or any Collateral;

          (b) make demands or file claims in respect of the Indenture Secured
Obligations except as permitted under Section 2.04(d) hereof;

          (c) sell, collect, transfer or dispose of any Collateral or Proceeds;
or

          (d) notify third party account debtors to make payment directly to it
or any of its agents or other Persons acting on its behalf.

     Section 3.02 Agent for Perfection. Each of the Senior Agent, on behalf of
itself and the Senior Lenders, the TB Wood's Agent, on behalf of itself and the
TB Wood's Lenders, and the Collateral Agent, for and on behalf of itself, the
Trustee, and each Noteholder, as applicable, agree to hold all Control
Collateral and Cash Collateral that is part of the Collateral in its respective
possession, custody, or control (or in the possession, custody, or control of
agents or bailees for either, as applicable) as agent for the other solely for
the purpose of perfecting the security interest granted to each in such Control
Collateral or Cash Collateral subject to the terms and conditions of this
Section 3.02. None of the Senior Agent, the Senior Lenders, the TB Wood's Agent,
the TB


                                       20



Wood's Lenders, the Collateral Agent, the Trustee, or the Noteholders, as
applicable, shall have any obligation whatsoever to the others to assure that
the Control Collateral is genuine or owned by any Borrower, any Guarantor or any
other Person or to preserve rights or benefits of any Person. The duties or
responsibilities of the Senior Agent, TB Wood's Agent and the Collateral Agent
under this Section 3.02 are and shall be limited solely to holding or
maintaining control of the Control Collateral and the Cash Collateral as agent
for the other for purposes of perfecting the Lien held by the Collateral Agent,
TB Wood's Agent or the Senior Agent, as applicable. The Senior Agent is not and
shall not be deemed to be a fiduciary of any kind for the TB Wood's Agent, TB
Wood's Lenders, Collateral Agent, the Trustee, the Noteholders or any other
Person. The Collateral Agent is not and shall not be deemed to be a fiduciary of
any kind for the TB Wood's Agent, TB Wood's Lenders, Senior Agent, any Senior
Lender or any other Person. The TB Wood's Agent is not and shall not be deemed
to be a fiduciary of any kind for the Senior Agent, Senior Lenders, Collateral
Agent, the Trustee, the Noteholders or any other Person. In the event that (a)
any of the Collateral Agent, the Trustee, or any Noteholder receives any
Proceeds or Collateral in contravention of the Lien Priority, (b) the Senior
Agent or any Senior Lender receives any Proceeds or Collateral in contravention
of the Lien Priority, or (c) the TB Wood's Agent or any TB Wood's Lender
receives any Proceeds or Collateral in contravention of the Lien Priority, it
shall promptly pay over such Proceeds or Collateral to (i) in the case of clause
(a), the Senior Agent or TB Wood's Agent, as applicable, (ii) in the case of
clause (b), the Collateral Agent or TB Wood's Agent, as applicable, and (iii) in
the case of clause (c), the Collateral Agent or Senior Agent, as applicable, in
the same form as received with any necessary endorsements, for application in
accordance with the provisions of Section 4.02 of this Agreement.

                                   ARTICLE IV.

                       NOTICES AND APPLICATION OF PROCEEDS

     Section 4.01 Notices of Exercise. Concurrently with any exercise by the
Collateral Agent of any of its rights and remedies under the Indenture Loan
Documents following the occurrence of any default under the Indenture Loan
Documents, the Collateral Agent shall give notice of such exercise to the Senior
Agent and TB Wood's Agent and shall only exercise such rights or remedies in a
manner consistent with the terms of this Agreement. Concurrently with any
exercise by the Senior Agent of any of its rights and remedies under the Senior
Loan Documents following the occurrence of any default under the Senior Loan
Documents, the Senior Agent shall give notice of such exercise to the Collateral
Agent and TB Wood's Agent and shall only exercise such rights or remedies in a
manner consistent with the terms of this Agreement. Concurrently with any
exercise by the TB Wood's Agent of any of its rights and remedies under the TB
Wood's Loan Documents following the occurrence of any default under the TB
Wood's Loan Documents, the TB Wood's Agent shall give notice of such exercise to
the Collateral Agent and Senior Agent and shall only exercise such rights or
remedies in a manner consistent with the terms of this Agreement.


                                       21



     Section 4.02 Application of Proceeds.

          (a) Revolving Nature of Credit Agreement Secured Obligations. As long
as the Senior Agent is not exercising any of its remedies as a secured creditor
under the Senior Loan Documents and including during any Standstill Period, the
Senior Agent may apply any and all of the proceeds of the Collateral consisting
of accounts receivable, other rights to payment or Cash Collateral in accordance
with the provisions of the Senior Loan Documents, subject to the provisions of
this Agreement, including Sections 3.02 and 4.02 hereof. The Collateral Agent,
for and on behalf of itself, the Trustee, and the Noteholders, expressly
acknowledges and agrees that (a) any such application of the proceeds of
accounts receivable, other rights to payment or Cash Collateral or the release
of any Lien by the Senior Agent upon any portion of the Collateral in connection
with a Permitted Disposition (as that term is defined in the Credit Agreement)
shall not be considered to be the exercise of remedies under this Agreement; and
(b) all Proceeds or Cash Collateral received by Senior Agent in connection
therewith may be applied, reversed, reapplied, credited or reborrowed, in whole
or in part, as Credit Agreement Secured Obligations without reducing the Maximum
Priority Debt Amount.

          (b) Turnover of Cash Collateral After Payment. Upon the Discharge of
the Credit Agreement Secured Obligations, the Senior Agent shall deliver to the
Collateral Agent or execute such documents as the Collateral Agent may
reasonably request to cause the Collateral Agent to have control over any Cash
Collateral or Control Collateral still in Senior Agent's or its designee's
possession, custody or control in the same form as received, with any necessary
endorsements or as a court of competent jurisdiction may otherwise direct, to be
applied by the Collateral Agent to the Indenture Secured Obligations. Upon the
Discharge of the TB Wood's Credit Agreement Secured Obligations, the TB Wood's
Agent shall deliver to the Senior Agent or execute such documents as the Senior
Agent may reasonably request to cause the Senior Agent to have control over any
Cash Collateral or Control Collateral still in TB Wood's Agent's or its
designee's possession, custody or control in the same form as received, with any
necessary endorsements or as a court of competent jurisdiction may otherwise
direct, to be applied in accordance with the terms hereof. Proceeds of any
exercise by the Senior Agent or the Collateral Agent, as applicable, of any of
their respective secured creditor rights or remedies under any of the Loan
Documents, under applicable law, or otherwise with respect to any Collateral
(other than TB Wood's Collateral until the Discharge of TB Wood's Credit
Agreement Secured Obligations) or Proceeds, shall be (a) until the Discharge of
the Credit Agreement Secured Obligations, retained by the Senior Agent or
promptly turned over by the Collateral Agent, the Trustee, or any Noteholder, as
the case may be, to the Senior Agent in the same form as received, with any
necessary endorsements, (b) after the Discharge of the Credit Agreement Secured
Obligations and until all Indenture Secured Obligations have been paid in full
in cash, retained by the Collateral Agent or promptly turned over by the Senior
Agent to the Collateral Agent in the same form as received, with any necessary
endorsements, and (c) if there are any amounts still due or any obligations
outstanding to the Senior Agent under the Senior


                                       22



Loan Documents in excess of the Maximum Priority Debt Amount after the payment
in full in cash of all Indenture Secured Obligations, shall be retained by the
Senior Agent or promptly turned over by the Collateral Agent to the Senior Agent
in the same form as received, with any necessary endorsements. Until the
Discharge of TB Wood's Credit Agreement Secured Obligations, proceeds of any
exercise by the TB Wood's Agent, Senior Agent or the Collateral Agent, as
applicable, of any of their respective secured creditor rights or remedies under
any of the Loan Documents, under applicable law, or otherwise with respect to
any TB Wood's Collateral or Proceeds thereof, shall be (a) retained by the TB
Wood's Agent or promptly turned over by the Senior Agent, Senior Lenders,
Collateral Agent, the Trustee, or any Noteholder, as the case may be, to the TB
Wood's Agent in the same form as received, with any necessary endorsements.

          (c) Application of Proceeds. (i) Except as set forth in clause (ii)
below, the Senior Agent and the Collateral Agent hereby agree that all
Collateral and all Proceeds received by either of them upon the Exercise Of
Secured Creditor Remedies shall be applied,

          first, to the payment of costs and expenses of the Senior Agent or the
Collateral Agent, as applicable, in connection with such exercise,

          second, to the payment of the Credit Agreement Secured Obligations up
to (but not in excess of) the Maximum Priority Debt Amount,

          third, to the payment of the Indenture Secured Obligations, and

          fourth, to the payment of any Credit Agreement Secured Obligations in
excess of the Maximum Priority Debt Amount.

In exercising remedies, whether as a secured creditor or otherwise, the Senior
Agent shall have no obligation or liability to the Collateral Agent, the
Trustee, or to any Noteholder and the Collateral Agent shall have no obligation
or liability to the Senior Agent or any Senior Lender regarding the adequacy of
any Proceeds or for any action or omission save and except solely an action or
omission that breaches the express obligations undertaken by each Party under
the terms of this Agreement.

          (ii) The TB Wood's Agent, the Senior Agent and the Collateral Agent
hereby agree that all TB Wood's Collateral and all Proceeds thereof received by
either of them prior to the Discharge of the TB Wood's Credit Agreement Secured
Obligations upon the Exercise Of Secured Creditor Remedies shall be applied,

          first, to the payment of costs and expenses of the TB Wood's Agent,
Senior Agent or the Collateral Agent, as applicable, in connection with such
exercise,

          second, to the payment of the TB Wood's Credit Agreement Secured
Obligations up to (but not in excess of) the Maximum Priority TB Wood's Debt
Amount,


                                       23



          third, to the payment of the Credit Agreement Secured Obligations up
to (but not in excess of) the Maximum Priority Debt Amount,

          fourth, to the payment of the Indenture Secured Obligations,

          fifth, to the payment of any TB Wood's Credit Agreement Secured
Obligations in excess of the Maximum Priority TB Wood's Debt Amount, and

          sixth, to the payment of any Credit Agreement Secured Obligations in
excess of the Maximum Priority Debt Amount.

In exercising remedies, whether as a secured creditor or otherwise, (x) the TB
Wood's Agent shall have no obligation or liability to the Senior Agent, the
Senior Lenders, the Collateral Agent, the Trustee, or to any Noteholder, (y) the
Senior Agent shall have no obligation or liability to the TB Wood's Agent, the
TB Wood's Lenders, the Collateral Agent, the Trustee, or to any Noteholder and
(z) the Collateral Agent shall have no obligation or liability to the TB Wood's
Agent, the TB Wood's Lender, Senior Agent or any Senior Lender regarding the
adequacy of any Proceeds or for any action or omission save and except solely an
action or omission that breaches the express obligations undertaken by each
Party under the terms of this Agreement.

     Section 4.03 Specific Performance. Each of the Senior Agent, the TB Wood's
Agent and the Collateral Agent is hereby authorized to demand specific
performance of this Agreement, whether or not any TB Wood's Credit Party,
Borrower or any Guarantor shall have complied with any of the provisions of any
of the Loan Documents, at any time when the other shall have failed to comply
with any of the provisions of this Agreement applicable to it; provided,
however, the remedy of specific performance shall not be available, and the
asserting party shall be free to assert any and all legal defenses it may
possess, if such remedy would result in, or otherwise constitute, a violation of
the Employee Retirement Income Security Act of 1974, as amended. Each of the
Senior Agent, the TB Wood's Agent and the Collateral Agent hereby irrevocably
waives any defense based on the adequacy of a remedy at law, which might be
asserted as a bar to such remedy of specific performance.

                                   ARTICLE V.

                   INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

     Section 5.01 Notice of Acceptance and Other Waivers.

          (a) All Credit Agreement Secured Obligations at any time made or
incurred by any Borrower or any Guarantor shall be deemed to have been made or
incurred in reliance upon this Agreement, and the Collateral Agent, on behalf of
itself, the Trustee, and the Noteholders, and TB Wood's Agent, on behalf of
itself and the TB Wood's Lenders, hereby waive (i) notice of acceptance, or
proof of reliance, by the


                                       24



Senior Agent of this Agreement, and (ii) notice of the existence, renewal,
extension, accrual, creation, or non-payment of all or any part of the Credit
Agreement Secured Obligations. Neither the Senior Agent, nor any Senior Lender,
nor any of their respective affiliates, directors, officers, employees, or
agents shall be liable for failure to demand, collect, or realize upon any of
the Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral or to take any other action
whatsoever with regard to the Collateral or any part thereof, except as
specifically provided in this Agreement. If the Senior Agent honors (or fails to
honor) a request by a Borrower for an extension of credit pursuant to the Credit
Agreement or any of the Senior Loan Documents, whether Senior Agent has
knowledge that the honoring of (or failure to honor) any such request would
constitute a default under the terms of the Indenture or any Indenture Loan
Document or an act, condition, or event that, with the giving of notice or the
passage of time, or both, would constitute such a default, or if Senior Agent
otherwise should exercise any of its contractual rights or remedies under the
Senior Loan Documents (subject to the express terms and conditions hereof),
Senior Agent shall not have any liability whatsoever to the TB Wood's Agent, any
TB Wood's Lender, the Collateral Agent, the Trustee or any Noteholder as a
result of such action, omission, or exercise (so long as any such exercise does
not breach the express terms and provisions of this Agreement). The Senior Agent
will be entitled to manage and supervise its loans and extensions of credit
under the Credit Agreement and other Senior Loan Documents as the Senior Agent
may, in its sole discretion, deem appropriate, and the Senior Agent may manage
its loans and extensions of credit without regard to any rights or interests
that the TB Wood's Agent, any TB Wood's Lender, the Collateral Agent, the
Trustee, or any of the Noteholders have in the Collateral or otherwise except as
otherwise expressly set forth in this Agreement. The Collateral Agent, on behalf
of itself, the Trustee, and the Noteholders, and the TB Wood's Agent, on behalf
of itself and the TB Wood's Lenders, agree that the Senior Agent shall not incur
any liability as a result of a sale, lease, license, or other disposition of the
Collateral, or any part thereof, pursuant to the Senior Loan Documents conducted
in accordance with mandatory provisions of applicable law.

          (b) All TB Wood's Credit Agreement Secured Obligations at any time
made or incurred by any TB Wood's Credit Party shall be deemed to have been made
or incurred in reliance upon this Agreement, and each of the Collateral Agent,
on behalf of itself, the Trustee, and the Noteholders, and the Senior Agent, on
behalf of itself and the Senior Lenders, hereby waives (i) notice of acceptance,
or proof of reliance, by the TB Wood's Agent of this Agreement, and (ii) notice
of the existence, renewal, extension, accrual, creation, or non-payment of all
or any part of the TB Wood's Credit Agreement Secured Obligations. Neither the
TB Wood's Agent, nor any TB Wood's Lender, nor any of their respective
affiliates, directors, officers, employees, or agents shall be liable for
failure to demand, collect, or realize upon any of the TB Wood's Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any TB Wood's Collateral or to take any other action whatsoever with
regard to the TB Wood's Collateral or any part thereof, except as specifically
provided in this Agreement. If the TB Wood's Agent honors (or fails to honor) a
request by a TB Wood's Credit Party for


                                       25



an extension of credit pursuant to the TB Wood's Credit Agreement or any of the
TB Wood's Loan Documents, whether TB Wood's Agent has knowledge that the
honoring of (or failure to honor) any such request would constitute a default
under the terms of the Indenture, any Indenture Loan Document, the Credit
Agreement, any Senior Loan Document or an act, condition, or event that, with
the giving of notice or the passage of time, or both, would constitute such a
default, or if TB Wood's Agent otherwise should exercise any of its contractual
rights or remedies under the TB Wood's Loan Documents (subject to the express
terms and conditions hereof), TB Wood's Agent shall not have any liability
whatsoever to the Senior Agent, Senior Lenders, Collateral Agent, the Trustee or
any Noteholder as a result of such action, omission, or exercise (so long as any
such exercise does not breach the express terms and provisions of this
Agreement). The TB Wood's Agent will be entitled to manage and supervise its
loans and extensions of credit under the TB Wood's Credit Agreement and other TB
Wood's Loan Documents as the TB Wood's Agent may, in its sole discretion, deem
appropriate, and the TB Wood's Agent may manage its loans and extensions of
credit without regard to any rights or interests that the Senior Agent, Senior
Lenders, Collateral Agent, the Trustee, or any of the Noteholders have in the TB
Wood's Collateral or otherwise except as otherwise expressly set forth in this
Agreement. Each of the Collateral Agent, on behalf of itself, the Trustee, and
the Noteholders, and the Senior Agent, on behalf of itself and the Senior
Lenders, agrees that the TB Wood's Agent shall not incur any liability as a
result of a sale, lease, license, or other disposition of the TB Wood's
Collateral, or any part thereof, pursuant to the TB Wood's Loan Documents
conducted in accordance with mandatory provisions of applicable law.

          (c) None of Collateral Agent, Trustee, or any of the Noteholders nor
any of their affiliates, directors, officers, employees, or agents shall be
liable for failure to demand, collect, or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral or to take any other action whatsoever with regard to
the Collateral or any part thereof, except as specifically provided in this
Agreement. If Collateral Agent, Trustee, or any of the Noteholders should
exercise any of their contractual rights or remedies under the Indenture
Agreements (subject to the express terms and conditions hereof), none of
Collateral Agent, Trustee, or any of the Noteholders shall have any liability
whatsoever to the Senior Agent as a result of such action, omission, or exercise
(so long as any such exercise does not breach the express terms and provisions
of this Agreement). The Collateral Agent, Trustee, and Noteholders will be
entitled to manage and supervise the Parent's obligations under the Indenture
Agreements as they may, in their sole discretion, deem appropriate, and they may
manage such obligations without regard to any rights or interests that the
Senior Agent or the TB Wood's Agent has in the Collateral or otherwise except as
otherwise expressly set forth in this Agreement. Subject to Section 2.03, the
Senior Agent and the TB Wood's Agent agree that none of the Collateral Agent,
the Trustee, or the Noteholders shall incur any liability as a result of a sale,
lease, license, or other disposition of the Collateral, or any part thereof,
pursuant to the Indenture Agreements conducted in accordance with mandatory
provisions of applicable law.


                                       26



     Section 5.02 Modifications to Senior Loan Documents and Indenture
Agreements.

          (a) The Collateral Agent, on behalf of itself, the Trustee, and the
Noteholders, and the TB Wood's Agent, on behalf of itself and the TB Wood's
Lenders, hereby agree that, without affecting the obligations of the TB Wood's
Agent, the TB Wood's Lenders, the Collateral Agent, the Trustee and the
Noteholders hereunder, the Senior Agent, on behalf of itself and the Senior
Lenders, may, at any time and from time to time, in its sole discretion without
the consent of or notice to the TB Wood's Agent, the TB Wood's Lenders, the
Collateral Agent, the Trustee or any Noteholder (except to the extent such
notice or consent is required pursuant to the express provisions of this
Agreement), and without incurring any liability to the TB Wood's Agent, the TB
Wood's Lenders, the Collateral Agent, the Trustee or any Noteholder or impairing
or releasing the subordination provided for herein, amend, restate, supplement,
replace, refinance, extend, consolidate, restructure, or otherwise modify the
Credit Agreement or any of the Senior Loan Documents in any manner whatsoever,
including, to

               (i) change the manner, place, time, or terms of payment or renew
          or alter, all or any of the Credit Agreement Secured Obligations or
          otherwise amend, restate, supplement, or otherwise modify in any
          manner, or grant any waiver or release with respect to, all or any
          part of the Credit Agreement Secured Obligations or any of the Senior
          Loan Documents,

               (ii) retain or obtain a Lien on any property of any Person to
          secure any of the Credit Agreement Secured Obligations, and in that
          connection to enter into any additional Senior Loan Documents,

               (iii) amend, or grant any waiver, compromise or release with
          respect to, or consent to any departure from, any guaranty or other
          obligations of any Person obligated in any manner under or in respect
          of the Credit Agreement Secured Obligations,

               (iv) release its Lien on any Collateral or other property,

               (v) exercise or refrain from exercising any rights against any
          Borrower, any Guarantor or any other Person,

               (vi) retain or obtain the primary or secondary obligation of any
          other Person with respect to any of the Credit Agreement Secured
          Obligations, and

               (vii) otherwise manage and supervise the Credit Agreement Secured
          Obligations as the Senior Agent shall deem appropriate.


                                       27



          (b) The Senior Agent, on behalf of itself and the Senior Lenders, and
the TB Wood's Agent, on behalf of itself and the TB Wood's Lenders, hereby agree
that Collateral Agent, on behalf of itself, the Trustee, and the Noteholders
may, at any time and from time to time, in its sole discretion without the
consent of or notice to the TB Wood's Agent or the Senior Agent (except to the
extent such notice or consent is required pursuant to the express provisions of
this Agreement), and without incurring any liability to the TB Wood's Agent or
the Senior Agent or impairing or releasing the subordination provided for
herein, amend, restate, supplement, replace, refinance, extend, consolidate,
restructure, or otherwise modify the Indenture Agreements in any manner
whatsoever, provided, however, that (x) in no event shall Collateral Agent, the
Trustee, or any Noteholder obtain a Lien on any assets of any Borrower or any
Guarantor not constituting Collateral unless (i) Senior Agent also obtains a
Lien on such assets either before or at the same time as Collateral Agent, the
Trustee or such Noteholder or (ii) Senior Agent declines in a writing to
Collateral Agent to obtain a Lien on such assets or (y) in no event shall
Collateral Agent, the Trustee, or any Noteholder obtain a Lien on any assets of
any TB Wood's Credit Party not constituting TB Wood's Collateral unless (i) TB
Wood's Agent also obtains a Lien on such assets either before or at the same
time as Collateral Agent, the Trustee or such Noteholder or (ii) TB Wood's Agent
declines in a writing to Collateral Agent to obtain a Lien on such assets.

          (c) Each of the Collateral Agent, on behalf of itself, the Trustee,
and the Noteholders, and the Senior Agent, on behalf of itself and the Senior
Lenders, hereby agrees that, without affecting the obligations of the Senior
Agent, the Senior Lenders, the Collateral Agent, the Trustee and the Noteholders
hereunder, the TB Wood's Agent, on behalf of itself and the TB Wood's Lenders,
may, at any time and from time to time, in its sole discretion without the
consent of or notice to the Senior Agent, the Senior Lenders, the Collateral
Agent, the Trustee or any Noteholder (except to the extent such notice or
consent is required pursuant to the express provisions of this Agreement), and
without incurring any liability to the Senior Agent, the Senior Lenders, the
Collateral Agent, the Trustee or any Noteholder or impairing or releasing the
subordination provided for herein, amend, restate, supplement, replace,
refinance, extend, consolidate, restructure, or otherwise modify the TB Wood's
Credit Agreement or any of the TB Wood's Loan Documents in any manner
whatsoever, including, to

               (i) change the manner, place, time, or terms of payment or renew
          or alter, all or any of the TB Wood's Credit Agreement Secured
          Obligations or otherwise amend, restate, supplement, or otherwise
          modify in any manner, or grant any waiver or release with respect to,
          all or any part of the TB Wood's Credit Agreement Secured Obligations
          or any of the TB Wood's Loan Documents,

               (ii) retain or obtain a Lien on any property of any Person to
          secure any of the TB Wood's Credit Agreement Secured Obligations, and


                                       28



          in that connection to enter into any additional TB Wood's Loan
          Documents,

               (iii) amend, or grant any waiver, compromise or release with
          respect to, or consent to any departure from, any guaranty or other
          obligations of any Person obligated in any manner under or in respect
          of the TB Wood's Credit Agreement Secured Obligations,

               (iv) release its Lien on any TB Wood's Collateral or other
          property,

               (v) exercise or refrain from exercising any rights against any TB
          Wood's Credit Party or any other Person,

               (vi) retain or obtain the primary or secondary obligation of any
          other Person with respect to any of the TB Wood's Credit Agreement
          Secured Obligations, and

               (vii) otherwise manage and supervise the TB Wood's Credit
          Agreement Secured Obligations as the TB Wood's Agent shall deem
          appropriate.

          (d) Notwithstanding anything to the contrary herein, this Section 5.02
shall not be construed to constitute a waiver by the Collateral Agent, the
Trustee, or any Noteholder of any provision of the Indenture.

     Section 5.03 Reinstatement and Continuation of Agreement.

          (a) If Senior Agent is required in any Insolvency Proceeding or
otherwise to turn over or otherwise pay to the estate of any Borrower, any
Guarantor or any other Person any amount (a "Recovery"), then the Credit
Agreement Secured Obligations shall be reinstated to the extent of such
Recovery. If this Agreement shall have been terminated prior to such Recovery,
this Agreement shall be reinstated in full force and effect, and such prior
termination shall not diminish, release, discharge, impair, or otherwise affect
the obligations of the parties hereto from such date of reinstatement. All
rights, interests, agreements, and obligations of the TB Wood's Agent, the TB
Wood's Lenders, the Collateral Agent, the Trustee, the Senior Agent, the Senior
Lenders, and the Noteholders under this Agreement shall remain in full force and
effect and shall continue irrespective of the commencement of, or any discharge,
confirmation, conversion, or dismissal of any Insolvency Proceeding by or
against any Borrower or any Guarantor or any other circumstance which otherwise
might constitute a defense available to, or a discharge of any Borrower or any
Guarantor in respect of the Credit Agreement Secured Obligations. No priority or
right of the Senior Agent shall at any time be prejudiced or impaired in any way
by any act or failure to act on the part of any Borrower or any Guarantor or by
the noncompliance by any Person with the terms,


                                       29



provisions, or covenants of the TB Wood's Credit Agreement, the Credit
Agreement, the Indenture or any of the other Loan Documents, regardless of any
knowledge thereof which the Senior Agent may have.

          (b) If TB Wood's Agent is required in any Insolvency Proceeding or
otherwise to turn over or otherwise pay to the estate of any TB Wood's Credit
Party or any other Person a Recovery, then the TB Wood's Credit Agreement
Secured Obligations shall be reinstated to the extent of such Recovery. If this
Agreement shall have been terminated prior to such Recovery, this Agreement
shall be reinstated in full force and effect, and such prior termination shall
not diminish, release, discharge, impair, or otherwise affect the obligations of
the parties hereto from such date of reinstatement. All rights, interests,
agreements, and obligations of the TB Wood's Agent, the TB Wood's Lenders, the
Collateral Agent, the Trustee, the Senior Agent, the Senior Lenders, and the
Noteholders under this Agreement shall remain in full force and effect and shall
continue irrespective of the commencement of, or any discharge, confirmation,
conversion, or dismissal of any Insolvency Proceeding by or against any TB
Wood's Credit Party or any other circumstance which otherwise might constitute a
defense available to, or a discharge of any TB Wood's Credit Party in respect of
the TB Wood's Credit Agreement Secured Obligations. No priority or right of the
TB Wood's Agent shall at any time be prejudiced or impaired in any way by any
act or failure to act on the part of any TB Wood's Credit Party or by the
noncompliance by any Person with the terms, provisions, or covenants of the TB
Wood's Credit Agreement, the Credit Agreement, the Indenture or any of the other
Loan Documents, regardless of any knowledge thereof which the TB Wood's Agent
may have.

          (c) If Collateral Agent, the Trustee, or any Noteholder is required in
any Insolvency Proceeding or otherwise to turn over or otherwise pay to the
estate of any Borrower, any Guarantor or any other Person a Recovery, then the
Indenture Secured Obligations shall be reinstated to the extent of such
Recovery. No priority or right of the Collateral Agent, the Trustee, or any
Noteholder shall at any time be prejudiced or impaired in any way by any act or
failure to act on the part of any Borrower or any Guarantor or by the
noncompliance by any Person with the terms, provisions, or covenants of the TB
Wood's Credit Agreement, the Credit Agreement, the Indenture or any of the other
Indenture Agreements, regardless of any knowledge thereof which the Collateral
Agent, the Trustee, or any Noteholder may have.

     Section 5.04 New Credit Facility. At any time any Borrower or any of its
Subsidiaries enters into a New Credit Facility (provided that the lender
providing such New Credit Facility or its designee executes an acknowledgment,
in substantially the form of Annex A), this Agreement shall be reinstated in
full force and effect, and any prior termination thereof, if any, as a result of
a prior Discharge of Credit Agreement Secured Obligations, shall not diminish,
release, discharge, impair, or otherwise affect the obligations of the parties
hereto (including the lender providing for the New Credit Facility) from such
date of reinstatement. It is hereby agreed that the entering into of any


                                       30



new Credit Agreement would not constitute an amendment, modification or
supplement to any of the Indenture Loan Documents.

                                   ARTICLE VI.

                             INSOLVENCY PROCEEDINGS

     Section 6.01 DIP Financing. If any Borrower or any Guarantor shall be
subject to any Insolvency Proceeding and the Senior Agent shall desire, prior to
the Discharge of Credit Agreement Secured Obligations, to permit the use of cash
collateral or to permit any Borrower or any Guarantor to obtain financing under
Section 363 or Section 364 of Title 11 of the United States Code or any similar
provision under the law applicable to any Insolvency Proceeding ("DIP
Financing") to be secured by all or any portion of the Collateral, then the
Collateral Agent, on behalf of itself, the Trustee, and the Noteholders, agrees
that it will raise no objection to such use of cash collateral or DIP Financing
and will not request adequate protection or any other relief in connection with
its or their interest in any such Collateral except to the extent specified in
this Section 6.01. To the extent the Liens securing the Credit Agreement Secured
Obligations are subordinated or pari passu with such DIP Financing, the
Collateral Agent, for and on behalf of itself, the Trustee, and the Noteholders,
hereby agrees that its Liens in the Collateral shall be subordinated to such DIP
Financing (and all obligations relating thereto) upon the terms and conditions
specified in this Agreement. Until the Discharge of Credit Agreement Secured
Obligations has occurred, the Collateral Agent, on behalf of itself, the
Trustee, and the Noteholders, agrees that none of them shall seek relief from
the automatic stay or any other stay in any Insolvency Proceeding in respect of
the Collateral and will not provide or offer to provide any DIP Financing
secured by a Lien senior to or pari passu with the Liens securing the Credit
Agreement Secured Obligations, in each case unless the Senior Agent otherwise
has provided its express written consent.

     Section 6.02 No Contest. The Collateral Agent, on behalf of itself, the
Trustee, and the Noteholders, agrees that, prior to the Discharge of Credit
Agreement Secured Obligations, none of them shall contest (or support any other
Person contesting) (a) any request by the Senior Agent for adequate protection,
or (b) any objection by the Senior Agent to any motion, relief, action, or
proceeding based on Senior Agent claiming that their interests in the Collateral
are not adequately protected or any other similar request under any law
applicable to an Insolvency Proceeding. Notwithstanding the foregoing, in any
Insolvency Proceeding, if the Senior Agent is granted adequate protection in the
form of additional collateral in connection with any DIP Financing or use of
cash collateral under Section 363 or Section 364 of Title 11 of the United
States Code or any similar law applicable to any Insolvency Proceeding, then the
Collateral Agent, on behalf of itself, the Trustee, or any of the Noteholders,
may seek or request adequate protection in the form of a Lien on such additional
collateral, which Lien hereby is and shall be deemed to be subordinated to the
Liens securing the Credit Agreement Secured Obligations up to (but not in excess
of) the Maximum Priority Debt Amount and such DIP Financing (and


                                       31



all obligations relating thereto) on the same basis as the Lien Priority. In the
event the Collateral Agent, on behalf of itself, the Trustee, and the
Noteholders, seeks or requests adequate protection and such adequate protection
is granted in the form of Liens in respect of additional collateral, then the
Collateral Agent, on behalf of itself, the Trustee, and each of the Noteholders,
agrees that the Senior Agent also shall be granted a senior Lien on such
additional collateral as security for the Credit Agreement Secured Obligations
(and for any such DIP Financing) and that any Lien on such additional collateral
securing the Indenture Secured Obligations shall be subordinated to the Liens in
respect of such additional collateral securing the Credit Agreement Secured
Obligations and any such DIP Financing and any other Liens granted to the Senior
Agent as adequate protection on the same basis as the other Liens securing the
Indenture Secured Obligations are subordinated to the Credit Agreement Secured
Obligations under this Agreement up to the Maximum Priority Debt Amount. Nothing
contained herein shall prohibit or in any way limit the Senior Agent, prior to
the Discharge of Credit Agreement Secured Obligations, from objecting in any
Insolvency Proceeding or otherwise to any action taken by the Collateral Agent,
the Trustee or any of the Noteholders, including the seeking by the Collateral
Agent, the Trustee or any Noteholder of adequate protection or the asserting by
the Collateral Agent, the Trustee or any Noteholder of any of its rights and
remedies under the Indenture Loan Documents or otherwise.

     Section 6.03 Asset Sales. The Collateral Agent agrees, on behalf of itself,
the Trustee, and the Noteholders, that it will not oppose any sale consented to
by Senior Agent of Collateral pursuant to Section 363 or 365 of Title 11 of the
United States Code (or any similar provision in any other applicable Bankruptcy
Law) so long as the proceeds of such sale are applied in accordance with this
Agreement. The Collateral Agent agrees, on behalf of itself, the Trustee, and
the Noteholders, that it will not oppose any sale consented to by TB Wood's
Agent of TB Wood's Collateral pursuant to Section 363 or 365 of Title 11 of the
United States Code (or any similar provision in any other applicable Bankruptcy
Law) so long as the proceeds of such sale are applied in accordance with this
Agreement.

     Section 6.04 Enforceability. The provisions of this Agreement are intended
to be and shall be enforceable under Section 510 of Title 11 of the United
States Code. The Collateral Agent, on behalf of itself, the Trustee, and the
Noteholders, agrees that all distributions that the Collateral Agent, the
Trustee, or any Noteholder receives in any Insolvency Proceeding on account of
the Collateral or Proceeds shall be held in trust by such Person and turned over
to the Senior Agent, on behalf of itself and the Senior Lenders, for application
in accordance with Section 4.02 of this Agreement. The Collateral Agent, on
behalf of itself, the Trustee, and the Noteholders, agrees that all
distributions that the Collateral Agent, the Trustee, or any Noteholder receives
in any Insolvency Proceeding on account of the TB Wood's Collateral or Proceeds
thereof shall be held in trust by such Person and turned over to the TB Wood's
Agent, on behalf of itself and the TB Wood's Lenders, for application in
accordance with Section 4.02 of this


                                       32



Agreement. To the extent that any amounts received by the Collateral Agent, the
Trustee, or any Noteholder are paid over in connection with this provision, the
obligations owed by the Borrower to such Person will be deemed to be reinstated
to the extent of the amounts so paid over.

                                  ARTICLE VII.

                                  MISCELLANEOUS

     Section 7.01 Rights of Subrogation. The Collateral Agent agrees that no
payment or distribution to the Senior Agent pursuant to the provisions of this
Agreement shall entitle the Collateral Agent, the Trustee, or any Noteholder to
exercise any rights of subrogation in respect thereof until the Discharge of
Credit Agreement Secured Obligations shall have occurred. Following the
Discharge of Credit Agreement Secured Obligations, the Senior Agent agrees to
execute such documents, agreements, and instruments as the Collateral Agent, the
Trustee or any Noteholder may reasonably request to evidence the transfer by
subrogation to any such Person of an interest in the Credit Agreement Secured
Obligations resulting from payments or distributions to the Senior Agent by such
Person, so long as all costs and expenses (including all reasonable legal fees
and disbursements) incurred in connection therewith by the Senior Agent are paid
by such Person upon request for payment thereof. Each of the Senior Agent and
the Collateral Agent agrees that no payment or distribution to the TB Wood's
Agent pursuant to the provisions of this Agreement in respect of the TB Wood's
Collateral shall entitle the Senior Agent, the Senior Lenders, the Collateral
Agent, the Trustee, or any Noteholder to exercise any rights of subrogation in
respect thereof until the Discharge of TB Wood's Credit Agreement Secured
Obligations shall have occurred. Following the Discharge of TB Wood's Credit
Agreement Secured Obligations, the TB Wood's Agent agrees to execute such
documents, agreements, and instruments as the Senior Agent, the Senior Lenders,
the Collateral Agent, the Trustee or any Noteholder may reasonably request to
evidence the transfer by subrogation to any such Person of an interest in the TB
Wood's Credit Agreement Secured Obligations resulting from payments or
distributions to the TB Wood's Agent by such Person, so long as all costs and
expenses (including all reasonable legal fees and disbursements) incurred in
connection therewith by the TB Wood's Agent are paid by such Person upon request
for payment thereof.

     Section 7.02 Further Assurances. The Parties will, at their own expense and
at any time and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that either Party may reasonably request, in order to protect any
right or interest granted or purported to be granted hereby or to enable the TB
Wood's Agent, the Senior Agent or the Collateral Agent to exercise and enforce
its rights and remedies hereunder; provided, however, that no Party shall be
required to pay over any payment or distribution, execute any instruments or
documents, or take any other action referred to in this Section 7.02 to the
extent that such action would contravene any law, order or other legal
requirement,


                                       33



and in the event of a controversy or dispute, such Party may interplead any
payment or distribution in any court of competent jurisdiction, without further
responsibility in respect of such payment or distribution under this Section
7.02.

     Section 7.03 Representations. The Original Senior Agent represents and
warrants to the TB Wood's Agent and the Collateral Agent that it has the
requisite power and authority under the Original Credit Agreement to enter into,
execute, deliver, and carry out the terms of this Agreement on behalf of itself
and the Senior Lenders. The Collateral Agent represents and warrants to the TB
Wood's Agent and the Senior Agent that it has the requisite power and authority
under the Indenture to enter into, execute, deliver, and carry out the terms of
this Agreement on behalf of itself, the Trustee, and the Noteholders. The
Original TB Wood's Agent represents and warrants to the Collateral Agent and the
Senior Agent that it has the requisite power and authority under the Original TB
Wood's Credit Agreement to enter into, execute, deliver, and carry out the terms
of this Agreement on behalf of itself and the TB Wood's Lenders.

     Section 7.04 Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by any Party hereto shall be effective
unless it is in a written agreement executed by the Collateral Agent, the TB
Wood's Agent and the Senior Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

     Section 7.05 Addresses for Notices. All demands, notices and other
communications provided for hereunder shall be in writing and, if to the
Collateral Agent, mailed or sent by telecopy or delivered to it, addressed to it
as follows:

          The Bank of New York Trust Company, N.A.
          700 South Flower Street, Suite 500
          Los Angeles, California 90017
          Attention: Corporate Trust Department/Altra Industrial Motion, Inc.
          Telephone: 213-630-6176
          Facsmile: 213-630-6298

With a copy to:

          Proskauer Rose LLP
          1585 Broadway
          New York, NY
          Attention: Julie M. Allen, Esq.
          Facsmile: 212-969-2900

if to the Senior Agent, mailed, sent or delivered thereto, addressed to it as
follows:

          Wells Fargo Foothill, Inc.
          One Boston Place


                                       34



          Boston, MA 02108
          Attention: Business Finance Manager
          Facsimile: (617) 523-5839

With a copy to:

          Moses & Singer LLP
          The Chrysler Building
          405 Lexington Avenue
          New York, NY 10174-1299
          Attention: Howard L. Siegel, Esq.
          Facsimile: (212) 554-7700

if to the TB Wood's Agent, mailed, sent or delivered thereto, addressed to it as
follows:

          Wells Fargo Foothill, Inc.
          One Boston Place
          Boston, MA 02108
          Attention: Business Finance Manager
          Facsimile: (617) 523-5839

With a copy to:

          Moses & Singer LLP
          The Chrysler Building
          405 Lexington Avenue
          New York, NY 10174-1299
          Attention: Howard L. Siegel, Esq.
          Facsimile: (212) 554-7700

If to Parent or Administrative Borrower, mailed, sent or delivered thereto,
addressed to it as follows:

          Altra Industrial Motion, Inc.
          14 Hayward St.
          Quincy, Massachusetts 02171
          Attention: Michael L. Hurt
          Facsimile: (617) 689-6202

With a copies to:

          Genstar Capital, L.P.
          Four Embarcadero Center, Suite 1900
          San Francisco, CA 94111
          Attention: Darren J. Gold


                                       35



          Facsimile:  (415) 834-2383

and

          Weil, Gotshal & Manges LLP
          200 Crescent Court, Suite 300
          Dallas, Texas 75201
          Attention: Angela L. Fontana, Esq.
          Facsimile: (214) 746-7777

or as to any party at such other address as shall be designated by such party in
a written notice to the other parties complying as to delivery with the terms of
this Section 7.05. All such demands, notices and other communications shall be
effective, when mailed, two business days after deposit in the mails, postage
prepaid, when sent by telecopy, when receipt is acknowledged by the receiving
telecopy equipment (or at the opening of the next business day if receipt is
after normal business hours), or when delivered, as the case may be, addressed
as aforesaid.

     Section 7.06 No Waiver, Remedies. No failure on the part of any Party to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

     Section 7.07 Continuing Agreement, Transfer of Secured Obligations. This
Agreement is a continuing agreement and shall (i) remain in full force and
effect until the Discharge of the TB Wood's Credit Agreement Secured Obligations
shall have occurred, the Discharge of the Credit Agreement Secured Obligations
shall have occurred and the Indenture Secured Obligations shall have been paid
in full, (ii) be binding upon the Parties and their successors and assigns, and
(iii) inure to the benefit of and be enforceable by the Parties and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (iii), the TB Wood's Agent or any TB Wood's Lender, the
Senior Agent or any Senior Lender, or the Collateral Agent, the Trustee, or any
Noteholder may assign or otherwise transfer all or any portion of the TB Wood's
Credit Agreement Secured Obligations, the Credit Agreement Secured Obligations
or the Indenture Secured Obligations, as applicable, to any other Person (other
than any Borrower, any Guarantor or any Affiliate of any Borrower or any
Guarantor), and such other Person shall thereupon become vested with all the
rights and obligations in respect thereof granted to the TB Wood's Agent or any
TB Wood's Lender, the Senior Agent or any Senior Lender, or the Collateral
Agent, the Trustee, or any Noteholder, as the case may be, herein or otherwise.

     Section 7.08 Information Concerning Financial Condition.


                                       36



          (a) Collateral Agent hereby assumes responsibility for keeping itself
informed of the financial condition of the Borrowers and Guarantors and of all
other circumstances bearing upon the risk of nonpayment of the Indenture Secured
Obligations, and agrees that neither TB Wood's Agent nor Senior Agent has and
shall have no duty to advise Collateral Agent of information known to TB Wood's
Agent or Senior Agent regarding such condition or any such circumstances. In the
event TB Wood's Agent or Senior Agent, in their sole discretion, undertake, at
any time or from time to time, to provide any such information to Collateral
Agent, neither TB Wood's Agent nor Senior Agent shall be under any obligation
(i) to provide any such information to Collateral Agent on any subsequent
occasion, (ii) to undertake any investigation, or (iii) to disclose any
information which, pursuant to its commercial finance practices, TB Wood's Agent
or Senior Agent, as applicable, wishes to maintain confidential. Collateral
Agent acknowledges and agrees that neither TB Wood's Agent or Senior Agent has
made any warranties or representations with respect to the legality, validity,
enforceability, collectability or perfection of the TB Wood's Credit Agreement
Secured Obligations, the Credit Agreement Secured Obligations or any liens or
security interests held in connection therewith.

          (b) TB Wood's Agent hereby assumes responsibility for keeping itself
informed of the financial condition of the Borrowers and Guarantors and of all
other circumstances bearing upon the risk of nonpayment of the TB Wood's Credit
Agreement Secured Obligations, and agrees that neither the Collateral Agent nor
the Senior Agent has and shall have no duty to advise TB Wood's Agent of
information known to Collateral Agent or the Senior Agent regarding such
condition or any such circumstances. In the event Collateral Agent or Senior
Agent, in their sole discretion, undertake, at any time or from time to time, to
provide any such information to TB Wood's Agent, neither Collateral Agent nor
Senior Agent, as applicable, shall be under any obligation (i) to provide any
such information to TB Wood's Agent on any subsequent occasion, (ii) to
undertake any investigation, or (iii) to disclose any information which,
pursuant to its commercial finance practices, Collateral Agent or Senior Agent,
as applicable, wishes to maintain confidential. TB Wood's Agent acknowledges and
agrees that neither Collateral Agent nor Senior Agent has made any warranties or
representations with respect to the legality, validity, enforceability,
collectability or perfection of the Indenture Secured Obligations, the Credit
Agreement Secured Obligations or any liens or security interests held in
connection therewith.

          (c) Senior Agent hereby assumes responsibility for keeping itself
informed of the financial condition of the Borrowers and Guarantors and of all
other circumstances bearing upon the risk of nonpayment of the Credit Agreement
Secured Obligations, and agrees that neither TB Wood's Agent nor Collateral
Agent has and shall have no duty to advise Senior Agent of information known to
TB Wood's Agent or Collateral Agent regarding such condition or any such
circumstances. In the event TB Wood's Agent or Collateral Agent, in their sole
discretion, undertake, at any time or from time to time, to provide any such
information to Senior Agent, neither TB Wood's


                                       37



Agent nor Collateral Agent shall be under any obligation (i) to provide any such
information to Senior Agent on any subsequent occasion, (ii) to undertake any
investigation, or (iii) to disclose any information which, pursuant to its
commercial finance practices, TB Wood's Agent or Collateral Agent, as
applicable, wishes to maintain confidential. Senior Agent acknowledges and
agrees that neither TB Wood's Agent nor Collateral Agent has made any warranties
or representations with respect to the legality, validity, enforceability,
collectability or perfection of the TB Wood's Credit Agreement Secured
Obligations, the Indenture Secured Obligations or any liens or security
interests held in connection therewith.

     Section 7.09 Governing Law: Entire Agreement. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New York
except as otherwise preempted by applicable federal law. This Agreement
constitutes the entire agreement and understanding among the Parties with
respect to the subject matter hereof and supersedes any prior agreements,
written or oral, with respect thereto.

     Section 7.10 Counterparts. This Agreement maybe executed in any number of
counterparts, and it is not necessary that the signatures of all Parties be
contained on any one counterpart hereof, each counterpart will be deemed to be
an original, and all together shall constitute one and the same document.

     Section 7.11 No Third Party Beneficiary. This Agreement is solely for the
benefit of the Parties (and their permitted assignees). No other Person
(including Borrower, any Guarantor or any Affiliate of Borrower and any
Subsidiary of Borrower or any Guarantor) shall be deemed to be a third party
beneficiary of this Agreement.

     Section 7.12 Headings. The headings of the articles and sections of this
Agreement are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof

     Section 7.13 Severability. If any of the provisions in this Agreement
shall, for any reason, be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement and shall not invalidate the Lien Priority or any
other priority set forth in this Agreement.

     Section 7.14 Collateral Agent Status. Nothing in this Agreement shall be
construed to operate as a waiver by the Collateral Agent, with respect to any
Borrower, any Guarantor, the Trustee, or any Noteholder, of the benefit of any
exculpatory rights, privileges, immunities, indemnities, or reliance rights
contained in the Indenture or any of the other Indenture Loan Documents. For all
purposes of this Agreement, the Collateral Agent may (a) rely in good faith, as
to matters of fact, on any representation of fact believed by the Collateral
Agent to be true (without any duty of investigation) and that is contained in a
written certificate of any authorized representative of any Borrower or of the
Senior Agent, any Senior Lender, the TB Wood's Agent, or any TB Wood's Lender,
and (b) assume in good faith (without any duty of investigation), and rely upon,
the


                                       38



genuineness, due authority, validity, and accuracy of any certificate,
instrument, notice, or other document believed by it in good faith to be genuine
and presented by the proper person. Each Borrower, Senior Agent, each Senior
Lender, TB Wood's Agent and each TB Wood's Lender expressly acknowledge that the
subordination and related agreements set forth herein by the Collateral Agent
are made solely in its capacity as Collateral Agent under the Indenture with
respect to the Notes issued thereunder and the other Indenture Loan Documents
and are not made by the Collateral Agent in its individual commercial capacity.

     Section 7.15 Acknowledgment. Each Borrower, each Guarantor and each TB
Wood's Credit Party hereby acknowledges that it has received a copy of this
Agreement and consents thereto, and agrees to recognize all rights granted
thereby to the TB Wood's Agent, the Senior Agent and the Collateral Agent and
will not do any act or perform any obligation which is not in accordance with
the agreements set forth in this Agreement. Each Borrower, each Guarantor and
each TB Wood's Credit Party further acknowledges and agrees that it is not an
intended beneficiary or third party beneficiary under this Agreement.

     Section 7.16 VENUE; JURY TRIAL WAIVER.

          (a) THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND FEDERAL COURTS LOCATED IN THE CITY OF NEW YORK OR THE SOUTHERN DISTRICT OF
NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT SENIOR AGENT'S OR TB WOOD'S
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SENIOR AGENT OR TB
WOOD'S AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH PARTY HERETO WAIVES, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 7.16.

          (b) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY HERETO REPRESENTS THAT IT HAS REVIEWED THIS WAIVER
AND IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL


                                       39



COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 7.17 Intercreditor Agreement. This Agreement amends and restates in its
entirety the Original Intercreditor Agreement, but shall not be deemed a
novation or termination of the Original Intercreditor Agreement. This Agreement
is the Intercreditor Agreement referred to in the Indenture. If this Agreement
or all or any portion of either Party's rights or obligations hereunder are
assigned or otherwise transferred to any other Person, such other Person shall
execute and deliver an agreement containing terms substantially identical to
those contained in this Agreement.


                                       40



     IN WITNESS WHEREOF, the Senior Agent, the TB Wood's Agent, the Collateral
Agent, each Borrower, each Guarantor and each TB Wood's Credit Party has caused
this Agreement to be duly executed and delivered as of the date first above
written.

SENIOR AGENT AND TB WOOD'S AGENT:       WELLS FARGO FOOTHILL, INC.,
                                        a California corporation


                                        By: /s/ Vincent J. Egan, Jr.
                                            ------------------------------------
                                        Name: Vincent J. Egan, Jr.
                                              ----------------------------------
                                        Title: VP
                                               ---------------------------------

        [SIGNATURE PAGE OF AMENDED AND RESTATED INTERCREDITOR AGREEMENT]



COLLATERAL AGENT AND TRUSTEE:           THE BANK OF NEW YORK TRUST COMPANY,
                                        N.A., in its capacities as Collateral
                                        Agent and Trustee under the Indenture
                                        (and not individually)


                                        By: /s/ Sandee Parks
                                            ------------------------------------
                                        Name: Sandee Parks
                                              ----------------------------------
                                        Title: Vice President
                                               ---------------------------------

        [SIGNATURE PAGE OF AMENDED AND RESTATED INTERCREDITOR AGREEMENT]



The undersigned, each a Borrower, Guarantor or TB Wood's Credit Party referred
to in the foregoing Intercreditor Agreement, hereby agrees to comply with all of
the terms and provisions of the Intercreditor Agreement in all respects.

                                        ALTRA INDUSTRIAL MOTION, INC.,
                                        a Delaware corporation, as a Borrower


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------


                                        WARNER ELECTRIC LLC,
                                        a Delaware limited liability company, as
                                        a Borrower


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------


                                        KILIAN MANUFACTURING CORPORATION,
                                        a Delaware corporation, as a Borrower


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------


                                        WARNER ELECTRIC TECHNOLOGY LLC,
                                        a Delaware limited liability company, as
                                        a Borrower


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------


                                        FORMSPRAG LLC,
                                        a Delaware limited liability company, as
                                        a Borrower


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------


                                        BOSTON GEAR LLC,
                                        a Delaware limited liability company, as
                                        a Borrower


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------


                                        NUTTALL GEAR LLC,
                                        a Delaware limited liability company, as
                                        a Borrower


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------

        [SIGNATURE PAGE OF AMENDED AND RESTATED INTERCREDITOR AGREEMENT]



                                        AMERIDRIVES INTERNATIONAL, L.P.,
                                        a Delaware limited partnership, as a
                                        Borrower


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------


                                        THE KILIAN COMPANY,
                                        a Delaware corporation, as a Guarantor


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------


                                        WARNER ELECTRIC INTERNATIONAL HOLDING,
                                        INC.,
                                        a Delaware corporation, as a Guarantor


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------


                                        AMERICAN ENTERPRISES MPT CORP.,
                                        a Delaware corporation, as a Guarantor


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------


                                        AMERICAN ENTERPRISES MPT, L.P.,
                                        a Delaware limited partnership, as a
                                        Guarantor


                                        By: /s/ Michael L. Hurt
                                            ------------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------------

        [SIGNATURE PAGE OF AMENDED AND RESTATED INTERCREDITOR AGREEMENT]



                                        TB WOOD'S INCORPORATED,
                                        a Pennsylvania corporation, as a TB
                                        Wood's Credit Party


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------


                                        PLANT ENGINEERING CONSULTANTS, LLC,
                                        a Tennessee limited liability company,
                                        as a TB Wood's Credit Party


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Title: Treasurer and Secretary
                                               ---------------------------------


                                        TB WOOD'S ENTERPRISES, INC.,
                                        a Delaware corporation, as a TB Wood's
                                        Credit Party


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Title: President and Treasurer
                                               ---------------------------------


                                        TB WOOD'S CORPORATION,
                                        a Delaware corporation, as a TB Wood's
                                        Credit Party


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------

        [SIGNATURE PAGE OF AMENDED AND RESTATED INTERCREDITOR AGREEMENT]



                                     Annex A

     This ACKNOWLEDGMENT, dated as of _________ __, 20__, is delivered pursuant
to Section 5.04 of the Amended and Restated Intercreditor and Lien Subordination
Agreement (the "Intercreditor Agreement"), dated as of April 5, 2007 by Wells
Fargo Foothill, Inc. (as Senior Agent and TB Wood's Agent) and The Bank Of New
York, as Collateral Agent and Trustee, and acknowledged by Altra Industrial
Motion, Inc., as a Borrower, certain of its Subsidiaries as Borrowers and
Guarantors, and TB Wood's Corporation and certain of its Subsidiaries as TB
Wood's Credit Parties. Capitalized terms used herein but not defined herein are
used with the meanings given them in the Intercreditor Agreement.

     By executing and delivering this Acknowledgment, the undersigned, as
provided in Section 5.04 of the Intercreditor Agreement, hereby becomes a party
to the Intercreditor Agreement as Senior Agent, with the same force and effect
as if originally named as the Original Senior Agent therein.

     IN WITNESS WHEREOF, the undersigned has caused this Acknowledgment to be
duly executed and delivered as of the date first above written.

                                        [LENDER PROVIDING NEW CREDIT FACILITY]


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

EX-10.40

                                                                   EXHIBIT 10.40

                      INTERCOMPANY SUBORDINATION AGREEMENT

          THIS INTERCOMPANY SUBORDINATION AGREEMENT, made and entered into as of
April 5, 2007 (this "Subordination Agreement"), by and among, TB Wood's
Corporation, a Delaware corporation ("Parent"), TB Wood's Incorporated, a
Pennsylvania corporation ("TBWI"), Plant Engineering Consultants, LLC, a
Tennessee limited liability company ("Plant"), TB Wood's Enterprises, Inc., a
Delaware corporation ("Enterprises", and together with Parent, TBWI and Plant,
the "Subordinating Creditors" and each a "Subordinating Creditor"), and Wells
Fargo Foothill, Inc., a California corporation, as the arranger and
administrative agent (together with any successor(s) thereto in such capacity,
the "Agent") under the Credit Agreement referenced below. Unless otherwise
defined herein, all capitalized terms used herein shall have the respective
meanings assigned to such terms in the Credit Agreement, dated as of April 5,
2007 (as amended, modified, supplemented or restated from time to time, the
"Credit Agreement"), by and among Borrowers, the lenders signatory thereto (the
"Lenders") and Agent.

                                   WITNESSETH:

          WHEREAS, Borrowers or Guarantors or any of their respective Restricted
Subsidiaries may have borrowed, or may desire to borrow, certain sums from a
Subordinating Creditor as permitted by the Credit Agreement;

          WHEREAS, Borrowers desire to borrow certain sums from the Secured
Parties (as defined herein) pursuant to the Credit Agreement; and

          WHEREAS, as a condition to entering into the Credit Agreement, each of
the Subordinating Creditors agrees that any loan extended to Borrowers,
Guarantors, or any of their respective Restricted Subsidiaries (each, an
"Applicable Debtor" and, collectively, the "Applicable Debtors") will be
subordinated to the Senior Debt (as defined herein), as more fully provided in
this Subordination Agreement;

          NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the Subordinating Creditors hereby agrees with the Secured
Parties as follows:

          1. Subordination. Subject to the terms hereof, each of the
Subordinating Creditors hereby subordinates and defers, to the extent and in the
manner set forth herein, the payment (including, without limitation, in any
Insolvency Proceeding (as defined herein)) of any and all Indebtedness which may
be now or hereafter owing by any Applicable Debtor to any such Subordinating
Creditor (whether by reason of subrogation rights of such Subordinating Creditor
or otherwise) as may be evidenced by any promissory notes and/or any other
documents, instruments or agreements now or hereafter executed and delivered by
any Applicable Debtor to any Subordinating Creditor (all such amounts, notes,
documents, instruments, and agreements being hereinafter referred to as the
"Subordinated Debt") to the prior Discharge of Senior Debt (as defined below).


                                        1



          "Bankruptcy Code" means the United States Bankruptcy Code, as in
effect from time to time.

          "Discharge of Senior Debt" means payment and satisfaction in full in
cash of any and all Senior Debt (as defined below) which may be now or hereafter
owing to any Secured Party (as defined below) by any Applicable Debtor,
including, with respect to amounts available to be drawn under outstanding
letters of credit issued under the Credit Agreement or any other Loan Document
(or indemnities issued pursuant thereto in respect of outstanding letters of
credit), delivery of cash to be held as collateral for such letters of credit or
backstop letters of credit in respect thereof in compliance with the terms of
the Credit Agreement, in each case, after or concurrently with the termination
of the Credit Agreement and the termination of all obligations and commitments
to make loans, advances or otherwise extend credit thereunder.

          "Insolvency Proceeding" means any proceeding commenced by or against
any Applicable Debtor under any provision of the Bankruptcy Code or under any
other state or federal bankruptcy or insolvency law, assignments for the benefit
of creditors, formal or informal moratoria, compositions, extensions generally
with creditors, or proceedings seeking reorganization, arrangement, or other
similar relief and including the appointment of a trustee, receiver,
administrative receiver, administrator or similar officer.

          "Secured Party" means Agent or any member of the Lender Group.

          "Senior Debt", as used herein, shall mean any and all Obligations,
including, without limitation, any and all now existing and future indebtedness,
obligations or liabilities of the Applicable Debtors under the Credit Agreement
to the Secured Parties, whether direct or indirect, absolute or contingent,
secured or unsecured, arising under, or in connection with, the Credit Agreement
or any other Loan Documents (including, without limitation, any guaranty
executed in connection therewith) in favor of the Secured Parties, as each of
the foregoing may be from time to time amended, modified, waived, supplemented,
extended, renewed, deferred, refinanced, replaced, refunded or restated, in
whole or in part, in accordance with the terms and conditions thereof, by
operation of law or otherwise, including any and all expenses (including,
without limitation, reasonable attorneys' fees and disbursements), premiums,
fees and charges incurred in connection therewith and any interest thereon,
including, without limitation, any post-petition interest accruing on such
Senior Debt after any Applicable Debtor becomes subject to an Insolvency
Proceeding (whether or not such interest is allowable or enforceable against
such Applicable Debtor or recoverable against such Applicable Debtor or its
bankruptcy estate), whether by means of an adequate protection payment or
otherwise. For all purposes hereunder, Senior Debt shall also include all
indebtedness, obligations and liabilities of the Applicable Debtors to repay any
amounts previously paid by the Applicable Debtors pursuant to the Credit
Agreement, which amounts have been returned to the Applicable Debtors or to a
trustee by any Secured Party pursuant to Sections 547 or 548 of the Bankruptcy
Code or otherwise under other applicable legislation.

          2. Covenants. Without limiting any other provision of this
Subordination Agreement, each of the Subordinating Creditors hereby covenants
and agrees that, until such time as this Subordination Agreement is terminated
as provided herein, such Subordinating Creditor will not, except to the extent
expressly permitted by Sections 8, 9, and 10 hereof, assert


                                        2



any right which it may have to setoff against the Subordinated Debt any amounts
which are or may be owing by such Subordinating Creditor to any Applicable
Debtor, and that until such time as this Subordination Agreement is terminated
as provided herein, and except to the extent expressly permitted by Sections 8,
9, and 10 hereof, such Subordinating Creditor will not directly or indirectly:
(a) demand or receive payment of; exchange, forgive, or modify; request or
obtain collateral or security or guarantees for; or Commence Legal Action (as
defined in Section 11 hereof) in respect of the Subordinated Debt, or (b) sell,
assign, transfer, endorse, pledge, encumber or otherwise dispose of (whether by
means of participation or otherwise) any portion of the Subordinated Debt or any
interest therein to any Person without the prior written consent of the Agent,
it being understood that each such assignee and transferee shall be bound in all
respects by the terms and conditions of this Subordination Agreement.

          3. Inducement. This Subordination Agreement is executed as an
inducement to the Secured Parties to make loans or advances to Borrowers or
otherwise to extend credit or financing accommodations to Borrowers, and to
enter into the Loan Documents and to continue a financing arrangement with
Borrowers and is executed in consideration of the Agent and Lenders entering
into the Loan Documents and continuing such financing arrangement.

          4. Continuing Agreement. This Subordination Agreement (a) may be
terminated only upon the occurrence of the Discharge of Senior Debt, (b) is a
continuing agreement of subordination, (c) shall be binding upon the
Subordinating Creditors, the Applicable Debtors and their respective successors,
transferees and assigns, and (d) shall inure to the benefit of the Secured
Parties and be enforceable by the Agent, for the benefit of the Secured Parties,
and each their respective successors, transferees and assigns, unless such
successors, assignees and transferees are not parties to the Credit Agreement as
permitted therein. Without limiting the generality of the foregoing, the Secured
Parties may assign or otherwise transfer the Senior Debt to any other Person,
and such other Person shall thereupon become vested with all the rights and
benefits in respect thereof granted to the Secured Parties herein or otherwise,
subject to Section 13.1 of the Credit Agreement. This Subordination Agreement
shall continue to be effective (or, if previously terminated, reinstated), if at
any time any payment of any of the Senior Debt is rescinded or must otherwise be
returned by any Secured Party in connection with any Insolvency Proceeding or
otherwise, all as though such payment had not been made.

          5. Rights in Insolvency Proceedings. Each of the Subordinating
Creditors hereby authorizes and empowers the Agent, for the benefit of the
Lenders, in any Insolvency Proceeding to file a proof of claim on behalf of such
Subordinating Creditor with respect to the Subordinated Debt (a) if such
Subordinating Creditor fails to file such proof of claim prior to thirty (30)
days before the expiration of the time period during which such claims must be
submitted, or (b) if the Agent, in its Permitted Discretion, believes that any
statements or assertions in a proof of claim filed by such Subordinating
Creditor are not consistent with the terms and conditions hereof; provided,
however, that any failure of the Agent to file such proof of claim shall not be
deemed to be a waiver by the Agent or any Secured Party of any of the rights and
benefits granted herein by such Subordinating Creditor. Each Subordinating
Creditor shall provide the Agent with a copy of any proof of claim filed by such
Subordinating Creditor in any Insolvency Proceeding. Each Subordinating Creditor
hereby irrevocably grants the Agent the sole and exclusive authority and power
in any Insolvency Proceeding, unless and until this Subordination Agreement is
terminated in accordance with its terms: (a) to accept and receive any payment
or


                                        3



distribution which may be payable or deliverable at any time upon or in respect
of the Subordinated Debt; and (b) to take such other action as may be necessary
or advisable to effectuate the foregoing. Each Subordinating Creditor shall
provide to the Agent all information and documents necessary to present claims
or seek enforcement as described in the immediately preceding sentence. Each of
the Subordinating Creditors hereby agrees that, while it shall retain the right
to vote its claims and, except as otherwise provided in this Subordination
Agreement, otherwise act in any Insolvency Proceeding relative to the related
Applicable Debtor (including, without limitation, the right to vote to accept or
reject any plan of partial or complete liquidation, reorganization, arrangement,
composition, or extension), such Subordinating Creditor shall not: (i) take any
action or vote in any way so as to directly or indirectly challenge or contest
(A) the validity or the enforceability of the Credit Agreement, the other Loan
Documents, or the liens and security interests granted to the Secured Parties
with respect to the Senior Debt, (B) the rights and duties of the Secured
Parties established in the Credit Agreement or any other Loan Documents, or (C)
the validity or enforceability of this Subordination Agreement; (ii) seek, or
acquiesce in any request, to dismiss any Insolvency Proceeding or to convert an
Insolvency Proceeding under chapter 11 of the Bankruptcy Code to a case under
chapter 7 of the Bankruptcy Code; (iii) seek, or acquiesce in any request for,
the appointment of a trustee or examiner with expanded powers for the related
Applicable Debtor; (iv) propose, vote in favor of or otherwise approve a plan of
reorganization, arrangement or liquidation, or file any motion or pleading in
support of any plan of reorganization, arrangement or liquidation, unless it
provides for the Discharge of Senior Debt or unless the Secured Parties have
approved of the treatment of their claims with respect to the Senior Debt under
such plan; (v) object to the treatment under a plan of reorganization or
arrangement of the Secured Parties' claims with respect to the Senior Debt; (vi)
seek relief from the automatic stay of Section 362 of the Bankruptcy Code or any
other stay in any Insolvency Proceeding in respect of any portion of the
Collateral; or (vii) directly or indirectly oppose any relief requested or
supported by the Secured Parties, including any sale or other disposition of
property free and clear of the liens and security interests of the Subordinating
Creditors under Section 363(f) of Title 11 of the United States Code or any
other similar provision of applicable law.

          6. No Liability. None of the Secured Parties shall in any event be
liable for: (a) any failure to prove the Subordinated Debt; (b) any failure to
exercise any rights with respect thereto; (c) any failure to collect any sums
payable thereon; or (d) any impairment or nonpayment of the Subordinated Debt
that results, directly or indirectly, from the exercise by the Secured Parties
of any of their rights or remedies under this Subordination Agreement, the
Credit Agreement, the other Loan Documents or under applicable law.

          7. Subordination Rights Not Impaired by Acts or Omissions of the
Applicable Debtors or Secured Parties. No right of the Secured Parties to
enforce subordination as provided in this Subordination Agreement will at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of any Applicable Debtor or by any act or failure to act by any Secured
Party, or by any noncompliance by the Subordinating Creditors or any agent
thereof with the terms of this Subordination Agreement, regardless of any
knowledge thereof with which any such Person may have or otherwise be charged.
The Secured Parties may extend, renew, modify or amend any terms of the Senior
Debt or any security therefor or guaranty thereof and grant any waiver, release
or consent in respect of, or release, sell or exchange such security and
otherwise deal freely with the Applicable Debtors and their respective
Affiliates, all without


                                        4



notice to or consent from the Subordinating Creditors and without in any way
impairing or affecting this Subordination Agreement.

          8. Payments to the Subordinating Creditors. Subject to Sections 9 and
10 of this Subordination Agreement, until this Subordination Agreement shall
have been terminated in accordance with the terms and conditions hereof, the
Applicable Debtors may make payment on, on account of or in respect of the
Subordinated Debt.

          9. No Payment to Subordinating Creditors When Senior Debt in Default.

               (a) No Applicable Debtor may pay the principal of, premium, if
any, or interest on, or make any other payment in respect of, the Subordinated
Debt if a Default or Event of Default on the Senior Debt shall have occurred and
be continuing unless and until such Default or Event of Default shall have been
cured or waived or shall have ceased to exist or a Discharge of Senior Debt
shall have occurred.

               (b) If any payment or distribution of assets of any Applicable
Debtor of any kind or character, whether in cash, property or securities
(including, without limitation, any issuance of securities by such Applicable
Debtor), is received by any Subordinating Creditor as a payment in respect of
the Subordinated Debt at a time when such payment or distribution should not
have been made in accordance with subsection (a) of this Section 9, such payment
or distribution shall be received and held in trust for and shall be paid over
immediately to the Agent or its representative (for the benefit of the Secured
Parties) for application to the payment of the Senior Debt until the Discharge
of Senior Debt shall have occurred.

               (c) The provisions of this Section 9 shall not apply to any
payments with respect to which Section 10 would be applicable.

          10. Subordinated Debt Subordinated to Prior Payment of All Senior Debt
in Insolvency Proceeding. Upon any payment or distribution of assets of any
Applicable Debtor of any kind, whether in cash, property or securities
(including, without limitation, any issuance of securities by an Applicable
Debtor), in connection with any Insolvency Proceeding:

               (a) the Secured Parties shall first be entitled to receive
payment in full in cash of all Senior Debt before the Subordinating Creditors
shall be entitled to receive any payment or other distribution of assets in
respect of the Subordinated Debt;

               (b) any payment or distribution of assets of any Applicable
Debtor of any kind or character, whether in cash, property or securities
(including, without limitation, any issuance of securities by such Applicable
Debtor) to which the Subordinating Creditors would be entitled except for the
provisions of this Subordination Agreement will be paid by such Applicable
Debtor, the liquidating trustee or agent or such other Person making such a
payment or distribution directly to the Agent (for the benefit of the Secured
Parties) to the extent necessary to effect the Discharge of Senior Debt; and

               (c) if, notwithstanding the foregoing, any payment or
distribution of assets of any Applicable Debtor of any kind or character,
whether in cash, property or securities (including, without limitation, any
issuance of securities by such Applicable Debtor), is received


                                        5



by a Subordinating Creditor as payment in respect of the Subordinated Debt
before the occurrence of the Discharge of Senior Debt, such payment or
distribution shall be received and held in trust for and shall be paid over
immediately to the Agent or its representative (for the benefit of the Secured
Parties) for application to the payment of the Senior Debt until the Discharge
of Senior Debt has occurred.

          11. No Enforcement or Commencement of Any Proceedings. Each of the
Subordinating Creditors hereby agrees that, so long as any Senior Debt shall
remain unpaid, or the Credit Agreement shall be in effect, such Subordinating
Creditor will not (a) except to the extent expressly permitted by Sections 8, 9
and 10 of this Subordination Agreement, take, demand, receive or accept any
payment of the Subordinated Debt, and the Applicable Debtors shall not give,
make or permit any such payment, or (b) commence, prosecute, assert, participate
in or bring, or join with any other creditor of the Applicable Debtors (other
than the Agent) in commencing, prosecuting, asserting, participating in or
bringing, any sort of action, suit or proceeding (including, without limitation,
any Insolvency Proceeding) either at law or in equity for the enforcement,
collection or realization on the whole, or any part of the Subordinated Debt or
any collateral, security or guarantees (if any) which is security for the
Subordinated Debt, or accelerate, demand or otherwise make due and payable prior
to the original due date thereof any payment of the Subordinated Debt (except
pursuant to a modification or amendment of the terms of such Subordinated Debt
that is permitted under the Credit Agreement), (c) possess any assets of any
Applicable Debtor pursuant to a legal action or other legal proceeding, or (d)
send any notice to or otherwise seek to obtain payment directly from any account
debtor of any Applicable Debtor (clauses (a) through (d) inclusive,
collectively, "Commence Legal Action").

          12. Action Against. If the Subordinating Creditors, in violation of
this Subordination Agreement, shall Commence Legal Action against an Applicable
Debtor, such Applicable Debtor may interpose as a defense or dilatory plea the
making of this Subordination Agreement, and the Secured Parties are hereby
irrevocably authorized to intervene and to interpose such defense or plea in
their names or in the name of the related Applicable Debtor. If the
Subordinating Creditors shall attempt to enforce, collect or realize upon any
Subordinated Debt or any collateral, security or guarantees (if any) securing
the Subordinated Debt in violation of this Subordination Agreement, the
Applicable Debtors may, by virtue of this Subordination Agreement, restrain any
such enforcement, collection or realization, or upon failure to do so, the
Secured Parties may restrain such enforcement, collection or realization, either
in their own names or in the name of the Applicable Debtors.

          13. Lien Subordination. Each Subordinating Creditor hereby confirms
that, regardless of (a) the relative date, time, method, manner or order of
grant, attachment or the perfection of any security interest or lien granted to
any Secured Party or any Subordinating Creditor in respect of all or any portion
of any collateral, (b) the order of filing or recordation of financing
statements, mortgages or other security documents, (c) any provision of the
Uniform Commercial Code, any other applicable law or anything in the
Subordinated Loan Documents (as hereinafter defined) to the contrary, (d)
whether the liens securing the Senior Debt are valid, enforceable, void,
avoidable, subordinated, disputed, or allowed, or (e) any other circumstance
whatsoever, the security interests and liens upon the Collateral granted or to
be granted from time to time pursuant to the Credit Agreement and the other Loan
Documents or any other agreements or instruments covering Senior Debt shall in
all respects be first priority and senior


                                        6



security interests and liens and any security interests and liens upon the
Collateral granted or to be granted from time to time pursuant to the
Subordinated Loan Documents or any other agreements or instruments covering the
Subordinated Debt shall in all respects be junior and subordinate to such
security interests and liens upon the Collateral granted pursuant to the terms
of the Credit Agreement and the other Loan Documents.

          14. Release of Liens. In the event of any private or public sale or
other disposition of all or any portion of the Collateral by or with the consent
of the Agent, on behalf of the Secured Parties, or as otherwise permitted by the
Credit Agreement, at any time prior to the date upon which the Discharge of
Senior Debt shall have occurred, each Subordinating Creditor agrees that such
sale or disposition will be free and clear of the liens and security interests
securing the Subordinated Debt (if any) of such Subordinating Creditor and, if
the sale or other disposition includes Equity Interests (as defined below) in
any Applicable Debtor, such Subordinating Creditor agrees to release the
entities whose Equity Interests are sold from all Subordinated Debt so long as
the Agent also releases the entities whose Equity Interests are sold or disposed
of from all Senior Debt. In furtherance thereof, each Subordinating Creditor
agrees that (a) the Agent is authorized to file any and all Uniform Commercial
Code lien releases and/or terminations of the liens and security interests in
respect of property of the Applicable Debtor held by such Subordinating Creditor
in connection with such a sale or other disposition, and (b) it will execute any
and all lien and security interest releases or other documents necessary to
release liens on property of the Applicable Debtor reasonably requested by the
Agent in connection therewith. For purposes hereof, "Equity Interests" means
Capital Stock (as defined below) and all warrants, options, or other rights to
acquire Capital Stock (but excluding any debt security that is convertible into,
or exchangeable for, Capital Stock), and "Capital Stock" means (i) in the case
of a corporation, corporate stock, (ii) in the case of an association or
business entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, (iii) in the case of a
partnership or limited liability company, partnership or membership interests
(whether general or limited), and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of property of, the issuing Person.

          15. Endorsement of Note; Other Documents. Each of the Subordinating
Creditors agrees to mark all agreements, bonds, debentures, notes or other
similar instruments relating to the Subordinated Debt (the "Subordinated Loan
Documents") and all other evidences of, or instruments relating to, Subordinated
Debt with a notation in substantially the following form:

          "THIS NOTE IS SUBJECT TO THE TERMS AND PROVISIONS OF THE SUBORDINATION
          AGREEMENT EXECUTED BY THE PAYEE AND THE OTHER PARTIES THERETO IN FAVOR
          OF WELLS FARGO FOOTHILL, INC. DATED AS OF APRIL 5, 2007,"

and to deliver proof of such notation to the Agent. If, upon the occurrence and
during the continuation of an Event of Default, the Agent requires the
possession of any of the Subordinated Loan Documents in order to present claims
or seek enforcement against the Applicable Debtors for payment under the
Subordinated Loan Documents in accordance with the provisions of this
Subordination Agreement, the Subordinating Creditors agree, subject to the terms
hereof, to


                                        7



endorse and deliver such Subordinated Loan Documents to the Agent. The
Subordinating Creditors and the Applicable Debtors will at their expense and at
any time and from time to time promptly execute and deliver all further
instruments and documents and take all further action that may be reasonably
necessary to protect any right or interest of the Secured Parties granted
hereunder or to enable the Secured Parties to exercise and enforce their rights
and remedies hereunder.

          16. Modifications to the Subordinated Loan Documents. Except as
otherwise expressly permitted under the Credit Agreement or any other applicable
Loan Document, none of the Subordinated Loan Documents shall be amended or
otherwise modified without obtaining the prior written consent of the Agent, or
as otherwise permitted under the Credit Agreement, so as to provide for (a) any
increase in the rate of interest charged thereunder as in effect on the date
hereof, (b) any increase in the principal amount or any installment due
thereunder, (c) any reduction of the maturity date of any payment of principal
or interest, (d) the granting or obtaining of any collateral security or
obtaining any lien on any collateral or (e) any other amendment or modification
which would result in a Material Adverse Change with respect to the operations
of the Applicable Debtors, the Agent's security interests in the Collateral or
the claims of the Secured Parties.

          17. No Impairment of Applicable Debtors' Obligations. Subject to all
of the Secured Parties' rights as provided in this Subordination Agreement,
nothing contained in this Subordination Agreement shall impair, as between the
Applicable Debtors, on the one hand, and the Subordinating Creditors, on the
other hand, the obligation of the Applicable Debtors, which is unconditional and
absolute, to pay the Subordinated Debt to the Subordinating Creditors as and
when all or any portion thereof shall become due and payable in accordance with
its terms or prevent the Subordinating Creditors, upon any default under the
Subordinated Debt, from exercising all rights, powers and remedies otherwise
provided therein or by applicable law.

          18. Subrogation. Until the Discharge of Senior Debt shall have
occurred and this Subordination Agreement is terminated as provided herein, the
Subordinating Creditors shall not assert or be entitled to any subrogation
rights. Subject to the immediately preceding sentence, if any payment or
distribution to which any of the Subordinating Creditors would otherwise have
been entitled (but for the provisions of this Subordination Agreement) shall
have been turned over to the Agent or otherwise applied to the payment of the
Senior Debt pursuant to the provisions of this Subordination Agreement, then
such Subordinating Creditor shall be entitled to receive from the Agent any
payments or distributions received by the Secured Parties in excess of the
amount sufficient to effect the Discharge of Senior Debt, and upon such
Discharge of Senior Debt shall be subrogated (without any representation by, or
any recourse whatsoever to, the Secured Parties) to all rights of the Secured
Parties to receive all further payments or distributions applicable to the
Senior Debt or the Subordinated Debt until the Subordinated Debt shall have been
paid in full. For purposes of the Subordinating Creditors' subrogation rights
hereunder, payments to the Secured Parties with respect to the Senior Debt which
the Subordinating Creditors would have been entitled to receive with respect to
the Subordinated Debt but for the provisions of this Subordination Agreement
shall not, as between the Applicable Debtors, their respective creditors (other
than the Secured Parties) and the Subordinating Creditors, be deemed payments
with respect to the Senior Debt.


                                        8



          19. Entire Agreement, etc. This Subordination Agreement embodies the
whole agreement of the parties with respect to the subject matter hereof and may
not be modified except in writing executed and delivered by the parties hereto.
The failure of the Secured Parties, or any one of them, to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same
or any other rights at any other time and from time to time thereafter, and such
rights shall be considered as cumulative rather than alternative. No knowledge
of any breach or other non-observance by the Subordinating Creditors of the
terms and provisions of this Subordination Agreement shall constitute a waiver,
nor a waiver of any obligations to be performed by the Subordinating Creditors
hereunder.

          20. Notices. All notices and other communications hereunder shall be
sent in accordance with the provisions of, and to the addresses set forth in,
Section 11 of the Credit Agreement, and if to any Subordinating Creditor that is
not a party to the Credit Agreement, to the address set forth for the
Administrative Borrower in the Credit Agreement.

          21. Construction. Except as otherwise expressly provided herein, the
rules of interpretation set forth in Section 1.4 of the Credit Agreement shall
apply mutatis mutandis to this Subordination Agreement.

          22. CHOICE OF LAW; JURISDICTION; JURY TRIAL WAIVER; ETC. THIS
SUBORDINATION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AGREES THAT ANY
FEDERAL DISTRICT COURT IN THE STATE OF NEW YORK AND COUNTY OF NEW YORK OR ANY
STATE COURT LOCATED IN NEW YORK COUNTY, NEW YORK SHALL HAVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE PARTIES HERETO
PERTAINING DIRECTLY OR INDIRECTLY TO THIS SUBORDINATION AGREEMENT OR TO ANY
MATTER ARISING HEREFROM. EACH OF THE PARTIES HERETO EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED
IN SUCH COURT. EACH OF THE PARTIES HERETO WAIVES ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE VENUE OF ANY PROCEEDING IN ANY SUCH COURT OR THAT SUCH
PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR
CLAIM THE SAME. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO A JURY TRIAL AS
TO ANY DISPUTE UNDER THIS SUBORDINATION AGREEMENT.

          23. Counterparts; Effectiveness. This Subordination Agreement and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts (and by facsimile or other electronic transmission) and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.

          24. Severability. Any provision of this Subordination Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions


                                        9



hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

          25. Section Headings. The section headings used in this Subordination
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.

                           [Signature Pages to follow]


                                       10



          IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Subordination Agreement effective as of the date first above written.

SUBORDINATING CREDITORS:                TB WOOD'S INCORPORATED,
                                        a Pennsylvania corporation, as a
                                        Subordinating Creditor


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------


                                        PLANT ENGINEERING CONSULTANTS, LLC,
                                        a Tennessee limited liability company,
                                        as a Subordinating Creditor


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------


                                        TB WOOD'S ENTERPRISES, INC.,
                                        a Delaware corporation, as a
                                        Subordinating Creditor


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------


                                        TB WOOD'S CORPORATION,
                                        a Delaware corporation, as a
                                        Subordinating Creditor


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------

            [SIGNATURE PAGE TO INTERCOMPANY SUBORDINATION AGREEMENT]



                                        ACCEPTED AND AGREED TO
                                        AS OF THE DATE FIRST ABOVE WRITTEN:


                                        WELLS FARGO FOOTHILL, INC.,
                                        a California corporation, as Agent


                                        By: /s/ Vincent J. Egan, Jr.
                                            ------------------------------------
                                        Name: Vincent J. Egan, Jr.
                                              ----------------------------------
                                        Title: VP
                                               ---------------------------------

            [SIGNATURE PAGE OF INTERCOMPANY SUBORDINATION AGREEMENT]

EX-10.41

                                                                   EXHIBIT 10.41

                            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 and the Bank Product Providers (together with its
successors and assigns in such capacity, "Agent").

                                   WITNESSETH:

     WHEREAS, pursuant to that certain Credit Agreement dated of November 30,
2004 (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, including all exhibits and schedules thereto, the
"Credit Agreement") among Altra Industrial Motion, Inc., 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 and the Bank Product
Providers, that certain Security Agreement dated as of November 30, 2004
(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 and the Bank
Product Providers, 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 and the Bank Product
Providers, 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 and the Bank Product Providers, 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: VP, 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: VP, CFO and Corporate Secretary
                                               ---------------------------------


                                        TB WOOD'S ENTERPRISES, INC.,
                                        a Delaware corporation, as a Grantor


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------


                                        TB WOOD'S CORPORATION,
                                        a Delaware corporation, as a Grantor


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------

                   SIGNATURE PAGE OF 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 PATENT SECURITY AGREEMENT



                                   SCHEDULE I
                                       TO
                            PATENT SECURITY AGREEMENT

                         PATENTS AND PATENT APPLICATIONS



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

EX-10.42

                                                                   EXHIBIT 10.42

                          TRADEMARK SECURITY AGREEMENT

     This TRADEMARK SECURITY AGREEMENT (this "Trademark Security Agreement") is
made this 5th day of April, 2007, among 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 Agent for the
Lender Group and the Bank Product Providers (together with its successors and
assigns in such capacity, "Agent").

                                   WITNESSETH:

     WHEREAS, pursuant to that certain Credit Agreement dated of November 30,
2004 (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, including all exhibits and schedules thereto, the
"Credit Agreement") among Altra Industrial Motion, Inc., a Delaware corporation
("Parent"), each of Parent's 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 the 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 Grantors shall have executed and
delivered to Agent, for the benefit of Lender Group and the Bank Product
Providers, that certain Security Agreement dated as of November 30, 2004
(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 Lender Group and the Bank
Product Providers, this Trademark 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 TRADEMARK COLLATERAL. Each Grantor hereby
grants to Agent, for the benefit of the Lender Group and the Bank Product
Providers, 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 "Trademark Collateral"):

          (a) all of its Trademarks and rights in and to Trademark Intellectual
Property Licenses to which it is a party including those referred to on Schedule
I hereto;

          (b) all extensions, modifications and renewals of the foregoing;

          (c) all goodwill of the business connected with the use of, and
symbolized by, each Trademark; and

          (d) all products and proceeds of the foregoing, including, without
limitation, any claim by such Grantor against third parties for past, present or
future (i) infringement or dilution of any Trademark, or (ii) injury to the
goodwill associated with any Trademark.



     3. SECURITY AGREEMENT. The security interests granted pursuant to this
Trademark Security Agreement are granted in conjunction with the security
interests granted to Agent, for the benefit of the Lender Group and the Bank
Product Providers, 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 Trademark 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
trademarks, registrations, or applications therefor (including, without
limitation, extensions or renewals) which become part of the Trademark
Collateral under the Security Agreement. Notwithstanding the foregoing, no
failure to so modify this Trademark 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 Trademark 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 Trademark 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: VP, 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: VP, CFO and Corporate Secretary
                                               ---------------------------------


                                        TB WOOD'S ENTERPRISES, INC.,
                                        a Delaware corporation, as a Grantor


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------

                                        TB WOOD'S CORPORATION,
                                        a Delaware corporation, as a Grantor


                                        By: /s/ Joseph C. Horvath
                                            ------------------------------------
                                        Name: Joseph C. Horvath
                                              ----------------------------------
                                        Title: VP, CFO and Corporate Secretary
                                               ---------------------------------


                [SIGNATURE PAGE OF TRADEMARK 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 TRADEMARK SECURITY AGREEMENT



                                   SCHEDULE I
                                       to
                          TRADEMARK SECURITY AGREEMENT

                      TRADEMARK REGISTRATIONS/APPLICATIONS



                                                  APPLICATION/
    GRANTOR              COUNTRY     MARK         REGISTRATION NO.   APP/REG DATE
- ---------------          -------     ----         ----------------   ------------
                                                         
TB Wood's           United States   ALL-PRO          75/290,731/     5/12/1997/
Enterprises, Inc.                                    2,165,737       6/16/1998
TB Wood's           United States   BRAKETRON        73/254,657/     3/19/1980/
Enterprises, Inc.                                    1,164,393       8/11/1981
TB Wood's           United States   DECK             73/581,633/     2/7/1986/
Enterprises, Inc.                   (stylized)       1,409,209       9/16/1986
TB Wood's           United States   DISC-O-TORQUE    72/285,224/     11/20/1967/
Enterprises, Inc.                                    859,264         10/29/1968
TB Wood's           Mexico          DURA-FLEX        267,615/        6/9/1997/
Enterprises, Inc.                                    552,086         6/26/1997
TB Wood's           United States   DURA-FLEX        73/158,649/     2/13/1978/
Enterprises, Inc.                                    1,116,828       4/24/1979
TB Wood's           United States   E-FLOW           75/280,015/     4/23/1997/
Enterprises, Inc.                                    2,169,361       6/30/1998
TB Wood's           United States   E-trAC           73/491,494/     7/24/1984/
Enterprises, Inc.                   (Stylized)       1,333,061       4/30/1985
TB Wood's           United States   E-TROL+PLUS      75/273,178/     4/11/1997/
Enterprises, Inc.                                    2,156,683       5/12/1998
TB Wood's           United States   FIRST IN         73/526,310/     3/11/1985/
Enterprises, Inc.                   COUPLINGS        1,361,466       9/24/1985
TB Wood's           Canada          FORMFLEX         352,690/
Enterprises, Inc.                                    215,307         8/23/1991
TB Wood's           United States   FORM-FLEX        75/273,175/     4/11/1997/
Enterprises, Inc.                                    2,152,362       4/21/1998
TB Wood's           United States   IMD              75/272,935/     4/11/1997/
Enterprises, Inc.                                    2,261,432       7/13/1999
TB Wood's           United States   NLS              75/273,181/     4/11/1997/
Enterprises, Inc.                                    2,152,366       4/21/1998
TB Wood's           Canada          PDA-TRAC         1,210,875/      3/24/2004/
Enterprises, Inc.                                    TMA669,532      8/9/2006
TB Wood's           Mexico          PDA-TRAC         862222/         4/21/2004/
Enterprises, Inc.                                    862222          4/21/2004
TB Wood's           United States   PDA-TRAC         78/329,999      11/19/2003/
Enterprises, Inc.                                    2,986,366       8/16/2005
TB Wood's           United States   PETRO-TRAC       78/052,072/     3/8/2001/
Enterprises, Inc.                                    2,641,082       10/22/2002
TB Wood's           United States   POOLE            75/251,697/     2/28/1997/
Enterprises, Inc.                                    2,191,918       9/29/1998
TB Wood's           Mexico          QT POWER CHAIN   573133/         10/20/2002/
Enterprises, Inc.                                    818826          1/26/2004
TB Wood's           United States   QT POWER CHAIN   76/403,299/     5/2/2002/
Enterprises, Inc.                                    2,723,745       6/10/2003
TB Wood's           United States   ROTO-CAM         72/285,223/     11/20/1967/
Enterprises, Inc.                                    859,263         10/29/1968
TB Wood's           United States   ROTO-CONE        72/015,359/     9/10/1956/
Enterprises, Inc.                                    676,279         3/31/1959
TB Wood's           Canada          SPEEDLIGN        1,223,603/      7/14/2004/
Enterprises, Inc.                                    TMA665,131      5/29/2006
TB Wood's           Mexico          SPEEDLIGN        666,531/        7/14/04/
Enterprises, Inc.                                    896,028         8/23/05
TB Wood's           United States   SPEEDLIGN        78/350,700/     1/12/2004/
Enterprises, Inc.                                    2,991,827       9/6/2005
TB Wood's           United States   S-TRAC           75/272,936/     4/11/1997/
Enterprises, Inc.                                    2,257,668       6/29/1999
TB Wood's           United States   SUPERSTART       74/104,389/     10/9/1990/
Enterprises, Inc.                                    1,686,040       5/12/1992
TB Wood's           United States   SURE GRIP        71/640,418/     1/6/1953/
Enterprises, Inc.                   (stylized)       645,415         5/14/1957
TB Wood's           Great Britain   SUREFLEX         B998,327/       9/13/1993
Enterprises, Inc.                                    B998,327
TB Wood's           Australia       SURE-FLEX        B375,472/       5/13/1982/
Enterprises, Inc.                                    B375,472        5/13/1989
TB Wood's           Canada          SURE-FLEX        645,519/        11/23/1989/
Enterprises, Inc.                                    380,915         3/1/1991
TB Wood's           Japan           SURE-FLEX        40,343/1982/    5/12/1982/
Enterprises, Inc.                                    1,923,250       12/24/1986
TB Wood's           Switzerland     SURE-FLEX        405,626/        9/14/1992/
Enterprises, Inc.                                    405,626         9/14/1992
TB Wood's           United States   SURE-FLEX        72/043,720/     1/9/1958/
Enterprises, Inc.                   (stylized)       668,649         10/21/1958
TB Wood's           Japan           SUREFLEX         7-700836/       1/13/1995/
Enterprises, Inc.                   and Katakana     1,740,974       1/23/1995
TB Wood's           United States   SURE-GRIP        71/575,508/     3/15/1949/
Enterprises, Inc.                                    646,423         6/4/1957
TB Wood's           United States   SURE-GRIP        73/136,699/     8/8/1977/
Enterprises, Inc.                                    1,109,150       12/19/1978
TB Wood's           United States   TRUETUBE         75/273,177/     4/11/1997/
Enterprises, Inc.                                    2,152,364       4/21/1998
TB Wood's           United States   ULTRACON         72/300,318/     6/13/1968/
Enterprises, Inc.                                    862,655         12/31/1968
TB Wood's           United States   ULTRACON II      75/273,179/     4/11/1997/
Enterprises, Inc.                                    2,150,835       4/14/1998
TB Wood's           United States   ULTRA-HELIX      75/559,570/     9/25/1998/
Enterprises, Inc.                                    2,351,349       5/23/2000
TB Wood's           United States   ULTRA-V          73/001,734/     10/9/1973/
Enterprises, Inc.                                    1,001,969       1/21/1975
TB Wood's           United States   ULTRA-V          73/003,203/     10/10/1973/
Enterprises, Inc.                                    1,001,970       1/21/1975
TB Wood's           United States   U-TROL           73/104,511/     10/26/1976/
Enterprises, Inc.                                    1,070,167       7/26/1977
TB Wood's           United States   VAR-A-CONE       75/273,180/     4/11/1997/
Enterprises, Inc.                                    2,152,365       4/21/1998
TB Wood's           United States   W TB WOOD'S      75/107,136/     5/20/1996/
Enterprises, Inc.                   (and design)     2,059,245       5/6/1997
TB Wood's           Canada          WIN-TRAC         1,210,868/      3/24/2004/
Enterprises, Inc.                                    TMA664,172      5/12/2006
TB Wood's           Community       WIN-TRAC         3.828.019/      5/20/2004/
Enterprises, Inc.   Trademark                        3.828.019       11/15/2005
TB Wood's           Mexico          WIN-TRAC         653047          4/21/2004
Enterprises, Inc.
TB Wood's           United States   WIN-TRAC         78/306,778/     9/29/2003/
Enterprises, Inc.                                    2,961,309       6/7/2005
TB Wood's           Mexico          WOOD'S WORK      573134/         10/30/2002/
Enterprises, Inc.                                    904275          11/30/2002
TB Wood's           United States   WOOD'S@WORK      76/402,992/     5/2/2002/
Enterprises, Inc.                                    2,801,090       12/30/2003
TB Wood's Sons      Germany         FORM-FLEX        D 36648 7W2/    9/22/1983/
Company                                              1,053,953       9/23/1983
TB Wood's Sons      Germany         SUREFLEX         W24959/         4/5/1973/
Company                                              926 107         12/17/1974
TB Wood's           Argentina       DURA-FLEX        2,066,443/      1/23/1997/
Incorporated                                         1,783,301       3/27/2000
TB Wood's           Community       DURA-FLEX        507.277         2/7/1997
Incorporated        Trademark
TB Wood's           Japan           DURA-FLEX        27318/97/       3/17/1997/
Incorporated                                         4,166,483       7/10/1998
TB Wood's           Malaysia        DURA-FLEX        97/01971        2/19/1997
Incorporated
TB Wood's           Taiwan          DURA-FLEX        (86)5713/       2/1/1997/
Incorporated                                         807300          7/1/1998
TB Wood's           Japan           FORMFLEX         41,517/85/      8/19/1987/
Incorporated                                         1,975,830       8/19/1997
TB Wood's           Venezuela       PETRO-TRAC       2001-016447/    9/7/2001/
Incorporated                                         P-245856        8/22/2003
TB Wood's           Canada          QT POWER CHAIN   1,157,003/      10/25/2002/
Incorporated                                         TMA623,038      10/20/2004
TB Wood's           France          SPEEDLIGN        717,131/        6/19/1974/
Incorporated                                         1,286,266       6/19/1974
TB Wood's           Germany         SPEEDLIGN        935,511/
Incorporated                                         935,511         6/10/1974
TB Wood's           Great Britain   SPEEDLIGN        99999/
Incorporated                                         1,029,397       5/13/1974
TB Wood's           Singapore       SUREFLEX         2556/82/        5/21/1982/
Incorporated                                         T82/02556B      5/21/1982
TB Wood's           Benelux         SURE-FLEX        0316801/        10/20/1972/
Incorporated                                         0316801         10/20/1972
TB Wood's           Brazil          SURE-FLEX        810,942,631/    8/23/1982/
Incorporated                                         810,942,631     3/19/1995
TB Wood's           France          SURE-FLEX        02 3 196 347/   11/27/2002/
Incorporated                                         02 3 196 347    11/27/2002
TB Wood's           Italy           SURE-FLEX        MI2003002784/   9/25/1992/
Incorporated                                         654849          9/25/1974
TB Wood's           Canada          WOOD'S@WORK      1,157,004/      10/25/2002/
Incorporated                                         TMA626,975      11/29/2004

EX-10.43

                                                                   EXHIBIT 10.43

                            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 THE BANK OF NEW YORK TRUST COMPANY, N.A., in its capacity as
Collateral Agent for itself, the Holders and the Trustee (together with its
successors and assigns in such capacity, "Collateral Agent").

                              W I T N E S S E T H:

      WHEREAS, pursuant to that certain Indenture dated of November 30, 2004 (as
amended, restated, amended and restated, supplemented or otherwise modified from
time to time, including all exhibits and schedules thereto, the "Indenture")
among Altra Industrial Motion, Inc., a Delaware corporation ("Company"), each of
the Guarantors named therein ("Guarantors"), The Bank of New York Trust Company,
N.A., as Trustee (in such capacity, the "Trustee"), and Collateral Agent,
Company has issued to the Holders its 9% Senior Secured Notes Due 2011, and may
issue from time to time additional notes in connection with the provisions of
the Indenture (as the same may be amended and restated, supplemented or
otherwise modified from time to time, collectively, the "Notes");

      WHEREAS, as a condition precedent to the initial purchase by the Holders
of the Notes, Company and Guarantors (each in their respective capacity as a
Grantor) executed and delivered to Collateral Agent, for the benefit of the
Holders, Trustee and Collateral Agent, that certain Security Agreement dated as
of November 30, 2004 (including all annexes, exhibits or schedules thereto, as
from time to time amended and restated, supplemented or otherwise modified, the
"Security Agreement");

      WHEREAS, as a condition precedent to the purchase by the Holders of
additional Notes in the aggregate principal amount of $105,000,000, the Grantors
shall have executed and delivered to Collateral Agent, for the benefit of the
Holders, Trustee and Collateral Agent, that certain Supplement No. 1 to Security
Agreement dated as of the date hereof (including all annexes, exhibits or
schedules thereto, the "Supplement"); and

      WHEREAS, pursuant to the Security Agreement, as modified by the
Supplement, the Grantors are required to execute and deliver to Collateral
Agent, for the benefit of the Trustee and the Holders, 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
Indenture.

      2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby
grants to Collateral Agent, for the benefit of the Trustee, the Collateral Agent
and the Holders, 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 Collateral Agent, for the benefit of the Trustee, the Collateral
Agent and the Holders, pursuant to the Security Agreement. Each Grantor hereby
acknowledges and affirms that the rights and remedies of Collateral 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 Collateral 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 Collateral 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/ William T. Fejes, Jr.
                                                -------------------------------
                                            Name: William T. Fejes, Jr.
                                            Title: President, CEO and Director

                                      PLANT ENGINEERING CONSULTANTS, LLC,
                                      a Tennessee limited liability company, as
                                      a Grantor

                                            By: /s/ William T. Fejes, Jr.
                                                -------------------------------
                                            Name: William T. Fejes, Jr.
                                            Title: President

                                      TB WOOD'S ENTERPRISES, INC.,
                                      a Delaware corporation, as a Grantor

                                            By: /s/ Joseph C. Horvath
                                                -------------------------------
                                            Name: Joseph C. Horvath
                                            Title: President and Treasurer

                                      TB WOOD'S CORPORATION,
                                      a Delaware corporation, as a Grantor



                                            By: /s/ William T. Fejes, Jr.
                                                -------------------------------
                                            Name: William T. Fejes, Jr.
                                            Title: President, CEO and Director

COLLATERAL AGENT:                     THE BANK OF NEW YORK TRUST COMPANY, N.A.,
                                      as Collateral Agent

                                      By:    /s/ Sandee Parks
                                             ----------------------------------
                                      Name:  Sandee Parks
                                             ----------------------------------
                                      Title: Vice President
                                             ----------------------------------


                   SIGNATURE PAGE OF PATENT SECURITY AGREEMENT



                     SCHEDULE I TO PATENT SECURITY AGREEMENT

                         PATENTS AND PATENT APPLICATIONS



                                                           REGISTRATION     REGISTRATION
   GRANTOR          COUNTRY              PATENT                 NO.            DATE
   -------          -------              ------                 ---            ----
                                                                
TB Wood's        United States     Housing for Motor         D343,387         1/18/1994
Incorporated                       Control Equipment

TB Wood's        United States     Combination of a         5,465,804        11/14/1995
Incorporated                       Power Steering Pump
                                   and Air Conditioning
                                   Compressor in an
                                   Automotive Vehicle

TB Wood's        United States     Shaft Mountable          5,304,101         4/19/1994
Incorporated                       Bushing and Hub for
                                   Industrial Power
                                   Transmissions

TB Wood's        United States     Precision Winding        6,311,920         11/6/2001
Incorporated                       Method and Apparatus

TB Wood's        United States     Flexible Coupling        5,611,732         3/18/1997
Incorporated                       with End Stress
                                   Relief Structure

EX-10.44

                                                                   EXHIBIT 10.44

                          TRADEMARK SECURITY AGREEMENT

      This TRADEMARK SECURITY AGREEMENT (this "Trademark 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 THE BANK OF NEW YORK TRUST COMPANY, N.A., in its
capacity as Collateral Agent for itself, the Holders and the Trustee (together
with its successors and assigns in such capacity, "Collateral Agent").

                              W I T N E S S E T H:

      WHEREAS, pursuant to that certain Indenture dated of November 30, 2004 (as
amended, restated, amended and restated, supplemented or otherwise modified from
time to time, including all exhibits and schedules thereto, the "Indenture")
among Altra Industrial Motion, Inc., a Delaware corporation ("Company"), each of
the Guarantors named therein ("Guarantors"), The Bank of New York Trust Company,
N.A., as Trustee (in such capacity, the "Trustee"), and Collateral Agent,
Company has issued to the Holders its 9% Senior Secured Notes Due 2011, and may
issue from time to time additional notes in connection with the provisions of
the Indenture (as the same may be amended and restated, supplemented or
otherwise modified from time to time, collectively, the "Notes");

      WHEREAS, as a condition precedent to the initial purchase by the Holders
of the Notes, Company and Guarantors (each in their respective capacity as a
Grantor) executed and delivered to Collateral Agent, for the benefit of the
Holders, Trustee and Collateral Agent, that certain Security Agreement dated as
of November 30, 2004 (including all annexes, exhibits or schedules thereto, as
from time to time amended and restated, supplemented or otherwise modified, the
"Security Agreement")

      WHEREAS, as a condition precedent to the purchase by the Holders of
additional Notes in the aggregate principal amount of $105,000,000, the Grantors
shall have executed and delivered to Collateral Agent, for the benefit of the
Holders, Trustee and Collateral Agent, that certain Supplement No. 1 to Security
Agreement dated as of the date hereof (including all annexes, exhibits or
schedules thereto, the "Supplement"); and

      WHEREAS, pursuant to the Security Agreement, as modified by the
Supplement, the Grantors are required to execute and deliver to Collateral
Agent, for the benefit of the Trustee, the Collateral Agent and the Holders,
this Trademark 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
Indenture.

      2. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL. Each Grantor hereby
grants to Collateral Agent, for the benefit of the Trustee and the Holders, 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
"Trademark Collateral"):

            (a) all of its Trademarks and rights in and to Trademark
Intellectual Property Licenses to which it is a party including those referred
to on Schedule I hereto;

            (b) all extensions, modifications and renewals of the foregoing;




            (c) all goodwill of the business connected with the use of, and
symbolized by, each Trademark; and

            (d) all products and proceeds of the foregoing, including, without
limitation, any claim by such Grantor against third parties for past, present or
future (i) infringement or dilution of any Trademark, or (ii) injury to the
goodwill associated with any Trademark.

      3. SECURITY AGREEMENT. The security interests granted pursuant to this
Trademark Security Agreement are granted in conjunction with the security
interests granted to Collateral Agent, for the benefit of the Trustee, the
Collateral Agent and the Holders, pursuant to the Security Agreement. Each
Grantor hereby acknowledges and affirms that the rights and remedies of
Collateral Agent with respect to the security interest in the Trademark
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 Collateral Agent
unilaterally to modify this Agreement by amending Schedule I to include any
trademarks, registrations, or applications therefor (including, without
limitation, extensions or renewals) which become part of the Trademark
Collateral under the Security Agreement. Notwithstanding the foregoing, no
failure to so modify this Trademark 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 Trademark 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 Trademark 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/ William T. Fejes, Jr.
                                                --------------------------------
                                            Name: William T. Fejes, Jr.
                                            Title: President, CEO and Director

                                      PLANT ENGINEERING CONSULTANTS, LLC,
                                      a Tennessee limited liability company, as
                                      a Grantor

                                            By: /s/ William T. Fejes, Jr.
                                                --------------------------------
                                            Name: William T. Fejes, Jr.
                                            Title: President

                                      TB WOOD'S ENTERPRISES, INC.,
                                      a Delaware corporation, as a Grantor

                                            By: /s/ Joseph C. Horvath
                                                --------------------------------
                                            Name: Joseph C. Horvath
                                            Title: President and Treasurer

                                      TB WOOD'S CORPORATION,
                                      a Delaware corporation, as a Grantor

                                            By: /s/ William T. Fejes, Jr.
                                                --------------------------------
                                            Name: William T. Fejes, Jr.
                                            Title: President, CEO and Director

COLLATERAL AGENT:                     THE BANK OF NEW YORK TRUST
                                      COMPANY, N.A.,
                                      as Collateral Agent

                                      By:    /s/ Sandee Parks
                                             -----------------------------------
                                      Name:  Sandee Parks
                                             -----------------------------------
                                      Title: Vice President
                                             -----------------------------------

                SIGNATURE PAGE OF TRADEMARK SECURITY AGREEMENT




                                   SCHEDULE I
                                       to
                          TRADEMARK SECURITY AGREEMENT

                      TRADEMARK REGISTRATIONS/APPLICATIONS



                                                  APPLICATION/
    GRANTOR                                       REGISTRATION
                     COUNTRY          MARK             NO.        APP/REG DATE
- --------------------------------------------------------------------------------
                                                     
TB Wood's        United States   ALL-PRO         75/290,731/     5/12/1997/
Enterprises,                                     2,165,737       6/16/1998
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   BRAKETRON       73/254,657/     3/19/1980/
Enterprises,                                     1,164,393       8/11/1981
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   DECK            73/581,633/     2/7/1986/
Enterprises,                                     1,409,209       9/16/1986
Inc.                             (stylized)
- --------------------------------------------------------------------------------
TB Wood's        United States   DISC-O-TORQUE   72/285,224/     11/20/1967/
Enterprises,                                     859,264         10/29/1968
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   DURA-FLEX       73/158,649/     2/13/1978/
Enterprises,                                     1,116,828       4/24/1979
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   E-FLOW          75/280,015/     4/23/1997/
Enterprises,                                     2,169,361       6/30/1998
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   E-trAC          73/491,494/     7/24/1984/
Enterprises,                     (Stylized)      1,333,061       4/30/1985
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   E-TROL+PLUS     75/273,178/     4/11/1997/
Enterprises,                                     2,156,683       5/12/1998
Inc.
- --------------------------------------------------------------------------------



                                       i




                                                  APPLICATION/
    GRANTOR                                       REGISTRATION
                     COUNTRY          MARK             NO.        APP/REG DATE
- --------------------------------------------------------------------------------
                                                     
TB Wood's        United States   FIRST IN        73/526,310/     3/11/1985/
Enterprises,                     COUPLINGS       1,361,466       9/24/1985
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   FORM-FLEX       75/273,175/     4/11/1997/
Enterprises,                                     2,152,362       4/21/1998
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   IMD             75/272,935/     4/11/1997/
Enterprises,                                     2,261,432       7/13/1999
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   NLS             75/273,181/     4/11/1997/
Enterprises,                                     2,152,366       4/21/1998
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   PDA-TRAC        78/329,999      11/19/2003/
Enterprises,                                     2,986,366       8/16/2005
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   PETRO-TRAC      78/052,072/     3/8/2001/
Enterprises,                                     2,641,082       10/22/2002
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   POOLE           75/251,697/     2/28/1997/
Enterprises,                                     2,191,918       9/29/1998
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   QT POWER CHAIN  76/403,299/     5/2/2002/
Enterprises,                                     2,723,745       6/10/2003
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   ROTO-CAM        72/285,223/     11/20/1967/
Enterprises,                                     859,263         10/29/1968
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   ROTO-CONE       72/015,359/     9/10/1956/
Enterprises,                                     676,279         3/31/1959
Inc.
- --------------------------------------------------------------------------------



                                       ii




                                                  APPLICATION/
    GRANTOR                                       REGISTRATION
                     COUNTRY          MARK             NO.        APP/REG DATE
- --------------------------------------------------------------------------------
                                                     
TB Wood's        United States   SPEEDLIGN       78/350,700/     1/12/2004/
Enterprises,                                     2,991,827       9/6/2005
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   S-TRAC          75/272,936/     4/11/1997/
Enterprises,                                     2,257,668       6/29/1999
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   SUPERSTART      74/104,389/     10/9/1990/
Enterprises,                                     1,686,040       5/12/1992
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   SURE GRIP       71/640,418/     1/6/1953/
Enterprises,                     (stylized)      645,415         5/14/1957
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   SURE-FLEX       72/043,720/     1/9/1958/
Enterprises,                                     668,649         10/21/1958
Inc.                             (stylized)
- --------------------------------------------------------------------------------
TB Wood's        United States   SURE-GRIP       71/575,508/     3/15/1949/
Enterprises,                                     646,423         6/4/1957
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   SURE-GRIP       73/136,699/     8/8/1977/
Enterprises,                                     1,109,150       12/19/1978
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   TRUETUBE        75/273,177/     4/11/1997/
Enterprises,                                     2,152,364       4/21/1998
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   ULTRACON        72/300,318/     6/13/1968/
Enterprises,                                     862,655         12/31/1968
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   ULTRACON II     75/273,179/     4/11/1997/
Enterprises,                                     2,150,835       4/14/1998
Inc.
- --------------------------------------------------------------------------------



                                       iii




                                                  APPLICATION/
    GRANTOR                                       REGISTRATION
                     COUNTRY          MARK             NO.        APP/REG DATE
- --------------------------------------------------------------------------------
                                                     
TB Wood's        United States   ULTRA-HELIX     75/559,570/     9/25/1998/
Enterprises,                                     2,351,349       5/23/2000
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   ULTRA-V         73/001,734/     10/9/1973/
Enterprises,                                     1,001,969       1/21/1975
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   ULTRA-V         73/003,203/     10/10/1973/
Enterprises,                                     1,001,970       1/21/1975
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   U-TROL          73/104,511/     10/26/1976/
Enterprises,                                     1,070,167       7/26/1977
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   VAR-A-CONE      75/273,180/     4/11/1997/
Enterprises,                                     2,152,365       4/21/1998
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   W TB WOOD'S     75/107,136/     5/20/1996/
Enterprises,                     (and design)    2,059,245       5/6/1997
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   WIN-TRAC        78/306,778/     9/29/2003/
Enterprises,                                     2,961,309       6/7/2005
Inc.
- --------------------------------------------------------------------------------
TB Wood's        United States   WOOD'S@WORK     76/402,992/     5/2/2002/
Enterprises,                                     2,801,090       12/30/2003
Inc.
- --------------------------------------------------------------------------------



                                       iv

EX-12.1

                                                                               .
                                                                               .
                                                                               .

                                                                    EXHIBIT 12.1

                             ALTRA INDUSTRIAL MOTION
                       RATIO OF EARNINGS TO FIXED CHARGES
                                  ($ IN 000'S)



                                                                                                 PREDECESSOR
                                                                              ------------------------------------------------
                                      PRO-FORMA                                  FROM      11 MONTHS
                                      YEAR ENDED    YEAR ENDED   YEAR ENDED    INCEPTION     ENDED     YEAR ENDED   YEAR ENDED
                                       DEC. 31,      DEC. 31,     DEC. 31,    DEC. 1-31,    NOV. 30,    DEC. 31,     DEC. 31,
                                         2006          2006         2005          2004        2004        2003         2002
                                      ----------    ----------   ----------   ----------   ---------   ----------   ----------
                                                                                               
Net Income (loss) ..................   $ 6,455        $10,363      $ 4,444     $(5,762)     $ 6,895     $(9,306)    $(108,223)
ADJUSTMENTS TO NET LOSS:
   Cummulative effect of change
      in accounting principle -
      goodwill impairment ..........        --             --           --          --           --          --        83,412
   Loss from discontinued
      operations ...................        --             --           --          --           --          --           700
   Interest expense ................    36,431         23,522       17,065       1,410        4,294       5,368         5,489
   Interest component of
      operating rental expense .....       528            528          344          56          440         488           472
   Income taxes ....................     3,586          6,352        3,917        (221)       5,532      (1,658)        2,455
                                       -------        -------      -------     -------      -------     -------     ---------
EARNINGS ...........................   $47,000        $40,765      $25,770     $(4,517)     $17,161     $(5,108)      (15,695)
                                       =======        =======      =======     =======      =======     =======     =========
Fixed charges
   Interest expense ................   $36,431        $23,522      $17,065     $ 1,410      $ 4,294     $ 5,368     $   5,489
   Interest component of
      operating rental expense .....       528            528          344          56          440         488           472
                                       -------        -------      -------     -------      -------     -------     ---------
TOTAL FIXED CHARGES ................   $36,959        $24,050      $17,409     $ 1,466      $ 4,734     $ 5,856         5,961
                                       -------        -------      -------     -------      -------     -------     ---------
RATIO (1) (2) ......................      1.27           1.70         1.48          --         3.63          --            --
                                       -------        -------      -------     -------      -------     -------     ---------


- ----------
(1)  For purposes of calculating the ratio of earnings to fixed charges,
     earnings represent income before income taxes, discontinued operations,
     cumulative effect of change in accounting principle charges and fixed
     charges. Fixed charges represent interest expense and a portion of rental
     expense which we believe is representative of the interest component of
     rental expense.

(2)  Earnings were insufficient to cover fixed charges in the period December 1
     to December 31, 2004, and each of the years ended December 31, 2003 and
     2002 by $6.0 million, $11.0 million, and $21.7 million, respectively.

EX-21.1

                                                                               .
                                                                               .
                                                                               .
                                                                    EXHIBIT 21.1

                      SUBSIDIARIES OF ALTRA HOLDINGS, INC.





                                                                                                    JURISDICTION OF
NAME OF SUBSIDIARY                                                                                    ORGANIZATION
                                                                                                

- -    Altra Industrial Motion, Inc.                                                                      Delaware
         -   American Enterprises MPT Corp.                                                             Delaware
                -   Nuttall Gear LLC                                                                    Delaware
                -   American Enterprises MPT Holdings, LLC                                              Delaware
                -   Ameridrives International, LLC                                                      Delaware
                -   Formsprag LLC                                                                       Delaware
         -   Warner Electric LLC                                                                        Delaware
         -   Warner Electric Technology LLC                                                             Delaware
         -   Boston Gear LLC                                                                            Delaware
         -   Kilian Manufacturing Corporation                                                           Delaware
                -   3091780 Nova Scotia Company                                                    Nova Scotia, Canada
                -   Kilian Canada, ULC                                                             Nova Scotia, Canada
         -   TB Wood's Corporation                                                                      Delaware
                -   TB Wood's Incorporated                                                            Pennsylvania
                         -   TB Wood's Enterprises, Inc.                                                Delaware
                         -   Plant Engineering Consultants, LLC                                        Tennessee
                         -   T.B. Wood's Canada Ltd.                                                 Ontario, Canada
                         -   Industrial Blaju, S.A. de C.V.                                              Mexico
                         -   Berges Electronic GmbH                                                      Germany
                                  -   Berges Electronic S.r.L.                                           Italy
                         -   TB Wood's (India) Private Ltd.                                              India
         -   Warner Electric International Holding, Inc.                                                Delaware
                -   Warner Electric (Holding) SAS                                                        France
                         -   Warner Electric Europe SAS                                                  France
                -   Warner Electric Group GmbH                                                           Germany
                         -   Warner Electric Verwaltungs GmbH                                            Germany
                         -   Stieber GmbH                                                                Germany
                -   Warner Electric (Netherlands) Holding, B.V.                                        Netherlands
                         -   Warner Electric Australia Pty. Ltd.                                        Australia
                         -   Warner Shui Hing Limited, (HK)                                             Hong Kong
                         -   Warner Electric (Singapore), Ltd.                                          Singapore
                         -   Warner Electric (Taiwan) Ltd.                                               Taiwan
                         -   Warner Electric (Thailand) Ltd.                                             Thailand
                -   Warner Electric UK Group Ltd.                                                     United Kingdom
                         -   Warner Electric UK Holding, Ltd.                                         United Kingdom
                                  -   Wichita Company Ltd.                                            United Kingdom
                         -   Hay Hall Holdings Limited                                                United Kingdom
                                  -   The Hay Hall Group Limited                                      United Kingdom
                                          -   Matrix International, Ltd.                              United Kingdom
                                                  -   Matrix International GmbH                          Germany
                                          -   Inertia Dynamics, LLC                                     Delaware
                                          -   Bibby Group Ltd.                                        United Kingdom
                                                  -   Bibby Transmissions Ltd.                        United Kingdom
                                                          -   Bibby Turboflex SA                      South Africa
                                                          -   Turboflex Ltd.                          United Kingdom
                                                                  -   Torsiflex Ltd.                  United Kingdom
                                                          -   Rathi Turboflex Pty Ltd                     India
                                          -   Huco Power Transmission, Ltd.                           United Kingdom
                                                  -   Huco Engineering Industries Ltd.                United Kingdom
                                                          -   Dynatork Air Motors Ltd.                United Kingdom
                                                          -   Dynatork, Ltd.                          United Kingdom
                                          -   Twiflex Ltd.                                            United Kingdom
                                                  -   Saftek Ltd.                                     United Kingdom

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

     We consent to the reference to our firm under the caption “Experts” and to the use of our report dated March 9, 2007, in the Registration Statement (Form S-4 No. 333-000000) and related Prospectus of Altra Industrial Motion, Inc. for the registration of the 9% Senior Secured Notes due 2011.

/s/ Ernst & Young LLP

Boston, Massachusetts
May 3, 2007

EX-23.2

Exhibit 23.2

Consent of Independent Chartered Accounts

     We hereby consent to the use in the Prospectus constituting a part of this Registration Statement on Form S-4 filed by Altra Industrial Motion, Inc. on 8 May 2007 of our report dated 8 June 2006 relating to the consolidated financial statements of Hay Hall Holdings Limited, which are contained in that Prospectus.

     We also consent to the reference to us under the caption “Experts” in the Prospectus.

/s/ BDO Stoy Hayward LLP Birmingham, United Kingdom
May 08, 2007

EX-23.3

Exhibit 23.3

Consent of Independent Registered Public Accounting Firm

     We have issued our report dated March 1, 2007 accompanying the consolidated financial statements and schedules of TB Wood’s Corporation contained in the Registration Statement on Form S-4 and the related Prospectus of Altra Industrial Motion, Inc. We consent to the use of the aforementioned report in the Registration Statement and Prospectus of Altra Industrial Motion, Inc., and to the use of our name as it appears under the caption “Experts.”

/s/ GRANT THORNTON LLP Baltimore, Maryland
May 2, 2007

EX-25.1

                                                                    EXHIBIT 25.1

================================================================================

                                    FORM T-1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                            STATEMENT OF ELIGIBILITY
                   UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE

                      CHECK IF AN APPLICATION TO DETERMINE
                      ELIGIBILITY OF A TRUSTEE PURSUANT TO
                             SECTION 305(b)(2)                               [ ]

                                   ----------

                    THE BANK OF NEW YORK TRUST COMPANY, N.A.
               (Exact name of trustee as specified in its charter)

                                                          
                                                                  95-3571558
         (State of incorporation                              (I.R.S. employer
      if not a U.S. national bank)                           identification no.)



                                                          
         700 South Flower Street
                Suite 500
         Los Angeles, California                                    90017
(Address of principal executive offices)                          (Zip code)



                                   ----------

                          Altra Industrial Motion, Inc.
               (Exact name of obligor as specified in its charter)

                                                          
            Delaware                                              30-0283143
(State or other jurisdiction of                                (I.R.S. employer
incorporation or organization)                               identification no.)





                             ADDITIONAL REGISTRANTS



                                                 STATE OR
                                                  OTHER
                                               JURISDICTION
                                                    OF
                                              INCORPORATION
          EXACT NAME OF REGISTRANT                  OR          I.R.S. EMPLOYER
        AS SPECIFIED IN ITS CHARTER            ORGANIZATION   IDENTIFICATION NO.
        ---------------------------           -------------   ------------------
                                                        
      American Enterprises MPT Corp.             Delaware         52-2005169
  American Enterprises MPT Holdings, LLC         Delaware         52-2005171
      Ameridrives International, LLC             Delaware         52-1826102
              Boston Gear LLC                    Delaware         11-3723980
               Formsprag LLC                     Delaware         01-0712538
           Inertia Dynamics, LLC                 Delaware         20-4221420
     Kilian Manufacturing Corporation            Delaware         06-0933715
            Nuttall Gear L L C                   Delaware         54-1856788
          TB Wood's Incorporated               Pennsylvania       23-1232420
    Plant Engineering Consultants, LLC          Tennessee         62-1230818
           TB Wood's Corporation                 Delaware         25-1771145
        TB Wood's Enterprises, Inc.              Delaware         51-0393505
            Warner Electric LLC                  Delaware         54-1967089
      Warner Electric Technology LLC             Delaware         54-1967084
Warner Electric International Holding, Inc.      Delaware         54-1967086


                                                                   
            14 Hayward Street
          Quincy, Massachusetts                                          02171
(Address of principal executive offices)                              (Zip code)



                                   ----------

                        9% Senior Secured Notes due 2011
                      (Title of the indenture securities)

================================================================================


                                      -2-



1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

     (A)  NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
          IT IS SUBJECT.



              Name                            Address
              ----                -------------------------------
                               
Comptroller of the Currency
United States Department of the
Treasury                          Washington, D.C. 20219

Federal Reserve Bank              San Francisco, California 94105

Federal Deposit Insurance
Corporation                       Washington, D.C. 20429


     (B)  WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

     Yes.

2. AFFILIATIONS WITH OBLIGOR.

     IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
     AFFILIATION.

     None.

16. LIST OF EXHIBITS.

     EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
     INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
     7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
     229.10(D).

     1.   A copy of the articles of association of The Bank of New York Trust
          Company, N.A. (Exhibit 1 to Form T-1 filed with Registration Statement
          No. 333-121948).

     2.   A copy of certificate of authority of the trustee to commence
          business. (Exhibit 2 to Form T-1 filed with Registration Statement No.
          333-121948).

     3.   A copy of the authorization of the trustee to exercise corporate trust
          powers. (Exhibit 3 to Form T-1 filed with Registration Statement No.
          333-121948).

     4.   A copy of the existing by-laws of the trustee. (Exhibit 4 to Form T-1
          filed with Registration Statement No. 333-121948).


                                      -3-



     6.   The consent of the trustee required by Section 321(b) of the Act.
          (Exhibit 6 to Form T-1 filed with Registration Statement No.
          333-121948).

     7.   A copy of the latest report of condition of the Trustee published
          pursuant to law or to the requirements of its supervising or examining
          authority.


                                      -4-



                                    SIGNATURE

     Pursuant to the requirements of the Act, the trustee, The Bank of New York
Trust Company, N.A., a banking association organized and existing under the laws
of the United States of America, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
The City of Los Angeles, and State of California, on the 1st day of May, 2007.

                                        THE BANK OF NEW YORK TRUST COMPANY, N.A.


                                        By: /S/ MELONEE YOUNG
                                            ------------------------------------
                                        Name: MELONEE YOUNG
                                        Title: VICE PRESIDENT


                                      -5-


                                                                       EXHIBIT 7

                       Consolidated Report of Condition of
                    THE BANK OF NEW YORK TRUST COMPANY, N.A.
          of 700 South Flower Street, Suite 200, Los Angeles, CA 90017

     At the close of business December 31, 2006, published in accordance with
Federal regulatory authority instructions.



                                                           Dollar
                                                           Amounts
                                                             in
                                                          Thousands
                                                         ----------
                                                      
ASSETS

Cash and balances due from
   depository institutions:
   Noninterest-bearing balances
      and currency and coin ..........................       10,020
   Interest-bearing balances .........................            0
Securities:
   Held-to-maturity securities .......................           56
   Available-for-sale securities .....................       64,801
Federal funds sold and securities
   purchased under agreements to resell:
   Federal funds sold ................................       49,900
   Securities purchased under agreements to resell ...       40,000
Loans and lease financing receivables:
   Loans and leases held for sale ....................            0
   Loans and leases,
      net of unearned income .........................            0
   LESS: Allowance for loan and
      lease losses ...................................            0
   Loans and leases, net of unearned
      income and allowance ...........................            0
Trading assets .......................................            0
Premises and fixed assets (including
   capitalized leases) ...............................        5,051
Other real estate owned ..............................            0
Investments in unconsolidated
   subsidiaries and associated
   companies .........................................            0
Not applicable Intangible assets:
   Goodwill ..........................................      889,415
   Other Intangible Assets ...........................      277,086
Other assets .........................................      113,348
                                                         ----------
Total assets .........................................   $1,449,677
                                                         ==========



                                       1



                                                      
LIABILITIES

Deposits:
   In domestic offices ...............................        2,517
   Noninterest-bearing ...............................        2,517
   Interest-bearing ..................................            0
Not applicable
Federal funds purchased and securities
   sold under agreements to repurchase:
   Federal funds purchased ...........................            0
   Securities sold under agreements to repurchase ....            0
Trading liabilities ..................................            0
Other borrowed money:
   (includes mortgage indebtedness
   and obligations under capitalized
   leases) ...........................................       58,000
Not applicable
Not applicable
Subordinated notes and debentures ....................            0
Other liabilities ....................................      127,233
Total liabilities ....................................      187,750
Minority interest in consolidated subsidiaries .......            0

EQUITY CAPITAL

Perpetual preferred stock and related surplus ........            0
Common stock .........................................        1,000
Surplus (exclude all surplus related to preferred
   stock) ............................................    1,121,520
Retained earnings ....................................      139,524
Accumulated other comprehensive income ...............         -117
Other equity capital components ......................            0
Total equity capital .................................    1,261,927
                                                         ----------
Total liabilities, minority interest, and equity
   capital (sum of items 21, 22, and 28) .............    1,449,677
                                                         ==========



     I, William J. Winkelmann, Vice President of the above-named bank do hereby
declare that the Reports of Condition and Income (including the supporting
schedules) for this report date have been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and are true
to the best of my knowledge and belief.

     William J. Winkelmann   )  Vice President

     We, the undersigned directors (trustees), attest to the correctness of the
Report of Condition (including the supporting schedules) for this report date
and declare that it has been examined by us and to the best of our knowledge and
belief has been prepared in conformance with the instructions issued by the
appropriate Federal regulatory authority and is true and correct.

     Michael K. Klugman, President         )
     Michael F. McFadden, MD               )  Directors (Trustees)
     Frank P. Sulzberger, Vice President   )


                                       2

EX-99.1

Exhibit 99.1

LETTER OF TRANSMITTAL

ALTRA INDUSTRIAL MOTION, INC.

OFFER TO EXCHANGE ALL OUTSTANDING

9% SENIOR SECURED NOTES DUE 2011
FOR NEWLY ISSUED
9% SENIOR SECURED NOTES DUE 2011
That Have Been Registered Under
the Securities Act of 1933

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _________, 2007
UNLESS EXTENDED (THE “EXPIRATION DATE”). WITHDRAWAL RIGHTS FOR ACCEPTANCES OF THE
EXCHANGE OFFER WILL EXPIRE AT THAT TIME, UNLESS THE EXPIRATION DATE IS EXTENDED.

The Exchange Agent for the Exchange Offer is:

The Bank of New York

By Registered or Certified Mail, by Hand or by Overnight Courier:

101 Barclay Street, 7 East
New York, New York 10286
Attention: Corporate Trust Operations

By Facsimile:
(212) 298-1915

By Telephone:
(212) 815-3687

     DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

     The undersigned acknowledges that he or she has received and reviewed the Prospectus dated                     , 2007 (the “Prospectus”) of Altra Industrial Motion, Inc. (the “Issuer”) and this Letter of Transmittal (the “Letter of Transmittal”), which together constitute the Issuer’s offer (the “Exchange Offer”) to exchange an aggregate principal amount of up to $105,000,000 of the Issuer’s newly issued 9% Senior Secured Notes due 2011 (the “Registered Notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for a like principal amount of the Issuer’s outstanding 9% Senior Secured Notes due 2011 (the “Original Notes”) from the registered holders thereof, that have not been so registered. The terms of the Registered Notes are identical in all material respects to the terms of the Original Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Registered Notes are freely transferable by holders thereof (except as provided herein or in the Prospectus), are not subject to any covenant regarding registration under the Securities Act and are not subject to any covenant regarding additional interest payment provisions. Both the Original Notes and the Registered Notes are guaranteed on a senior secured basis by American Enterprises MPT Corp., American Enterprises MPT Holdings, LLC, Ameridrives International, LLC, Boston Gear LLC, Formsprag LLC, Inertia Dynamics, LLC, Kilian Manufacturing Corporation, Nuttall Gear L L C, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Corporation, TB Wood’s Enterprises, Inc., Warner Electric LLC, Warner Electric Technology LLC and Warner Electric International Holding, Inc. (collectively, the “Guarantors”).

     The undersigned has checked the appropriate boxes below and signed this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer.

     PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW. YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.

     List below the Original Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the certificate numbers and principal amounts of Original Notes should be listed on a separate signed schedule affixed hereto.

DESCRIPTION OF ORIGINAL NOTES TENDERED
Name(s) and Address(es) of Registered Holder(s)		Aggregate Principal
(Please fill in)	Certificate	Amount Represented	Principal Amount
	Number(s)*	by Original Notes	Tendered**
	Total

*	Need not be completed if Original Notes are being tendered by book-entry transfer.
**	Unless otherwise indicated, the holder will be deemed to have tendered the full aggregate principal amount represented by such Original Notes. See Instruction 2.

2

     This Letter of Transmittal is to be used either if certificates representing Original Notes are to be forwarded herewith or if delivery of Original Notes is to be made by book-entry transfer to an account maintained by the Exchange Agent at the Depository Trust Company (the “Book-Entry Transfer Facility”), pursuant to the procedures set forth in the Prospectus under the caption “The Exchange Offer—Procedures for Tendering.” DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

     Holders whose Original Notes are not immediately available or who cannot deliver their Original Notes and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date must tender their Original Notes according to the guaranteed delivery procedures set forth in the Prospectus under the caption “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery Procedures.”

o CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:

Name of Tendering Institution(s)

The Depository Trust Company Account Number

Transaction Code Number

     By crediting the Original Notes to the Exchange Agent’s account at the Book-Entry Transfer Facility’s Automated Tender Offer Program (“ATOP”) and by complying with applicable ATOP procedures with respect to the Exchange Offer, including transmitting to the Exchange Agent a computer-generated agent’s message in which the holder of the Original Notes acknowledges and agrees to be bound by the terms of, and makes the representations and warranties contained in, the Letter of Transmittal, the participant in the Book-Entry Transfer Facility confirms on behalf of itself and the beneficial owners of such Original Notes all provisions of this Letter of Transmittal (including all representations and warranties) applicable to it and such beneficial owner as fully as if it had completed the information required herein and executed and transmitted this Letter of Transmittal to the Exchange Agent.

o  CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:

Name of Registered Holder(s)

Window Ticket Number (if any)

Name of Eligible Institution that Guaranteed Delivery

Date of Execution of Notice of Guaranteed Delivery

     If Delivered by Book-Entry Transfer:

Account Number Transaction Code Number

o  CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO:

Name

Address

     If the undersigned is a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Registered Notes. If the undersigned is a participating broker-dealer

3

that will receive Registered Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of such Registered Notes. However, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. Any holder who is an “affiliate” of the Issuer within the meaning of the Securities Act or who has an arrangement or understanding with respect to the distribution of the Registered Notes to be acquired pursuant to the Exchange Offer, or any broker-dealer who purchased Original Notes from the Issuer to resell pursuant to Rule 144A under the Securities Act or any other available exemption under the Securities Act, must comply with the registration and prospectus delivery requirements under the Securities Act.

o  CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.

4

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

     1. Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Issuer the aggregate principal amount of Original Notes indicated above. Subject to, and effective upon, the acceptance for exchange of the Original Notes tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Issuer all right, title and interest in and to such Original Notes as are being tendered hereby.

     2. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Original Notes tendered hereby and that the Issuer will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by the Issuer. The undersigned hereby further represents that: (i) any Registered Notes acquired in exchange for Original Notes tendered hereby will have been acquired in the ordinary course of business of the undersigned; (ii) at the time of the commencement of the Exchange Offer, the undersigned has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the Registered Notes to be issued in the Exchange Offer in violation of the Securities Act; (iii) it is not an affiliate (as defined in Rule 405 under the Securities Act) of the Issuer; (iv) if the undersigned is a broker-dealer, the undersigned is not engaged in, and does not intend to engage in, a distribution of the Registered Notes; (v) if the undersigned is a participating broker-dealer that will receive Registered Notes for its own account in exchange for the Original Notes that were acquired as a result of market-making or other trading activities, that the undersigned will deliver a prospectus in connection with any resale of such Registered Notes; and (vi) the undersigned is not acting on behalf of any persons or entities who cannot truthfully make the foregoing representations.

     3. The undersigned also acknowledges that the Exchange Offer is being made in reliance on interpretations by the staff of the Securities and Exchange Commission (the “SEC”), as set forth in no-action letters issued to third parties, that the Registered Notes issued in exchange for the Original Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than any such holder that is an “affiliate” of the Issuer within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that: (i) such Registered Notes are acquired in the ordinary course of such holder’s business; (ii) at the time of the commencement of the Exchange Offer, such holder has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the Registered Notes to be issued in the Exchange Offer in violation of the Securities Act; (iii) such holder is not an affiliate (as defined in Rule 405 of the Securities Act) of the Issuer; (iv) if such holder is a broker-dealer, the holder is not engaged in, and does not intend to engage in, a distribution of the Registered Notes; (v) if such holder is a participating broker-dealer that will receive Registered Notes for its own account in exchange for the Original Notes that were acquired as a result of market-making or other trading activities, that such holder will deliver a prospectus in connection with any resale of such Registered Notes; and (vi) such holder is not acting on behalf of any persons or entities who could not truthfully make the foregoing representations. However, the SEC has not considered the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer as in other circumstances. If the undersigned is a participating broker-dealer that will receive Registered Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of such Registered Notes. However, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

5

     4. The undersigned may, if, and only if, it would not receive freely tradable Registered Notes in the Exchange Offer or is not eligible to participate in the Exchange Offer, elect to have its Original Notes registered in the shelf registration described in the Registration Rights Agreement, dated as of April 5, 2007, among the Issuer and Jefferies & Company, Inc., as initial purchaser (the “Registration Rights Agreement”), filed as Exhibit 4.15 to the Registration Statement of the Issuer, Registration No. 333-     . Capitalized terms used in this paragraph 4 and not otherwise defined herein shall have the meanings given to them in the Registration Rights Agreement. Such election may be made by checking the box under “Special Registration Instructions” below. By making such election, the undersigned agrees, as a holder of Original Notes participating in a Shelf Registration, to comply with the Registration Rights Agreement and to indemnify and hold harmless the Issuer, its respective affiliates, directors, officers, representatives, employees, agents and each person, if any, who controls the Issuer, within the meaning of either Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from and against any and all losses, claims, damages, judgments, liabilities and expenses (including without limitation, the reasonable legal fees and other expenses actually incurred in connection with any suit, action or proceeding or any claim asserted) caused by, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) or Prospectus (as amended or supplemented if the Issuer shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by, arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading, but only with reference to information relating to such participant furnished to the Issuer in writing by such participant expressly for use in any Registration Statement or Prospectus, any amendment or supplement thereto, or any preliminary prospectus. Any such indemnification shall be governed by the terms and subject to the conditions set forth in the Registration Rights Agreement, including, without limitation, the provisions regarding notice, retention of counsel, contribution and payment of expenses set forth therein. The above summary of the indemnification provisions of the Registration Rights Agreement is not intended to be exhaustive and is qualified in its entirety by the Registration Rights Agreement.

     5. The undersigned will, upon request, execute and deliver any additional documents deemed by the Issuer to be necessary or desirable to complete the sale, assignment and transfer of the Original Notes tendered hereby. All authority conferred or agreed to be conferred in this Letter of Transmittal and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in the Prospectus under the caption “The Exchange Offer—Withdrawal Rights.” See Instruction 9.

     6. Unless otherwise indicated in the box entitled “Special Issuance Instructions” below, please issue the Registered Notes (and, if applicable, substitute certificates representing Original Notes for any Original Notes not exchanged) in the name of the undersigned or, in the case of a book-entry delivery of Original Notes, please credit the account indicated above maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated under the box entitled “Special Delivery Instructions” below, please send the Registered Notes (and, if applicable, substitute certificates representing Original Notes for any Original Notes not exchanged) to the undersigned at the address shown above in the box entitled “Description of Original Notes Tendered.”

6

     THE UNDERSIGNED ACKNOWLEDGES THAT THE EXCHANGE OFFER IS SUBJECT TO THE MORE DETAILED TERMS SET FORTH IN THE PROSPECTUS AND, IN CASE OF ANY CONFLICT BETWEEN THE TERMS OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL, THE TERMS OF THE PROSPECTUS SHALL PREVAIL.

     THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED “DESCRIPTION OF ORIGINAL NOTES TENDERED” ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED THE ORIGINAL NOTES AS SET FORTH IN SUCH BOX ABOVE.

SPECIAL ISSUANCE INSTRUCTIONS		SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)		(See Instructions 3 and 4)
To be completed ONLY if certificates for Original Notes not exchanged and/or Registered Notes are to be issued in the name of someone other than the person or persons whose signature(s) appear(s) on this Letter of Transmittal below, or if Original Notes delivered by book-entry transfer which are not accepted for exchange are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than the account indicated above.		To be completed ONLY if certificates for Original Notes not exchanged and/or Registered Notes are to be sent to someone other than the person or persons whose signature(s) appear(s) on this Letter of Transmittal below or to such person or persons at an address other than shown in the box entitled “Description of Original Notes Tendered” on this Letter of Transmittal above.
Issue Registered Notes and/or Original Notes to:		Mail Registered Notes and/or Original Notes to:
Name(s)*		Name(s)*
	(Please type or print)		(Please type or print)
	(Please type or print)		(Please type or print)
	(Please type or print)		(Please type or print)
Address:		Address:
	(Zip Code)		(Zip Code)
(* Such person(s) must properly complete a Substitute Form W-9, a Form W-8BEN, a Form W-8ECI or a Form W-8IMY)		(* Such person(s) must properly complete a Substitute Form W-9, a Form W-8BEN, a Form W-8ECI or a Form W-8IMY)
Credit unexchanged Original Notes delivered by book-entry transfer to the Book-Entry Transfer Facility account set forth below.
(Book-Entry Transfer Facility Account Number, if applicable)

7

SPECIAL REGISTRATION INSTRUCTIONS
(See Paragraph 4 above)

To be completed ONLY IF the undersigned (i) satisfies the conditions set forth in paragraph 4 above, (ii) elects to register its Original Notes in the shelf registration described in the Registration Rights Agreement, and (iii) agrees to comply with the Registration Rights Agreement and to indemnify certain entities and individuals as set forth in paragraph 4 above.

o      By checking this box the undersigned hereby (i) represents that it is entitled to have its Original Notes registered in a shelf registration in accordance with the Registration Rights Agreement, (ii) elects to have its Original Notes registered pursuant to the shelf registration described in the Registration Rights Agreement, and (iii) agrees to comply with the Registration Rights Agreement and to indemnify certain entities and individuals identified in, and to the extent provided in, paragraph 4 above.

IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR ORIGINAL NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.

8

PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.

PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)

X			, 2007
X			, 2007
X			, 2007
	Signature(s) of Holder(s)	Date

Area Code and Telephone Number

     If a holder is tendering any Original Notes, this Letter of Transmittal must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the Original Notes or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 3.

Name(s):

Capacity:

Address:

Telephone:

Employer Identification or Social Security Number:

SIGNATURE GUARANTEE
(if required by Instruction 3)

Signature(s) Guaranteed by an Eligible Institution:
	(Authorized Signature)
(Title)
(Name and Firm)
		, 2007
(Date)

9

INSTRUCTIONS

1. Delivery of this Letter of Transmittal and Notes; Guaranteed Delivery Procedures.

     This Letter of Transmittal is to be completed by holders of Original Notes either if certificates are to be forwarded herewith or if tenders are to be made pursuant to the procedures for delivery by book-entry transfer set forth in the Prospectus under the caption “The Exchange Offer—Book—Entry Transfer.” Certificates for all physically tendered Original Notes, or Book-Entry Confirmation, as the case may be, as well as a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof), with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at the address set forth herein on or prior to 5:00 p.m., New York City time, on the Expiration Date, or the tendering holder must comply with the guaranteed delivery procedures set forth below. Original Notes tendered hereby must be in denominations or principal amount at maturity of $1,000 or any integral multiple thereof.

     Holders whose certificates for Original Notes are not immediately available or who cannot deliver their certificates and any other required documents to the Exchange Agent on or prior to 5:00 p.m., New York City time, on the Expiration Date, or who cannot complete the procedure for book-entry transfer on a timely basis, may tender their Original Notes pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery Procedures.” Pursuant to such procedures, (i) such tender must be made through an Eligible Institution (as defined below), (ii) on or prior to 5:00 p.m., New York City time, on the Expiration Date, the Exchange Agent must receive from such Eligible Institution, a written for facsimile copy of a properly completed and duly executed Letter of Transmittal and Notice of Guaranteed Delivery, substantially in the form provided by the Issuer, setting forth the name and address of the holder of Original Notes and the amount of Original Notes tendered, stating that the tender is being made thereby and guaranteeing that within three The New York Stock Exchange (“NYSE”) trading days after the date of execution of the Notice of Guaranteed Delivery, the Eligible Institution will deliver to the Exchange Agent the certificates for all certificated Original Notes being tendered, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, a written or facsimile copy of the Letter of Transmittal or a Book Entry Confirmation, as the case may be, and any other documents required by this Letter of Transmittal, and (iii) the certificates for all certificated Original Notes, in proper form for transfer, or Book-Entry Confirmation, as the case may be, and all other documents required by this Letter of Transmittal, must be received by the Exchange Agent within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery.

     THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE ORIGINAL NOTES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDERS, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT TO THE ISSUER.

     See “The Exchange Offer” section in the Prospectus.

2. Partial Tenders (not applicable to holders who tender by book-entry transfer).

     If less than all of the Original Notes evidenced by a submitted certificate are to be tendered, the tendering holder(s) should fill in the aggregate principal amount at maturity of Original Notes to be tendered in the box above entitled “Description of Original Notes Tendered” under “Principal Amount Tendered.” A reissued certificate representing the balance of nontendered Original Notes of a tendering holder who physically delivered Original Notes will be sent to such tendering holder, unless otherwise

10

provided in the appropriate box on this Letter of Transmittal, promptly after the Expiration Date. All of the Original Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated.

3. Signatures on this Letter of Transmittal; Bond Powers and Endorsements; Guarantee of Signatures.

     If this Letter of Transmittal is signed by the registered holder of the Original Notes tendered hereby, the signature must correspond exactly with the name as written on the face of the certificates without any change whatsoever.

     If any tendered Original Notes are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal.

     If any tendered Original Notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of certificates.

     When this Letter of Transmittal is signed by the registered holder or holders of the Original Notes specified herein and tendered hereby, no endorsements of certificates or separate bond powers are required. If, however, the Registered Notes are to be issued, or any nontendered Original Notes are to be reissued, to a person other than the registered holder, then endorsements of any certificates transmitted hereby or separate bond powers are required. Signatures on such certificate(s) or bond powers must be guaranteed by an Eligible Institution.

     If this Letter of Transmittal is signed by a person other than the registered holder or holders of any certificate(s) specified herein, such certificates must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name or names of the registered holder or holders appear(s) on the certificate(s) and signatures on such certificates(s) or bond powers must be guaranteed by an Eligible Institution.

     If this Letter of Transmittal or any certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Issuer, proper evidence satisfactory to the Issuer of its authority to so act must be submitted with this Letter of Transmittal.

     Endorsements on certificates for Original Notes or signatures on bond powers required by this Instruction 3 must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Program or the Stock Exchange Medallion Program (each an “Eligible Institution” and collectively, “Eligible Institutions”).

     Signatures on the Letter of Transmittal need not be guaranteed by an Eligible Institution if (A) the Original Notes are tendered (i) by a registered holder of Original Notes (which term, for purposes of the Exchange Offer, includes any participant in the Book-Entry Transfer Facility system whose name appears on a security position listing as the holder of such Original Notes) who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on this Letter of Transmittal, or (ii) for the account of an Eligible Institution and (B) the box entitled “Special Registration Instructions” on this Letter of Transmittal has not been completed.

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4. Special Issuance and Delivery Instructions.

     Tendering holders of Original Notes should indicate in the applicable box the name and address to which Registered Notes issued pursuant to the Exchange Offer and/or substitute certificates evidencing Original Notes not exchanged are to be issued or sent, if different from the name or address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated and such person named must properly complete an IRS Substitute Form W-9, IRS Form W-8BEN, IRS Form W-8ECI or IRS Form W-8IMY, as applicable. Noteholders tendering Original Notes by book-entry transfer may request that Original Notes not exchanged be credited to such account maintained at the Book-Entry Transfer Facility as such noteholder may designate hereon. If no such instructions are given, such Original Notes not exchanged will be returned to the name and address of the person signing this Letter of Transmittal.

5. Transfer Taxes.

     Tendering holders of Original Notes will not be obligated to pay any transfer taxes in connection with a tender of their Original Notes for exchange unless a holder instructs the Issuer to register Registered Notes in the name of, or request that Original Notes not tendered or not accepted in the Exchange Offer be returned to, a person other than the registered tendering holder, in which event the registered tendering holder will be responsible for the payment of any applicable transfer tax. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed to such tendering holder and the Exchange Agent will retain possession of an amount of Registered Notes with a face amount equal to the amount of such transfer taxes due by such tendering holder pending receipt by the Exchange Agent of the amount of such taxes.

6. Waiver of Conditions.

     The Issuer reserves the absolute right to waive satisfaction of any or all conditions enumerated in the Prospectus.

7. No Conditional Tenders.

     No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders of Original Notes, by execution of this Letter of Transmittal, shall waive any right to receive notice of the acceptance of their Original Notes for exchange.

     Although the Issuer intends to notify holders of defects or irregularities with respect to tenders of Original Notes, neither the Issuer, the Exchange Agent nor any other person shall incur any liability for failure to give any such notice.

8. Mutilated, Lost, Stolen or Destroyed Original Notes.

     Any holder whose Original Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions.

9. Withdrawal of Tenders.

     Tenders of Original Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date.

     For a withdrawal of a tender of Original Notes to be effective, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth above prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Original Notes to be withdrawn (the “Depositor”), (ii) identify the

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specific Original Notes to be withdrawn (including the certificate number or numbers and principal amount of such Original Notes), (iii) be signed by the holder in the same manner as the original signature on this Letter of Transmittal by which such Original Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Exchange Agent to register the transfer of such Original Notes into the name of the person withdrawing the tender, and (iv) specify the name in which any such Original Notes are to be registered, if different from that of the Depositor. Any Original Notes so properly withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Original Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder as soon as practicable after withdrawal, rejection of tender, or termination of the Exchange Offer. Properly withdrawn Original Notes may be retendered by following the procedures described under “The Exchange Offer—Procedures for Tendering” at any time on or prior to 5:00 p.m., New York City time, on the Expiration Date.

     All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Original Notes will be determined by the Issuer in its sole discretion, which determination will be final and binding on all parties. The Issuer reserves the absolute right to reject any and all Original Notes not properly tendered or any Original Notes the Issuer’s acceptance of which would, in the opinion of counsel for the Issuer, be unlawful. The Issuer also reserves the right to waive any defects, irregularities, or conditions of tender as to particular Original Notes. The Issuer’s interpretation of the terms and conditions of the Exchange Offer (including the instructions of this Letter of Transmittal) will be final and binding on all parties.

10. Requests for Assistance or Additional Copies.

     Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus, this Letter of Transmittal and other related documents may be directed to the Exchange Agent, at the address and telephone number indicated above.

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IMPORTANT TAX INFORMATION

     Each prospective holder of Registered Notes to be issued pursuant to Special Issuance Instructions should complete the attached Substitute Form W-9. Under current federal income tax law, a holder of Registered Notes is required to provide the Issuer (as payor) with such holder’s correct taxpayer identification number (“TIN”) on Substitute Form W-9 or otherwise establish a basis for exemption from backup withholding to prevent any backup withholding on any payments received in respect of the Registered Notes. If a holder of Registered Notes is an individual, the TIN is such holder’s social security number. If the Issuer is not provided with the correct taxpayer identification number, a holder of Registered Notes may be subject to a $50 penalty imposed by the Internal Revenue Service. The Substitute Form W-9 need not be completed if the box entitled Special Issuance Instructions has not been completed.

     Certain holders of Registered Notes (including, among others, all corporations) are not subject to these backup withholding and reporting requirements. Exempt prospective holders of Registered Notes should indicate their exempt status on Substitute Form W-9. A foreign individual may qualify as an exempt recipient by submitting to the Issuer, through the Exchange Agent, the appropriate Internal Revenue Service Form W-8 (e.g., Form W-8BEN, Form W-8ECI or Form W-8IMY) properly completed and signed under penalty of perjury, attesting to the holder’s exempt status. The appropriate Form W-8 will be provided by the Exchange Agent upon request and is also available at the IRS website (http://www.irs.gov). See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions.

     If backup withholding applies, the Issuer is required to withhold 28% (or such other percentage that may be applicable to payments made after December 31, 2010) of any “reportable payment” made to the holder of Registered Notes or other payee. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service.

     Purpose of Substitute Form W-9

     To prevent backup withholding with respect to any payments received in respect of the Registered Notes, each prospective holder of Registered Notes to be issued pursuant to Special Issuance Instructions should provide the Issuer, through the Exchange Agent, with either: (i) such prospective holder’s correct TIN by completing the form below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such prospective holder is awaiting a TIN) and that (A) such prospective holder has not been notified by the Internal Revenue Service that he or she is subject to backup withholding as a result of a failure to report all interest or dividends or (B) the Internal Revenue Service has notified such prospective holder that he or she is no longer subject to backup withholding or (ii) an adequate basis for exemption.

     What Number to Give the Exchange Agent

     The prospective holder of Registered Notes to be issued pursuant to Special Issuance Instructions is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the prospective record owner of the Registered Notes. If the Registered Notes will be held in more than one name or are not held in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance regarding which number to report.

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Exhibit 99.1

PAYOR’S NAME: ALTRA INDUSTRIAL MOTION, INC.
	Part 1—PLEASE PROVIDE	Social security number(s) or
SUBSTITUTE FORM W-9 Department of the Treasury Internal Revenue Service Payor’s Request for Taxpayer Identification Number (TIN)	YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW.	Employer identification number(s) ___________________
	Part 2—Certification—Under penalties of perjury, I certify that: (1) the number shown on this form is my current taxpayer identification number (or I am waiting for a number to be issued to me); (2) I am not subject to backup withholding either because I am exempt from backup withholding, 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 the IRS has notified me that I am no longer subject to backup withholding; and (3) I am a U.S. person (including a resident alien).
	Certificate Instructions—You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you are subject to backup withholding you receive another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2).			Part 3 Awaiting TIN o
Signature _________________________________________________________			Date ____________________ , 2007

NOTE: FAILURE BY A PROSPECTIVE HOLDER OF REGISTERED NOTES TO BE ISSUED PURSUANT TO THE SPECIAL ISSUANCE INSTRUCTIONS ABOVE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 28% OF ALL PAYMENTS MADE TO YOU IN RESPECT OF THE REGISTERED NOTES DELIVERABLE TO YOU PURSUANT TO THE EXCHANGE 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 CERTIFICATION IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

          I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (b) I intend to mail or deliver such an application in the near future. I understand that if I do not provide a taxpayer identification number within sixty (60) days, 28% of all reportable payments made to me thereafter will be withheld until I provide such a number.

Signature Date , 2007 

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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. All “Section” references are to the Internal Revenue Code of 1986, as amended (the “Code”). “IRS” is the Internal Revenue Service.

For this type of account:			Give the SOCIAL SECURITY NUMBER of:
1.	An individual’s account		The individual
2.	Two or more individuals (joint account)		The actual owner of the account or, if combined funds, the first individual on the account(1)
3.	Custodian account of a minor (Uniform Gift to Minors Act)		The minor(2)
4.	a.	The usual revocable savings trust account (grantor is also trustee)	The grantor-trustee(1)
4.	b.	So-called trust account that is not a legal or valid trust under State law.	The actual owner(1)
5.	Sole proprietorship account or single-owner LLC		The owner(3)
6.	A valid trust, estate, or pension trust		The legal entity (4)
7.	Corporate account or LLC electing corporate status on Form 8832		The corporation
8.	Association, club, religious, charitable, educational, or other tax-exempt organization account.		The organization
9.	Partnership account or multimember LLC		The legal entity
10.	A broker or registered nominee		The broker or nominee
11.	Account with the Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments		The public entity
12.	Sole proprietorship or single owner LLC		The owner(3)

(1)	List first and circle the name of the person whose number you furnish. If only one person on a joint account has a Social Security Number, that person’s number must be furnished.
(2)	Circle the minor’s name and furnish the minor’s Social Security Number.
(3)	You must show your individual name. You may also enter your business name. You may use either your Social Security Number or your Employer Identification Number.
(4)	List first and circle the name of the legal trust, estate, or pension trust, (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)

NOTE: If no name is circled when there is more than one name listed, the number will be considered to be that of the first name listed.

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GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
(Continued)

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 (for individuals) or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the IRS and apply for a number. U.S. resident aliens who cannot obtain a Social Security Number must apply for an ITIN (Individual Taxpayer Identification Number) on Form W-7.

Payees Exempt from Backup Withholding

     Payees specifically exempted from backup withholding on ALL payments include the following:

• An organization exempt from tax under Section 501(a) of the Code, or an individual retirement plan or a custodial account under Section 403(b) (7) of the Code, if the account satisfies the requirements of Section 401(f) (2) of the Code.

• 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.

     Other payees that MAY BE EXEMPT from backup withholding include the following:

• A corporation.

• A financial institution.

• A dealer in securities or commodities required to register in the U.S., the District of Columbia or a possession of the U.S.

• A dealer in securities or commodities required to register in the U.S., the District of Columbia 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.

• A trust exempt from tax under Section 664 of the Code or a trust described in Section 4947 of the Code.

• An entity registered at all times during the tax year under the Investment Company Act of 1940.

• A foreign central bank of issue.

• A futures commission merchant registered with the Commodity Futures Trading Commission.

• A middleman known in the investment community as a nominee or custodian.

     With respect to interest payments, all payees listed above, except the futures commission merchant registered with the Commodity Futures Trading Commission, are exempt payees.

Payments Exempt from Backup Withholding

     Payment 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 U.S. and which have at least one nonresident alien partner.

• Payments of patronage dividends where the amount received is not paid in money.

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GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
(Continued)

• Payments made by certain foreign organizations.

• Section 404(k) payments made by an ESOP.

     Payments of interest not generally subject to backup withholding include the following:

• Payment 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.

• Payment of tax-exempt interest (including exempt interest dividends under Section 852 of the Code).

• Payment described in Section 6049(b) (5) to nonresident aliens.

• Payments on tax-free covenant bonds under Section 1451 of the Code

• Payments made by certain foreign organizations.• • Mortgage or student loan interest paid to you.

Exempt payees described above that are U.S. persons (including a U.S. resident alien individual) should file Form W-9 (or appropriate substitute form) to avoid possible erroneous backup withholding. ENTER YOUR NAME, ADDRESS, STATUS AND TAXPAYER IDENTIFICATION NUMBER, WRITE “EXEMPT” ON THE FACE OF PART 11 OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH THE PAYER A COMPLETED INTERNAL REVENUE FORM W-8BEN, W8ECI, W-8IMY or W-8EXP, AS APPLICABLE.

Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see Sections 6041, 6041A, 6042, 6044, 6045, 6049, and 6050A and 605ON of the Code and the regulations promulgated thereunder.

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 the 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 tax returns. Payers must generally withhold 28% (or such other percentage as may be applicable to payments made after December 31, 2010) 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. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.
(4)	Misuse of TINs. If the requester discloses or uses TINs in violation of Federal law, the register may be subject to civil and criminal penalties.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS.

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EX-99.2

Exhibit 99.2

NOTICE OF GUARANTEED DELIVERY

Altra Industrial Motion, Inc.
OFFER TO EXCHANGE ALL OUTSTANDING

9% SENIOR SECURED NOTES DUE 2011
FOR NEWLY ISSUED
9% SENIOR SECURED NOTES DUE 2011
That Have Been Registered Under
the Securities Act of 1933

     This Notice of Guaranteed Delivery or one substantially equivalent hereto must be used by registered holders of outstanding 9% Senior Secured Notes due 2011 (the “Original Notes”) of Altra Industrial Motion, Inc. (the “Issuer”), American Enterprises MPT Corp., American Enterprises MPT Holdings, LLC, Ameridrives International, LLC, Boston Gear LLC, Formsprag LLC, Inertia Dynamics, LLC, Kilian Manufacturing Corporation, Nuttall Gear L L C, TB Wood’s Incorporated, Plant Engineering Consultants, LLC, TB Wood’s Corporation, TB Wood’s Enterprises, Inc., Warner Electric LLC, Warner Electric Technology LLC and Warner Electric International Holding, Inc. (collectively, the “Guarantors”) who wish to tender their Original Notes in exchange for a like principal amount of newly issued 9% Senior Secured Notes due 2011 of the Issuer registered under the Securities Act of 1933, as amended (the “Registered Notes”) pursuant to the exchange offer described in the Prospectus, dated           , 2007 (as the same may be amended or supplemented from time to time, the “Prospectus”), if the holder’s Original Notes are not immediately available or if such holder cannot deliver its Original Notes and Letter of Transmittal (and any other documents required by the Letter of Transmittal) to The Bank of New York (the “Exchange Agent”) prior to 5:00 p.m., New York City time, on           , 2007, or such later date and time to which the Exchange Offer may be extended (the “Expiration Date”). This Notice of Guaranteed Delivery or one substantially equivalent hereto may be delivered by hand or sent by facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight courier) or mail to the Exchange Agent, and must be received by the Exchange Agent prior to the Expiration Date. See “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery Procedures” in the Prospectus.

The Exchange Agent for the Exchange Offer is:

The Bank of New York

By Registered or Certified Mail, by Hand or by Overnight Courier:

101 Barclay Street, 7 East
New York, New York 10286
Attention: Corporate Trust Operations

By Facsimile:
(212) 298-1915

By Telephone:
(212) 815-3687

     DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

     This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an eligible institution (as defined in the Prospectus), such signature guarantee must appear in the applicable space provided on the Letter of Transmittal for Guarantee of Signatures.

Ladies and Gentlemen:

     The undersigned hereby tenders to the Issuers the principal amount of Original Notes indicated below, upon the terms and subject to the conditions contained in the Prospectus and the Letter of Transmittal, receipt of which is hereby acknowledged.

DESCRIPTION OF ORIGINAL NOTES TENDERED
		Name and Address of Registered	Certificate Number(s)	Principal Amount of
		Holder as it appears on the	for Original Notes	Original Notes
	Name of Tendering Holder	Original Notes (Please print)	Tendered	Tendered

PLEASE SIGN HERE

X		X
X		X
X		X
	Signature(s) of Holder(s)		Date

     Must be signed by the holder(s) of Original Notes as their name(s) appear(s) on certificates for Original Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below.

Please print name(s) and address(es)

Name(s):

Capacity:

Address(es):

o  The Depository Trust Company
(Check if Original Notes will be tendered by book-entry transfer)
Account Number:                                                                                                     

THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED

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THE FOLLOWING GUARANTEE MUST BE COMPLETED

GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)

     The undersigned, a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees to deliver to the Exchange Agent at its address set forth above, the certificates representing the Original Notes (or a confirmation of book-entry transfer of such Original Notes into the Exchange Agent’s account at The Depository Trust Company), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guaranteed, and any other documents required by the Letter of Transmittal within three New York Stock Exchange trading days after the date of execution of this Notice of Guaranteed Delivery.

Name of Firm:
	(Authorized Signature)

Address: Title:

	Name:
(Zip Code)		(Please type or print)
	Date:
(Area Code and Telephone No.)

NOTE: DO NOT SEND ORIGINAL NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. ORIGINAL NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

3

EX-99.3

Exhibit 99.3

___________, 2007

EXCHANGE AGENT AGREEMENT

The Bank of New York
700 South Flower Street, Suite 500
Los Angeles, California 90017-4104
Attention: Corporate Trust Administration

Ladies and Gentlemen:

          Altra Industrial Motion, Inc., a Delaware corporation (the “Company”), American Enterprises MPT Corp., American Enterprises MPT Holdings, L.P., Ameridrives International, L.P., Boston Gear LLC, Formsprag LLC, Inertia Dynamics, LLC, The Kilian Company, Kilian Manufacturing Corporation, Nuttall Gear L L C, Plant Engineering Consultants, LLC, TB Wood’s Corporation, TB Wood’s Enterprises, TB Wood’s Incorporated, Warner Electric LLC, Warner Electric Technology LLC, and Warner Electric International Holding, Inc. (collectively, the “Guarantors”) propose to make an offer (the “Exchange Offer”) to exchange all of the Company’s outstanding 9% Senior Secured Notes due 2011 (the “Original Notes”) for an equal amount of 9% Senior Secured Notes due 2011 that have been registered under the Securities Act of 1933, as amended (the “Registered Notes”). The terms and conditions of the Exchange Offer as currently contemplated are set forth in a prospectus, dated   , 2007 (the “Prospectus”), proposed to be distributed to all record holders of the Original Notes. The Original Notes and the Registered Notes are collectively referred to herein as the “Securities”.

          The Company hereby appoints The Bank of New York to act as exchange agent (the “Exchange Agent”) in connection with the Exchange Offer. References hereinafter to “you” shall refer to The Bank of New York.

          The Exchange Offer is expected to be commenced by the Company on or about                     , 2007. The Letter of Transmittal accompanying the Prospectus (or in the case of book-entry securities, the Automated Tender Offer Program (“ATOP”) of the Book-Entry Transfer Facility (as defined below)) is to be used by the holders of the Original Notes to accept the Exchange Offer and contains instructions with respect to the delivery of certificates for Original Notes tendered in connection therewith.

          The Exchange Offer shall expire at 5:00 p.m., New York City time, on                     , 2007 or on such subsequent date or time to which the Company may extend the Exchange Offer (the “Expiration Date”). Subject to the terms and conditions set forth in the Prospectus, the Company expressly reserves the right to extend the

Exchange Offer from time to time and may extend the Exchange Offer by giving oral (promptly confirmed in writing) or written notice to you before 9:00 a.m., New York City time, on the business day following the previously scheduled Expiration Date.

          The Company expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Original Notes not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified in the Prospectus under the caption “The Exchange Offer — Conditions.” The Company will give oral (promptly confirmed in writing) or written notice of any amendment, termination or non-acceptance to you as promptly as practicable.

          In carrying out your duties as Exchange Agent, you are to act in accordance with the following instructions:

          1. You will perform such duties and only such duties as are specifically set forth in the section of the Prospectus captioned “The Exchange Offer” or as specifically set forth herein; provided, however, that in no way will your general duty to act in good faith be discharged by the foregoing.

          2. You will establish a book-entry account with respect to the Original Notes at The Depository Trust Company (the “Book-Entry Transfer Facility”) for purposes of the Exchange Offer within two business days after the date of the Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility’s systems may make book-entry delivery of the Original Notes by causing the Book-Entry Transfer Facility to transfer such Original Notes into your account in accordance with the Book-Entry Transfer Facility’s procedure for such transfer.

          3. You are to examine each of the Letters of Transmittal and certificates for Original Notes (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility) and any other documents delivered or mailed to you by or for holders of the Original Notes to ascertain whether: (i) the Letters of Transmittal and any such other documents are duly executed and properly completed in accordance with instructions set forth therein; and (ii) the Original Notes have otherwise been properly tendered. In each case where the Letter of Transmittal or any other document has been improperly completed or executed or any of the certificates for Original Notes are not in proper form for transfer or some other irregularity in connection with the acceptance of the Exchange Offer exists, you will endeavor to inform the presenters of the need for fulfillment of all requirements and to take any other action as may be reasonably necessary or advisable to cause such irregularity to be corrected.

          4. With the approval of the Chairman of the Board, Chief Executive Officer, President or Chief Financial Officer of the Company (such approval, if given orally, to be promptly confirmed in writing) or any other party designated in writing, by such an officer, you are authorized to waive any irregularities in connection with any tender of Original Notes pursuant to the Exchange Offer.

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          5. Tenders of Original Notes may be made only as set forth in the Letter of Transmittal and in the section of the Prospectus captioned “The Exchange Offer — Procedures for Tendering”, and Original Notes shall be considered properly tendered to you only when tendered in accordance with the procedures set forth therein.

          Notwithstanding the provisions of this Section 5, Original Notes which the Chairman of the Board, Chief Executive Officer, President or Chief Financial Officer of the Company shall approve as having been properly tendered shall be considered to be properly tendered (such approval, if given orally, shall be promptly confirmed in writing).

          6. You shall advise the Company with respect to any Original Notes received subsequent to the Expiration Date and accept the Company’s instructions with respect to disposition of such Original Notes.

          7. You shall accept tenders:

               (a) in cases where the Original Notes are registered in two or more names only if signed by all named holders;

               (b) in cases where the signing person (as indicated on the Letter of Transmittal) is acting in a fiduciary or a representative capacity only when proper evidence of his or her authority so to act is submitted; and

               (c) from persons other than the registered holder of Original Notes, provided that customary transfer requirements, including payment of any applicable transfer taxes, are fulfilled.

          You shall accept partial tenders of Original Notes where so indicated and as permitted in the Letter of Transmittal and deliver certificates for Original Notes to the registrar for split-up and return any untendered Original Notes to the holder (or such other person as may be designated in the Letter of Transmittal) as promptly as practicable after expiration or termination of the Exchange Offer.

          8. Upon satisfaction or waiver of all of the conditions to the Exchange Offer, the Company will notify you (such notice, if given orally, to be promptly confirmed in writing) of its acceptance, promptly after the Expiration Date, of all Original Notes properly tendered and you, on behalf of the Company, will exchange such Original Notes for Registered Notes and cause such Original Notes to be cancelled. Delivery of Registered Notes will be made on behalf of the Company by you at the rate of $1,000 principal amount of Registered Notes for each $1,000 principal amount of the corresponding series of Original Notes tendered promptly after notice (such notice if given orally, to be promptly confirmed in writing) of acceptance of said Original Notes by the Company; provided, however, that in all cases, Original Notes tendered pursuant to the Exchange Offer will be exchanged only after timely receipt by you of certificates

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for such Original Notes (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility), a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) with any required signature guarantees and any other required documents. You shall issue Registered Notes only in denominations of $1,000 or any integral multiple thereof.

          9. Tenders pursuant to the Exchange Offer are irrevocable, except that, subject to the terms and upon the conditions set forth in the Prospectus and the Letter of Transmittal, Original Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date.

          10. The Company shall not be required to exchange any Original Notes tendered if any of the conditions set forth in the Exchange Offer are not met. Notice of any decision by the Company not to exchange any Original Notes tendered shall be given (if given orally, to be promptly confirmed in writing) by the Company to you.

          11. If, pursuant to the Exchange Offer, the Company does not accept for exchange all or part of the Original Notes tendered because of an invalid tender, the occurrence of certain other events set forth in the Prospectus under the caption “The Exchange Offer — Conditions” or otherwise, you shall as soon as practicable after the expiration or termination of the Exchange Offer return those certificates for unaccepted Original Notes (or effect appropriate book-entry transfer), together with any related required documents and the Letters of Transmittal relating thereto that are in your possession, to the persons who deposited them.

          12. All certificates for reissued Original Notes, unaccepted Original Notes or for Registered Notes shall be forwarded by first-class mail.

          13. You are not authorized to pay or offer to pay any concessions, commissions or solicitation fees to any broker, dealer, bank or other persons or to engage or utilize any person to solicit tenders.

          14. As Exchange Agent hereunder you:

               (a) shall not be liable for any action or omission to act unless the same constitutes your own gross negligence, willful misconduct or bad faith, and in no event shall you be liable to a securityholder, the Company or any third party for special, indirect or consequential damages or lost profits, arising in connection with this Agreement;

               (b) shall have no duties or obligations other than those specifically set forth herein or as may be subsequently agreed to in writing between you and the Company;

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               (c) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any of the certificates or the Original Notes represented thereby deposited with you pursuant to the Exchange Offer, and will not be required to and will make no representation as to the validity, value or genuineness of the Exchange Offer;

               (d) shall not be obligated to take any legal action hereunder which might in your judgment involve any expense or liability, unless you shall have been furnished with indemnity satisfactory to you;

               (e) may conclusively rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telegram or other document or security delivered to you and believed by you to be genuine and to have been signed or presented by the proper person or persons;

               (f) may act upon any tender, statement, request, document, agreement, certificate or other instrument whatsoever not only as to its due execution and validity and effectiveness of its provisions, but also as to the truth and accuracy of any information contained therein, which you shall in good faith believe to be genuine or to have been signed or presented by the proper person or persons;

               (g) may conclusively rely on and shall be protected in acting upon written or oral instructions from any authorized officer of the Company;

               (h) may consult with counsel of your selection with respect to any questions relating to your duties and responsibilities and the advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by you hereunder in good faith and in accordance with the advice or opinion of such counsel;

               (i) shall in no event be responsible or liable for any failure or delay in the performance of your obligations under this Agreement arising out of or caused by, directly or indirectly, forces beyond your reasonable control, including without limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services; and

               (j) shall not advise any person tendering Original Notes pursuant to the Exchange Offer as to the wisdom of making such tender or as to the market value or decline or appreciation in market value of any Original Notes.

          15. You shall take such action as may from time to time be requested by the Company (and such other action as you may deem appropriate) to furnish copies of the Prospectus, Letter of Transmittal and the Notice of Guaranteed Delivery (as

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defined in the Prospectus) or such other forms as may be approved from time to time by the Company, to all persons requesting such documents and to accept and comply with telephone requests for information relating to the Exchange Offer, provided that such information shall relate only to the procedures for accepting (or withdrawing from) the Exchange Offer. The Company will furnish you with copies of such documents on your request. All other requests for information relating to the Exchange Offer shall be directed to the Company, Attention: David Wall.

          16. You shall advise by facsimile transmission David Wall, the Chief Financial Officer of the Company (at the facsimile number (617) 689-6202), and such other person or persons as the Company may request, daily (and more frequently during the week immediately preceding the Expiration Date if requested) up to and including the Expiration Date, as to the number of Original Notes which have been tendered pursuant to the Exchange Offer and the items received by you pursuant to this Agreement, separately reporting and giving cumulative totals as to items properly received and items improperly received. In addition, you will also inform, and cooperate in making available to, the Company or any such other person or persons upon oral request made from time to time prior to the Expiration Date of such other information as they may reasonably request. Such cooperation shall include, without limitation, the granting by you to the Company and such person as the Company may request of access to those persons on your staff who are responsible for receiving tenders, in order to ensure that immediately prior to the Expiration Date the Company shall have received information in sufficient detail to enable it to decide whether to extend the Exchange Offer. You shall prepare a final list of all persons whose tenders were accepted, the aggregate principal amount of Original Notes tendered, the aggregate principal amount of Original Notes accepted and deliver said list to the Company.

          17. Letters of Transmittal and Notices of Guaranteed Delivery shall be stamped by you as to the date and, after the expiration of the Exchange Offer, the time, of receipt thereof and shall be preserved by you for a period of time at least equal to the period of time you preserve other records pertaining to the transfer of securities. You shall dispose of unused Letters of Transmittal and other surplus materials by returning them to the Company.

          18. You hereby expressly waive any lien, encumbrance or right of setoff whatsoever that you may have with respect to funds deposited with you for the payment of transfer taxes by reasons of amounts, if any, borrowed by the Company, or any of their subsidiaries or affiliates pursuant to any loan or credit agreement with you or for compensation owed to you hereunder.

          19. For services rendered as Exchange Agent hereunder, you shall be entitled to such compensation as shall be agreed in writing between the Company and you. The provisions of this section shall survive the termination of this Agreement.

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          20. You hereby acknowledge receipt of the Prospectus and the Letter of Transmittal. Any inconsistency between this Agreement, on the one hand, and the Prospectus and the Letter of Transmittal (as they may be amended from time to time), on the other hand, shall be resolved in favor of the latter two documents, except with respect to your duties, liabilities and indemnification as Exchange Agent.

          21. The Company covenants and agrees to fully indemnify and hold you harmless against any and all loss, liability, and cost or expense, including reasonable attorneys’ fees and expenses, incurred without gross negligence or willful misconduct on your part, arising out of or in connection with any act, omission, delay or refusal made by you in reliance upon any signature, endorsement, assignment, certificate, order, request, notice, instruction or other instrument or document believed by you to be valid, genuine and sufficient and in accepting any tender or effecting any transfer of Original Notes believed by you in good faith to be authorized, and in delaying or refusing in good faith to accept any tenders or effect any transfer of Original Notes. In each case, the Company shall be notified by you, by letter or facsimile transmission, of the written assertion of a claim against you or of any other action commenced against you, promptly after you shall have received any such written assertion or shall have been served with a summons in connection therewith. The Company shall be entitled to participate at its own expense in the defense of any such claim or other action and, if the Company so elects, the Company shall assume the defense of any suit brought to enforce any such claim. In the event that the Company shall assume the defense of any such suit, the Company shall not be liable for the fees and expenses of any additional counsel thereafter retained by you, so long as the Company shall retain counsel satisfactory to you to defend such suit, and so long as you have not determined, in your reasonable judgment, that a conflict of interest exists between you and the Company. The provisions of this section shall survive the termination of this Agreement.

          22. You shall arrange to comply with all requirements under the tax laws of the United States, including those relating to missing Tax Identification Numbers, and shall file any appropriate reports with the Internal Revenue Service.

          23. You shall deliver or cause to be delivered, in a timely manner to each governmental authority to which any transfer taxes are payable in respect of the exchange of Original Notes, the Company’s check in the amount of all transfer taxes so payable; provided, however, that you shall reimburse the Company for amounts refunded to you in respect of your payment of any such transfer taxes, at such time as such refund is received by you.

          24. This Agreement and your appointment as Exchange Agent hereunder shall be construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such state, and without regard to conflicts of law principles, and shall inure to the benefit of, and the

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obligations created hereby shall be binding upon, the successors and assigns of each of the parties hereto.

          25. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same agreement.

          26. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

          27. This Agreement shall not be deemed or construed to be modified, amended, rescinded, cancelled or waived, in whole or in part, except by a written instrument signed by a duly authorized representative of the party to be charged. This Agreement may not be modified orally.

          28. Unless otherwise provided herein, all notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party, addressed to it, at its address or telecopy number set forth below:

If to the Company:

Altra Industrial Motion, Inc.
14 Hayward Street
Quincy, Massachusetts 02171

Facsimile: (617) 689-6202
Attention: David Wall

with a copy to:

Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153

Facsimile: (212) 310-8007
Attention: Matthew Bloch, Esq.

If to the Exchange Agent:

The Bank of New York
700 South Flower Street, Suite 500
Los Angeles, California 90017-4104

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Facsimile: (213) 630-6298
Attention: Corporate Trust Administration

          29. Unless terminated earlier by the parties hereto, this Agreement shall terminate 90 days following the Expiration Date. Notwithstanding the foregoing, Sections 18 and 20 shall survive the termination of this Agreement. Upon any termination of this Agreement, you shall promptly deliver to the Company any certificates for Securities, funds or property then held by you as Exchange Agent under this Agreement.

          30. This Agreement shall be binding and effective as of the date hereof.

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          Please acknowledge receipt of this Agreement and confirm the arrangements herein provided by signing and returning the enclosed copy.

ALTRA INDUSTRIAL MOTION, INC.
By:
	Name:	David Wall
	Title:	Chief Financial Officer

Accepted as of the date
first above written:

THE BANK OF NEW YORK, as Exchange Agent
By:
	Name:
	Title:

[EXCHANGE AGENT AGREEMENT]

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