Document:

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                                                                   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.

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          (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.

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          (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.

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          (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");

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          (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

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(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

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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

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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".

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          (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

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

          (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

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

                           [SIGNATURE PAGES TO FOLLOW]

                                       18

<PAGE>

          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]

<PAGE>

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]
<PAGE>
                                   SCHEDULE 1
                                   COPYRIGHTS

None.

                                       1
<PAGE>

                                   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
<PAGE>

                                   SCHEDULE 3
                                     PATENTS

<Table>
<Caption>
        GRANTOR                  COUNTRY                 PATENT            REGISTRATION NO.       REGISTRATION DATE
---------------------     --------------         --------------------    ------------------     --------------------
<S>                       <C>                    <C>                     <C>                    <C>

TB Wood's Incorporated    United States          Housing for Motor       D343,387               1/18/1994
                                                 Control Equipment

TB Wood's Incorporated    United States          Combination of a        5,465,804              11/14/1995
                                                 Power Steering Pump
                                                 and Air Conditioning
                                                 Compressor in an
                                                 Automotive Vehicle

TB Wood's Incorporated    United States          Shaft Mountable         5,304,101              4/19/1994
                                                 Bushing and Hub for
                                                 Industrial Power
                                                 Transmissions

TB Wood's Incorporated    United States          Precision Winding       6,311,920              11/6/2001
                                                 Method and Apparatus

TB Wood's Incorporated    United States          Flexible Coupling       5,611,732              3/18/1997
                                                 with End Stress
                                                 Relief Structure
</Table>

                                       3
<PAGE>

                                   SCHEDULE 4
                                PLEDGED COMPANIES

<Table>
<Caption>
        NAME OF PLEDGOR          NAME OF PLEDGED COMPANY      NUMBER OF      CLASS OF      PERCENTAGE OF CERTIFICATE PERCENTAGE OF
                                                            SHARES/UNITS     INTERESTS      CLASS OWNED     NOS.     CLASS PLEDGED
----------------------------- --------------------------- --------------- --------------  -------------- ----------- --------------
<S>                           <C>                         <C>             <C>             <C>            <C>         <C>
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%
</Table>

                                       4
<PAGE>

                                   SCHEDULE 5
                                   TRADEMARKS

<Table>
<Caption>
                                                                       APPLICATION/
       GRANTOR                COUNTRY                MARK            REGISTRATION NO.       APP/REG DATE
----------------------- -------------------- ---------------------- -------------------- --------------------
<S>                     <C>                  <C>                    <C>                  <C
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 (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 COUPLINGS     73/526,310/          3/11/1985/
Enterprises, Inc.                                                   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/
</TABLE>

                                       5
<PAGE>

<Table>
<Caption>
                                                                       APPLICATION/
       GRANTOR                COUNTRY                MARK            REGISTRATION NO.       APP/REG DATE
----------------------- -------------------- ---------------------- -------------------- --------------------
<S>                     <C>                  <C>                    <C>                  <C
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 (stylized)   71/640,418/          1/6/1953/
Enterprises, Inc.                                                   645,415              5/14/1957

TB Wood's               Great Britain        SUREFLEX               B998,327/
Enterprises, Inc.                                                   B998,327             9/13/1993

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 and Katakana  7-700836/            1/13/1995/
Enterprises, Inc.                                                   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/
</TABLE>

                                       6
<PAGE>

<Table>
<Caption>
                                                                       APPLICATION/
       GRANTOR                COUNTRY                MARK            REGISTRATION NO.       APP/REG DATE
----------------------- -------------------- ---------------------- -------------------- --------------------
<S>                     <C>                  <C>                    <C>                  <C
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               Canada               WIN-TRAC               1,210,868/           3/24/2004/
Enterprises, Inc.                                                   TMA664,172           5/12/2006

TB Wood's               Community Trademark  WIN-TRAC               3.828.019/           5/20/2004/
Enterprises, Inc.                                                   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 Company  Germany              FORM-FLEX              D 36648 7W2/         9/22/1983/
                                                                    1,053,953            9/23/1983

TB Wood's Sons Company  Germany              SUREFLEX               W24959/              4/5/1973/
                                                                    926 107              12/17/1974

TB Wood's Incorporated  Argentina            DURA-FLEX              2,066,443/           1/23/1997/
                                                                    1,783,301            3/27/2000

TB Wood's Incorporated  Community Trademark  DURA-FLEX              507.277              2/7/1997

TB Wood's Incorporated  Japan                DURA-FLEX              27318/97/            3/17/1997/
                                                                    4,166,483            7/10/1998

TB Wood's Incorporated  Malaysia             DURA-FLEX              97/01971             2/19/1997

TB Wood's Incorporated  Taiwan               DURA-FLEX              (86)5713/            2/1/1997/
                                                                    807300               7/1/1998

TB Wood's Incorporated  Japan                FORMFLEX               41,517/85/           8/19/1987/
                                                                    1,975,830            8/19/1997

TB Wood's Incorporated  Venezuela            PETRO-TRAC             2001-016447/         9/7/2001/
                                                                    P-245856             8/22/2003

TB Wood's Incorporated  Canada               QT POWER CHAIN         1,157,003/           10/25/2002/
                                                                    TMA623,038           10/20/2004

TB Wood's Incorporated  France               SPEEDLIGN              717,131/             6/19/1974/
                                                                    1,286,266            6/19/1974

TB Wood's Incorporated  Germany              SPEEDLIGN              935,511/
                                                                    935,511              6/10/1974

TB Wood's Incorporated  Great Britain        SPEEDLIGN              99999/
                                                                    1,029,397            5/13/1974

TB Wood's Incorporated  Singapore            SUREFLEX               2556/82/             5/21/1982/
                                                                    T82/02556B           5/21/1982

TB Wood's Incorporated  Benelux              SURE-FLEX              0316801/             10/20/1972/
                                                                    0316801              10/20/1972

TB Wood's Incorporated  Brazil               SURE-FLEX              810,942,631/         8/23/1982/
                                                                    810,942,631          3/19/1995

TB Wood's Incorporated  France               SURE-FLEX              02 3 196 347/        11/27/2002/
</TABLE>

                                       7
<PAGE>

<Table>
<Caption>
                                                                       APPLICATION/
       GRANTOR                COUNTRY                MARK            REGISTRATION NO.       APP/REG DATE
----------------------- -------------------- ---------------------- -------------------- --------------------
<S>                     <C>                  <C>                    <C>                  <C>
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
</Table>

                                       8
<PAGE>

                                   SCHEDULE 6
                             COMMERCIAL TORT CLAIMS

None.

<PAGE>

                                   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
<PAGE>

                                   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
<PAGE>

                          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.

<PAGE>

     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]

<PAGE>

     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

<PAGE>

                                    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

<PAGE>

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

<PAGE>

     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

<PAGE>

AGENT:                                  WELLS FARGO FOOTHILL, INC.,
                                        a California corporation, as Agent

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                 SIGNATURE PAGE OF COPYRIGHT SECURITY AGREEMENT

                                        2
<PAGE>

                                   SCHEDULE I
                                       TO
                          COPYRIGHT SECURITY AGREEMENT

                             COPYRIGHT REGISTRATIONS

<TABLE>
<CAPTION>
GRANTOR   COUNTRY   COPYRIGHT   REGISTRATION NO.   REGISTRATION DATE
-------   -------   ---------   ----------------   -----------------
<S>       <C>       <C>         <C>                <C>

</TABLE>

COPYRIGHT SECURITY AGREEMENT

<PAGE>

                                    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.

<PAGE>

     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

<PAGE>

     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

<PAGE>

AGENT:                                  WELLS FARGO FOOTHILL, INC.,
                                        a California corporation, as Agent

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                   SIGNATURE PAGE OF PATENT SECURITY AGREEMENT

<PAGE>

                                   SCHEDULE I
                                       TO
                            PATENT SECURITY AGREEMENT

                         PATENTS AND PATENT APPLICATIONS

<TABLE>
<CAPTION>
GRANTOR   COUNTRY   PATENT   REGISTRATION NO.   REGISTRATION DATE
-------   -------   ------   ----------------   -----------------
<S>       <C>       <C>      <C>                <C>

</TABLE>

<PAGE>

                                    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

<PAGE>

<TABLE>
<CAPTION>
                  NAME OF PLEDGED     NUMBER OF     CLASS OF   PERCENTAGE OF   CERTIFICATE
NAME OF PLEDGOR       COMPANY       SHARES/UNITS   INTERESTS    CLASS OWNED        NOS.
---------------   ---------------   ------------   ---------   -------------   -----------
<S>               <C>               <C>            <C>         <C>             <C>

</TABLE>

<PAGE>

                                    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.

<PAGE>

     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

<PAGE>

         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

<PAGE>

AGENT:                                  WELLS FARGO FOOTHILL, INC.,
                                        a California corporation, as Agent

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                 SIGNATURE PAGE OF TRADEMARK SECURITY AGREEMENT

<PAGE>

                                   SCHEDULE I
                                       to
                          TRADEMARK SECURITY AGREEMENT

                      TRADEMARK REGISTRATIONS/APPLICATIONS

<TABLE>
<CAPTION>
                             APPLICATION/
GRANTOR   COUNTRY   MARK   REGISTRATION NO.   APP/REG DATE
-------   -------   ----   ----------------   ------------
<S>       <C>       <C>    <C>                <C>

</TABLE><PAGE>

                                                                   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

<PAGE>

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

<PAGE>

     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

<PAGE>

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

<PAGE>
                     SCHEDULE I TO PATENT SECURITY AGREEMENT
                         PATENTS AND PATENT APPLICATIONS

<Table>
<Caption>
        GRANTOR                  COUNTRY                 PATENT            REGISTRATION NO.       REGISTRATION DATE
        -------                  -------                 ------            ----------------       -----------------
<S>                       <C>                    <C>                     <C>                    <C>
TB Wood's Incorporated    United States          Housing for Motor       D343,387               1/18/1994
                                                 Control Equipment

TB Wood's Incorporated    United States          Combination of a        5,465,804              11/14/1995
                                                 Power Steering Pump
                                                 and Air Conditioning
                                                 Compressor in an
                                                 Automotive Vehicle

TB Wood's Incorporated    United States          Shaft Mountable         5,304,101              4/19/1994
                                                 Bushing and Hub for
                                                 Industrial Power
                                                 Transmissions

TB Wood's Incorporated    United States          Precision Winding       6,311,920              11/6/2001
                                                 Method and Apparatus

TB Wood's Incorporated    United States          Flexible Coupling       5,611,732              3/18/1997
                                                 with End Stress
                                                 Relief Structure
</Table>

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