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Advisory Services Agreement

This is an actual contract by Altra Industrial Motion,.

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Sectors: Manufacturing
Governing Law: New York, View New York State Laws
Effective Date: November 30, 2004
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Exhibit 10.18


GENSTAR CAPITAL, L.P. FOUR EMBARCADERO CENTER, SUITE 1900 SAN FRANCISCO, CA 94111


NOVEMBER 30, 2004


Altra Holdings, Inc. and Altra Industrial Motion, Inc.

c/o Genstar Capital Partners III, L.P.

Four Embarcadero Center, Suite 1900

San Francisco, CA 94111-4191


Attention:


Re: Advisory Services Agreement


Ladies and Gentlemen:


This letter serves to confirm our retention by Altra Holdings, Inc. (the " Company" or " you" ) to provide management, consulting and financial services to the Company as follows:


1. The Company has retained us, and we hereby agree to accept such retention, to provide to the Company, when and if called upon, certain management, business strategy, consulting and financial services of the type customarily performed by us, including assisting the Company in analyzing, structuring, negotiating and effecting Transactions (as defined below).


2. You agree to pay us the following:


(a) In consideration of services provided by us in connection with the purchase of all of the limited liability company interests of the Company pursuant to that certain LLC Purchase Agreement dated as of October 25, 2004 (the " Purchase Agreement" ), by and among Colfax Corporation, a Delaware corporation, Warner Electric Holdings, Inc., a Delaware corporation and the Company and the related financing transactions, the Company shall pay to us a fee of $4,000,000 in cash concurrently with the consummation of the purchase contemplated by the Purchase Agreement (the " Closing Fee" ) and reimburse all of our expenses incurred by and on behalf of us in connection with the Purchase Agreement and the transactions contemplated thereby.


(b) In consideration for the services provided by us hereunder, the Company shall pay to us an annual management fee of $1,000,000 (the " Consulting Fee" ). The Consulting Fee shall be payable in equal quarterly installments in arrears on the last day of each calendar quarter (i.e., the last day of March, June, September and December of each such year). Such quarterly payments shall be (i) subject to withholding as required by applicable law and (ii) prorated for partial periods based on the actual number of days during such calendar quarter that we are retained hereunder.


(c) In addition to our fees for advisory services, we will separately bill our expenses as incurred. Generally, these expenses include travel costs, document production costs, the reasonable fees and disbursements of our legal counsel tax, financial and other advisors, and other expenses of this type. The Company agrees to reimburse us, upon request made from time to time, for such expenses.


(d) In the event a Transaction (as defined below) is consummated, the Company agrees to pay us an advisory fee equal to 2.0% of the Aggregate Consideration (as defined below) in connection with the Transaction (the " Advisory Fee" ). The Advisory Fee will be fully earned on the date of closing of the Transaction and shall be payable by the Company to Genstar in cash on the date of closing.


(e) For purposes of this agreement, a " Transaction" shall mean (i) the consummation of any transaction involving the direct or indirect acquisition by the Company or any of its direct or indirect subsidiaries (whether in one or a series of transactions) of all or a substantial amount of the assets or the capital stock, voting securities or equity interests of another entity, as well as any merger, recapitalization, restructuring or liquidation of another entity by its current owners, a third party or any combination thereof, or any other form of disposition which results in the effective sale, in whole or in part, of the business or operations of the entity to the Company or any of its direct or indirect subsidiaries (a transaction described in this clause (i), an " Acquisition" ), or (ii) the consummation of any transaction involving the direct or indirect disposition by the Company or any of its direct or indirect subsidiaries (whether in one or a series of transactions) of all or a substantial amount of its assets, capital stock, voting securities or equity interests, as well as any merger, recapitalization, restructuring or liquidation of the Company or any of its direct or indirect subsidiaries by their current owners, a third party or any combination thereof, or any other form of disposition which results in the effective sale, in whole or in part, of the business or operations of the Company or any of its direct or indirect subsidiaries to another entity (a transaction described in this clause (ii), a " Disposition" ).


For purposes of this agreement, " Aggregate Consideration" shall mean (i) in connection with an Acquisition, the total fair market value (at the time of closing) of all consideration (including cash, securities, property, all debt remaining on the acquired entity' s financial statements immediately prior to closing and other indebtedness and obligations assumed by the Company or any of its direct or indirect subsidiaries, as applicable, and any other form of consideration) paid or payable, or otherwise to be distributed, directly or indirectly in connection with the Transa
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