ENPRO INDUSTRIES INC (Form: 10-12B/A, Received: 05/24/2002 15:51:05)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10/A-4

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or 12(g) of

the Securities Exchange Act of 1934

ENPRO INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)


North Carolina		01-0573945
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5605 Carnegie Boulevard

Suite 500

Charlotte, North Carolina 28209

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (704) 731-1500.

Securities to be registered pursuant to Section 12(b) of the Act:


		Name of Each Exchange on Which
Title of Each Class to be so Registered		Each Class is to be Registered

Common Stock, par value $0.01 per share Preferred Stock Purchase Rights		New York Stock Exchange New York Stock Exchange

Securities to be registered pursuant to Section 12(g) of the Act:

None

INFORMATION REQUIRED IN REGISTRATION STATEMENT

Item 1. Business.

The information required by this item is contained in the sections entitled “Summary,” “Risk Factors,” “Selected Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “The EnPro Business,” and “Available Information” in the amended information statement of EnPro Industries, Inc. (the “Information Statement”) filed with the Securities and Exchange Commission on May 24, 2002, and attached hereto as Exhibit 99.1 and such sections are incorporated herein by reference.

Item 2. Financial Information.

The information required by this item is contained in the unaudited pro forma combined financial statements, the audited balance sheet of EnPro, the audited consolidated financial statements of Coltec and the unaudited condensed consolidated financial statements of Coltec, and in each case the related note or notes thereto, and in the sections entitled “Selected Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Information Statement and such financial statements and sections are incorporated herein by reference.

Item 3. Properties.

The information required by this item is contained in the section entitled “The EnPro Business — Facilities” in the Information Statement and such section is incorporated herein by reference.

Item 4. Security Ownership of Certain Beneficial Owners and Management.

The information required by this item is contained in the section entitled “Ownership of Our Common Stock” in the Information Statement and such section is incorporated herein by reference.

Item 5. Directors and Executive Officers.

The information required by this item is contained in the section entitled “Management — Our Directors and Executive Officers” in the Information Statement and such section is incorporated herein by reference.

Item 6. Executive Compensation.

The information required by this item is contained in the section entitled “Management” starting with “ — Director Compensation” in the Information Statement and such section is incorporated herein by reference.

Item 7. Certain Relationships and Related Transactions.

The information required by this item is contained in the sections entitled “Arrangements between Goodrich and EnPro,” “Management — Indebtedness to Goodrich,” “Management — Goodrich Executive Stock Purchase Program” and “Indemnification of Directors and Officers” in the Information Statement and such sections are incorporated herein by reference.

Item 8. Legal Proceedings.

The information required by this item is contained in the sections entitled “Risk Factors — Risks Related to Our Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contingencies” and “The EnPro Business — Legal and Environmental Matters” in the Information Statement and such sections are incorporated herein by reference.


Item 9.	*Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.*

The information required by this item is contained in the sections entitled “Risk Factors — Risks Related to Ownership of Our Common Stock,” “The Distribution,” “Dividend Policy,” “Ownership of Our Common Stock,” “Description of Our Capital Stock” and “Shares Eligible for Future Sale” in the Information Statement and such sections are incorporated herein by reference.

Item 10. Recent Sales of Unregistered Securities.

On January 14, 2002, EnPro issued 1,000 shares of its common stock to Goodrich Corporation, its direct parent, for consideration of $1,000. No underwriter was involved in this sale. This transaction was exempt from registration under the Securities Act of 1933, as amended, pursuant to the exemption afforded by Section 4(2) thereof in that such transaction did not involve a public offering.

Item 11. Description of Registrant’s Securities to be Registered.

The information required by this item is contained in the sections entitled “Risk Factors — Risks Related to Ownership of Our Common Stock,” “The Distribution,” “Description of Our Capital Stock” and “Description of Our Debt and Convertible Preferred Securities” in the Information Statement and such sections are incorporated herein by reference.

Item 12. Indemnification of Directors and Officers.

The information required by this item is contained in the section entitled “Indemnification of Directors and Officers” in the Information Statement and such section is incorporated herein by reference.

Item 13. Financial Statements and Supplementary Data.

The information required by this item is contained in the unaudited pro forma combined financial statements, the audited balance sheet of EnPro, the audited consolidated financial statements of Coltec, and the unaudited condensed consolidated financial statements of Coltec, and in each case the related note or notes thereto, and in the sections “Capitalization” and “Selected Financial Information” in the Information Statement and such financial statements and sections are incorporated herein by reference.

Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 15. Financial Statements and Exhibits.

(a) Financial Statements. The information required by this item is contained in the audited balance sheet of EnPro, the audited consolidated financial statements of Coltec, and the unaudited condensed consolidated financial statements of Coltec, and in each case the related note or notes thereto, and such financial statements are incorporated herein by reference.

(b) Exhibits. The following documents are filed as exhibits hereto:


Exhibit No.		Description

	2.1	Form of Distribution Agreement.****
	3.1	Form of Restated Articles of Incorporation of EnPro Industries, Inc.***
	3.2	Form of Restated Bylaws of EnPro Industries, Inc.***
	4.1	Form of certificate representing shares of common stock, par value $0.01 per share, of EnPro Industries, Inc.**
	4.2	Form of Rights Agreement between EnPro Industries, Inc. and The Bank of New York, as rights agent.**

(2)


Exhibit No.		Description

	4.3	Certificate of Trust of Coltec Capital Trust, filed as Exhibit 4.1 to Coltec Industries Inc’s Registration Statement on Form S-3 (No. 333-52975) and incorporated herein by reference.
	4.4	Amended and Restated Declaration of Trust of Coltec Capital Trust dated as of April 14, 1998, among Coltec Industries Inc, as Sponsor, The Bank of New York, as Property Trustee, and The Bank of New York (Delaware), as Delaware Trustee, and the individuals named therein as Administrative Trustees, filed as Exhibit 4.2 to Coltec Industries Inc’s Registration Statement on Form S-3 (No. 333-52975) and incorporated herein by reference.
	4.5	Form of 5 1/4% Convertible Preferred Securities (included in Exhibit 4.4 above).
	4.6	Indenture dated as of April 14, 1998, between Coltec Industries Inc and The Bank of New York, as Trustee, relating to the 5 1/4% Convertible Junior Subordinated Deferrable Interest Debentures due 2028, filed as Exhibit 4.3 on Coltec Industries Inc’s Registration Statement on Form S-3 (No. 333-52975) and incorporated herein by reference.
	4.7	First Supplemental Indenture, dated as of July 12, 1999, between The B.F. Goodrich Company and The Bank of New York, as trustee.***
	4.8	Form of 5 1/4% Convertible Junior Subordinated Deferrable Interest Debenture Due 2028 (included in Exhibit 4.6 above).
	4.9	Guarantee Agreement, dated as of April 14, 1998, between Coltec Industries Inc and The Bank of New York, as Trustee, filed as Exhibit 4.6 to Coltec Industries Inc’s Registration Statement on Form S-3 (No. 333-52975) and incorporated herein by reference.
	4.10	Guarantee Agreement, dated as of July 12, 1999, between The B.F. Goodrich Company and The Bank of New York, as trustee.***
	4.11	Form of Guarantee Agreement between EnPro Industries, Inc. and The Bank of New York, as trustee.****
	4.12	Form of Second Supplemental Indenture among Coltec Industries Inc, EnPro Industries, Inc., Goodrich Corporation and The Bank of New York, as trustee.****
	4.13	Indenture dated as of April 16, 1998, between Coltec Industries Inc and Bankers Trust Company as Trustee, relating to the Coltec Industries Inc 7 1/2% Senior Notes due 2008, filed as Exhibit 4.1 to Coltec Industries Inc’s Registration Statement on Form S-4 (No. 333-53005) and incorporated herein by reference.
	4.14	Form of 7 1/2% Senior Note due 2008 (included in Exhibit 4.13 above).
	10.1	Form of Tax Matters Arrangements between Goodrich Corporation and EnPro Industries, Inc.****
	10.2	Form of Transition Services Agreement between Goodrich Corporation and EnPro Industries, Inc.****
	10.3	Form of Employee Matters Agreement between Goodrich Corporation and EnPro Industries, Inc.****
	10.4	Form of Indemnification Agreement among Goodrich Corporation, EnPro Industries, Inc., Coltec Industries Inc and Coltec Capital Trust.****
	10.5	Form of Indemnification Agreement for directors and officers.*****
	10.6	Letter Agreement, dated as of March 11, 2002, between Coltec Industries Inc and First Union Securities, Inc., as agent for First Union National Bank, for the purchase of call options that expire in March 2005.****
	10.7	Letter Agreement, dated as of March 11, 2002, between Coltec Industries Inc and First Union Securities, Inc., as agent for First Union National Bank, for the purchase of call options that expire in March 2007.****
	10.8	Consulting Agreement, dated as of March 1, 2002, among Goodrich Corporation, EnPro Industries, Inc. and William R. Holland.****
	10.9	EnPro Industries, Inc. 2002 Equity Compensation Plan**

(3)


Exhibit No.		Description

	10.10	EnPro Industries, Inc. Senior Executive Annual Performance Plan**
	10.11	EnPro Industries, Inc. Long-Term Incentive Program**
	10.12	EnPro Industries, Inc. Performance Share Deferred Compensation Program**
	10.13	EnPro Industries, Inc. Deferred Compensation Plan**
	10.14	Credit Agreement dated as of May 16, 2002, among the financial institutions named therein, Bank of America, N.A., as the agent, Citicorp USA, Inc., as the syndication agent, and Coltec Industries Inc, Coltec Industrial Products LLC, Garlock Sealing Technologies LLC, Garlock Bearings LLC, Haber Tool Company, and Stemco LLC, as the borrowers, and Coltec Industries Inc, as the funds administrator**
	10.15	Security Agreement dated as of May 16, 2002 between Bank of America, N.A., as agent, and EnPro Industries, Inc., Coltec Industries Inc, Coltec Industrial Products LLC, Garlock Sealing Technologies LLC, Garlock Bearings LLC, Haber Tool Company Inc, Stemco LLC, QFM Sales and Services, Inc., Coltec Technical Services Inc., Coltec International Services Co., Garrison Litigation Management Group, Ltd., Glacier Garlock Bearings, Inc., Garlock International Inc., and Garlock Overseas Corporation**
	21.1	Subsidiaries of EnPro Industries, Inc.**
	99.1	Information Statement.**


**		Filed herewith.
***		Filed as part of Amendment No. 1 to Form 10 dated March 15, 2002.
****		Filed as part of Amendment No. 2 to Form 10 dated March 21, 2002.
*****		Filed as part of Amendment No. 3 to Form 10 dated May 16, 2002.

(4)

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this amended registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

EnPro Industries, Inc.

By /s/ RICHARD L. MAGEE

Richard L. Magee

Senior Vice President, Secretary

and General Counsel

Date: May 24, 2002

(5)

Exhibit 4.1

COMMON STOCK COMMON STOCK

S H A R E S

N U M B E R

INCORPORATED UNDER THE LAWS
OF THE STATE OF NORTH CAROLINA
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFICATE IS TRANSFERABLE IN CUSIP _____________
CHARLOTTE, N.C. OR NEW YORK, N.Y

ENPRO INDUSTRIES, INC.

THIS CERTIFIES THAT

IS THE OWNER OF

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE PAR VALUE OF
$.01 EACH OF

EnPro Industries, Inc. transferable on the books of the Company in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed.

This Certificate is not valid until countersigned and registered by the Transfer Agent and Registrar.

Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers.

Dated: ____________ ___, _____

COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK
(NEW YORK, N.Y.)

TRANSFER AGENT PRESIDENT
AND REGISTRAR
[CORPORATE SEAL]

AUTHORIZED SIGNATURE

SECRETARY

ENPRO INDUSTRIES, INC.

THE COMPANY WILL FURNISH TO ANY SHAREHOLDER, UPON REQUEST AND WITHOUT CHARGE, A FULL OR SUMMARY STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OF STOCK OF THE COMPANY AUTHORIZED TO BE ISSUED AND THE VARIATIONS IN THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES OF PREFERRED STOCK SO FAR AS THE SAME HAVE BEEN FIXED AND DETERMINED, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES.

SUCH REQUEST SHOULD BE ADDRESSED TO THE TRANSFER AGENT NAMED ON THE FACE HEREOF.

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOKE, MUTILATED OR DESTROYED THE COMPANY WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations.

TEN COM - as tenants in common
TEN ENT - as tenants by the entireties

JT TEN  - as joint tenants with right of
          survivorship and not as tenants
          in common

UNIF GIFT MIN ACT - . . . . . . .Custodian . . . . . .
                     (Cust)                    (Minor)
                     under Uniform Gifts to Minors
                     Act . . . . . . . . . . .
                               (State)

Additional abbreviations may also be used though not in the above list.

For value received, hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)

shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint

Attorney to transfer the said stock on the books of the within named Company with full power of substitution in the premises.

Dated

THE SIGNATURES SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockholders, Savings and Loan Associations and Credit Unions) WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO S.E.C. RULE 17Ad-15.

NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Rights Agreement between EnPro Industries, Inc. (the "Company") and The Bank of New York, as Rights Agent, dated as of May 31, 2002 as it may from time to time be supplemented or amended pursuant to its terms (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights may be redeemed, may expire, or may be evidenced by separate certificates and will no longer be evidenced by this certificate. The Company will mail to the holder of this certificate a copy of the Rights Agreement without charge within ten business days after receipt of a written request therefor. Under certain circumstances, as set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void.

EXHIBIT 4.2

RIGHTS AGREEMENT

Dated as of May 31, 2002

By and Between

ENPRO INDUSTRIES, INC.

and

THE BANK OF NEW YORK

as Rights Agent

TABLE OF CONTENTS

                                                                                                               PAGE

1.       Certain Definitions.....................................................................................1

2.       Appointment of Rights Agent.............................................................................5

3.       Issue of Right Certificates.............................................................................5

4.       Form of Right Certificates..............................................................................7

5.       Countersignature and Registration.......................................................................7

6.       Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
         Lost or Stolen Right Certificates.......................................................................7

7.       Exercise of Rights; Purchase Price; Expiration Date of Rights...........................................8

8.       Cancellation of Right Certificates......................................................................9

9.       Company Covenants Concerning Securities and Rights.....................................................10

10.      Record Date............................................................................................11

11.      Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights........................11

12.      Certificate of Adjusted Purchase Price or Number of Securities.........................................19

13.      Consolidation, Merger or Sale or Transfer of Assets or Earning Power...................................19

14.      Fractional Rights and Fractional Securities............................................................22

15.      Rights of Action.......................................................................................23

16.      Agreement of Rights Holders............................................................................24

17.      Right Certificate Holder Not Deemed a Shareholder......................................................24

18.      Concerning the Rights Agent............................................................................25

19.      Merger or Consolidation or Change of Name of Rights Agent..............................................25

20.      Duties of Rights Agent.................................................................................25

21.      Change of Rights Agent.................................................................................27

22.      Issuance of New Right Certificates.....................................................................28

23.      Redemption.............................................................................................28

TABLE OF CONTENTS
(continued)

                                                                                                               PAGE

24.      Exchange...............................................................................................29

25.      Notice of Certain Events...............................................................................30

26.      Notices................................................................................................31

27.      Supplements and Amendments.............................................................................31

28.      Successors; Certain Covenants..........................................................................32

29.      Benefits of This Agreement.............................................................................32

30.      Governing Law..........................................................................................32

31.      Severability...........................................................................................32

32.      Descriptive Headings, Etc..............................................................................32

33.      Determinations and Actions by the Directors............................................................32

34.      Counterparts...........................................................................................33

EXHIBIT A......................................................................................................A-1

EXHIBIT B......................................................................................................B-1

EXHIBIT C......................................................................................................C-1

-ii-

RIGHTS AGREEMENT

This RIGHTS AGREEMENT, dated as of May 31, 2002 (this "AGREEMENT"), is made and entered into by and between EnPro Industries, Inc., a North Carolina corporation (the "COMPANY"), and The Bank of New York, a New York banking corporation (the "RIGHTS AGENT").

RECITALS

WHEREAS, on May 22, 2002, the Directors of the Company authorized and declared a dividend distribution of one right (a "RIGHT") for each share of common stock, par value $0.01 per share, of the Company (each, a "COMMON SHARE") outstanding as of the Rights Dividend Effective Time (as defined in
Section 1(aa)) on the date upon which the Separation (as defined in Section
1(cc)) occurs (the "RECORD DATE"), each Right initially representing the right to purchase one one-hundredth of a Preferred Share (as defined in Section 1(s)) on the terms and subject to the conditions herein set forth, and further authorized and directed the issuance of one Right (subject to adjustment as provided herein) with respect to each Common Share issued or delivered by the Company (whether originally issued or delivered from the Company's treasury) after the Record Date but prior to the earlier of the Distribution Date (as defined in Section 1(i)) and the Expiration Date (as defined in Section 1(k)) or as provided in Section 22.

NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto hereby agree as follows:

1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated:

(a) "ACQUIRING PERSON" means any Person (other than the Company or any Related Person) that, together with all Affiliates and Associates of such Person, is the Beneficial Owner of 15% or more of the then-outstanding Common Shares; provided, however, that a Person will not be deemed to have become an Acquiring Person solely as a result of a reduction in the number of Common Shares outstanding unless and until such time as (i) such Person or any Affiliate or Associate of such Person thereafter becomes the Beneficial Owner of additional Common Shares representing 1% or more of the then-outstanding Common Shares, other than as a result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Common Shares are treated equally, or (ii) any other Person that is the Beneficial Owner of Common Shares representing 1% or more of the then-outstanding Common Shares thereafter becomes an Affiliate or Associate of such Person. Notwithstanding the foregoing, (x) if the Directors of the Company determine in good faith that a Person who would otherwise be an "ACQUIRING PERSON" as defined pursuant to the foregoing provisions of this paragraph (a), has become such inadvertently, and such Person divests as promptly as practicable a sufficient number of Common Shares so that such Person would no longer be an "ACQUIRING PERSON" as defined pursuant to the foregoing provisions of this paragraph (a), then such Person shall not be deemed to be an "ACQUIRING PERSON" for any purposes of this Agreement, and (y) Goodrich shall

not be deemed to be an "ACQUIRING PERSON" at any time prior to the effectiveness of the Separation.

(b) "AFFILIATE" and "ASSOCIATE" will have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Agreement, provided however, that a Person will not be deemed to be the Affiliate or Associate of another Person solely because either or both Persons are or were Directors of the Company.

(i) the beneficial ownership of which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing), or upon the exercise of conversion rights, exchange rights, warrants, options or other rights (in each case, other than upon exercise or exchange of the Rights); provided, however, that a Person will not be deemed the Beneficial Owner of, or to Beneficially Own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or

(ii) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has or shares the right to vote or dispose of, including pursuant to any agreement, arrangement or understanding (whether or not in writing); or

(iii) of which any other Person is the Beneficial Owner, if such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) with such other Person (or any of such other Person's Affiliates or Associates) with respect to acquiring, holding, voting or disposing of any securities of the Company;

provided, however, that a Person will not be deemed the Beneficial Owner of, or to Beneficially Own, any security (A) if such Person has the right to vote such security pursuant to an agreement, arrangement or understanding (whether or not in writing) which (1) arises solely from a revocable proxy given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report), or (B) if such beneficial ownership arises solely as a result of such Person's status as a "clearing agency," as defined in Section 3(a)(23) of the Exchange Act; provided further, however, that nothing in this paragraph (c) will cause a Person engaged in business as an underwriter of securities to be the Beneficial Owner of, or to Beneficially Own, any securities acquired through such Person's participation in good faith in an underwriting syndicate until the expiration of 40 calendar days after the date of such acquisition, or such later date as the Directors of the Company may determine in any specific case.

(d) "BUSINESS DAY" means any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York (or such other state in which the principal office of the Rights Agent is located) are authorized or obligated by law or executive order to close.

(e) "CLOSE OF BUSINESS" on any given date means 5:00 P.M., Eastern time, on that date; provided, however, that if such date is not a Business Day it means 5:00 P.M., Eastern time, on the next succeeding Business Day.

(f) "COMMON SHARES" when used with reference to the Company means the shares of common stock, par value $0.01 per share, of the Company; provided, however, that, if the Company is the continuing or surviving corporation in a transaction described in Section 13(a)(ii), "COMMON SHARES" when used with reference to the Company means shares of the capital stock or units of the equity interests with the greatest aggregate voting power of the Company. "COMMON SHARES" when used with reference to any corporation or other legal entity other than the Company, including an Issuer, means shares of the capital stock or units of the equity interests with the greatest aggregate voting power of such corporation or other legal entity.

(g) "COMPANY" means EnPro Industries, Inc., a North Carolina corporation.

(h) "DISTRIBUTION AGREEMENT" means the Distribution Agreement, by and between Goodrich and the Company, dated as of __________, 2002.

(i) "DISTRIBUTION DATE" means the earlier of: (i) the Close of Business on the tenth calendar day following the Share Acquisition Date, or
(ii) the Close of Business on the tenth Business Day (or, unless the Distribution Date shall have previously occurred, such later date as may be specified by the Directors of the Company) after the commencement of a tender or exchange offer by any Person (other than the Company or any Related Person), if upon the consummation thereof such Person would be the Beneficial Owner of 15% or more of the then-outstanding Common Shares.

(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

(k) "EXPIRATION DATE" means the earliest of (i) the Close of Business on the Final Expiration Date, (ii) the time at which the Rights are redeemed as provided in Section 23, and (iii) the time at which all exercisable Rights are exchanged as provided in Section 24.

(l) "FINAL EXPIRATION DATE" means the tenth anniversary of the Record Date.

(m) "FLIP-IN EVENT" means any Person, alone or together with its Affiliates and Associates, becoming an Acquiring Person.

(n) "FLIP-OVER EVENT" means any event described in clauses (i),
(ii) or (iii) of Section 13(a).

(o) "GOODRICH" means Goodrich Corporation, a New York corporation.

(p) "ISSUER" has the meaning set forth in Section 13(b).

(q) "NASDAQ" means The NASDAQ Stock Market.

(r) "PERSON" means any individual, firm, corporation or other legal entity, and includes any successor (by merger or otherwise) of such entity.

(s) "PREFERRED SHARES" means shares of Series A Junior Participating Preferred Stock, par value $0.01 per share, of the Company having the rights and preferences set forth in the form of Articles of Amendment attached as Exhibit A.

(t) "PURCHASE PRICE" means initially $65.00 per one one-hundredth of a Preferred Share, subject to adjustment from time to time as provided in this Agreement.

(u) "RECORD DATE" has the meaning set forth in the Recitals to this Agreement.

(v) "REDEMPTION PRICE" means $0.01 per Right, subject to adjustment by resolution of the Directors of the Company to reflect any stock split, stock dividend or similar transaction occurring after the Record Date.

(w) "RELATED PERSON" means (i) any Subsidiary of the Company or
(ii) any employee benefit or stock ownership plan of the Company or of any Subsidiary of the Company or any entity holding Common Shares for or pursuant to the terms of any such plan.

(x) "RIGHT" has the meaning set forth in the Recitals to this Agreement.

(y) "RIGHT CERTIFICATES" means certificates evidencing the Rights, in substantially the form attached as Exhibit B.

(z) "RIGHTS AGENT" means The Bank of New York, unless and until a successor Rights Agent has become such pursuant to the terms of this Agreement, and thereafter, "Rights Agent" means such successor Rights Agent.

(aa) "RIGHTS DIVIDEND EFFECTIVE TIME" means the time immediately prior to the time at which the Separation becomes effective.

(bb) "SECURITIES ACT" means the Securities Act of 1933, as amended.

(cc) "SEPARATION" means the distribution of Common Shares to holders of common stock of Goodrich, as contemplated by and described in the Distribution Agreement.

(dd) "SHARE ACQUISITION DATE" means the first date of public announcement by the Company or an Acquiring Person (by press release, filing made with the Securities and Exchange Commission or otherwise) that an Acquiring Person has become such.

(ee) "SUBSIDIARY" when used with reference to any Person means any corporation or other legal entity of which a majority of the voting power of the voting equity securities or equity interests is owned, directly or indirectly, by such Person; provided, however, that for purposes of Section
13(b), "SUBSIDIARY" when used with reference to any Person means any corporation or

other legal entity of which at least 20% of the voting power of the voting equity securities or equity interests is owned, directly or indirectly, by such Person.

(ff) "TRADING DAY" means any day on which the principal national securities exchange on which the Common Shares are listed or admitted to trading is open for the transaction of business or, if the Common Shares are not listed or admitted to trading on any national securities exchange, a Business Day.

(gg) "TRIGGERING EVENT" means any Flip-in Event or Flip-over Event.

2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment and hereby certifies that it complies with the requirements of the New York Stock Exchange governing transfer agents and registrars. The Company may from time to time act as Co-Rights Agent or appoint such Co-Rights Agents as it may deem necessary or desirable upon ten (10) days' prior written notice to the Rights Agent. The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of any such Co-Rights Agent. Any actions which may be taken by the Rights Agent pursuant to the terms of this Agreement may be taken by any such Co-Rights Agent. To the extent that any Co-Rights Agent takes any action pursuant to this Agreement, such Co-Rights Agent will be entitled to all of the rights and protections of, and subject to all of the applicable duties and obligations imposed upon, the Rights Agent pursuant to the terms of this Agreement.

3. Issue of Right Certificates. (a) Until the Distribution Date,
(i) the Rights will be evidenced by the certificates representing Common Shares registered in the names of the record holders thereof (which certificates representing Common Shares will also be deemed to be Right Certificates), (ii) the Rights will be transferable only in connection with the transfer of the underlying Common Shares, and (iii) the surrender for transfer of any certificates evidencing Common Shares in respect of which Rights have been issued will also constitute the transfer of the Rights associated with the Common Shares evidenced by such certificates.

(b) Rights will be issued by the Company in respect of all Common Shares (other than Common Shares issued upon the exercise or exchange of any Right) issued or delivered by the Company (whether originally issued or delivered from the Company's treasury) after the Record Date but prior to the earlier of the Distribution Date and the Expiration Date. Certificates evidencing such Common Shares will have stamped on, impressed on, printed on, written on, or otherwise affixed to them the following legend or such similar legend as the Company may deem appropriate and as is not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or transaction reporting system on which the Common Shares may from time to time be listed or quoted, or to conform to usage:

This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Rights Agreement, dated as of May 31, 2002, Agreement between EnPro Industries, Inc. (the "COMPANY") and The Bank of New York, as Rights Agent, as it may from time to time be supplemented or amended pursuant to its terms (the "RIGHTS AGREEMENT"), the terms of which are hereby incorporated herein by reference and a copy

of which is on file at the principal offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights may be redeemed, may expire, or may be evidenced by separate certificates and will no longer be evidenced by this certificate. The Company will mail to the holder of this certificate a copy of the Rights Agreement without charge within ten business days after receipt of a written request therefor. Under certain circumstances, as set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void.

(c) Any Right Certificate issued pursuant to this Section 3 that represents Rights beneficially owned by an Acquiring Person or any Associate or Affiliate thereof and any Right Certificate issued at any time upon the transfer of any Rights to an Acquiring Person or any Associate or Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate and any Right Certificate issued pursuant to Section 6 or 11 hereof upon transfer, exchange, replacement or adjustment of any other Right Certificate referred to in this sentence, shall be subject to and contain the following legend or such similar legend as the Company may deem appropriate and as is not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage:

The Rights represented by this Right Certificate are or were beneficially owned by a Person who was an Acquiring Person or an Affiliate or an Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). This Right Certificate and the Rights represented hereby may become null and void in the circumstances specified in Section 11(a)(ii) or Section 13 of the Rights Agreement.

The Company shall instruct the Rights Agent in writing of the Right Certificates which should be so legended and shall supply the Rights Agent with such legended Right Certificates.

(d) The Company shall give the Rights Agent prompt written notice of the Distribution Date. As promptly as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign and the Company will send or cause to be sent (and the Rights Agent will, if requested and at the expense of the Company, send), by first class, insured, postage prepaid mail, to each record holder of Common Shares as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, a Right Certificate evidencing one Right for each Common Share so held, subject to adjustment as provided herein. As of and after the Distribution Date, the Rights will be evidenced solely by such Right Certificates.

(e) In the event that the Company purchases or otherwise acquires any Common Shares after the Record Date but prior to the Distribution Date, any Rights associated with such Common Shares will be deemed canceled and retired so that the Company will not be entitled to exercise any Rights associated with the Common Shares so purchased or acquired.

4. Form of Right Certificates. The Right Certificates (and the form of election to purchase and the form of assignment to be printed on the reverse thereof) will be substantially in the form attached as Exhibit B with such changes and marks of identification or designation, and such legends, summaries or endorsements printed thereon, as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or transaction reporting system on which the Rights may from time to time be listed or quoted, or to conform to usage. The Right Certificates shall be in a machine printable format and in a form reasonably satisfactory to the Rights Agent. Subject to the provisions of Section 22, the Right Certificates, whenever issued, shall show the date of countersignature, and on their face will entitle the holders thereof to purchase such number of one one-hundredths of a Preferred Share as are set forth therein at the Purchase Price set forth therein, but the Purchase Price, the number and kind of securities issuable upon exercise of each Right and the number of Rights outstanding will be subject to adjustment as provided herein.

5. Countersignature and Registration. (a) The Right Certificates will be executed on behalf of the Company by its Chairman, its President or any Vice President, either manually or by facsimile signature, and will have affixed thereto the Company's seal or a facsimile thereof which will be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Right Certificates will be manually countersigned by the Rights Agent and will not be valid for any purpose unless so countersigned. In case any officer of the Company who signed any of the Right Certificates ceases to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent, and issued and delivered by the Company with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, is a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such officer.

(b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at the principal office of the Rights Agent designated for such purpose and at such other offices as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or any transaction reporting system on which the Rights may from time to time be listed or quoted, books for registration and transfer of the Right Certificates issued hereunder. Such books will show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates.

6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a) Subject to the provisions of Sections 7(d), 14 and 24, at any time after the Close of Business on the Distribution Date and prior to the Expiration Date, any Right Certificate or Right Certificates representing exercisable Rights may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a

Preferred Share (or other securities, as the case may be) as the Right Certificate or Right Certificates surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any such Right Certificate or Right Certificates must make such request in a writing delivered to the Rights Agent and must surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged at the principal office of the Rights Agent designated for such purpose. Thereupon or as promptly as practicable thereafter, subject to the provisions of Sections 7(d), 14 and 24, the Company will prepare, execute and deliver to the Rights Agent, and the Rights Agent will countersign and deliver, a Right Certificate or Right Certificates, as the case may be, as so requested. The Company may require payment by the holders of Rights of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates.

(b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, if requested by the Company, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will prepare, execute and deliver a new Right Certificate of like tenor to the Rights Agent and the Rights Agent will countersign and deliver such new Right Certificate to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) The registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the Distribution Date and prior to the Expiration Date, upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the office or offices of the Rights Agent designated for such purpose, together with payment in cash, in lawful money of the United States of America by certified check or bank draft payable to the order of the Company, equal to the sum of (i) the aggregate Purchase Price for the total number of one one-hundredths of a Preferred Share as to which such surrendered Rights are exercised and (ii) an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with the provisions of Section 9(d).

(b) Upon receipt of a Right Certificate representing exercisable Rights with the form of election to purchase duly executed, accompanied by payment as described above, the Rights Agent will promptly (i) requisition from any transfer agent of the Preferred Shares (or make available, if the Rights Agent is the transfer agent) certificates representing the number of one one-hundredths of a Preferred Share to be purchased (and the Company hereby irrevocably authorizes and directs its transfer agent to comply with all such requests), or, if the Company elects to deposit Preferred Shares issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-hundredths of a Preferred Share as are to be purchased (and the Company hereby irrevocably authorizes and directs such depositary agent to comply with all such requests), (ii) after receipt of such certificates (or depositary receipts, as the case may be), cause the same to be delivered to or upon the order of the registered holder of such Right Certificate,

registered in such name or names as may be designated by such holder, (iii) when appropriate, requisition from the Company or any transfer agent therefor (or make available, if the Rights Agent is the transfer agent) certificates representing the number of equivalent common shares to be issued in lieu of the issuance of Common Shares in accordance with the provisions of Section
11(a)(iii), (iv) when appropriate, after receipt of such certificates, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder, (v) when appropriate, requisition from the Company the amount of cash to be paid in lieu of the issuance of fractional shares in accordance with the provisions of Section 14 or in lieu of the issuance of Common Shares in accordance with the provisions of Section 11(a)(iii), (vi) when appropriate, after receipt, deliver such cash to or upon the order of the registered holder of such Right Certificate, and (vii) when appropriate, deliver any due bill or other instrument provided to the Rights Agent by the Company for delivery to the registered holder of such Right Certificate as provided by Section 11(l).

(c) In case the registered holder of any Right Certificate exercises less than all the Rights evidenced thereby, the Company will prepare, execute and deliver a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised and the Rights Agent will countersign and deliver such new Right Certificate to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 14.

(d) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company will be obligated to undertake any action with respect to any purported transfer, split up, combination or exchange of any Right Certificate pursuant to Section 6 or exercise of a Right Certificate as set forth in this Section 7 unless the registered holder of such Right Certificate has (i) completed and signed the certificate following the form of assignment or the form of election to purchase, as applicable, set forth on the reverse side of the Right Certificate surrendered for such transfer, split up, combination, exchange or exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company may reasonably request. The Rights Agent will endeavor to comply with the provisions hereof to the extent it has received instructions from the Company concerning such matters.

8. Cancellation of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange will, if surrendered to the Company or to any of its stock transfer agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, will be canceled by it, and no Right Certificates will be issued in lieu thereof except as expressly permitted by the provisions of this Agreement. The Company will deliver to the Rights Agent for cancellation and retirement, and the Rights Agent will so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent will deliver all canceled Right Certificates to the Company.

9. Company Covenants Concerning Securities and Rights. The Company covenants and agrees that:

(a) It will cause to be reserved and kept available out of its authorized and unissued Preferred Shares or any Preferred Shares held in its treasury, a number of Preferred Shares that

will be sufficient to permit the exercise in full of all outstanding Rights in accordance with Section 7.

(b) So long as the Preferred Shares (and, following the occurrence of a Triggering Event, Common Shares and/or other securities) issuable upon the exercise of the Rights may be listed on a national securities exchange, or quoted on Nasdaq, it will endeavor to cause, from and after such time as the Rights become exercisable, all securities reserved for issuance upon the exercise of Rights to be listed on such exchange, or quoted on Nasdaq, upon official notice of issuance upon such exercise.

(c) It will take all such action as may be necessary to ensure that all Preferred Shares (and, following the occurrence of a Triggering Event, Common Shares and/or other securities) delivered upon exercise of Rights, at the time of delivery of the certificates for such securities, will be (subject to payment of the Purchase Price) duly authorized, validly issued, fully paid and nonassessable securities.

(d) It will pay when due and payable any and all federal and state transfer taxes and charges that may be payable in respect of the issuance or delivery of the Right Certificates and of any certificates representing securities issued upon the exercise of Rights; provided, however, that the Company will not be required to pay any transfer tax or charge which may be payable in respect of any transfer or delivery of Right Certificates to a person other than, or the issuance or delivery of certificates or depositary receipts representing securities issued upon the exercise of Rights in a name other than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise, or to issue or deliver any certificates or depositary receipts representing securities issued upon the exercise of any Rights until any such tax or charge has been paid (any such tax or charge being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company's reasonable satisfaction that no such tax is due.

(e) It will use its best efforts (i) to file on an appropriate form, as soon as practicable following the later of the Share Acquisition Date and the Distribution Date, a registration statement under the Securities Act with respect to the securities issuable upon exercise of the Rights, (ii) to cause such registration statement to become effective as soon as practicable after such filing, and (iii) to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities and (B) the Expiration Date. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend, for a period of time after the date set forth in clause (i) of the first sentence of this Section 9(e), the exercisability of the Rights in order to prepare and file such registration statement and to permit it to become effective. Upon any such suspension, the Company will issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect, in each case with simultaneous written notice to the Rights Agent. In addition, if the Company determines that a registration statement should be filed under the Securities Act or any state securities laws following the Distribution Date, the Company may temporarily suspend the exercisability of the Rights in each relevant jurisdiction until such time

as a registration statement has been declared effective and, upon any such suspension, the Company will issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. Notwithstanding anything in this Agreement to the contrary, the Rights will not be exercisable in any jurisdiction if the requisite registration or qualification in such jurisdiction has not been effected or the exercise of the Rights is not permitted under applicable law. The Rights Agent may assume, unless notified in writing to the contrary by the Company, that any Right exercised is permitted to be exercised under applicable law and shall have no liability for acting in reliance upon such assumption.

(f) Notwithstanding anything in this Agreement to the contrary, after the later of the Share Acquisition Date and the Distribution Date it will not take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will eliminate or otherwise diminish the benefits intended to be afforded by the Rights.

(g) In the event that the Company is obligated to issue other securities of the Company and/or pay cash pursuant to Section 11, 13, 14 or 24 it will make all arrangements necessary so that such other securities and/or cash are available for distribution by the Rights Agent, if and when appropriate.

10. Record Date. Each Person in whose name any certificate representing Preferred Shares (or Common Shares and/or other securities, as the case may be) is issued upon the exercise of Rights will for all purposes be deemed to have become the holder of record of the Preferred Shares (or Common Shares and/or other securities, as the case may be) represented thereby on, and such certificate will be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and all applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a date upon which the transfer books of the Company for the Preferred Shares (or Common Shares and/or other securities, as the case may be) are closed, such Person will be deemed to have become the record holder of such securities on, and such certificate will be dated, the next succeeding Business Day on which the transfer books of the Company for the Preferred Shares (or Common Shares and/or other securities, as the case may be) are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate will not be entitled to any rights of a holder of any security for which the Rights are or may become exercisable, including, without limitation, the right to vote, to receive dividends or other distributions, or to exercise any preemptive rights, and will not be entitled to receive any notice of any proceedings of the Company, except as provided herein.

11. Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights. The Purchase Price, the number and kind of securities issuable upon exercise of each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.

(a) (i) In the event that the Company at any time after the Record Date (A) declares a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivides the outstanding Preferred Shares, (C) combines the outstanding Preferred Shares into a smaller number of Preferred Shares, or (D) issues any shares of its capital stock in a reclassification of

the Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification and/or the number and/or kind of shares of capital stock issuable on such date upon exercise of a Right, will be proportionately adjusted so that the holder of any Right exercised after such time is entitled to receive upon payment of the Purchase Price then in effect the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the transfer books of the Company for the Preferred Shares were open, the holder of such Right would have owned upon such exercise (and, in the case of a reclassification, would have retained after giving effect to such reclassification) and would have been entitled to receive by virtue of such dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock issuable upon exercise of one Right. If an event occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) or Section 13, the adjustment provided for in this Section 11(a)(i) will be in addition to, and will be made prior to, any adjustment required pursuant to Section 11(a)(ii) or Section 13.

(ii) Subject to the provisions of Section 24, if a Flip-in Event occurs, then, from and after the latest of the Distribution Date, the Share Acquisition Date and the date of the occurrence of such Flip-in Event, proper provision will be made so that each holder of a Right, except as provided below, will thereafter have the right to receive, upon exercise thereof in accordance with the terms of this Agreement at an exercise price per Right equal to the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the occurrence of such Flip-in Event (or, if any other Flip-in Event shall have previously occurred, the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the first occurrence of a Flip-in Event), in lieu of Preferred Shares, such number of Common Shares as equals the result obtained by (x) multiplying the then-current Purchase Price by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the occurrence of such Flip-in Event (or, if any other Flip-in Event shall have previously occurred, multiplying the then-current Purchase Price by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the first occurrence of a Flip-in Event), and dividing that product by (y) 50% of the current per share market price of the Common Shares (determined pursuant to Section
11(d)) on the date of the occurrence of such Flip- in Event. Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Flip-in Event, any Rights that are Beneficially Owned by (A) any Acquiring Person (or any Affiliate or Associate of any Acquiring Person), (B) a transferee of any Acquiring Person (or any such Affiliate or Associate) who becomes a transferee after the occurrence of a Flip-in Event, or (C) a transferee of any Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or concurrently with the occurrence of a Flip-in Event pursuant to either (1) a transfer from an Acquiring Person to holders of its equity securities or to any Person with whom it has any continuing agreement,

arrangement or understanding regarding the transferred Rights or (2) a transfer which the Directors of the Company have determined is part of a plan, arrangement or understanding which has the purpose or effect of avoiding the provisions of this Section 11(a)(ii), and subsequent transferees of any of such Persons, will be void without any further action and any holder of such Rights will thereafter have no rights whatsoever with respect to such Rights under any provision of this Agreement. The Company will use all reasonable efforts to ensure that the provisions of this Section 11(a)(ii) are complied with, but will have no liability to any holder of Right Certificates or any other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. Upon the occurrence of a Flip-in Event, no Right Certificate that represents Rights that are or have become void pursuant to the provisions of this Section 11(a)(ii) will thereafter be issued pursuant to Section 3 or Section 6, and any Right Certificate delivered to the Rights Agent that represents Rights that are or have become void pursuant to the provisions of this Section 11(a)(ii) will be canceled. Upon the occurrence of a Flip-over Event, any Rights that shall not have been previously exercised pursuant to this Section 11(a)(ii) shall thereafter be exercisable only pursuant to Section 13 and not pursuant to this Section 11(a)(ii).

(iii) Upon the occurrence of a Flip-in Event, if there are not sufficient Common Shares authorized but unissued or issued but not outstanding to permit the issuance of all the Common Shares issuable in accordance with Section 11(a)(ii) upon the exercise of a Right, the Directors of the Company will use their best efforts promptly to authorize and, subject to the provisions of Section 9(e), make available for issuance additional Common Shares or other equity securities of the Company having equivalent voting rights and an equivalent value (as determined in good faith by the Directors of the Company) to the Common Shares (for purposes of this Section
11(a)(iii), "EQUIVALENT COMMON SHARES"). In the event that equivalent common shares are so authorized, upon the exercise of a Right in accordance with the provisions of Section 7, the registered holder will be entitled to receive (A) Common Shares, to the extent any are available, and (B) a number of equivalent common shares, which the Directors of the Company have determined in good faith to have a value equivalent to the excess of (x) the aggregate current per share market value on the date of the occurrence of the most recent Flip-in Event of all the Common Shares issuable in accordance with Section 11(a)(ii) upon the exercise of a Right (the "EXERCISE VALUE") over (y) the aggregate current per share market value on the date of the occurrence of the most recent Flip-in Event of any Common Shares available for issuance upon the exercise of such Right; provided, however, that if at any time after 90 calendar days after the latest of the Share Acquisition Date, the Distribution Date and the date of the occurrence of the most recent Flip-in Event, there are not sufficient Common Shares and/or equivalent common shares available for issuance upon the exercise of a Right, then the Company will be obligated to deliver, upon the surrender of such Right and without requiring payment of the Purchase Price, Common Shares (to the extent available), equivalent common shares (to the extent available) and then cash (to the extent permitted by applicable law and any agreements or instruments to which the Company is a party in effect immediately prior to the Share Acquisition Date), which securities and cash have an aggregate value equal to the excess of (1) the Exercise Value over (2) the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right

was exercisable immediately prior to the date of the occurrence of the most recent Flip-in Event (or, if any other Flip-in Event shall have previously occurred, the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right would have been exercisable immediately prior to the date of the occurrence of such Flip-in Event if no other Flip-in Event had previously occurred). To the extent that any legal or contractual restrictions prevent the Company from paying the full amount of cash payable in accordance with the foregoing sentence, the Company will pay to holders of the Rights as to which such payments are being made all amounts which are not then restricted on a pro rata basis and will continue to make payments on a pro rata basis as promptly as funds become available until the full amount due to each such Rights holder has been paid.

(b) In the event that the Company fixes a record date for the issuance of rights, options or warrants to all holders of Preferred Shares entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Shares (or securities having equivalent rights, privileges and preferences as the Preferred Shares (for purposes of this Section 11(b), "EQUIVALENT PREFERRED SHARES")) or securities convertible into Preferred Shares or equivalent preferred shares at a price per Preferred Share or equivalent preferred share (or having a conversion price per share, if a security convertible into Preferred Shares or equivalent preferred shares) less than the current per share market price of the Preferred Shares (determined pursuant to Section 11(d)) on such record date, the Purchase Price to be in effect after such record date will be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which is the number of Preferred Shares outstanding on such record date plus the number of Preferred Shares which the aggregate offering price of the total number of Preferred Shares and/or equivalent preferred shares so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current per share market price and the denominator of which is the number of Preferred Shares outstanding on such record date plus the number of additional Preferred Shares and/or equivalent preferred shares to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock issuable upon exercise of one Right. In case such subscription price may be paid in a consideration part or all of which is in a form other than cash, the value of such consideration will be as determined in good faith by the Directors of the Company, whose determination will be described in a statement filed with the Rights Agent. Preferred Shares owned by or held for the account of the Company will not be deemed outstanding for the purpose of any such computation. Such adjustment will be made successively whenever such a record date is fixed, and in the event that such rights, options or warrants are not so issued, the Purchase Price will be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.

(c) In the event that the Company fixes a record date for the making of a distribution to all holders of Preferred Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness, cash (other than a regular periodic cash dividend), assets, stock (other than a dividend payable in Preferred Shares) or subscription rights, options or warrants (excluding those referred to in Section 11(b)), the Purchase Price to be in effect after such record

date will be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which is the current per share market price of the Preferred Shares (as determined pursuant to
Section 11(d)) on such record date or, if earlier, the date on which Preferred Shares begin to trade on an ex-dividend or when issued basis for such distribution, less the fair market value (as determined in good faith by the Directors of the Company, whose determination will be described in a statement filed with the Rights Agent) of the portion of the evidences of indebtedness, cash, assets or stock so to be distributed or of such subscription rights, options or warrants applicable to one Preferred Share, and the denominator of which is such current per share market price of the Preferred Shares; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock issuable upon exercise of one Right. Such adjustments will be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price will again be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.

(d) (i) For the purpose of any computation hereunder, the "CURRENT PER SHARE MARKET PRICE" of Common Shares on any date will be deemed to be the average of the daily closing prices per share of such Common Shares for the 30 consecutive Trading Days immediately prior to such date; provided, however, that in the event that the current per share market price of the Common Shares is determined during a period following the announcement by the issuer of such Common Shares of (A) a dividend or distribution on such Common Shares payable in such Common Shares or securities convertible into such Common Shares (other than the Rights) or (B) any subdivision, combination or reclassification of such Common Shares, and prior to the expiration of 30 Trading Days after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the current per share market price will be appropriately adjusted to take into account ex-dividend trading or to reflect the current per share market price per Common Share equivalent. The closing price for each day will be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Shares are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Shares are listed or admitted to trading or, if the Common Shares are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by Nasdaq or such other system then in use, or, if on any such date the Common Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Shares selected by the Directors of the Company. If the Common Shares are not publicly held or not so listed or traded, or are not the subject of available bid and asked quotes, "CURRENT PER SHARE MARKET PRICE" will mean the fair value per share as determined in good faith by the Directors of the Company, whose determination will be described in a statement filed with the Rights Agent.

(ii) For the purpose of any computation hereunder, the "CURRENT PER SHARE MARKET PRICE" of the Preferred Shares will be determined in the same manner as set forth above for Common Shares in
Section 11(d)(i), other than the last sentence thereof. If the current per share market price of the Preferred Shares cannot be determined in the manner provided above, the "CURRENT PER SHARE MARKET PRICE" of the Preferred Shares will be conclusively deemed to be an amount equal to the current per share market price of the Common Shares multiplied by one hundred (as such number may be appropriately adjusted to reflect events such as stock splits, stock dividends, recapitalizations or similar transactions relating to the Common Shares occurring after the date of this Agreement). If neither the Common Shares nor the Preferred Shares are publicly held or so listed or traded, or the subject of available bid and asked quotes, "CURRENT PER SHARE MARKET PRICE" of the Preferred Shares will mean the fair value per share as determined in good faith by the Directors of the Company, whose determination will be described in a statement filed with the Rights Agent. For all purposes of this Agreement, the current per share market price of one one-hundredth of a Preferred Share will be equal to the current per share market price of one Preferred Share divided by one hundred.

(e) Except as set forth below, no adjustment in the Purchase Price will be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made will be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 will be made to the nearest cent or to the nearest one one-millionth of a Preferred Share or one ten-thousandth of a Common Share or other security, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 will be made no later than the earlier of (i) three years from the date of the transaction which requires such adjustment and (ii) the Expiration Date.

(f) If as a result of an adjustment made pursuant to Section
11(a), the holder of any Right thereafter exercised becomes entitled to receive any securities of the Company other than Preferred Shares, thereafter the number and/or kind of such other securities so receivable upon exercise of any Right (and/or the Purchase Price in respect thereof) will be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares (and the Purchase Price in respect thereof) contained in this Section 11, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares (and the Purchase Price in respect thereof) will apply on like terms to any such other securities (and the Purchase Price in respect thereof).

(g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder will evidence the right to purchase, at the adjusted Purchase Price, the number of one one-hundredths of a Preferred Share issuable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

(h) Unless the Company has exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price pursuant to Section 11(b) or Section 11(c), each Right outstanding immediately prior to the making of such adjustment will thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-hundredths of a Preferred Share (calculated to the nearest one one-millionth of a Preferred Share) obtained by

(i)

multiplying (x) the number of one one-hundredths of a Preferred Share issuable upon exercise of a Right immediately prior to such adjustment of the Purchase Price by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

(i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to adjust the number of Rights in substitution for any adjustment in the number of one one-hundredths of a Preferred Share issuable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights will be exercisable for the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights will become that number of Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company will make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. Such record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, will be at least 10 calendar days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company will, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to the provisions of Section 14, the additional Rights to which such holders are entitled as a result of such adjustment, or, at the option of the Company, will cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof if required by the Company, new Right Certificates evidencing all the Rights to which such holders are entitled after such adjustment. Right Certificates so to be distributed will be issued, executed, and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and will be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement.

(j) Without respect to any adjustment or change in the Purchase Price and/or the number and/or kind of securities issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number and kind of securities which were expressed in the initial Right Certificate issued hereunder.

(k) Before taking any action that would cause an adjustment reducing the Purchase Price below one one-hundredth of the then par value, if any, of the Preferred Shares or below the then par value, if any, of any other securities of the Company issuable upon exercise of the Rights, the Company will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Preferred Shares or such other securities, as the case may be, at such adjusted Purchase Price.

(l) In any case in which this Section 11 otherwise requires that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date the number of Preferred Shares or other securities of the Company, if any, issuable upon such exercise over and above the number of Preferred Shares or other securities of the Company, if any,

issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company delivers to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional Preferred Shares or other securities upon the occurrence of the event requiring such adjustment.

(m) Notwithstanding anything in this Agreement to the contrary, the Company will be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that in its good faith judgment the Directors of the Company determine to be advisable in order that any (i) consolidation or subdivision of the Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less than the current per share market price therefor, (iii) issuance wholly for cash of Preferred Shares or securities which by their terms are convertible into or exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred Shares is not taxable to such shareholders.

(n) The Company covenants and agrees that it will not, at any time after the Distribution Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section
11(o)), (ii) merge with or into any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o)), or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of related transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o)), if at the time of or immediately after such consolidation, merger or sale there are any rights, warrants or other instruments or securities outstanding or agreements in effect that would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights.

(o) The Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 23 or Section 27, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.

(p) Notwithstanding anything in this Agreement to the contrary, in the event that the Company at any time after the Record Date prior to the Distribution Date (i) pays a dividend on the outstanding Common Shares payable in Common Shares, (ii) subdivides the outstanding Common Shares, (iii) combines the outstanding Common Shares into a smaller number of shares, or (iv) issues any shares of its capital stock in a reclassification of the outstanding Common Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), the number of Rights associated with each Common Share then outstanding, or issued or delivered thereafter but prior to the Distribution Date, will be proportionately adjusted so that the number of Rights thereafter associated with each Common Share following any such event equals the result obtained by multiplying the number of Rights associated with each Common Share immediately prior to such event by a fraction the numerator of which is the total number of Common Shares outstanding immediately prior to the occurrence of the event and the denominator of which is the total

number of Common Shares outstanding immediately following the occurrence of such event. The adjustments provided for in this Section 11(p) will be made successively whenever such a dividend is paid or such a subdivision, combination or reclassification is effected.

12. Certificate of Adjusted Purchase Price or Number of Securities. Whenever an adjustment is made as provided in Section 11 or Section 13, the Company will promptly (a) prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Preferred Shares and the Common Shares a copy of such certificate, and (c) if such adjustment is made after the Distribution Date, mail a brief summary of such adjustment to each holder of a Right Certificate in accordance with Section 26. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained and shall not be deemed to have knowledge of such adjustment unless and until it shall have received such certificate.

13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. (a) In the event that:

(i) at any time after a Person has become an Acquiring Person, the Company consolidates with, or merges with or into, any other Person (other than a Subsidiary of the Company in a transaction that complies with Section 11(o)) and the Company is not the continuing or surviving corporation of such consolidation or merger; or

(ii) at any time after a Person has become an Acquiring Person, any Person consolidates with the Company, or merges with or into the Company, and the Company is the continuing or surviving corporation of such merger or consolidation and, in connection with such merger or consolidation, all or part of the Common Shares is changed into or exchanged for stock or other securities of any other Person or cash or any other property; or

(iii) at any time after a Person has become an Acquiring Person, the Company, directly or indirectly, sells or otherwise transfers (or one or more of its Subsidiaries sells or otherwise transfers), in one or more transactions, assets or earning power (including without limitation securities creating any obligation on the part of the Company and/or any of its Subsidiaries) representing in the aggregate more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons other than the Company or one or more of its wholly owned Subsidiaries;

then, and in each such case, proper provision will be made so that from and after the latest of the Share Acquisition Date, the Distribution Date and the date of the occurrence of such Flip-over Event (A) each holder of a Right (except as otherwise provided herein) thereafter has the right to receive, upon the exercise thereof in accordance with the terms of this Agreement at an exercise price per Right equal to the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the Share Acquisition Date, such number of duly authorized, validly issued, fully paid, nonassessable and freely tradeable Common Shares of the Issuer, free and clear of any liens, encumbrances and other adverse claims and not subject to any rights of call or first refusal, as equals the result obtained by (x) multiplying the then-current Purchase Price by the number of

one one-hundredths of a Preferred Share for which a Right is exercisable immediately prior to the Share Acquisition Date and dividing that product by
(y) 50% of the current per share market price of the Common Shares of the Issuer (determined pursuant to Section 11(d)), on the date of the occurrence of such Flip-over Event; (B) the Issuer will thereafter be liable for, and will assume, by virtue of the occurrence of such Flip-over Event, all the obligations and duties of the Company pursuant to this Agreement; (C) the term "COMPANY" will thereafter be deemed to refer to the Issuer; and (D) the Issuer will take such steps (including without limitation the reservation of a sufficient number of its Common Shares to permit the exercise of all outstanding Rights) in connection with such consummation as may be necessary to assure that the provisions hereof are thereafter applicable, as nearly as reasonably may be possible, in relation to its Common Shares thereafter deliverable upon the exercise of the Rights.

(b) For purposes of this Section 13, "ISSUER" means (i) in the case of any Flip-over Event described in Sections 13(a)(i) or (ii) above, the Person that is the continuing, surviving, resulting or acquiring Person (including the Company as the continuing or surviving corporation of a transaction described in Section 13(a)(ii) above), and (ii) in the case of any Flip-over Event described in Section 13(a)(iii) above, the Person that is the party receiving the greatest portion of the assets or earning power (including without limitation securities creating any obligation on the part of the Company and/or any of its Subsidiaries) transferred pursuant to such transaction or transactions; provided, however, that, in any such case, (A) if
(1) no class of equity security of such Person is, at the time of such merger, consolidation or transaction and has been continuously over the preceding 12-month period, registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a Subsidiary, directly or indirectly, of another Person, a class of equity security of which is and has been so registered, the term "ISSUER" means such other Person; and (B) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, a class of equity security of two or more of which are and have been so registered, the term "ISSUER" means whichever of such Persons is the issuer of the equity security having the greatest aggregate market value. Notwithstanding the foregoing, if the Issuer in any of the Flip-over Events listed above is not a corporation or other legal entity having outstanding equity securities, then, and in each such case, (x) if the Issuer is directly or indirectly wholly owned by a corporation or other legal entity having outstanding equity securities, then all references to Common Shares of the Issuer will be deemed to be references to the Common Shares of the corporation or other legal entity having outstanding equity securities which ultimately controls the Issuer, and (y) if there is no such corporation or other legal entity having outstanding equity securities, (I) proper provision will be made so that the Issuer creates or otherwise makes available for purposes of the exercise of the Rights in accordance with the terms of this Agreement, a kind or kinds of security or securities having a fair market value at least equal to the economic value of the Common Shares which each holder of a Right would have been entitled to receive if the Issuer had been a corporation or other legal entity having outstanding equity securities; and (II) all other provisions of this Agreement will apply to the issuer of such securities as if such securities were Common Shares.

(c) The Company will not consummate any Flip-over Event if, (i) at the time of or immediately after such Flip-over Event, there are or would be any rights, warrants, instruments or securities outstanding or any agreements or arrangements in effect which would eliminate or substantially diminish the benefits intended to be afforded by the Rights, (ii) prior to, simultaneously with or immediately after such Flip-over Event, the shareholders of the Person

who constitutes, or would constitute, the Issuer for purposes of Section 13(a) shall have received a distribution of Rights previously owned by such Person or any of its Affiliates or Associates, or (iii) the form or nature of the organization of the Issuer would preclude or limit the exercisability of the Rights. In addition, the Company will not consummate any Flip-over Event unless the Issuer has a sufficient number of authorized Common Shares (or other securities as contemplated in Section 13(b) above) which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior to such consummation the Company and the Issuer have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in subsections (a) and
(b) of this Section 13 and further providing that as promptly as practicable after the consummation of any Flip-over Event, the Issuer will:

(A) prepare and file a registration statement under the Securities Act with respect to the Rights and the securities issuable upon exercise of the Rights on an appropriate form, and use its best efforts to cause such registration statement to (1) become effective as soon as practicable after such filing and (2) remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the Expiration Date;

(B) take all such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the various states in connection with the exercisability of the Rights; and

(C) deliver to holders of the Rights historical financial statements for the Issuer and each of its Affiliates which comply in all respects with the requirements for registration on Form 10 under the Exchange Act.

(d) The provisions of this Section 13 will similarly apply to successive mergers or consolidations or sales or other transfers. In the event that a Flip-over Event occurs at any time after the occurrence of a Flip-in Event, except for Rights that have become void pursuant to Section 11(a)(ii), Rights that shall not have been previously exercised will cease to be exercisable in the manner provided in Section 11(a)(ii) and will thereafter be exercisable in the manner provided in Section 13(a).

14. Fractional Rights and Fractional Securities. (a) The Company will not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, the Company will pay as promptly as practicable to the registered holders of the Right Certificates with regard to which such fractional Rights otherwise would be issuable, an amount in cash equal to the same fraction of the current market value of one Right. For the purposes of this Section 14(a), the current market value of one Right is the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights otherwise would have been issuable. The closing price for any day is the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with

respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by Nasdaq or such other system then in use, or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Directors of the Company. If the Rights are not publicly held or are not so listed or traded, or are not the subject of available bid and asked quotes, the current market value of one Right will mean the fair value thereof as determined in good faith by the Directors of the Company, whose determination will be described in a statement filed with the Rights Agent.

(b) The Company will not be required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute certificates which evidence fractional Preferred Shares (other than fractions which are integral multiples of one one-hundredth of a Preferred Share). Fractions of Preferred Shares in integral multiples of one one-hundredth of a Preferred Share may, at the election of the Company, be evidenced by depositary receipts pursuant to an appropriate agreement between the Company and a depositary selected by it, provided that such agreement provides that the holders of such depositary receipts have all the rights, privileges and preferences to which they are entitled as beneficial owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of one one-hundredth of a Preferred Share, the Company may pay to any Person to whom or which such fractional Preferred Shares would otherwise be issuable an amount in cash equal to the same fraction of the current market value of one Preferred Share. For purposes of this Section 14(b), the current market value of one Preferred Share is the closing price of the Preferred Shares (as determined in the same manner as set forth for Common Shares in the second sentence of
Section 11(d)(i)) for the Trading Day immediately prior to the date of such exercise; provided, however, that if the closing price of the Preferred Shares cannot be so determined, the closing price of the Preferred Shares for such Trading Day will be conclusively deemed to be an amount equal to the closing price of the Common Shares (determined pursuant to the second sentence of
Section 11(d)(i)) for such Trading Day multiplied by one hundred (as such number may be appropriately adjusted to reflect events such as stock splits, stock dividends, recapitalizations or similar transactions relating to the Common Shares occurring after the date of this Agreement); provided further, however, that if neither the Common Shares nor the Preferred Shares are publicly held or listed or admitted to trading on any national securities exchange, or the subject of available bid and asked quotes, the current market value of one Preferred Share will mean the fair value thereof as determined in good faith by the Directors of the Company, whose determination will be described in a statement filed with the Rights Agent.

(c) Following the occurrence of a Triggering Event, the Company will not be required to issue fractions of Common Shares or other securities issuable upon exercise or exchange of the Rights or to distribute certificates which evidence any such fractional securities. In lieu of issuing any such fractional securities, the Company may pay to any Person to whom or which such fractional securities would otherwise be issuable an amount in cash equal to the same fraction of the current market value of one such security. For purposes of this Section 14(c), the current market value of one Common Share or other security issuable upon the exercise or exchange of Rights is the closing price thereof (as determined in the same manner as set forth for

Common Shares in the second sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date of such exercise or exchange; provided, however, that if neither the Common Shares nor any such other securities are publicly held or listed or admitted to trading on any national securities exchange, or the subject of available bid and asked quotes, the current market value of one Common Share or such other security will mean the fair value thereof as determined in good faith by the Directors of the Company, whose determination will mean the fair value thereof as will be described in a statement filed with the Rights Agent.

15. Rights of Action. All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Shares); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the holder of any Common Shares), may in his own behalf and for his own benefit enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under this Agreement, and injunctive relief against actual or threatened violations of the obligations of any Person subject to this Agreement.

16. Agreement of Rights Holders. Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:

(a) Prior to the Distribution Date, the Rights are transferable only in connection with the transfer of the Common Shares;

(b) After the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer;

(c) The Company and the Rights Agent may deem and treat the person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Share certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificate or the associated Common Share certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent will be affected by any notice to the contrary;

(d) Such holder expressly waives any right to receive any fractional Rights and any fractional securities upon exercise or exchange of a Right, except as otherwise provided in Section 14; and

(e) Notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent will have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, that the Company will use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible.

17. Right Certificate Holder Not Deemed a Shareholder. No holder, as such, of any Right Certificate will be entitled to vote, receive dividends, or be deemed for any purpose the holder of Preferred Shares or any other securities of the Company which may at any time be issuable upon the exercise of the Rights represented thereby, nor will anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a shareholder of the Company or any right to vote for the election of Directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in Section 25), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions of this Agreement or exchanged pursuant to the provisions of Section 24.

18. Concerning the Rights Agent. (a) The Company will pay to the Rights Agent such compensation as shall be agreed to in writing between the Company and the Rights Agent for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company will also indemnify the Rights Agent for, and hold it harmless against, any loss, liability, suit, action, proceeding or expense, incurred without gross negligence, bad faith, or willful misconduct on the part of the Rights Agent, for anything done or omitted to be done by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim (whether asserted by the Company, a holder of Rights, or any other Person) of liability arising therefrom, directly or indirectly. The provisions of this Section 18(a) shall survive the expiration of the Rights and the termination of this Agreement.

(b) The Rights Agent will be protected and will incur no liability for or in respect of any action taken, suffered, or omitted by it in connection with its administration of this Agreement in reliance upon any Right Certificate or certificate evidencing Preferred Shares or Common Shares or other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, instruction, direction, consent, certificate, statement or other paper or document believed by it to be genuine and to be signed and executed by the proper Person or Persons.

(c) Notwithstanding anything in this Agreement to the contrary, in no event shall the Rights Agent be liable for special, indirect, punitive or consequential loss or damage of any kind

whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of the loss or damage and regardless of the form of the action.

19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent is a party, or any corporation succeeding to all or substantially all the corporate trust or agency business of the Rights Agent or any successor Rights Agent, will be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of
Section 21. If at the time such successor Rights Agent succeeds to the agency created by this Agreement any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and if at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates will have the full force provided in the Right Certificates and in this Agreement.

(b) If at any time the name of the Rights Agent changes and at such time any of the Right Certificates have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and if at that time any of the Right Certificates have not been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates will have the full force provided in the Right Certificates and in this Agreement.

20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations expressly imposed by this Agreement, and no implied duties or obligations shall be read into this Agreement against the Rights Agent, upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, will be bound:

(a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel will be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.

(b) Whenever in the performance of its duties under this Agreement the Rights Agent deems it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman, the President, any Vice President, the Secretary or the Treasurer of the Company and delivered to the Rights Agent, and such certificate will be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.

(c) The Rights Agent will be liable hereunder only for its own gross negligence, bad faith or willful misconduct; provided, however, that the Rights Agent shall not be liable for any indirect, special, consequential or punitive damages.

(d) The Rights Agent will not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and will be deemed to have been made by the Company only.

(e) The Rights Agent will not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution and delivery hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor will it be responsible for any breach by the Company of any covenant contained in this Agreement or in any Right Certificate; nor will it be responsible for any adjustment required under the provisions of Sections 11 or 13 (including any adjustment which results in Rights becoming void) or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice of any such adjustment); nor will it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of stock or other securities to be issued pursuant to this Agreement or any Right Certificate or as to whether any shares of stock or other securities will, when issued, be duly authorized, validly issued, fully paid and nonassessable, nor shall the Rights Agent be responsible for the legality of the terms hereof in its capacity as an administrative agent.

(f) The Company will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.

(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman, the President, any Vice President, the Secretary or the Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it will not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer or for any delay in acting while waiting for those instructions. Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent under this Agreement and the date on and/or after which such action shall be taken or such omission shall be effective. The Rights Agent shall not be liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written instructions in response to such application specifying the action to be taken or omitted.

(h) The Rights Agent and any shareholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein will preclude the Rights Agent from acting in any other capacity for the Company or for any other Person.

(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent will not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof. The Rights Agent will not be under any duty or responsibility to ensure compliance with any applicable federal or state securities laws in connection with the issuance, transfer or exchange of Right Certificates.

(j) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise, transfer, split up, combination or exchange, either
(i) the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause 1 or 2 thereof, or (ii) any other actual or suspected irregularity exists, the Rights Agent will not take any further action with respect to such requested exercise, transfer, split up, combination or exchange without first consulting with the Company, and will thereafter take further action with respect thereto only in accordance with the Company's written instructions.

(k) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.

(l) In addition to the foregoing, the Rights Agent shall be protected and shall incur no liability for, or in respect of, any action taken or omitted by it in connection with its administration of this Agreement if such acts or omissions are in reliance upon (i) the proper execution of the certification concerning beneficial ownership appended to the form of assignment and the form of election to purchase attached hereto unless the Rights Agent shall have actual knowledge that, as executed, such certification is untrue, or (ii) the non-execution of such certification including, without limitation, any refusal to honor any otherwise permissible assignment or election by reason of such non-execution.

(m) The Company agrees to give the Rights Agent prompt written notice of any event or ownership which would prohibit the exercise or transfer of the Right Certificates.

21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 calendar days' notice in writing mailed to the Company and to each transfer agent of the Preferred Shares or the Common Shares by registered or certified mail. The Company may remove the Rights Agent or any

successor Rights Agent upon 30 calendar days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Preferred Shares and the Common Shares by registered or certified mail, and to the holders of the Right Certificates by first class mail. If the Rights Agent resigns or is removed or otherwise becomes incapable of acting, the Company will appoint a successor to the Rights Agent. If the Company fails to make such appointment within a period of 30 calendar days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who will, with such notice, submit his Right Certificate for inspection by the Company), then the Rights Agent, at the expense of the Company, or the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, will be a corporation or other legal entity organized and doing business under the laws of the United States or of the State of New York (or of any other state of the United States), in good standing, which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million. After appointment, the successor Rights Agent will be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent will deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company will file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Preferred Shares or the Common Shares, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, will not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by its Directors to reflect any adjustment or change in the Purchase Price per share and the number or kind of securities issuable upon exercise of the Rights made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale by the Company of Common Shares following the Distribution Date and prior to the Expiration Date, the Company (a) will, with respect to Common Shares so issued or sold pursuant to the exercise, exchange or conversion of securities (other than Rights) issued prior to the Distribution Date which are exercisable or exchangeable for, or convertible into Common Shares, and (b) may, in any other case, if deemed necessary, appropriate or desirable by the Directors of the Company, issue Right Certificates representing an equivalent number of Rights as would have been issued in respect of such Common Shares if they had been issued or sold prior to the Distribution Date, as appropriately adjusted as provided herein as if they had been so issued or sold; provided, however, that
(i) no such Right Certificate will be issued if, and to the extent that, in its good faith judgment the Directors of the Company determine that the issuance of such Right Certificate could have a material adverse tax consequence to the Company or to the Person to whom or which such Right Certificate otherwise would be issued and (ii) no such Right

Certificate will be issued if, and to the extent that, appropriate adjustment otherwise has been made in lieu of the issuance thereof.

23. Redemption. (a) Prior to the Expiration Date, the Directors of the Company may, at their option, redeem all but not less than all of the then-outstanding Rights at the Redemption Price at any time prior to the Close of Business on the later of (i) the Distribution Date and (ii) Share Acquisition Date. Any such redemption will be effective immediately upon the action of the Directors of the Company ordering the same, unless such action of the Directors of the Company expressly provides that such redemption will be effective at a subsequent time or upon the occurrence or nonoccurrence of one or more specified events (in which case such redemption will be effective in accordance with the provisions of such action of the Directors of the Company).

(b) Immediately upon the effectiveness of the redemption of the Rights as provided in Section 23(a), and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights will be to receive the Redemption Price, without interest thereon. Promptly after the effectiveness of the redemption of the Rights as provided in Section 23(a), the Company will publicly announce such redemption and, within 10 calendar days thereafter, will give notice of such redemption to the Rights Agent and the holders of the then-outstanding Rights by mailing such notice to all such holders at their last addresses as they appear upon the registry books of the Company; provided, however, that the failure to give, or any defect in, any such notice will not affect the validity of the redemption of the Rights. Any notice that is mailed in the manner herein provided will be deemed given, whether or not the holder receives the notice. The notice of redemption mailed to the holders of Rights will state the method by which the payment of the Redemption Price will be made. The Company may, at its option, pay the Redemption Price in cash, Common Shares (based upon the current per share market price of the Common Shares (determined pursuant to
Section 11(d)) at the time of redemption), or any other form of consideration deemed appropriate by the Directors of the Company (based upon the fair market value of such other consideration, determined by the Directors of the Company in good faith) or any combination thereof. The Company may, at its option, combine the payment of the Redemption Price with any other payment being made concurrently to holders of Common Shares and, to the extent that any such other payment is discretionary, may reduce the amount thereof on account of the concurrent payment of the Redemption Price. If legal or contractual restrictions prevent the Company from paying the Redemption Price (in the form of consideration deemed appropriate by the Directors) at the time of redemption, the Company will pay the Redemption Price, without interest, promptly after such time as the Company ceases to be so prevented from paying the Redemption Price.

24. Exchange. (a) The Directors of the Company may, at their option, at any time after the Share Acquisition Date, exchange all or part of the then-outstanding and exercisable Rights (which will not include Rights that have become void pursuant to the provisions of Section 11(a)(ii)) for Common Shares at an exchange ratio of one Common Share per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the Record Date (such exchange ratio being hereinafter referred to as the "EXCHANGE RATIO"). Any such exchange will be effective immediately upon the action of the Directors of the Company ordering the same, unless such action of the Directors of the Company expressly provides that such exchange will be effective at a subsequent time or upon the occurrence or

nonoccurrence of one or more specified events (in which case such exchange will be effective in accordance with the provisions of such action of the Directors of the Company). Notwithstanding the foregoing, the Directors of the Company will not be empowered to effect such exchange at any time after any Person (other than the Company or any Related Person), who or which, together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the then-outstanding Common Shares.

(b) Immediately upon the effectiveness of the exchange of any Rights as provided in Section 24(a), and without any further action and without any notice, the right to exercise such Rights will terminate and the only right with respect to such Rights thereafter of the holder of such Rights will be to receive that number of Common Shares equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. Promptly after the effectiveness of the exchange of any Rights as provided in Section 24(a), the Company will publicly announce such exchange and, within 10 calendar days thereafter, will give notice of such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent; provided, however, that the failure to give, or any defect in, such notice will not affect the validity of such exchange. Any notice that is mailed in the manner herein provided will be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Common Shares for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange will be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 11(a)(ii)) held by each holder of Rights.

(c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute for any Common Share exchangeable for a Right (i) equivalent common shares (as such term is used in Section 11(a)(iii)), (ii) cash, (iii) debt securities of the Company, (iv) other assets, or (v) any combination of the foregoing, in any event having an aggregate value, as determined in good faith by the Directors of the Company (whose determination will be described in a statement filed with the Rights Agent), equal to the current market value of one Common Share (determined pursuant to Section 11(d)) on the Trading Day immediately preceding the date of the effectiveness of the exchange pursuant to this Section 24.

25. Notice of Certain Events. (a) If, after the Distribution Date, the Company proposes (i) to pay any dividend payable in stock of any class to the holders of Preferred Shares or to make any other distribution to the holders of Preferred Shares (other than a regular periodic cash dividend),
(ii) to offer to the holders of Preferred Shares rights, options or warrants to subscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Preferred Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), (iv) to effect any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of assets or earning power (including, without limitation, securities creating any obligation on the part of the Company and/or any of its Subsidiaries) representing more than 50% of the assets and earning power of the Company and its Subsidiaries, taken as a whole, in either case to any other Person or Persons (other than the Company or one or more of its Subsidiaries in one or more transactions each of which complies with Section 11(o) above), (v)

to effect the liquidation, dissolution or winding up of the Company, or (vi) to declare or pay any dividend on the Common Shares payable in Common Shares or to effect a subdivision, combination or reclassification of the Common Shares then, in each such case, the Company will give to each holder of a Right Certificate and the Rights Agent, to the extent feasible and in accordance with
Section 26, a notice of such proposed action, which specifies the record date for the purposes of such stock dividend, distribution or offering of rights, options or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is to take place and the date of participation therein by the holders of the Common Shares and/or Preferred Shares, if any such date is to be fixed, and such notice will be so given, in the case of any action covered by clause (i) or (ii) above, at least 10 calendar days prior to the record date for determining holders of the Preferred Shares for purposes of such action, and, in the case of any such other action, at least 10 calendar days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Common Shares and/or Preferred Shares, whichever is the earlier.

(b) In case any Triggering Event occurs, then, in any such case, the Company will as soon as practicable thereafter give to the Rights Agent and each holder of a Right Certificate, in accordance with Section 26, a notice of the occurrence of such event, which specifies the event and the consequences of the event to holders of Rights.

26. Notices. (a) Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company will be sufficiently given or made if sent by first class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows:

EnPro Industries, Inc. 5605 Carnegie Boulevard Suite 500
Charlotte, North Carolina 28209 Attention: General Counsel

(b) Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent will be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows:

The Bank of New York 28 East 28th Street 8th Floor
New York, New York 10016 Attention: Jeff Grosse

(c) Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate (or, if prior the Distribution Date, to the holder of any certificate evidencing Common Shares) will be sufficiently given or made if sent by first class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company.

27. Supplements and Amendments. Prior to the time at which the Rights cease to be redeemable pursuant to Section 23, and subject to the last sentence of this Section 27, the Company may in its sole and absolute discretion, and the Rights Agent will if the Company so directs, supplement or amend any provision of this Agreement in any respect without the approval of any holders of Rights or Common Shares. From and after the time at which the Rights cease to be redeemable pursuant to Section 23, and subject to the last sentence of this Section 27, the Company may, and the Rights Agent will if the Company so directs, supplement or amend this Agreement without the approval of any holders of Rights or Common Shares in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) to shorten or lengthen any time period hereunder, or (iv) to supplement or amend the provisions hereunder in any manner which the Company may deem desirable; provided that no such supplement or amendment shall adversely affect the Rights Agent or the interests of the holders of Rights as such (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no such supplement or amendment shall cause the Rights again to become redeemable or cause this Agreement again to become supplementable or amendable otherwise than in accordance with the provisions of this sentence. Without limiting the generality or effect of the foregoing, this Agreement may be supplemented or amended to provide for such voting powers for the Rights and such procedures for the exercise thereof, if any, as the Directors of the Company may determine to be appropriate. Upon the delivery of a certificate from an officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent will execute such supplement or amendment; provided, however, that the failure or refusal of the Rights Agent to execute such supplement or amendment will not affect the validity of any supplement or amendment adopted by the Directors of the Company, any of which will be effective in accordance with the terms thereof. Notwithstanding anything in this Agreement to the contrary, no supplement or amendment may be made which decreases the stated Redemption Price to an amount less than $.01 per Right.

28. Successors; Certain Covenants. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent will be binding on and inure to the benefit of their respective successors and assigns hereunder.

29. Benefits of This Agreement. Nothing in this Agreement will be construed to give to any Person other than the Company, the Rights Agent, and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right, remedy or claim under this Agreement. This Agreement will be for the sole and exclusive benefit of the Company, the Rights Agent, and the registered holders of the Right Certificates (or prior to the Distribution Date, the Common Shares).

30. Governing Law. This Agreement, each Right and each Right Certificate issued hereunder will be deemed to be a contract made under the internal substantive laws of the State of North Carolina and for all purposes will be governed by and construed in accordance with the internal substantive laws of such State applicable to contracts to be made and performed entirely within such State, provided, however, that the rights and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York. The parties hereby submit to the nonexclusive jurisdiction of the courts of the borough of Manhattan, New York City, New York, and acknowledge that such courts are a convenient forum.

31. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement will remain in full force and effect and will in no way be affected, impaired or invalidated; provided, however, that nothing contained in this Section 31 will affect the ability of the Company under the provisions of Section 27 to supplement or amend this Agreement to replace such invalid, void or unenforceable term, provision, covenant or restriction with a legal, valid and enforceable term, provision, covenant or restriction.

32. Descriptive Headings, Etc. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and will not control or affect the meaning or construction of any of the provisions hereof. Unless otherwise expressly provided, references herein to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of or to this Agreement.

33. Determinations and Actions by the Directors. For all purposes of this Agreement, any calculation of the number of Common Shares outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding Common Shares of which any Person is the Beneficial Owner, will be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Directors of the Company will have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Directors of the Company or to the Company, or as may be necessary or advisable in the administration of this Agreement, including without limitation the right and power to (i) interpret the provisions of this Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including any determination as to whether particular Rights shall have become void). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, any omission with respect to any of the foregoing) which are done or made by the Directors of the Company in good faith will (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties and (y) not subject the Directors of the Company to any liability to any Person, including without limitation the Rights Agent and the holders of the Rights.

34. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts will for all purposes be deemed to be an original, and all such counterparts will together constitute but one and the same instrument.

[Signatures appear on following page]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

ENPRO INDUSTRIES, INC.

By:

Name:

Title:

THE BANK OF NEW YORK,
as Rights Agent

By:

Name:

Title:

EXHIBIT A

FORM OF ARTICLES OF AMENDMENT

ENPRO INDUSTRIES, INC.

Pursuant to Section 55-10-06 of the General Statutes of North Carolina, the undersigned corporation (the "Corporation") hereby submits these Articles of Amendment for the purpose of amending its Restated Articles of Incorporation to create a series of Preferred Stock designated as Series A Junior Participating Preferred Stock:

1. The name of the Corporation is EnPro Industries, Inc.

2. The following resolution relating to the fixing of the designations, preferences, limitations and relative rights of the Series A Junior Participating Preferred Stock, $0.01 par value per share, of the Corporation was duly adopted by the Board of Directors of the Corporation at a meeting held on May 22, 2002, without shareholder approval, which was not required because the Restated Articles of Incorporation of the Corporation provide that the Board of Directors may determine the designations, preferences, limitations and relative rights of that class:

RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation by the Restated Articles of Incorporation, the Board of Directors hereby creates a series of Preferred Stock designated as Series A Junior Participating Preferred Stock, $0.01 par value per share, of the Corporation and hereby states the designation and number of shares, and fixes the preferences, limitations and relative rights thereof, as follows:

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

I. Designation and Amount

The shares of such series will be designated as Series A Junior Participating Preferred Stock (the "SERIES A PREFERRED") and the number of shares constituting the Series A Preferred is ________. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, however, that no decrease will reduce the number of shares of Series A Preferred to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Preferred.

A-1

II. Dividends and Distributions

(a) Subject to the rights of the holders of any shares of any series of Preferred Stock ranking prior to the Series A Preferred with respect to dividends, the holders of shares of Series A Preferred, in preference to the holders of Common Stock, par value $0.01 per share (the "COMMON STOCK"), of the Corporation, and of any other junior stock, will be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, dividends payable in cash (except as otherwise provided below) on such dates as are from time to time established for the payment of dividends on the Common Stock (each such date being referred to herein as a "DIVIDEND PAYMENT DATE"), commencing on the first Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred (the "FIRST DIVIDEND PAYMENT DATE"), in an amount per share (rounded to the nearest cent) equal to the greater of (i) $1.00 or (ii) subject to the provision for adjustment hereinafter set forth, one hundred times the aggregate per share amount of all cash dividends, and one hundred times the aggregate per share amount (payable in kind) of all non-cash dividends, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Dividend Payment Date or, with respect to the First Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred. In the event that the Corporation at any time
(i) declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding shares of Common Stock,
(iii) combines the outstanding shares of Common Stock into a smaller number of shares, or (iv) issues any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing or surviving corporation), then, in each such case and regardless of whether any shares of Series A Preferred are then issued or outstanding, the amount to which holders of shares of Series A Preferred would otherwise be entitled immediately prior to such event under clause (ii) of the preceding sentence will be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(b) The Corporation will declare a dividend on the Series A Preferred as provided in the immediately preceding paragraph immediately after it declares a dividend on the Common Stock (other than a dividend payable in shares of Common Stock). Each such dividend on the Series A Preferred will be payable immediately prior to the time at which the related dividend on the Common Stock is payable.

(c) Dividends will accrue on outstanding shares of Series A Preferred from the Dividend Payment Date next preceding the date of issue of such shares, unless (i) the date of issue of such shares is prior to the record date for the First Dividend Payment Date, in which case dividends on such shares will accrue from the date of the first issuance of a share of Series A Preferred or (ii) the date of issue is a Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred entitled to receive a dividend and before such Dividend Payment Date, in either of which events such dividends will accrue from such Dividend Payment Date. Accrued but unpaid dividends will cumulate from the applicable Dividend Payment Date but will not bear interest. Dividends paid on the shares of Series A

A-2

Preferred in an amount less than the total amount of such dividends at the time accrued and payable on such shares will be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred entitled to receive payment of a dividend or distribution declared thereon, which record date will be not more than 60 calendar days prior to the date fixed for the payment thereof.

III. Voting Rights

The holders of shares of Series A Preferred will have the following voting rights:

(a) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred will entitle the holder thereof to one hundred votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation at any time (i) declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivides the outstanding shares of Common Stock, (iii) combines the outstanding shares of Common Stock into a smaller number of shares, or (iv) issues any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing or surviving corporation), then, in each such case and regardless of whether any shares of Series A Preferred are then issued or outstanding, the number of votes per share to which holders of shares of Series A Preferred would otherwise be entitled immediately prior to such event will be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(b) Except as otherwise provided herein, in the Restated Articles of Incorporation, in any other Preferred Stock Designation creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights will vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(c) Except as set forth in the Restated Articles of Incorporation or herein, or as otherwise provided by law, holders of shares of Series A Preferred will have no voting rights.

IV. Certain Restrictions

(a) Whenever regular dividends or other dividends or distributions payable on the Series A Preferred are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred outstanding have been paid in full, the Corporation will not:

(i) Declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the shares of Series A Preferred;

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(ii) Declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the shares of Series A Preferred, except dividends paid ratably on the shares of Series A Preferred and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii) Redeem, purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the shares of Series A Preferred; provided, however, that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the shares of Series A Preferred; or

(iv) Redeem, purchase or otherwise acquire for consideration any shares of Series A Preferred, or any shares of stock ranking on a parity with the shares of Series A Preferred, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, may determine in good faith will result in fair and equitable treatment among the respective series or classes.

(b) The Corporation will not permit any majority-owned subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (a) of this Article IV, purchase or otherwise acquire such shares at such time and in such manner.

V. Reacquired Shares

Any shares of Series A Preferred purchased or otherwise acquired by the Corporation in any manner whatsoever will be retired and canceled promptly after the acquisition thereof. All such shares will upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Restated Articles of Incorporation of the Corporation, or in any other Preferred Stock Designation creating a series of Preferred Stock or any similar stock or as otherwise required by law.

VI. Liquidation, Dissolution or Winding Up

Upon any liquidation, dissolution or winding up of the Corporation, no distribution will be made (a) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the shares of Series A Preferred unless, prior thereto, the holders of shares of Series A Preferred have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment; provided, however, that the holders of shares of Series A Preferred will be entitled to receive an aggregate amount per share, subject to the provision for adjustment

A-4

hereinafter set forth, equal to one hundred times the aggregate amount to be distributed per share to holders of shares of Common Stock or (b) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the shares of Series A Preferred, except distributions made ratably on the shares of Series A Preferred and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation at any time (i) declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding shares of Common Stock, (iii) combines the outstanding shares of Common Stock into a smaller number of shares, or (iv) issues any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing or surviving corporation), then, in each such case and regardless of whether any shares of Series A Preferred are then issued or outstanding, the aggregate amount to which each holder of shares of Series A Preferred would otherwise be entitled immediately prior to such event under the proviso in clause (a) of the preceding sentence will be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

VII. Consolidation, Merger, Etc.

In the event that the Corporation enters into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then, in each such case, each share of Series A Preferred will at the same time be similarly exchanged for or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to one hundred times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation at any time (a) declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (b) subdivides the outstanding shares of Common Stock, (c) combines the outstanding shares of Common Stock in a smaller number of shares, or (d) issues any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing or surviving corporation), then, in each such case and regardless of whether any shares of Series A Preferred are then issued or outstanding, the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred will be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

VIII. Redemption

The shares of Series A Preferred are not redeemable.

A-5

IX. Rank

The Series A Preferred rank, with respect to the payment of dividends and the distribution of assets, junior to all other series of the Corporation's Preferred Stock, unless the terms of any such series shall provide otherwise.

X. Amendment

Notwithstanding anything contained in the Restated Articles of Incorporation of the Corporation to the contrary and in addition to any other vote required by applicable law, the Restated Articles of Incorporation of the Corporation may not be amended in any manner that would materially alter or change the powers, preferences or special rights of the Series A Preferred so as to affect them adversely without the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of Series A Preferred, voting together as a single series.

This 31st day of May, 2002.

ENPRO INDUSTRIES, INC.

By:

[NAME]
[TITLE]

A-6

EXHIBIT B

FORM OF RIGHT CERTIFICATE

Certificate No. R-_________ ___________ Rights

NOT EXERCISABLE AFTER MAY 31, 2012 OR EARLIER IF REDEEMED, EXCHANGED OR AMENDED. THE RIGHTS ARE SUBJECT TO REDEMPTION, EXCHANGE AND AMENDMENT AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OR WERE BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR A TRANSFEREE THEREOF MAY BECOME NULL AND VOID.

Right Certificate

ENPRO INDUSTRIES, INC.

This certifies that _______________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions, and conditions of the Rights Agreement, dated as of May 31, 2002 (the "RIGHTS AGREEMENT"), between EnPro Industries, Inc., a North Carolina corporation (the "COMPANY"), and The Bank of New York, a New York banking corporation (the "RIGHTS AGENT"), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M. (Eastern time) on the Expiration Date (as such term is defined in the Rights Agreement) at the principal office or offices of the Rights Agent designated for such purpose, one one-hundredth of a fully paid nonassessable share of Series A Junior Participating Preferred Stock, par value $0.01 per share (the "PREFERRED SHARES"), of the Company, at a purchase price of $________ per one one-hundredth of a Preferred Share (the "PURCHASE PRICE"), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase and related Certificate duly executed. If this Right Certificate is exercised in part, the holder will be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised. The number of Rights evidenced by this Right Certificate (and the number of one one-hundredths of a Preferred Share which may be purchased upon exercise thereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of the date of the Rights Agreement, based on the Preferred Shares as constituted at such date.

As provided in the Rights Agreement, the Purchase Price and/or the number and/or kind of securities issuable upon the exercise of the Rights evidenced by this Right Certificate are subject to adjustment upon the occurrence of certain events.

This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a

B-1

full description of the rights, limitations of rights, obligations, duties and immunities of the Rights Agent, the Company and the holders of the Right Certificates, which limitations of rights include the temporary suspension of the exercisability of the Rights under the circumstances specified in the Rights Agreement. Copies of the Rights Agreement are on file at the above- mentioned office of the Rights Agent and can be obtained from the Company without charge upon written request therefor. Terms used herein with initial capital letters and not defined herein are used herein with the meanings ascribed thereto in the Rights Agreement.

Pursuant to the Rights Agreement, from and after the occurrence of a Flip-in Event, any Rights that are Beneficially Owned by (i) any Acquiring Person (or any Affiliate or Associate of any Acquiring Person), (ii) a transferee of any Acquiring Person (or any such Affiliate or Associate) who becomes a transferee after the occurrence of a Flip-in Event, or (iii) a transferee of any Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or concurrently with the Flip-in Event pursuant to either (a) a transfer from an Acquiring Person to holders of its equity securities or to any Person with whom it has any continuing agreement, arrangement or understanding regarding the transferred Rights or (b) a transfer which the Directors of the Company have determined is part of a plan, arrangement or understanding which has the purpose or effect of avoiding certain provisions of the Rights Agreement, and subsequent transferees of any of such Persons, will be void without any further action and any holder of such Rights will thereafter have no rights whatsoever with respect to such Rights under any provision of the Rights Agreement. From and after the occurrence of a Flip-in Event, no Right Certificate will be issued that represents Rights that are or have become void pursuant to the provisions of the Rights Agreement, and any Right Certificate delivered to the Rights Agent that represents Rights that are or have become void pursuant to the provisions of the Rights Agreement will be canceled.

This Right Certificate, with or without other Right Certificates, may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates entitling the holder to purchase a like number of one one-hundredths of a Preferred Share (or other securities, as the case may be) as the Right Certificate or Right Certificates surrendered entitled such holder (or former holder in the case of a transfer) to purchase, upon presentation and surrender hereof at the principal office of the Rights Agent designated for such purpose, with the Form of Assignment (if appropriate) and the related Certificate duly executed.

Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Company at its option at a redemption price of $.01 per Right or may be exchanged in whole or in part. The Rights Agreement may be supplemented and amended by the Company, as provided therein.

The Company is not required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one one-hundredth of a Preferred Share, which may, at the option of the Company, be evidenced by depositary receipts) or other securities issuable upon the exercise of any Right or Rights evidenced hereby. In lieu of issuing such fractional Preferred Shares or other securities, the Company may make a cash payment, as provided in the Rights Agreement.

B-2

No holder of this Right Certificate, as such, will be entitled to vote or receive dividends or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the Company which may at any time be issuable upon the exercise of the Right or Rights represented hereby, nor will anything contained herein or in the Rights Agreement be construed to confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting shareholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate have been exercised in accordance with the provisions of the Rights Agreement.

This Right Certificate will not be valid or obligatory for any purpose until it has been countersigned by an authorized signatory of the Rights Agent.

WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of ________, ____.

[SEAL]

ATTEST:  __________________                  ENPRO INDUSTRIES, INC.


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


Countersigned:

THE BANK OF NEW YORK


By:
   ------------------------------
   Authorized Signatory

B-3

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the Right Certificate)

FOR VALUE RECEIVED, _______________ hereby sells, assigns and transfers unto

(Please print name and address of transferee)

this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint _______________ Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution.

Dated: __________, ____

Signature

Signature Guaranteed:

CERTIFICATE

The undersigned hereby certifies by checking the appropriate boxes that:

1. the Rights evidenced by this Right Certificate [ ] are [ ] are not being sold, assigned, transferred, split up, combined or exchanged by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Person (as such terms are defined in the Rights Agreement);

2. after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

Dated: __________, ____

Signature

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to
exercise the Right Certificate)

To EnPro Industries, Inc.:

The undersigned hereby irrevocably elects to exercise __________ Rights represented by this Right Certificate to purchase the one one-hundredths of a Preferred Share or other securities issuable upon the exercise of such Rights and requests that certificates for such securities be issued in the name of and delivered to:

Please insert social security
or other identifying number:

(Please print name and address)

If such number of Rights is not all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights will be registered in the name of and delivered to:

Please insert social security
or other identifying number:

(Please print name and address)

Dated: __________, ____

Signature

Signature Guaranteed:

CERTIFICATE

The undersigned hereby certifies by checking the appropriate boxes that:

1. the Rights evidenced by this Right Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Person (as such terms are defined pursuant to the Rights Agreement);

2. after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from any Person who is, was, or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

Dated: __________, ____

Signature

NOTICE

SIGNATURES ON THE FOREGOING FORM OF ASSIGNMENT AND FORM OF ELECTION TO PURCHASE AND IN THE RELATED CERTIFICATES MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS RIGHT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.

Signatures must be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved medallion signature program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended.

EXHIBIT 10.9

ENPRO INDUSTRIES, INC.

2002 EQUITY COMPENSATION PLAN

1. PURPOSE; EFFECTIVE DATE. The purpose of this Plan is to promote the interests of the shareholders by providing stock-based incentives to selected employees to align their interests with shareholders and to motivate them to put forth maximum efforts toward the continued growth, profitability and success of EnPro Industries, Inc. (the "Company"). In furtherance of this objective, stock options, stock appreciation rights, performance shares, restricted shares, phantom shares, common stock of the Company ("Common Stock"), and/or other incentive awards may be granted in accordance with the provisions of this Plan.

This Plan shall be effective as of Distribution Date, as such term is defined in the Distribution Agreement among Goodrich Corporation, EnPro Industries, Inc. and Coltec Industries Inc (the "Effective Date"). This Plan is subject to the approval, prior to the Effective Date, of the shareholders of the Company.

2. ADMINISTRATION. This Plan is to be administered by the Compensation and Human Resources Committee or any successor committee (the "Committee") of the Board of Directors of the Company (the "Board"). The Committee shall consist of at least three members who shall not be eligible to participate in this Plan. The Committee shall have full power and authority to construe, interpret and administer this Plan. All decisions, actions or interpretations of the Committee shall be final, conclusive and binding on all parties.

The Committee may delegate to the Chief Executive Officer and to other senior officers of the Company the authority to make awards under this Plan with respect to not more than ten percent of the shares authorized under this Plan, pursuant to such conditions and limitations as the Committee may establish, except that only the Committee may make awards to participants who are subject to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

3. SHARES AVAILABLE FOR THIS PLAN. Subject to Section 17 hereof, the maximum number of shares of Common Stock that shall be available for delivery pursuant to the provisions of this Plan shall be equal to 3,000,000 shares of Common Stock. Such shares may be either authorized but unissued shares or treasury shares.

For purposes of calculating the number of shares of Common Stock available for delivery under this Plan, (i) the grant of a Performance Share Award (as defined in Section 9) or other unit or phantom share award shall be deemed to be equal to the maximum number of shares of Common Stock that may be issued under the award and (ii) where the value of an award is variable on the date it is granted, the value shall be deemed to be the maximum limitation of the award. Awards payable solely in cash will not reduce the number of shares of Common Stock available for awards granted under this Plan.

If the exercise price of any stock option granted under this Plan is satisfied by tendering shares of Common Stock to the Company (by either actual delivery or by attestation), only the number of shares of Common Stock issued net of the shares of Common Stock tendered shall be deemed delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under this Plan.

Any shares awarded under this Plan that are not issued or otherwise are returned to the Company, whether because awards have been forfeited, lapsed, expired, been canceled, withheld to satisfy withholding tax obligations or otherwise, shall again be available for other awards under this Plan.

4. LIMITATION ON AWARDS. Subject to Section 17 hereof, (a) no individual employee may receive awards under this Plan with respect to more than 500,000 shares in any calendar year, (b) the maximum number of shares of Common Stock that may be issued pursuant to options designated as Incentive Stock Options (as defined in Section 7) shall be 1,000,000 shares, (c) the maximum number of shares of Common Stock that may be issued pursuant to Performance Share Awards (as defined in Section 9) and Other Awards (as defined in Section 12) shall be 1,000,000 shares, and (d) the maximum number of shares of Common Stock that may be issued pursuant to Restricted Share Awards (as defined in
Section 11) shall be 150,000 shares.

5. TERM. No awards may be granted under this Plan after May 22, 2012.

6. ELIGIBILITY. Awards under this Plan may be made to any salaried, full-time employee of the Company or any subsidiary corporation of which more than 50% of the voting stock is owned by the Company. Directors who are not full-time employees are not eligible to participate.

7. STOCK OPTIONS. The Committee may, in its discretion, from time to time grant to eligible employees options to purchase Common Stock, at a price not less than 100% of the fair market value of the Common Stock on the date of grant (the "option price"), subject to the conditions set forth in this Plan. The Committee may not reduce the option price of any stock option grant after it is made, except in connection with a Corporate Reorganization (as defined in
Section 17), nor may the Committee agree to exchange a new lower priced option for an outstanding higher priced option.

The Committee, at the time of granting to any employee an option to purchase shares or any related stock appreciation right or limited stock appreciation right under this Plan, shall fix the terms and conditions upon which such option or appreciation right may be exercised, and may designate options as incentive stock options ("Incentive Stock Options") pursuant to
Section 422 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") or any other statutory stock option that may be permitted under the Internal Revenue Code from time to time, provided, however that (i) the date on which such options and related appreciation rights

shall expire, if not exercised, may not be later than ten years after the date of grant of the option, (ii) the terms and conditions of Incentive Stock Options must be in accordance with the qualification requirements of the Internal Revenue Code and (iii) the provisions of any other statutory stock option permitted under the Internal Revenue Code must be consistent with applicable Internal Revenue Code requirements.

Within the foregoing limitations, the Committee shall have the authority in its discretion to specify all other terms and conditions relating to stock options, including but not limited to provisions for the exercise of options in installments, the time limits during which options may be exercised, and in lieu of payment in cash, the exercise in whole or in part of options by tendering Common Stock owned by the employee, valued at the fair market value on the date of exercise or other acceptable forms of consideration equal in value to the option price. The Committee may, in its discretion, issue rules or conditions with respect to utilization of Common Stock for all or part of the option price, including limitations on the pyramiding of shares.

8. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant stock appreciation rights and limited stock appreciation rights (as hereinafter described) in connection with any stock option, either at the time of grant of such stock option or any time thereafter during the term of such stock option. Except for the terms of this Plan with respect to limited stock appreciation rights, each stock appreciation right shall be subject to the same terms and conditions as the related stock option and shall be exercisable at such times and to such extent as the Committee shall determine, but only so long as the related option is exercisable. The number of stock appreciation rights or limited stock appreciation rights shall be reduced not only by the number of appreciation rights exercised but also by the number of shares purchased upon the exercise of a related option. A related stock option shall cease to be exercisable to the extent the stock appreciation rights or limited stock appreciation rights are exercised.

Upon surrender to the Company of the unexercised related stock option, or any portion thereof, a stock appreciation right shall entitle the optionee to receive from the Company in exchange therefor (a) a payment in stock as determined below, or (b) to the extent determined by the Committee, the cash equivalent of the fair market value of such payment in stock on the exercise date had the employee been awarded a payment in stock instead of cash, or any combination of stock and cash. The number of shares which shall be issued pursuant to the exercise of stock appreciation rights shall be determined by dividing (1) the product of (A) the total number of stock appreciation rights being exercised times (B) the amount by which the fair market value of a share of Common Stock on the exercise date exceeds the option price of the related option, by (2) the fair market value of a share of Common Stock on the exercise date. No fractional shares shall be issued.

The grant of limited stock appreciation rights will permit a grantee to exercise such limited stock appreciation rights for cash during a sixty-day period commencing on the date on which any of the events described in the definition of Change in Control (as defined in Section 25) occurs. Upon surrender to the Company of the unexercised related stock option, a limited stock appreciation right shall entitle the optionee to receive cash with a fair market value equal to

the excess, if any, of the fair market value of a share of Common Stock on the date of exercise of the limited stock appreciation right, over the option price of the stock option to which the limited stock appreciation right relates.

9. PERFORMANCE SHARE AWARDS. The Committee may make awards ("Performance Share Awards") in Common Stock or phantom shares subject to conditions established by the Committee that may include attainment of specific Performance Objectives (as defined below). Performance Share Awards may include the awarding of additional shares upon attainment of the specified Performance Objectives. Any Restricted Share Award which is conditioned upon attainment of specific Performance Objectives shall have a minimum performance period of one year, except in the case of death, disability or retirement and except as otherwise provided pursuant to Section 26.

10. PERFORMANCE OBJECTIVES. Performance objectives that may be used under this Plan include Net Income, Pretax Income, Consolidated Operating Income, Segment Operating Income, Return on Equity, Operating Income Return on Net Capital Employed, Return on Assets, Cash Flow (with or without regard to asbestos), Working Capital, Share Appreciation, Total Shareholder Return, Total Business Return (calculated utilizing Earnings Before Interest, Taxes, Depreciation and Amortization and cash flow) and Earnings Per Share of Common Stock of the Company (the "Performance Objectives").

11. RESTRICTED SHARES. The Committee may make awards in Common Stock subject to conditions, if any, established by the Committee which may include continued service with the Company or its subsidiaries ("Restricted Share Awards"). Any Restricted Share Award which is conditioned upon continued employment shall be conditioned upon continued employment for a minimum period of three years following the award, except in the case of death, disability or retirement and except as otherwise provided pursuant to Section 26.

12. OTHER AWARDS. The Committee may make awards authorized under this Plan in units or phantom shares, the value of which is based, in whole or in part, on the value of Common Stock, in lieu of making such awards in Common Stock ("Other Awards"). The Committee may provide for Other Awards to be paid in cash, in Common Stock, or in a combination of both cash and Common Stock, under such terms and conditions as in its discretion it deems appropriate.

13. DEFERRED AWARDS. The Committee may permit recipients of awards to elect to defer receipt of such awards, either in cash or in Common Stock, under such terms and conditions that the Committee may prescribe. The Committee may authorize the Company to establish various trusts or make other arrangements with respect to any deferred awards.

14. FAIR MARKET VALUE. For all purposes of this Plan the fair market value of a share of Common Stock shall be the mean of the high and low prices of Common Stock on the relevant date (as of 4:00 P.M. Eastern Standard Time) as reported on the New York Stock Exchange -- Composite Transactions listing (or similar report), or, if no sale was made on such date, then on

the next preceding day on which such a sale was made; provided, however, that with respect to any grant of an award during 2002, the fair market value of a share of Common Stock shall be the mean of the average of the closing prices of Common Stock (as of 4:00 P.M. Eastern Standard Time) as reported on the New York Stock Exchange -- Composite Transactions listing (or similar report) over the 20-trading-day period ending on the relevant date.

15. TERMINATION OF EMPLOYMENT. The Committee may make such provisions as it, in its sole discretion, may deem appropriate with respect to the effect, if any, the termination of employment will have on any grants or awards under this Plan.

16. ASSIGNABILITY. Options and any related appreciation rights and other awards granted under this Plan shall not be transferable by the grantee other than by will or the laws of descent and distribution or by such other means as the Committee may approve from time to time.

17. CORPORATE REORGANIZATION. In the event of any change in corporate capitalization (including, but not limited to, a change in the number of shares of Common Stock outstanding), such as a stock split or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Internal Revenue Code) or any partial or complete liquidation of the Company, (a "Corporate Reorganization), the Committee or the Board may make such substitution or adjustments in the aggregate number and kind of shares reserved for issuance under this Plan, and the maximum limitation on the number of awards that may be granted to any participant, in the number, kind and option price of shares subject to outstanding stock options and stock appreciation rights, in the number and kind of shares subject to other outstanding awards granted under this Plan and/or such other equitable substitution or adjustments as it may determine to be appropriate in its sole discretion; provided, however, that the number of shares subject to any award shall always be a whole number.

18. COMMITTEE'S DETERMINATION. The Committee's determinations under this Plan including without limitation, determinations of the employees to receive awards or grants, the form, amount and timing of such awards or grants, the terms and provisions of such awards or grants and the agreements evidencing same, and the establishment of Performance Objectives need not be uniform and may be made by the Committee selectively among employees who receive, or are eligible to receive awards or grants under this Plan whether or not such employees are similarly situated. The Committee may, with the consent of the participant, modify any determination it previously made.

19. LEAVE OF ABSENCE OR OTHER CHANGE IN EMPLOYMENT STATUS. The Committee shall be entitled to make such rules, regulations and determinations as it deems appropriate under this Plan in respect of any leave of absence taken by an employee or any other change in employment status, such as a change from full time employment to a consulting relationship, of an employee relative to any grant or award. Without limiting the generality of the foregoing, the Committee shall be entitled to determine (i) whether or not any such leave of absence or other

change in employment status shall constitute a termination of employment within the meaning of this Plan and (ii) the impact, if any, of any such leave of absence or other change in employment status on awards under this Plan theretofore made to any employee who takes such leave of absence or otherwise changes his or her employment status.

20. WITHHOLDING TAXES. The Committee or its designee shall have the right to determine the amount of any Federal, state or local required withholding tax, and may require that any such required withholding tax be satisfied by withholding shares of Common Stock or other amounts which would otherwise be payable under this Plan.

21. RETENTION OF SHARES. If shares of Common Stock are awarded subject to attainment of Performance Objectives, continued service with the Company or other conditions, the shares may be registered in the employees' names when initially awarded, but possession of certificates for the shares shall be retained by the Secretary of the Company for the benefit of the employees, or shares may be registered in book entry form only, in both cases subject to the terms of this Plan and the conditions of the particular awards.

22. DIVIDENDS AND VOTING. The Committee may permit each participant to receive or accrue dividends and other distributions made with respect to such awards under such terms and conditions as in its discretion it deems appropriate. With respect to shares actually issued, the Committee under such terms and conditions as in its discretion it deems appropriate, may permit the participant to vote or execute proxies with respect to such registered shares.

23. FORFEITURE OF AWARDS. Any awards or parts thereof made under this Plan which are subject to Performance Objectives or other conditions which are not satisfied, shall be forfeited, and any shares of Common Stock issued shall revert to the Treasury of the Company.

24. CONTINUED EMPLOYMENT. Nothing in this Plan or in any agreement entered into pursuant to this Plan shall confer upon any employee the right to continue in the employment of the Company or affect any right which the Company may have to terminate the employment of such employee.

25. CHANGE IN CONTROL. For purposes of this Plan, a "Change in Control" shall mean:

(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of Common Stock (the "Outstanding Company Common Stock") or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (other than by exercise of a conversion privilege), (B) any acquisition by the Company or any of its subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (D) any

acquisition by any company with respect to which, following such acquisition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, solely in their capacity as shareholders of the Company, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or

(ii) individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board"), cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest; or

(iii) shareholder approval of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation, do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, solely in their capacity as shareholders of the Company, more than 70% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the company resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or

(iv) shareholder approval of (A) a complete liquidation or dissolution of the Company or (B) a sale or other disposition of all or substantially all of the assets of the Company, other than to a company, with respect to which following such sale or other disposition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities, solely in their capacity as shareholders of the Company, who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other

disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be.

26. EFFECT OF CHANGE IN CONTROL. In the event of a Change in Control, options and any related appreciation rights that are not then exercisable shall become immediately exercisable, and, notwithstanding any other provisions of this Plan or any award agreement, shall remain exercisable for no less than the shorter of (i) two years or (ii) the remainder of the full term of the option or appreciation right. The Committee may make such provision with respect to other awards under this Plan as it deems appropriate in its discretion.

27. COMPLIANCE WITH LAWS AND REGULATIONS. Notwithstanding any other provisions of this Plan, the issuance or delivery of any shares may be postponed for such period as may be required to comply with any applicable requirements of any national securities exchange or any requirements under any other law or regulation applicable to the issuance or delivery of such shares, and the Company shall not be obligated to issue or deliver any such shares if the issuance or delivery thereof shall constitute a violation of any provision of any law or any regulation of any governmental authority, whether foreign or domestic, or any national securities exchange.

28. AMENDMENT. The Board of Directors of the Company may alter or amend this Plan, in whole or in part, from time to time, or terminate this Plan at any time; provided, however, that no such action shall adversely affect any rights or obligations with respect to awards previously made under this Plan unless the action is taken in order to comply with applicable law, stock exchange rules or accounting rules; and, provided, further, that no amendment which has the effect of increasing the number of shares subject to this Plan (other than in connection with a Corporate Reorganization) shall be made without the approval of the Company's shareholders.

EXHIBIT 10.10

ENPRO INDUSTRIES, INC.

SENIOR EXECUTIVE ANNUAL PERFORMANCE PLAN

PURPOSE

The EnPro Industries, Inc. Senior Executive Annual Performance Plan (the "Plan") has been established effective as of the Distribution Date, as such term is defined in the Distribution Agreement among Goodrich Corporation, EnPro Industries, Inc. and Coltec Industries Inc (the "Effective Date") to provide opportunities to certain senior executives to receive incentive compensation as a reward for high levels of personal performance above the ordinary performance standards compensated by base salary, and for their contributions to the strong performance of the Company. The Plan, together with base compensation, is designed to provide above average total cash compensation when all relevant performance objectives are achieved and below average total cash compensation when such objectives are not achieved.

ELIGIBILITY

Participation in the Plan will be limited to those senior executives whose compensation may become subject to the non-deductibility provisions of
Section 162(m) of the Internal Revenue Code of 1986, as amended, or any similar successor provision (the "Code"). Participants will be selected prior to or within 90 days of the beginning of each Plan Year by the Compensation and Human Resources Committee of the Company's Board of Directors or a subcommittee of the committee consisting only of those members of that committee who are "outside" Directors as defined in regulations under the Code if any members of the committee are not "outside" Directors as so defined (the "Committee").

INCENTIVE CATEGORIES

Each year the Committee will assign each Participant to an incentive category based on organizational level and potential impact on important Company or division results. The incentive categories define the target level of incentive opportunity, stated as a percentage of base salary as determined by the Committee, that will be available to the Participant if the Company's target performance levels are met for the Plan Year (the "Target Incentive Amount").

MAXIMUM AND THRESHOLD AWARDS

Each Participant will be assigned maximum and threshold award levels. Maximum award level represents the maximum amount of incentive award that may be paid to a Participant for a Plan Year. Threshold award level represents the level above which an incentive award will be paid to a Participant. Performance at or below the threshold level will earn no incentive payments. Each Participant's maximum award level will be 200% of his or her Target Incentive Amount. Under no circumstances will any Participant be paid an award exceeding $2,500,000.

PERFORMANCE MEASURES

Performance measures that may be used under the Plan include Net Income, Pretax Income, Consolidated Operating Income, Segment Operating Income, Return on Equity, Operating Income Return on Net Capital Employed, Return on Assets, Cash Flow (with or without regard to asbestos), Working Capital, Share Appreciation, Total Shareholder Return relative to the manufacturing companies within the S&P 400 index, Total Business Return (calculated utilizing Earnings Before Interest, Taxes, Depreciation and Amortization and cash flow) and Earnings per Share of Common Stock of the Company for the Plan Year.

PARTIAL PLAN YEAR PARTICIPATION

Subject to the Change in Control provisions described below, incentive awards to Participants who terminate during the Plan Year for reasons of death, disability (under the Company's Long-Term Disability Plan), or retirement (under the Company's Salaried Retirement Plan) will be calculated as specified above and will be paid pro rata based on a fraction, the numerator of which is the number of full and partial months of the Plan Year during which the Participant was employed by the Company, and the denominator of which is the total number of months in the Plan Year. Subject to the Change in Control provisions described below, Participants who terminate during a Plan Year for reasons other than death, disability, or retirement will receive no incentive award payments for such Plan Year.

PERFORMANCE GOALS

The Committee will designate, prior to or within 90 days of the beginning of each Plan Year:

- The incentive category and percentage of base salary for each Participant to determine his or her Target Incentive Amount;

- The performance measures and calculation methods to be used for the Plan Year;

- A schedule for each performance measure relating achievement levels for the performance measure to incentive award levels as a percentage of Participants' Target Incentive Amounts; and

- The relative weightings of the performance measures for the Plan Year.

PERFORMANCE CERTIFICATION

As soon as practicable following the end of each Plan Year, the Committee will certify the Company's performance with respect to each performance measure used for that Plan Year.

AWARD CALCULATION AND PAYMENT

Individual incentive awards will be calculated and paid as soon as practicable following the Committee's certification of performance for each Plan Year. The amount of a

Participant's incentive award to be paid based on each individual performance measure will be calculated based on the following formula (the "Formula").

Participant's           Participant's                 Percentage of          Relative              Amount of
total gross        X    incentive category       x    target award     x     weighting of     =    incentive award
base salary             percentage                    to be paid             performance           based on
                        for achievement                                      measure               performance
                        against performance                                                        measure
                        measure

The incentive amounts to be paid to the Participant based on each performance measure will be summed to arrive at the Participant's total incentive award payment for the Plan Year.

PAYMENT UPON CHANGE IN CONTROL

Anything to the contrary notwithstanding, within five days following the occurrence of a Change in Control, the Company shall pay to each Participant an interim lump-sum cash payment (the "Interim Payment") with respect to his or her participation in the Plan. The amount of the Interim Payment shall equal the product of (x) the number of months in the Plan Year in which the Change in Control occurs, including fractional months, that elapsed before the occurrence of the Change in Control and (y) one-twelfth of the greater of (i) the amount most recently paid to each Participant for a full Plan Year under the Plan or
(ii) the Target Incentive Amount for each Participant in effect prior to the Change in Control for the Plan Year in which the Change in Control occurs. The Interim Payment shall not reduce the obligation of the Company to make a final payment under the terms of the Plan, but any Interim Payment made shall be offset against any later payment required under the terms of the Plan for the Plan Year in which a Change in Control occurs. Notwithstanding the foregoing, in no event shall any Participant be required to refund to the Company, or have offset against any other payment due any Participant from or on behalf of the Company, all or any portion of the Interim Payment.

For purposes of the Plan, a Change in Control shall mean:

(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (other than by exercise of a conversion privilege), (B) any acquisition by the Company or any of its subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (D) any acquisition by any company with respect to which, following such acquisition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the

combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, solely in their capacity as shareholders of the Company, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or

(ii) individuals who, as of the Effective Date, constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest; or

(iv) shareholder approval of (A) a complete liquidation or dissolution of the Company or (B) a sale or other disposition of all or substantially all of the assets of the Company, other than to a company, with respect to which following such sale or other disposition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities, solely in their capacity as shareholders of the Company, who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other

disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be.

PLAN YEAR

The Plan Year shall be the fiscal year of the Company, provided that the first Plan Year shall commence on the Effective Date of the Plan.

PLAN ADMINISTRATION

The Plan will be administered by the Committee. In administering the Plan, the Committee shall be empowered to interpret the provisions of the Plan and to perform and exercise all of the duties and powers granted to it under the terms of the Plan by action of a majority of its members in office from time to time. The Committee is empowered to set preestablished performance targets, measure the results and determine the amounts payable according to the Formula. While the Committee may not increase the amounts payable under the Formula, it retains discretionary authority to reduce the amount of compensation that would otherwise be payable to the Participants if the goals are attained. The Committee may also adopt such rules and regulations for the administration of the Plan as are consistent with the terms hereof and shall keep adequate records of its proceedings and acts. All interpretations and decisions made (both as to law and fact) and other action taken by the Committee with respect to the Plan shall be conclusive and binding upon all parties having or claiming to have an interest under the Plan. Not in limitation of the foregoing, the Committee shall have the discretion to decide any factual or interpretative issues that may arise in connection with its administration of the Plan (including without limitation any determination as to claims for benefits hereunder), and the Committee's exercise of such discretion shall be conclusive and binding on all affected parties as long as it is not arbitrary or capricious.

MISCELLANEOUS

(i) Amendment and termination. The Board of Directors of the Company may amend, modify, or terminate the Plan at any time, provided that no amendment, modification or termination of the Plan shall reduce the amount payable to a Participant under the Plan as of the date of such amendment, modification or termination.

(ii) Shareholder Approval. No amounts shall be payable hereunder on or after the first annual shareholders meeting that occurs after the Effective Date unless the terms of the Plan are approved by the shareholders of the Company on or before such annual shareholders meeting consistent with the requirements of Section 162(m) of the Code. In accordance with Section 162(m)(4)(C)(ii) of the Code, the continued effectiveness of the Plan is subject to its approval by the shareholders of the Company at such other times as required by Section 162(m)(4)(C)(ii) of the Code.

(iii) Applicable law. The Plan shall be governed and construed in accordance with the laws of the State of North Carolina, except to the extent such laws are preempted by the laws of the United States of America.

EXHIBIT 10.11

SUMMARY PLAN DESCRIPTION

ENPRO INDUSTRIES, INC. LONG-TERM INCENTIVE PROGRAM

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933.

The EnPro Industries, Inc. Long-Term Incentive Program (the "LTIP Program") is designed to provide long-term incentive compensation to key executives who are in positions to influence the performance of the Company, and thereby enhance shareholder value over time. The LTIP Program provides a significant additional financial opportunity and complements other parts of the Company's total compensation program for executives (base salary, annual performance plan, stock options and benefits).

The LTIP Program is promulgated under the EnPro Industries, Inc. 2002 Equity Compensation Plan (the "Equity Compensation Plan"). In the case of any conflict between the terms of the LTIP Program and the Equity Compensation Plan or any award agreement thereunder, the terms of the Equity Compensation Plan or any such award agreement shall control. Capitalized terms not otherwise defined in this summary will have such meanings as defined under the Equity Compensation Plan.

The benefits described in this summary have been structured to be in compliance with current tax law. Any change in legislation or the interpretation of tax laws which affect the tax nature of the benefits provided may necessitate revisions in the LTIP Program.

The Company reserves the right to amend, modify, suspend or partially or completely terminate the LTIP Program at any time.

PROGRAM OVERVIEW

- Participation in the LTIP will be approved by the Compensation and Human Resources Committee of the Board of Directors (the "Committee").

- The LTIP will provide for annual grants of Performance Shares with multi-year overlapping cycles. Every year, a separate multi-year performance cycle will begin.

- At the beginning of each performance cycle, a grant of Performance Shares will be made to each participant. Grants will be credited as phantom Performance Shares in a book account for each participant. Each phantom Performance Share will be equivalent to one share of Company common stock.

- With respect to each performance cycle, the Committee will establish multi-year performance goals for the Company and each segment. The performance goals are set forth in the Equity Compensation Plan. The performance goals applicable to each participant will be set forth in his or her award agreement.

- During the performance cycle, dividend equivalents will be accrued on all phantom Performance Shares under the LTIP Program. Upon the payment date of each dividend declared on the Company's common stock, that number of additional phantom Performance Shares will be credited to your account which is equivalent in value to the aggregate amount of dividends which would be paid if the number of phantom Performance Shares credited to your account were actual shares of the Company's common stock.

- Participants will be entitled to a payout at the end of each performance cycle only if a threshold performance standard is met. The payment to be received free of further restrictions will range from 0% to 200% of the value of the participant's total phantom Performance Share account (including shares credited through dividend equivalents), based on attainment against goals set by the Committee.

- Payments from the LTIP Program, if any, at the end of the performance cycle will be made fifty percent (50%) in shares of Company common stock and fifty percent (50%) in cash, less the amount necessary to satisfy applicable withholding taxes.

- Shares of Company common stock to be paid under the LTIP Program are issued pursuant to the provisions of the Equity Compensation Plan.

- The value of your earned Performance Shares for tax purposes and for purposes of determining the cash portion of any payments will be calculated using the fair market value of Company common stock as reported on the New York Stock Exchange - Composite Transactions Listing (or similar report) on the first business day after the end of the applicable performance cycle, or if no sale was made on such date, then on the next preceding day on which such sale was made.

- Participants may elect to defer all or a portion of their award until termination of employment as described in the Performance Share Deferred Compensation Program.

- The Committee retains the right in its sole discretion to reduce any award which would otherwise be payable, unless there has been a Change in Control, as defined in the Equity Compensation Plan.

PROGRAM PROVISIONS

ELIGIBILITY

Eligibility to participate in the LTIP Program will be determined by the Committee.

AWARD GRANTS

The LTIP Program rewards financial performance for multi-year overlapping cycles. Every year, a separate multi-year performance cycle will begin.

At the beginning of each performance cycle, a grant of Performance Shares will be made to each participant. Grants will be credited as phantom Performance Shares in a book account for each participant. Each phantom Performance Share will be equivalent to one share of Company common stock.

The Company will maintain a phantom Performance Share account for each participant for each separate performance cycle. The account will be used solely for record keeping purposes. No actual shares of Company common stock will be registered in participants' names.

DIVIDENDS

Dividend equivalents will be accrued on all phantom Performance Shares in each participant's account for each performance cycle. Upon the payment date of each dividend declared on the Company's common stock, that number of additional phantom Performance Shares will be credited to your account which is equivalent in value to the aggregate amount of dividends which would be paid if the number of phantom Performance Shares credited to your account were actual shares of the Company's common stock.

PERFORMANCE GOALS

With respect to each performance cycle, the Committee will establish multi-year performance goals for the Company and each segment. The performance goals are set forth in the Equity Compensation Plan. The performance goals applicable to each participant will be set forth in his or her award agreement.

PROGRAM PAYOUTS

Payments from the LTIP Program, if any, at the end of the performance cycle, will be made fifty percent (50%) in shares of Company common stock and fifty percent (50%) in cash, less the amount necessary to satisfy applicable withholding taxes. Any fractional shares of Company common stock will also be paid in cash.

Shares of Company common stock to be paid under the LTIP Program are issued pursuant to the provisions of the Equity Compensation Plan.

At the end of each performance cycle, if a participant is still employed by the Company, he or she will receive a payment from the LTIP Program after the Committee determines the final payout based upon specific financial performance goals established for participants.

Participants will be entitled to a payout at the end of each performance cycle only if a threshold performance standard is met. If threshold performance is achieved, the payment to be received free of further restrictions will range from 0% to 200% of the value of your total Performance Share account (including shares credited through dividend equivalents), based on attainment against goals set by the Committee.

The value of your earned Performance Shares for tax purposes and for purposes of determining the cash portion of any payments will be calculated using the fair market value of Company

common stock as reported on the New York Stock Exchange - Composite Transactions Listing (or similar report) on the first business day after the end of the applicable performance cycle, or if no sale was made on such date, then on the next preceding day on which such sale was made.

TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, RETIREMENT

If a participant becomes totally disabled under the Company's Long-Term Disability Plan, or retires (or is deemed to retire) under the Company's Salaried Retirement Plan during a performance cycle, the participant will receive a pro rata payout at the end of the performance cycle, based upon the time portion of the cycle during which he or she was employed. The actual payout will not occur until after the end of the performance cycle, at which time the financial performance for the entire performance cycle will be used to determine the size of the award in that event.

If a participant dies during a performance cycle, the participant will receive a pro rata payout of the shares originally awarded to him or her, including a pro rata payout of dividends credited to the participant's account, based upon financial results calculated for the portion of the cycle through the end of the fiscal quarter following the participant's death.

OTHER TERMINATION OF EMPLOYMENT

If a participant terminates employment prior to the end of a performance cycle for reasons other than death, disability or retirement, he or she will forfeit all Performance Shares, unless the Committee determines otherwise.

NEW HIRES OR PROMOTIONS INTO ELIGIBLE POSITIONS

Participants will become eligible for participation in the LTIP Program at their new position level beginning with the performance cycle which begins on the January 1 immediately following their hire or promotion date. No new Performance Share awards or adjustments to Performance Share awards for performance cycles that commenced prior to a participant's hire or promotion date will be made.

CHANGE IN CONTROL

Generally, participants will not receive a payout under the LTIP Program until the end of a performance cycle. An exception will occur, however, if there is a Change in Control of the Company. A Change in Control is defined in the Equity Compensation Plan. The effect of a Change in Control on a participant's ability to receive Performance Shares is described in the LTIP Program. Generally, that LTIP Program provides that, as of the date of the Change in Control, a participant will become entitled to a prorated portion of the shares originally awarded to him or her, based upon financial performance for the portion of the cycle which ends on the date of the Change in Control. A participant's entitlement to additional shares will be based upon financial performance for the portion of the performance cycle that occurs after the Change in Control.

DEFERRAL OF PAYOUTS

Participants may elect to defer all or a portion of Performance Shares that may be earned and payable at the end of a performance cycle as described in the Performance Share Deferred Compensation Plan. A deferral election must be made before the performance cycle begins, using a form provided by the Company.

PROGRAM ADMINISTRATION

This LTIP Program is administered by the Committee. In administering the LTIP Program, the Committee shall be empowered to interpret the provisions of the LTIP Program and to perform and exercise all of the duties and powers granted to it under the terms of the LTIP Program by action of a majority of its members in office from time to time. The Committee may also adopt such rules and regulations for the administration of the LTIP Program as are consistent with the terms hereof and shall keep adequate records of its proceedings and acts. All interpretations and decisions made (both as to law and fact) and other action taken by the Committee with respect to the LTIP Program shall be conclusive and binding upon all parties having or claiming to have an interest under the LTIP Program. Not in limitation of the foregoing, the Committee shall have the discretion to decide any factual or interpretative issues that may arise in connection with its administration of the LTIP Program (including without limitation any determination as to claims for benefits hereunder), and the Committee's exercise of such discretion shall be conclusive and binding on all affected parties as long as it is not arbitrary or capricious. The Committee may delegate any of its duties and powers hereunder to the extent permitted by applicable law.

The Committee retains the right in its sole discretion to reduce any award which would otherwise be payable, unless there has been a Change in Control.

The Committee reserves the right to amend, modify, suspend or partially or completely terminate the LTIP Program, unless there has been a Change in Control.

TAX INFORMATION

Generally, participants are not taxed on Performance Shares until the date on which they become entitled to a payout of their Performance Shares. Under current tax law, on the date participants become entitled to receive the shares following completion of a performance cycle, the market value of the shares (net of any shares deferred) at that time is considered to be ordinary income and they will be taxed on that amount. If participants hold the shares and later sell them, any appreciation over the market value of the shares when they received them at the end of the performance cycle will be taxed based on capital gains tax rules.

EARNINGS FOR BENEFIT PURPOSES

Any income participants derive from Performance Share payouts will not be considered eligible earnings for Company or subsidiary pension plans, savings plans, profit sharing plans or any other benefit plans.

WITHHOLDING TAX INFORMATION

At the end of the performance cycle, the payout participants will receive will be net of an amount sufficient to satisfy any federal, state and local withholding tax requirements with which the Company must comply.

Participants should consult their tax advisor for a complete explanation of the tax impact of their participation in the LTIP Program.

EXHIBIT 10.12

SUMMARY PROGRAM DESCRIPTION

PERFORMANCE SHARE
DEFERRED COMPENSATION PROGRAM

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.

The EnPro Industries, Inc. Performance Share Deferred Compensation Program (the "Deferral Program") provides certain employees, as designated by the Compensation and Human Resources Committee of the Board of Directors (the "Committee"), with the opportunity to defer receipt of certain Performance Share awards under the Long-Term Incentive Program (the "LTIP Program").

The LTIP Program and the Deferral Program are each promulgated under the EnPro Industries, Inc. 2002 Equity Compensation Plan (the "Equity Compensation Plan"). In the case of any conflict between the terms of the Deferral Program or the LTIP Program and the Equity Compensation Plan or any award agreement thereunder, the terms of the Equity Compensation Plan or any such award agreement shall control. Capitalized terms not otherwise defined in this summary will have such meanings as defined under the Equity Compensation Plan or the LTIP Program, as applicable.

The Company reserves the right to amend, modify, suspend or terminate the Deferral Program at any time, provided that such action does not result in any reduction of your vested account balance (except for future investment losses).

OVERVIEW

- The Deferral Program allows you to defer receipt of certain Performance Shares which may be earned and payable to you pursuant to the terms of the LTIP Program.

- Your deferrals of Performance Shares will be credited as phantom shares to a bookkeeping account in your name and will accumulate on a tax-deferred basis. Each phantom share will be equal at all times to one share of Company common stock.

- The bookkeeping account will be used solely for record keeping purposes. This will be an unfunded account and no assets will be placed into an account in your name.

You will be an unsecured general creditor of the Company with respect to your Deferral Program benefits.

- Dividend equivalents will be accrued on all phantom shares under the Deferral Program. Upon the payment date of each dividend declared on the Company's common stock, that number of additional phantom shares will be credited to your account which is equivalent in value to the aggregate amount of dividends which would be paid if the number of phantom shares credited to your account were actual shares of the Company's common stock.

- At distribution, your Deferral Program benefits will be paid fifty percent (50%) in shares of Company common stock and fifty percent (50%) in cash, less the amount necessary to satisfy applicable withholding taxes.

- You may choose to receive your benefits in a lump sum, or in quarterly installments paid over 5, 10 or 15 years, on termination of employment on or after age 55.

- Upon your death, your beneficiary will receive any benefits not yet paid to you in a lump sum payment.

- Upon a Change in Control or termination of employment prior to age 55, your Deferral Program benefits will be paid to you in a lump sum promptly following the Change in Control or your termination, as applicable.

- Federal and state income taxes will not be payable until you, or your beneficiary, receives benefits in the future.

- Performance Share deferrals are subject to FICA taxes in the year when payouts from the LTIP Program otherwise would have occurred, had you not elected the deferral.

PROGRAM PROVISIONS

ELIGIBILITY

You are eligible to participate in the Deferral Program if you are a participant in the LTIP Program and:

- You are designated by the Committee as eligible to participate.

PARTICIPATION

In order to participate in this Deferral Program, you must:

1. Complete enrollment forms.

2. Submit all forms in a timely fashion to the Company's designated human resources personnel.

DEFERRALS

You may choose to defer 0%, 25%, 50%, 75% or 100% of all Performance Shares that maybe earned and payable to you pursuant to the terms of the LTIP Program.

You will have an opportunity prior to earning future Performance Shares to elect to defer 25%, 50%, 75% or 100% of the final payout at completion of the future performance period.

DEFERRAL ELECTION

Participation in the Deferral Program is voluntary. You may elect to participate by completing a Participation and Distribution Election Form.

On the Participation and Distribution Election Form, you will indicate whether you wish to defer 0%, 25%, 50%, 75% or 100% of all Performance Shares that may be earned and payable to you pursuant to the terms of the LTIP Program.

PAYOUT ELECTION

You will also be asked on the Participation and Distribution Election Form to elect how you want your benefit to be paid to you when your employment terminates. This election will apply to Deferral of Performance Shares under the LTIP Program, as well as to any future deferral election. You may not change your payout election.

MINIMUM DEFERRAL AMOUNT

If you elect to defer Performance Shares under the LTIP Program, you must elect to defer at least 25% of the final payout at completion of the performance period.

TIMING OF DEFERRALS

Your deferrals will be credited to your Deferral Program account as of the same date the Committee approves your payout under the LTIP Program.

ELECTIONS IRREVOCABLE

You may not change or revoke your deferral election once it is made.

FICA WITHHOLDING

Performance Share deferrals are subject to withholding for FICA taxes in the year when payouts from the LTIP Program otherwise would have occurred had you not elected deferral.

BOOKKEEPING ACCOUNT

The Company will maintain an account of your benefits. The account is used solely for record keeping purposes. To comply with tax rules, no assets will be placed into an account in your name.

Your account or other interest under the Deferral Program may not be alienated, assigned, transferred, pledged or hypothecated in any manner.

ACCOUNT VESTING

You are fully vested at all times in your deferrals and dividends on your deferrals as represented by the number of phantom shares in your account.

INVESTMENT OF YOUR ACCOUNT

Your deferral of each Performance Share will be credited as one phantom share in an account for you under the Deferral Program. Each phantom share will be equal at all times to one share of Company common stock.

Dividend equivalents will be accrued on all phantom shares under the Deferral Program. Upon the payment date of each dividend declared on the Company's common stock, that number of additional phantom shares will be credited to your account which is equivalent in value to the aggregate amount of dividends which would be paid if the number of phantom shares credited to your account were actual shares of the Company's common stock.

It is important to note that your deferrals may not actually be invested in Company common stock. Each phantom share in your account will be equal at all times to the one share of Company common stock, but no actual shares will be placed into an account in your name. This is necessary to preserve the tax-deferred status of your account.

Your account is subject to investment risk. If the rate of return in Company common stock is positive, you will experience growth in the market value of your account balance. If the rate of return is negative, you will experience a loss.

BENEFIT DISTRIBUTIONS

TERMINATION ON OR AFTER AGE 55

You are eligible for extended payment benefits under this Deferral Program when you terminate employment on or after age 55.

Your account balance at termination of employment on or after age 55 will be paid in quarterly installments or a lump sum. As long as you have an account balance, dividends will continue to be credited until the distribution valuation date.

BENEFIT PAYOUT OPTIONS

The first time you enroll in this Deferral Program, you will indicate how you want your vested account balance paid out when you terminate employment on or after age 55. You may choose:

- A lump sum payment, or

- Quarterly installments over 5, 10 or 15 years.

Your election as to the form of payout will apply to your entire account balance, including all future deferrals to your account. If you do not make an election, your account balance will be paid in quarterly installments over 15 years.

CHANGING YOUR ELECTION

You may not change your payout election.

FORM OF BENEFIT PAYMENTS

All benefit payments, whether in a lump sum or installments, will be made fifty percent (50%) in shares of Company common stock and fifty percent (50%) in cash. Any fractional shares of Company common stock will also be paid in cash.

SOURCE OF SHARES

Shares of Company common stock to be paid under the Deferral Program and the LTIP Program are issued pursuant to the provisions of the Equity Compensation Plan.

BENEFIT COMMENCEMENT

Benefit payments will begin in the January following your termination of employment on or after age 55.

At the time of your initial deferral election, you may choose a commencement year for Deferral Program benefits that would be later than the year following your date of termination of employment on or after age 55. Your benefits must commence no later than January of the year in which you attain age 70. Once made, this election is irrevocable.

FOR EXAMPLE: YOU MAY ELECT TO HAVE PROGRAM BENEFITS COMMENCE IN
JANUARY, 2010, EVEN THOUGH YOU TERMINATE EMPLOYMENT IN 2005 AT AGE 65.

SMALL ACCOUNT RULES

If the market value of your account at termination of employment on or after age 55 is less than $10,000, your benefits will be paid in a lump sum. If, at the time benefits are to commence, your quarterly installment payment is less than the value of 100 shares of Company common stock

per quarter, the Company may shorten the payout period until the payments equal or exceed the value of 100 shares of Company common stock per quarter. In either case, payments will be made fifty percent (50%) in shares of Company common stock and fifty percent (50%) in cash as described above.

ACCOUNT VALUATION

The value of your account balance for tax purposes and for purposes of determining the cash portion of any payments will be calculated using the fair market value of Company common stock as reported on the New York Stock Exchange (NYSE) Composite Transactions (or similar) listing as follows:

1. For lump sum payments at termination of employment on or after age 55, the value of your account will be calculated as of the January 2 in the year immediately following your year of termination (or, if the NYSE is closed on January 2, the first business day following January 2 on which the NYSE is open).

2. For quarterly installment payments, the value of each installment payment will be calculated as of the first business day of each calendar year quarter on which the NYSE is open.

3. For lump sum payments in the event you die, in the event of a Change in Control of the Company, or in the event you terminate your employment with the Company prior to age 55, the value of your account will be calculated as of the first business day of the month immediately following the date of the event requiring the calculation.

ADJUSTMENT OF INSTALLMENT PAYMENTS

Your account will continue to be credited with dividends as described earlier (see "Investment of Your Account") during the payment period you elect.

Installment payments will be made as of the first business day of each calendar year quarter.

The number of phantom shares in your account as of the first day of each calendar year quarter will be divided by the number of remaining installment payments to determine the number of shares of Company common stock and cash that will be distributed for such calendar year quarter.

TERMINATION BEFORE AGE 55

If your employment terminates before your age 55, your account balance will be distributed to you in a lump sum payment, fifty percent (50%) in shares of Company common stock and fifty percent (50%) in cash as described above.

Your benefit will be paid to you as soon as practical after termination, and dividends will be credited to your account up to the date on which your termination occurs.

DISABILITY

If you are totally disabled under the Company's Long-Term Disability Plan, you will be entitled to receive payment of your account when your Long-Term Disability benefits begin. Your benefit payments will be calculated and paid in the same manner as if you had terminated employment on or after age 55.

SURVIVOR BENEFITS

BEFORE COMMENCEMENT OF PROGRAM BENEFIT PAYMENTS

In the event of your death before LTIP Program benefits commence, your account balance will be paid to your designated beneficiary in a lump sum payment, fifty percent (50%) in shares of Company common stock and fifty percent (50%) in cash as described above.

AFTER COMMENCEMENT OF INSTALLMENT PAYMENTS

If your quarterly installment payments have commenced at the time of your death, your beneficiary will receive your remaining account balance in a lump sum payment as soon as practical after your death, fifty percent (50%) in shares of Company common stock and fifty percent (50%) in cash as described above.

CHANGE IN CONTROL

Upon a Change in Control of the Company, your account balance will be paid out in a lump sum payment (less any applicable withholding taxes), fifty percent (50%) in shares of Company common stock and fifty percent (50%) in cash as described above. This will apply even though you may be receiving quarterly installments as your payout election and even though you may not yet have terminated employment.

OTHER PROVISIONS

ABOUT YOUR BENEFICIARY

At the time you first elect to participate in the Deferral Program, you should designate any person(s), trust or organization as beneficiaries to receive any Deferral Program benefits remaining unpaid upon your death. You may change your designation at any time by completing a Designation of Beneficiary Form.

To request a form, you may contact the Director of Benefits and Compensation, EnPro Industries, Inc., 5605 Carnegie Blvd., Charlotte, NC 28209-4674 (704.731.1516; facsimile 704.731.1513).

In the event there is no beneficiary designation on file with the Company or all designated beneficiaries have predeceased you, the Company will pay any remaining value in your account to your estate.

BENEFIT STATEMENTS

You will receive a benefit statement after the end of each calendar year quarter summarizing the activity and value of your account.

IMPORTANT INFORMATION

UNSECURED GENERAL CREDITOR

You are an unsecured general creditor of the Company with respect to your Deferral Program benefits. Benefits are payable solely from the Company's general assets. Your benefits are subject to the risk of corporate insolvency, in which case they may be subject to a lien or security interest of other creditors.

PROGRAM ADMINISTRATION

This Deferral Program is administered by the Committee. In administering the Deferral Program, the Committee shall be empowered to interpret the provisions of the Deferral Program and to perform and exercise all of the duties and powers granted to it under the terms of the Deferral Program by action of a majority of its members in office from time to time. The Committee may also adopt such rules and regulations for the administration of the Deferral Program as are consistent with the terms hereof and shall keep adequate records of its proceedings and acts. All interpretations and decisions made (both as to law and fact) and other action taken by the Committee with respect to the Deferral Program shall be conclusive and binding upon all parties having or claiming to have an interest under the Deferral Program. Not in limitation of the foregoing, the Committee shall have the discretion to decide any factual or interpretative issues that may arise in connection with its administration of the Deferral Program (including without limitation any determination as to claims for benefits hereunder), and the Committee's exercise of such discretion shall be conclusive and binding on all affected parties as long as it is not arbitrary or capricious. The Committee may delegate any of its duties and powers hereunder to the extent permitted by applicable law.

The Company reserves the right to amend, modify, suspend, or partially or completely terminate the Deferral Program on a prospective basis only, provided that the amendment or termination does not result in any reduction of your vested account balance (except for future investment losses).

If the Deferral Program is completely terminated prior to a Change in Control, all future deferrals will stop. Your account balances, including investment gains and losses and dividend accruals, will be paid to you in a lump sum payment.

For more information about the Deferral Program or its administrators, or to receive a copy of the Deferral Program, contact the Director of Benefits and Compensation, EnPro Industries, Inc., 5605 Carnegie Blvd., Charlotte, NC 28209-4674 (704.731.1516; facsimile 704.731.1513).

ERISA

The Deferral Program is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for "a select group of management or highly compensated employees" within the meaning of Section 201, 301 and 401 of ERISA and, therefore, is exempt from parts 2, 3 and 4 of Title I of ERISA.

CLAIMS REVIEW AND PROCEDURES

You should submit a written application to the Company if you believe you are eligible to receive payments under the Deferral Program. The Company will notify you whether you are so eligible. If the Company determines that you are not eligible, or you believe that you are entitled to receive greater or different payments, you may ask the Company to review your claim.

CONSTRUCTIVE RECEIPT

In the event one or more individuals is proven to be in constructive receipt for income tax purposes, the Company will distribute that individual's (or all participants') account in a lump sum payment (less any applicable taxes).

IRC 162(M) PAYMENT

The Company may postpone any individual's payout until the next fiscal year to avoid loss of a tax deduction pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, or any similar provision.

FEDERAL SECURITIES LAWS

The Company's obligations under the Deferral Program have been registered under the Securities Act of 1933 pursuant to a registration statement filed by the Company with respect to the Equity Compensation Plan. This summary constitutes part of a prospectus covering those securities. Certain documents filed by the Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 are incorporated by reference in the prospectus. You may obtain copies of these documents, and all documents which constitute part of the prospectus, without charge, upon written or oral request to Director of Benefits and Compensation, EnPro Industries, Inc., 5605 Carnegie Blvd., Charlotte, NC 28209-4674 (704.731.1516; facsimile 704.731.1513).

TAXATION QUESTIONS AND ANSWERS

The following is intended as general information which is based on current law and is subject to change. It is not to be considered as tax advice. Participants are advised to consult their tax

advisor regarding consequences of participating in the Deferral Program. The Deferral Program does not qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended.

DO I PAY FEDERAL INCOME TAXES ON DEFERRALS TO THE PROGRAM OR DIVIDENDS
WHEN CREDITED TO MY ACCOUNT?

No. For federal income tax purposes, subject to certain rules, you will not be deemed to be in receipt of the amount deferred or the earnings thereon. You will not pay federal income taxes until you actually receive payouts from the Deferral Program.

HOW DOES THIS AFFECT THE WITHHOLDING ON MY PAYCHECK?

Your federal and state W-2 earnings exclude Deferral Program deferrals.

Deferrals are subject to FICA taxes in the year of deferral until the annual taxable wage base for OASDI under Social Security law is reached. Medicare earnings include your deferrals, so there will be Medicare taxes (currently 1.45%) on all these amounts.

Check with your tax advisor regarding the impact of tax laws on your personal financial circumstances.

WHEN PAID OUT AFTER TERMINATION OF EMPLOYMENT, HOW ARE PROGRAM BENEFITS
TAXED TO ME?

Deferral Program benefits paid to you are taxed as ordinary income when received but, under current law are not subject to income tax withholding since you will not be employed by the Company at the time of receipt of the payments. You may be required to make estimated tax payments with regard to these benefits. You should check with your tax advisor in this regard.

WILL I PAY SOCIAL SECURITY FICA TAXES WHEN I TAKE MY DISTRIBUTION?

No, because the deferrals were included in your wage base at the time they were credited to your account.

IS MY DISTRIBUTION ELIGIBLE TO BE ROLLED OVER TO AN IRA?

No, because this is not an IRS tax-qualified plan. When electing a Deferral Program distribution, we encourage you to seek professional advice to determine the best course of action for your financial circumstances.

WILL THE PROGRAM BENEFITS PAID TO MY BENEFICIARIES BE INCLUDED IN MY
GROSS ESTATE FOR FEDERAL ESTATE FAX PURPOSES?

Yes. The present value of the benefit at the time of your death is included. If, however, your beneficiary is your spouse and the benefit qualifies for the estate tax marital deduction, there will be no federal estate tax. Check with your tax advisor regarding the impact of estate tax laws on your personal financial circumstances.

WHEN PAID OUT, HOW ARE PROGRAM BENEFITS TAXED TO MY BENEFICIARIES?

Deferral Program benefits paid to your beneficiaries are taxed as ordinary income to them in the year received.

WHEN PAID OUT, CAN PROGRAM BENEFITS AFFECT THE TAXATION OF MY SOCIAL
SECURITY BENEFITS?

Yes. Deferral Program benefit payments will be included as income when calculating income tax on Social Security benefits.

WHEN PAID OUT, CAN PROGRAM BENEFITS REDUCE THE AMOUNT OF MY SOCIAL
SECURITY INCOME?

No. Deferral Program benefit payments will not reduce Social Security benefit payments (although your income tax may be affected, as described above).

IF I DEFER WHILE LIVING IN ONE STATE, THEN RETIRE IN A DIFFERENT STATE,
TO WHICH STATE WILL I PAY TAXES?

Benefits as provided under this Deferral Program are subject to income taxes only in your state of residence at the time payments are received, only if you elect quarterly installments to be paid over 10 or more years.

If you have additional questions, please contact the Director of Benefits and Compensation, EnPro Industries, Inc., 5605 Carnegie Blvd., Charlotte, NC 28209-4674 (704.731.1516; facsimile 704.731.1513)

EXHIBIT 10.13

ENPRO INDUSTRIES, INC. DEFERRED COMPENSATION PLAN

ENPRO INDUSTRIES, INC. DEFERRED COMPENSATION PLAN
Table of Contents

                                                                                                 Page
                                                                                                 ----
ARTICLE I DEFINITIONS...............................................................................1

         Section 1.1       Definitions..............................................................1

ARTICLE II PLAN ADMINISTRATION......................................................................5

         Section 2.1       Committee................................................................5

ARTICLE III DEFERRED COMPENSATION PROVISIONS........................................................5

         Section 3.1       Eligibility..............................................................5

         Section 3.2       Deferral Elections.......................................................6

         Section 3.3       Matching Contribution Restoration Accounts...............................6

         Section 3.4       Account Adjustments......................................................7

         Section 3.5       Account Payments.........................................................8

         Section 3.6       Withdrawals on Account of an Unforeseeable Emergency.....................9

         Section 3.7       Other Contributions.....................................................10

ARTICLE IV AMENDMENT AND TERMINATION...............................................................10

         Section 4.1       Amendment and Termination...............................................10

ARTICLE V CHANGE IN CONTROL........................................................................11

         Section 5.1       Set Aside...............................................................11

         Section 5.2       Vesting.................................................................11

ARTICLE VI MISCELLANEOUS PROVISIONS................................................................11

         Section 6.1       Nature of Plan and Rights...............................................11

         Section 6.2       Termination of Employment...............................................11

         Section 6.3       Spendthrift Provision...................................................11

         Section 6.4       Employment Noncontractual...............................................12

Section 6.5       Adoption by Other Participating Employers...............................12

Section 6.6       Applicable Law..........................................................12

ENPRO INDUSTRIES, INC. DEFERRED COMPENSATION PLAN

Statement of Purpose

The Company sponsors the EnPro Industries, Inc. Retirement Savings Plan for Salaried Employees (the "Savings Plan"), a tax-qualified defined contribution plan pursuant to which eligible employees may make pre-tax employee contributions and receive related employer matching contributions. Benefits under the Savings Plan may be limited for certain highly compensated employees as a result of the limitations of Sections 401(a)(17), 401(k)(3), 401(m), 402(g) and 415(c) of the Internal Revenue Code, as well as a result of limits placed on the contribution rates of participants in the Savings Plan (including any such limits placed on highly compensated employees established by the administrative committee under the Savings Plan). The Company desires to establish the EnPro Industries, Inc. Deferred Compensation Plan as set forth herein (the "Plan") in order to provide designated highly compensated employees with the opportunity, on a non-qualified, unfunded basis, to defer compensation and receive employer matching contributions that are not available under the Savings Plan due to the limitations described above.

NOW, THEREFORE, for the purposes aforesaid, the Company hereby establishes the Plan effective as of the Distribution Date, as such term is defined in the Distribution Agreement among Goodrich Corporation, EnPro Industries, Inc. and Coltec Industries Inc (the "Effective Date") to consist of the following Articles I through VI:

ARTICLE I
DEFINITIONS

Section 1.1 Definitions. Unless the context clearly indicates otherwise, when used in the Plan:

Account means, collectively, the Deferral Account and the Matching Contribution Restoration Account.

Board means the Board of Directors of the Company.

Change in Control means any of the following events:

Control: (A) any acquisition directly from the Company (other than by exercise of a conversion privilege), (B) any acquisition by the Company or any of its subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (D) any acquisition by any company with respect to which, following such acquisition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, solely in their capacity as shareholders of the Company, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or

(ii) individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest; or

election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities, solely in their capacity as shareholders of the Company, who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be.

Code means the Internal Revenue Code of 1986, as amended. References to the Code shall include the valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder.

Code Limitations means any one or more of the limitations and restrictions that Sections 401(a)(17), 401(k)(3), 401(m), 402(g) and 415(c) of the Code place on the pre-tax employee contributions and matching employer contributions of a participant in the Savings Plan. In addition, Code Limitations also means and refers to any limits placed on the contribution rate of a participant in the Savings Plan, including any such limits placed on highly compensated employees established by the administrative committee under the Savings Plan.

Committee means the Compensation and Human Resources Committee of the Board.

Company is defined in the Statement of Purpose as EnPro Industries, Inc. and includes any successor thereto.

Covered Incentive Award means, with respect to a Participant, any incentive award payable to such Participant pursuant to any incentive compensation plan of the Company or any Participating Employer approved for purposes of this Plan by the Committee from time to time. Covered Incentive Awards may be payable annually, quarterly, or on such other basis as provided by the applicable plan.

Deferral Account means the account established and maintained on the books of a Participating Employer to record a Participant's interest under the Plan attributable to amounts credited to the Participant pursuant to Section 3.2.

Effective Date is defined in the Statement of Purpose as the Distribution Date, as such term is defined in the Distribution Agreement among Goodrich Corporation, EnPro Industries, Inc. and Coltec Industries Inc.

Eligible Employee means an Employee designated as an Eligible Employee in accordance with Section 3.1. Eligible Employees are eligible to defer compensation in accordance with Section 3.2.

Employee means an individual employed by a Participating Employer.

Exchange Act means the Securities Exchange Act of 1934.

Match Eligible Employee means an Eligible Employee designated as a Match Eligible Employee in accordance with Section 3.1. Match Eligible Employees are eligible to receive allocations of matching contributions in accordance with Section 3.3.

Plan is defined in the Statement of Purpose as this plan: the EnPro Industries, Inc. Deferred Compensation Plan, as the same may be amended from time to time.

Matching Contribution Restoration Account means the account established and maintained on the books of a Participating Employer to record a Participant's interest under the Plan attributable to amounts credited to the Participant pursuant to Section 3.3.

Participant means any Eligible Employee who makes an election to participate in accordance with Section 3.2. Participant shall also include any former Eligible Employee who continues to have an Account maintained under the Plan.

Participating Employer means (i) the Company, (ii) each other participating employer under the Savings Plan on the date hereof that is part of the same controlled group of corporations as the Company and
(iii) any other incorporated or unincorporated trade or business which may hereafter adopt both the Savings Plan and the Plan.

Plan Year means the twelve-month period commencing January 1 and ending the following December 31.

Potential Change in Control means any of the following events:

(i) the Company entering into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(ii) the Company or any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) publicly announcing an intention to take actions, which if consummated, would constitute a Change in Control; or

(iii) the Board in its sole and exclusive discretion determining, based on facts and circumstances, that there is a possible Change in Control.

Savings Plan is defined in the Statement of Purpose as the EnPro Industries, Inc. Retirement Savings Plan for Salaried Employees, as the same may be amended from time to time.

Savings Plan Compensation means compensation used for purposes of determining the amount of pre-tax employee contributions under the Savings Plan.

Any capitalized terms used in the Plan that are defined in the documents comprising the Savings Plan have the meanings assigned to them in the Savings Plan, unless such terms are otherwise defined above in this Article or unless the context clearly indicates otherwise.

ARTICLE II
PLAN ADMINISTRATION

Section 2.1 Committee. The Plan shall be administered by the Committee. In that regard, the Committee shall be empowered to interpret the provisions of the Plan and to perform and exercise all of the duties and powers granted to it under the terms of the Plan by action of a majority of its members in office from time to time. The Committee may adopt such rules and regulations for the administration of the Plan as are consistent with the terms hereof and shall keep adequate records of its proceedings and acts. All interpretations and decisions made (both as to law and fact) and other action taken by the Committee with respect to the Plan shall be conclusive and binding upon all parties having or claiming to have an interest under the Plan. Not in limitation of the foregoing, the Committee shall have the discretion to decide any factual or interpretative issues that may arise in connection with its administration of the Plan (including without limitation any determination as to claims for benefits hereunder), and the Committee's exercise of such discretion shall be conclusive and binding on all affected parties as long as it is not arbitrary or capricious. The Committee may delegate any of its duties and powers hereunder to the extent permitted by applicable law.

ARTICLE III
DEFERRED COMPENSATION PROVISIONS

Section 3.1 Eligibility. The Committee shall designate which Employees of the Company or any other Participating Employer shall be Eligible Employees for a given Plan Year and whether a person designated as an Eligible Employee shall be a Match Eligible Employee for the Plan Year. An Employee designated as an Eligible Employee with respect to one Plan Year need not be designated as an Eligible Employee for any subsequent Plan Year. Similarly, an Eligible Employee's status as a Match Eligible Employee may be changed by the Committee from one Plan Year to the next. The Plan is intended to limit eligibility to a "select group of management or highly compensated employees" within the meaning of the Employee Retirement Income Security Act of 1974, as amended.

Section 3.2 Deferral Elections.

(a) Time and Form of Elections. Elections to defer compensation for a Plan Year under this Section 3.2 shall be made prior to January 1 of the Plan Year, or at such other times as the Committee may determine consistent with the intent that the Plan operate so as to defer recognition of income taxes on amounts deferred until the date the amounts are actually paid. All elections made under this Section 3.2 shall be made in writing on a form, or pursuant to such other non-written procedures, as may be prescribed from time to time by the Committee and shall be irrevocable for such Plan Year. An election by an Eligible Employee under this Section 3.2 shall continue in effect for all subsequent Plan Years (during which the Employee is an Eligible Employee) unless and until changed or terminated by the Eligible Employee in accordance with procedures established from time to time by the Committee. Any such change in, or termination of, an election under this Section 3.2 shall be effective as of the January 1 of the next succeeding Plan Year and shall be irrevocable for such Plan Year.

(b) Deferral Elections. An Eligible Employee may elect to defer, on a combined basis with the Savings Plan as hereinafter provided, up to twenty-five percent (25%) of the Eligible Employee's Savings Plan Compensation other than Covered Incentive Awards for a Plan Year and up to fifty percent (50%) of the Eligible Employee's Covered Incentive Awards for the Plan Year. Deferrals shall be made to the maximum extent possible, subject to the Code Limitations, to the Savings Plan, and any such deferrals which cannot be made to the Savings Plan solely because of the Code Limitations shall instead be made to this Plan. The Committee, in its sole and exclusive discretion, may determine to cause the deferral elections described above to be effected through a single election made in coordination with the Savings Plan or through separate deferral elections under this Plan and the Savings Plan.

(c) Suspension Due to Hardship Withdrawal. If an Eligible Employee's pre-tax employee contributions to the Savings Plan are suspended under the terms of the Savings Plan in connection with a hardship distribution, then all deferrals under this Plan shall be suspended (to the extent such suspension is required by Section 401(k) of the Code) for the same period that the Participant's pre-tax employee contributions to the Savings Plan are suspended.

(d) Deferral Accounts. A Participating Employer shall establish and maintain on its books a Deferral Account for each Eligible Employee employed by such Participating Employer who elects to defer the receipt of any amount pursuant to this Section 3.2. Such Deferral Account shall be designated by the name of the Eligible Employee for whom established. The amount to be deferred under this Section 3.2 for a given period shall be credited to such Deferral Account as of the date such amount would have otherwise been credited to the Savings Plan but for the Code Limitations.

Section 3.3 Matching Contribution Restoration Accounts. A Participating Employer shall establish and maintain on its books a Matching Contribution Restoration Account for each Match Eligible Employee employed by such Participating Employer whose matching employer contributions under the Savings Plan shall have been limited, directly or indirectly, by the operation of the Code Limitations. Such Matching Contribution Restoration Account shall be designated by the name of the Match Eligible Employee for whom established. If a Match

Eligible Employee is eligible for an allocation of matching employer contributions for a given period under the Savings Plan, the Eligible Employee's Matching Contribution Restoration Account shall be credited with an amount equal to the excess, if any, of Amount A over Amount B, where:

Amount A is the amount of matching employer contributions the Match Eligible Employee would have received under the Savings Plan had the Code Limitations not applied to the Savings Plan, taking into account for such purpose all matchable pre-tax and after-tax employee contributions made to the Savings Plan for the applicable period plus all amounts credited to the Eligible Employee's Deferral Account for the applicable period pursuant to Section 3.2 that would have been matchable pre-tax employee contributions had the amounts been deferred under the Savings Plan; and

Amount B is the amount of matching employer contributions the Match Eligible Employee actually received under the Savings Plan for the applicable period.

Amounts shall be credited under this Section 3.3 at the same time the related matching employer contributions are credited to the Savings Plan.

Section 3.4 Account Adjustments.

(a) Account Adjustments for Deemed Investments. The Committee shall from time to time designate one or more investment vehicle(s) in which the Accounts of Participants shall be deemed to be invested. The investment vehicle(s) may be designated by reference to the investments available under the Savings Plan. Each Participant shall designate the investment vehicle(s) in which his or her Account shall be deemed to be invested according to the procedures developed by the Committee, except as otherwise required by the terms of the Plan. No Participating Employer shall be under an obligation to acquire or invest in any of the deemed investment vehicle(s) under this subparagraph, and any acquisition of or investment in a deemed investment vehicle by a Participating Employer shall be made in the name of such Participating Employer and shall remain the sole property of such Participating Employer. As of the Effective Date, the designated investment vehicles shall be (and shall remain until such time as changed by the Committee in its sole discretion from time to time according to its procedures for designating investments) the following:

Dreyfus Cash Management Plus Fund Dreyfus Premier Core Bond Fund
Dreyfus Lifetime Growth Fund
Dreyfus Lifetime Income Fund
Dreyfus Lifetime Growth & Income Fund Deutsche Asset Management Equity 500 Index Fund Dreyfus Appreciation Fund
MFS Mid Cap Value Fund
Deutsche International Equity Fund Dreyfus Premier Future Leaders Fund

The Committee shall also establish from time to time a default Fund into which a Participant's Account shall be deemed to be invested if the Participant fails to provide investment instructions pursuant to this Section 3.4. As of the Effective Date, such default Fund shall be the Dreyfus Cash Management Plus Fund.

(b) Periodic Account Adjustments. Each Account shall be adjusted from time to time at such intervals as determined by the Committee. The Committee may determine the frequency of Account adjustments by reference to the frequency of Account adjustments under the Savings Plan. The amount of the adjustment shall equal the amount that the Participant's Account would have earned (or lost) for the period since the last adjustment had the Account actually been invested in the deemed investment vehicle(s) designated by the Participant for such period pursuant to this Section 3.4.

Section 3.5 Account Payments.

(a) Payment Options. Each Participant shall have the opportunity to make an election as to the method of payment of the Participant's Account following termination of employment in accordance with, and subject to, the terms and provisions of this Section 3.5. Generally, Accounts shall be payable following termination of employment in a single cash payment. However, a Participant may elect either five (5) or ten (10) annual installments in lieu of a single cash payment, or the Participant may elect a combination of a single cash payment and any one of the foregoing installment options, all in accordance with the following provisions:

(i) Upon becoming a Participant, the Participant shall be given the opportunity to elect a single cash payment, five (5) or ten
(10) annual installment payments in lieu of the single cash payment or a combination of a single cash payment and any one of the foregoing installment options. In the event a Participant elects the combination payment method, the Participant must further elect the percentage of the balance of the Account to be paid as a single cash payment. Such elections shall become effective immediately and shall remain in effect unless and until changed as provided herein.

(ii) The Participant shall also be given the opportunity to make or change the Participant's payment election as to a single cash payment, annual installments or a combination of a single cash payment and annual installments as provided in Section 3.5(a)(i). Such election shall be effective only if made at least six (6) months prior to the Participant's termination of employment.

(iii) Any election made under this Section 3.5(a) shall be made on such form, at such time and pursuant to such procedures as determined by the Committee in its sole discretion from time to time.

(iv) For a Participant who does not yet have an election in effect under this Section 3.5(a) or for a Participant who fails to elect a payment option under this Section 3.5(a), the method of payment shall be the single cash payment.

(b) Single Cash Payments. If and to the extent that a Participant's Account is to be paid to the Participant following termination of employment with the Participating Employers in a single cash payment in accordance with Section 3.5(a), the applicable portion of the Account shall be paid in a single cash payment as soon as administratively practicable (generally within 90 days) following the date of such termination of employment.

(c) Annual Installments. If and to the extent that a Participant's Account is to be paid to the Participant following termination of employment with the Participating Employers in either five (5) or ten (10) annual installments in accordance with Section 3.5(a), then the first installment shall be payable as soon as administratively practicable (generally within 90 days) following the date of such termination of employment and each subsequent installment shall be payable on or about the anniversary of the first installment. The amount payable for each installment shall equal the applicable portion of the Account payable in installments as of the payment date divided by the number of remaining installments (including the installment then payable). During the installment payment period, the Account shall continue to be adjusted in accordance with the provisions of Section 3.4.

(d) Vesting of Matching Accounts. Notwithstanding any provision of the Plan to the contrary, if a Participant is not fully (100%) vested in the amount credited to the Participant's matching employer contribution account under the Savings Plan at the time of the Participant's termination of employment with the Participating Employers, then the amount credited to the Participant's Matching Contribution Restoration Account shall be reduced at the time of such termination of employment to an amount equal to the product of (i) the amount then credited to said Matching Contribution Restoration Account multiplied by (ii) the vested percentage applicable to the Participant's matching employer contribution account under the Savings Plan as of the date of such termination of employment. The amount by which the Participant's Matching Contribution Restoration Account is reduced by application of the preceding sentence shall be forfeited at the time the Participant terminates employment.

(e) Other Payment Provisions. Subject to the provisions of Section 3.6, a Participant shall not be paid any portion of the Participant's Account prior to the Participant's termination of employment with the Participating Employers. Any deferral or payment hereunder shall be subject to applicable payroll and withholding taxes. If a Participant dies prior to having received the entire balance of the Participant's Accounts, the remaining vested balance in the Accounts shall be payable to the Participant's beneficiary(ies) determined under the Savings Plan as and when such amounts would have otherwise been payable to the Participant. In the event any amount becomes payable under the provisions of the Plan to a Participant, beneficiary or other person who is a minor or an incompetent, whether or not declared incompetent by a court, such amount may be paid directly to the minor or incompetent person or to such person's fiduciary (or attorney-in-fact in the case of an incompetent) as the Committee, in its sole discretion, may decide, and the Committee shall not be liable to any person for any such decision or any payment pursuant thereto.

Section 3.6 Withdrawals on Account of an Unforeseeable Emergency. A Participant who is in active service of a Participating Employer may, in the Committee's sole discretion,

receive a refund of all or any part of the amounts previously credited to the Participant's Accounts (to the extent vested) in the case of an "unforeseeable emergency." A Participant requesting a payment pursuant to this Section shall have the burden of proof of establishing, to the Committee's satisfaction, the existence of such "unforeseeable emergency," and the amount of the payment needed to satisfy the same. In that regard, the Participant shall provide the Committee with such financial data and information as the Committee may request. If the Committee determines that a payment should be made to a Participant under this Section such payment shall be made within a reasonable time after the Committee's determination of the existence of such "unforeseeable emergency" and the amount of payment so needed. The Committee may in its discretion establish the order in which amounts shall be withdrawn under this Section from a Participant's Accounts. As used herein, the term "unforeseeable emergency" means a severe financial hardship to a Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The circumstances that shall constitute an "unforeseeable emergency" shall depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, or (ii) by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship. Examples of what are not considered to be "unforeseeable emergencies" include, without limitation, the need to send a Participant's child to college or the purchase of a home. Withdrawals of amounts because of an "unforeseeable emergency" shall not exceed an amount reasonably needed to satisfy the emergency need.

Section 3.7 Other Contributions. The Participating Employers may

rom time to time, in their sole and exclusive discretion, elect to credit a Participant's Account with additional amounts not otherwise contemplated by this Article.

ARTICLE IV
AMENDMENT AND TERMINATION

Section 4.1 Amendment and Termination. The Company shall have the right and power at any time and from time to time to amend the Plan in whole or in part, on behalf of all Participating Employers, and at any time to terminate the Plan or any Participating Employer's participation hereunder; provided, however, that no such amendment or termination shall reduce the amount actually credited to the Account(s) of any current or former Participant (or beneficiary of a deceased Participant) on the date of such amendment or termination, or further defer the due dates for the payment of such amounts, without the consent of the affected person. Notwithstanding any provision of the Plan to the contrary, in connection with any termination of the Plan the Committee shall have the authority to cause the Accounts of all Participants (and beneficiaries of any deceased Participants) to be paid in a single sum payment as of a date determined by the Committee or to otherwise accelerate the payment of all Accounts in such manner as the Committee shall determine in its discretion.

ARTICLE V
CHANGE IN CONTROL

Section 5.1 Set Aside. Upon or following the occurrence of a Potential Change in Control, if so directed by the Board in its sole and exclusive discretion, the Company shall set aside in a grantor trust, either existing or to be established, such amount as may be determined by the Board not to exceed the projected benefit obligations under the Plan as of the anticipated date of the possible Change in Control, less any amounts previously set aside in a grantor trust to provide benefits under the Plan.

If a Change in Control does not occur within a reasonable time from the date such funds are set aside, the funds, adjusted for any gains or losses, shall revert to the Company.

Section 5.2 Vesting. Upon the occurrence of a Change in Control, each Participant shall become fully vested in his entire Account under the Plan as of the date of the Change in Control. Such vested Account shall be paid at the time and in the manner provided in Section 3.5.

ARTICLE VI
MISCELLANEOUS PROVISIONS

Section 6.1 Nature of Plan and Rights. The Plan is unfunded and intended to constitute an incentive and deferred compensation plan for a select group of officers and key management employees of the Participating Employers. If necessary to preserve the above intended plan status, the Committee, in its sole discretion, reserves the right to limit or reduce the number of actual participants and otherwise to take any remedial or curative action that the Committee deems necessary or advisable. The Accounts established and maintained under the Plan by a Participating Employer are for accounting purposes only and shall not be deemed or construed to create a trust fund of any kind or to grant a property interest of any kind to any Participant, designated beneficiary or estate. The amounts credited by a Participating Employer to such Accounts are and for all purposes shall continue to be a part of the general assets of such Participating Employer, and to the extent that a Participant, beneficiary or estate acquires a right to receive payments from such Participating Employer pursuant to the Plan, such right shall be no greater than the right of any unsecured general creditor of such Participating Employer.

Section 6.2 Termination of Employment. For the purposes of the Plan, an Employee's employment with a Participating Employer shall not be considered to have terminated so long as the Employee is in the employ of any Participating Employer or other affiliated company.

Section 6.3 Spendthrift Provision. No Account balance or other right or interest under the Plan of a Participant, beneficiary or estate may be assigned, transferred or alienated, in whole or in part, either directly or by operation of law, and no such balance, right or interest shall be liable for or subject to any debt, obligation or liability of the Employee, designated beneficiary or estate.

Section 6.4 Employment Noncontractual. The establishment of the Plan shall not enlarge or otherwise affect the terms of any Employee's employment with his Participating Employer, and such Participating Employer may terminate the employment of the Employee as freely and with the same effect as if the Plan had not been established.

Section 6.5 Adoption by Other Participating Employers. The Plan may be adopted by any Participating Employer participating under the Savings Plan, such adoption to be effective as of the date specified by such Participating Employer at the time of adoption.

Section 6.6 Applicable Law. The Plan shall be governed and construed in accordance with the laws of the State of North Carolina, except to the extent such laws are preempted by the laws of the United States of America.

[Signature on next page]

IN WITNESS WHEREOF, this instrument has been executed by the Company on , 2002.

ENPRO INDUSTRIES, INC.

By:

Name:
Title:

EXHIBIT 10.14

CREDIT AGREEMENT

Dated as of May 16, 2002

Among

THE FINANCIAL INSTITUTIONS NAMED HEREIN

as the Lenders

and

BANK OF AMERICA, N.A.

as the Agent

CITICORP USA, INC.,

as the Syndication Agent

and

Coltec Industries Inc,
Coltec Industrial Products LLC,
Garlock Sealing Technologies LLC,
Garlock Bearings LLC,
Haber Tool Company, and
Stemco LLC

as the Borrowers

and

Coltec Industries Inc

as the Funds Administrator

TABLE OF CONTENTS

Section                                                                                                         Page
-------                                                                                                         ----
ARTICLE 1 LOANS AND LETTERS OF CREDIT.............................................................................1

         1.1      Total Facility..................................................................................1
         1.2      Revolving Loans.................................................................................1
         1.3      [Reserved.].....................................................................................5
         1.4      Letters of Credit...............................................................................5
         1.5      Bank Products...................................................................................8

ARTICLE 2 INTEREST AND FEES.......................................................................................8

         2.1      Interest........................................................................................8
         2.2      Continuation and Conversion Elections...........................................................9
         2.3      Maximum Interest Rate..........................................................................10
         2.4      Agent Fees.....................................................................................11
         2.5      Unused Line Fee................................................................................11
         2.6      Letter of Credit Fee...........................................................................11

ARTICLE 3 PAYMENTS AND PREPAYMENTS...............................................................................11

         3.1      Revolving Loans................................................................................11
         3.2      Termination of Facility........................................................................12
         3.3      Lockboxes and Blocked Accounts.................................................................12
         3.4      [Reserved].....................................................................................13
         3.5      LIBOR Rate Loan Prepayments....................................................................13
         3.6      Payments by the Borrowers......................................................................13
         3.7      Payments as Revolving Loans....................................................................13
         3.8      Apportionment, Application and Reversal of Payments............................................13
         3.9      Indemnity for Returned Payments................................................................14
         3.10     Agent's and Lenders' Books and Records; Monthly Statements.....................................14

ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY.................................................................15

         4.1      Taxes..........................................................................................15
         4.2      Illegality.....................................................................................16
         4.3      Increased Costs and Reduction of Return........................................................16
         4.4      Funding Losses.................................................................................17
         4.5      Inability to Determine Rates...................................................................17
         4.6      Certificates of Agent; Replacement of Requesting Lenders.......................................18
         4.7      Survival.......................................................................................18

ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES......................................................18

         5.1      Books and Records..............................................................................18
         5.2      Financial Information..........................................................................18
         5.3      Notices to the Lenders.........................................................................21

         5.4      Initial Field Examination......................................................................23

ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS.................................................................23

         6.1      Authorization, Validity, and Enforceability of this Agreement and the Loan Documents...........24
         6.2      Validity and Priority of Security Interest.....................................................24
         6.3      Organization and Qualification.................................................................24
         6.4      Corporate Name; Prior Transactions.............................................................24
         6.5      Subsidiaries and Affiliates....................................................................25
         6.6      Financial Statements and Projections...........................................................25
         6.7      Capitalization.................................................................................25
         6.8      Solvency.......................................................................................26
         6.9      Debt...........................................................................................26
         6.10     Distributions..................................................................................26
         6.11     Real Estate; Leases............................................................................26
         6.12     Proprietary Rights.............................................................................26
         6.13     [Reserved].....................................................................................27
         6.14     Litigation.....................................................................................27
         6.15     Labor Disputes.................................................................................27
         6.16     Environmental Laws.............................................................................27
         6.17     No Violation of Law............................................................................28
         6.18     No Default.....................................................................................28
         6.19     ERISA Compliance...............................................................................28
         6.20     Taxes..........................................................................................29
         6.21     Regulated Entities.............................................................................29
         6.22     Use of Proceeds; Margin Regulations............................................................29
         6.23     [Reserved].....................................................................................29
         6.24     No Material Adverse Change.....................................................................29
         6.25     Full Disclosure................................................................................29
         6.26     Material Agreements............................................................................29
         6.27     Bank Accounts..................................................................................29
         6.28     Governmental Authorization.....................................................................29
         6.29     Tax Matters....................................................................................30
         6.30     EIFA...........................................................................................30

ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS.....................................................................30

         7.1      Taxes and Other Obligations....................................................................30
         7.2      Legal Existence and Good Standing..............................................................30
         7.3      Compliance with Law and Agreements; Maintenance of Licenses....................................30
         7.4      Maintenance of Property; Inspection of Property................................................31
         7.5      Insurance......................................................................................31
         7.6      Insurance and Condemnation Proceeds............................................................32
         7.7      Environmental Laws.............................................................................32
         7.8      Compliance with ERISA..........................................................................33
         7.9      Mergers, Consolidations or Sales...............................................................33

         7.10     Distributions; Restricted Investments..........................................................33
         7.11     Transactions Affecting Collateral or Obligations...............................................34
         7.12     Guaranties.....................................................................................34
         7.13     Debt...........................................................................................34
         7.14     Prepayment.....................................................................................35
         7.15     Transactions with Affiliates...................................................................35
         7.16     Investment Banking and Finder's Fees...........................................................35
         7.17     Business Conducted.............................................................................36
         7.18     Liens..........................................................................................36
         7.19     Sale and Leaseback Transactions................................................................36
         7.20     New Subsidiaries...............................................................................36
         7.21     Fiscal Year....................................................................................36
         7.22     Limitation on Accelerated Settlement of Claims.................................................36
         7.23     Fixed Charge Coverage Ratio....................................................................36
         7.24     Use of Proceeds................................................................................37
         7.25     Real Property Liens............................................................................37
         7.26     Dormant Subsidiaries...........................................................................37
         7.27     Tax Matters Agreement..........................................................................37
         7.28     Modification to the EIFA.......................................................................37
         7.29     Further Assurances.............................................................................38

ARTICLE 8 CONDITIONS OF LENDING..................................................................................38

         8.1      Conditions Precedent to Making of Loans on the Closing Date....................................38
         8.2      Conditions Precedent to Each Loan..............................................................40

ARTICLE 9 DEFAULT; REMEDIES......................................................................................40

         9.1      Events of Default..............................................................................41
         9.2      Remedies.......................................................................................44

ARTICLE 10 TERM AND TERMINATION..................................................................................45

         10.1     Term and Termination...........................................................................45

ARTICLE 11 AMENDMENTS; WAIVERs; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS..........................................46

         11.1     Amendments and Waivers.........................................................................46
         11.2     Assignments; Participations....................................................................47

ARTICLE 12 THE AGENT.............................................................................................49

         12.1     Appointment and Authorization..................................................................49
         12.2     Delegation of Duties...........................................................................50
         12.3     Liability of Agent.............................................................................50
         12.4     Reliance by Agent..............................................................................50
         12.5     Notice of Default..............................................................................51

iii

         12.6     Credit Decision................................................................................51
         12.7     Indemnification................................................................................51
         12.8     Agent in Individual Capacity...................................................................52
         12.9     Successor Agent................................................................................52
         12.10    Withholding Tax................................................................................52
         12.11    Collateral Matters.............................................................................54
         12.12    Restrictions on Actions by Lenders; Sharing of Payments........................................55
         12.13    Agency for Perfection..........................................................................55
         12.14    Payments by Agent to Lenders...................................................................55
         12.15    Settlement.....................................................................................56
         12.16    Letters of Credit; Intra-Lender Issues.........................................................59
         12.17    Concerning the Collateral and the Related Loan Documents.......................................61
         12.18    Field Audit and Examination Reports; Disclaimer by Lenders.....................................61
         12.19    Relation Among Lenders.........................................................................62
         12.20    Syndication Agent..............................................................................62

ARTICLE 13 MISCELLANEOUS.........................................................................................62

         13.1     No Waivers; Cumulative Remedies................................................................62
         13.2     Severability...................................................................................63
         13.3     Governing Law; Choice of Forum; Service of Process.............................................63
         13.4     WAIVER OF JURY TRIAL...........................................................................64
         13.5     Survival of Representations and Warranties.....................................................64
         13.6     Other Security and Guaranties..................................................................64
         13.7     Fees and Expenses..............................................................................64
         13.8     Notices........................................................................................65
         13.9     Waiver of Notices..............................................................................66
         13.10    Binding Effect.................................................................................66
         13.11    Indemnity of the Agent and the Lenders by the Borrowers........................................66
         13.12    Limitation of Liability........................................................................67
         13.13    Final Agreement................................................................................67
         13.14    Counterparts...................................................................................67
         13.15    Captions.......................................................................................67
         13.16    Right of Setoff................................................................................67
         13.17    Confidentiality................................................................................68
         13.18    Conflicts with Other Loan Documents............................................................68
         13.19    Joint and Several Liability of Borrowers.......................................................69
         13.20    Appointment and Authorization of Funds Administrator...........................................70
         13.21    Allocation of Loans and Expenses...............................................................71
         13.22    Designated Senior Debt.........................................................................72
         13.23    Agreement Effectiveness........................................................................72

ANNEXES, EXHIBITS AND SCHEDULES

ANNEX A       -     DEFINED TERMS

EXHIBIT A     -     FORM OF BORROWING BASE CERTIFICATE

EXHIBIT B     -     FINANCIAL STATEMENTS

EXHIBIT C     -     FORM OF NOTICE OF BORROWING

EXHIBIT D     -     FORM OF NOTICE OF CONTINUATION/CONVERSION

EXHIBIT E     -     FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

SCHEDULE 1.2  -     LENDERS' COMMITMENTS (ANNEX A - DEFINED TERMS)

SCHEDULE 6.3  -     ORGANIZATION AND QUALIFICATIONS

SCHEDULE 6.4  -     TRADE NAMES

SCHEDULE 6.5  -     SUBSIDIARIES AND AFFILIATES

SCHEDULE 6.7  -     CAPITALIZATION

SCHEDULE 6.9  -     DEBT

SCHEDULE 6.11 -     REAL ESTATE; LEASES

SCHEDULE 6.12 -     PROPRIETARY RIGHTS

SCHEDULE 6.14 -     LITIGATION

SCHEDULE 6.15 -     LABOR DISPUTES

SCHEDULE 6.16 -     ENVIRONMENTAL LAW

SCHEDULE 6.19 -     ERISA COMPLIANCE

SCHEDULE 6.26 -     MATERIAL AGREEMENTS

SCHEDULE 6.27 -     BANK ACCOUNTS

SCHEDULE 7.10 -     PERMITTED SHORT TERM INVESTMENTS

SCHEDULE A-1 -      SUBSIDIARY GUARANTORS

CREDIT AGREEMENT

This Credit Agreement, dated as of May 16, 2002, (this "Agreement") among the financial institutions from time to time parties hereto (such financial institutions, together with their respective successors and assigns, are referred to hereinafter each individually as a "Lender" and collectively as the "Lenders"), Bank of America, N.A. with an office at 600 Peachtree Street, 5th Floor, Atlanta, Georgia 30308, as agent for the Lenders (in its capacity as agent, the "Agent"), Citicorp USA, Inc., as Syndication Agent, and Coltec Industries Inc, a Pennsylvania corporation ("Coltec"), Coltec Industrial Products LLC, a Delaware limited liability company ("CIP"), Garlock Sealing Technologies LLC, a Delaware limited liability company ("Garlock Sealing"), Garlock Bearings LLC, a Delaware limited liability company ("Garlock Bearing"), Haber Tool Company, a Michigan corporation ("Haber Tool"), and Stemco LLC, a Delaware limited liability company ("Stemco" and, together with Coltec, CIP, Garlock Sealing, Garlock Bearing and Haber Tool, each individually referred to herein as a "Borrower" and collectively as "Borrowers") with Coltec acting in its capacity as Funds Administrator for the Borrowers.

WITNESSETH:

WHEREAS, the Borrowers have requested the Lenders to make available to the Borrowers a revolving line of credit for loans and letters of credit in an amount not to exceed $60,000,000, which extensions of credit the Borrowers will use for the purposes permitted hereunder;

WHEREAS, capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in Annex A which is attached hereto and incorporated herein; the rules of construction contained therein shall govern the interpretation of this Agreement, and all Annexes, Exhibits and Schedules attached hereto are incorporated herein by reference;

WHEREAS, the Lenders have agreed to make available to the Borrowers a revolving credit facility upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, the Lenders, the Agent, and the Borrowers hereby agree as follows.

ARTICLE 1
LOANS AND LETTERS OF CREDIT

1.1 Total Facility. Subject to all of the terms and conditions of this Agreement, the Lenders agree to make available a total credit facility of up to $60,000,000 (the "Total Facility") to the Borrowers from time to time during the term of this Agreement. The Total Facility shall be composed of a revolving line of credit consisting of Revolving Loans and Letters of Credit described herein.

1.2 Revolving Loans.

(a) Amounts. Subject to the satisfaction of the conditions precedent set forth in Article 8, each Lender severally, but not jointly, agrees, upon the Funds Administrator's request from time to time on any Business Day during the period from the Closing Date to the Termination Date, to make revolving loans (the "Revolving Loans") to the Borrowers on a joint and several basis in amounts not to exceed such Lender's Pro Rata Share of Availability with respect to Garlock Sealing or the Excess Collateral Providers, as the case may be (or if less, such Lender's Pro Rata Share of Aggregate Availability), on behalf of which such request is made, except for Non-Ratable Loans and Agent Advances. The Lenders, however, in their unanimous discretion, may elect to make Revolving Loans or issue or arrange to have issued Letters of Credit in excess of the applicable Garlock Sealing Borrowing Base or the Excess Collateral Providers Borrowing Base (as applicable) on one or more occasions, but if they do so, neither the Agent nor the Lenders shall be deemed thereby to have changed the limits of such Borrowing Base or to be obligated to exceed such limits on any other occasion. If any Borrowing to Garlock Sealing would exceed the Availability of Garlock Sealing, any Borrowing to the Excess Collateral Providers would exceed the Availability of the Excess Collateral Providers, or any Borrowing to any Borrower exceed Aggregate Availability, the Lenders may refuse to make or may otherwise restrict the making of such Revolving Loans as the Lenders determine until such excess has been eliminated, subject to the Agent's authority, in its sole discretion, to make Agent Advances pursuant to the terms of Section 1.2(i).

(b) Procedure for Borrowing.

(1) Each Borrowing shall be made upon the Funds Administrator's irrevocable written notice delivered by the Funds Administrator to the Agent in the form of a notice of borrowing ("Notice of Borrowing"), which must be received by the Agent prior to (i) 1:00 p.m. (Eastern time) three Business Days prior to the requested Funding Date, in the case of LIBOR Rate Loans and (ii) 12:00 noon (Eastern time) on the requested Funding Date, in the case of Base Rate Loans, specifying:

(A) the amount of the Borrowing, which in the case of a LIBOR Rate Loan must equal or exceed $2,000,000 (and increments of $1,000,000 in excess of such amount);

(B) the requested Funding Date, which must be a Business Day;

(C) whether the Revolving Loans requested are to be Base Rate Loans or LIBOR Rate Loans (and if not specified, it shall be deemed a request for a Base Rate Loan);

(D) the duration of the Interest Period for LIBOR Rate Loans (and if not specified, it shall be deemed a request for an Interest Period of one month); and

(E) the applicable Borrower(s) (i.e. Garlock Sealing or the Excess Collateral Providers) on behalf of which such request is made;

provided, however, that with respect to any Borrowing to be made on the Closing Date, such Borrowings will consist of Base Rate Loans only.

(2) In lieu of delivering a Notice of Borrowing, the Funds Administrator may give the Agent telephonic notice of such request for advances to the Designated Account on or before the deadline set forth above. The Agent at all times shall be entitled to rely on such telephonic notice in making such Revolving Loans, regardless of whether any written confirmation is received.

(3) The Borrowers shall have no right to request a LIBOR Rate Loan while a Default or Event of Default has occurred and is continuing.

(c) Reliance upon Authority. Prior to the Closing Date, the Funds Administrator shall deliver to the Agent, a notice setting forth the account of each of Garlock Sealing and the Funds Administrator (each a "Designated Account") to which the Agent is authorized to transfer the proceeds of the Revolving Loans requested hereunder. The Funds Administrator may designate a replacement account from time to time by written notice. All such Designated Accounts must be reasonably satisfactory to the Agent. The Agent is entitled to rely conclusively on any person's request for Revolving Loans on behalf of any Borrower or the Funds Administrator, so long as the proceeds thereof are to be transferred to the applicable Designated Account. The Agent has no duty to verify the identity of any individual representing himself or herself as a person authorized by any Borrower or the Funds Administrator to make such requests on its behalf.

(d) No Liability. The Agent shall not incur any liability to any Borrower or the Funds Administrator as a result of acting upon any notice referred to in Sections 1.2(b) and (c), which the Agent believes in good faith to have been given by an officer or other person duly authorized by any Borrower or the Funds Administrator to request Revolving Loans on its behalf. The crediting of Revolving Loans to the applicable Designated Account conclusively establishes the obligation of the Borrowers to repay such Revolving Loans as provided herein.

(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic notice in lieu thereof) made pursuant to Section 1.2(b) shall be irrevocable. The Borrowers shall be bound to borrow the funds requested therein in accordance therewith.

(f) Agent's Election. Promptly after receipt of a Notice of Borrowing (or telephonic notice in lieu thereof), the Agent shall elect to have the terms of Section 1.2(g) or the terms of Section 1.2(h) apply to such requested Borrowing. If the Bank declines in its sole discretion to make a Non-Ratable Loan pursuant to Section 1.2(h), the terms of Section 1.2(g) shall apply to the requested Borrowing.

(g) Making of Revolving Loans. If Agent elects to have the terms of this Section 1.2(g) apply to a requested Borrowing, then promptly after receipt of a Notice of Borrowing or telephonic notice in lieu thereof, the Agent shall notify the Lenders by telecopy, telephone or e-mail of the requested Borrowing. Each Lender shall transfer its Pro Rata Share of the requested Borrowing available to the Agent in immediately available funds, to the account from time to time designated by Agent, not later than 1:00 p.m. (Eastern time) on the applicable Funding Date. After the Agent's receipt of all proceeds of such Revolving Loans, the Agent shall make the proceeds of such Revolving Loans available to the designated Borrower(s) on the

applicable Funding Date by transferring same day funds to the account of Garlock Sealing in the case of a Revolving Loan to Garlock Sealing and/or the Funds Administrator in the case of a Revolving Loan to the Excess Collateral Providers (as applicable); provided, however, that the amount of Revolving Loans so made on any date shall not exceed the applicable Availability of the applicable Borrowers on such date nor shall the amount of Revolving Loans made on any date exceed Aggregate Availability.

(h) Making of Non-Ratable Loans.

(A) If Agent elects, with the consent of the Bank, to have the terms of this Section 1.2(h) apply to a requested Borrowing, the Bank shall make a Revolving Loan in the amount of that Borrowing available on the applicable Funding Date by transferring same day funds to the applicable Designated Account. Each Revolving Loan made solely by the Bank pursuant to this
Section is herein referred to as a "Non-Ratable Loan", and such Revolving Loans are collectively referred to as the "Non-Ratable Loans." Each Non-Ratable Loan shall be subject to all the terms and conditions applicable to other Revolving Loans except that all payments thereon shall be payable to the Bank solely for its own account. The aggregate amount of Non-Ratable Loans outstanding at any time shall not exceed $5,000,000. The Agent shall not request the Bank to make any Non-Ratable Loan if (1) the Agent has received written notice from any Lender that one or more of the applicable conditions precedent set forth in Article 8 will not be satisfied on the requested Funding Date for the applicable Borrowing, (2) the requested Borrowing on behalf of Garlock Sealing or the Excess Collateral Providers would exceed the applicable Availability of such Persons on that Funding Date or (3) the requested Borrowing would exceed Aggregate Availability on that Funding Date.

(B) The Non-Ratable Loans shall be secured by the Agent's Liens in and to the Collateral and shall constitute Base Rate Loans and Obligations hereunder.

(i) Agent Advances.

(A) Subject to the limitations set forth below, the Agent is authorized by the Borrowers and the Lenders, from time to time in the Agent's sole discretion, (A) after the occurrence of a Default or an Event of Default, or (B) at any time that any of the other conditions precedent set forth in Article 8 have not been satisfied, to make Base Rate Loans to any Borrower on behalf of the Lenders in an aggregate amount outstanding at any time not to exceed 10% of the Borrowing Base of such Borrower but not in excess of the Maximum Revolver Amount which the Agent, in its reasonable business judgment, deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, (2) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (3) to pay any other amount chargeable to the Borrowers pursuant to the terms of this Agreement, including costs, fees and expenses as described in Section 13.7 (any of such advances are herein referred to as "Agent Advances"); provided, that the Majority Lenders may at any time revoke the Agent's authorization to make Agent Advances. Any such revocation must be in writing and shall become effective prospectively upon the Agent's receipt thereof.

(B) The Agent Advances shall be secured by the Agent's Liens in and to the Collateral and shall constitute Base Rate Loans and Obligations hereunder.

1.3 [Reserved.]

1.4 Letters of Credit.

(a) Agreement to Issue or Cause To Issue. Subject to the terms and conditions of this Agreement, the Agent agrees (i) to cause the Letter of Credit Issuer to issue for the account of each Borrower one or more commercial/documentary and standby letters of credit ("Letter of Credit") and/or
(ii) to provide credit support or other enhancement to a Letter of Credit Issuer acceptable to Agent, which issues a Letter of Credit for the account of each Borrower (any such credit support or enhancement being herein referred to as a "Credit Support") from time to time during the term of this Agreement.

(b) Amounts; Outside Expiration Date. The Agent shall not have any obligation to issue or cause to be issued any Letter of Credit or to provide Credit Support for any Letter of Credit at any time if: (i) the maximum face amount of the requested Letter of Credit is greater than the Unused Letter of Credit Subfacility at such time; (ii) the maximum undrawn amount of the requested Letter of Credit by the Funds Administrator on behalf of any Borrower and all commissions, fees, and charges due from such Borrower in connection with the opening thereof would exceed either (A) the applicable Availability of Garlock Sealing or the Excess Collateral Providers, as applicable, or (B) Aggregate Availability at such time; or (iii) such Letter of Credit has an expiration date less than 30 days prior to the Stated Termination Date or more than 12 months from the date of issuance for standby letters of credit and 180 days for documentary letters of credit. With respect to any Letter of Credit which contains any "evergreen" or automatic renewal provision, each Lender shall be deemed to have consented to any such extension or renewal unless any such Lender shall have provided to the Agent, written notice that it declines to consent to any such extension or renewal at least thirty (30) days prior to the date on which the Letter of Credit Issuer is entitled to decline to extend or renew the Letter of Credit. If all of the requirements of this Section 1.4 are met and no Default or Event of Default has occurred and is continuing, no Lender shall decline to consent to any such extension or renewal.

(c) Other Conditions. In addition to conditions precedent contained in Article 8, the obligation of the Agent to issue or to cause to be issued any Letter of Credit or to provide Credit Support for any Letter of Credit is subject to the following conditions precedent having been satisfied in a manner reasonably satisfactory to the Agent:

(1) The Funds Administrator (on behalf of the requesting Borrower) shall have delivered to the Letter of Credit Issuer, at such times and in such manner as such Letter of Credit Issuer may prescribe, an application in form and substance satisfactory to such Letter of Credit Issuer and reasonably satisfactory to the Agent for the issuance of the Letter of Credit and such other documents as may be required pursuant to the terms thereof, and the form, terms and purpose of the proposed Letter of Credit shall be reasonably satisfactory to the Agent and the Letter of Credit Issuer; and

(2) As of the date of issuance, no order of any court, arbitrator or Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of

Credit, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that the proposed Letter of Credit Issuer refrain from, the issuance of letters of credit generally or the issuance of such Letters of Credit.

(d) Issuance of Letters of Credit.

(1) Request for Issuance. The Funds Administrator must notify the Agent of a requested Letter of Credit at least three (3) Business Days prior to the proposed issuance date. Such notice shall be irrevocable and must specify the original face amount of the Letter of Credit requested, the Business Day of issuance of such requested Letter of Credit, whether such Letter of Credit may be drawn in a single or in partial draws, the Business Day on which the requested Letter of Credit is to expire, the purpose for which such Letter of Credit is to be issued, and the beneficiary of the requested Letter of Credit. The Funds Administrator shall attach to such notice the proposed form of the Letter of Credit.

(2) Responsibilities of the Agent; Issuance. As of the Business Day immediately preceding the requested issuance date of the Letter of Credit, the Agent shall determine the amount of the applicable Unused Letter of Credit Subfacility, the applicable Availability of the applicable Borrower and Aggregate Availability. If (i) the face amount of the requested Letter of Credit is less than the Unused Letter of Credit Subfacility and (ii) the amount of such requested Letter of Credit and all commissions, fees, and charges due from such Borrower in connection with the opening thereof would not exceed such Borrower's applicable Availability or Aggregate Availability, the Agent shall cause the Letter of Credit Issuer to issue the requested Letter of Credit on the requested issuance date so long as the other conditions hereof are met.

(3) No Extensions or Amendment. The Agent shall not be obligated to cause the Letter of Credit Issuer to extend or amend any Letter of Credit issued pursuant hereto unless the requirements of this Section 1.4 are met as though a new Letter of Credit were being requested and issued.

(e) Payments Pursuant to Letters of Credit. The Borrowers agree on a joint and several basis to reimburse immediately the Letter of Credit Issuer for any draw under any Letter of Credit and the Agent for the account of the Lenders upon any payment pursuant to any Credit Support, and to pay the Letter of Credit Issuer the amount of all other charges and fees payable to the Letter of Credit Issuer in connection with any Letter of Credit immediately when due, irrespective of any claim, setoff, defense or other right which the Borrowers may have at any time against the Letter of Credit Issuer or any other Person. Each drawing under any Letter of Credit shall constitute a request by the Funds Administrator on behalf of the applicable Borrower to the Agent for a Borrowing of a Base Rate Loan in the amount of such drawing. The Funding Date with respect to such borrowing shall be the date of such drawing.

(f) Indemnification; Exoneration; Power of Attorney.

(1) Indemnification. In addition to amounts payable as elsewhere provided in this Section 1.4, the Borrowers agree to protect, indemnify, pay and save the Lenders and the Agent harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees) which any Lender or the Agent (other than a Lender in its capacity as Letter of Credit Issuer) may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit or the provision of any Credit Support or enhancement in connection therewith. The Borrowers' obligations under this Section shall survive payment of all other Obligations.

(2) Assumption of Risk by the Borrowers. As among the Borrowers, the Lenders, and the Agent, the Borrowers assume all risks of the acts and omissions of, or misuse of any of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Lenders and the Agent shall not be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any Person in connection with the application for and issuance of and presentation of drafts with respect to any of the Letters of Credit, even if it should prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (C) the failure of the beneficiary of any Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (D) errors, omissions, interruptions, or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof; (G) the misapplication by the beneficiary of any Letter of Credit of the proceeds of any drawing under such Letter of Credit; (H) any consequences arising from causes beyond the control of the Lenders or the Agent, including any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority or (I) the Letter of Credit Issuer's honor of a draw for which the draw or any certificate fails to comply in any respect with the terms of the Letter of Credit. None of the foregoing shall affect, impair or prevent the vesting of any rights or powers of the Agent or any Lender under this
Section 1.4(f).

(3) Exoneration. Without limiting the foregoing, no action or omission by Agent or any Lender (excluding any Lender in its capacity as a Letter of Credit Issuer) with respect to any Letter of Credit shall result in any liability of Agent or and Lender to the Borrowers, or relieve the Borrowers of any of their respective obligations hereunder to any such Person.

(4) Rights Against Letter of Credit Issuer. Nothing contained in this Agreement is intended to limit the Borrowers' rights, if any, with respect to the Letter of Credit Issuer which arise as a result of the letter of credit application and related documents executed by and between the Borrowers and the Letter of Credit Issuer.

(5) Account Party. The Borrowers hereby authorize and direct any Letter of Credit Issuer to name the Borrowers (or any applicable Borrower) as the "Account Party" therein and to deliver to the Agent all instruments, documents and other writings and property received by the Letter of Credit Issuer pursuant to the Letter of Credit, and to accept and rely upon the Agent's instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the application therefor.

(g) Supporting Letter of Credit; Cash Collateral. If, notwithstanding the provisions of Section 1.4(b) and Section 10.1, any Letter of Credit or Credit Support is outstanding upon the termination of this Agreement, then upon such termination the Borrowers shall deposit with the Agent, for the ratable benefit of the Agent and the Lenders, with respect to each Letter of Credit or Credit Support then outstanding, a standby letter of credit (a "Supporting Letter of Credit") in form and substance satisfactory to the Agent, issued by an issuer satisfactory to the Agent in an amount equal to the greatest amount for which such Letter of Credit or such Credit Support may be drawn plus any fees and expenses associated with such Letter of Credit or such Credit Support, under which Supporting Letter of Credit the Agent is entitled to draw amounts necessary to reimburse the Agent and the Lenders for payments to be made by the Agent and the Lenders under such Letter of Credit or Credit Support and any fees and expenses associated with such Letter of Credit or Credit Support. Such Supporting Letter of Credit shall be held by the Agent, for the ratable benefit of the Agent and the Lenders, as security for, and to provide for the payment of, the aggregate undrawn amount of such Letters of Credit or such Credit Support remaining outstanding.

1.5 Bank Products. The Borrowers may request and the Agent may, in its sole and absolute discretion, arrange for the Borrowers to obtain from the Bank or the Bank's Affiliates Bank Products although the Borrowers are not required to do so. If Bank Products are provided by an Affiliate of the Bank, the Borrowers agree, on a joint and several basis, to indemnify and hold the Agent, the Bank and the Lenders harmless from any and all costs and obligations now or hereafter incurred by the Agent, the Bank or any of the Lenders which arise from any indemnity given by the Agent to its Affiliates related to such Bank Products; provided, however, nothing contained herein is intended to limit the Borrowers' rights, with respect to the Bank or its Affiliates, if any, which arise as a result of the execution of documents by and between the Borrowers (or any of them) and the Bank which relate to Bank Products. The agreement contained in this Section shall survive termination of this Agreement. Each of the Borrowers acknowledges and agrees that the obtaining of Bank Products from the Bank or the Bank's Affiliates (a) is in the sole and absolute discretion of the Bank or the Bank's Affiliates, and (b) is subject to all rules and regulations of the Bank or the Bank's Affiliates.

ARTICLE 2
INTEREST AND FEES

2.1 Interest.

(a) Interest Rates. All outstanding Obligations shall bear interest on the unpaid principal amount thereof (including, to the extent permitted by law, on interest thereon not paid when due) from the date made until paid in full in cash at a rate determined by reference to the Base Rate or the LIBOR Rate plus the Applicable Margins as set forth below,

but not to exceed the Maximum Rate. If at any time Loans are outstanding with respect to which the Funds Administrator has not delivered to the Agent a notice specifying the basis for determining the interest rate applicable thereto in accordance herewith, those Loans shall bear interest at a rate determined by reference to the Base Rate until notice to the contrary has been given to the Agent in accordance with this Agreement and such notice has become effective. Except as otherwise provided herein, the outstanding Obligations shall bear interest as follows:

(i) For all Base Rate Loans and other Obligations (other than LIBOR Rate Loans) at a fluctuating per annum rate equal to the Base Rate plus the Applicable Margin; and

(ii) For all LIBOR Rate Loans at a per annum rate equal to the LIBOR Rate plus the Applicable Margin.

Each change in the Base Rate shall be reflected in the interest rate applicable to Base Rate Loans as of the effective date of such change. All interest charges shall be computed on the basis of a year of 360 days and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). The Borrowers shall pay to the Agent, for the ratable benefit of Lenders, interest accrued on all Base Rate Loans in arrears on the first day of each month hereafter and on the Termination Date. The Borrowers shall pay to the Agent, for the ratable benefit of Lenders, interest on all LIBOR Rate Loans in arrears on each LIBOR Interest Payment Date.

(b) Default Rate. If any Default or Event of Default occurs and is continuing and the Agent or the Required Lenders in their discretion so elect, then, while any such Default or Event of Default is continuing, all of the Obligations shall bear interest at the Default Rate applicable thereto.

2.2 Continuation and Conversion Elections.

(a) The Borrowers may (by notice from the Funds Administrator):

(i) elect, as of any Business Day, in the case of Base Rate Loans to convert any Base Rate Loans (or any part thereof in an amount not less than $2,000,000, or that is in an integral multiple of $1,000,000 in excess thereof) into LIBOR Rate Loans; or

(ii) elect, as of the last day of the applicable Interest Period, to continue any LIBOR Rate Loans having Interest Periods expiring on such day (or any part thereof in an amount not less than $2,000,000, or that is in an integral multiple of $1,000,000 in excess thereof);

provided, that if at any time the aggregate amount of LIBOR Rate Loans in respect of any Borrowing is reduced, by payment, prepayment, or conversion of part thereof to be less than $1,000,000, such LIBOR Rate Loans shall automatically convert into Base Rate Loans; provided further that if the notice shall fail to specify the duration of the Interest Period, such Interest Period shall be one month.

(b) The Funds Administrator shall deliver a notice of continuation/conversion ("Notice of Continuation/Conversion") to the Agent not later than 1:00 p.m. (Eastern time) at least three (3) Business Days in advance of the Continuation/Conversion Date, if the Loans are to be converted into or continued as LIBOR Rate Loans and specifying:

(i) the proposed Continuation/Conversion Date;

(ii) the aggregate amount of Loans to be converted or renewed;

(iii) the type of Loans resulting from the proposed conversion or continuation; and

(iv) the duration of the requested Interest Period, provided, however, the Funds Administrator may not select an Interest Period that ends after the Stated Termination Date.

(c) If upon the expiration of any Interest Period applicable to LIBOR Rate Loans, the Funds Administrator has failed to select timely a new Interest Period to be applicable to LIBOR Rate Loans or if any Default or Event of Default then exists, the Funds Administrator shall be deemed to have elected to convert such LIBOR Rate Loans into Base Rate Loans effective as of the expiration date of such Interest Period.

(d) The Agent will promptly notify each Lender of its receipt of a Notice of Continuation/Conversion. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of the Loans with respect to which the notice was given held by each Lender.

(e) There may not be more than ten (10) different LIBOR Rate Loans in effect hereunder at any time.

2.3 Maximum Interest Rate. In no event shall any interest rate provided for hereunder exceed the maximum rate legally chargeable by any Lender under applicable law for such Lender with respect to loans of the type provided for hereunder (the "Maximum Rate"). If, in any month, any interest rate, absent such limitation, would have exceeded the Maximum Rate, then the interest rate for that month shall be the Maximum Rate, and, if in future months, that interest rate would otherwise be less than the Maximum Rate, then that interest rate shall remain at the Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the same had not been limited by the Maximum Rate. In the event that, upon payment in full of the Obligations, the total amount of interest paid or accrued under the terms of this Agreement is less than the total amount of interest which would, but for this Section 2.3, have been paid or accrued if the interest rate otherwise set forth in this Agreement had at all times been in effect, then the Borrowers shall, to the extent permitted by applicable law, pay the Agent, for the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been charged if the Maximum Rate had, at all times, been in effect or (ii) the amount of interest which would have accrued had the interest rate otherwise set forth in this Agreement, at all times, been in effect over (b) the amount of interest actually paid or accrued under this Agreement. If a court of competent jurisdiction determines that the Agent and/or any Lender has received interest and other charges hereunder in

excess of the Maximum Rate, such excess shall be deemed received on account of, and shall automatically be applied to reduce, the Obligations other than interest, in the inverse order of maturity, and if there are no Obligations outstanding, the Agent and/or such Lender shall refund to the Borrowers such excess.

2.4 Agent Fees. The Borrowers agree on a joint and several basis to pay the Agent the fees as set forth in the fee letter dated May 16 2002, between the Agent and the Borrowers.

2.5 Unused Line Fee. On the first day of each month and on the Termination Date the Borrowers agree to pay to the Agent, for the account of the Lenders, in accordance with their respective Pro Rata Shares, an unused line fee (the "Unused Line Fee") equal to the Applicable Unused Line Rate per annum on each day during the immediately preceding month (or shorter period if calculated for the first month hereafter or on the Termination Date) times the amount by which the Maximum Revolver Amount exceeded the sum of the outstanding amount of Revolving Loans and the undrawn face amount of outstanding Letters of Credit on such day. The Unused Line Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed. All principal payments received by the Agent shall be deemed to be credited to the Borrowers' Loan Accounts immediately upon receipt for purposes of calculating the Unused Line Fee pursuant to this
Section 2.5.

2.6 Letter of Credit Fee. The Borrowers agree to pay to the Agent, for the account of the Lenders, in accordance with their respective Pro Rata Shares, for each Letter of Credit, a per annum fee (the "Letter of Credit Fee") equal to (i) the Applicable Margin with respect to LIBOR Loans in effect from time to time in the case of documentary Letters of Credit and (ii) the Applicable Margin with respect to LIBOR Loans in effect from time to time plus one-eighth percent (0.125%) per annum facing fee in the case of standby Letters of Credit, and to the Letter of Credit Issuer, all other customary out-of-pocket costs, fees and expenses incurred by the Letter of Credit Issuer in connection with the application for, processing of, issuance of, or amendment to any Letter of Credit. The Letter of Credit Fee shall be payable monthly in arrears on the first day of each month following any month in which a Letter of Credit is outstanding and on the Termination Date. The Letter of Credit Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed.

ARTICLE 3
PAYMENTS AND PREPAYMENTS

3.1 Revolving Loans. The Borrowers shall repay the outstanding principal balance of the Revolving Loans, plus all accrued but unpaid interest thereon, on the Termination Date. The Borrowers may prepay Revolving Loans at any time, and reborrow subject to the terms of this Agreement. In addition, and without limiting the generality of the foregoing, upon demand the Borrowers shall pay to the Agent, for account of the Lenders, (i) the amount, without duplication, by which the Aggregate Revolver Outstandings exceeds the lesser of the aggregate Borrowing Base or the Maximum Revolver Amount, (ii) the amount by which the Aggregate Revolver Outstandings of Garlock Sealing exceeds the Garlock Sealing Borrowing Base and (iii) the amount by which the Aggregate Revolver Outstandings of the Excess Collateral Providers exceeds the Excess Collateral Providers Borrowing Base.

3.2 Termination of Facility. The Borrowers may terminate this Agreement upon at least ten (10) Business Days' notice to the Agent and the Lenders, upon (a) the payment in full of all outstanding Revolving Loans, together with accrued interest thereon, and the cancellation and return of all outstanding Letters of Credit, (b) the payment in full in cash of all reimbursable expenses and other Obligations, and (e) with respect to any LIBOR Rate Loans prepaid, payment of the amounts due under Section 4.4, if any

3.3 Lockboxes and Blocked Accounts.

(a) (I) Each Borrower shall have established and shall maintain, at one or more financial institutions selected by such Borrower and acceptable to the Agent (each a "Lockbox Bank"), one or more lockboxes (with respect to each Borrower, such Borrower's "Lockboxes") and shall instruct all account debtors on the Accounts of such Borrower to remit all payments to such Borrower's Lockboxes. Each applicable Borrower shall maintain a depository account at each Lockbox Bank (with respect to each Borrower, such Borrower's "Depository Accounts") and shall cause all amounts remitted to each such Lockbox to be deposited into such Depository Accounts. Each Borrower, the Agent and the applicable financial institutions shall have entered into a Lockbox and Control Agreement providing, among other things, that all amounts which are deposited into the Depository Accounts shall be transferred at the end of each day to, (A) in the case of Garlock Sealing, the Garlock Sealing Concentration Account and (B) in the case of any Excess Collateral Provider, the Excess Collateral Provider Concentration Account. All amounts received by any Borrower from any account debtor, in addition to all other cash received from any other source that constitutes proceeds of Collateral, shall upon receipt be deposited into (A) in the case of such a receipt by Garlock Sealing, the Garlock Sealing Concentration Account and (B) in the case of such a receipt by an Excess Collateral Provider, the Excess Collateral Provider Concentration Account. In addition, from and after the Closing Date the Borrowers shall cause all proceeds payable to any Borrower under or in connection with any Asbestos Insurance Policy to be deposited into the Insurance Proceeds Account.

(ii) In addition, (A) Garlock Sealing and the Bank and (B) each of the Excess Collateral Providers and the Bank shall enter into agreements (each a "Concentration Account Agreement") providing that all available amounts held or received in the Garlock Sealing Concentration Account or the Excess Collateral Providers Concentration Account shall be transferred at the end of each day to an account maintained by the Agent at the Bank (the "Agent Account") and applied in accordance with the provisions of Section 3.8 hereof and
Section 11(c) of the Security Agreement.

(iii) The closing of any Lockbox, any related Depository Account, and the termination of any Lockbox and Control Agreement

shall require in each case the prior written consent of the Agent, which consent shall not be unreasonably withheld. The Borrowers shall not close either of the Garlock Concentration Account or the Excess Collateral Providers Concentration Account or any related Concentration Account Agreement without the prior written consent of the Agent.

(b) All amounts received by the Agent for distribution hereunder shall, except as otherwise provided in this Agreement, be applied in the order and manner set forth in Section 3.8 hereof and Section 11(c) of the Security Agreement.

3.4 [Reserved].

3.5 LIBOR Rate Loan Prepayments. In connection with any prepayment, if any LIBOR Rate Loans are prepaid prior to the expiration date of the Interest Period applicable thereto, the Borrowers shall pay to the Lenders the amounts described in Section 4.4.

3.6 Payments by the Borrowers.

(a) All payments to be made by the Borrowers shall be made without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein, all payments by the Borrowers shall be made to the Agent for the account of the Lenders, at the account designated by the Agent and shall be made in Dollars and in immediately available funds, no later than 1:00 p.m. (Eastern time) on the date specified herein. Any payment received by the Agent after such time shall be deemed (for purposes of calculating interest only) to have been received on the following Business Day and any applicable interest shall continue to accrue.

(b) Subject to the provisions set forth in the definition of "Interest Period", whenever any payment is due on a day other than a Business Day, such payment shall be due on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be.

3.7 Payments as Revolving Loans. At the election of Agent, all payments of principal, interest, reimbursement obligations in connection with Letters of Credit and Credit Support for Letters of Credit, fees, premiums, reimbursable expenses and other sums payable hereunder, may be paid from the proceeds of Revolving Loans made hereunder. The Borrowers hereby irrevocably authorize the Agent to charge the Loan Accounts for the purpose of paying all amounts from time to time due hereunder and agrees that all such amounts charged shall constitute Revolving Loans (including Non-Ratable Loans and Agent Advances).

3.8 Apportionment, Application and Reversal of Payments. Principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Loans to which such payments relate held by each Lender) and payments of the fees shall, as applicable, be apportioned ratably among the Lenders, except for fees payable solely to Agent and the Letter of Credit Issuer and except as provided in Section 11.1(b). All payments shall be remitted to the Agent and all such payments not relating to principal or interest of specific Loans, or not constituting payment of specific fees, and all proceeds of Accounts or other Collateral received by the Agent, shall be applied, ratably, subject to the

provisions of this Agreement, first, to pay any fees, indemnities or expense reimbursements then due to the Agent from the Borrowers; second, to pay any fees or expense reimbursements then due to the Lenders from the Borrowers; third, to pay interest due in respect of all Loans, including Non-Ratable Loans and Agent Advances; fourth, to pay or prepay principal of the Non-Ratable Loans and Agent Advances; fifth, to pay or prepay principal of the Revolving Loans (other than Non-Ratable Loans and Agent Advances) and unpaid reimbursement obligations in respect of Letters of Credit (provided that, unless payment is otherwise required pursuant to the terms of this Agreement or a Event of Default shall have occurred and be continuing, no payment of any LIBOR Rate Loan shall be required other than on the last day of the applicable Interest Period); sixth, to pay an amount to Agent equal to all due and outstanding Letter of Credit Obligations (and, to the extent required pursuant to this Agreement or after the occurrence and during the continuance of an Event of Default an additional amount to be held as cash collateral for such Obligations not yet due); seventh, to the payment of any other Obligation, including any amounts relating to Bank Products due to the Agent or any Lender (or any Affiliate of any Lender) by the Borrowers; and eighth, to the Funds Administrator for the benefit of the Borrowers. Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Funds Administrator, or unless an Event of Default has occurred and is continuing, neither the Agent nor any Lender shall apply any payments which it receives to any LIBOR Rate Loan, except (a) on the expiration date of the Interest Period applicable to any such LIBOR Rate Loan, or (b) in the event, and only to the extent, that there are no outstanding Base Rate Loans and, in any event, the Borrowers shall pay LIBOR breakage losses in accordance with Section 4.4. The Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Obligations.

3.9 Indemnity for Returned Payments. If after receipt of any payment which is applied to the payment of all or any part of the Obligations, the Agent, any Lender, the Bank or any Affiliate of the Bank is for any reason compelled to surrender such payment or proceeds to any Person because such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other reason, then the Obligations or part thereof intended to be satisfied shall be revived and continued and this Agreement shall continue in full force as if such payment or proceeds had not been received by the Agent or such Lender and the Borrowers shall be liable to pay to the Agent and the Lenders, and hereby indemnify the Agent and the Lenders and hold the Agent and the Lenders harmless for the amount of such payment or proceeds surrendered. The provisions of this Section 3.9 shall be and remain effective notwithstanding any contrary action which may have been taken by the Agent or any Lender in reliance upon such payment or application of proceeds, and any such contrary action so taken shall be without prejudice to the Agent's and the Lenders' rights under this Agreement and shall be deemed to have been conditioned upon such payment or application of proceeds having become final and irrevocable. The provisions of this Section 3.9 shall survive the termination of this Agreement.

3.10 Agent's and Lenders' Books and Records; Monthly Statements. The Agent shall record the principal amount of the Loans owing to each Lender, the undrawn face amount of all outstanding Letters of Credit and the aggregate amount of unpaid reimbursement obligations outstanding with respect to the Letters of Credit from time to time on its books. In

addition, each Lender may note the date and amount of each payment or prepayment of principal of such Lender's Loans in its books and records. Failure by Agent or any Lender to make such notation shall not affect the obligations of the Borrowers with respect to the Loans or the Letters of Credit. The Borrowers agree that the Agent's and each Lender's books and records showing the Obligations and the transactions pursuant to this Agreement and the other Loan Documents shall be admissible in any action or proceeding arising therefrom, and shall constitute rebuttably presumptive proof thereof, irrespective of whether any Obligation is also evidenced by a promissory note or other instrument. The Agent will provide to the Funds Administrator a monthly statement of Loans, payments, and other transactions pursuant to this Agreement. Such statement shall be deemed correct, accurate, and binding on the Borrowers and an account stated (except for reversals and reapplications of payments made as provided in
Section 3.8 and corrections of errors discovered by the Agent), unless the Funds Administrator notifies the Agent in writing to the contrary within sixty (60) days after such statement is rendered. In the event a timely written notice of objections is given by the Funds Administrator, only the items to which exception is expressly made will be considered to be disputed by the Borrowers.

ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY

4.1 Taxes.

(a) Any and all payments by the Borrowers to each Lender or the Agent under this Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding for any Taxes. In addition, the Borrowers shall pay all Other Taxes.

(b) Each of the Borrowers agrees to indemnify and hold harmless each Lender and the Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section) paid by any Lender or the Agent and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days after the date such Lender or the Agent makes written demand therefor.

(c) If any Borrower shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum payable hereunder to any Lender or the Agent, then:

(i) the sum payable shall be increased as necessary so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section) such Lender or the Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions or withholdings been made;

(ii) the applicable Borrower shall make such deductions and withholdings;

(iii) the applicable Borrower shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law; and

(iv) the Borrowers shall also pay to each Lender or the Agent for the account of such Lender, at the time interest is paid, all additional amounts which the respective Lender specifies as necessary to preserve the after-tax yield such Lender would have received if such Taxes or Other Taxes had not been imposed.

(d) At the Agent's request, within 30 days after the date of any payment by the Borrowers of Taxes or Other Taxes, the Funds Administrator shall furnish the Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Agent.

(e) If any Borrower is required to pay additional amounts to any Lender or the Agent pursuant to subsection (c) of this Section, then such Lender shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its lending office so as to eliminate any such additional payment by such Borrower which may thereafter accrue, if such change in the judgment of such Lender is not otherwise disadvantageous to such Lender.

4.2 Illegality.

(a) If any Lender determines that the introduction of any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Lender or its applicable lending office to make LIBOR Rate Loans, then, on notice thereof by that Lender to the Funds Administrator through the Agent, any obligation of that Lender to make LIBOR Rate Loans shall be suspended until that Lender notifies the Agent and the Funds Administrator that the circumstances giving rise to such determination no longer exist.

(b) If a Lender determines that it is unlawful to maintain any LIBOR Rate Loan, the Borrowers shall, upon receipt by the Funds Administrator of notice of such fact and demand from such Lender (with a copy to the Agent), prepay in full such LIBOR Rate Loans of that Lender then outstanding, together with interest accrued thereon and amounts required under
Section 4.4, either on the last day of the Interest Period thereof, if that Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or immediately, if that Lender may not lawfully continue to maintain such LIBOR Rate Loans. If any Borrower is required to so prepay any LIBOR Rate Loans, then concurrently with such prepayment, such Borrower shall borrow from the affected Lender, in the amount of such repayment, a Base Rate Loan.

4.3 Increased Costs and Reduction of Return.

(a) If any Lender determines that due to either (i) the introduction of or any change in the interpretation of any law or regulation or
(ii) the compliance by that Lender

with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining any LIBOR Rate Loans, then the Borrowers shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be sent to the Agent), pay to the Agent for the account of such Lender, additional amounts as are sufficient to compensate such Lender for such increased costs.

(b) If any Lender shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by such Lender or any corporation or other entity controlling such Lender with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation or other entity controlling such Lender and (taking into consideration such Lender's or such corporation's or other entity's policies with respect to capital adequacy and such Lender's desired return on capital) determines that the amount of such capital is increased as a consequence of its Commitments, loans, credits or obligations under this Agreement, then, upon demand of such Lender to the Funds Administrator through the Agent, the Borrowers shall pay to such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender for such increase.

4.4 Funding Losses. The Borrowers shall reimburse each Lender and hold each Lender harmless on a joint and several basis from any loss or expense which such Lender may sustain or incur as a consequence of:

(a) the failure of any Borrower to make on a timely basis any payment of principal of any LIBOR Rate Loan;

(b) the failure of any Borrower to borrow, continue or convert a Loan after such Borrower has given (or is deemed to have given) a Notice of Borrowing or a Notice of Continuation/Conversion; or

(c) the prepayment or other payment (including after acceleration thereof) of any LIBOR Rate Loans on a day that is not the last day of the relevant Interest Period;

including any such loss of anticipated profit and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its LIBOR Rate Loans or from fees payable to terminate the deposits from which such funds were obtained. Borrowers shall also pay any customary administrative fees charged by any Lender in connection with the foregoing.

4.5 Inability to Determine Rates. If the Agent determines that for any reason adequate and reasonable means do not exist for determining the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Loan, or that the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Loan does not adequately and fairly reflect the cost to the Lenders of funding such Loan, the Agent will promptly so notify the

Funds Administrator and each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate Loans hereunder shall be suspended until the Agent revokes such notice in writing. Upon receipt of such notice, the Funds Administrator may revoke any Notice of Borrowing or Notice of Continuation/Conversion then submitted by it. If the Funds Administrator does not revoke such Notice, the Lenders shall make, convert or continue the Loans, as proposed by the Funds Administrator, in the amount specified in the applicable notice submitted by the Funds Administrator, but such Loans shall be made, converted or continued as Base Rate Loans instead of LIBOR Rate Loans.

4.6 Certificates of Agent; Replacement of Requesting Lenders(a) . If any Lender claims reimbursement or compensation under this Article 4, Agent shall reasonably determine the amount thereof and shall deliver to the Funds Administrator (with a copy to the affected Lender) a certificate setting forth in reasonable detail the amount payable to the affected Lender and the basis for the determination of such amount, and such certificate shall be conclusive and binding on the Borrowers in the absence of manifest error. If, any Lender shall so claim any reimbursement or compensation pursuant to Section 4.1 or 4.3, or is unable to make LIBOR Loans as a consequence of the items described in Section 4.2, then, at the Funds Administrator's request, the Agent or an Eligible Assignee shall have the right (but not the obligation) with the Agent's approval, to purchase from such Lender, and such Lender agrees that it shall sell, all such Lender's Commitments for an amount equal to the principal balances thereof and all accrued interest and fees with respect thereto through the date of sale pursuant to Assignment and Acceptance Agreement(s), without premium or discount.

4.7 Survival. The agreements and obligations of the Borrowers in this Article 4 shall survive the payment of all other Obligations.

ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES

5.1 Books and Records. The Borrowers shall maintain, at all times, correct and complete books, records and accounts in which complete, correct and timely entries are made of its transactions in accordance with GAAP applied consistently with the audited Financial Statements required to be delivered pursuant to Section 5.2(a). The Borrowers shall, by means of appropriate entries, reflect in such accounts and in all Financial Statements proper liabilities and reserves for all taxes and proper provision for depreciation and amortization of property and bad debts, all in accordance with GAAP. The Borrowers shall maintain at all times books and records pertaining to the Collateral in such detail, form and scope as the Agent or any Lender shall reasonably require, including, but not limited to, records of (a) all payments received and all credits and extensions granted with respect to the Accounts;
(b) the return, rejection, repossession, stoppage in transit, loss, damage, or destruction of any Inventory; and (c) all other dealings affecting the Collateral.

5.2 Financial Information. The Borrowers shall promptly furnish to each Lender, all such financial information as the Agent shall reasonably request. Without limiting the foregoing, the Borrowers will furnish to the Agent, in sufficient copies for distribution by the Agent to each Lender, in such detail as the Agent or the Lenders shall request, the following:

(a) As soon as available, but in any event not later than ninety (90) days after the close of each Fiscal Year, consolidated audited balance sheets, and income statements, cash flow statements and changes in stockholders' equity for the Parent for such Fiscal Year, and the accompanying notes thereto, setting forth in each case in comparative form figures for the previous Fiscal Year, all in reasonable detail, fairly presenting the financial position and the results of operations of Parent and its consolidated Subsidiaries as at the date thereof and for the Fiscal Year then ended, and prepared in accordance with GAAP. Such statements shall be examined in accordance with generally accepted auditing standards by and, in the case of such statements performed on a consolidated basis, accompanied by a report thereon unqualified in any respect of independent certified public accountants selected by the Parent and reasonably satisfactory to the Agent. The Parent, simultaneously with retaining such independent public accountants to conduct such annual audit, shall send a letter to such accountants, with a copy to the Agent and the Lenders, notifying such accountants that one of the primary purposes for retaining such accountants' services and having audited financial statements prepared by them is for use by the Agent and the Lenders. Upon the Agent's request, the Parent and each of the Borrowers shall authorize the Agent to communicate directly with its certified public accountants and, by this provision, authorizes those accountants to disclose to the Agent any and all financial statements and other supporting financial documents and schedules relating to the Parent and its Subsidiaries and to discuss directly with the Agent the finances and affairs of the Parent and its Subsidiaries. So long as no Default or Event of Default shall have occurred and be continuing, the Parent and the Borrowers shall be included in any such communications with such accountants.

(b) As soon as available, but in any event not later than forty five (45) days after the end of each month (including the last month of each Fiscal Year), consolidated and consolidating (by business unit) unaudited balance sheets of the Parent and of its consolidated Subsidiaries as at the end of such month, and consolidated and consolidating (by business unit) unaudited income statements and cash flow statements for the Parent and its consolidated Subsidiaries for such month and for the period from the beginning of the Fiscal Year to the end of such month, all in reasonable detail, fairly presenting the financial position and results of operations of the Parent and its consolidated Subsidiaries as at the date thereof and for such periods, and prepared in accordance with GAAP applied consistently with the audited Financial Statements required to be delivered pursuant to Section 5.2(a). The Parent and each Borrower shall certify by a certificate signed by the Parent's chief financial officer and an officer of each Borrower that all such statements have been prepared in accordance with GAAP (other than the absence of footnotes and customary year-end audit adjustments) and present fairly the Parent's and such Borrower's financial position as at the dates thereof and its results of operations for the periods then ended, subject to normal year-end adjustments.

(c) As soon as available, but in any event not later than ninety (90) days after the close of each Fiscal Year, a certificate of the independent certified public accountants that examined the audited financial statements delivered pursuant to Section 5.2(a) with respect to such year, to the effect that they have reviewed and are familiar with this Agreement and that, in examining such Financial Statements, they did not become aware of any fact or condition which then constituted a Default or Event of Default with respect to a financial covenant, except for those, if any, described in reasonable detail in such certificate.

(d) Within forty five (45) days after the end of each fiscal month (including the last month of each Fiscal Year), a certificate of the chief financial officer of the Parent and an officer of each Borrower setting forth in reasonable detail the calculations required to establish compliance with the covenants set forth in Section 7.23 during the period covered in such Financial Statements and as at the end thereof (to the extent compliance is required during such applicable period as provided in Section
7.23. Within forty five (45) days after the end of each month, a certificate of the chief financial officer of the Parent and an officer of each Borrower stating that, except as explained in reasonable detail in such certificate, (A) all of the representations and warranties of the Borrowers contained in this Agreement and the other Loan Documents are correct and complete in all material respects as at the date of such certificate as if made at such time, except for those that speak as of a particular date, (B) each Borrower is, at the date of such certificate, in compliance in all material respects with all of its respective covenants and agreements in this Agreement and the other Loan Documents, (C) no Default or Event of Default then exists or existed during the period covered by the Financial Statements for such month, (D) describing and analyzing in reasonable detail all material trends, changes, and developments in each and all Financial Statements; and (E) explaining the variances of the figures versus the prior Fiscal Year financial statements; provided that the information described in clauses (D) and (E) above need only be furnished after the end of each fiscal quarter and may be delivered within such forty-five (45) day period after the first three fiscal quarters of each Fiscal Year with the 10-Q and within ninety (90) days after the last fiscal quarter of each Fiscal Year with the 10-K reports required to be delivered pursuant to clause (f) below. If such certificate discloses that a representation or warranty is not correct or complete, or that a covenant has not been complied with, or that a Default or Event of Default existed or exists, such certificate shall set forth what action the Borrowers have taken or propose to take with respect thereto.

(e) No later than forty five (45) days after the beginning of each Fiscal Year, annual forecasts (to include forecasted consolidated and consolidating (by business unit) balance sheets, income statements and cash flow statements) for each Borrower and its Subsidiaries as at the end of and for each month of such Fiscal Year.

(f) Promptly upon the filing thereof, copies of all reports, if any, to or other documents filed by Parent or any Borrower or any of their respective Subsidiaries with the Securities and Exchange Commission under the Exchange Act (including all 10-Ks and 10-Qs filed by any such Person), and all material reports, notices, or statements sent or received by Parent, any such Borrower or any of their respective Subsidiaries to or from the holders of any equity interests of Parent or of any Debt of Parent, any Borrower or any of their respective Subsidiaries registered under the Securities Act of 1933 or to or from the trustee under any indenture under which the same is issued.

(g) Within forty five (45) days after the end of each fiscal quarter, the updated reports of patents, trademarks and other Proprietary Rights required to be delivered pursuant to the terms of any Copyright Security Agreement, Trademark Security Agreement or Patent Security Agreement.

(h) Promptly after their preparation, copies of any and all proxy statements, financial statements, and reports which Parent or any Borrower makes available to shareholders of the Parent or holders of any public Debt of Parent or any Borrower.

(i) If requested by the Agent, promptly after filing with the IRS, a copy of each tax return filed by Parent, any Borrower or any of their respective Subsidiaries.

(j) As soon as available, but in any event (i) at any time that the Aggregate Availability shall be greater than $30,000,000, within fifteen (15) days after the end of each month (for such month) and (ii) at any time that the Aggregate Availability shall be equal to or less than $30,000,000, within two (2) Business Days after the end of each calendar week, a Borrowing Base Certificate and supporting information in accordance with Section 9 of the Security Agreement.

(k) Such additional information as the Agent and/or any Lender may from time to time reasonably request regarding the financial and business affairs, Collateral, litigation, liabilities or potential liabilities of Parent, any Borrower or any Subsidiary of any Borrower.

5.3 Notices to the Lenders. The Borrowers shall notify the Agent and the Lenders in writing of the following matters at the following times (which notification may be made by the Funds Administrator):

(a) Immediately after becoming aware of any Default or Event of Default;

(b) Immediately after becoming aware of the assertion by the holder of any Debt of Parent, any Borrower or any Subsidiary in a face amount in excess of $2,000,000 that a default exists with respect thereto or that the Parent, any Borrower or such Subsidiary is not in compliance with the terms thereof;

(c) Immediately after becoming aware of any event or circumstance which could reasonably be expected to have a Material Adverse Effect;

(d) Immediately after becoming aware of any pending or threatened action, suit, or proceeding, by any Person, or any pending or threatened investigation by a Governmental Authority, which could reasonably be expected to have a Material Adverse Effect;

(e) Immediately after becoming aware of any pending or threatened strike, work stoppage, unfair labor practice claim, or other labor dispute affecting the Parent, any Borrower or any of their respective Subsidiaries in a manner which could reasonably be expected to have a Material Adverse Effect;

(f) Immediately after becoming aware of any violation of any law, statute, regulation, or ordinance of a Governmental Authority affecting the Parent, any Borrower or any of their respective Subsidiaries which could reasonably be expected to have a Material Adverse Effect;

(g) Immediately after receipt of any notice (i) of any violation by the Parent, any Borrower or any of their respective Subsidiaries of any Environmental Law or (ii) that any Governmental Authority has asserted in writing that the Parent, any Borrower or any of their respective Subsidiaries is not in compliance with any Environmental Law or is investigating the Parent, any such Borrower's or such Subsidiary's compliance therewith, which in either case, could reasonably be expected to have a Material Adverse Effect;

(h) Immediately after receipt of any written notice that the Parent, any Borrower or any of their respective Subsidiaries is or may be liable to any Person as a result of the Release or threatened Release of any Contaminant or that the Parent, any Borrower or any of their respective Subsidiaries is subject to investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to the Release or threatened Release of any Contaminant which, in either case, is reasonably likely to give rise to liability in excess of $3,000,000;

(i) Immediately after receipt of any written notice of the imposition of any Environmental Lien against any property of the Parent, any Borrower or any of their respective Subsidiaries;

(j) Any change in the Parent's, any Borrower's or any Guarantors' name as it appears in the state of its incorporation or other organization, state of incorporation or organization, type of entity, organizational identification number, locations where Collateral is located (other than (A) consignments of Inventory in the ordinary course of business not to exceed $2,000,000 at any one time, (B) other Inventory having an aggregate value of less than $1,000,000 and (C) other immaterial portions of the Collateral), or form of organization, trade names under which any Borrower will sell Inventory or create Accounts, or to which instruments in payment of Accounts may be made payable, in each case at least thirty (30) days prior thereto;

(k) Within ten (10) Business Days after any Borrower or any ERISA Affiliate knows that an ERISA Event or a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred, and, when known, any action taken or threatened by the IRS, the DOL or the PBGC with respect thereto;

(l) Upon request, or, in the event that such filing reflects a significant change with respect to the matters covered thereby, within three (3) Business Days after the filing thereof with the PBGC, the DOL or the IRS, as applicable, copies of the following: (i) each annual report (form 5500 series), including Schedule B thereto, filed with the PBGC, the DOL or the IRS with respect to each Plan, (ii) a copy of each funding waiver request filed with the PBGC, the DOL or the IRS with respect to any Plan and all communications received by the Borrower or any ERISA Affiliate from the PBGC, the DOL or the IRS any respect to such request, and (iii) a copy of each other filing or notice filed with the

PBGC, the DOL or the IRS, with respect to each Plan by either any Borrower or any ERISA Affiliate;

(m) Upon request, copies of each actuarial report for any Plan or Multi-employer Plan and annual report for any Multi-employer Plan; and within three (3) Business Days after receipt thereof by any Borrower or any ERISA Affiliate, copies of the following: (i) any notices of the PBGC's intention to terminate a Plan or to have a trustee appointed to administer such Plan; (ii) any favorable or unfavorable determination letter from the IRS regarding the qualification of a Plan under Section 401(a) of the Code; or (iii) any notice from a Multi-employer Plan regarding the imposition of withdrawal liability;

(n) Within three (3) Business Days after the occurrence thereof: (i) any changes in the benefits of any existing Plan which increase the Parent's any Borrower's or any of their respective Subsidiaries' annual costs with respect thereto by an amount in excess of $3,000,000, or the establishment of any new Plan or the commencement of contributions to any Plan to which any Borrower or any ERISA Affiliate was not previously contributing; or (ii) any failure by any Borrower or any ERISA Affiliate to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; or

(o) Within three (3) Business Days after any Borrower or any ERISA Affiliate knows that any of the following events has or will occur: (i) a Multi-employer Plan has been or will be terminated; (ii) the administrator or plan sponsor of a Multi-employer Plan intends to terminate a Multi-employer Plan; or (iii) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan.

Each notice given under this Section shall describe the subject matter thereof in reasonable detail, and shall set forth the action that the Parent, the applicable Borrower(s), the Subsidiary, or any ERISA Affiliate, as applicable, has taken or proposes to take with respect thereto.

5.4 Initial Field Examination. The Borrowers acknowledge and agree the Agent shall conduct (at the Borrowers' expense) a field examination of the Collateral, including, without limitation, the Borrowers' Accounts and Inventory within sixty (60) days after the Closing Date, and that such examination may result in adjustments to Eligible Accounts, Eligible Inventory and related Reserves.

ARTICLE 6
GENERAL WARRANTIES AND REPRESENTATIONS

Each Borrower with respect to itself, each other Borrower and each of their respective Subsidiaries warrants and represents to the Agent and the Lenders that except as hereafter disclosed to and accepted by the Agent and the Required Lenders in writing:

6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents. Each Borrower has the power and authority to execute, deliver and perform this Agreement and the other Loan Documents to which it is a party, to incur the Obligations, and to grant to the Agent Liens upon and security interests in the Collateral. Each Borrower has taken all necessary action (including obtaining approval of its stockholders if necessary) to authorize its execution, delivery, and performance of this Agreement and the other Loan Documents to which it is a party. This Agreement and the other Loan Documents to which it is a party have been duly executed and delivered by each Borrower, and constitute the legal, valid and binding obligations of each such Borrower, enforceable against it in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally, or by general equitable principles. Each Borrower's execution, delivery, and performance of this Agreement and the other Loan Documents to which it is a party do not and will not conflict with, or constitute a violation or breach of, or result in the imposition of any Lien upon the property of any Borrower or any of its Subsidiaries, by reason of the terms of (a) any contract, mortgage, lease, agreement, indenture, or instrument to which any Borrower is a party or which is binding upon it, (b) any Requirement of Law applicable to any Borrower or any of their respective Subsidiaries, or (c) the certificate or articles of incorporation or by-laws or the limited liability company or limited partnership agreement of any Borrower or any of their respective Subsidiaries.

6.2 Validity and Priority of Security Interest. The provisions of this Agreement and the other Loan Documents create legal and valid Liens on all the Collateral in favor of the Agent, for the ratable benefit of the Agent and the Lenders, and such Liens constitute perfected and continuing Liens on all the Collateral securing all the Obligations, having priority over all other Liens on the Collateral, except for those Liens identified in clauses (a), (c), (d) and
(e) of the definition of Permitted Liens, Liens existing as of the Closing Date and described on Schedule 6.9, and Liens securing Capital Leases and purchase money liens on Collateral (other than Inventory) securing purchase money Debt permitted by Section 7.13, and enforceable against each applicable Borrower and all third parties, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally, or by general equitable principles.

6.3 Organization and Qualification. Each Borrower (a) is duly organized or incorporated and validly existing in good standing under the laws of the state of its organization or incorporation, (b) is qualified to do business and is in good standing in each jurisdiction necessary in order for it to own or lease its property and conduct its business, except for such jurisdictions where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect, and (c) has all requisite power and authority to conduct its business and to own its property. As of the Closing Date each Borrower is qualified to do business and is in good standing in the jurisdictions set forth opposite its name on Schedule 6.3 which are the only jurisdictions in which qualification is necessary in order for it to own or lease its property and conduct its business as of the Closing Date.

6.4 Corporate Name; Prior Transactions. Except as set forth on Schedule 6.4 or as disclosed pursuant to the requirements of the Security Agreement, no Borrower or Domestic Subsidiary of any Borrower has, during the past five (5) years, been known by or used

any other corporate or fictitious name or trade name, or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person. All trade names or styles under which the Parent, any Borrower or any of their respective Domestic Subsidiaries will sell Inventory or create Accounts, or to which instruments in payment of Accounts may be made payable, are listed on Schedule 6.4 or have been disclosed to the Agent pursuant to the requirements of the Security Agreement.

6.5 Subsidiaries and Affiliates. Schedule 6.5 is a correct and complete list of the name and relationship to the Borrowers of each and all of the Borrowers' Subsidiaries and other Affiliates as of the Closing Date. Each Domestic Subsidiary is (a) duly incorporated or organized and validly existing in good standing under the laws of its state of incorporation or organization set forth on Schedule 6.5, and (b) qualified to do business and in good standing in each jurisdiction in which the failure to so qualify or be in good standing could reasonably be expected to have a Material Adverse Effect and (c) has all requisite power and authority to conduct its business and own its property.

6.6 Financial Statements and Projections.

(a) The Borrowers have delivered to the Agent and the Lenders the pro forma balance sheet and related statements of income, retained earnings, cash flows, and changes in stockholders equity for the Parent and its consolidated Subsidiaries as of December 31, 2001 (which pro forma was based on the audited financial statements for such Fiscal Year of Coltec and its consolidated Subsidiaries, which was accompanied by the report thereon of such Borrower's independent certified public accountants, Ernst & Young). All such financial statements have been prepared in accordance with GAAP (to the extent applicable) and present accurately and fairly in all material respects on a pro forma basis the financial position of the Parent and its consolidated Subsidiaries as at the dates thereof and their results of operations for the periods then ended.

(b) The Latest Projections as of the date submitted to the Lenders as required herein represent the Borrowers' best estimate of the future financial performance of the Borrowers and their respective consolidated Subsidiaries for the periods set forth therein. The Latest Projections have been prepared on the basis of the assumptions set forth therein, which the Borrowers believe are fair and reasonable in light of current and reasonably foreseeable business conditions at the time submitted to the Lenders.

(c) The Borrowers have delivered the pro forma balance sheet and related pro forma statement of income, retained earnings, and cash flows for the Parent and its consolidated Subsidiaries as at May 31, 2002, attached hereto as Exhibit B, and such financial statements have been prepared in accordance with GAAP (to the extent applicable) and present accurately and fairly the Parent's financial condition on a pro forma basis as at such date after giving effect to the transactions contemplated by the Spinoff (assuming the Spinoff had occurred on such date and the Closing Date had been such date).

6.7 Capitalization. Set forth on Schedule 6.7 is the authorized capital stock of the Parent, each Borrower and each of the Borrower's Subsidiaries as of the Closing Date. All shares and other equity interests reflected as being outstanding on such Schedule are validly

issued and outstanding and are owned beneficially and of record as of the Closing Date by the Person indicated on such Schedule. All such shares of any corporation are fully paid and non-assessable.

6.8 Solvency. The Parent and each Borrower is Solvent prior to and after giving effect to each requested Borrowing and the issuance of each Letter of Credit to be issued, and reasonably expects to remain Solvent during the term of this Agreement.

6.9 Debt. After giving effect to the making of the Revolving Loans to be made on the Closing Date, the Parent, the Borrowers and their respective Domestic Subsidiaries have no Debt, except (a) the Obligations, (b) Debt described on Schedule 6.9 and (c) Debt expressly permitted pursuant to Section 7.13.

6.10 Distributions. Through the date of the Spinoff, no Distribution has been declared, paid, or made upon or in respect of any capital stock or other securities of the Parent, any Borrower or any of their respective Subsidiaries, except as set forth in the financial statements referred to in
Section 6.6(c).

6.11 Real Estate; Leases. Schedule 6.11 sets forth, as of the Closing Date, a correct and complete list of all Real Estate owned by the Parent or any Borrower and all Real Estate owned by any of their respective Domestic Subsidiaries, all leases and subleases of real or personal property held by the Parent, any Borrower or any of their respective Domestic Subsidiaries as lessee or sublessee (other than leases of personal property as to which any such Borrower is lessee or sublessee for which the value of such personal property in the aggregate is less than $1,500,000), and all leases and subleases of real or personal property held by the Parent, any Borrower or any of their respective Domestic Subsidiaries as lessor, or sublessor. Except to the extent terminated in the ordinary course of business, each of such leases and subleases relating to the lease of any material personal property or the lease of any location at which any Collateral is located is valid and enforceable in accordance with its terms and is in full force and effect, and no default by any Borrower or any such Domestic Subsidiary, or to the Borrowers' knowledge any other party, party to any such lease or sublease exists, except as identified on Schedule 6.11. The Parent, the applicable Borrower, or the applicable Subsidiary has good and marketable title in fee simple to the Real Estate identified on Schedule 6.11 as owned by such Person, or valid leasehold interests in all Real Estate designated therein as "leased" by such Person and such Person has good, indefeasible, and merchantable title to all of its other material property reflected on the pro forma balance sheet referred to in Section 6.6(c), except as disposed of as permitted by this Agreement since the date thereof, free of all Liens except Liens permitted under Section 7.18.

6.12 Proprietary Rights. Schedule 6.12 sets forth a correct and complete list of all of the Parent's, each Borrower's and each of their respective Domestic Subsidiaries' registered United States patents and patent applications, United States registered trademark and trademark applications, United States registered copyright and copyright applications and all other material United States Proprietary Rights as of the Closing Date. None of such Proprietary Rights is subject to any licensing agreement or similar arrangement except as set forth on Schedule 6.12. Each of the Parent, each Borrower and each of their respective Subsidiaries owns or is licensed or otherwise has the right to use all Proprietary Rights that are reasonably

necessary for the operation of its businesses, without conflict with the rights of any other Person, except for any such conflict which could not reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Borrowers, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Parent, any Borrower or any of their respective Subsidiaries infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of the Borrowers, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect.

6.13 [Reserved].

6.14 Litigation. Except as set forth on Schedule 6.14, there is no pending, or to the best of the Borrowers' knowledge threatened, action, suit, proceeding, or counterclaim by any Person, or to the best of the Borrowers' knowledge, investigation by any Governmental Authority, or any basis for any of the foregoing, which could reasonably be expected to have a Material Adverse Effect.

6.15 Labor Disputes. Except as set forth on Schedule 6.15, as of the Closing Date (a) there is no collective bargaining agreement or other labor contract covering employees of the Parent, any Borrower or any of their respective Domestic Subsidiaries, (b) no such collective bargaining agreement or other labor contract is scheduled to expire during the term of this Agreement,
(c) no union or other labor organization is seeking to organize, or to be recognized as, a collective bargaining unit of employees of the Parent, any Borrower or any of their respective Domestic Subsidiaries or for any similar purpose, and (d) there is no pending or (to the best of each Borrower's knowledge) threatened, strike, work stoppage, material unfair labor practice claim, or other material labor dispute against or affecting the Parent, any Borrower or any of their respective Domestic Subsidiaries or their employees.

6.16 Environmental Laws. Except as otherwise disclosed on Schedule 6.16:

(a) The Parent, each Borrower and each of their respective Subsidiaries have complied in all material respects with all Environmental Laws. None of the Parent, any Borrower nor any of their respective Subsidiaries nor any of their respective presently owned real property or presently conducted operations, nor, to their knowledge, any of their previously owned real property or prior operations, is subject to any enforcement order from or liability agreement with any Governmental Authority or private Person respecting (i) compliance with any Environmental Law or (ii) any potential liabilities and costs or remedial action arising from the Release or threatened Release of a Contaminant, except to the extent any such noncompliance, enforcement order or liability could not reasonably be expected to have a Material Adverse Effect.

(b) The Parent, each Borrower and each of their respective Subsidiaries have obtained all permits necessary for their current operations under Environmental Laws, and all such permits are in good standing and the Parent, each Borrower and each of their respective Subsidiaries are in compliance with all material terms and conditions

of such permits, except to the extent that the lack of a permit or any such non-compliance could not reasonably be expected to have a Material Adverse Effect.

(c) None of the products manufactured, distributed or sold by the Parent, any Borrower or any of their respective Subsidiaries on and after the date of this Agreement contain asbestos containing material.

(d) No Environmental Lien has attached to the Real Estate.

6.17 No Violation of Law. None of the Parent, any Borrower nor any of their respective Subsidiaries is in violation of any law, statute, regulation, ordinance, judgment, order, or decree applicable to it which violation could reasonably be expected to have a Material Adverse Effect.

6.18 No Default. None of the Parent, any Borrower nor any of their respective Subsidiaries is in default with respect to any note, indenture, loan agreement, mortgage, lease, deed, or other agreement to which the Parent, any Borrower or such Subsidiary is a party or by which it is bound, which default could reasonably be expected to have a Material Adverse Effect.

6.19 ERISA Compliance. Except as specifically disclosed in Schedule 6.19:

(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law. Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS and to the best knowledge of the Borrowers, nothing has occurred which would cause the loss of such qualification. The Borrowers and each ERISA Affiliate have made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending or, to the best knowledge of Borrowers, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect.

(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) no Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv) no Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan; and (v) no Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069(a) or 4212(c) of ERISA.

6.20 Taxes. Each of the Parent, each Borrower and each of their respective Subsidiaries have filed all federal and other tax returns and reports required to be filed, and have paid all federal and other taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable unless such unpaid taxes and assessments would constitute a Permitted Lien.

6.21 Regulated Entities. None of the Parent, any Borrower, any of their respective Subsidiaries nor any Person controlling the Parent, any Borrower, or any of their respective Subsidiaries, is an "Investment Company" within the meaning of the Investment Company Act of 1940. None of the Parent, any Borrower, nor any of their respective Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code or law, or any other federal or state statute or regulation limiting its ability to incur indebtedness.

6.22 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to be used solely for working capital purposes and other general corporate purposes permitted by this Agreement. None of the Parent, any Borrower nor any of their respective Subsidiaries is engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock.

6.23 [Reserved].

6.24 No Material Adverse Change. No Material Adverse Effect has occurred since May 31, 2002.

6.25 Full Disclosure. None of the representations, warranties or statements made by the Parent, any Borrower or any of their respective Subsidiaries in the Loan Documents as of the date such representations, warranties and statements are made or deemed made, and none of the statements contained in any exhibit, report, statement or certificate furnished by or on behalf of the Parent, any Borrower or any of their respective Subsidiaries in connection with the Loan Documents (including the offering and disclosure materials delivered by or on behalf of the Parent or any Borrower to the Lenders prior to the Closing Date), in each case, as of the date made, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.

6.26 Material Agreements. Schedule 6.26 hereto sets forth as of the Closing Date all material agreements and contracts (within the meaning of Item 601(b)(10) of Regulation S-K of the Securities Act of 1933, as amended) to which the Parent, any Borrower or any of their respective Domestic Subsidiaries is a party or is bound as of the date hereof.

6.27 Bank Accounts. Schedule 6.27 contains as of the Closing Date a complete and accurate list of all bank accounts maintained by the Parent, any Borrower or any of their respective Domestic Subsidiaries with any bank or other financial institution.

6.28 Governmental Authorization. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or other Person is necessary or required in connection with the execution, delivery or performance

by, or enforcement against, the Parent, any Borrower or any of their respective Subsidiaries of this Agreement or any other Loan Document.

6.29 Tax Matters. The representations and warranties of the Parent in support of the "Tax Opinion" (as defined in the Tax Matters Agreement) are true and correct in all material respects as of the Closing Date.

6.30 EIFA. All amounts owing or payable to any of Coltec, Garlock Sealing or Garrison under any Asbestos Insurance Policy issued by any Person party to the EIFA are and shall be payable solely pursuant to the EIFA.

ARTICLE 7
AFFIRMATIVE AND NEGATIVE COVENANTS

Each of the Borrowers covenants to the Agent and each Lender that so long as any of the Obligations remain outstanding or this Agreement is in effect:

7.1 Taxes and Other Obligations. The Borrowers shall, and shall cause each of their respective Subsidiaries to, (a) file when due all tax returns and other reports which it is required to file; (b) pay, or provide for the payment, when due, of all taxes, fees, assessments and other governmental charges against it or upon its property, income and franchises, make all required withholding and other tax deposits, and establish adequate reserves for the payment of all such items, and provide to the Agent and the Lenders, upon request, satisfactory evidence of its timely compliance with the foregoing; and
(c) pay when due all Debt owed by it and all claims of materialmen, mechanics, carriers, warehousemen, landlords, processors and other like Persons, and all other indebtedness owed by it and perform and discharge in a timely manner all other obligations undertaken by it; provided, however, no Borrower nor any of its Subsidiaries need pay any tax, fee, assessment, or governmental charge or Debt described in clause (c) above (i) it is contesting in good faith by appropriate proceedings diligently pursued, (ii) as to which such Borrower or its Subsidiary, as the case may be, has established proper reserves as required under GAAP, and (iii) the nonpayment of which does not result in the imposition of a Lien (other than a Permitted Lien).

7.2 Legal Existence and Good Standing. Each Borrower shall, and shall cause each of its Subsidiaries to, maintain its legal existence and its qualification and good standing in all jurisdictions in which the failure to maintain such existence and qualification or good standing could reasonably be expected to have a Material Adverse Effect.

7.3 Compliance with Law and Agreements; Maintenance of Licenses. Each Borrower shall comply, and shall cause each Subsidiary to comply, in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act and all Environmental Laws). Each Borrower shall, and shall cause each of its Subsidiaries to, obtain and maintain all licenses, permits, franchises, and governmental authorizations necessary to own its property and to conduct its business as conducted on the Closing Date. No Borrower shall modify, amend or alter its certificate or articles of incorporation, or its limited liability company operating

agreement or limited partnership agreement, as applicable, other than in a manner which does not adversely affect the rights of the Lenders or the Agent.

7.4 Maintenance of Property; Inspection of Property.

(a) Each Borrower shall, and shall cause each of its Subsidiaries to, maintain all of its property necessary and useful in the conduct of its business, in good operating condition and repair, ordinary wear and tear excepted.

(b) Each Borrower shall permit representatives and independent contractors of the Agent (at the expense of the Borrowers) to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom and to discuss its affairs, finances and accounts with its directors, officers and independent public accountants, at such reasonable times during normal business hours and as soon as may be reasonably desired, upon reasonable advance notice to the Funds Administrator; provided, however, when an Event of Default exists, the Agent or any Lender may do any of the foregoing at the expense of the Borrowers at any time during normal business hours and without advance notice.

7.5 Insurance.

(a) Each Borrower shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable insurers having a rating of at least B+ or better by Best Rating Guide, insurance against loss or damage by fire with extended coverage; theft, burglary, pilferage and loss in transit; public liability and third party property damage; larceny, embezzlement or other criminal liability; business interruption; public liability and third party property damage; and such other hazards or of such other types as is customary for Persons engaged in the same or similar business, as the Agent, in its reasonable discretion, or acting at the reasonable direction of the Required Lenders, shall specify, in amounts, and under policies acceptable to the Agent and the Required Lenders (provided that such insurance so specified by the Agent shall be obtainable from such an insurer). Without limiting the foregoing, in the event that any improved Real Estate covered by the Mortgages is determined to be located within an area that has been identified by the Director of the Federal Emergency Management Agency as a Special Flood Hazard Area ("SFHA"), the Borrowers shall purchase and maintain flood insurance on the improved Real Estate and any Equipment and Inventory located on such Real Estate. The amount of said flood insurance will be reasonably determined by the Agent, and shall, at a minimum, comply with applicable federal regulations as required by the Flood Disaster Protection Act of 1973, as amended. The Borrowers shall also maintain flood insurance for its Inventory and Equipment which is, at any time, located in a SFHA. The Agent and each of the Lenders confirm to the Borrowers that the level of insurance in effect with respect to the Borrowers and their respective Domestic Subsidiaries and disclosed to the Agent as of the Closing Date constitute an acceptable level of coverage as of such date.

(b) The Borrowers shall cause the Agent, for the ratable benefit of the Agent and the Lenders, to be named as secured party or mortgagee and sole loss payee (with respect to the Collateral) or additional insured, in a manner acceptable to the Agent. Each policy of insurance shall contain a clause or endorsement requiring the insurer to give not less than

thirty (30) days' prior written notice to the Agent in the event of cancellation of the policy for any reason whatsoever and a clause or endorsement stating that the interest of the Agent shall not be impaired or invalidated by any act or neglect of the Parent, any Borrower or any of their respective Subsidiaries or the owner of any Real Estate for purposes more hazardous than are permitted by such policy. All premiums for such insurance shall be paid by the Borrowers when due, and certificates of insurance and, if requested by the Agent or any Lender, photocopies of the policies, shall be delivered to the Agent, in each case in sufficient quantity for distribution by the Agent to each of the Lenders. If the Borrowers fail to procure such insurance or to pay the premiums therefor when due, the Agent may, and at the direction of the Required Lenders shall, do so from the proceeds of Revolving Loans.

7.6 Insurance and Condemnation Proceeds. The Borrowers (through the Funds Administrator) shall promptly notify the Agent and the Lenders of any loss, damage, or destruction to the Collateral in excess of $1,000,000, whether or not covered by insurance. The Agent is hereby authorized to collect all insurance and condemnation proceeds in respect of Collateral directly and to apply or remit them as follows:

(i) With respect to insurance and condemnation proceeds relating to Collateral other than Collateral consisting of Fixed Assets, after deducting from such proceeds the reasonable expenses, if any, incurred by the Agent in the collection or handling thereof, the Agent shall apply such proceeds, ratably, to the reduction of the Obligations in the order provided for in Section 3.8.

(ii) With respect to insurance and condemnation proceeds relating to Collateral consisting of Fixed Assets, the Agent shall permit or require the Borrowers to use such proceeds, or any part thereof, to replace, repair, restore or rebuild the relevant Fixed Assets in a diligent and expeditious manner with materials and workmanship of substantially the same quality as existed before the loss, damage or destruction so long as (1) no Default or Event of Default has occurred and is continuing, and (2) Aggregate Availability shall be greater than $15,000,000 at the time of Borrowers' receipt thereof. If at the time of the receipt of any such insurance and condemnation proceeds either (1) a Default or Event of Default has occurred and is continuing or (2) Aggregate Availability shall not be greater than $15,000,000, then such funds shall be paid to the Agent and the Agent shall apply such insurance and condemnation proceeds, ratably, to the reduction of the Obligations in the order provided for in Section 3.8.

7.7 Environmental Laws.

(a) Each Borrower shall, and shall cause each of its Subsidiaries to, conduct its business in material compliance with all Environmental Laws applicable to it, including those relating to the generation, handling, use, storage, and disposal of any Contaminant. Each Borrower shall, and shall cause each of its Subsidiaries to, take prompt and appropriate action to respond to any non-compliance with Environmental Laws and shall, at the request of the Agent, regularly report to the Agent on such response.

(b) Without limiting the generality of the foregoing, each Borrower, at the Agent's request, (through the Funds Administrator) shall submit to the Agent and the Lenders annually, an update of the status of each material environmental compliance or liability issue.

(c) The Agent and its representatives will have the right at any reasonable time to enter and visit the Real Estate and any other place where any property of the Parent, any Borrower or any of their respective Subsidiaries is located for the purposes of observing the Real Estate.

7.8 Compliance with ERISA. The Borrowers shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; (c) make all required contributions to any Plan subject to Section 412 of the Code; (d) not engage in a prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan; and (e) not engage in a transaction that could be subject to Section 4069(a) or 4212(c) of ERISA.

7.9 Mergers, Consolidations or Sales. No Borrower nor any of their respective Subsidiaries shall enter into any transaction of merger, reorganization, or consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or any part of its property, or wind up, liquidate or dissolve, or agree to do any of the foregoing, except for (i) sales of Inventory and licenses or leases of any Proprietary Rights in the ordinary course of its business (provided that no such license or lease shall be on an exclusive basis, if the Proprietary Rights which are the subject thereof are necessary or desirable to enable the Agent to sell, dispose, or complete manufacture of, or otherwise exercise its rights with respect to, any Collateral), (ii) sales or other dispositions of Equipment in the ordinary course of business that are obsolete or no longer used by Borrower in its business, (iii) Permitted Dispositions, (iv) sales or other dispositions of Fixed Assets which do not constitute Collateral for fair market value in an aggregate amount with respect to all such sales and dispositions after the Closing Date not to exceed $20,000,000 and (v) sales or other dispositions of Fixed Assets which do not constitute Collateral by Foreign Subsidiaries for fair market value. In addition to the foregoing, any Borrower may merge with any other Borrower, any Subsidiary of any Borrower may merge or consolidate with or into any Borrower, and any Subsidiary of any Borrower may merge with any Subsidiary of such Borrower or any other Borrower so long as (i) the surviving Person in any such merger shall be a Wholly-Owned Subsidiary of the Parent and (ii) in no event whatsoever shall any of Garlock Sealing, Garrison or any Dormant Subsidiary be a party to any such merger or consolidation.

7.10 Distributions; Restricted Investments. None of the Parent, any Borrower nor any of their respective Subsidiaries shall directly or indirectly declare or make, or incur any liability to make, any Distribution, except (i) Distributions to a Borrower by its Subsidiaries or by any such Subsidiary to any other Subsidiary (provided that no Borrower nor any Subsidiary Guarantor may declare or pay any Distribution to any Person that is not a Borrower or a Subsidiary Guarantor), (ii) so long as no Default or Event of Default shall have occurred and be continuing at the time of such Distribution, Distributions from any Borrower or any Subsidiary of any Borrower to the Parent in an amount during any twelve (12) month period, which when added to all other amounts received by the Parent during such period from any Borrower or any

Subsidiary of any Borrower from any source (including, without limitation, payments on any Debt of such Borrower or any of their respective Subsidiaries held by the Parent) shall not exceed 120% of the Parent's actual operating expenses during such period, and (iii) so long as no Default or Event of Default shall have occurred and be continuing at the time of declaration or payment thereof, the Parent may pay cash dividends in an aggregate amount not to exceed $250,000 in any twelve (12) month period. None of the Parent, any Borrower nor any of their respective Subsidiaries shall directly or indirectly declare or make, or incur any liability to make, any Restricted Investment other than (i) Permitted Restricted Investments, (ii) Permitted Foreign Subsidiary Investments,
(iii) Permitted Excess Collateral Provider Loans, (iv) Debt among the Borrowers and their respective Subsidiaries to the extent expressly permitted by Section 7.13(b), (d), (e) and (f) and (v) Permitted Purchase Money Acquisitions.

7.11 Transactions Affecting Collateral or Obligations. No Borrower nor any of its Subsidiaries shall enter into any transaction which would be reasonably expected to have a Material Adverse Effect.

7.12 Guaranties. None of Parent, any Borrower nor any of their respective Subsidiaries shall make, issue, or become liable on any Guaranty, except (i) Guaranties of the Obligations in favor of the Agent, (ii) unsecured Guaranties by the Parent, any Borrower or any of their respective Subsidiaries (other than Garlock Sealing or Garrison) with respect to Debt of Parent, any other Borrower or any such Subsidiary in an aggregate outstanding principal amount not to exceed $5,000,000, (iii) unsecured Guaranties entered into by the Parent in the ordinary course of business guaranteeing obligations and/or liabilities not constituting Debt of any Borrower or any Borrower's respective Subsidiaries and (iv) to the extent permitted under Section 7.13(b), other unsecured Guaranties and related obligations in existence as of the Closing Date and arising from discontinued operations.

7.13 Debt. No Borrower nor any of its Domestic Subsidiaries shall incur or maintain any Debt, other than: (a) the Obligations; (b) Debt described on Schedule 6.9; (c) Capital Leases of Equipment and purchase money secured Debt incurred to purchase Equipment provided that (i) Liens securing the same attach only to the Equipment acquired by the incurrence of such Debt, and (ii) the aggregate amount of such Debt (including Capital Leases) outstanding does not exceed $5,000,000 at any time; (d) Debt from any Borrower to Coltec in connection with the ordinary course operation of the Borrowers' cash management system; (e) intercompany Debt from any Excess Collateral Provider to any other Excess Collateral Provider (provided that such Debt is subordinated to the Obligations pursuant to the terms of the Intercompany Subordination Agreement);
(f) Debt owing from Garrison to Garlock Sealing pursuant to the terms of that certain Letter Agreement dated as of September 13, 1996 (provided that such Debt is subordinated to the Obligations on terms satisfactory to the Agent); (g) unsecured Debt of the Borrowers (or any Borrower) in an aggregate principal amount for all Borrowers not to exceed $10,000,000 so long as the payment of such Debt is subordinated to the Obligations on terms and conditions satisfactory to the Required Lenders; (h) Debt evidencing a refunding, renewal or extension of the Debt described on Schedule 6.9; provided that (i) the principal amount thereof is not increased, (ii) the Liens, if any, securing such refunded, renewed or extended Debt do not attach to any assets in addition to those assets, if any, securing the Debt to be refunded, renewed or extended,
(iii) no Person that is not an obligor or guarantor of such Debt as of the Closing Date shall become an obligor or guarantor thereof, and (iv) the terms of

such refunding, renewal or extension are no less favorable in any material respect to the applicable Borrower, the Agent or the Lenders than the original Debt (other than increases in interest rates to reflect the then current market interest rates; provided that such interest rate may not exceed 125% of the interest rate on such original Debt); (i) Permitted Excess Collateral Provider Loans permitted pursuant to Section 7.10 and (j) Debt incurred by a newly created Subsidiary of any Borrower formed in connection with a Permitted Purchase Money Acquisition, provided that (A) such newly created Subsidiary shall not engage in any transaction with any of the Parent, any Borrower or any other Subsidiary of any Borrower (other than diminimis ordinary course transactions that comply with the provisions of Section 7.15, including diminimis capital contributions required in connection with the formation of such Subsidiary), (B) shall not receive any proceeds of any Revolving Loan or the benefit of any Letter of Credit or any credit or other support from the Parent, any Borrower or any other Subsidiary of the Parent or any Borrower and
(C) such Debt shall be recourse solely to the assets of such newly created Subsidiary.

7.14 Prepayment. No Borrower nor any of its Subsidiaries shall voluntarily prepay or repurchase any Debt, except (i) the Obligations in accordance with the terms of this Agreement, (ii) payments with respect to Debt owing to or from any Borrower or its respective Subsidiaries to any other Borrower or its respective Subsidiaries, to the extent such payment is permitted pursuant to the terms of the Intercompany Subordination Agreement, and (iii) payments and repurchases of the TIDES if (A) at the time of any such prepayment or repurchase no Default or Event of Default shall have occurred and be continuing, (B) after giving effect to any such prepayment Aggregate Availability shall exceed $30,000,000 and (C) the aggregate amount of any such prepayment shall not exceed the Permitted Excess Expenditure Amount calculated on the date of such prepayment or repurchase.

7.15 Transactions with Affiliates. Except as set forth below, no Borrower nor any of its Subsidiaries shall, sell, transfer, distribute, or pay any money or property, including, but not limited to, any fees or expenses of any nature (including, but not limited to, any fees or expenses for management services), to any Affiliate, or lend or advance money or property to any Affiliate, or invest in (by capital contribution or otherwise) or purchase or repurchase any stock or indebtedness, or any property, of any Affiliate, or become liable on any Guaranty of the indebtedness, dividends, or other obligations of any Affiliate. Notwithstanding the foregoing, while no Event of Default has occurred and is continuing, each Borrower and its Subsidiaries may
(i) engage in transactions with Affiliates in the ordinary course of business consistent with past practices, in amounts and upon terms fully disclosed to the Agent and the Lenders, and no less favorable to such Borrower and its Subsidiaries than would be obtained in a comparable arm's-length transaction with a third party who is not an Affiliate, (ii) make payments pursuant to that certain management agreements and tax sharing agreements to be executed prior to the Closing Date, copies of which shall have been provided to the Agent and each of the Lenders, or which have otherwise been approved by the Agent, (iii) enter into transactions expressly permitted by the terms of Sections 7.9, 7.10, 7.12 and 7.13 and (iv) the guaranty fee payable to Garlock (not to exceed $1,000,000 per annum) payable pursuant to that certain agreement dated on or about the Closing Date between Garlock and Garrison.

7.16 Investment Banking and Finder's Fees. No Borrower nor any of its Subsidiaries shall pay or agree to pay, or reimburse any other party with respect to, any

investment banking or similar or related fee, underwriter's fee, finder's fee, or broker's fee to any Person in connection with this Agreement. The Borrowers shall defend and indemnify the Agent and the Lenders against and hold them harmless from all claims of any Person that any Borrower is obligated to pay for any such fees, and all costs and expenses (including attorneys' fees) incurred by the Agent and/or any Lender in connection therewith.

7.17 Business Conducted. No Borrower shall nor shall it permit any of its Subsidiaries to, engage directly or indirectly, in any line of business other than the businesses in which such Person is engaged on the Closing Date (after giving effect to the Spinoff) and similar businesses that manufacture products, and provide related services, for sale to industrial customers.

7.18 Liens. No Borrower nor any of their respective Domestic Subsidiaries shall create, incur, assume, or permit to exist any Lien on any property now owned or hereafter acquired by any of them, except Permitted Liens, and Liens, if any, in effect as of the Closing Date described in Schedule 6.9 securing Debt described in Schedule 6.9 and Liens securing Capital Leases and purchase money Debt permitted in Section 7.13.

7.19 Sale and Leaseback Transactions. No Borrower nor any of their respective Domestic Subsidiaries shall, directly or indirectly, enter into any arrangement with any Person providing for any Borrower or any Domestic Subsidiary to lease or rent property that any Borrower or any Domestic Subsidiary has sold or will sell or otherwise transfer to such Person; provided, however, that any Borrower (or any Domestic Subsidiary of any Borrower) may lease or rent any asset which is sold or disposed of as permitted by Section 7.9.

7.20 New Subsidiaries. The Borrowers shall not, directly or indirectly, organize, create, acquire or permit to exist any Subsidiary other than those listed on Schedule 6.5 and Wholly Owned Subsidiaries created in connection with any Permitted Restricted Investment.

7.21 Fiscal Year. Neither the Parent nor the Borrowers shall change their Fiscal Year.

7.22 Limitation on Accelerated Settlement of Claims. If at any time Aggregate Availability shall be less than $30,000,000, the Agent, Garlock Sealing and any other Borrower or Subsidiary Guarantor managing asbestos claims against itself shall meet on a prompt basis and discuss such Persons' ongoing strategy with respect to settling and payment of legal claims relating to asbestos and possible changes that such Persons may propose to implement in connection therewith.

7.23 Fixed Charge Coverage Ratio. The Parent and the Borrowers will maintain a Fixed Charge Coverage Ratio for each period of twelve consecutive fiscal months ended on the last day of each fiscal month of not less than 1.0 to 1; provided that with respect to the fiscal months ending on or before May 31, 2003, such Fixed Charge Coverage Ratio shall be calculated for the period commencing on the Closing Date and ending on the last day of such fiscal month; and provided further that for any period ending prior to September 1, 2002, the Borrowers need only maintain a Fixed Charge

Coverage Ratio of not less than 0.80 to 1.0 and for the period ending on September 30, 2002, the Borrowers need only maintain a Fixed Charge Coverage Ratio of not less than 0.90 to 1.0. The Fixed Charge Coverage Ratio shall only be tested, and the Borrowers need only comply with the covenant set forth in the
Section 7.23, as of the last day of any fiscal month in which either (i) average daily Aggregate Availability of the Borrowers during such fiscal month (as determined by the Agent) shall be equal to or less than $30,000,000 or (ii) Aggregate Availability on any day during such fiscal month (as determined by the Agent) shall be equal to or less than $15,000,000; provided, however, that a breach of such covenant when so tested shall not be cured by an increase of the aggregate average daily Availability in any subsequent month above $30,000,000 or an increase of the Aggregate Availability on any day above $15,000,000.

7.24 Use of Proceeds. The Borrowers shall not, and shall not suffer or permit any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance indebtedness of any Borrower or others incurred to purchase or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act.

7.25 Real Property Liens.

If at any time Aggregate Availability shall be less than $15,000,000 for ten (10) consecutive Business Days, the Borrowers shall, and shall cause each of their respective Domestic Subsidiaries to, promptly (and in any event within 60 days after such event) secure their respective obligations under this Agreement and the other Loan Documents with mortgage liens on all of their respective domestic Real Estate. In connection with the recording of such mortgages and deeds of trust and similar documents, the Agent shall be entitled to obtain title insurance (with appropriate endorsements and a waiver of any survey exception contained therein) and other items customarily received by lenders in similar transactions secured by real property collateral. All costs, expenses, title fees, insurance premiums and similar amounts in connection therewith and with the preparation, negotiation and execution of such mortgages and deeds of trust and similar documents shall be for the account of the Borrowers.

7.26 Dormant Subsidiaries. From and after the date of this Agreement, no Dormant Subsidiary shall (i) conduct or engage in any business,
(ii) incur of become liable with respect to any Debt, (iii) acquire any assets,
(iv) enter into any transaction with any of the Parent, any Borrower, any of their respective Subsidiaries or any other Person.

7.27 Tax Matters Agreement. The Parent shall comply in all material respects with all of its respective covenants and obligations under the Tax Matters Agreement, including without limitation, its obligations pursuant to
Section 3.02(b) thereof not to take any action inconsistent with the representation letter delivered by the Parent in connection with the "Tax Opinion" as defined therein (unless the requirements of such Section 3.02(b) have been satisfied).

7.28 Modification to the EIFA. None of the Parent, any Borrower nor any of their respective Subsidiaries shall amend, modify, supplement, waive or terminate the EIFA or any term, condition or other provision thereof without the prior written consent of the Required Lenders; provided that only the prior written consent of the Agent shall be required with respect

to any immaterial amendment, modification, supplement or waiver or any amendment, modification, supplement or waiver that increases or accelerates the timing of payments thereunder.

7.29 Further Assurances. The Borrowers shall execute and deliver, or cause to be executed and delivered, to the Agent and/or the Lenders such documents and agreements, and shall take or cause to be taken such actions, as the Agent or any Lender may, from time to time, request to carry out the terms and conditions of this Agreement and the other Loan Documents.

ARTICLE 8
CONDITIONS OF LENDING

8.1 Conditions Precedent to Making of Loans on the Closing Date. The obligation of the Lenders to make the initial Revolving Loans on the Closing Date, and the obligation of the Agent to cause the Letter of Credit Issuer to issue any Letter of Credit on the Closing Date, are subject to the following conditions precedent having been satisfied in a manner satisfactory to the Agent and each Lender:

(a) This Agreement and the other Loan Documents shall have been executed by each party thereto and the Borrowers shall have performed and complied with all covenants, agreements and conditions contained herein and the other Loan Documents which are required to be performed or complied with by the Borrowers before or on such Closing Date.

(b) Upon making the Revolving Loans (including such Revolving Loans made to finance the fees payable to the Agent on the Closing Date or otherwise as reimbursement for fees, costs and expenses then payable under this Agreement) and with all its obligations current, the Borrowers shall have Aggregate Availability of at least $35,000,000.

(c) All representations and warranties made hereunder and in the other Loan Documents shall be true and correct in all material respects as if made on such date.

(d) No Default or Event of Default shall have occurred and be continuing after giving effect to the Loans to be made and the Letters of Credit to be issued on the Closing Date.

(e) The Agent and the Lenders shall have received such opinions of counsel for the Parent, each Borrower and their respective Domestic Subsidiaries as the Agent or any Lender shall request, each such opinion to be in a form, scope, and substance satisfactory to the Agent, the Lenders, and their respective counsel.

(f) The Agent shall have received:

(i) acknowledgment copies of proper financing statements, duly filed on or before the Closing Date under the UCC of all jurisdictions that the Agent may deem necessary or desirable in order to perfect the Agent's Liens;

(ii) duly executed UCC-3 Termination Statements and such other instruments, in form and substance satisfactory to the Agent, as shall be

necessary to terminate and satisfy all Liens on the Property of the Parent, each Borrower and their respective Domestic Subsidiaries except Permitted Liens;

(iii) (A) executed Assignments of Proceeds of Insurance Policy as Collateral by each of Coltec, Garrison and Garlock, together with executed acknowledgments, in each case in form and substance satisfactory to the Agent, from Eligible Insurance Providers which are obligated, in the aggregate, on at least 50% of the amounts owing to Garlock Sealing as of the Closing Date to reimburse Garlock Sealing for payments made by Garlock Sealing with respect to claims against Garlock Sealing relating to its use and distribution of products alleged to contain asbestos, and (B) an opinion of Robinson, Bradshaw & Hinson, P.A. as to the perfection and priority of the security interest granted to the Agent pursuant to such assignments under North Carolina law.

(g) The Borrowers shall have paid all fees and expenses of the Agent and the Attorney Costs incurred in connection with any of the Loan Documents and the transactions contemplated thereby to the extent invoiced.

(h) The Agent shall have received evidence, in form, scope, and substance, reasonably satisfactory to the Agent, of all insurance coverage as required by this Agreement and the Agent and each of the Lenders shall be satisfied with such coverage as of the Closing Date.

(i) The Agent and the Lenders shall have had an opportunity, if they so choose, to examine the books of account and other records and files of the Borrowers and to make copies thereof, and to conduct a pre-closing audit which shall include, without limitation, verification of Inventory, Accounts, and the Borrowing Base, and the results of such examination and audit shall have been satisfactory to the Agent and the Lenders in all respects.

(j) All proceedings taken in connection with the execution of this Agreement, all other Loan Documents and all documents and papers relating thereto shall be satisfactory in form, scope, and substance to the Agent and the Lenders, including, without limitation, acceptable intercreditor agreements with any other secured Debt and subordination terms with respect to any obligations which may become owing under the Goodrich Indemnification Agreement and acceptable subordination terms with respect to Debt among the Borrowers and their respective Subsidiaries.

(k) Without limiting the generality of the items described above, the Parent, the Borrowers and each Person guarantying or securing payment of the Obligations shall have delivered or caused to be delivered to the Agent (in form and substance reasonably satisfactory to the Agent), the financial statements, instruments, resolutions, documents, agreements, certificates, opinions and other items set forth on the "Closing Checklist" delivered by the Agent to the Borrowers prior to the Closing Date.

(l) The Spinoff shall have occurred and the Agent shall have received comfort satisfactory to the Agent that the representations made by the Parent in support

of the "Tax Opinion" as such opinion relates to the tax free nature of the Spinoff are true and correct in all material respects, together with a copy of the executed Tax Matters Agreement.

The acceptance by the Borrowers of any Loans made or Letters of Credit issued on the Closing Date shall be deemed to be a representation and warranty made by the Borrowers to the effect that all of the conditions precedent to the making of such Loans or the issuance of such Letters of Credit have been satisfied (or waived by the necessary Lenders, as applicable), with the same effect as delivery to the Agent and the Lenders of a certificate signed by a Responsible Officer of the Borrowers, dated the Closing Date, to such effect.

8.2 Conditions Precedent to Each Loan. The obligation of the Lenders to make each Loan, including the initial Revolving Loans on the Closing Date, and the obligation of the Agent to cause the Letter of Credit Issuer to issue any Letter of Credit shall be subject to the further conditions precedent that on and as of the date of any such extension of credit:

(a) The following statements shall be true, and the acceptance by any Borrower of any extension of credit shall be deemed to be a statement to the effect set forth in clauses (i), (ii) and (iii) with the same effect as the delivery to the Agent and the Lenders of a certificate signed by a Responsible Officer, dated the date of such extension of credit, stating that:

(i) The representations and warranties contained in this Agreement and the other Loan Documents are correct in all material respects on and as of the date of such extension of credit as though made on and as of such date, other than any such representation or warranty which relates to a specified prior date and except to the extent the Agent and the Lenders have been notified in writing by the Funds Administrator that any representation or warranty is not correct and the Required Lenders have explicitly waived in writing compliance with such representation or warranty; and

(ii) No event has occurred and is continuing, or would result from such extension of credit, which constitutes a Default or an Event of Default; and

(iii) No event has occurred and is continuing, or would result from such extension of credit, which has had or would have a Material Adverse Effect.

(b) No such Borrowing with respect to any Borrower shall exceed Availability of such Borrower and no such Borrowing to any Borrower shall exceed Aggregate Availability, provided, however, that the foregoing conditions precedent are not conditions to each Lender participating in or reimbursing the Bank or the Agent for such Lenders' Pro Rata Share of any Non-Ratable Loan or Agent Advance made in accordance with the provisions of Sections 1.2(h) and (i).

ARTICLE 9
DEFAULT; REMEDIES

9.1 Events of Default. It shall constitute an event of default ("Event of Default") if any one or more of the following shall occur for any reason:

(a) any failure by any Borrower to pay the principal of or interest or premium on any of the Obligations or any fee or other amount owing hereunder when due, whether upon demand or otherwise;

(b) any representation or warranty made or deemed made by any Borrower in this Agreement or by the Parent, any Borrower or any of their respective Subsidiaries in any of the other Loan Documents, any Financial Statement, or any certificate furnished any such Person at any time to the Agent or any Lender shall prove to be untrue in any material respect as of the date on which made, deemed made, or furnished;

(c) (i) any default shall occur in the observance or performance of any of the covenants and agreements contained in Sections 5.2(j), 7.2, 7.5, 7.9-7.25, or Section 11 of any Security Agreement, (ii) any default shall occur in the observance or performance of any of the covenants and agreements contained in Sections 5.2 (other than 5.2(j)) or 5.3 and such default shall continue for five (5) Business Days or more after the earlier of (A) the date on which an officer of any Borrower acquired knowledge thereof and (B) the date on which written notice thereof is delivered by the Agent or any Lender to the Funds Administrator; or (iii) any default shall occur in the observance or performance of any of the other covenants or agreements contained in any other Section of this Agreement or any other Loan Document, any other Loan Documents, or any other agreement entered into at any time to which the Parent, any Borrower or any of their respective Subsidiaries and the Agent or any Lender are party (including in respect of any Bank Products) and such default shall continue for fifteen (15) days or more after the earlier of (A) the date on which an officer of any Borrower acquired knowledge thereof and (B) the date on which written notice thereof is delivered by the Agent or any Lender to the Funds Administrator;

(d) any default shall occur with respect to any Debt (other than the Obligations) of the Parent, any Borrower or any of their respective Subsidiaries in an outstanding principal amount which exceeds $2,000,000, or under any agreement or instrument under or pursuant to which any such Debt may have been issued, created, assumed, or guaranteed by the Parent, any Borrower or any of their respective Subsidiaries, and such default shall continue for more than the period of grace, if any, therein specified, if the effect thereof (with or without the giving of notice or further lapse of time or both) is to accelerate, or to permit the holders of any such Debt to accelerate, the maturity of any such Debt; or any such Debt shall be declared due and payable or be required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof; or the Parent, any Borrower or any of their respective Subsidiaries shall default beyond any applicable grace period in the payment of principal of, or interest on, any such Debt when due (whether at the final maturity thereof or otherwise);

(e) the Parent, any Borrower or any of their respective Subsidiaries shall (i) file a voluntary petition in bankruptcy or file a voluntary petition or an answer or otherwise commence any action or proceeding seeking reorganization, arrangement or readjustment of its debts or for any other relief under the federal Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or law, state or federal, now or hereafter existing, or consent to, approve of, or acquiesce in, any such petition, action or proceeding; (ii) apply for or acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee or similar officer for it or for all or any part of its property; (iii) make an assignment for the benefit of creditors; (iv) be unable generally to pay its debts as they become due or shall admit in writing its inability to pay such debts as they become due;

(f) an involuntary petition shall be filed or an action or proceeding otherwise commenced seeking reorganization, arrangement, consolidation or readjustment of the debts of the Parent, any Borrower or any of their respective Subsidiaries or for any other relief under the federal Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or law, state or federal, now or hereafter existing and such petition or proceeding shall not be dismissed within thirty
(30) days after the filing or commencement thereof or an order of relief shall be entered with respect thereto;

(g) a receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee or similar officer for the Parent, any Borrower or any of their respective Subsidiaries or for all or any part of its property shall be appointed or a warrant of attachment, execution or similar process shall be issued against any part of the property of the Parent, any Borrower or any of their respective Subsidiaries;

(h) the Parent, any Borrower or any of their respective Subsidiaries shall file a certificate of dissolution under applicable state law or shall be liquidated, dissolved or wound-up or shall commence or have commenced against it any action or proceeding for dissolution, winding-up or liquidation, or shall take any corporate action in furtherance thereof;

(i) all or any material part of the property of the Parent, any Borrower or any of their respective Subsidiaries with assets in excess of $2,000,000 in value shall be nationalized, expropriated or condemned, seized or otherwise appropriated, or custody or control of such property or of the Parent, any Borrower or any of their respective Subsidiaries shall be assumed by any Governmental Authority or any court of competent jurisdiction at the instance of any Governmental Authority, except where contested in good faith by proper proceedings diligently pursued where a stay of enforcement is in effect;

(j) any Loan Document shall be terminated, revoked or declared void or invalid or unenforceable or challenged by the Parent, any Borrower or any of their respective Subsidiaries or any other obligor; or the Goodrich Subordination Agreement shall be terminated, revoked or declared void or invalid or

unenforceable or challenged by Goodrich, any Borrower or any of their respective Subsidiaries, or any payment shall be made in violation of the terms and provisions thereof; or any subordination agreement or intercreditor agreement (including, without limitation the Intercompany Subordination Agreement) entered into with the Agent with respect to any intercompany Debt among the Parent, Borrowers and their respective Subsidiaries shall be terminated, revoked or declared void or invalid or unenforceable or challenged by the Parent, any Borrower or any of their respective Subsidiaries, or any payment shall be made in violation of the terms and provisions thereof;

(k) one or more judgments, orders, decrees or arbitration awards is entered against the Parent, any Borrower or any of their respective Subsidiaries involving in the aggregate liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) as to any single or related or unrelated series of transactions, incidents or conditions, of $2,000,000 or more, and the same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of thirty (30) days after the entry thereof;

(l) any loss, theft, damage or destruction of any item or items of Collateral or other property of the Parent, any Borrower or any of their respective Subsidiaries occurs which could reasonably be expected to cause a Material Adverse Effect and is not adequately covered by insurance;

(m) there is filed against the Parent, any Borrower or any of their respective Subsidiaries any action, suit or proceeding under any federal or state racketeering statute (including the Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit or proceeding (i) is not dismissed within one hundred twenty (120) days, and (ii) could reasonably be expected to result in the confiscation or forfeiture of any material portion of the Collateral;

(n) for any reason other than the failure of the Agent to take any action available to it to maintain perfection of the Agent's Liens, pursuant to the Loan Documents, any Loan Document ceases to be in full force and effect or any Lien with respect to any material portion of the Collateral intended to be secured thereby ceases to be, or is not, valid, perfected and prior to all other Liens (other than Permitted Liens) or is terminated, revoked or declared void;

(o) an ERISA Event shall occur with respect to a Pension Plan or Multi-employer Plan which has resulted or could reasonably be expected to result in liability of any Borrower under Title IV of ERISA to the Pension Plan, Multi-employer Plan or the PBGC in an aggregate amount in excess of $2,000,000; (ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans at any time exceeds $2,000,000; or (iii) any Borrower or any ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multi-employer Plan in an aggregate amount in excess of $2,000,000;

(p) at any time the Agent shall not have a perfected first priority security interest (acknowledged by the applicable insurance company pursuant to an acknowledgment in form and substance satisfactory to the Agent) in at least 50% of the amounts owing to Garlock Sealing as such time to reimburse Garlock Sealing for payments made by Garlock Sealing with respect to claims against Garlock Sealing relating to its use and distribution of products alleged to contain asbestos;

(q) there occurs a Change of Control; or

(r) there occurs an event having a Material Adverse Effect.

9.2 Remedies.

(a) If a Default or an Event of Default exists, the Agent may, in its discretion, and shall, at the direction of the Required Lenders, do one or more of the following at any time or times and in any order, without notice to or demand on any Borrower: (i) reduce the Maximum Revolver Amount, or the advance rates against Eligible Accounts and/or Eligible Inventory used in computing the Borrowing Base, or reduce one or more of the other elements used in computing the Borrowing Base; (ii) restrict the amount of or refuse to make Revolving Loans; and (iii) restrict or refuse to provide Letters of Credit or Credit Support. If an Event of Default exists, the Agent shall, at the direction of the Required Lenders, do one or more of the following, in addition to the actions described in the preceding sentence, at any time or times and in any order, without notice to or demand on any Borrower: (A) terminate the Commitments and this Agreement; (B) declare any or all Obligations to be immediately due and payable; provided, however, that upon the occurrence of any Event of Default described in Sections 9.1(e), 9.1(f), 9.1(g), or 9.1(h), the Commitments shall automatically and immediately expire and all Obligations shall automatically become immediately due and payable without notice or demand of any kind; (C) require any Borrower to cash collateralize all outstanding Letter of Credit Obligations; and (D) pursue its other rights and remedies under the Loan Documents and applicable law.

(b) If an Event of Default has occurred and is continuing: (i) the Agent shall have for the benefit of the Lenders, in addition to all other rights of the Agent and the Lenders, the rights and remedies of a secured party under the Loan Documents and the UCC; (ii) the Agent may, at any time, take possession of the Collateral and keep it on the Borrowers' premises, at no cost to the Agent or any Lender, or remove any part of it to such other place or places as the Agent may desire, or the Borrowers shall, upon the Agent's demand, at the Borrowers' cost, assemble the Collateral and make it available to the Agent at a place reasonably convenient to the Agent; and (iii) the Agent may sell and deliver any Collateral at public or private sales, for cash, upon credit or otherwise, at such prices and upon such terms as the Agent deems advisable, in its sole discretion, and may, if the Agent deems it reasonable, postpone or adjourn any sale of the Collateral by an announcement at the time and place of sale or of such postponed or adjourned sale without giving a new notice of sale. Without in any way requiring notice to be given in the following manner, the Borrowers agree that any notice by the Agent of sale, disposition or other intended action hereunder or in connection herewith, whether required by the UCC or otherwise, shall constitute reasonable notice to the Borrowers if such notice is

mailed by registered or certified mail, return receipt requested, postage prepaid, or is delivered personally against receipt, at least five (5) Business Days prior to such action to the Borrowers' respective addresses specified in or pursuant to Section 13.8. If any Collateral is sold on terms other than payment in full at the time of sale, no credit shall be given against the Obligations until the Agent or the Lenders receive payment, and if the buyer defaults in payment, the Agent may resell the Collateral without further notice to any Borrower. In the event the Agent seeks to take possession of all or any portion of the Collateral by judicial process, each of the Borrowers irrevocably waives:
(A) the posting of any bond, surety or security with respect thereto which might otherwise be required; (B) any demand for possession prior to the commencement of any suit or action to recover the Collateral; and (C) any requirement that the Agent retain possession and not dispose of any Collateral until after trial or final judgment. Each of the Borrowers agrees that the Agent has no obligation to preserve rights to the Collateral or marshal any Collateral for the benefit of any Person. The Agent is hereby granted a license or other right to use, without charge after the occurrence and during the continuance of an Event of Default, the Borrowers' labels, patents, copyrights, name, trade secrets, trade names, trademarks, and advertising matter, or any similar property, in completing production of, advertising or selling any Collateral, and the Borrowers' rights under all licenses and all franchise agreements shall inure to the Agent's benefit for such purpose. The proceeds of sale shall be applied first to all expenses of sale, including attorneys' fees, and then to the Obligations. The Agent will return any excess to the Borrowers and the Borrowers shall remain liable for any deficiency.

(c) If an Event of Default occurs, each of the Borrowers hereby waives all rights to notice and hearing prior to the exercise by the Agent of the Agent's rights to repossess the Collateral without judicial process or to reply, attach or levy upon the Collateral without notice or hearing.

ARTICLE 10
TERM AND TERMINATION

10.1 Term and Termination. The term of this Agreement shall end on the Stated Termination Date unless sooner terminated in accordance with the terms hereof. The Agent upon direction from the Required Lenders may terminate this Agreement without notice upon the occurrence of an Event of Default. Upon the effective date of termination of this Agreement for any reason whatsoever, all Obligations (including all unpaid principal, accrued and unpaid interest and any early termination or prepayment fees or penalties) shall become immediately due and payable and the Borrowers shall immediately arrange for the cancellation and return of Letters of Credit then outstanding. Notwithstanding the termination of this Agreement, until all Obligations are indefeasibly paid and performed in full in cash, the Borrowers shall remain bound by the terms of this Agreement and shall not be relieved of any of its Obligations hereunder or under any other Loan Document, and the Agent and the Lenders shall retain all their rights and remedies hereunder (including the Agent's Liens in and all rights and remedies with respect to all then existing and after-arising Collateral).

ARTICLE 11

AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

11.1 Amendments and Waivers.

(a) No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by the Parent, any Borrower or any of their respective Subsidiaries therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by the Agent at the written request of the Required Lenders) and the Borrowers (or other applicable Person) and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all the Lenders and the Borrowers and acknowledged by the Agent, do any of the following:

(i) increase or extend the Commitment of any Lender;

(ii) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document;

(iii) reduce the principal of, or the rate of interest specified herein on any Loan, or any fees or other amounts payable hereunder or under any other Loan Document;

(iv) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans which is required for the Lenders or any of them to take any action hereunder;

(v) increase any of the percentages set forth in the definition of the Borrowing Base, Garlock Sealing Borrowing Base or Excess Collateral Providers Borrowing Base;

(vi) amend this Section or any provision of this Agreement providing for consent or other action by all Lenders;

(vii) release any Guaranties of the Obligations (other than release of any Subsidiary Guarantor of its obligations under the Subsidiary Guaranty if such Subsidiary Guarantor is sold or otherwise disposed of as permitted by this Agreement or pursuant to a transaction consented to by the Required Lenders) or release Collateral other than as permitted by Section 12.11;

(viii) change the definitions of "Majority Lenders" or "Required Lenders";

(ix) increase the Maximum Revolver Amount, and Letter of Credit Subfacility; or

(x) amend Section 3.8;

provided, however, the Agent may, in its sole discretion and notwithstanding the limitations contained in clauses (v) and (ix) above and any other terms of this Agreement, make Agent Advances in accordance with Section 1.2(i) and, provided further, that no amendment, waiver or consent shall, unless in writing and signed by the Agent, affect the rights or duties of the Agent under this Agreement or any other Loan Document and provided further, that Schedule 1.2 hereto (Commitments) may be amended from time to time by Agent alone to reflect assignments of Commitments in accordance herewith.

(b) If any fees are paid to the Lenders as consideration for amendments, waivers or consents with respect to this Agreement, at Agent's election, such fees may be paid only to those Lenders that agree to such amendments, waivers or consents within the time specified for submission thereof.

(i) requiring the consent of all Lenders, the consent of Required Lenders is obtained, but the consent of other Lenders is not obtained (any such Lender whose consent is not obtained as described in this clause (i) and in clause (ii) below being referred to as a "Non-Consenting Lender"), or

(ii) requiring the consent of Required Lenders, the consent of Majority Lenders is obtained,

then, so long as the Agent is not a Non-Consenting Lender, at the Funds Administrator's request, the Agent or an Eligible Assignee shall have the right (but not the obligation) with the Agent's approval, to purchase from the Non-Consenting Lenders, and the Non-Consenting Lenders agree that they shall sell, all the Non-Consenting Lenders' Commitments for an amount equal to the principal balances thereof and all accrued interest and fees with respect thereto through the date of sale pursuant to Assignment and Acceptance Agreement(s), without premium or discount.

11.2 Assignments; Participations.

(a) Any Lender may, with the written consent of the Agent (which consent shall not be unreasonably withheld), and so long as no Default or Event of Default has occurred and is continuing, with the written consent of the Funds Administrator (which consent shall not be unreasonably withheld), assign and delegate to one or more Eligible Assignees (provided that no consent of the Agent or the Funds Administrator shall be required in connection with any assignment and delegation by a Lender to an Affiliate of such Lender) (each an "Assignee") all, or any ratable part of all, of the Loans, the Commitments and the other rights and obligations of such Lender hereunder, in a minimum amount of $5,000,000 (provided that, unless an assignor Lender has assigned and delegated all of its Loans and Commitments, no such assignment and/or delegation shall be permitted unless, after giving effect thereto, such assignor Lender retains a Commitment in a minimum amount of $10,000,000; provided, however, that the Borrowers and the Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such

assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Funds Administrator and the Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall have delivered to the Funds Administrator and the Agent an Assignment and Acceptance in the form of Exhibit E ("Assignment and Acceptance") together with any note or notes subject to such assignment and
(iii) the assignor Lender or Assignee has paid to the Agent a processing fee in the amount of $3,500 (other than with respect to assignments to such assignor's Affiliates). The Borrowers agree to promptly execute and deliver new promissory notes and replacement promissory notes as reasonably requested by the Agent to evidence assignments of the Loans and Commitments in accordance herewith.

(b) From and after the date that the Agent notifies the assignor Lender that it has received an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations, including, but not limited to, the obligation to participate in Letters of Credit and Credit Support have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto).

(c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto or the attachment, perfection, or priority of any Lien granted by the Borrowers to the Agent or any Lender in the Collateral; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or the performance or observance by the Borrowers of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto; (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such Assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such Assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers, including the discretionary rights and incidental power, as are reasonably incidental thereto; and (vi) such Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(d) Immediately upon satisfaction of the requirements of
Section 11.2(a), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

(e) Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons not Affiliates of any Borrower (a "Participant") participating interests in any Loans, the Commitment of that Lender and the other interests of that Lender (the "originating Lender") hereunder and under the other Loan Documents; provided, however, that (i) the originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance of such obligations, (iii) the Borrowers and the Agent shall continue to deal solely and directly with the originating Lender in connection with the originating Lender's rights and obligations under this Agreement and the other Loan Documents, and (iv) no Lender shall transfer or grant any participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document except the matters set forth in Section 11.1(a) (i), (ii) and (iii), and all amounts payable by the Borrowers hereunder shall be determined as if such Lender had not sold such participation; except that, if amounts outstanding under this Agreement are due and unpaid, or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent and subject to the same limitation as if the amount of its participating interest were owing directly to it as a Lender under this Agreement.

(f) Notwithstanding any other provision in this Agreement, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.

ARTICLE 12
THE AGENT

12.1 Appointment and Authorization. Each Lender hereby designates and appoints Bank as its Agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. The Agent agrees to act as such on the express conditions contained in this Article 12. The provisions of this Article 12 are solely for the benefit of the Agent and the Lenders and the Borrowers shall have no rights as a third party beneficiary of any of the provisions contained herein. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary

relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. Except as expressly otherwise provided in this Agreement, the Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions which the Agent is expressly entitled to take or assert under this Agreement and the other Loan Documents, including (a) the determination of the applicability of ineligibility criteria with respect to the calculation of the Borrowing Base, the Garlock Sealing Borrowing Base or the Excess Collateral Providers Borrowing Base, (b) the making of Agent Advances pursuant to Section 1.2(i), and (c) the exercise of remedies pursuant to Section 9.2, and any action so taken or not taken shall be deemed consented to by the Lenders.

12.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects as long as such selection was made without gross negligence or willful misconduct.

12.3 Liability of Agent. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by the Parent, any Borrower or any of their respective Subsidiaries or Affiliates, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Parent, the Borrowers or any of their respective Subsidiaries or Affiliates.

12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Borrowers), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the

Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders (or all Lenders if so required by Section 11.1) and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

12.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, unless the Agent shall have received written notice from a Lender or the Funds Administrator referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default." The Agent will notify the Lenders of its receipt of any such notice. The Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 9; provided, however, that unless and until the Agent has received any such request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable.

12.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by the Agent hereinafter taken, including any review of the affairs of the Parent, the Borrowers and their respective Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Parent, the Borrowers and their respective Affiliates, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Parent, the Borrowers and their respective Affiliates. Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by the Agent, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Parent, the Borrowers and their respective Affiliates which may come into the possession of any of the Agent-Related Persons.

12.7 Indemnification. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Borrowers and without limiting the obligation of the Borrowers to do so), in accordance with their Pro Rata Shares, from and against any and all Indemnified Liabilities as such term is defined in Section 13.11; provided, however, that no Lender shall be liable for the payment to the Agent-Related Persons of any portion of such Indemnified Liabilities resulting solely from such Person's gross negligence or willful

misconduct. Without limitation of the foregoing, each Lender shall reimburse the Agent upon demand for its Pro Rata Share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of the Agent.

12.8 Agent in Individual Capacity. The Bank and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Parent, any Borrower and any of their respective Subsidiaries or Affiliates as though the Bank were not the Agent hereunder and without notice to or consent of the Lenders. The Bank or its Affiliates may receive information regarding the Parent, any Borrower and any of their respective Subsidiaries or Affiliates and Account Debtors (including information that may be subject to confidentiality obligations in favor of the Parent, any Borrower and any of their respective Subsidiaries or Affiliates) and acknowledge that the Agent and the Bank shall be under no obligation to provide such information to them. With respect to its Loans, the Bank shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent, and the terms "Lender" and "Lenders" include the Bank in its individual capacity.

12.9 Successor Agent. The Agent may resign as Agent upon at least 30 days' prior notice to the Lenders and the Funds Administrator, such resignation to be effective upon the acceptance of a successor agent to its appointment as Agent. In the event the Bank sells all of its Commitment and Revolving Loans as part of a sale, transfer or other disposition by the Bank of substantially all of its loan portfolio, the Bank shall resign as Agent and such purchaser or transferee shall become the successor Agent hereunder. Subject to the foregoing, if the Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Lenders and the Funds Administrator, a successor agent from among the Lenders. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean such successor agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article 12 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.

12.10 Withholding Tax.

(a) If any Lender is a "foreign corporation, partnership or trust" within the meaning of the Code and such Lender claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver to the Agent:

(i) if such Lender claims an exemption from, or a reduction of, withholding tax under a United States of America tax treaty, properly completed IRS Forms W-8BEN and W-8ECI before the payment of any interest in the first calendar year and before the payment of any interest in each third succeeding calendar year during which interest may be paid under this Agreement;

(ii) if such Lender claims that interest paid under this Agreement is exempt from United States of America withholding tax because it is effectively connected with a United States of America trade or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI before the payment of any interest is due in the first taxable year of such Lender and in each succeeding taxable year of such Lender during which interest may be paid under this Agreement, and IRS Form W-9; and

(iii) such other form or forms as may be required under the Code or other laws of the United States of America as a condition to exemption from, or reduction of, United States of America withholding tax.

Such Lender agrees to promptly notify the Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

(b) If any Lender claims exemption from, or reduction of, withholding tax under a United States of America tax treaty by providing IRS Form FW-8BEN and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations owing to such Lender, such Lender agrees to notify the Agent of the percentage amount in which it is no longer the beneficial owner of Obligations of the Borrowers to such Lender. To the extent of such percentage amount, the Agent will treat such Lender's IRS Form W-8BEN as no longer valid.

(c) If any Lender claiming exemption from United States of America withholding tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations owing to such Lender, such Lender agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code.

(d) If any Lender is entitled to a reduction in the applicable withholding tax, the Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (a) of this Section are not delivered to the Agent, then the Agent may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax.

(e) If the IRS or any other Governmental Authority of the United States of America or other jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax

ineffective, or for any other reason) such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of the Agent.

12.11 Collateral Matters.

(a) The Lenders hereby irrevocably authorize the Agent, at its option and in its sole discretion, to release any Agent's Liens upon any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by Borrowers of all Loans and reimbursement obligations in respect of Letters of Credit and Credit Support, and the termination of all outstanding Letters of Credit (whether or not any of such obligations are due) and all other Obligations; (ii) constituting property being sold or disposed of if the Funds Administrator certifies to the Agent that the sale or disposition is made in compliance with Section 7.9 (and the Agent may rely conclusively on any such certificate, without further inquiry); (iii) constituting property in which the Borrowers owned no interest at the time the Lien was granted or at any time thereafter; or (iv) constituting property leased to the Borrowers under a lease which has expired or been terminated in a transaction permitted under this Agreement. Except as provided above, the Agent will not release any of the Agent's Liens without the prior written authorization of the Lenders; provided that, in addition to releases of Collateral sold pursuant to Section 7.9 or other dispositions expressly approved by the Required Lenders, the Agent may, in its discretion, release the Agent's Liens on Collateral valued in the aggregate not in excess of $1,000,000 during each Fiscal Year without the prior written authorization of the Lenders and the Agent may release the Agent's Liens on Collateral valued in the aggregate not in excess of $2,000,000 during each Fiscal Year with the prior written authorization of Required Lenders. Upon request by the Agent or the Funds Administrator at any time, the Lenders will confirm in writing the Agent's authority to release any Agent's Liens upon particular types or items of Collateral pursuant to this Section 12.11.

(b) Upon receipt by the Agent of any authorization required pursuant to Section 12.11(a) from the Lenders of the Agent's authority to release Agent's Liens upon particular types or items of Collateral, and upon at least five (5) Business Days prior written request by the Funds Administrator, the Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Agent's Liens upon such Collateral; provided, however, that (i) the Agent shall not be required to execute any such document on terms which, in the Agent's opinion, would expose the Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Borrowers in respect of) all interests retained by the Borrowers, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral.

(c) The Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by the Borrowers or is cared for, protected or insured or has been encumbered, or that the Agent's Liens have been properly or

sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to the Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Agent may act in any manner it may deem appropriate, in its sole discretion given the Agent's own interest in the Collateral in its capacity as one of the Lenders and that the Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing.

12.12 Restrictions on Actions by Lenders; Sharing of Payments.

(a) Each of the Lenders agrees that it shall not, without the express consent of all Lenders, and that it shall, to the extent it is lawfully entitled to do so, upon the request of all Lenders, set off against the Obligations, any amounts owing by such Lender to the Borrowers or any accounts of the Borrowers now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so by the Agent, take or cause to be taken any action to enforce its rights under this Agreement or against any Borrower, including the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

(b) If at any time or times any Lender shall receive (i) by payment, foreclosure, setoff or otherwise, any proceeds of Collateral or any payments with respect to the Obligations of any Borrower to such Lender arising under, or relating to, this Agreement or the other Loan Documents, except for any such proceeds or payments received by such Lender from the Agent pursuant to the terms of this Agreement, or (ii) payments from the Agent in excess of such Lender's ratable portion of all such distributions by the Agent, such Lender shall promptly (1) turn the same over to the Agent, in kind, and with such endorsements as may be required to negotiate the same to the Agent, or in same day funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, however, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.

12.13 Agency for Perfection. Each Lender hereby appoints each other Lender as agent for the purpose of perfecting the Lenders' security interest in assets which, in accordance with Article 9 of the UCC can be perfected only by possession. Should any Lender (other than the Agent) obtain possession of any such Collateral, such Lender shall notify the Agent thereof, and, promptly upon the Agent's request therefor shall deliver such Collateral to the Agent or in accordance with the Agent's instructions.

12.14 Payments by Agent to Lenders. All payments to be made by the Agent to the Lenders shall be made by bank wire transfer or internal transfer of immediately available

funds to each Lender pursuant to wire transfer instructions delivered in writing to the Agent on or prior to the Closing Date (or if such Lender is an Assignee, on the applicable Assignment and Acceptance), or pursuant to such other wire transfer instructions as each party may designate for itself by written notice to the Agent. Concurrently with each such payment, the Agent shall identify whether such payment (or any portion thereof) represents principal, premium or interest on the Revolving Loans, Term Loans or otherwise. Unless the Agent receives notice from the Funds Administrator prior to the date on which any payment is due to the Lenders that the Borrowers will not make such payment in full as and when required, the Agent may assume that the Borrowers have made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrowers have not made such payment in full to the Agent, each Lender shall repay to the Agent on demand such amount distributed to such Lender, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Lender until the date repaid.

12.15 Settlement.

(a) (i) Each Lender's funded portion of the Revolving Loans is intended by the Lenders to be equal at all times to such Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding such agreement, the Agent, the Bank, and the other Lenders agree (which agreement shall not be for the benefit of or enforceable by the Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among them as to the Revolving Loans, the Non-Ratable Loans and the Agent Advances shall take place on a periodic basis in accordance with the following provisions:

(ii) The Agent shall request settlement ("Settlement") with the Lenders on at least a weekly basis, or on a more frequent basis at Agent's election, (A) on behalf of the Bank, with respect to each outstanding Non-Ratable Loan, (B) for itself, with respect to each Agent Advance, and (C) with respect to collections received, in each case, by notifying the Lenders of such requested Settlement by telecopy, telephone or other similar form of transmission, of such requested Settlement, no later than 12:00 noon (Eastern time) on the date of such requested Settlement (the "Settlement Date"). Each Lender (other than the Bank, in the case of Non-Ratable Loans and the Agent in the case of Agent Advances) shall transfer the amount of such Lender's Pro Rata Share of the outstanding principal amount of the Non-Ratable Loans and Agent Advances with respect to each Settlement to the Agent, to Agent's account, not later than 2:00 p.m. (Eastern time), on the Settlement Date applicable thereto. Settlements may occur during the continuation of a Default or an Event of Default and whether or not the applicable conditions precedent set forth in Article 8 have then been satisfied. Such amounts made available to the Agent shall be applied against the amounts of the applicable Non-Ratable Loan or Agent Advance and, together with the portion of such Non-Ratable Loan or Agent Advance representing the Bank's Pro Rata Share thereof, shall constitute Revolving Loans of such Lenders. If any such amount is not transferred to the Agent by any Lender on the Settlement Date applicable thereto, the Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate for the first three (3) days from and after the Settlement Date and thereafter at the Interest Rate then applicable to the Revolving Loans (A) on behalf of the Bank, with respect to each outstanding Non-Ratable Loan, and (B) for itself, with respect to each Agent Advance.

(iii) Notwithstanding the foregoing, not more than one (1) Business Day after demand is made by the Agent (whether before or after the occurrence of a Default or an Event of Default and regardless of whether the Agent has requested a Settlement with respect to a Non-Ratable Loan or Agent Advance), each other Lender (A) shall irrevocably and unconditionally purchase and receive from the Bank or the Agent, as applicable, without recourse or warranty, an undivided interest and participation in such Non-Ratable Loan or Agent Advance equal to such Lender's Pro Rata Share of such Non-Ratable Loan or Agent Advance and (B) if Settlement has not previously occurred with respect to such Non-Ratable Loans or Agent Advances, upon demand by Bank or Agent, as applicable, shall pay to Bank or Agent, as applicable, as the purchase price of such participation an amount equal to one-hundred percent (100%) of such Lender's Pro Rata Share of such Non-Ratable Loans or Agent Advances. If such amount is not in fact made available to the Agent by any Lender, the Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate for the first three (3) days from and after such demand and thereafter at the Interest Rate then applicable to Base Rate Loans.

(iv) From and after the date, if any, on which any Lender purchases an undivided interest and participation in any Non-Ratable Loan or Agent Advance pursuant to clause (iii) above, the Agent shall promptly distribute to such Lender, such Lender's Pro Rata Share of all payments of principal and interest and all proceeds of Collateral received by the Agent in respect of such Non-Ratable Loan or Agent Advance.

(v) Between Settlement Dates, the Agent, to the extent no Agent Advances are outstanding, may pay over to the Bank any payments received by the Agent, which in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to the Bank's Revolving Loans including Non-Ratable Loans. If, as of any Settlement Date, collections received since the then immediately preceding Settlement Date have been applied to the Bank's Revolving Loans (other than to Non-Ratable Loans or Agent Advances in which such Lender has not yet funded its purchase of a participation pursuant to clause (iii) above), as provided for in the previous sentence, the Bank shall pay to the Agent for the accounts of the Lenders, to be applied to the outstanding Revolving Loans of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Revolving Loans. During the period between Settlement Dates, the Bank with respect to Non-Ratable Loans, the Agent with respect to Agent Advances, and each Lender with respect to the Revolving Loans other than Non-Ratable Loans and Agent Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the actual average daily amount of funds employed by the Bank, the Agent and the other Lenders.

(vi) Unless the Agent has received written notice from a Lender to the contrary, the Agent may assume that the applicable conditions precedent set forth in Article 8 have been satisfied and the requested Borrowing will not exceed either the Availability of such Borrower or Aggregate Availability on any Funding Date for a Revolving Loan or Non-Ratable Loan.

(b) Lenders' Failure to Perform. All Revolving Loans (other than Non-Ratable Loans and Agent Advances) shall be made by the Lenders simultaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Revolving Loans hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligation to make any Revolving Loans hereunder, (ii) no failure by any Lender to perform its obligation to make any Revolving Loans hereunder shall excuse any other Lender from its obligation to make any Revolving Loans hereunder, and (iii) the obligations of each Lender hereunder shall be several, not joint and several.

(c) Defaulting Lenders. Unless the Agent receives notice from a Lender on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, at least one Business Day prior to the date of such Borrowing, that such Lender will not make available as and when required hereunder to the Agent that Lender's Pro Rata Share of a Borrowing, the Agent may assume that each Lender has made such amount available to the Agent in immediately available funds on the Funding Date. Furthermore, the Agent may, in reliance upon such assumption, make available to the Borrowers on such date a corresponding amount. If any Lender has not transferred its full Pro Rata Share to the Agent in immediately available funds and the Agent has transferred corresponding amount to the Borrowers on the Business Day following such Funding Date that Lender shall make such amount available to the Agent, together with interest at the Federal Funds Rate for that day. A notice by the Agent submitted to any Lender with respect to amounts owing shall be conclusive, absent manifest error. If each Lender's full Pro Rata Share is transferred to the Agent as required, the amount transferred to the Agent shall constitute that Lender's Revolving Loan for all purposes of this Agreement. If that amount is not transferred to the Agent on the Business Day following the Funding Date, the Agent will notify the Funds Administrator of such failure to fund and, upon demand by the Agent, the Borrowers shall pay such amount to the Agent for the Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the Interest Rate applicable at the time to the Revolving Loans comprising that particular Borrowing. The failure of any Lender to make any Revolving Loan on any Funding Date (any such Lender, prior to the cure of such failure, being hereinafter referred to as a "Defaulting Lender") shall not relieve any other Lender of its obligation hereunder to make a Revolving Loan on that Funding Date. No Lender shall be responsible for any other Lender's failure to advance such other Lenders' Pro Rata Share of any Borrowing.

(d) Retention of Defaulting Lender's Payments. The Agent shall not be obligated to transfer to a Defaulting Lender any payments made by any Borrower to the Agent for the Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid to or retained by the Agent. In its discretion, the Agent may loan Borrowers the amount of all such payments received or retained by it for the account of such Defaulting Lender. Any amounts so loaned to the Borrowers shall bear interest at the rate applicable to Base Rate Loans and for all other purposes of this Agreement shall be treated as if they were Revolving Loans, provided, however, that for purposes of voting or consenting to matters with respect to the Loan Documents and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender". Until a Defaulting Lender cures its failure to fund its Pro Rata Share of any Borrowing (A) such Defaulting Lender shall not be entitled to any portion of the Unused Line

Fee and (B) the Unused Line Fee shall accrue in favor of the Lenders which have funded their respective Pro Rata Shares of such requested Borrowing and shall be allocated among such performing Lenders ratably based upon their relative Commitments. This Section shall remain effective with respect to such Lender until such time as the Defaulting Lender shall no longer be in default of any of its obligations under this Agreement. The terms of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, or relieve or excuse the performance by the Borrowers of their respective duties and obligations hereunder.

(e) Removal of Defaulting Lender. At the Funds Administrator's request, the Agent or an Eligible Assignee reasonably acceptable to the Agent and the Funds Administrator shall have the right (but not the obligation) to purchase from any Defaulting Lender, and each Defaulting Lender shall, upon such request, sell and assign to the Agent or such Eligible Assignee, all of the Defaulting Lender's outstanding Commitments hereunder. Such sale shall be consummated promptly after Agent has arranged for a purchase by Agent or an Eligible Assignee pursuant to an Assignment and Acceptance, and at a price equal to the outstanding principal balance of the Defaulting Lender's Loans, plus accrued interest and fees, without premium or discount.

12.16 Letters of Credit; Intra-Lender Issues.

(a) Notice of Letter of Credit Balance. On each Settlement Date the Agent shall notify each Lender of the issuance of all Letters of Credit since the prior Settlement Date.

(b) Participations in Letters of Credit.

(i) Purchase of Participations. Immediately upon issuance of any Letter of Credit in accordance with Section 1.4(d), each Lender shall be deemed to have irrevocably and unconditionally purchased and received without recourse or warranty, an undivided interest and participation equal to such Lender's Pro Rata Share of the face amount of such Letter of Credit or the Credit Support provided through the Agent to the Letter of Credit Issuer, if not the Bank, in connection with the issuance of such Letter of Credit (including all obligations of the Borrowers with respect thereto, and any security therefor or guaranty pertaining thereto).

(ii) Sharing of Reimbursement Obligation Payments. Whenever the Agent receives a payment from the Borrowers on account of reimbursement obligations in respect of a Letter of Credit or Credit Support as to which the Agent has previously received for the account of the Letter of Credit Issuer thereof payment from a Lender, the Agent shall promptly pay to such Lender such Lender's Pro Rata Share of such payment from the Borrowers. Each such payment shall be made by the Agent on the next Settlement Date.

(iii) Documentation. Upon the request of any Lender, the Agent shall furnish to such Lender copies of any Letter of Credit, Credit Support for any Letter of Credit, reimbursement agreements executed in connection therewith, applications for any Letter of Credit, and such other documentation as may reasonably be requested by such Lender.

(iv) Obligations Irrevocable. The obligations of each Lender to make payments to the Agent with respect to any Letter of Credit or with respect to their participation therein or with respect to any Credit Support for any Letter of Credit or with respect to the Revolving Loans made as a result of a drawing under a Letter of Credit and the obligations of the Borrowers for whose account the Letter of Credit or Credit Support was issued to make payments to the Agent, for the account of the Lenders, shall be irrevocable and shall not be subject to any qualification or exception whatsoever, including any of the following circumstances:

(1) any lack of validity or enforceability of this Agreement or any of the other Loan Documents;

(2) the existence of any claim, setoff, defense or other right which any Borrower may have at any time against a beneficiary named in a Letter of Credit or any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), any Lender, the Agent, the issuer of such Letter of Credit, or any other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transactions between any Borrower or any other Person and the beneficiary named in any Letter of Credit);

(3) any draft, certificate or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(4) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents;

(5) the occurrence of any Default or Event of Default; or

(6) the failure of any Borrower to satisfy the applicable conditions precedent set forth in Article 8.

(c) Recovery or Avoidance of Payments; Refund of Payments In Error. In the event any payment by or on behalf of any Borrower received by the Agent with respect to any Letter of Credit or Credit Support provided for any Letter of Credit and distributed by the Agent to the Lenders on account of their respective participations therein is thereafter set aside, avoided or recovered from the Agent in connection with any receivership, liquidation or bankruptcy proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent their respective Pro Rata Shares of such amount set aside, avoided or recovered, together with interest at the rate required to be paid by the Agent upon the amount required to be repaid by it. Unless the Agent receives notice from the Funds Administrator prior to the date on which any payment is due to the Lenders that the Borrowers will not make such payment in full as and when required, the Agent may assume that the Borrowers have made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrowers have not made such payment in full to the Agent, each Lender shall repay to the Agent on demand such amount

distributed to such Lender, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Lender until the date repaid.

(d) Indemnification by Lenders. To the extent not reimbursed by the Borrowers and without limiting the obligations of the Borrowers hereunder, the Lenders agree to indemnify the Letter of Credit Issuer ratably in accordance with their respective Pro Rata Shares, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys' fees) or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against the Letter of Credit Issuer in any way relating to or arising out of any Letter of Credit or the transactions contemplated thereby or any action taken or omitted by the Letter of Credit Issuer under any Letter of Credit or any Loan Document in connection therewith; provided that no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful misconduct of the Person to be indemnified. Without limitation of the foregoing, each Lender agrees to reimburse the Letter of Credit Issuer promptly upon demand for its Pro Rata Share of any costs or expenses payable by the Borrowers to the Letter of Credit Issuer, to the extent that the Letter of Credit Issuer is not promptly reimbursed for such costs and expenses by the Borrowers. The agreement contained in this Section shall survive payment in full of all other Obligations.

12.17 Concerning the Collateral and the Related Loan Documents. Each Lender authorizes and directs the Agent to enter into the other Loan Documents, for the ratable benefit and obligation of the Agent and the Lenders. Each Lender agrees that any action taken by the Agent, Majority Lenders or Required Lenders, as applicable, in accordance with the terms of this Agreement or the other Loan Documents, and the exercise by the Agent, the Majority Lenders, or the Required Lenders, as applicable, of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. The Lenders acknowledge that the Revolving Loans, Agent Advances, Non-Ratable Loans, Hedge Agreements, Bank Products and all interest, fees and expenses hereunder constitute one Debt, secured pari passu by all of the Collateral.

12.18 Field Audit and Examination Reports; Disclaimer by Lenders. By signing this Agreement, each Lender:

(a) is deemed to have requested that the Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a "Report" and collectively, "Reports") prepared by or on behalf of the Agent;

(b) expressly agrees and acknowledges that neither the Bank nor the Agent (i) makes any representation or warranty as to the accuracy of any Report, or (ii) shall be liable for any information contained in any Report;

(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that the Agent or the Bank or other party performing any audit or examination will inspect only specific information regarding any Borrower and will rely significantly upon the Borrowers' books and records, as well as on representations of the Borrowers' personnel;

(d) agrees to keep all Reports confidential and strictly for its internal use, and not to distribute except to its participants, or use any Report in any other manner; and

(e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold the Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to any Borrower, or the indemnifying Lender's participation in, or the indemnifying Lender's purchase of, a loan or loans of any Borrower; and (ii) to pay and protect, and indemnify, defend and hold the Agent and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses and other amounts (including Attorney Costs) incurred by the Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

12.19 Relation Among Lenders. The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Agent) authorized to act for, any other Lender.

12.20 Syndication Agent. No Lender identified on the facing page or signature pages of this Agreement as a "Syndication Agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders so identified as a "Syndication Agent" shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

ARTICLE 13
MISCELLANEOUS

13.1 No Waivers; Cumulative Remedies. No failure by the Agent or any Lender to exercise any right, remedy, or option under this Agreement or any present or future supplement thereto, or in any other agreement between or among any Borrower and the Agent and/or any Lender, or delay by the Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by the Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by the Agent or the Lenders on any occasion shall affect or diminish the Agent's and each Lender's rights thereafter to require strict performance by the Borrowers of any provision of this Agreement. The Agent and the Lenders may proceed directly to collect the Obligations without any prior recourse to the Collateral. The Agent's and each Lender's rights under this Agreement will be cumulative and not exclusive of any other right or remedy which the Agent or any Lender may have.

13.2 Severability. The illegality or unenforceability of any provision of this Agreement or any Loan Document or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.

13.3 Governing Law; Choice of Forum; Service of Process.

(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NORTH CAROLINA; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NORTH CAROLINA OR OF THE UNITED STATES OF AMERICA LOCATED IN THE WESTERN DISTRICT OF NORTH CAROLINA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWERS, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.

(c) EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH BORROWER AT ITS ADDRESS SET FORTH IN SECTION 13.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.

13.4 WAIVER OF JURY TRIAL. EACH BORROWER, THE LENDERS AND THE AGENT EACH IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH BORROWER, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

13.5 Survival of Representations and Warranties. All of the Borrowers' respective representations and warranties contained in this Agreement shall survive the execution, delivery, and acceptance thereof by the parties, notwithstanding any investigation by the Agent or the Lenders or their respective agents.

13.6 Other Security and Guaranties. The Agent, may, without notice or demand and without affecting the Borrowers' obligations hereunder, from time to time: (a) take from any Person and hold collateral (other than the Collateral) for the payment of all or any part of the Obligations and exchange, enforce or release such collateral or any part thereof; and (b) accept and hold any endorsement or guaranty of payment of all or any part of the Obligations and release or substitute any such endorser or guarantor, or any Person who has given any Lien in any other collateral as security for the payment of all or any part of the Obligations, or any other Person in any way obligated to pay all or any part of the Obligations.

13.7 Fees and Expenses. The Borrowers agree to pay to the Agent, for its benefit, on demand, all costs and expenses that Agent pays or incurs in connection with the negotiation, preparation, syndication, consummation, administration, enforcement, and termination of this Agreement or any of the other Loan Documents, including: (a) Attorney Costs; (b) costs and expenses (including attorneys' and paralegals' fees and disbursements) for any amendment, supplement, waiver, consent, or subsequent closing in connection with the Loan Documents and the transactions contemplated thereby; (c) costs and expenses of lien and title searches and title insurance; (d) taxes, fees and other charges for recording the Mortgages, filing financing statements and continuations, and other actions to perfect, protect, and continue the Agent's Liens (including costs and expenses paid or incurred by the Agent in connection with the consummation of Agreement); (e) sums paid or incurred to pay any amount or take any action required of any Borrower under the Loan Documents that such Borrower fails to pay or take; (f) costs of appraisals, inspections, and verifications of the Collateral, including travel,

lodging, and meals for inspections of the Collateral and the Borrowers' respective operations by the Agent plus the Agent's then customary charge for field examinations and audits and the preparation of reports thereof (such charge is currently $750 per day (or portion thereof) for each Person retained or employed by the Agent with respect to each field examination or audit); and
(g) costs and expenses of forwarding loan proceeds, collecting checks and other items of payment, and establishing and maintaining Depository Accounts and lock boxes, and costs and expenses of preserving and protecting the Collateral. In addition, the Borrowers agree to pay costs and expenses incurred by the Agent (including Attorneys' Costs) to the Agent, for its benefit, on demand, and to the other Lenders for their benefit, on demand, and all reasonable fees, expenses and disbursements incurred by such other Lenders for one law firm retained by such other Lenders, in each case, paid or incurred to obtain payment of the Obligations, enforce the Agent's Liens, sell or otherwise realize upon the Collateral, and otherwise enforce the provisions of the Loan Documents, or to defend any claims made or threatened against the Agent or any Lender arising out of the transactions contemplated hereby (including preparations for and consultations concerning any such matters). The foregoing shall not be construed to limit any other provisions of the Loan Documents regarding costs and expenses to be paid by the Borrowers. All of the foregoing costs and expenses shall be charged to the Borrower's Loan Accounts as Revolving Loans as described in
Section 3.7.

13.8 Notices. Except as otherwise provided herein, all notices, demands and requests that any party is required or elects to give to any other shall be in writing, or by a telecommunications device capable of creating a written record, and any such notice shall become effective (a) upon personal delivery thereof, including, but not limited to, delivery by overnight mail and courier service, (b) four (4) days after it shall have been mailed by United States mail, first class, certified or registered, with postage prepaid, or (c) in the case of notice by such a telecommunications device, when properly transmitted, in each case addressed to the party to be notified as follows:

If to the Agent or to the Bank:

Bank of America, N.A.
600 Peachtree Street
5th Floor
Atlanta, Georgia 30308

Attention: Perri H. Love Telecopy No.: 404-607-6437

If to any Borrower or the Funds Administrator:

Coltec Industries Inc

c/o EnPro Industries, Inc. 5605 Carnegie Boulevard Charlotte, North Carolina 28209-4674 Attention: Treasurer
Telecopy No.: 704-731-1569

or to such other address as each party may designate for itself by like notice. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to the persons designated above to receive copies shall not adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication.

13.9 Waiver of Notices. Unless otherwise expressly provided herein, the each Borrower waives presentment, and notice of demand or dishonor and protest as to any instrument, notice of intent to accelerate the Obligations and notice of acceleration of the Obligations, as well as any and all other notices to which it might otherwise be entitled. No notice to or demand on any Borrower which the Agent or any Lender may elect to give shall entitle such Borrower or any other Borrower to any or further notice or demand in the same, similar or other circumstances.

13.10 Binding Effect. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective representatives, successors, and assigns of the parties hereto; provided, however, that no interest herein may be assigned by any Borrower without prior written consent of the Agent and each Lender. The rights and benefits of the Agent and the Lenders hereunder shall, if such Persons so agree, inure to any party acquiring any interest in the Obligations or any part thereof.

13.11 Indemnity of the Agent and the Lenders by the Borrowers.

(a) Each of the Borrowers agrees to defend, indemnify and hold the Agent-Related Persons, and each Lender and each of its respective officers, directors, employees, counsel, representatives, Affiliates, agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Loans and the termination, resignation or replacement of the Agent or replacement of any Lender) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement or any document contemplated by or referred to herein, or the transactions contemplated hereby, or any action taken or omitted by any such Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement, any other Loan Document, or the Loans or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided, that no Borrower shall have any obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities resulting primarily from the gross negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall survive payment of all other Obligations.

(b) Each of the Borrowers agrees to indemnify, defend and hold harmless the Agent and the Lenders (and their respective Affiliates) from any loss or liability directly or indirectly arising out of the use, generation, manufacture, production, storage, release, threatened release, discharge, disposal or presence of a hazardous substance relating to any Borrower's operations, business or property. This indemnity will apply whether the hazardous

substance is on, under or about any Borrower's property or operations or property leased to any Borrower. The indemnity includes but is not limited to Attorneys Costs. The indemnity extends to the Agent and the Lenders, their parents, affiliates, subsidiaries and all of their directors, officers, employees, agents, successors, attorneys and assigns. "Hazardous substances" means any substance, material or waste that is or becomes designated or regulated as "toxic," "hazardous," "pollutant," or "contaminant" or a similar designation or regulation under any federal, state or local law (whether under common law, statute, regulation or otherwise) or judicial or administrative interpretation of such, including petroleum or natural gas. This indemnity will survive repayment of all other Obligations.

13.12 Limitation of Liability. EXCEPT AS EXPRESSLY PROVIDED HEREIN,
NO CLAIM MAY BE MADE BY ANY BORROWER, ANY LENDER OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, ANY BORROWER, OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS OR ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH BORROWER, THE AGENT, AND EACH LENDER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

13.13 Final Agreement. This Agreement and the other Loan Documents are intended by the Borrowers, the Agent and the Lenders to be the final, complete, and exclusive expression of the agreement between them. This Agreement, the Fee Letter and the other Loan Documents supersede any and all prior oral or written agreements relating to the subject matter hereof. No modification, rescission, waiver, release, or amendment of any provision of this Agreement or any other Loan Document shall be made, except by a written agreement signed by the Borrowers and a duly authorized officer of each of the Agent and the requisite Lenders.

13.14 Counterparts. This Agreement may be executed in any number of counterparts, and by the Agent, each Lender and the Borrowers in separate counterparts, each of which shall be an original, but all of which shall together constitute one and the same agreement; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

13.15 Captions. The captions contained in this Agreement are for convenience of reference only, are without substantive meaning and should not be construed to modify, enlarge, or restrict any provision.

13.16 Right of Setoff. In addition to any rights and remedies of the Lenders provided by law, if an Event of Default exists or the Loans have been accelerated, each Lender is authorized at any time and from time to time, without prior notice to any Borrower, any such notice being waived by the Borrowers to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by,

and other indebtedness at any time owing by, such Lender or any Affiliate of such Lender to or for the credit or the account of any Borrower against any and all Obligations owing to such Lender, now or hereafter existing, irrespective of whether or not the Agent or such Lender shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Lender agrees promptly to notify the Funds Administrator and the Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY BORROWER OR SUBSIDIARY GUARANTOR HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.

13.17 Confidentiality.

(a) Each of the Borrowers hereby consents that the Agent and each Lender may issue and disseminate to the public general information describing the credit accommodation entered into pursuant to this Agreement, including the names and addresses of the Borrowers and a general description of the Borrowers' businesses and may use the Borrowers' names in advertising and other promotional material.

(b) Each Lender severally agrees to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as "confidential" or "secret" by the Borrowers and provided to the Agent or such Lender by or on behalf of the Borrowers, under this Agreement or any other Loan Document, except to the extent that such information (i) was or becomes generally available to the public other than as a result of disclosure by the Agent or such Lender, or (ii) was or becomes available on a nonconfidential basis from a source other than the Borrowers, provided that such source is not bound by a confidentiality agreement with the Borrowers known to the Agent or such Lender; provided, however, that the Agent and any Lender may disclose such information (1) at the request or pursuant to any requirement of any Governmental Authority to which the Agent or such Lender is subject or in connection with an examination of the Agent or such Lender by any such Governmental Authority; (2) pursuant to subpoena or other court process; (3) when required to do so in accordance with the provisions of any applicable Requirement of Law; (4) to the extent reasonably required in connection with any litigation or proceeding (including, but not limited to, any bankruptcy proceeding) to which the Agent, any Lender or their respective Affiliates may be party; (5) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document; (6) to the Agent's or such Lender's independent auditors, accountants, attorneys and other professional advisors; (7) to any prospective Participant or Assignee under any Assignment and Acceptance, actual or potential, provided that such prospective Participant or Assignee agrees to keep such information confidential to the same extent required of the Agent and the Lenders hereunder; (8) as expressly permitted under the terms of any other document or agreement regarding confidentiality to which the applicable Borrower is party or is deemed party with the Agent or such Lender, and (9) to its Affiliates.

13.18 Conflicts with Other Loan Documents. Unless otherwise expressly provided in this Agreement (or in another Loan Document by specific reference to the applicable

provision contained in this Agreement), if any provision contained in this Agreement conflicts with any provision of any other Loan Document, the provision contained in this Agreement shall govern and control.

13.19 Joint and Several Liability of Borrowers.

(a) Each of the Borrowers shall be jointly and severally liable hereunder and under each of the other Loan Documents with respect to all Obligations, regardless of which of the Borrowers actually receives the proceeds of the Loans or the benefit of any other extensions of credit hereunder, or the manner in which the Funds Administrator, the Borrowers, the Agent, the Lenders or any of the Letter of Credit Issuers account therefore in their respective books and records. In furtherance and not in limitation of the foregoing, (i) each Borrower's obligations and liabilities with respect to proceeds of Loans which it receives or Letters of Credit issued for its account, and related fees, costs and expenses, and (ii) each Borrower's obligations and liabilities arising as a result of the joint and several liability of the Borrowers hereunder with respect to proceeds of Loans received by, or Letters of Credit issued for the account of, any of the other Borrowers, together with the related fees, costs and expenses, shall be separate and distinct obligations, both of which are primary obligations of such Borrower. Neither the joint and several liability of, nor the Liens granted to the Agent under the Collateral Documents by, any of the Borrowers shall be impaired or released by (A) the failure of the Agent, any Lender or any Letter of Credit Issuer, any successors or assigns thereof, or any holder of any of the Obligations to assert any claim or demand or to exercise or enforce any right, power or remedy against the Funds Administrator, any Borrower, any Subsidiary of any Borrower, any other Person, the Collateral or otherwise; (B) any extension or renewal for any period (whether or not longer than the original period) or exchange of any of the Obligations or the release or compromise of any obligation of any nature of any Person with respect thereto; (C) the surrender, release or exchange of all or any part of any property (including without limitation the Collateral) securing payment, performance and/or observance of any of the Obligations or the compromise or extension or renewal for any period (whether or not longer than the original period) of any obligations of any nature of any Person with respect to any such property; (D) any action or inaction on the part of the Agent, any Lender or any Letter of Credit Issuer, or any other event or condition with respect to any other Borrower, including any such action or inaction or other event or condition, which might otherwise constitute a defense available to, or a discharge of, such Borrower, or a guarantor or surety of or for any or all of the Obligations; and (E) any other act, matter or thing (other than payment or performance of the Obligations) which would or might, in the absence of this provision, operate to release, discharge or otherwise prejudicially affect the obligations of such Borrower or any other Borrower.

(b) Notwithstanding any provision to the contrary contained herein or in any other of the Loan Documents, to the extent the joint obligations of a Borrower shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law) then the Obligations of each Borrower hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the federal Bankruptcy Code).

(c) To the extent that any Borrower shall make a payment under this Section 13.19 of all or any of the Obligations (other than Loans made to that Borrower for which it is primarily liable) (a "Guarantor Payment") that, taking into account all other Guarantor Payments then previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment in the same proportion that such Borrower's "Allocable Amount" (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the Obligations and termination of the Commitments, such Borrower shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment. As of any date of determination, the "Allocable Amount" of any Borrower shall be equal to the maximum amount of the claim that could then be recovered from such Borrower under this Section 13.19 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law. This Section 13.19(c) is intended only to define the relative rights of Borrowers and nothing set forth in this Section 13.19(c) is intended to or shall impair the obligations of Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Credit Agreement, including Section
13.19(a). Nothing contained in this Section 13.19(c) shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower and accrued interest, fees and expenses with respect thereto for which such Borrower shall be primarily liable. The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of each applicable Borrower to which such contribution and indemnification is owing. The rights of the indemnifying Borrowers against other Persons under this
Section 13.19(c) shall be exercisable upon the full and indefeasible payment of the Obligations and the termination of the Commitments.

(d) The liability of Borrowers under this Section 13.19 is in addition to and shall be cumulative with all liabilities of each Borrower to Agent and Lenders under this Agreement and the other Loan Documents to which such Borrower is a party, without any limitation as to amount.

13.20 Appointment and Authorization of Funds Administrator.

(a) Each Borrower hereby designates, appoints, authorizes and empowers Coltec as its agent to act as specified in the capacity of Funds Administrator under this Agreement and each of the other Loan Documents and Coltec hereby acknowledges such designation, authorization and empowerment, and accepts such appointment. Each Borrower hereby irrevocably authorizes and directs the Funds Administrator to take such action on its behalf under the respective provisions of this Agreement and the other Loan Documents, and any other instruments, documents and agreements referred to herein or therein, and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Funds Administrator by the respective terms and provisions hereof and thereof,

and such other powers as are reasonably incidental thereto, including, without limitation, to take the following actions for and on such Borrower's behalf:

(i) to submit on behalf of each Borrower Notices of Borrowing, Notices of Conversion and Notices of Continuation to Agent in accordance with the provisions of this Agreement, each such notice to be submitted by the Funds Administrator to Agent as soon as practicable after its receipt of a request to do so from a Borrower; and

(ii) to submit on behalf of each Borrower requests for the issuance of Letters of Credit in accordance with the provisions of this Agreement, each such request for the issuance of a Letter of Credit to be submitted by the Funds Administrator as soon as practicable after its receipt of a request to do so from any Borrower.

(b) The Funds Administrator is further authorized and directed by each of the Borrowers to take all such actions on behalf of such Borrower necessary to exercise the specific powers granted in clauses (i) and
(ii) above and to perform such other duties hereunder and under the other Loan Documents, and deliver such documents as delegated to or required of the Funds Administrator by the terms hereof or thereof. Agent and each Lender may regard any notice or other communication pursuant to any Loan Documents from the Funds Administrator as a notice or communication from all Borrowers, and may give any notice or communication required or permitted to be given to any Borrower or Borrowers hereunder to the Funds Administrator on behalf of such Borrower or Borrowers. Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by the Funds Administrator shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.

(c) The Funds Administrator may perform any of its duties hereunder or under any of the other Loan Documents by or through its agents or employees.

13.21 Allocation of Loans and Expenses.

(a) In order to efficiently fund and operate their respective businesses and minimize the number of Borrowings which they will make under this Agreement and thereby reduce the administrative costs and record keeping required in connection therewith, including the necessity to enter into and maintain separately identified and monitored borrowing facilities, the Borrowers have requested, and the Agent and the Lenders have agreed that, subject to Section 13.19, (i) all Loans will be advanced to and for the account of the Borrowers on a joint and several basis to the applicable Designated Account and (ii) all Letters of Credit will be issued pursuant to an letter of credit application executed by the Funds Administrator on behalf and for the account of the Borrower or Borrowers specified by the Funds Administrator in such application. Each Borrower hereby acknowledges that it will be receiving a direct benefit from each Loan made and each Letter of Credit issued pursuant to this Agreement.

(b) In order to track more precisely the respective recipients of the proceeds of each Loan and the Borrower or Borrowers receiving the primary benefit from the issuance of each Letter of Credit, and to assist the Funds Administrator, the Borrowers, the Agent and the Lenders in administering the Loans and the Letters of Credit, each Borrower has agreed with the Agent and the Lenders to cause the Funds Administrator to establish and maintain, and the Funds Administrator hereby agrees to establish and maintain, accounts and other appropriate business records with respect to each Borrower (each Borrower's "ALLOCATION ACCOUNT") in which the Funds Administrator shall record its good faith allocation to each of the Borrowers of (W) the proceeds, if any, of each Loan received by or for the account of such Borrower, (X) payments made to the Agent on account of the Obligations of such Borrower, whether from collection of proceeds of Collateral or otherwise, (Y) the aggregate face amount of all outstanding Letters of Credit (or an appropriate allocation thereof, if the Letters of Credit are issued for the direct benefit of more than one Borrower) issued for the benefit of such Borrower, and (Z) all previously unallocated Expenses.

At the request of the Agent, as soon as available, but not later than fifteen (15) Business Days after the last Business Day of each month ending after the Closing Date, the Funds Administrator shall deliver to the Agent and each Borrower a report prepared by or under the supervision of the chief financial officer of the Funds Administrator, and certified by such officer, setting forth with respect to each Borrower the balance of the Allocation Account of such Borrower as of the end of, and all activity occurring in such Allocation Account during, such month. Absent manifest error, each such monthly statement shall be final, conclusive and binding on the respective Borrowers.

13.22 Designated Senior Debt.

The Obligations incurred pursuant to this Agreement shall constitute "Designated Senior Debt" as such term is defined in the Indenture governing the subordinated debentures issued as part of the TIDES, and Coltec shall notify the Indenture Trustee thereunder of such designation of the Obligations on or prior to the Closing Date.

13.23 Agreement Effectiveness.

This Agreement shall become effective as of the date first above written when it has been executed and delivered by each of the parties hereto. The parties hereto agree that (i) as of its execution of this Agreement, the Borrowers shall be deemed to only make the representations and warranties set forth in Sections 6.1 (with respect to this Agreement, the Security Agreement and the Fee Letter) and 6.3(a) and (ii) for the period from the date of such execution until the Closing Date, the Borrowers shall not be obligated to comply with the covenants set forth in Article 7.

IN WITNESS WHEREOF, the parties have entered into this Agreement on the date first above written.

"BORROWERS"

COLTEC INDUSTRIES INC

By: /s/ Scott E. Kuechle
   -----------------------------------
Title: Vice President and Treasurer

COLTEC INDUSTRIAL PRODUCTS LLC

By: /s/ Scott E. Kuechle
   -----------------------------------
Title: Vice President and Treasurer

GARLOCK SEALING TECHNOLOGIES LLC

By: /s/ Michael J. Leslie
   -----------------------------------
Title: President

GARLOCK BEARINGS LLC

By: /s/ Scott E. Kuechle
   -----------------------------------
Title: Vice President and Treasurer

STEMCO LLC

By: /s/ Scott E. Kuechle
   -----------------------------------
Title: Vice President and Treasurer

HABER TOOL COMPANY INC

By: /s/ Scott E. Kuechle
   -----------------------------------
Title: Vice President and Treasurer

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"AGENT"

Bank of America, N.A., as the Agent

By: /s/ Perri H. Love
   ---------------------------------------
   Perri H. Love, Assistant Vice President

"LENDERS"

Bank of America, N.A., as a Lender

By: /s/ Perri H. Love
   ---------------------------------------
   Perri H. Love, Assistant Vice President

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CITICORP USA, INC., as Syndication Agent and as a Lender

By: /s/ Keith R. Karaco
   -----------------------------------
   Keith R. Karaco, Vice President

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ANNEX A
TO
CREDIT AGREEMENT

DEFINITIONS

Capitalized terms used in the Loan Documents shall have the following respective meanings (unless otherwise defined therein), and all section references in the following definitions shall refer to sections of the Agreement:

"Accounts" means, with respect to any Borrower, all of such Borrower's now owned or hereafter acquired or arising accounts, as defined in the UCC, including any rights to payment for the sale or lease of goods or rendition of services, whether or not they have been earned by performance.

"Account Debtor" means each Person obligated in any way on or in connection with an Account, Chattel Paper or General Intangibles (including a payment intangible).

"ACH Transactions" means any cash management or related services including the automatic clearing house transfer of funds by the Bank for the account of the Borrowers pursuant to agreement or overdrafts.

"Adjusted Net Earnings from Operations" means, with respect to the Parent and its consolidated Subsidiaries for any fiscal period, net income after provision for income taxes for such fiscal period, as determined in accordance with GAAP and reported on the Financial Statements for such period, excluding any and all of the following included in such net income: (a) gain or loss arising from the sale of any capital assets; (b) gain or non-cash loss arising from any write-up or write down in the book value of any asset; (c) earnings or losses of any Person, substantially all the assets of which have been acquired by the Parent or any consolidated Subsidiary in any manner, to the extent realized by such other Person prior to the date of acquisition; (d) earnings of any Person (other than a consolidated Subsidiary) in which the Parent or any consolidated Subsidiary has an ownership interest unless (and only to the extent) such earnings shall actually have been received by the Parent or any consolidated Subsidiary in the form of cash distributions; (e) earnings or losses of any Person to which assets of the Parent or any consolidated Subsidiary shall have been sold, transferred or disposed of, or into which the Parent or any Subsidiary shall have been merged, or which has been a party with the Parent or any Subsidiary to any consolidation or other form of reorganization, prior to the date of such transaction; (f) non-cash gain or non-cash loss arising from the acquisition of debt or equity securities of the Parent or any of its Subsidiaries or from cancellation or forgiveness of Debt;
(g) non-cash gain or non-cash loss arising from extraordinary items, as determined in accordance with GAAP, or from any other non-recurring transaction and (h) non-cash gain or non-cash loss arising from or relating to Hedge Agreements. Notwithstanding the foregoing, the net income (subject to the adjustments) of Foreign Subsidiaries of the Parent ("Foreign Sub Net Income") shall not be included in Adjusted Net Earnings from Operations for any fiscal period to the extent that Foreign Sub Net Income for such fiscal period exceeds forty five percent (45%) of Adjusted Net Earnings from Operations, except to the extent that Foreign Sub Net Income above such percentage reflects earnings actually received by the Parent or any Domestic Subsidiary in the form of cash distributions.

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"Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person or which owns, directly or indirectly, five percent (5%) or more of the outstanding equity interest of such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise.

"Agent" means the Bank, solely in its capacity as agent for the Lenders, and any successor agent.

"Agent Account" has the meaning specified in Section 3.3(a).

"Agent Advances" has the meaning specified in Section 1.2(i).

"Agent's Liens" means the Liens in the Collateral granted to the Agent, for the benefit of the Lenders, Bank, and Agent pursuant to this Agreement and the other Loan Documents.

"Agent-Related Persons" means the Agent, together with its Affiliates, and the officers, directors, employees, counsel, representatives, agents and attorneys-in-fact of the Agent and such Affiliates.

"Aggregate Availability" shall mean, at any time with respect to the Borrowers, an amount equal to (a) the lesser of (i) the Maximum Revolver Amount and (ii) the sum of (A) the Garlock Sealing Accounts and Inventory Borrowing Base, plus (B) the Excess Collateral Providers Borrowing Base, minus
(b) the Aggregate Revolver Outstandings with respect to all Borrowers, minus (c) without duplication, Reserves allocated by the Agent to any of the Borrowers.

"Aggregate Revolver Outstandings" means, at any date of determination, without duplication:

(i) with respect to all of the Borrowers, the sum of (a) the unpaid balance of Revolving Loans, (b) the aggregate amount of Pending Revolving Loans, (c) one hundred percent (100%) of the aggregate undrawn face amount of all outstanding Letters of Credit, and (d) the aggregate amount of any unpaid reimbursement obligations in respect of Letters of Credit;

(ii) with respect to Garlock Sealing, the sum of
(a) the unpaid balance of Revolving Loans allocated to Garlock Sealing,
(b) the aggregate amount of Pending Revolving Loans to be allocated to Garlock Sealing, (c) one hundred percent (100%) of the aggregate undrawn face amount of all outstanding Letters of Credit issued for the account of Garlock Sealing, and (d) the aggregate amount of any unpaid reimbursement obligations in respect of Letters of Credit issued for the account of Garlock Sealing; and

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(iii) with respect to the Excess Collateral Providers, the sum of (a) the unpaid balance of Revolving Loans allocated to the Excess Collateral Providers, (b) the aggregate amount of Pending Revolving Loans to be allocated to the Excess Collateral Providers, (c) one hundred percent (100%) of the aggregate undrawn face amount of all outstanding Letters of Credit issued for the account of any Excess Collateral Provider, and (d) the aggregate amount of any unpaid reimbursement obligations in respect of Letters of Credit issued for the account of any Excess Collateral Provider.

"Agreement" means the Credit Agreement to which this Annex A is attached, as from time to time amended, modified or restated.

"AIG Company" means each of AIU Insurance Co., Granite State, Insurance Company of Pennsylvania, Lexington, National Union, and American Home.

"Anniversary Date" means each anniversary of the Closing Date.

"Applicable Margin" means

(i) with respect to Base Rate Loans and all other Obligations under this Agreement or any other Loan Document (other than LIBOR Rate Loans), 1.5%; and

(ii) with respect to LIBOR Rate Loans, 2.75%.

"Applicable Unused Line Rate" means for any day (i) one percent (1%) if Facility Usage is less than or equal to 33.3%, (ii) three-quarters of one percent (0.75%) if Facility Usage is greater than 33.3% and less than or equal to 66.7% and (iii) one-half percent (0.50%) if Facility Usage is great than 66.7%.

"Asbestos Insurance Policy" means the insurance policies maintained by any of the Borrowers or any of their respective Domestic Subsidiaries with respect to which any such Borrower or Subsidiary is entitled to (or claims entitlement to) insurance coverage in connection with claims made against any such Borrower or such Subsidiary (or any of their predecessors) for asbestos related injury or alleged injury.

"Assignee" has the meaning specified in Section 11.2(a).

"Assignment and Acceptance" has the meaning specified in
Section 11.2(a).

"Attorney Costs" means and includes all reasonable fees, expenses and disbursements of any law firm or other counsel engaged by the Agent, the reasonably allocated costs and expenses of internal legal services of the Agent.

"Availability" means, at any time:

(i) with respect to Garlock Sealing, (a) the lesser of (i) the Maximum Revolver Amount or (ii) the Garlock Sealing Borrowing Base, minus (b) the Aggregate Revolver Outstandings of Garlock Sealing, minus (b) Reserves allocated by the Agent to Garlock Sealing, other than Reserves deducted in the calculation of the Garlock Sealing Borrowing Base,

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(ii) with respect to any Excess Collateral Provider, (a) the lesser of (i) the Maximum Revolver Amount and (ii) the Excess Collateral Providers Borrowing Base, minus (b) the Aggregate Revolver Outstandings of the Excess Collateral Providers, minus (c) Reserves allocated by the Agent to the Excess Collateral Providers, other than Reserves deducted in the calculation of the Excess Collateral Providers Borrowing Base.

"Bank" means Bank of America, N.A., a national banking association, or any successor entity thereto.

"Bank Products" means any one or more of the following types of services or facilities extended to any Borrower by the Bank or any affiliate of the Bank in reliance on the Bank's agreement to indemnify such affiliate: (i) credit cards; (ii) ACH Transactions; (iii) cash management, including controlled disbursement services; and (iv) Hedge Agreements.

"Bank Product Reserves" means all reserves which the Agent from time to time establishes in its reasonable discretion for the Bank Products then provided or outstanding.

"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. ss.101 et seq.).

"Base Rate" means, for any day, the rate of interest in effect for such day as publicly announced from time to time by the Bank in Charlotte, North Carolina as its "prime rate" (the "prime rate" being a rate set by the Bank based upon various factors including the Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate). Any change in the prime rate announced by the Bank shall take effect at the opening of business on the day specified in the public announcement of such change. Each Interest Rate based upon the Base Rate shall be adjusted simultaneously with any change in the Base Rate.

"Base Rate Loan" means a Revolving Loan during any period in which it bears interest based on the Base Rate.

"Borrowing" means a borrowing hereunder consisting of Revolving Loans made on the same day by the Lenders to the Borrowers or by Bank in the case of a Borrowing funded by Non-Ratable Loans or by the Agent in the case of a Borrowing consisting of an Agent Advance, or the issuance of Letters of Credit hereunder.

"Borrowing Base" means, at any time with respect to Garlock Sealing the Garlock Sealing Borrowing Base and (ii) with respect to an Excess Collateral Provider, the Excess Collateral Providers Borrowing Base. At any time that Aggregate Availability shall be less than $15,000,000, until such time as the Agent shall have received an updated Borrowing Base Certificate, all amounts transferred to the Agent pursuant to the requirement so Section 3.3(b) shall reduce the applicable Borrowing Base as determined based upon the most recently delivered Borrowing Base Certificate on a dollar for dollar basis.

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"Borrowing Base Certificate" means a certificate by a Responsible Officer of each Borrower, substantially in the form of Exhibit A (or another form acceptable to the Agent) setting forth the calculation of the Garlock Sealing Borrowing Base and the Excess Collateral Providers Borrowing Base, including a calculation of each component thereof, all in such detail as shall be reasonably satisfactory to the Agent. All calculations of the Garlock Sealing Borrowing Base and the Excess Collateral Providers Borrowing Base in connection with the preparation of any Borrowing Base Certificate shall originally be made by such applicable Borrower and certified to the Agent; provided, that the Agent shall have the right to review and adjust, in the exercise of its reasonable credit judgment, any such calculation (1) to reflect its reasonable estimate of declines in value of any of the Collateral described therein, and (2) to the extent that such calculation is not in accordance with this Agreement.

"Business Day" means (a) any day that is not a Saturday, Sunday, or a day on which banks in Atlanta, Georgia or Charlotte, North Carolina are required or permitted to be closed, and (b) with respect to all notices, determinations, fundings and payments in connection with the LIBOR Rate or LIBOR Rate Loans, any day that is a Business Day pursuant to clause (a) above and that is also a day on which trading in Dollars is carried on by and between banks in the London interbank market.

"Capital Adequacy Regulation" means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank.

"Capital Expenditures" means all payments due (whether or not paid during any fiscal period) in respect of the cost of any fixed asset or improvement, or replacement, substitution, or addition thereto, which has a useful life of more than one year, including, without limitation, those costs arising in connection with the direct or indirect acquisition of such asset by way of increased product or service charges or in connection with a Capital Lease.

"Capital Lease" means any lease of property by any Person which, in accordance with GAAP, should be reflected as a capital lease on the balance sheet of any Borrower or any of its Subsidiaries.

"Capital Security" shall mean, with respect to any Person, (a) any share of capital stock of or other unit of ownership interest in such Person and (b) any security convertible into, or any option, warrant or other right to acquire, any share of capital stock of or other unit of ownership interest in such Person.

"Change of Control" means one or more of the following events:

(a) less than a majority of the members of Parent's Board of Directors shall be persons who either (i) were serving as directors on the Closing Date or (ii) were nominated as directors and approved by the vote of the majority of the directors who are either directors referred to in clause (i) above or directors nominated and approved pursuant to this clause (ii); or

(b) the stockholders of Parent shall approve any plan or proposal for the liquidation or dissolution of Parent or the stockholders of any Borrower shall approve any plan for the liquidation or dissolution of such Borrower; or

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(c) a Person or group of Persons acting in concert shall, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, have become the direct or indirect beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended from time to time) of Capital Securities of Parent representing more than Parent twenty five per cent (25%) of the combined voting power of the outstanding voting Capital Securities or other ownership interests for the election of directors or shall have the right to elect a majority of the Board of Directors of Parent; or

(d) any Borrower ceases to be a Wholly Owned Subsidiary of Parent; or

(e) a "Change of Control" or similar event occurs under the terms of any document or agreement evidencing Debt of Parent, any Borrower or any of their respective Subsidiaries (other than the Obligations) having an outstanding principal balance of $2,000,000 or greater.

"Chattel Paper" means each Borrower's now owned or hereafter acquired chattel paper, as defined in the UCC, including electronic chattel paper.

"Closing Date" means the date of the initial extension of credit pursuant to this Agreement, whether as the making of Loans or the issuance of any Letter of Credit; provided, that in no event shall any such initial extension of credit be made after June 15, 2002.

"Code" means the Internal Revenue Code of 1986.

"Collateral" means all of the Borrowers', the Parent's and each of their respective Subsidiaries' real and personal property and all other assets of any Person from time to time subject to Agent's Liens securing payment or performance of the Obligations.

"Commitment" means, at any time with respect to a Lender, the principal amount set forth beside such Lender's name under the heading "Commitment" on Schedule 1.2 attached to the Agreement or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 11.2, as such Commitment may be adjusted from time to time in accordance with the provisions of Section 11.2, and "Commitments" means, collectively, the aggregate amount of the commitments of all of the Lenders.

"Concentration Account" means (i) Garlock Concentration Account and (ii) Coltec Concentration Account, in each case maintained at the Bank.

"Concentration Account Agreement" has the meaning specified in
Section 3.3(a).

"Contaminant" means any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, asbestos in any form or condition, polychlorinated biphenyls ("PCBs"), or any constituent of any such substance or waste.

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"Continuation/Conversion Date" means the date on which a Loan is converted into or continued as a LIBOR Rate Loan.

"Copyright Security Agreement" means any Copyright Security Agreement executed and delivered by a Borrower or any Subsidiary of any Borrower to the Agent, for the benefit of the Agent and the Lenders, to evidence and perfect the Agent's security interest in such Borrower's present and future copyrights and related licenses and rights.

"Credit Support" has the meaning specified in Section 1.4(a).

"Debt" of any Person means, without duplication, all liabilities, obligations and indebtedness of such Person to any other Person, of any kind or nature, now or hereafter owing, arising, due or payable, howsoever evidenced, created, incurred, acquired or owing, whether primary, secondary, direct, contingent, fixed or otherwise, consisting of indebtedness for borrowed money or the deferred purchase price of property, excluding trade payables, but including (a) with respect to the Borrowers, all Obligations; (b) all obligations and liabilities of any Person secured by any Lien on such Person's property, even though such Person shall not have assumed or become liable for the payment thereof; provided, however, that all such obligations and liabilities which are limited in recourse to such property shall be included in Debt only to the extent of the book value of such property as would be shown on a balance sheet of such Person prepared in accordance with GAAP; (c) all obligations or liabilities created or arising under any Capital Lease or conditional sale or other title retention agreement with respect to property used or acquired by such Person, even if the rights and remedies of the lessor, seller or lender thereunder are limited to repossession of such property; provided, however, that all such obligations and liabilities which are limited in recourse to such property shall be included in Debt only to the extent of the book value of such property as would be shown on a balance sheet of the applicable Borrower prepared in accordance with GAAP; (d) all obligations and liabilities under Guaranties; (e) the present value (discounted at the Base Rate) of lease payments due under synthetic leases and (f) any obligations or liabilities owing by the Parent, any Borrower or any of their respective Subsidiaries at any time under the Goodrich Indemnification Agreement.

"Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured, waived, or otherwise remedied during such time) constitute an Event of Default.

"Default Rate" means a fluctuating per annum interest rate at all times equal to the sum of (a) the otherwise applicable Interest Rate plus
(b) two percent (2%) per annum. Each Default Rate shall be adjusted simultaneously with any change in the applicable Interest Rate. In addition, the Default Rate shall result in an increase in the Letter of Credit Fee by two (2) percentage points per annum.

"Defaulting Lender" has the meaning specified in Section 12.15(c).

"Deposit Accounts" means all "deposit accounts" as such term is defined in the UCC, now or hereafter held in the name of any Borrower.

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"Depository Account" has the meaning specified in Section 3.3(a).

"Designated Account" has the meaning specified in Section 1.2(c).

"Dispositions" shall mean the sale, transfer or other disposition of any business unit or line of business of any Borrower or any of its respective Subsidiaries in one or a series of related transactions.

"Distribution" means, in respect of any Person: (a) the payment or making of any dividend or other distribution of property in respect of capital stock, partnership interest, member interest or other equity (or any options or warrants for, or other rights with respect thereto) of such Person, other than distributions in capital stock, partnership interest, member interest or other equity of such Person (or any options or warrants therefor) of the same class; or (b) the redemption or other acquisition by such Person of any capital stock, partnership interest, member interest or other equity of such Person (or any options or warrants therefor such stock) of such Person.

"Documents" means all documents as such term is defined in the UCC, including bills of lading, warehouse receipts or other documents of title, now owned or hereafter acquired by any Borrower.

"DOL" means the United States Department of Labor or any successor department or agency.

"Dollar" and "$" means dollars in the lawful currency of the United States. Unless otherwise specified, all payments under the Agreements shall be made in Dollars.

"Domestic Subsidiary" means any Subsidiary that is incorporated or formed under the laws of any jurisdiction of the United States of America or that conducts a substantial portion of its business in the United States of America.

"Dormant Subsidiary" means each of the following direct or indirect Subsidiaries of Coltec: (i) Coltec Automotive Inc, a Delaware corporation, (ii) Coltec Charitable Foundation Inc, a Delaware corporation,
(iii) EXH Automotive Holdings, Inc, a Delaware corporation, (iv) FSS Divestiture Corp., a Delaware corporation, (v) Mainland Sealing Products, LLC, a North Carolina limited liability company, (vi) The Anchor Packing Company, a Delaware corporation and (vii) Salt Lick Railroad Company, a Pennsylvania corporation.

"EBITDA" means, with respect to any fiscal period of the Borrowers, Adjusted Net Earnings from Operations, plus, to the extent deducted in the determination of Adjusted Net Earnings from Operations for that fiscal period, interest expenses, Federal, state, local and foreign income taxes, and depreciation and amortization.

"EIFA" means that certain Excess Insurance Funding Agreement dated on or about June 16, 1995 by and among Coltec and various insurance companies party thereto, as amended through the date of this Agreement, and as the same may hereafter be amended, supplemented or modified in accordance with the terms hereof.

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"Eligible Accounts" means the Accounts which the Agent in the exercise of its reasonable commercial discretion determines to be Eligible Accounts. Without limiting the discretion of the Agent to establish other criteria of ineligibility, Eligible Accounts shall not, unless the Agent in its sole discretion elects, include any Account:

(a) with respect to which more than 90 days have elapsed since the date of the original invoice therefor or which is more than 60 days past due;

(b) with respect to which any of the representations, warranties, covenants, and agreements contained in the Security Agreement are incorrect or have been breached;

(c) with respect to which Account (or any other Account due from such Account Debtor), in whole or in part, a check, promissory note, draft, trade acceptance or other instrument for the payment of money has been received, presented for payment and returned uncollected for any reason;

(d) which represents a progress billing (as hereinafter defined) or as to which the applicable Borrower has extended the time for payment without the consent of the Agent; for the purposes hereof, "progress billing" means any invoice for goods sold or leased or services rendered under a contract or agreement pursuant to which the Account Debtor's obligation to pay such invoice is conditioned upon such Borrower's completion of any further performance under the contract or agreement;

(e) with respect to which any one or more of the following events has occurred to the Account Debtor on such Account: death or judicial declaration of incompetency of an Account Debtor who is an individual; the filing by or against the Account Debtor of a request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or similar laws of the United States, any state or territory thereof, or any foreign jurisdiction, now or hereafter in effect; the making of any general assignment by the Account Debtor for the benefit of creditors; the appointment of a receiver or trustee for the Account Debtor or for any of the assets of the Account Debtor, including, without limitation, the appointment of or taking possession by a "custodian," as defined in the Federal Bankruptcy Code; the institution by or against the Account Debtor of any other type of insolvency proceeding (under the bankruptcy laws of the United States or otherwise) or of any formal or informal proceeding for the dissolution or liquidation of, settlement of claims against, or winding up of affairs of, the Account Debtor; the sale, assignment, or transfer of all or any material part of the assets of the Account Debtor; the nonpayment generally by the Account Debtor of its debts as they become due; or the cessation of the business of the Account Debtor as a going concern;

(f) if fifty percent (50%) or more of the aggregate Dollar amount of outstanding Accounts owed at such time by the Account Debtor thereon is classified as ineligible under clause (a) above;

(g) owed by an Account Debtor which: (i) does not maintain its chief executive office in the United States of America; or (ii) is not organized under the laws of the United States of America or Canada or any state or province thereof; or (iii) is the government of

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any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof; except to the extent that such Account is secured or payable by a letter of credit satisfactory to the Agent in its discretion;

(h) owed by an Account Debtor which is an Affiliate or employee of any Borrower;

(i) except as provided in clause (k) below, with respect to which either the perfection, enforceability, or validity of the Agent's Liens in such Account, or the Agent's right or ability to obtain direct payment to the Agent of the proceeds of such Account, is governed by any federal, state, or local statutory requirements other than those of the UCC;

(j) owed by an Account Debtor to which any Borrower or any of their respective Subsidiaries, is indebted in any way, or which is subject to any right of setoff or recoupment by the Account Debtor, unless the Account Debtor has entered into an agreement acceptable to the Agent to waive setoff rights; or if the Account Debtor thereon has disputed liability or made any claim with respect to any other Account due from such Account Debtor; but in each such case only to the extent of such indebtedness, setoff, recoupment, dispute, or claim;

(k) owed by the government of the United States of America, or any department, agency, public corporation, or other instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. ss.3727 et seq.), and any other steps necessary to perfect the Agent's Liens therein, have been complied with to the Agent's satisfaction with respect to such Account;

(l) owed by any state, municipality, or other political subdivision of the United States of America, or any department, agency, public corporation, or other instrumentality thereof and as to which the Agent determines that its Lien therein is not or cannot be perfected;

(m) which represents a sale on a bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment, or other repurchase or return basis;

(n) which is evidenced by a promissory note or other instrument or by chattel paper;

(o) if the Agent believes, in the exercise of its reasonable judgment, that the prospect of collection of such Account is impaired or that the Account may not be paid by reason of the Account Debtor's financial inability to pay;

(p) with respect to which the Account Debtor is located in any state requiring the filing of a Notice of Business Activities Report or similar report in order to permit the applicable Borrower to seek judicial enforcement in such State of payment of such Account, unless such Borrower has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then current year;

(q) which arises out of a sale not made in the ordinary course of such Borrower's business;

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(r) with respect to which the goods giving rise to such Account have not been shipped and delivered to and accepted by the Account Debtor or the services giving rise to such Account have not been performed by such Borrower, and, if applicable, accepted by the Account Debtor, or the Account Debtor revokes its acceptance of such goods or services;

(s) owed by an Account Debtor which is obligated to such Borrower respecting Accounts the aggregate unpaid balance of which exceeds twenty percent (20%) of the aggregate unpaid balance of all Accounts owed to such Borrower at such time by all of such Borrower's Account Debtors which but for the application of this clause (s) would otherwise constitute "Eligible Accounts", but only to the extent of such excess;

(t) which is not subject to a first priority and perfected security interest in favor of the Agent for the benefit of the Lenders.

If any Account at any time ceases to be an Eligible Account, then such Account shall promptly be excluded from the calculation of Eligible Accounts.

"Eligible Assignee" means (a) a commercial bank, commercial finance company or other asset based lender, having total assets in excess of $1,000,000,000; (b) any Lender listed on the signature page of this Agreement;
(c) any Affiliate of any Lender; and (d) if an Event of Default has occurred and is continuing, any Person reasonably acceptable to the Agent.

"Eligible Insurance Providers" means insurance companies acceptable to the Agent, having a rating of at least B+ or better by Best Rating Guide and which (i) either (A) in the case of each insurance company other than an AIG Company, have agreed in writing pursuant to the EIFA, to make payments to, or (B) in the case of an AIG Company, is making payments in accordance with the terms of the EIFA (as if it were a party thereto) to, reimburse Garlock Sealing for payments made by Garlock Sealing with respect to claims against Garlock Sealing relating to its use and distribution of products alleged to contain asbestos and (ii) have acknowledged, pursuant to a writing in form and substance satisfactory to the Agent, the Agent's security interest in the amounts payable by such insurance company to Garlock Sealing.

"Eligible Inventory" means Inventory, valued at the lower of cost (on a first-in, first-out basis) or market, which the Agent, in its reasonable discretion, determines to be Eligible Inventory. Without limiting the discretion of the Agent to establish other criteria of ineligibility, Eligible Inventory shall not, unless the Agent in its sole discretion elects, include any Inventory:

(a) that is not owned by a Borrower;

(b) that is not subject to the Agent's Liens, which are perfected as to such Inventory, or that are subject to any other Lien whatsoever (other than the Liens described in clause (d) of the definition of Permitted Liens provided that such Permitted Liens (i) are junior in priority to the Agent's Liens or subject to Reserves and (ii) do not impair directly or indirectly the ability of the Agent to realize on or obtain the full benefit of the Collateral);

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(d) that consists of work-in-process, chemicals, samples, prototypes, supplies, or packing and shipping materials;

(e) that is not in good condition, is unmerchantable, or does not meet all standards imposed by any Governmental Authority, having regulatory authority over such goods, their use or sale;

(f) that is not currently either usable or salable, at prices approximating at least cost, in the normal course of such Borrower's business, or that is slow moving or stale;

(g) that is obsolete or returned or repossessed or used goods taken in trade;

(h) that is located outside the United States of America (or that is in-transit from vendors or suppliers);

(i) that is located in a public warehouse or in possession of a bailee or in a facility leased by such Borrower, if the warehouseman, or the bailee, or the lessor has not delivered to the Agent, if requested by the Agent, a subordination agreement in form and substance satisfactory to the Agent or if a Reserve for rents or storage charges has not been established for Inventory at that location;

(j) that contains or bears any Proprietary Rights licensed to a Borrower by any Person, if the Agent is not satisfied that it may sell or otherwise dispose of such Inventory in accordance with the terms of the Security Agreement and Section 9.2 without infringing the rights of the licensor of such Proprietary Rights or violating any contract with such licensor (and without payment of any royalties other than any royalties due with respect to the sale or disposition of such Inventory pursuant to the existing license agreement), and, as to which such Borrower has not delivered to the Agent a consent or sublicense agreement from such licensor in form and substance acceptable to the Agent if requested;

(k) that is not reflected in the details of a current perpetual inventory report; or

(l) that is Inventory placed on consignment.

If any Inventory at any time ceases to be Eligible Inventory, such Inventory shall promptly be excluded from the calculation of Eligible Inventory.

"Environmental Claims" means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for a Release or injury to the environment.

"Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case relating to environmental, health, safety and land use matters.

"Environmental Lien" means a Lien in favor of any Governmental Authority for (a) any liability under Environmental Laws, or (b) damages arising from, or costs incurred by

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such Governmental Authority in response to, a Release or threatened Release of a Contaminant into the environment.

"Equipment" means with respect to any Borrower, all of such Borrower's now owned and hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and other tangible personal property (except Inventory), including embedded software, motor vehicles with respect to which a certificate of title has been issued, aircraft, dies, tools, jigs, molds and office equipment, as well as all of such types of property leased by such Borrower and all of such Borrower's rights and interests with respect thereto under such leases (including, without limitation, options to purchase); together with all present and future additions and accessions thereto, replacements therefor, component and auxiliary parts and supplies used or to be used in connection therewith, and all substitutes for any of the foregoing, and all manuals, drawings, instructions, warranties and rights with respect thereto; wherever any of the foregoing is located.

"ERISA" means the Employee Retirement Income Security Act of 1974, and regulations promulgated thereunder.

"ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Parent or any Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan, (b) a withdrawal by the Parent, any Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA, (c) a complete or partial withdrawal by the Parent, any Borrower or any ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan is in reorganization, (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multi-employer Plan, or (e) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Parent, any Borrower or any ERISA Affiliate.

"Event of Default" has the meaning specified in Section 9.1.

"Excess Collateral Amount" means at any time the lesser of
(a) 50% of the Insurance Receivables Amount due and payable to Garlock Sealing and (b) the difference between (i) the aggregate Excess Collateral Providers Borrowing Base (without giving effect to any reduction thereto as a result of the proviso set forth in such definition) minus (ii) the Aggregate Revolver Outstandings of the Excess Collateral Providers at such time.

"Excess Collateral Providers" means each of Coltec, CIP, Garlock Bearings, Haber Tool and Stemco.

"Excess Collateral Providers Accounts and Inventory Borrowing Base" means at any time with respect to the Excess Collateral Providers, an amount equal to (i) the sum of (A)

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up to eighty five percent (85%) of the Net Amount of Eligible Accounts of the Excess Collateral Providers, plus (B) up to fifty percent (50%) of the value of Eligible Inventory of the Excess Collateral Providers, minus (ii) Reserves from time to time established by the Agent in its reasonable credit judgment with respect to the Excess Collateral Providers.

"Excess Collateral Providers Borrowing Base" means at any time with respect to the Excess Collateral Providers, an amount equal to the Excess Collateral Providers Accounts and Inventory Borrowing Base; provided that there shall be subtracted from the Excess Collateral Providers Borrowing Base an amount equal to the excess of (x) the sum (without duplication) of (1) the unpaid balance of Revolving Loans allocated to Garlock Sealing, (2) the aggregate amount of Pending Revolving Loans to be allocated to Garlock Sealing,
(3) one hundred percent (100%) of the aggregate undrawn face amount of all outstanding Letters of Credit issued for the account of Garlock Sealing, and (4) the aggregate amount of any unpaid reimbursement obligations in respect of Letters of Credit issued for the account of Garlock Sealing over (y) the Garlock Sealing Accounts and Inventory Borrowing Base.

"Excess Collateral Providers Concentration Account" means the account designated by the Excess Collateral providers in writing to the Agent and maintained at the Bank.

"Exchange Act" means the Securities Exchange Act of 1934, and regulations promulgated thereunder.

"Excluded Foreign Sub Income Amount" means, in connection with any calculation of the Fixed Charge Coverage Ratio for any applicable fiscal period (i) if Foreign Subsidiary EBITDA is less than Foreign Subsidiary Fixed Charges, $0 and (ii) if Foreign Subsidiary EBITDA is equal to or greater than Foreign Subsidiary Fixed Charges, the Foreign Sub Net Income that is excluded from the calculation of Adjusted Net Earnings from Operations in calculating EBITDA for such fiscal period.

"Facility Usage" means for any day, a fraction expressed as a percentage equal to the outstanding amount of Revolving Loans and undrawn face amount of outstanding Letters of Credit on such day divided by the Maximum Revolver Amount.

"FDIC" means the Federal Deposit Insurance Corporation, and any Governmental Authority succeeding to any of its principal functions.

"Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Bank on such day on such transactions as determined by the Agent.

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"Federal Reserve Board" means the Board of Governors of the Federal Reserve System or any successor thereto.

"Financial Statements" means, according to the context in which it is used, the financial statements referred to in Sections 5.2 and 6.6 or any other financial statements required to be given to the Lenders pursuant to this Agreement.

"Fiscal Year" means the Borrowers' fiscal years for financial accounting purposes. The current Fiscal Year of each Borrower will end on December 31, 2002.

"Fixed Assets" means the Equipment and Real Estate of the Borrowers.

"Fixed Charge Coverage Ratio" means, with respect to any fiscal period of Borrowers, the ratio of (i) EBITDA plus administrative expenses and defense costs relating to asbestos claims to the extent such costs and expenses are not reimbursed by insurance and are expensed through the profit and loss statements of the Borrowers during such fiscal period to (ii) (A) Fixed Charges minus (B) the Excluded Foreign Sub Income Amount.

"Fixed Charges" means, with respect to any fiscal period of Parent and its consolidated Subsidiaries on a consolidated basis, without duplication, interest expense, Capital Expenditures (excluding Capital Expenditures funded with Debt other than Revolving Loans, but including, without duplication, principal payments with respect to such Debt), scheduled principal payments of Debt, Federal, state, local and foreign income taxes (excluding deferred taxes), payments (net of insurance reimbursements) relating to asbestos claims and litigation against any Borrower or its Subsidiaries, Permitted Restricted Investments made in accordance with Section 7.10 with the Permitted Excess Expenditure Amount and prepayments and repurchases of Debt made pursuant to Section 7.14 with the Permitted Excess Expenditure Amount.

"Foreign Sub Net Income" has the meaning specified in the definition of "Adjusted Net Earnings from Operations."

"Foreign Subsidiary" means any Subsidiary of a Borrower other than such Borrower's Domestic Subsidiaries.

"Foreign Subsidiary EBITDA" means for any applicable fiscal period, EBITDA calculated solely for the Foreign Subsidiaries of the Parent for such fiscal period.

"Foreign Subsidiary Fixed Charges" means for any applicable fiscal period, Fixed Charges calculated solely for the Foreign Subsidiaries of the Parent for such fiscal period.

"Funding Date" means the date on which a Borrowing occurs.

"Funds Administrator" means Coltec.

"GAAP" means generally accepted accounting principles and practices set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of

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the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the Closing Date.

"Garlock Sealing Accounts and Inventory Borrowing Base" means at any time with respect to Garlock Sealing, an amount equal to (i) the sum of (A) up to eighty five percent (85%) of the Net Amount of Eligible Accounts of Garlock Sealing, plus (B) up to fifty percent (50%) of the value of Eligible Inventory of Garlock Sealing, minus (ii) Reserves from time to time established by the Agent in its reasonable credit judgment with respect to Garlock Sealing.

"Garlock Sealing Borrowing Base" means at any time, an amount equal to (i) the sum of (A) the Garlock Sealing Accounts and Inventory Borrowing Base at such time plus (B) the Excess Collateral Amount at such time minus (ii) the outstanding principal balance of the Permitted Excess Collateral Provider Loans at such time.

"Garlock Sealing Concentration Account" means the account designated by Garlock Sealing in writing to the Agent and maintained at the Bank.

"Garrison" means Garrison Litigation Management Ltd., a Delaware corporation.

"General Intangibles" means with respect to any Borrower, all of such Borrower's now owned or hereafter acquired general intangibles, choses in action and causes of action and all other intangible personal property of such Borrower of every kind and nature (other than Accounts), including, without limitation, all contract rights, payment intangibles, Proprietary Rights, corporate or other business records, inventions, designs, blueprints, plans, specifications, patents, patent applications, trademarks, service marks, trade names, trade secrets, goodwill, copyrights, computer software, customer lists, registrations, licenses, franchises, tax refund claims, any funds which may become due to such Borrower in connection with the termination of any Plan or other employee benefit plan or any rights thereto and any other amounts payable to such Borrower from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, property, casualty or any similar type of insurance and any proceeds thereof, proceeds of insurance covering the lives of key employees on which such Borrower is beneficiary, rights to receive dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged equity interests or Investment Property and any letter of credit, guarantee, claim, security interest or other security held by or granted to such Borrower.

"Goodrich" means Goodrich Corporation, a New York corporation, and its successors and assigns.

"Goodrich Indemnification Agreement" means that certain Indemnification Agreement dated on or about the Closing Date by and among the Parent and Goodrich, Coltec and Coltec Capital Trust, a Delaware statutory trust.

"Goodrich Subordination Agreement" means that certain Subordination Agreement executed by Goodrich in favor of the Agent and the Lenders, as the same may be amended, supplemented, amended and restated or otherwise modified from time to time.

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"Goods" means with respect to any Borrower all "goods" as defined in the UCC, now owned or hereafter acquired by such Borrower, wherever located, including embedded software to the extent included in "goods" as defined in the UCC, manufactured homes, standing timber that is cut and removed for sale and unborn young of animals.

"Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

"Guaranty" means, with respect to any Person, all obligations of such Person which in any manner directly or indirectly guarantee or assure, or in effect guarantee or assure, the payment or performance of any indebtedness, dividend or other obligations of any other Person (the "guaranteed obligations"), or assure or in effect assure the holder of the guaranteed obligations against loss in respect thereof, including any such obligations incurred through an agreement, contingent or otherwise: (a) to purchase the guaranteed obligations or any property constituting security therefor; (b) to advance or supply funds for the purchase or payment of the guaranteed obligations or to maintain a working capital or other balance sheet condition; or (c) to lease property or to purchase any debt or equity securities or other property or services.

"Hedge Agreement" means any and all transactions, agreements or documents now existing or hereafter entered into, which provides for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging the Parent's or any Borrower's exposure to fluctuations in interest or exchange rates, loan, credit exchange, security or currency valuations or commodity prices.

"Instruments" means with respect to any Borrower, all instruments as such term is defined in the UCC, now owned or hereafter acquired by such Borrower.

"Insurance Proceeds Account" means the account designated by Garlock Sealing and Coltec in writing to the Agent and maintained at the Bank.

"Insurance Receivables Amount" means the aggregate amounts owing to Garlock Sealing from Eligible Insurance Providers pursuant to the EIFA (or in the case of AIG, amounts that would be owing from AIG pursuant to the EIFA if it were a party thereto) to reimburse Garlock Sealing for payments made by Garlock Sealing with respect to claims against Garlock Sealing relating to its use and distribution of products alleged to contain asbestos; provided that such amounts shall only include amounts with respect to which the Agent has been granted a perfected first priority security interest as collateral for the Obligations. Prior to the delivery of opinions in form and substance satisfactory to the Agent and from such counsel satisfactory to the Agent as to the perfection and priority of such security interest from counsel in Delaware, New York, North Carolina and Pennsylvania, the Insurance Receivables Amount shall be deemed to be $0. In addition, amounts owing from any Eligible Insurance Provider shall not be included in the Insurance Receivables Amount unless the Agent shall have received a full and

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complete copy of the EIFA (including all addendums, sideletters and other agreements related thereto) as executed by such Eligible Insurance Provider, accompanied by an executed certificate from an officer of the Funds Administrator and Garlock Sealing to such effect in form satisfactory to the Agent.

"Intercompany Subordination Agreement" means that certain Subordination Agreement date on or about the Closing Date by and among the Parent, the Borrowers and certain of their respective Subsidiaries subordinating certain intercompany Debt and other liabilities to the Obligations and such Persons' obligations under the Loan Documents, as the same may be amended, supplemented, amended and restated or otherwise modified from time to time.

"Interest Period" means, as to any LIBOR Rate Loan, the period commencing on the Funding Date of such Loan or on the Continuation/Conversion Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and ending on the date one, two, three or six months thereafter as selected by the Funds Administrator in its Notice of Borrowing, in the form attached hereto as Exhibit C, or Notice of Continuation/Conversion, in the form attached hereto as Exhibit D, provided that:

(a) if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day;

(b) any Interest Period pertaining to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

"Interest Rate" means each or any of the interest rates, including the Default Rate, set forth in Section 2.1.

"Inventory" means with respect to any Borrower, all of such Borrower's now owned and hereafter acquired inventory, goods and merchandise, wherever located, to be furnished under any contract of service or held for sale or lease, all returned goods, raw materials, work-in-process, finished goods (including embedded software), other materials and supplies of any kind, nature or description which are used or consumed in such Borrower's business or used in connection with the packing, shipping, advertising, selling or finishing of such goods, merchandise, and all documents of title or other Documents representing them.

"Investment Property" means with respect to any Borrower, all of such Borrower's right title and interest in and to any and all: (a) securities whether certificated or uncertificated; (b) securities entitlements;
(c) securities accounts; (d) commodity contracts; or (e) commodity accounts.

"IRS" means the Internal Revenue Service and any Governmental Authority succeeding to any of its principal functions under the Code.

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"Latest Projections" means: (a) on the Closing Date and thereafter until the Agent receives new projections pursuant to Section 5.2(e), the projections of the Parent's and the Borrowers' financial condition, results of operations, and cash flows, for the period commencing on January 1, 2002 and ending on December 31, 2002 and delivered to the Agent prior to the Closing Date; and (b) thereafter, the projections most recently received by the Agent pursuant to Section 5.2(f).

"Lender" and "Lenders" have the meanings specified in the introductory paragraph hereof and shall include the Agent to the extent of any Agent Advance outstanding and the Bank to the extent of any Non-Ratable Loan outstanding; provided that no such Agent Advance or Non-Ratable Loan shall be taken into account in determining any Lender's Pro Rata Share.

"Letter of Credit" has the meaning specified in Section 1.4(a).

"Letter of Credit Fee" has the meaning specified in Section 2.6.

"Letter of Credit Issuer" means the Bank, any affiliate of the Bank or any other financial institution that issues any Letter of Credit pursuant to this Agreement.

"Letter-of-Credit Rights" means with respect to any Borrower, "letter-of-credit rights" as such term is defined in the UCC, now owned or hereafter acquired by such Borrower, including rights to payment or performance under a letter of credit, whether or not such Borrower, as beneficiary, has demanded or is entitled to demand payment or performance.

"Letter of Credit Subfacility" means $15,000,000.

"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate Loan, the first day of each month and the Termination Date.

"LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate Loans, the rate of interest per annum determined pursuant to the following formula:

LIBOR Rate = Offshore Base Rate

1.00 - Eurodollar Reserve Percentage

Where,

"Offshore Base Rate" means the rate per annum appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the Offshore Base Rate shall be, for any Interest Period, the rate per annum appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen

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LIBO Page, the applicable rate shall be the arithmetic mean of all such rates. If for any reason none of the foregoing rates is available, the Offshore Base Rate shall be, for any Interest Period, the rate per annum determined by Agent as the rate of interest at which dollar deposits in the approximate amount of the LIBOR Rate Loan comprising part of such Borrowing would be offered by the Bank's London Branch to major banks in the offshore dollar market at their request at or about 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period.

"Eurodollar Reserve Percentage" means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day applicable to member banks under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"). The Offshore Rate for each outstanding LIBOR Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

"LIBOR Rate Loans" means a Revolving Loan during any period in which it bears interest based on the LIBOR Rate.

"Lien" means: (a) any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute, or contract, and including a security interest, charge, claim, or lien arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes; (b) to the extent not included under clause (a), any reservation, exception, encroachment, easement, right-of-way, covenant, condition, restriction, lease or other title exception or encumbrance affecting property; and (c) any contingent or other agreement to provide any of the foregoing.

"Loan Account" means the loan account of each Borrower, which account shall be maintained by the Agent.

"Loan Documents" means this Agreement, the Patent and Trademark Security Agreements, any Copyright Security Agreement, the Security Agreements, the Mortgages, the Parent Guaranty, the Subsidiary Guaranty, the Pledge Agreements and any other agreements, instruments, and documents heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise relating to the Obligations, the Collateral, or any other aspect of the transactions contemplated by this Agreement.

"Loans" means, collectively, all loans and advances provided for in Article 1.

"Lockbox and Control Agreement" means an agreement among any Borrower, the Agent and a Lockbox Bank, in form and substance reasonably satisfactory to the Agent, concerning the collection of payments which represent the proceeds of Accounts or of any other Collateral.

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"Lockbox Bank" has the meaning specified in Section 3.3(a).

"Lockboxes" has the meaning specified in Section 3.3(a).

"Majority Lenders" means at any date of determination Lenders whose Pro Rata Shares aggregate more than 50%.

"Margin Stock" means "margin stock" as such term is defined in Regulation T, U or X of the Federal Reserve Board.

"Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of the Parent, any Borrower, the Collateral or any guarantor of the Obligations, taken as a whole; (b) a material impairment of the ability of the Parent, any Borrower, or any Subsidiary Guarantor with assets valued at $2,000,000 or more, to perform under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Parent, any Borrower, or any Subsidiary Guarantor with assets valued at $2,000,000 or more, of any Loan Document to which it is a party.

"Maximum Revolver Amount" means $60,000,000.

"Mortgages" means and includes any and all of the mortgages, deeds of trust, deeds to secure debt, assignments and other instruments executed and delivered by any Borrower or any Affiliate of any Borrower to or for the benefit of the Agent by which the Agent, on behalf of the Lenders, acquires a Lien on the Real Estate or a collateral assignment of any Borrower's or any Borrower's Affiliate's interests under leases of Real Estate, and all amendments, modifications and supplements thereto.

"Multi-employer Plan" means a "multi-employer plan" as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years contributed to by the Parent, any Borrower or any ERISA Affiliate.

"Net Amount of Eligible Accounts" means, at any time, the gross amount of Eligible Accounts less sales, excise or similar taxes, and less returns, discounts, claims, credits and allowances accrued rebates, offsets, deductions, counterclaims, disputes and other defenses of any nature at any time issued, owing, granted, outstanding, available or claimed.

"Non-Ratable Loan" and "Non-Ratable Loans" have the meanings specified in Section 1.2(h).

"Notice of Borrowing" has the meaning specified in Section 1.2(b).

"Notice of Continuation/Conversion" has the meaning specified in Section 2.2(b).

"Obligations" means all present and future loans, advances, liabilities, obligations, covenants, duties, and debts owing by the Borrowers to the Agent and/or any

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Lender, arising under or pursuant to this Agreement or any of the other Loan Documents, whether or not evidenced by any note, or other instrument or document, whether arising from an extension of credit, opening of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including all principal, interest, charges, expenses, fees, attorneys' fees, filing fees and any other sums chargeable to the Borrowers hereunder or under any of the other Loan Documents. "Obligations" includes, without limitation, (a) all debts, liabilities, and obligations now or hereafter arising from or in connection with the Letters of Credit and (b) all debts, liabilities and obligations now or hereafter arising from or in connection with Bank Products.

"Other Taxes" means any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Documents.

"Parent" means EnPro Industries, Inc., a North Carolina corporation.

"Parent Guaranty" means the Guaranty, dated as of the date hereof, executed and delivery by the Parent, as the same may be amended, supplemented, amended and restated or otherwise modified from time to time.

"Participant" means any Person who shall have been granted the right by any Lender to participate in the financing provided by such Lender under this Agreement, and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.

"Patent and Trademark Security Agreements" means the Patent Security Agreement and the Trademark Security Agreement, each dated as of the date hereof, executed and delivered by each Borrower to the Agent to evidence and perfect the Agent's security interest in such Borrower's present and future patents, trademarks, and related licenses and rights, for the benefit of the Agent and the Lenders.

"PBGC" means the Pension Benefit Guaranty Corporation or any Governmental Authority succeeding to the functions thereof.

"Pending Revolving Loans" means, at any time, the aggregate principal amount of all Revolving Loans requested in any Notice of Borrowing received by the Agent which have not yet been advanced.

"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which the Parent or any Borrower sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multi-employer Plan has made contributions at any time during the immediately preceding five (5) plan years.

"Permitted Dispositions" means Dispositions for fair market value generating aggregate cash proceeds in an amount not to exceed (i) with respect to all such Dispositions during any twelve (12) month period, ten percent (10%) of the consolidated net assets of the

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Borrowers and their Subsidiaries taken as a whole as of the first day of such twelve (12) month period and (ii) with respect to all such Dispositions from and after the Closing Date, thirty percent (30%) of the consolidated net assets of the Borrowers and their Subsidiaries taken as a whole as of the Closing Date.

"Permitted Excess Collateral Provider Loans" means Debt owing from Garlock Sealing to one or more of the Excess Collateral Providers so long as (i) none of such loans and advances were made with the proceeds of Revolving Loans, (ii) such Debt is pledged to the Agent as additional security for the Obligations pursuant to a Pledge Agreement, (iii) such Debt is subordinated to the Obligations on terms and conditions satisfactory to the Required Lenders and
(iv) such Debt was incurred at a time when no Revolving Loans allocated to the Excess Collateral Providers were outstanding.

"Permitted Excess Expenditure Amount" means at any time during any month an amount (calculated for the twelve fiscal months ended as of the last day of the most recently completed fiscal month) equal to the excess of (i) EBITDA, plus administrative expenses and defense costs relating to asbestos claims to the extent such costs and expenses are not reimbursed by insurance and are expensed through the profit and loss statements of the Borrowers, plus Borrowers' cash on hand in excess of $25,000,000 over (ii) the sum of (A) Fixed Charges, (B) prepayments on or repurchases of the TIDES during such period as permitted by Section 7.14 and (C) Permitted Restricted Investments made during such period as permitted by Section 7.10. Notwithstanding the preceding sentence, if in connection with any transaction, distribution, prepayment, repurchase or other event with respect to which the Borrowers or any Subsidiary intends to utilize the "Permitted Excess Expenditure Amount calculated above,
(i) Aggregate Availability either before or after giving effect thereto would be less than or equal to $30,000,000 or (ii) prior to giving effect thereto the Borrowers shall have available cash on hand of less than $25,000,000, the Permitted Excess Expenditure Amount at such time shall be $0.

"Permitted Foreign Subsidiary Investments" means (i) Debt owing from any Borrower or Domestic Subsidiary to any Foreign Subsidiary so long as such Debt is subordinated to the Obligations and all other amounts owing under the Loan Documents (on terms and conditions satisfactory to the Required Lenders), (ii) any Debt owing from any Foreign Subsidiary to any Borrower (or any Borrower's Domestic Subsidiary) or any capital contribution made by any Borrower (or any Borrower's Domestic Subsidiary) in any Foreign Subsidiary which is incurred or made after the Closing Date, so long as at the time such Debt is incurred or such capital contribution is made, the aggregate of all such Debt and capital contributions outstanding with respect to all of the Borrowers' Foreign Subsidiaries does not exceed (A) $7,500,000 if at such time, after giving effect thereto, Aggregate Availability is in excess of $30,000,000 or (B) $5,000,000 if at such time, after giving effect thereto, Aggregate Availability is equal to or less than $30,000,000, and (iii) Debt of any Foreign Subsidiary set forth on Schedule 6.9, but not any refinancing or refunding thereof.

"Permitted Liens" means:

(a) Liens for taxes not delinquent or that remain payable without penalty or statutory Liens for taxes in an amount not to exceed $2,000,000 provided that the payment of such taxes which are due and payable is being contested in good faith and by appropriate

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proceedings diligently pursued and as to which adequate financial reserves have been established on the applicable Borrower's books and records and a stay of enforcement of any such Lien is in effect;

(b) the Agent's Liens;

(c) Liens on deposits made in the ordinary course of business in connection with, or to secure payment of, obligations under worker's compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of Debt) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of Debt) or to secure statutory obligations (other than liens arising under ERISA or Environmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds;

(d) Liens securing the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons, provided that if any such Lien arises from the nonpayment of such claims or demand when due, such claims or demands do not exceed $500,000 in the aggregate and provided that the payment of such claims and demands are being contested in good faith and by appropriate proceedings diligently pursued and as to which adequate financial reserves have been established on the applicable Borrower's books and records and a stay of enforcement of any such Lien is in effect;

(e) Liens constituting encumbrances in the nature of reservations, exceptions, encroachments, easements, rights of way, covenants running with the land, non-material leases, and other similar title exceptions or encumbrances affecting any Real Estate; provided that they do not in the aggregate materially detract from the value of the Real Estate or materially interfere with its use in the ordinary conduct of any Borrower's business; and

(f) Liens arising from judgments and attachments in connection with court proceedings provided that the attachment or enforcement of such Liens would not result in an Event of Default hereunder and such Liens are being contested in good faith by appropriate proceedings, adequate reserves have been set aside and no material Property is subject to a material risk of loss or forfeiture and a stay of execution pending appeal or proceeding for review is in effect.

"Permitted Purchase Money Acquisition" means the purchase by a Domestic Subsidiary of the Borrower (which Subsidiary shall not be a Subsidiary Guarantor or a Dormant Subsidiary) of all or substantially all of the assets of any business unit or line of business of any other Person in a line of business permitted to be engaged in by the Borrowers and its Subsidiaries pursuant to
Section 7.17 and for which the consideration paid to such Person shall consist of Debt payable to such Person and limited in recourse solely to the Subsidiary making such acquisition.

"Permitted Restricted Investment" means an acquisition by a Borrower or any of its Subsidiaries (other than a Dormant Subsidiary) of all or substantially all of the assets of any other Person (or a division of any other Person) in a line of business permitted to be engaged in by the Borrowers and its Subsidiaries pursuant to Section 7.17, and with respect to which (i) after

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giving effect thereto, Aggregate Availability shall be at least $30,000,000,
(ii) the aggregate consideration paid in connection with any such acquisition shall not exceed the Permitted Excess Expenditure Amount at such time, (iii) prior to and after giving effect to such acquisition no Default or Event of Default shall have occurred and be continuing, and (iv) in the event a new Domestic Subsidiary of the Parent is formed in connection therewith, such new Subsidiary shall, prior to or concurrently with such acquisition, execute all such documents and instruments as the Agent may request to guaranty the Obligations and to pledge all of its personal property assets (and to the effect the provisions of Section 7.25 shall be applicable all of its Real Estate) as security therefor and all (or in the case of a foreign Subsidiary that is owned directly by a Domestic Subsidiary, 65%) of the issued and outstanding equity securities of such new Subsidiary shall be pledged by the owner thereof as additional security for the Obligations. In no event shall (i) the purchase or acquisition of the stock, partnership interest, member interest or other equity of any Person constitute a Permitted Restricted Investment nor (ii) shall any purchase described in this definition be permitted if as of the last day of the last full fiscal month immediately prior to any such purchase, the Borrowers shall not have been in compliance with the Fixed Charge Coverage Ratio covenant set forth in Section 7.23 hereof (without regard to any limitation on the application of such covenant based on Aggregate Availability). In addition to the foregoing, solely with the proceeds of its cash on hand, any Foreign Subsidiary may acquire all or substantially all of the assets of any other Person (or a division of any other Person) in a line of business permitted to be engaged in by the Borrowers and its Subsidiaries pursuant to Section 7.17.

"Person" means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, Governmental Authority, or any other entity.

"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which the Parent or any Borrower sponsors or maintains or to which the Parent or any Borrower makes, is making, or is obligated to make contributions and includes any Pension Plan.

"Pledge Agreements" means any Pledge Agreements or similar documents executed by the Parent, any Borrower or any of their respective Subsidiaries evidencing the pledge by such Persons of any equity interests owned by such Person in any of its Subsidiaries and/or the pledge of any Debt owing to such Person.

"Proprietary Rights" means with respect to any Borrower, all of such Borrower's now owned and hereafter arising or acquired: licenses, franchises, permits, patents, patent rights, copyrights, works which are the subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent, trademark and service mark applications, and all licenses and rights related to any of the foregoing, including those patents, trademarks, service marks, trade names and copyrights set forth on Schedule 6.12 hereto, and all other rights under any of the foregoing, all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing, and all rights to sue for past, present and future infringement of any of the foregoing.

"Pro Rata Share" means, with respect to a Lender, a fraction (expressed as a percentage), the numerator of which is the amount of such Lender's Commitment and the

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denominator of which is the sum of the amounts of all of the Lenders' Commitments, or if no Commitments are outstanding, a fraction (expressed as a percentage), the numerator of which is the amount of Obligations owed to such Lender and the denominator of which is the aggregate amount of the Obligations owed to the Lenders, in each case giving effect to a Lender's participation in Non-Ratable Loans and Agent Advances.

"Real Estate" means with respect to any Borrower, all of such Borrower's now or hereafter owned or leased estates in real property, including, without limitation, all fees, leaseholds and future interests, together with all of such Borrower's now or hereafter owned or leased interests in the improvements thereon, the fixtures attached thereto and the easements appurtenant thereto.

"Release" means a release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant into the indoor or outdoor environment or into or out of any Real Estate or other property, including the movement of Contaminants through or in the air, soil, surface water, groundwater or Real Estate or other property.

"Reportable Event" means, any of the events set forth in
Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC or expressly waived by the PBGC.

"Required Lenders" means at any time Lenders whose Pro Rata Shares aggregate at least 66-2/3%.

"Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.

"Reserves" means reserves that limit the availability of credit hereunder, consisting of reserves against Availability, Eligible Accounts or Eligible Inventory, established by Agent from time to time in Agent's reasonable credit judgment. Without limiting the generality of the foregoing, the following reserves shall be deemed to be a reasonable exercise of Agent's credit judgment: (a) Bank Product Reserves, (b) a reserve for accrued, unpaid interest on the Obligations, (c) reserves for rent at leased locations subject to statutory or contractual landlord liens, (d) Inventory shrinkage, (e) customs charges, (f) dilution, and (g) warehousemen's or bailees' charges.

"Responsible Officer" means with respect to any Borrower, the chief executive officer or the president of such Borrower, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants and the preparation of the Borrowing Base Certificate, the chief financial officer or the treasurer of such Borrower, or any other officer having substantially the same authority and responsibility.

"Restricted Investment" means, as to any Person, any acquisition of property by such Person in exchange for cash or other property, whether in the form of an acquisition of

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stock, debt, or other indebtedness or obligation, or the purchase or acquisition of any other property, or a loan, advance, capital contribution, or subscription, except the following: (a) acquisitions of Equipment or other assets (including licenses or leases of Proprietary Rights) to be used in the business of such Person so long as the acquisition costs thereof constitute Capital Expenditures permitted hereunder; (b) acquisitions of Inventory in the ordinary course of business of such Person; (c) acquisitions of current assets acquired in the ordinary course of business of such Person; (d) short term investments made in conformity with the investment policies attached as Schedule 7.10, provided that (i) such direct or indirect obligations of the United States of America or of the listed European governments mature within one year from the date of acquisition thereof and (ii) each other investment must mature not more than 90 days from the date of creation thereof (or in the case of money market funds, have an average maturity of not more than 90 days); and (e) Hedge Agreements.

"Revolving Loans" has the meaning specified in Section 1.2 and includes each Agent Advance and Non-Ratable Loan.

"Security Agreements" means the Security Agreements of even date herewith among Borrowers, the Parent and the Subsidiary Guarantors and Agent for the benefit of Agent and other Lenders.

"Settlement" and "Settlement Date" have the meanings specified in Section 12.15(a)(ii).

"Software" means with respect to any Borrower, all "software" as such term is defined in the UCC, now owned or hereafter acquired by such Borrower, other than software embedded in any category of Goods, including all computer programs and all supporting information provided in connection with a transaction related to any program.

"Solvent" means, when used with respect to any Person, that at the time of determination:

(a) the assets of such Person, at a fair valuation, are in excess of the total amount of its debts (including contingent liabilities); and

(b) the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become absolute and matured; and

(c) it is then able and expects to be able to pay its debts (including contingent debts and other commitments) as they mature; and

(d) it has capital sufficient to carry on its business as conducted and as proposed to be conducted.

For purposes of determining whether a Person is Solvent, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

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"Spinoff" means the spinoff of the Parent from Goodrich Corporation on the terms and conditions described in the Form 10/A-3 by the Parent with the Securities and Exchange Commission on or about May 16, 2002 and effective May 31, 2002.

"Stated Termination Date" means May 31, 2006.

"Subsidiary" of a Person means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than fifty percent (50%) of the voting stock or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a "Subsidiary" refer to a Subsidiary of the Borrowers.

"Subsidiary Guarantor" means each of the Subsidiaries of the Parent listed on Schedule A-1 hereto and each other Subsidiary of any Borrower which guaranties all or any portion of the Obligations.

"Subsidiary Guaranty" means the Guaranty, dated as of the date hereof, executed and delivery by each Subsidiary Guarantor, as the same may be amended, supplemented, amended and restated or otherwise modified from time to time.

"Taxes" means any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Agent, such taxes (including income taxes or franchise taxes) as are imposed on or measured by the Agent's or each Lender's net income in any the jurisdiction (whether federal, state or local and including any political subdivision thereof) under the laws of which such Lender or the Agent, as the case may be, is organized or maintains a lending office.

"Tax Matters Agreement" means that certain Tax Matters Agreement dated on or about the Closing Date by and between Goodrich and the Parent, as the same may be amended, supplemented, amended and restated or otherwise modified from time to time with the prior written consent of the Required Lenders.

"Termination Date" means the earliest to occur of (i) the Stated Termination Date, (ii) the date the Total Facility is terminated either by the Borrowers pursuant to Section 3.2 or by the Required Lenders pursuant to
Section 9.2, and (iii) the date this Agreement is otherwise terminated for any reason whatsoever pursuant to the terms of this Agreement.

"TIDES" means, collectively, the $150 million of 5 1/4% Convertible Preferred Securities (Term Income Deferred Equity Securities) issued by Coltec Capital Trust, a Delaware business trust, which are supported by an equivalent aggregate principal amount of 5 1/4% Convertible Junior Subordinated Deferrable Interest Debentures due April 15, 2028, issued by Coltec to Coltec Capital Trust.

"Total Facility" has the meaning specified in Section 1.1.

"UCC" means the Uniform Commercial Code, as in effect from time to time, of the State of North Carolina or of any other state the laws of which are required as a result thereof

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to be applied in connection with the issue of perfection of security interests; provided, that to the extent that the UCC is used to define any term herein or in any other documents and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern.

"Unfunded Pension Liability" means the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

"Unused Letter of Credit Subfacility" means an amount equal to the Letter of Credit Subfacility minus the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit plus, without duplication, (b) the aggregate unpaid reimbursement obligations with respect to all Letters of Credit.

"Unused Line Fee" has the meaning specified in Section 2.5.

"Wholly Owned Subsidiary" shall mean, with respect to any Person, any Subsidiary of such Person all of the Capital Securities of which (except directors' qualifying shares) are, directly or indirectly, owned and controlled by such Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more of such Subsidiaries.

Accounting Terms. Any accounting term used in the Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations in the Agreement shall be computed, unless otherwise specifically provided therein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of the Financial Statements.

Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b) The words "hereof," "herein," "hereunder" and similar words refer to the Agreement as a whole and not to any particular provision of the Agreement; and Subsection, Section, Schedule and Exhibit references are to the Agreement unless otherwise specified.

(c) (i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced.

(ii) The term "including" is not limiting and means "including without limitation."

(iii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including," the words "to" and "until" each mean "to but excluding" and the word "through" means "to and including."

(iv) The word "or" is not exclusive.

(d) Unless otherwise expressly provided herein, (i) references to agreements

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(including the Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.

(e) The captions and headings of the Agreement and other Loan Documents are for convenience of reference only and shall not affect the interpretation of the Agreement.

(f) The Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms.

(g) For purposes of Section 9.1, a breach of a financial covenant contained in Section 7.23 shall be deemed to have occurred as of any date of determination thereof by the Agent or as of the last day of any specified measuring period, regardless of when the Financial Statements reflecting such breach are delivered to the Agent.

(h) The Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Borrowers and the other parties, and are the products of all parties. Accordingly, they shall not be construed against the Lenders or the Agent merely because of the Agent's or Lenders' involvement in their preparation.

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EXHIBIT 10.15

SECURITY AGREEMENT

SECURITY AGREEMENT, dated as of May 16, 2002, among each of the parties named as a Grantor on the signature pages hereto (individually a "Grantor" and collectively, the "Grantors"), and BANK OF AMERICA, N.A., in its capacity as agent (the "Agent") for the Lenders (defined below).

WITNESSETH:

WHEREAS, pursuant to that certain Credit Agreement dated as of the date hereof by and among the financial institutions from time to time parties thereto (such financial institutions, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a "Lender" and collectively as the "Lenders"), the Agent, and certain of the Grantors consisting of Coltec Industries, Inc., a Pennsylvania corporation ("Coltec"), Coltec Industrial Products LLC, a Delaware limited liability company ("CIP"), Garlock Sealing Technologies LLC, a Delaware limited liability company ("Garlock Sealing"), Garlock Bearings LLC, a Delaware limited liability company ("Garlock Bearing"), Haber Tool Company, a Michigan corporation ("Haber Tool"), and Stemco LLC, a Delaware limited liability company ("Stemco" and, together with Coltec, Garlock Sealing, Garlock Bearing and Haber Tool, each individually referred to herein as a "Borrower" and collectively as the "Borrowers") (including all annexes, exhibits and schedules thereto, as from time to time amended, restated, supplemented or otherwise modified, the "Credit Agreement"), the Lenders have agreed to make the Loans and issue Letters of Credit on behalf of the Borrowers;

WHEREAS, EnPro Industries, Inc., as parent company to the Borrowers and other Grantors and as a Grantor hereunder (herein, the "Parent Grantor"), has executed that certain Parent Guarantee dated as of the date hereof (as from time to time reaffirmed, amended, restated, supplemented or otherwise modified, the "Parent Guarantee") in favor of the Agent, pursuant to which the Parent has agreed to guarantee all the "Obligations" (as defined in the Credit Agreement);

WHEREAS, the Grantors hereunder, other than the Borrowers and the Parent Grantor (herein, the "Subsidiary Grantors"), have executed that certain Subsidiary Guarantee dated as of the date hereof (as from time to time reaffirmed, amended, restated, supplemented or otherwise modified, the "Subsidiary Guarantee") in favor of the Agent, pursuant to which such Grantors have agreed to guarantee all the "Obligations" (as defined in the Credit Agreement);

WHEREAS, in order to induce the Agent and the Lenders to enter into the Credit Agreement and the other Loan Documents and to induce the Lenders to make the Loans and issue Letters of Credit as provided for in the Credit Agreement, the Grantors have agreed to grant a continuing Lien on the Collateral (as hereinafter defined) to secure the "Obligations" (as herein defined);

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, the parties hereto agree as follows:

1. DEFINED TERMS. The following terms shall have the following respective meanings:

"Accounts" means, with respect to any Grantor, all of such Grantor's now owned or hereafter acquired or arising accounts, as defined in the UCC, including any rights to payment for the sale or lease of goods or rendition of services, whether or not they have been earned by performance, and all medical receivables.

"Asbestos Insurance Policy" has the meaning ascribed to such term in the Credit Agreement.

"Borrower Grantor" means each of Coltec, CIP, Garlock Sealing, Garlock Bearing, Haber Tool and Stemco.

"Chattel Paper" means, with respect to any Grantor, all of such Grantor's now owned or hereafter acquired chattel paper, as defined in the UCC, including electronic chattel paper.

"Deposit Accounts" means all "deposit accounts" as such term is defined in the UCC, now or hereafter held in the name of any Grantor.

"Documents" means all documents as such term is defined in the UCC, including bills of lading, warehouse receipts or other documents of title, now owned or hereafter acquired by any Grantor.

"EIFA" has the meaning ascribed to such term in the Credit Agreement.

"Equipment" means, with respect to any Grantor, all of such Grantor's now owned and hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and other tangible personal property (except Inventory), including embedded software, motor vehicles with respect to which a certificate of title has been issued, aircraft, dies, tools, jigs, molds and office equipment, as well as all of such types of property leased by such Grantor and all of such Grantor's rights and interests with respect thereto under such leases (including, without limitation, options to purchase); together with all present and future additions and accessions thereto, replacements therefor, component and auxiliary parts and supplies used or to be used in connection therewith, and all substitutes for any of the foregoing; wherever any of the foregoing is located.

"General Intangibles" means, with respect to any Grantor, all of such Grantor's now owned or hereafter acquired general intangibles, choses in action and causes of action and all other intangible personal property of such Grantor of every kind and nature (other than

Accounts), including, without limitation, all contract rights, payment intangibles, Proprietary Rights, corporate or other business records, inventions, designs, blueprints, plans, all manuals, drawings, instructions, warranties and rights with respect to any Equipment, specifications, patents, patent applications, trademarks, service marks, trade names, trade secrets, goodwill, copyrights, computer software, customer lists, registrations, licenses, franchises, tax refund claims, any funds which may become due to such Grantor in connection with the termination of any employee benefit plan or any rights thereto and any other amounts payable to such Grantor from any employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, property, casualty or any similar type of insurance and any proceeds thereof, proceeds of insurance covering the lives of key employees on which such Grantor is a beneficiary, rights to receive dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged equity interests or Investment Property and any letter of credit, guarantee, claim, security interest or other security held by or granted to such Grantor.

"Goods" means all "goods" as defined in the UCC, now owned or hereafter acquired by any Grantor, wherever located, including embedded software to the extent included in "goods" as defined in the UCC, manufactured homes, standing timber that is cut and removed for sale and unborn young of animals.

"Instruments" means all instruments as such term is defined in the UCC, now owned or hereafter acquired by any Grantor.

"Insurance Receivables Rights" means all rights and interests, now owned or hereafter acquired, in and to the insurance accounts receivable with respect to the Asbestos Insurance Policies, and any supplementary and other contracts issued in connection with such Asbestos Insurance Policies (including, if the applicable insurer is a party thereto, the EIFA), any additional insurance proceeds of such insurance policies which are or may hereafter become payable, and all claims, options, privileges, rights, and interests in and under such policies to collect and receive such accounts receivable and insurance proceeds, subject to all the terms and conditions of such policies.

"Inventory" means, with respect to any Grantor, all of such Grantor's now owned and hereafter acquired inventory, goods and merchandise, wherever located, to be furnished under any contract of service or held for sale or lease, all returned goods, raw materials, work-in-process, finished goods (including embedded software), other materials and supplies of any kind, nature or description which are used or consumed in such Grantor's business or used in connection with the packing, shipping, advertising, selling or finishing of such goods, merchandise.

"Investment Property" means, with respect to any Grantor, all of such Grantor's right title and interest in and to any and all: (a) securities whether certificated or uncertificated; (b) securities entitlements; (c) securities accounts; (d) commodity contracts; or (e) commodity accounts.

"Letter-of-Credit Rights" means "letter-of-credit rights" as such term is defined in the UCC, now owned or hereafter acquired by any Grantor, including rights to payment or

performance under a letter of credit, whether or not any Grantor, as beneficiary, has demanded or is entitled to demand payment or performance.

"Obligations" means (i) with respect to each Borrower Grantor, the Obligations (as defined in the Credit Agreement), (ii) with respect to the Parent Grantor, all obligations and liabilities of the Parent Grantor under the Parent Guarantee and (iii) with respect to the Subsidiary Grantors, all obligations and liabilities of the Subsidiary Grantors under the Subsidiary Guarantee.

"Payment Account" means each bank account established pursuant to this Security Agreement, to which the proceeds of Accounts and other Collateral are deposited or credited, and which is maintained in the name of the Agent or one or more Grantors, as the Agent may determine, on terms acceptable to the Agent.

"Proprietary Rights" means, with respect to any Grantor, all of such Grantor's now owned and hereafter arising or acquired: licenses, franchises, permits, patents, patent rights, copyrights, works which are the subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent, trademark and service mark applications, and all licenses and rights related to any of the foregoing, and all other rights under any of the foregoing, all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing, and all rights to sue for past, present and future infringement of any of the foregoing.

"Software" means all "software" as such term is defined in the UCC, now owned or hereafter acquired by any Grantor, other than software embedded in any category of Goods, including all computer programs and all supporting information provided in connection with a transaction related to any program.

"Supporting Obligations" means all supporting obligations as such term is defined in the UCC.

"UCC" means the Uniform Commercial Code, as in effect from time to time, of the State of North Carolina or of any other state the laws of which are required as a result thereof to be applied in connection with the issue of perfection of security interests.

"Uniform Commercial Code jurisdiction" means any jurisdiction that has adopted "Revised Article 9" of the UCC on or after July 1, 2001.

All other capitalized terms used but not otherwise defined herein have the meanings given to them in the Credit Agreement or in Annex A thereto. All other undefined terms contained in this Security Agreement, unless the context indicates otherwise, have the meanings provided for by the UCC to the extent the same are used or defined therein.

2. GRANT OF LIEN.

(a) As security for all of its Obligations, each Grantor hereby grants to the Agent, for the benefit of the Agent and the Lenders, a continuing security interest in and lien on all of the following property and assets of such Grantor, whether now owned or existing or hereafter acquired or arising, regardless of where located:

(i) all Accounts;

(ii) all Inventory;

(iii) all Chattel Paper;

(iv) all Documents;

(v) all Instruments;

(vi) all Supporting Obligations and Letter-of-Credit Rights;

(vii) all General Intangibles (including payment intangibles and Software), excluding, however, rights under (but not excluding Proceeds of) any lease, contract or agreement (including, without limitation, any license), that contains an enforceable restriction on such Grantor's right to grant the security interest to the Agent contemplated by this Security Agreement, unless and until such Grantor shall have obtained consent from the relevant party or parties thereto to the grant of such security interest;

(viii) all Goods;

(ix) all Equipment;

(x) all Investment Property;

(xi) all Insurance Receivables Rights;

(xii) all money, cash, cash equivalents, securities and other property of any kind of such Grantor held directly or indirectly by the Agent or any Lender;

(xiii) all of such Grantor's Deposit Accounts, credits, and balances with and other claims against the Agent or any Lender or any of their Affiliates or any other financial institution with which such Grantor maintains deposits, including any Payment Accounts;

(xiv) all books, records and other property related to or referring to any of the foregoing, including books, records, account ledgers, data processing records, computer software and other property and General Intangibles at any time evidencing or relating to any of the foregoing; and

(xv) all accessions to, substitutions for and replacements, products and proceeds of any of the foregoing, including, but not limited to, proceeds of any insurance policies, claims against third parties, and condemnation or requisition payments with respect to all or any of the foregoing.

All of the foregoing, together with the Real Estate covered by Mortgage(s) (if any), and all other personal property of the Grantors in which the Agent or any Lender may at any time be granted a Lien as collateral for the Obligations, is herein collectively referred to as the "Collateral."

(b) All of the Obligations shall be secured by all of the Collateral.

3. PERFECTION AND PROTECTION OF SECURITY INTEREST.

(a) Each Grantor shall, at its expense, subject to clauses (c), (d) and (e) below, perform all steps requested by the Agent at any time to perfect, maintain, protect, and enforce the Agent's Liens, including:
(i) executing, delivering and/or filing and recording of the Copyright Security Agreements, the Patent and Trademark Agreements and executing and filing financing or continuation statements, and amendments thereof, in form and substance reasonably satisfactory to the Agent; (ii) delivering to the Agent warehouse receipts covering any portion of the Collateral located in warehouses and for which warehouse receipts are issued to the extent Collateral located in any such warehouse exceeds $100,000 or if Agent shall request delivery of such warehouse receipts, (iii) delivering to Agent certificates of title covering any portion of the Collateral for which certificates of title have been issued to the extent such Collateral exceeds $100,000 or if Agent shall request delivery of such certificates of title; (iv) when an Event of Default has occurred and is continuing, transferring Inventory to warehouses or other locations designated by the Agent; (v) placing notations on its books of account to disclose the Agent's security interest; and (vi) taking such other steps as are deemed necessary or desirable by the Agent to maintain and protect the Agent's Liens. Each Grantor agrees that a carbon, photographic, photostatic, or other reproduction of this Security Agreement or of a financing statement is sufficient as a financing statement.

(b) Unless the Agent shall otherwise consent in writing (which consent may be revoked), the Grantors shall deliver to the Agent all Collateral consisting of negotiable Documents (subject to Section 3(a) above), certificated securities (accompanied by stock powers executed in blank), Chattel Paper and Instruments promptly after the Grantors receive the same.

(c) The Grantors shall, in accordance with the terms of the Credit Agreement, obtain or use their commercially reasonable efforts to obtain waivers or subordinations of Liens from landlords and mortgagees for locations at which Collateral in excess of $1,000,000 is located, and the Grantors shall in all instances obtain or use commercially reasonable efforts to obtain signed acknowledgements of the Agent's Liens from bailees having possession of any Collateral in excess of $1,000,000 that they hold for the benefit of the Agent; provided that no Collateral may be deemed Eligible Inventory unless all the eligibility requirements set forth in the definition of Eligible Inventory are satisfied.

(d) If required by the terms of the Credit Agreement and not waived by the Agent in writing (which waiver may be revoked), the Grantors shall use commercially reasonable efforts to 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 the Grantors.

(e) If a Grantor is or becomes the beneficiary of a letter of credit such Grantor shall promptly notify the Agent thereof and use commercially reasonable efforts to enter into a tri-party agreement with the Agent and the issuer and/or confirmation bank with respect to Letter-of-Credit Rights assigning such Letter-of-Credit Rights to the Agent and directing all payments thereunder to the Payment Account, all in form and substance reasonably satisfactory to the Agent.

(f) The Grantors shall take all commercially reasonable steps necessary to grant the Agent control of all electronic chattel paper in accordance with the Code and all "transferable records" as defined in the Uniform Electronic Transactions Act.

(g) Each Grantor hereby irrevocably authorizes the Agent at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of such Grantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC of the State of North Carolina or such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by part 5 of Article 9 of the UCC of the State of North Carolina for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether such Grantor is an organization, the type of organization and any organization identification number issued to such Grantor, and (ii) in the case of a financing statement filed as a fixture filing, a sufficient description of real property to which the Collateral relates. The Grantors agree to furnish any such information to the Agent promptly upon request. The Grantors also ratify their authorization for the Agent to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof. In addition, each Grantor hereby irrevocably authorizes the Agent, at any time, to notify any applicable insurance company of the security interest granted to the Agent in the Insurance Receivables Rights pursuant to this Security Agreement.

(h) Each Grantor shall promptly notify the Agent of any commercial tort claim (as defined in the UCC) in excess of $100,000 individually or in excess of $500,000 in the aggregate for all commercial tort claims acquired by it and unless otherwise consented to by the Agent, such Grantor shall enter into a supplement to this Security Agreement, granting to the Agent a Lien in such commercial tort claim(s).

(i) From time to time, the Grantors shall, upon the Agent's request, execute and deliver confirmatory written instruments pledging to the Agent, for the ratable benefit of the Agent and the Lenders, the Collateral, but any Grantor's failure to do so shall not affect or limit any security interest or any other rights of the Agent or any Lender in and to the Collateral with respect to such Grantor. So long as the Credit Agreement is in effect and until all Obligations have been fully satisfied, the Agent's Liens shall continue in full force and effect in all Collateral (whether or not deemed eligible for the purpose of calculating the Availability or as the basis for any advance, loan, extension of credit, or other financial accommodation).

(j) Good Standing Certificates. Not less frequently than once during each calendar year, each Grantor shall, unless the Agent shall otherwise consent, provide to the Agent a certificate of good standing from its state or country of incorporation or organization.

(k) No Reincorporation. Except as permitted by the Credit Agreement, the Grantors shall not reincorporate or reorganize themselves under the laws of any jurisdiction other than the respective jurisdiction in which they are incorporated or organized as of the date hereof or change their respective type of entity as identified on Schedule II without the prior written consent of the Agent.

(l) Terminations Amendments Not Authorized. The Grantors acknowledge that they are not authorized to file any financing statement or amendment or termination statement with respect to any financing statement without the prior written consent of the Agent and agree that they will not do so without the prior written consent of the Agent, subject to the Grantors' rights under Section 9-509(d)(2).

(m) No Restriction on Payments to Agent. The Grantors shall not enter into any Contract that restricts or prohibits the grant of a security interest in Accounts, Chattel Paper, Instruments or payment intangibles or the proceeds of the foregoing to the Agent. To the best of any Grantor's knowledge, no material General Intangible contains any provision that restricts or prohibits the grant of the security interest contemplated by this Security Agreement in such General Intangible except as set forth on Schedule IV hereto.

4. LOCATION OF COLLATERAL. (a) Each Grantor represents and warrants to the Agent and the Lenders that: (A) Schedule I is a correct and complete list as of the Closing Date of the location of such Grantor's chief executive office, the location of its books and records, the locations of the Collateral, and the locations of all of its other places of business; and (b) Schedule I correctly identifies any of such facilities and locations that are not owned by such Grantor and sets forth the names of the owners and lessors or sublessors of such facilities and locations. Each Grantor covenants and agrees that it will not (i) maintain any Collateral at any location other than those locations listed for such Grantor on Schedule I, (ii) otherwise change or add to any of such locations, or (iii) change the location of its chief executive office from the location identified in Schedule I, unless it gives the Agent at least twenty
(20) days' prior written notice thereof and executes any and all financing statements and other documents that the Agent reasonably requests in connection therewith. Without limiting the foregoing, each Grantor represents that all of its Inventory (other than Inventory in transit) is, and covenants that all of its Inventory will be, located either (a) on premises owned by such Grantor, (b) on premises leased by such Grantor; provided that (i) with respect to any such premises leased pursuant to a lease entered into prior to the Closing Date, such Grantor shall have used commercially reasonable efforts to obtain an executed landlord waiver from the landlord of such premises in form and substance satisfactory to the Agent to the extent that the Inventory at such location is at least $1,000,000 and with respect to any such premises leased pursuant to a lease agreement entered into on or after the Closing Date, such Grantor shall have used commercially reasonable efforts to obtain an executed landlord waiver from the landlord of such premises in form and substance satisfactory to the Agent to the extent that the Inventory at such location is at least $1,000,000, or (c) in a warehouse or with a bailee, provided that (i) with respect to any such agreement with respect to the storage of such Inventory or with any such bailees entered into prior to the Closing Date, such Grantor shall have used commercially reasonable efforts to obtain an executed bailee letter from the applicable Person in form and substance satisfactory to the Agent to the extent that the Inventory at such location is at least $1,000,000 and (ii) with respect to any other such agreement relating to such stored Inventory entered into on or after the Closing Date, such Grantor shall have used commercially reasonable efforts to obtain an executed bailee letter from the applicable Person in form and substance satisfactory to the Agent to the extent that the Inventory at such location is at least $1,000,000. Notwithstanding the foregoing, no Inventory described in the immediately preceding sentence may be deemed to be Eligible Inventory unless all the eligibility requirements set forth in the definition of Eligible Inventory are satisfied.

5. JURISDICTION OF ORGANIZATION. Schedule II hereto identifies each Grantor's name as of the Closing Date as it appears in official filings in the state or country of its incorporation or other organization, the type of entity of each Grantor (including corporation, partnership, limited partnership or limited liability company), organizational identification number issued by each Grantor's state or country of incorporation or organization or a statement that no such number has been issued and the jurisdiction in which each Grantor is incorporated or organized. Each Grantor has only one state or country of incorporation or organization.

6. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Grantor represents and warrants to the Agent and the Lenders and agrees with the Agent and the Lenders that: (a) such Grantor has rights in and the power to transfer all of the Collateral free and clear of all Liens whatsoever, except for Liens permitted by Section 7.18 of the Credit Agreement; (b) the Agent's Liens in the Collateral will not be subject to any prior Lien except for those Liens identified in clauses (a), (c), (d) and (e) of the definition of Permitted Liens existing as of the Closing Date and described on Schedule 6.9 to the Credit Agreement and Liens securing Capital Leases and purchase money Liens on Collateral (other than Inventory) securing purchase money Debt permitted by
Section 7.13 of the Credit Agreement; and (c) such Grantor will use, store, and maintain the Collateral with all reasonable care and will use such Collateral for lawful purposes only.

7. APPRAISALS. Whenever a Default or Event of Default exists, each Grantor shall, at its expense and upon the Agent's request, provide the Agent with appraisals or updates thereof of any or all of the Collateral from an appraiser, and prepared on a basis, satisfactory to the Agent, such appraisals and updates to include, without limitation, information required by applicable law and regulation and by the internal policies of the Lenders.

8. ACCESS AND EXAMINATION. The Agent, accompanied by any Lender which so elects, may at all reasonable times during regular business hours (and at any time when a Default or Event of Default exists and is continuing) have access to, examine, audit, make extracts from or copies of and inspect any or all of each Grantor's records, files, and books of account and the Collateral, and discuss each Grantor's affairs with such Grantor's officers and management. Each Grantor will deliver to the Agent any instrument necessary for the Agent to obtain records from any service bureau maintaining records for such Grantor. The Agent may, and at the direction of the Required Lenders shall, at any time when a Default or Event of Default exists, and at each Grantor's expense, make copies of all of such Grantor's books and records, or require such Grantor to deliver such copies to the Agent. The Agent may, without expense to the Agent, use such of each Grantor's supplies and Real Estate as may be reasonably necessary for maintaining or enforcing the Agent's Liens and each Grantor shall cause its applicable personnel to provide such assistance as Agent shall reasonably require to effectuate the terms of this Section 8. The Agent shall have the right, at any time, in the Agent's name or in the name of a nominee of the Agent, to verify the validity, amount or any other matter relating to the Accounts, Inventory, or other Collateral, by mail, telephone, or otherwise.

9. COLLATERAL REPORTING. Each Borrower Grantor shall provide the Agent with the following documents at the following times in form satisfactory to the Agent: (a) at the times specified in Section 5.2(j) of the Credit Agreement, a schedule of such Borrower Grantor's Accounts created, credits given, cash collected and other adjustments to Accounts since the last

such schedule and a Borrowing Base Certificate; (b) on a monthly basis, by the 20th day of the following month, an aging of such Borrower Grantor's Accounts, together with a reconciliation to the corresponding Borrowing Base and to such Borrower Grantor's general ledger; (c) on a monthly basis by the 20th day of the following month, an aging of such Borrower Grantor's accounts payable; (d) at the time of delivery of each Borrowing Base Certificate required to be delivered pursuant to the Credit Agreement (or more frequently if requested by the Agent), a detailed calculation of Eligible Accounts and Eligible Inventory; (e) on a monthly basis by the 20th day of the following month (or more frequently if requested by the Agent), Inventory reports by category and business division (and if requested by the Agent, location), together with a reconciliation to the corresponding Borrowing Base and to such Borrower Grantor's general ledger; (f) upon request, copies of invoices in connection with such Borrower Grantor's Accounts, customer statements, credit memos, remittance advices and reports, deposit slips, shipping and delivery documents in connection with such Borrower Grantor's Accounts and for Inventory and Equipment acquired by such Borrower Grantor, purchase orders and invoices; (g) upon request, a statement of the balance of each of the Intercompany Accounts; (h) such other reports as to the Collateral of such Borrower Grantor as the Agent shall reasonably request from time to time; and (i) with the delivery of each of the foregoing, a certificate of such Borrower Grantor executed by an officer thereof certifying as to the accuracy and completeness in all material respects of the foregoing; provided that with respect to any deliveries made under clauses (f), (g) and (h), such certificate shall be given upon Agent's request. If any of a Borrower Grantor's records or reports of the Collateral are prepared by an accounting service or other agent, such Borrower Grantor hereby authorizes such service or agent to deliver such records, reports, and related documents to the Agent, for distribution to the Lenders.

10. ACCOUNTS.

(a) Each Borrower Grantor hereby represents and warrants to the Agent and the Lenders, with respect to such Borrower Grantor's Eligible Accounts used in calculating the Borrowing Base, that: (i) each existing Eligible Account represents, and each future Eligible Account will represent, a bona fide sale or lease and delivery of goods by such Borrower Grantor, or rendition of services by such Borrower Grantor, in the ordinary course of such Borrower Grantor's business; (ii) each existing Eligible Account is, and each future Eligible Account will be, for a liquidated amount payable by the Account Debtor thereon on the terms set forth in the invoice therefor or in the schedule thereof delivered to the Agent, without any offset, deduction, defense, or counterclaim except those known to such Borrower Grantor and disclosed to the Agent and the Lenders pursuant to this Security Agreement; (iii) no payment will be received with respect to any Eligible Account, and no credit, discount, or extension, or agreement therefor will be granted on any Eligible Account, except as reported to the Agent and the Lenders in Borrowing Base Certificates delivered in accordance with this Security Agreement; (iv) each copy of an invoice delivered to the Agent by such Borrower Grantor will be a genuine copy of the original invoice sent to the Account Debtor named therein; and (v) all goods described in any invoice representing a sale of goods will have been delivered to the Account Debtor and all services of such Borrower Grantor described in each invoice will have been performed.

(b) Each Borrower Grantor shall not re-date any invoice or sale or make sales on extended dating beyond that customary in such Borrower Grantor's business or extend or

modify any Eligible Account. If a Borrower Grantor becomes aware of any matter adversely affecting the collectibility of any Eligible Account or the Account Debtor therefor involving an amount greater than $1,000,000, including information regarding the Account Debtor's creditworthiness, such Borrower Grantor will promptly so advise the Agent and exclude such Account from Eligible Accounts.

(c) Each Grantor shall not accept any note or other instrument (except a check or other instrument for the immediate payment of money) with respect to any Account other than in the ordinary course of business but only to the extent such Account is defaulted or delinquent or only to the extent such Account is not included in the Borrowing Base as an Eligible Account. Any acceptance of any such instrument, shall be considered as evidence of the Account and not payment thereof and such Grantor will promptly deliver such instrument to the Agent, endorsed by such Grantor to the Agent in a manner satisfactory in form and substance to the Agent. Regardless of the form of presentment, demand, notice of protest with respect thereto, such Grantor (as the endorser thereof) shall remain liable thereon until such instrument is paid in full.

(d) Each Borrower Grantor shall notify the Agent promptly of all disputes and claims in excess of $1,000,000 with any Account Debtor, and agrees to settle, contest, or adjust such dispute or claim at no expense to the Agent or any Lender. No discount, credit or allowance shall be granted to any such Account Debtor without the Agent's prior written consent, except for discounts, credits and allowances made or given in the ordinary course of such Borrower Grantor's business when no Event of Default exists hereunder. Each Borrower Grantor shall send the Agent a copy of each credit memorandum in excess of $1,000,000 as soon as issued, and such Borrower Grantor shall promptly report that credit on Borrowing Base Certificates submitted by it. The Agent may at all times when an Event of Default exists hereunder, settle or adjust disputes and claims directly with Account Debtors for amounts and upon terms which the Agent or the Required Lenders, as applicable, shall consider advisable and, in all cases, the Agent will credit such Grantor's Loan Account with the net amounts received by the Agent in payment of any Accounts.

(e) If an Account Debtor returns any Inventory to a Borrower Grantor when no Event of Default exists, then such Borrower Grantor shall promptly determine the reason for such return and shall issue a credit memorandum to the Account Debtor in the appropriate amount. Each Borrower Grantor shall immediately report to the Agent any return involving an amount in excess of $1,000,000. Each such report shall indicate the reasons for the returns and the locations and condition of the returned Inventory. In the event any Account Debtor returns Inventory to a Grantor when an Event of Default exists, such Borrower Grantor, upon the request of the Agent, shall: (i) hold the returned Inventory in trust for the Agent; (ii) segregate all returned Inventory from all of its other property; (iii) dispose of the returned Inventory solely according to the Agent's written instructions; and (iv) not issue any credits or allowances with respect thereto without the Agent's prior written consent. All returned Inventory shall be subject to the Agent's Liens thereon. Whenever any Inventory is returned, the related Account shall be deemed ineligible to the extent of the amount owing by the Account Debtor with respect to such returned Inventory and such returned Inventory shall not be Eligible Inventory unless (i) such Inventory meets the criteria for Eligible Inventory and (ii) the related Account has been made ineligible.

11. COLLECTION OF ACCOUNTS; PAYMENTS.

(a) Each Borrower Grantor shall make collection of all Accounts and other Collateral for the Agent, shall receive all payments as the Agent's trustee, and shall immediately deliver all payments in their original form duly endorsed in blank to the Agent, in each case in accordance with
Section 3.3 of the Credit Agreement. If, notwithstanding such instructions, a Borrower Grantor receives any proceeds of Accounts, it shall receive such payments as the Agent's trustee, and shall immediately deliver such payments to the Agent in their original form duly endorsed in blank or deposit them into the Agent Account. The Agent or the Agent's designee may, at any time after the occurrence of an Event of Default, notify Account Debtors that the Accounts have been assigned to the Agent and of the Agent's security interest therein, and may collect them directly and charge the collection costs and expenses to the Loan Account as a Revolving Loan. So long as an Event of Default has occurred and is continuing, each Borrower Grantor, at the Agent's request, shall execute and deliver to the Agent such documents as the Agent shall require to grant the Agent access to any post office box in which collections of Accounts are received.

(b) If sales of Inventory are made or services are rendered for cash, each Borrower Grantor shall immediately deliver to the Agent or deposit into the Agent Account the cash which such Borrower Grantor receives.

(c) All payments, including immediately available funds received by the Agent at a bank account designated by it, will be the Agent's sole property for its benefit and the benefit of the Lenders and will be credited to the Loan Account (conditional upon final collection) after allowing one (1) Business Day for collection of such payments (excluding payments consisting of immediately available funds which shall be credited to the Loan Account immediately upon receipt); provided, however, that such payments shall be deemed to be credited to the Loan Account immediately upon receipt for purposes of (i) determining Availability, (ii) calculating the Unused Line Fee pursuant to Section 2.5 of the Credit Agreement and (iii) calculating the amount of interest accrued thereon solely for purposes of determining the amount of interest to be distributed by the Agent to the Lenders (but not the amount of interest payable by the Borrower Grantors).

(d) In the event that the Borrower Grantors repay all of the Obligations upon the termination of the Credit Agreement or upon acceleration of the Obligations, other than through the Agent's receipt of payments on account of the Accounts or proceeds of the other Collateral, such payment will be credited to the appropriate Borrower Grantor's Loan Account upon the Agent's receipt of immediately available funds.

12. INVENTORY; PERPETUAL INVENTORY.

(a) Each Grantor represents and warrants to the Agent and the Lenders and agrees with the Agent and the Lenders that all of the Inventory owned by such Grantor is and will be held for sale or lease, or to be furnished in connection with the rendition of services, in the ordinary course of such Grantor's business. Each Grantor will keep its Inventory in good and marketable condition, except for damaged or defective goods arising in the ordinary course of such Grantor's business. Each Grantor will not, without the prior written consent of the Agent,

acquire or accept any Inventory on consignment or approval unless such Inventory is segregated from such Grantor's other owned Inventory and is marked in a manner designating the true owner thereof. Each Grantor agrees that all Inventory produced by such Grantor in the United States of America will be produced in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations, and orders thereunder. Each Grantor will conduct a physical count of the Inventory at least once per Fiscal Year, and after and during the continuation of an Event of Default, at such other times as the Agent requests. Each Grantor will maintain a perpetual inventory reporting system at all times. Each Grantor will not, without the Agent's written consent, sell any Inventory on a bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment, or other repurchase or return basis except that Grantors may sell non-Eligible Inventory on a consignment basis in the ordinary course of their business to the extent the amount of such Inventory does not exceed $2,000,000 in the aggregate for all Grantors.

(b) In connection with all Inventory financed by Letters of Credit, each Grantor will, at the Agent's request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash, checks, Inventory, Documents or Instruments in which the Agent holds a security interest to deliver them to the Agent and/or subject to the Agent's order, and if they shall come into such Grantor's possession, to deliver them, upon request, to the Agent in their original form. Each Grantor shall also, at the Agent's request, designate the Agent as the consignee on all bills of lading and other negotiable and non-negotiable documents.

13. EQUIPMENT.

(a) Each Grantor represents and warrants to the Agent and the Lenders and agrees with the Agent and the Lenders that all of the Equipment owned by such Grantor is and will be used or held for use in such Grantor's business. Each Grantor shall keep and maintain its Equipment necessary for the conduct of its business in operating condition and repair sufficient for the conduct of its business (ordinary wear and tear excepted) and shall make all necessary replacements thereof.

(b) Each Grantor shall promptly inform the Agent of any material deletions from the Equipment. Each Grantor shall not permit any Equipment to become a fixture with respect to real property or to become an accession with respect to other personal property with respect to which real or personal property the Agent does not have a Lien. Each Grantor will not, without the Agent's prior written consent, alter or remove any identifying symbol or number on any of such Grantor's Equipment constituting Collateral.

(c) Except as permitted by the Credit Agreement, each Grantor shall not, without the Agent's prior written consent, sell, license, lease as a lessor, or otherwise dispose of any of such Grantor's Equipment.

14. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Grantor represents and warrants to the Agent and the Lenders that (a) all Documents, Instruments, and Chattel Paper describing, evidencing, or constituting Collateral, and all signatures and endorsements thereon, are and will be complete, valid, and genuine, and (b) all goods evidenced

by such Documents, Instruments, Letter of Credit Rights and Chattel Paper are and will be owned by such Grantor, free and clear of all Liens other than Permitted Liens, Liens securing Capital Leases and purchase money Liens on Collateral (other than Inventory) securing purchase money Debt permitted by
Section 7.13 of the Credit Agreement. If a Grantor retains possession of any Chattel Paper or Instruments with Agent's consent, such Chattel Paper and Instruments shall be marked with the following legend: "This writing and the obligations evidenced or served hereby are subject to the security interest of Bank of America, N.A., as Agent, for the benefit of the Agent and certain Lenders."

15. RIGHT TO CURE. The Agent may, in its discretion, and shall, at the direction of the Required Lenders, pay any amount or do any act required of a Grantor hereunder or under any other Loan Document in order to preserve, protect, maintain or enforce the Obligations, the Collateral or the Agent's Liens therein, and which such Grantor fails to pay or do, including payment of any judgment against such Grantor, any insurance premium, any warehouse charge, any finishing or processing charge, any landlord's or bailee's claim, and any other Lien upon or with respect to the Collateral. All payments that the Agent makes under this Section 15 and all out-of-pocket costs and expenses that the Agent pays or incurs in connection with any action taken by it hereunder shall be charged to the Loan Account of the Borrowers as a Revolving Loan. Any payment made or other action taken by the Agent under this Section 15 shall be without prejudice to any right to assert an Event of Default hereunder and to proceed thereafter as herein provided.

16. POWER OF ATTORNEY. Each Grantor hereby appoints the Agent and the Agent's designee as such Grantor's attorney, with power at any time that any Event of Default shall have occurred and be continuing (except as noted below):
(a) to endorse such Grantor's name on any checks, notes, acceptances, money orders, or other forms of payment or security that come into the Agent's or any Lender's possession; (b) to sign such Grantor's name on any invoice, bill of lading, warehouse receipt or other negotiable or non-negotiable Document constituting Collateral, on drafts against customers, on public records and on assignments of Accounts, (c) regardless of whether any Event of Default shall then exist, to sign such Grantor's name on any on notices of assignment, and financing statements and to file any such financing statements by electronic means with or without a signature as authorized or required by applicable law or filing procedure; (d) to notify the post office authorities to change the address for delivery of such Grantor's mail to an address designated by the Agent and to receive, open and dispose of all mail addressed to such Grantor;
(e) regardless of whether any Event of Default shall then exist to send requests for verification of Accounts to customers or Account Debtors; (f) to complete in such Grantor's name or the Agent's name, any order, sale or transaction, obtain the necessary Documents in connection therewith, and collect the proceeds thereof; (g) to clear Inventory through customs in such Grantor's name, the Agent's name or the name of the Agent's designee, and to sign and deliver to customs officials powers of attorney in such Grantor's name for such purpose;
(h) to the extent that such Grantor's authorization given in Section 3(g) of this Security Agreement is not sufficient, to file such financing statements with respect to this Security Agreement, with or without such Grantor's signature, or to file a photocopy of this Security Agreement in substitution for a financing statement, as the Agent may deem appropriate and to execute in such Grantor's name such financing statements and amendments thereto and continuation statements which may require such Grantor's signature; and (i) to do all things necessary to exercise the Agent's rights and remedies under the Credit

Agreement or this Security Agreement. Each Grantor ratifies and approves all acts of such attorney. None of the Lenders or the Agent nor their attorneys will be liable for any acts or omissions or for any error of judgment or mistake of fact or law except for their gross negligence or willful misconduct. This power, being coupled with an interest, is irrevocable until the Credit Agreement has been terminated and the Obligations have been fully satisfied.

17. THE AGENT'S AND LENDERS' RIGHTS, DUTIES AND LIABILITIES.

(a) Each Grantor assumes all responsibility and liability arising from or relating to the use, sale, license or other disposition of such Grantor's Collateral. The Obligations shall not be affected by any failure of the Agent or any Lender to take any steps to perfect the Agent's Liens or to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release any Grantor from any of the Obligations. Following the occurrence and during the continuation of an Event of Default, the Agent may (but shall not be required to), and at the direction of the Required Lenders shall, without notice to or consent from any Grantor, sue upon or otherwise collect, extend the time for payment of, modify or amend the terms of, compromise or settle for cash, credit, or otherwise upon any terms, grant other indulgences, extensions, renewals, compositions, or releases, and take or omit to take any other action with respect to the Collateral, any security therefor, any agreement relating thereto, any insurance applicable thereto, or any Person liable directly or indirectly in connection with any of the foregoing, without discharging or otherwise affecting the liability of any Grantor for the Obligations or under the Credit Agreement or any other agreement now or hereafter existing between the Agent and/or any Lender and the Grantors.

(b) It is expressly agreed by each Grantor that, anything herein to the contrary notwithstanding, such Grantor shall remain liable under each of its contracts and each of its licenses to observe and perform all the conditions and obligations to be observed and performed by it thereunder. Neither the Agent nor any Lender shall have any obligation or liability under any contract or license by reason of or arising out of this Security Agreement or the granting herein of a Lien thereon or the receipt by the Agent or any Lender of any payment relating to any contract or license pursuant hereto. Neither the Agent nor any Lender shall be required or obligated in any manner to perform or fulfill any of the obligations of the Grantors under or pursuant to any contract or license, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any contract or license, or to present or file any claims, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

(c) The Agent may at any time after a Default or an Event of Default has occurred and be continuing (or if any rights of set-off (other than set-offs against an Account arising under the contract giving rise to the same Account) or contra accounts may be asserted with respect to the following), without prior notice to the Grantors, notify Account Debtors, and other Persons obligated on the Collateral that the Agent has a security interest therein, and that payments shall be made directly to the Agent, for itself and the benefit of the Lenders. Upon the request of the Agent, each Grantor shall so notify Account Debtors and other Persons obligated on Collateral. Once any such notice has been given to any Account Debtor or other Person

obligated on the Collateral, each Grantor shall not give any contrary instructions to such Account Debtor or other Person without the Agent's prior written consent.

(d) The Agent may at any time in the Agent's own name or in the name of any Grantor communicate with Account Debtors, parties to Contracts and obligors in respect of Instruments to verify with such Persons, to the Agent's satisfaction, the existence, amount and terms of Accounts, payment intangibles, Instruments or Chattel Paper. If a Default or Event of Default shall have occurred and be continuing, each Grantor, at its own expense, shall cause the independent certified public accountants then engaged by such Grantor to prepare and deliver to the Agent and each Lender at any time and from time to time promptly upon the Agent's request the following reports with respect to such Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a test verification of such Accounts as the Agent may request. Upon the Agent's request, each Grantor, at its own expense, shall deliver to the Agent the results of each physical verification, if any, which such Grantor may in its discretion have made, or caused any other Person to have made on its behalf, of all or any portion of its Inventory.

18. PATENT, TRADEMARK AND COPYRIGHT COLLATERAL.

(a) The Grantors do not have any interest in, or title to, any U.S. Patent, U.S. registered Trademark or U.S. registered Copyright except as set forth in Schedule III hereto. This Security Agreement is effective to create a valid and continuing Lien on and, upon filing of the Copyright Security Agreement with the United States Copyright Office and filing of the Patent and Trademark Agreements with the United States Patent and Trademark Office, and filing of appropriate financing statements, perfected Liens in favor of the Agent on each Grantor's U.S. patents, U.S. registered trademarks and U.S. registered copyrights and such perfected Liens are enforceable against any and all creditors of and purchasers from any Grantor, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally, or by general equitable principles. Upon filing of the Copyright Security Agreements with the United States Copyright Office and filing of the Patent and Trademark Agreements with the United States Patent and Trademark Office and the filing of appropriate financing statements, all action necessary or desirable to protect and perfect the Agent's Lien on each Grantor's U.S. patents, U.S. registered trademarks or U.S. registered copyrights shall have been duly taken.

(b) Each Grantor shall promptly notify the Agent if it knows that any application or registration relating to any material patent, trademark or copyright (now or hereafter existing) may become abandoned or dedicated, or of any material adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding such Grantor's ownership of any material patent, trademark or copyright, its right to register the same, or to keep and maintain the same.

(c) In no event shall a Grantor, either directly or through any agent, employee, licensee or designee, file an application for the registration of any U.S. patent, U.S. registered trademark or U.S. registered copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency without giving the Agent prompt

written notice thereof, and, upon request of the Agent, such Grantor shall execute and deliver any and all Patent Security Agreements, Copyright Security Agreements or Trademark Security Agreements as the Agent may request to evidence the Agent's Lien on such U.S. patent, U.S. registered trademark or U.S. registered copyright, and the General Intangibles of Grantor relating thereto or represented thereby.

(d) Each Grantor shall take all commercially reasonable actions necessary or reasonably requested by the Agent to maintain and pursue each application, to obtain the relevant registration and to maintain the registration of each of the U.S. patents, U.S. registered trademarks and U.S. registered copyrights (now or hereafter existing), including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings, unless such Grantor shall determine that such patent, trademark or copyright is not material to the conduct of its business.

(e) In the event that any of the U.S. patent, U.S. registered trademark or U.S. registered copyright Collateral relating to the manufacture, processing, production, sale or disposition of any Inventory or any of the other material patent, trademark or copyright Collateral (in each case, whether now or hereafter existing) is infringed upon, or misappropriated or diluted by a third party, the appropriate Grantor shall notify the Agent promptly after such Grantor learns thereof. Such Grantor shall, unless it shall reasonably determine that such patent, trademark or copyright Collateral is in no way material to the conduct of its business or operations, unless otherwise consented to by the Agent in writing, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and shall take such other actions as the Agent shall deem appropriate under the circumstances to protect such patent, trademark or copyright Collateral.

19. INDEMNIFICATION. In any suit, proceeding or action brought by the Agent or any Lender relating to any Collateral for any sum owing with respect thereto or to enforce any rights or claims with respect thereto, each Grantor will save, indemnify and keep the Agent and the Lenders harmless from and against all expense (including reasonable attorneys' fees and expenses), loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the Account Debtor or other Person obligated on the Collateral, arising out of a breach by such Grantor of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to, or in favor of, such obligor or its successors from such Grantor, except in the case of the Agent or any Lender, to the extent such expense, loss, or damage is attributable primarily to the gross negligence or willful misconduct of the Agent or such Lender. All such obligations of the Grantors shall be and remain enforceable against and only against the Grantors and shall not be enforceable against the Agent or any Lender.

20. LIMITATION ON LIENS ON COLLATERAL. The Grantors will not create, permit or suffer to exist, and will defend the Collateral against, and take such other action as is necessary to remove, any Lien on the Collateral except Liens permitted by Section 7.18 of the Credit Agreement, and will defend the right, title and interest of the Agent and the Lenders in and to any of the Grantors' rights under the Collateral against the claims and demands of all Persons whomsoever.

21. NOTICE REGARDING COLLATERAL. Each Grantor will advise the Agent promptly, in reasonable detail, (i) of any Lien (other than Liens permitted by
Section 7.18 of the Credit Agreement) or claim (to the extent such claim is in excess of $100,000) made or asserted against any of such Grantor's Collateral, and (ii) of the occurrence of any other event which would have a Material Adverse Effect.

22. REMEDIES; RIGHTS UPON DEFAULT.

(a) In addition to all other rights and remedies granted to it under this Security Agreement, the Credit Agreement, the other Loan Documents and under any other instrument or agreement securing, evidencing or relating to any of the Obligations, if any Event of Default shall have occurred and be continuing, the Agent may exercise all rights and remedies of a secured party under the UCC. Without limiting the generality of the foregoing, each Grantor expressly agrees that in any such event the Agent, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon such Grantor or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the UCC and other applicable law), may forthwith enter upon the premises of such Grantor where any Collateral is located through self-help, without judicial process, without first obtaining a final judgment or giving such Grantor or any other Person notice and opportunity for a hearing on the Agent's claim or action and may collect, receive, assemble, process, appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, license, assign, give an option or options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels at a public or private sale or sales, at any exchange at such prices as it may deem acceptable, for cash or on credit or for future delivery without assumption of any credit risk. The Agent or any Lender shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for the benefit of the Agent and the Lenders, the whole or any part of said Collateral so sold, free of any right or equity of redemption, which equity of redemption each Grantor hereby releases. Such sales may be adjourned and continued from time to time with or without notice. The Agent shall have the right to conduct such sales on any Grantor's premises or elsewhere and shall have the right to use each Grantor's premises without charge for such time or times as the Agent deems necessary or advisable.

(b) Each Grantor further agrees, at the Agent's request during the existence of an Event of Default, to assemble the Collateral and make it available to the Agent at a place or places designated by the Agent which are reasonably convenient to the Agent and such Grantor, whether at such Grantor's premises or elsewhere. Until the Agent is able to effect a sale, lease, or other disposition of the Collateral, the Agent shall have the right to hold or use the Collateral, or any part thereof, to the extent that it deems appropriate for the purpose of preserving the Collateral or its value or for any other purpose deemed appropriate by the Agent. The Agent shall have no obligation to the Grantors to maintain or preserve the rights of the Grantors as against third parties with respect to Collateral while Collateral is in the possession of the Agent. The Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of the Collateral and to enforce any of the Agent's remedies (for the benefit of the Agent and the Lenders), with respect to such appointment without prior notice or hearing as to such appointment. The Agent shall apply the net proceeds of any such collection, recovery, receipt,

appropriation, realization or sale to the Obligations as provided in the Credit Agreement, and only after so paying over such net proceeds, and after the payment by the Agent of any other amount required by any provision of law, need the Agent account for the surplus, if any, to the Grantors. To the maximum extent permitted by applicable law, each Grantor waives all claims, damages, and demands against the Agent or any Lender arising out of the repossession, retention or sale of the Collateral except such as arise primarily out of the gross negligence or willful misconduct of the Agent or any Lender as finally determined by a court of competent jurisdiction. The Grantors agree that ten
(10) days prior notice by the Agent of the time and place of any public sale or of the time after which a private sale may take place is reasonable notification of such matters. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all Obligations, including any attorneys' fees or other expenses incurred by the Agent or any Lender to collect such deficiency.

(c) Except as otherwise specifically provided herein, the Grantors hereby waive presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Security Agreement or any Collateral.

(d) To the extent that applicable law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is not commercially unreasonable for the Agent
(a) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (d) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other Persons, whether or not in the same business as such Grantor, for expressions of interest in acquiring all or any portion of such Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (h) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (k) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Agent in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section 22(d) is to provide non-exhaustive indications of what actions or omissions by the Agent would not be commercially unreasonable in the Agent's exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 22(d). Without limitation upon the foregoing, nothing contained in this Section 22(d)

shall be construed to grant any rights to the Grantors or to impose any duties on the Agent that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section 22(d).

23. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the purpose of enabling the Agent to exercise rights and remedies under Section 22 hereof (including, without limiting the terms of Section 22 hereof, in order to take possession of, hold, preserve, process, assemble, prepare for sale, market for sale, sell or otherwise dispose of Collateral) during the existence of an Event of Default, each Grantor hereby grants to the Agent, for the benefit of the Agent and the Lenders, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor but with such quality controls as are necessary to avoid abandonment of any trademark) to use, license or sublicense any Proprietary Rights now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.

24. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF COLLATERAL. The Agent and each Lender shall use reasonable care with respect to the Collateral in its possession or under its control and shall account for money actually received by it. Neither the Agent nor any Lender shall have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of the Agent or such Lender, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.

25. MISCELLANEOUS.

(a) REINSTATEMENT. This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Grantor for liquidation or reorganization, should any Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of any Grantor's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a "voidable preference," "fraudulent conveyance," or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

(b) NOTICES. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any of the parties desires to give and serve upon any other party any communication with respect to this Security Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be given in the manner, and deemed received, as provided for in the Credit Agreement, the Parent Guarantee or Subsidiary Guarantee, as applicable.

(c) SEVERABILITY. Whenever possible, each provision of this Security Agreement shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision of this Security Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Security Agreement. This Security Agreement is to be read, construed and applied together with the Credit Agreement and the other Loan Documents which, taken together, set forth the complete understanding and agreement of the Agent, the Lenders and the Grantors with respect to the matters referred to herein and therein.

(d) NO WAIVER; CUMULATIVE REMEDIES. Neither the Agent nor any Lender shall by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder, and no waiver shall be valid unless in writing, signed by Agent and then only to the extent therein set forth. A waiver by the Agent of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Agent would otherwise have had on any future occasion. No failure to exercise nor any delay in exercising on the part of the Agent or any Lender, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law. None of the terms or provisions of this Security Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by the Agent and the Grantors.

(e) LIMITATION BY LAW. All rights, remedies and powers provided in this Security Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Security Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not render this Security Agreement invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

(f) TERMINATION OF THIS SECURITY AGREEMENT. Subject to
Section 26(a) hereof, this Security Agreement shall terminate upon the satisfactory collateralization of all Letters of Credit and the payment in full of all other Obligations (other than indemnification Obligations as to which no claim has been asserted).

(g) SUCCESSORS AND ASSIGNS. This Security Agreement and all obligations of Grantors hereunder shall be binding upon their respective successors and assigns (including any debtor-in-possession on behalf of any Grantor) and shall, together with the rights and remedies of the Agent, for the benefit of the Agent and the Lenders, hereunder, inure to the benefit of the Agent and the Lenders, all future holders of any instrument evidencing any of the Obligations and their respective successors and assigns. No sales of participations, other sales, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the Obligations or any portion thereof or interest therein shall in any manner affect the Lien granted to the Agent, for the benefit of the Agent and the Lenders, hereunder. The Grantors may not

assign, sell, hypothecate or otherwise transfer any interest in or obligation under this Security Agreement.

(h) COUNTERPARTS. This Security Agreement may be authenticated in any number of separate counterparts, each of which shall collectively and separately constitute one and the same agreement. This Security Agreement may be authenticated by manual signature, facsimile or, if approved in writing by the Agent, electronic means, all of which shall be equally valid.

(i) GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NORTH CAROLINA, PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(j) JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NORTH CAROLINA OR OF THE UNITED STATES OF AMERICA LOCATED IN THE WESTERN DISTRICT OF NORTH CAROLINA, AND BY EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT, EACH OF THE GRANTORS, THE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE GRANTORS, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS SECURITY AGREEMENT. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY GRANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.

(k) SERVICE OF PROCESS. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH GRANTOR AT ITS ADDRESS SET FORTH HEREIN AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF

AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.

(l) WAIVER OF JURY TRIAL. EACH GRANTOR, THE LENDERS AND THE AGENT EACH IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS SECURITY AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GRANTOR, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

(m) SECTION TITLES. The Section titles contained in this Security Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

(n) NO STRICT CONSTRUCTION. The parties hereto have participated jointly in the negotiation and drafting of this Security Agreement. In the event an ambiguity or question of intent or interpretation arises, this Security Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Security Agreement.

(o) ADVICE OF COUNSEL. Each of the parties represents to each other party hereto that it has discussed this Security Agreement and, specifically, the provisions of Section 26(i) and Section 26(j), with its counsel.

(p) BENEFIT OF LENDERS. All Liens granted or contemplated hereby shall be for the benefit of the Agent and the Lenders, and all proceeds or payments realized from Collateral in accordance herewith shall be applied to the Obligations in accordance with the terms of the Credit Agreement.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

ENPRO INDUSTRIES, INC., as Grantor

By: /s/ Ernest F. Schaub
   ------------------------------------------
Name: Ernest F. Schaub
Title: President

COLTEC INDUSTRIES INC, as Grantor

By: /s/ Scott E. Kuechle
   ------------------------------------------
Name: Scott E. Kuechle
Title: Vice President and Treasurer

COLTEC INDUSTRIAL PRODUCTS LLC, as Grantor

By: /s/ Scott E. Kuechle
   ------------------------------------------
Name: Scott E. Kuechle
Title: Vice President and Treasurer

GARLOCK SEALING TECHNOLOGIES LLC, as Grantor

By: /s/ Michael J. Leslie
   ------------------------------------------
Name: Michael J. Leslie
Title: President

GARLOCK BEARINGS LLC, as Grantor

By: /s/ Scott E. Kuechle
   ------------------------------------------
Name: Scott E. Kuechle
Title: Vice President and Treasurer

HABER TOOL COMPANY INC, as Grantor

By: /s/ Scott E. Kuechle
   ------------------------------------------
Name: Scott E. Kuechle
Title: Vice President and Treasurer

S-1

STEMCO LLC, as Grantor

By: /s/ Scott E. Kuechle
   ------------------------------------------
Name: Scott E. Kuechle
Title: Vice President and Treasurer

QFM SALES AND SERVICES, INC., as Grantor

By: /s/ Scott E. Kuechle
   ------------------------------------------
Name: Scott E. Kuechle
Title: Vice President and Treasurer

COLTEC TECHNICAL SERVICES INC., as Grantor

By: /s/ Scott E. Kuechle
   ------------------------------------------
Name: Scott E. Kuechle
Title: Vice President and Treasurer

COLTEC INTERNATIONAL
SERVICES CO., as Grantor

By: /s/ Scott E. Kuechle
   ------------------------------------------
Name: Scott E. Kuechle
Title: Vice President and Treasurer

GARRISON LITIGATION
MANAGEMENT GROUP, LTD., as
Grantor

By: /s/ Timothy O'Reilly
   ------------------------------------------
Name: Timothy O'Reilly
Title: President

S-2

GLACIER GARLOCK BEARINGS, INC., as Grantor

By: /s/ Scott E. Kuechle
   ------------------------------------------
Name: Scott E. Kuechle
Title: Vice President and Treasurer

GARLOCK INTERNATIONAL INC., as Grantor

By: /s/ Scott E. Kuechle
   ------------------------------------------
Name: Scott E. Kuechle
Title: Vice President and Treasurer

GARLOCK OVERSEAS CORPORATION, as Grantor

By: /s/ Scott E. Kuechle
   ------------------------------------------
Name: Scott E. Kuechle
Title: Vice President and Treasurer

BANK OF AMERICA, N.A.,
as Agent

By: /s/ Perri H. Love
   ------------------------------------------
Name: Perri H. Love
Title: Assistant Vice President

S-3

Exhibit 21.1

ENPRO INDUSTRIES, INC.*

Parent And Subsidiaries Of Registrant                                 Percentage
-------------------------------------                                 Of Voting
                                                        Place Of      Securities
Consolidated Subsidiary Companies                     Incorporation     Owned
---------------------------------                     -------------   ----------

  EnPro Industries, Inc.                              North Carolina    100.00
   Coltec Industries Inc                              Pennsylvania      100.00
     Coltec North Carolina Inc.                       North Carolina    100.00
     Coltec Automotive Inc                            Delaware          100.00
     Coltec Charitable Foundation, Inc.               Delaware          100.00
     Coltec do Brasil Produtos Industrias Ltda.       Brazil             89.00
     Garlock (Great Britain) Limited                  United Kingdom    100.00
     Coltec Industries France SAS                     France             25.00
       Cefilac, S.A.                                  France            100.00
       Liard, S.A.                                    France            100.00
     Coltec Industries Korea Inc                      Korea              89.00
     Coltec Industries Pacific Pte Ltd                Singapore         100.00
     Coltec International Services Co.                Delaware          100.00
       Coltec do Brasil Produtos Industrias Ltda.     Brazil             11.00
       Coltec Industries Korea Inc                    Korea              11.00
       Coltec Productos y Servicios S.A. de C.V.      Mexico             25.00
     Coltec Productos y Servicios S.A. de C.V.        Mexico             75.00
     Coltec Technical Services Inc                    Delaware          100.00
     EXH Automotive Holdings, Inc.                    Delaware          100.00
     FSS Divestiture Corp.                            Delaware          100.00
     Garlock Sealing Technologies LLC                 Delaware          100.00
       Coltec Industrial Products LLC                 Delaware          100.00
       Garlock Bearings LLC                           Delaware           96.30
       Garlock International Inc                      Delaware          100.00
         Garlock of Canada Ltd.                       Ontario, Canada   100.00
       Garlock de Mexico, S.A. de C.V.                Mexico             65.70
       Garlock Overseas Corporation                   Delaware          100.00
         Stemco Truck Products Pty Limited            Australia         100.00
       Garlock Pty Limited                            Australia          80.00
       Louis Mulas Sucs, S.A. de C.V.                 Mexico             67.30
       Mainland Sealing Products, LLC.                North Carolina    100.00
       Stemco LLC                                     Delaware          100.00
     Garrison Litigation Management Group, Ltd.       Delaware           90.30
       The Anchor Packing Company                     Delaware          100.00
     Glacier Garlock Bearings, Inc.                   Delaware          100.00
       Glacier Garlock Bearings do Brasil Ltda.       Brazil            100.00
       GIB Germany G.m.b.H.                           Germany           100.00
         YY110 Verwaltungsgesellschaft m.b.H.         Germany           100.00
         Glacier IHG Gleitlager G.m.b.H. & Co. K.G.   Germany           100.00
       Glacier Garlock Bearings S.r.l.                Italy             100.00
         Glacier Tristar S.A.                         Switzerland       100.00
         Glacier Bearings Benelux B.V.                Netherlands       100.00
           Glacier Nederland B.V.                     Netherlands       100.00
           Glacier Belgium S.A.                       Belgium           100.00
       Glacier Garlock Bearings S.r.o.                Slovakia          100.00
         Glacier Garlock Bearings (Gleitlager) m.b.H. Austria           100.00
       GIB Real Estate Germany G.m.b.H.               Germany           100.00
       GIB Holdings UK Limited                        United Kingdom    100.00
         Glacier Garlock Bearings Limited             United Kingdom    100.00
       Coltec Holdings SARL                           France            100.00
         Coltec Bearings SARL                         France            100.00
     Haber Tool Company                               Michigan          100.00
     Holley Automotive Systems G.m.b.H.               Germany           100.00
       Garlock G.m.b.H.                               Germany           100.00
       Coltec Industries France SAS                   France             75.00
       Cefilac, S.A.                                  France            100.00
       Liard, S.A.                                    France            100.00
     QFM Sales and Services, Inc.                     Delaware          100.00
     Salt Lick Railroad Company                       Pennsylvania      100.00

* The subsidiaries listed on this exhibit will be the subsidiaries of EnPro Industries, Inc. at the time of the distribution.

Exhibit 99.1

(GOODRICH LOGO)

Four Coliseum Centre

2730 West Tyvola Road

Charlotte, North Carolina 28217

704/423-7000

May 24, 2002

Dear Goodrich Shareholder:

The board of directors of Goodrich Corporation has approved a spin-off that would result in Goodrich becoming two independent, publicly traded companies:

• Goodrich Corporation, a leading worldwide supplier of aerospace components, systems and services; and

• EnPro Industries, Inc., a leading provider of engineered industrial products for the processing and general manufacturing industries.

The separation of these businesses will be accomplished through a pro rata distribution, which we refer to as the distribution, of 100% of the outstanding common stock of EnPro to Goodrich shareholders on the record date for the distribution. As a result of the distribution, each Goodrich shareholder will:

• receive one share of EnPro common stock, as well as an associated preferred stock purchase right, for every five shares of Goodrich common stock they own; and

• retain their Goodrich shares and the preferred stock purchase rights associated with those shares.

EnPro has been approved to list its shares of common stock on The New York Stock Exchange under the symbol “NPO.” Goodrich shares will continue to be listed on The New York Stock Exchange under the symbol “GR.”

No action is required on your part to receive your EnPro shares. You will not be required either to pay anything for the new shares or to surrender any shares of Goodrich common stock. No fractional shares of EnPro common stock will be issued. If you would be entitled to a fractional share of EnPro common stock in the distribution you will receive its cash value instead.

The enclosed information statement describes the distribution of shares of EnPro common stock and contains important information about EnPro and its business. I suggest that you read it carefully. If you have any questions regarding the distribution, please contact EnPro’s transfer agent, The Bank of New York, Shareholder Services, 101 Barclay Street, New York, New York 10286, Telephone: 800/ 524-4458, or send an e-mail to The Bank of New York at shareowner svcs@bankofny.com.

Sincerely,

-S- DAVID L. BRUNER

David L. Burner

Chairman and Chief Executive Officer

5605 Carnegie Boulevard

Suite 500

Charlotte, North Carolina 28209

704/731-1500

May 24, 2002

Dear EnPro Industries, Inc. Shareholder:

It is my pleasure to welcome you as a shareholder of EnPro Industries, Inc., a leading provider of engineered industrial products for the processing and general manufacturing industries. Our shares are being distributed to holders of Goodrich Corporation common shares, and they will begin regular way trading on the New York Stock Exchange on June 3, 2002 under the symbol “NPO.” I invite you to learn more about EnPro by reading the attached information statement.

As an independent public company, separated from Goodrich, EnPro will have the focus and direction required to be successful in today’s industrial markets. Our dedicated and experienced management team is focused exclusively on creating value for our shareholders. Our goals are to:

• expand our product offerings and the markets we serve through internal development;

• improve our manufacturing processes and cost structure to attain additional operating efficiencies and customer responsiveness; and

• strengthen the mix of our businesses with opportunistic acquisitions that are of an appropriate scale and that create additional value.

Success in these areas, coupled with an increased emphasis on management of working capital and cash flow, will enable us to maintain and improve our operating margins, providing the opportunity for continued increases in value. We also recognize the critical importance of effectively managing the asbestos claims against our subsidiaries and the insurance asset available to pay those claims. We clearly intend to remain focused on this issue.

As a shareholder in EnPro Industries, Inc. you are invested in a company with well known, highly respected industrial products and brands that are recognized worldwide for quality and reliability. We believe this foundation, combined with our highly capable and highly motivated management team, will allow us to grow into an even stronger company than we are today and deliver growing returns for our shareholders.

I look forward to a successful and rewarding future for all of us.

Sincerely,

-S- ERNEST F. SCHAUB

Ernest F. Schaub

President and Chief Executive Officer

INFORMATION STATEMENT

(ENPRO INDUSTRIES LOGO)

ENPRO INDUSTRIES, INC.

Distribution of Approximately 20,388,437 Shares of Common Stock

The board of directors of Goodrich Corporation has approved a spin-off that would result in Goodrich becoming two independent, publicly traded companies:

The separation of these businesses will be accomplished through a pro rata distribution of 100% of the outstanding common stock of EnPro to Goodrich shareholders, which we refer to as the distribution. Shares of EnPro common stock will be distributed to holders of Goodrich common stock of record as of the close of business of The New York Stock Exchange on May 28, 2002, which will be the record date. The distribution will be effective at 11:59 p.m. Eastern time on May 31, 2002. As a result of the distribution, each Goodrich shareholder will:

No fractional shares of EnPro common stock will be issued. If you would be entitled to a fractional share of EnPro common stock in the distribution, you will receive its cash value instead, which may be taxable. See “The Distribution — U.S. Federal Income Tax Consequences of the Distribution” for more information.

There is no current trading market for EnPro common stock. EnPro has been approved to list its common stock on The New York Stock Exchange under the symbol “NPO.” Goodrich shares will continue to be listed on The New York Stock Exchange under the symbol “GR.”

This information statement provides information about the distribution and the businesses of Goodrich and EnPro following the distribution. No shareholder approval of the distribution is required or sought. We are not asking you for a proxy and you are requested not to send us a proxy. No action is required on your part to receive your EnPro shares. You will not be required either to pay anything for the new shares or to surrender any shares of Goodrich common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

The date of this information statement is May 24, 2002 and

it is first being mailed to shareholders on or about May 28, 2002.

INFORMATION STATEMENT

Table of Contents


	Page

Questions and Answers About the Distribution		1
Summary		5
Risk Factors		8
Forward-Looking Statements		17
Dividend Policy		18
The Distribution		19
Capitalization		25
Unaudited Pro Forma Combined Financial Statements		27
Selected Financial Information		33
Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
The EnPro Business		53
Arrangements Between Goodrich and EnPro		61
Management		64
Ownership of Our Common Stock		76
Description of Our Capital Stock		79
Description of Our Debt and Convertible Preferred Securities		82
Shares Eligible for Future Sale		88
Indemnification of Directors and Officers		89
Available Information		90
Index to Financial Statements		F-1

The terms Term Income Deferrable Equity Securities (TIDES) ^SM and TIDES ^SM are registered servicemarks of Credit Suisse First Boston Corporation and are used in this information statement with the permission of Credit Suisse First Boston Corporation.

QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION


Q1:		What is the distribution?

A1:		The distribution is the method by which Goodrich will be separated into two independent, publicly traded companies:

• Goodrich, a leading worldwide supplier of aerospace components, systems and services; and

• EnPro, a leading provider of engineered industrial products for the processing and general manufacturing industries.


Q2:		What will Goodrich shareholders receive in the distribution?

A2:		In the distribution, Goodrich shareholders will retain their Goodrich shares and the preferred stock purchase rights associated with those shares and will receive one share of EnPro common stock, as well as an associated EnPro preferred stock purchase right, for every five shares of Goodrich common stock they own as of the record date. Immediately after the distribution, Goodrich’s shareholders will own shares of both Goodrich and EnPro common stock, as well as the associated preferred stock purchase rights. After the distribution, Goodrich and EnPro together will comprise all of Goodrich’s businesses as they exist today. However, shareholders will own securities of those companies as two separate investments.

Q3:		What is EnPro?


A3:		EnPro is currently a wholly owned subsidiary of Goodrich that will be spun off to Goodrich shareholders if the distribution is completed. Following the distribution, EnPro will own 100% of the stock of Coltec Industries Inc. Coltec currently owns an engineered industrial products business and an aerospace business. Prior to the distribution, Coltec will transfer its aerospace business to Goodrich. After the distribution is completed, EnPro will own and operate, through Coltec and its subsidiaries, all of the engineered industrial products business. That business is referred to as the “EnPro business” throughout this information statement.


Q4:		Why is Goodrich separating its businesses?

A4:		Goodrich believes that separating its businesses will result in greater long-term value for its shareholders because the distribution will provide:

• greater strategic focus for each management’s efforts and financial resources;

• increased speed and responsiveness in management decision making and resource allocation;

• direct and differentiated access to capital markets; and

• enhanced investor choices by offering investment opportunities in two separate highly focused companies.


Q5:		Will fractional shares of EnPro common stock be distributed?

A5:		No. Fractional shares of EnPro common stock will not be distributed. Fractional shares of EnPro common stock to which Goodrich shareholders of record would otherwise be entitled will be aggregated and sold in the public market by the distribution agent. The aggregate net cash proceeds of the sales will be distributed ratably to those shareholders who would otherwise have received the fractional shares of EnPro common stock. Proceeds from these sales will generally result in a taxable gain or loss to those shareholders. Each shareholder entitled to receive cash proceeds from these shares should consult his or her own tax advisor as to the shareholder’s particular circumstances. The tax consequences of the distribution are described in more detail under “The Distribution — U.S. Federal Income Tax Consequences of the Distribution.”

Q6:		Why is this transaction structured as a distribution and what are the federal income tax consequences of the distribution?


A6:		Goodrich believes that the distribution is an effective and tax-efficient way to separate Goodrich’s distinctly different businesses. Goodrich has obtained an opinion from its tax counsel that, for federal income tax purposes, the distribution will be tax-free to Goodrich and its shareholders under Section 355 of the Internal Revenue Code of 1986, except for cash payments made to shareholders in lieu of fractional shares the shareholders would otherwise receive in the distribution.


Q7:		Will the EnPro common stock be listed on a stock exchange?


A7:		Yes. Although there is not currently a public market for EnPro common stock, EnPro has been approved to list its common stock on The New York Stock Exchange under the symbol “NPO.” We anticipate that trading of EnPro common stock will commence on a when-issued basis prior to the distribution. When-issued trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. On the first trading day following the distribution date, when-issued trading with respect to EnPro common stock will end and regular way trading will begin. Regular way trading refers to trading after a security has been issued and typically involves a transaction that settles on the third full business day following the date of the transaction. We cannot predict what the trading prices for EnPro common stock will be before or after the distribution date. However, we believe that the presence of a when-issued trading market before the distribution may have a stabilizing effect on the price of EnPro common stock immediately following the distribution.


Q8:		Will my shares of Goodrich common stock continue to trade?

A8:		Yes, Goodrich common stock will continue to be listed and trade on The New York Stock Exchange under the symbol “GR.” However, we cannot provide you with any assurance as to the price at which the Goodrich shares will trade following the distribution.

Q9:		What indebtedness will EnPro have following the distribution?

A9:		EnPro expects to have approximately $166 million of debt and convertible preferred securities outstanding on a combined basis. The following is a description of Coltec’s existing debt and convertible preferred securities and the actions we expect to be taken with respect to each issue.

		As of March 31, 2002, Coltec, which will become our subsidiary prior to the distribution, had approximately $463 million of long-term debt, excluding intercompany balances, and convertible preferred securities outstanding, consisting of:

• $150 million of 5 1/4% Convertible Preferred Securities — Term Income Deferred Equity Securities, or the TIDES, issued by Coltec Capital Trust, a Delaware business trust, all of the common equity of which is owned by Coltec, which are supported by an equivalent aggregate principal amount of 5 1/4% Convertible Junior Subordinated Deferrable Interest Debentures due April 15, 2028, or the TIDES Debentures, issued by Coltec to Coltec Capital Trust;

• $300 million aggregate principal amount of 7 1/2% Senior Notes due April 15, 2008, which we refer to in this information statement as the Coltec Senior Notes;

• approximately $12 million of industrial revenue bonds; and

• approximately $1 million of other long-term debt.


		Following the distribution, the TIDES will remain an obligation of Coltec Capital Trust and the TIDES Debentures and Coltec’s guarantee of amounts owed by Coltec Capital Trust with respect to the TIDES will remain obligations of Coltec. Goodrich has guaranteed the amounts owed by Coltec Capital Trust with respect to the TIDES and Coltec’s performance of its obligations with respect to the TIDES and the TIDES Debentures. In connection with the distribution, we expect that EnPro will enter into a similar guarantee with respect to the TIDES and the TIDES Debentures.


		Prior to the distribution, Goodrich offered to exchange new Goodrich securities for the outstanding Coltec Senior Notes. Goodrich acquired all $296.9 million of Coltec Senior Notes tendered pursuant to the offer. Coltec purchased all of these notes from Goodrich in exchange for a $201.9 million debenture, which we refer to in this information statement as the Coltec Debenture, and $97.2 million in cash, after which such notes were cancelled. The cash portion of the purchase price was financed through an intercompany loan from Goodrich that has been assumed by Coltec’s aerospace business. The Coltec Debenture will be contributed by Goodrich to EnPro and will remain an outstanding obligation of Coltec to EnPro, which, for accounting purposes, will be eliminated upon consolidation in EnPro’s financial statements going forward. The $3.1 million of Coltec Senior Notes that remain outstanding following completion of the exchange offer will remain obligations of Coltec after the distribution.


		The industrial revenue bonds, together with approximately $1 million of other long-term debt, will continue to be obligations of Coltec following the distribution.


		EnPro’s primary U.S. operating subsidiaries have executed a credit agreement dated May 16, 2002 for a new senior secured revolving credit facility and we expect that the credit facility will become effective at the time we complete the distribution. The revolving credit facility will be secured by receivables, inventories, equipment, intellectual property, insurance receivables and all other personal property assets of EnPro and its U.S. subsidiaries and by a pledge of 65% of the capital stock of their direct foreign subsidiaries. The maximum available amount under the revolving credit facility will be $60 million and we anticipate that as of the date of the distribution the initial availability under this facility will be approximately $50 million. On the date of the distribution we expect that certain letters of credit will be issued under the facility in an aggregate amount of less than $2 million. We do not anticipate other borrowings under the facility for the foreseeable future.



		Prior to the distribution and the transfer of Coltec’s aerospace business to Goodrich, all intercompany balances outstanding between EnPro, Coltec and their subsidiaries, on the one hand, and Goodrich and its subsidiaries, on the other hand, including the loan to finance the purchase by Coltec of Coltec Senior Notes surrendered by holders in the exchange offer, were assumed by Coltec’s aerospace business. As a result, at the time of the distribution, there will be no intercompany balances outstanding between EnPro, Coltec and their subsidiaries, on the one hand, and Goodrich and its subsidiaries, on the other hand.


		See “Capitalization,” “Description of Our Debt and Convertible Preferred Securities” and Notes J and S to Coltec’s consolidated financial statements for more information.

Q10:		What will the relationship be between Goodrich and EnPro after the distribution?

A10:		Following the distribution, EnPro will be an independent public company and Goodrich will have no continuing stock ownership interest in EnPro. Goodrich and EnPro will enter into a distribution agreement and will enter into several other agreements for the purpose of accomplishing the contribution of the engineered industrial products business to EnPro, the transfer of Coltec’s aerospace business to Goodrich and the distribution. These agreements will also govern EnPro’s relationship with Goodrich following the distribution and will provide arrangements for employee matters, tax matters and some other liabilities and obligations attributable to periods before and, in some cases, after the distribution. These agreements will also include arrangements with respect to transitional services. The distribution agreement will provide that EnPro will indemnify Goodrich against any and all liabilities arising out of the EnPro business, and that Goodrich will indemnify EnPro against any and all liabilities arising out of Goodrich’s retained business, including the aerospace business transferred by Coltec to Goodrich prior to the distribution. In addition, our non-executive Chairman of the Board will continue to serve on the Goodrich board of directors following the distribution.

		Goodrich will continue to be a guarantor of amounts owed by Coltec Capital Trust with respect to the TIDES on a joint and several basis with Coltec and a guarantor of Coltec’s performance of its obligations with respect to the TIDES and the TIDES Debentures. We expect that EnPro will enter into a similar guarantee with respect to the TIDES and the TIDES Debentures. Following the distribution and until April 15, 2028, each TIDES will be convertible, at the option of the holder, into a combination of 0.955248 of a share of Goodrich common stock and 0.1910496 of a share of EnPro common stock, subject to adjustment. Should the holders exercise their right to convert the TIDES, Coltec would be required to deliver shares of Goodrich common stock and EnPro common stock to the holders as promptly as practicable on or after the conversion date. In connection therewith, EnPro would be required to purchase shares of Goodrich common stock on the open market, directly from Goodrich or by exercising its call options on Goodrich common stock. EnPro, Goodrich, Coltec and Coltec Capital Trust will enter into an indemnification agreement that outlines the obligations of the various parties with respect to the TIDES.


Q11:		What will EnPro’s post-distribution dividend policy be?


A11:		EnPro does not anticipate paying any dividends on its common stock in the foreseeable future. The payment and amount of dividends by EnPro after the distribution will be subject to the discretion of our board of directors. In addition, the terms of Coltec’s new senior secured revolving credit facility will, and the agreements governing the TIDES and additional debt that we may incur in the future may, limit the payment of dividends.


Q12:		What are the anti-takeover effects of the distribution?

A12:		Under tax matters arrangements, EnPro will agree to indemnify Goodrich for any tax resulting from any acquisition or issuance of EnPro stock that causes the distribution and some associated restructuring activities to be taxable to Goodrich and Coltec. Generally, Goodrich will recognize a taxable gain on the distribution if there are one or more acquisitions or issuances of our capital stock representing 50% or more of our then outstanding capital, measured by vote or value, and the acquisitions or issuances are deemed to be part of a plan or series of related transactions that include the distribution. Any shares of our stock acquired or issued within two years before or after the distribution will generally be presumed to be part of such a plan unless we can rebut that presumption. As a result, our obligation to indemnify Goodrich may discourage, delay or prevent a change of control of EnPro. In addition, some provisions of EnPro’s articles of incorporation, bylaws, North Carolina law and the agreements governing EnPro’s debt, as each will be in effect following the distribution, as well as EnPro’s shareholder rights plan, may have the effect of making more difficult an acquisition of control of EnPro in a transaction not approved by our board of directors.

Q13:		What are the risks associated with the distribution?

A13:		There are a number of risks associated with the distribution and ownership of EnPro common stock. These risks are discussed under “Risk Factors” beginning on page 8.

Q14:		What do I need to do now?

A14:		You are not required to take any action, although we urge you to read this entire document carefully. No shareholder approval of the distribution is required or sought. We are not asking you for a proxy and you are requested not to send us a proxy. No action is required on your part to receive your EnPro shares. You will not be required either to pay anything for the new shares or to surrender any shares of Goodrich common stock.

Q15:		When is the record date?


A15:		The record date will be the close of business of The New York Stock Exchange on May 28, 2002.


Q16:		When will the distribution be completed?


A16:		The distribution will be completed at 11:59 p.m. Eastern time on May 31, 2002.


Q17:		Where can I get more information?

A17:		Goodrich shareholders with additional questions related to the distribution should contact EnPro’s transfer agent, The Bank of New York, Shareholder Services, 101 Barclay Street, New York, New York 10286, Telephone: 800/524-4458, or send an e-mail to The Bank of New York at shareowner svcs@bankofny.com. The Bank of New York will be the distribution agent, transfer agent and registrar for the EnPro common stock.

SUMMARY

The following is a summary of some of the information contained in this information statement. We urge you to read this entire document carefully, especially the risks of owning EnPro common stock discussed under “Risk Factors” and the attached financial statements and the related notes. The terms “we,” “our” and “us” in this information statement refer to EnPro and the business it will own and operate following the distribution. When used in this information statement, “Coltec” refers to Coltec Industries Inc and its subsidiaries, excluding its aerospace business, which will be transferred to Goodrich prior to the distribution and which is treated as a discontinued operation in this information statement and in Coltec’s historical consolidated financial statements included in this information statement. Additionally, “Glacier” refers to the Glacier industrial metal polymer bearing business that Coltec acquired from Dana Corporation in September 2001.

We describe in this information statement the historical engineered industrial products business of Coltec, which is currently a wholly owned subsidiary of Goodrich and which will be our wholly owned subsidiary at the time of the distribution. All of the capital stock of Coltec will be transferred to EnPro immediately prior to the distribution as described in “The Distribution — Actions to be Taken Prior to the Distribution” and will be our only material asset at the time of the distribution. Following the distribution, we will be an independent public company and Goodrich will have no continuing stock ownership in us.

This information statement contains financial statements of EnPro and Coltec. Coltec’s financial information includes information about its aerospace business, which is treated as a discontinued operation. Coltec’s historical results may not be indicative of our financial results in the future as an independent company and may also differ from what our financial results would have been had we been an independent company during the periods presented.

The information contained in this information statement as it pertains to EnPro assumes the completion of the distribution as if it had already occurred.

Goodrich

Goodrich Corporation

Four Coliseum Centre

2730 West Tyvola Road

Charlotte, North Carolina 28217

704/423-7000

Goodrich is a leading worldwide supplier of aerospace components, systems and services serving the commercial, military, regional, business and general aviation markets. Until the distribution Goodrich is also a leading provider of engineered industrial products for the processing and general manufacturing industries.

Goodrich’s continuing operations are classified into four reportable business segments: Aerostructures and Aviation Technical Services, Landing Systems, Engine and Safety Systems, and Electronic Systems.

Aerostructures and Aviation Technical Services: Aerostructures is a leading supplier of nacelles, pylons, thrust reversers and related aircraft engine housing components. The aviation technical sales division performs comprehensive total aircraft maintenance, repair, overhaul and modification for many commercial airlines, independent operations, aircraft leasing companies and airfreight carriers.

Landing Systems: Landing Systems provides systems and components pertaining to aircraft taxi, take-off, landing and stopping. Several divisions within the segment are linked by their ability to contribute to the integration, design, manufacture and service of entire aircraft undercarriage systems, including sensors, landing gear, certain brake controls and wheels and brakes.

Engine and Safety Systems: Engine and Safety Systems produces engine and fuel controls, pumps, fuel delivery systems, as well as structural and rotating components such as disks, blisks, shafts and airfoils for both aerospace and industrial gas turbine applications. This segment also produces aircraft evacuation, de-icing and passenger restraint systems, as well as ejection seats and crew and attendant seating.

Electronic Systems: Electronic Systems produces a wide array of products that provide flight performance measurements, flight management and control and safety data. Included are a variety of sensor systems that measure and manage aircraft fuel and monitor oil debris; engine, transmission and structural health; and aircraft motion control systems. The segment’s products also include instruments and avionics, warning and detection systems, ice detection systems, test equipment, aircraft lighting systems, landing gear cables and harnesses, satellite control, data management and payload systems, launch and missile telemetry systems, airborne surveillance and reconnaissance systems and laser warning systems.

Goodrich’s business is conducted on a global basis with manufacturing, service and sales undertaken in various locations throughout the world.

EnPro

EnPro Industries, Inc.

5605 Carnegie Boulevard

Suite 500

Charlotte, North Carolina 28209

704/731-1500

When the distribution is complete, our business will consist of the historical sealing and engineered industrial products businesses of Coltec, including Glacier. We will manage our operations in two business segments. This business is referred to as the “EnPro business” or “our business” in this information statement.

We are a leader in the design, development, manufacturing and marketing of proprietary engineered industrial products, including sealing products, self-lubricating, non-rolling, metal polymer bearing products, air compressor systems and vacuum pumps and heavy-duty diesel and natural gas engines. We also design, manufacture and sell engineered industrial products such as polytetrafluoroethylene, or PTFE, products and specialized tooling. We have 33 primary manufacturing facilities located in nine countries in the Americas, Europe and Australia. We sell our products through approximately 2,600 independent agents and distributors worldwide and have over 200 internal sales managers and representatives. These sales managers and representatives are complemented by teams of highly experienced engineers. In 2001 on a pro forma basis, we had revenues of $696.4 million, operating income of $54.0 million and net income of $9.9 million.

We sell our products to approximately 50,000 customers worldwide and are diversified both by industry served and geographically. In 2001, no single customer accounted for more than 2% of our revenues. Management estimates that our percentages of revenues by industry are chemical and petrochemical 28%, automotive and heavy-duty vehicle 19%, utility 13%, marine 8%, other transportation 5% and general and other industries 27%. Management estimates that our percentages of revenues by geographic region are North America 71%, Europe 24% and the rest of the world 5%. Management estimates that we derived approximately 62% of our revenues in 2001 from our aftermarket, or parts and services, sales.

Business Strengths

We believe that we have the following business strengths:

• we are a leading supplier of engineered industrial products and services in each of our major product categories;

• we offer a comprehensive range of products and services in each of our major product categories and sell products under leading brand names;

• we have strong aftermarket sales that produce recurring revenues and a large installed equipment base that routinely needs replacement parts and services;

• we sell our products to a diverse, worldwide customer base operating in a wide range of industries;

• we have a superior distribution network that combines with global manufacturing capabilities to offer superior customer service; and

• we have an experienced senior management team.

Business Strategy

Our strategic objectives are to develop and maintain leading positions for our products while improving margins through cost efficiencies, technological innovation, product differentiation and superior quality and service. In pursuing these objectives, we intend to continue to:

• expand our product offerings and customer base;

• lower costs and increase operational efficiency; and

• effectively manage our subsidiaries’ asbestos exposure.

The Glacier Acquisition

In September 2001, Coltec acquired the Glacier industrial metal polymer bearing business from Dana Corporation. The acquisition of Glacier, in combination with our existing bearing business, created the largest manufacturer of self-lubricating, non-rolling, metal polymer bearings in the world. The combined company is now operating as Glacier Garlock Bearings. We believe that the combination of these businesses will enable us to serve worldwide customers more effectively and create economies of scale in research and development and in marketing. With the acquisition of Glacier we added manufacturing facilities in Annecy and Dieuze, France; Heilbronn, Germany; Kilmarnock, U.K.; Dolny Kubin, Slovakia; and Sao Paulo, Brazil. In addition, we acquired extensive sales and marketing resources in Europe and South America. The combined companies will operate research and development facilities in Thorofare, New Jersey and Annecy, France.

RISK FACTORS

Risks Related to the Distribution

We may incur greater costs as an independent company than Coltec did when it was a part of Goodrich.

Prior to the distribution, Coltec took advantage of Goodrich’s size and purchasing power in procuring certain goods and services such as insurance and health care benefits, and technology such as computer software licenses. Coltec also relied on Goodrich to provide various corporate functions. As a separate, independent entity, we may be unable to obtain these goods, services and technology at prices or on terms as favorable to us as those we obtained prior to the distribution. We may also incur costs for functions previously performed by Goodrich that are higher than the amounts reflected in Coltec’s historical financial statements, which could cause our profitability to decrease.

Our debt agreements will impose limitations on our operations, which could impede our ability to respond to market conditions, address unanticipated capital investments and/or pursue business opportunities.

Following the distribution, the TIDES and some of the Coltec Senior Notes will remain outstanding. The agreements relating to the TIDES and the Coltec Senior Notes impose limitations on our operations. Our primary U.S. operating subsidiaries have executed a credit agreement dated May 16, 2002 for a new senior secured revolving credit facility and we expect that the credit facility will become effective at the time we complete the distribution. The agreements relating to the new revolving credit facility will impose additional and, in some cases, more restrictive limitations. These limitations could impede our ability to respond to market conditions, address unanticipated capital investments and/or pursue business opportunities.

If we incur new debt, we may have a higher cost of capital, which could adversely affect our profitability and financial condition.

We expect to have a higher cost of capital than Goodrich for any new debt we may incur. If we have to pay significantly higher interest rates, our profitability may decline. For purposes of preparing our unaudited pro forma combined financial statements included elsewhere in this information statement, we have estimated the amount of interest expense based upon the debt balances we expect to be outstanding on the distribution date, the cost of maintaining our new senior secured credit facility outstanding and the applicable interest rates for these debt obligations. Although management believes that these assumptions are reasonable, they are subject to a number of uncertainties. Therefore, Coltec’s historical consolidated financial statements and our unaudited pro forma combined financial statements may not be indicative of our future performance as a stand-alone company.

We may increase our debt or raise additional capital in the future, which could affect the financial health of our company, and may decrease our profitability.

We may increase our debt or raise additional capital in the future, subject to restrictions in our existing and anticipated debt agreements. If our cash flow from operations is less than we anticipate, or if our cash requirements, including those of our subsidiaries to pay asbestos claims, are more than we expect, we may require more financing. However, debt or equity financing may not be available to us on terms acceptable to us, if at all. If we incur additional debt or raise equity through the issuance of preferred stock, the terms of the debt or preferred stock issued may give the holders rights, preferences and privileges senior to those of holders of our common stock, particularly in the event of a liquidation. The terms of the debt may also impose additional and more stringent restrictions on our operations than we currently have. If we raise funds through the issuance of additional equity, your ownership in us would be diluted. If we are unable to raise additional capital when needed, it could affect the financial health of our company, which could negatively affect your investment in us. Also, regardless of the terms of our debt or equity financing, we may be limited in the amount of our stock that we can issue because the issuance of our stock may cause the distribution to be a taxable event for Goodrich under Section 355(e) of the Internal Revenue Code, and under the tax sharing arrangement we could be required to indemnify Goodrich for that tax.

Our ability to make payments on and to refinance our indebtedness, including the debt retained or incurred pursuant to the distribution as well as any future debt that we may incur, and to fund working capital, capital expenditures, asbestos claims of our subsidiaries and strategic acquisitions and investments,

will depend on our ability to generate cash in the future from operations, financings and asset sales. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. If we are not able to repay or refinance our debt as it becomes due, we may be forced to sell assets or take other disadvantageous actions. The lenders who hold such debt could also accelerate amounts due, which could trigger a default or acceleration of our other debt.

We may not have adequate cash or the ability to finance conversions of the TIDES.

Following the distribution and until April 15, 2028, each TIDES will be convertible, at the option of the holder, into a combination of 0.955248 of a share of Goodrich common stock and 0.1910496 of a share of EnPro common stock, subject to adjustment. Should the holders exercise their right to convert the TIDES, Coltec would be required to deliver shares of Goodrich and EnPro common stock to the holders as promptly as practicable on or after the conversion date and in connection therewith would be required to purchase shares of Goodrich common stock on the open market, directly from Goodrich or by exercising its call options on Goodrich common stock discussed below. Coltec may not have sufficient cash on hand or the ability to finance these transactions in the time period required by the agreements relating to the TIDES. Failure to honor conversion rights would be a default under the TIDES agreements.

Further, the value of Goodrich and EnPro common stock may increase to the level where Coltec’s cost to acquire shares in a conversion could exceed, with no maximum, the aggregate liquidation value of the TIDES of $150 million. Coltec has purchased call options on 2,865,744 shares of Goodrich common stock with an exercise price of $52.34 per share, which represents the total Goodrich shares that would be required if all TIDES holders convert. The call options provide for either an adjustment to the exercise price or a cash payment, at Coltec’s option, if there is a change in the cash dividends paid on Goodrich common stock. On May 17, 2002 Goodrich announced that its board of directors approved a change to Goodrich’s quarterly dividend from 27.5 cents per share to 20 cents per share of common stock. Coltec’s management is evaluating the impact of the reduction in the dividend and has not decided which option it will elect. One-third of these call options expire in March 2005, and the remainder expire in March 2007. Until they expire, the call options provide protection against Coltec’s risk that the cash required to finance conversions of the TIDES would exceed the TIDES liquidation value. While Coltec has hedged its exposure to conversion costs in excess of the aggregate liquidation value of the TIDES, as described earlier, we cannot be certain that Coltec will have the financial resources to redeem these securities or effectively hedge its exposure to potential conversion costs in excess of the aggregate liquidation value of the TIDES beyond the term of the call options.

EnPro, Goodrich, Coltec and Coltec Capital Trust will enter into an indemnification agreement with respect to the TIDES under which EnPro, Coltec and Coltec Capital Trust will indemnify Goodrich from any costs and liabilities that Goodrich incurs after the distribution as a result of its guarantee of Coltec and Coltec Capital Trust’s obligations under the TIDES. Such indemnification obligations may result in payments that could have a material adverse effect on our financial condition, results of operations and cash flows.

Upon the adoption of Statement of Financial Accounting Standards No. 133, Coltec elected not to apply the provisions of the statement to embedded derivatives existing before January 1, 1999 as permitted by the transition provisions of the statement. As a result, the feature of the TIDES that allows them to be converted into Goodrich common stock will not be accounted for separately as a derivative. However, the call options on Goodrich common stock purchased by Coltec in March 2002 to mitigate its economic risk created by the conversion feature of the TIDES are derivative instruments and are carried at fair value in our balance sheet with changes in the fair value reflected currently in our earnings as other income (expense) — net. Changes in the fair value of the call options will not result in a current cash obligation to Coltec. The change in fair value of the derivatives could be material to our financial condition and results of operations in a given period.

Coltec’s historical consolidated financial information may not be representative of our historical results as an independent company; therefore, it may not be reliable as an indicator of historical or future results.

Coltec’s historical consolidated financial information included in this information statement may not reflect what our financial condition, results of operations and cash flows would have been on a historical basis

had we operated the EnPro business as an independent company during the periods presented or what our financial condition, results of operations and cash flows will be in the future. This is because Coltec’s historical consolidated financial statements include allocations for services provided or procured by Goodrich, which we may not be able to procure or provide ourselves on the same basis. In addition, we have not made adjustments to Coltec’s historical consolidated financial information to reflect other changes that will occur in our cost structure, financing and operations as a result of the distribution. These changes could potentially include increased costs associated with reduced economies of scale and a higher cost of capital, and also changes in how we fund our operations, conduct research and development and pursue our strategic objectives. Finally, at the time of the distribution we will not own Coltec’s aerospace business, which is reflected in Coltec’s historical consolidated financial information as a discontinued operation. Therefore, Coltec’s historical consolidated financial statements may not be indicative of our future performance as an independent company.

We have no history operating as an independent company and we may be unable to implement sufficient operating systems and business functions to allow us to operate effectively as an independent company.

Prior to the distribution, Goodrich provided certain services to the EnPro business as a part of Goodrich’s broader corporate organization. Goodrich performed various corporate functions for us, including the following:

• public and investor relations;

• accounting consolidation;

• treasury administration;

• insurance administration;

• internal audit;

• human resources functions;

• information technology services;

• telecommunications;

• corporate income tax administration; and

• selected legal functions.

Following the distribution, Goodrich will not provide services to us, other than the transition services described under “Arrangements Between Goodrich and EnPro.” We are in the process of creating our own, or engaging third parties to provide, systems and business functions to replace all of the systems and business functions Goodrich currently provides for us. If we are not successful in implementing our own systems and business functions or entering into agreements with other providers of these services once our transition services agreement with Goodrich expires, or if we are not successful in transferring data from Goodrich’s systems to our systems, we may not be able to operate our business effectively. In addition, if Goodrich does not perform the transition services it has agreed to provide for us at the same level as it did when we were part of Goodrich, these services may not be sufficient to meet our needs. This may adversely affect our ability to operate our business effectively.

As an independent company, we may have difficulty attracting or retaining personnel, which could make it difficult for us to pursue our strategic objectives.

Our ability to attract new customers, retain existing customers and pursue our strategic objectives depends on the continued services of our current management, sales, product development and technical personnel and our ability to identify, attract, train and retain new personnel. Competition for top management personnel is intense and, as an independent company that is significantly smaller than Goodrich, we may find it more difficult to attract qualified personnel. In order to retain key personnel, we may have to increase our salaries and benefits, which would increase our expenses and cause our profitability to decline. The loss of key management personnel or our inability to identify, attract, retain and integrate additional qualified management personnel could make it difficult for us to manage our business successfully and pursue our strategic objectives. We do not currently have employment agreements with any of our employees.

We could incur significant indemnity obligations to Goodrich for U.S. federal income tax liability if acquisitions or issuances of EnPro stock cause the distribution to be taxable.

The distribution is intended to be tax-free to Goodrich and its shareholders under Section 355 of the Internal Revenue Code. Generally, Goodrich may recognize a taxable gain on the distribution if there are one or more acquisitions or issuances of our capital stock representing 50% or more of our then-outstanding capital, measured by vote or value, and the acquisitions or issuances are deemed to be part of a plan or series of related transactions that include the distribution. Any shares of our stock acquired or issued within two years before or after the distribution will generally be presumed to be part of such a plan unless we can rebut that presumption. If the acquisition or issuance of our stock causes the distribution to be taxable to Goodrich, we would be required to indemnify Goodrich against any tax payable under the tax matters arrangements we will enter into with Goodrich as part of the distribution. In addition, aside from the tax matters arrangements, under U.S. federal income tax laws, we and Goodrich would be severally liable for Goodrich’s federal income taxes from the distribution being taxable. This means that even if we do not have to indemnify Goodrich for any tax liabilities if the distribution fails to be tax-free, we may still be liable for any part of, including the whole amount of, these liabilities and expenses if Goodrich fails to pay them.

Risks Related to Our Business

Certain of our subsidiaries are defendants in asbestos litigation.

The historical business operations of two Coltec subsidiaries, Garlock Sealing Technologies LLC, or Garlock, and The Anchor Packing Company, or Anchor, have resulted in a substantial volume of asbestos litigation in which plaintiffs have alleged personal injury or death as a result of exposure to asbestos fibers. Those subsidiaries manufactured and/or sold industrial sealing products, predominately gaskets, which contained encapsulated asbestos fibers. Although those subsidiaries actively manage their exposure to asbestos litigation and their relationships with insurance carriers through another Coltec subsidiary, Garrison Litigation Management Group, Ltd., or Garrison, several risks and uncertainties may result in potential liabilities to us in the future that could have a material adverse effect on our business, financial condition, results of operations and cash flows. Those risks and uncertainties include the following:

• the potential for a large volume of future asbestos claims to the extent such claims are not covered by insurance because insurance coverage is, or will be, depleted;

• the uncertainty of the per claim value of current and potential future asbestos claims;

• the timing of payout of claims relative to recoveries of amounts covered by insurance from our subsidiaries’ insurance carriers and limitations imposed on the amount that may be recovered in any given year;

• the financial viability of our subsidiaries’ insurance carriers and their reinsurance carriers, and our subsidiaries’ ability to collect on claims from them;

• an increase in litigation or other costs that are not covered by insurance;

• the unavailability of any insurance for claims alleging first exposure to asbestos after July 1, 1984; and

• bankruptcies of other defendants.

Potential liability for asbestos claims may adversely affect our ability to retain and attract customers and quality personnel. To the extent our subsidiaries’ insurance is depleted or the payments required in any given year exceed the annual limitations on insurance recoveries from our subsidiaries’ carriers, our subsidiaries would be required to fund these obligations from available cash, even if such amounts are recoverable under these insurance policies in later years. This could adversely affect our ability to use cash for other purposes, including growth of our business, and adversely affect our financial condition.

Our business and some of the markets we serve are cyclical and changes in general market conditions could have a material adverse effect on our business.

The markets in which we sell our products, particularly chemical companies, petroleum refineries and the automotive industry, are, to varying degrees, cyclical and have historically experienced periodic downturns. Prior downturns have been characterized by diminished product demand, excess manufacturing capacity and subsequent erosion of average selling prices in these markets resulting in negative effects on our net sales, gross margins and net income. Economic downturns or other material weakness in demand in any of these markets could have a material adverse effect on our business, financial condition, results of operations and cash flows. Following the distribution, we will be less diversified and have a narrower business focus than that of Goodrich before the distribution. Therefore, we will be more susceptible to these risks.

The U.S. and other world markets are currently experiencing a severe economic downturn and many of the markets that we serve have been affected by this downturn. As a result, our business and financial results have been adversely affected. If this economic slowdown were to continue for an extended period or if conditions were to worsen, the negative impact on our business and financial results could be further exacerbated.

Further, the terrorist attacks of September 11, 2001 adversely impacted the U.S. and world economies and a wide range of industries. Those terrorist attacks, the allied military response and subsequent developments may lead to future acts of terrorism, additional hostilities and financial, economic and political instability. While the precise effects of such instability on our industry, our business and our insurance carriers and their reinsurance carriers is difficult to determine, it may negatively impact our business, financial condition, results of operations and cash flows.

We face intense competition that could have a material adverse effect on our business.

We encounter intense competition in almost all areas of our business. Additionally, customers for many of our products are attempting to reduce the number of vendors from which they purchase in order to reduce inventories. To remain competitive, we need to invest continuously in manufacturing, marketing, customer service and support and our distribution networks. We may not have sufficient resources to continue to make such investments or maintain our competitive position. Additionally, some of our competitors, such as Smiths Group plc, Flowserve Corporation and Ingersoll-Rand Company, are larger than we are and have substantially greater financial resources than we do. As a result, they may be better able to withstand the effects of periodic economic downturns. Pricing and other competitive pressures could adversely affect our business, financial condition, results of operations and cash flows.

If we fail to retain the independent agents and distributors upon whom we rely to market our products, we may be unable to effectively market our products and our revenue and profitability may decline.

Our marketing success in the U.S. and abroad depends largely upon our independent agents’ and distributors’ sales and service expertise and relationships with customers in our markets. Many of these agents have developed strong ties to existing and potential customers because of their detailed knowledge of our products. A loss of a significant number of these agents or distributors, or of a particular agent or distributor in a key market or with key customer relationships, could significantly inhibit our ability to effectively market our products, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We have exposure to some contingent liabilities relating to discontinued operations, which could have a material adverse effect on our financial condition, results of operations or cash flows in any fiscal period.

We have some contingent liabilities related to discontinued operations of our predecessors, including environmental liabilities and liabilities for certain products and other matters. In some instances, we have indemnified others against those liabilities, and in other instances, we have received indemnities from third parties against those liabilities.

Under federal and state environmental laws, Coltec, or one of its subsidiaries, has been named as a potentially responsible party at 17 sites where the costs to it at each site are expected to exceed $100

thousand. Investigations have been completed or are near completion for 14 of these sites and are in progress at the other three sites. The majority of these sites relate to remediation projects at former operating facilities that have been sold or closed and primarily deal with soil and groundwater contamination. We believe that any liability incurred for cleanup at these sites will be satisfied over a number of years, and, in some cases, the costs will be shared with other potentially responsible parties.

In addition, there is the potential for claims to arise relating to products or other matters related to discontinued operations. Some of these claims could seek substantial monetary damages. Specifically, we may potentially be subject to the liabilities related to the firearms manufactured prior to 1990 by Colt Firearms, a former operation of Coltec, and for electrical transformers manufactured prior to 1994 by Central Maloney, another former Coltec operation. Coltec also has ongoing obligations with regard to workers compensation, retiree medical and other retiree benefit matters associated with discontinued operations that relate to Coltec’s periods of ownership of those operations.

We have insurance and reserves to address these liabilities. However, if our insurance coverage is depleted or our reserves are not adequate, environmental and other liabilities relating to discontinued operations could have a material adverse effect on our financial condition, results of operations and cash flows.

We conduct a significant amount of our sales activities outside of the U.S., which subjects us to additional business risks that may cause our profitability to decline.

Because we sell our products in a number of foreign countries, we are subject to risks associated with doing business internationally. In 2001, we derived approximately 30% of our revenues from sales of our products outside of the U.S. Our international operations are, and will continue to be, subject to a number of risks, including:

• unfavorable fluctuations in foreign currency exchange rates;

• adverse changes in foreign tax, legal and regulatory requirements;

• difficulty in protecting intellectual property;

• trade protection measures and import or export licensing requirements;

• differing labor regulations;

• political and economic instability; and

• acts of hostility, terror or war.

Any of these factors, individually or together, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We intend to continue to pursue international growth opportunities, which could increase our exposure to risks associated with international sales and operations. As we expand our international operations, we may also encounter new risks that could adversely affect our revenues and profitability. For example, as we focus on building our international sales and distribution networks in new geographic regions, we must continue to develop relationships with qualified local agents, distributors and trading companies. If we are not successful in developing these relationships, we may not be able to increase sales in these regions. We could also face increased costs associated with staffing and managing foreign operations.

We may not achieve our strategic objectives, which could adversely affect our growth.

Our strategic objectives include expansion of our product lines into new industrial and geographic markets. We may not be able to expand into these new markets effectively or at all.

Additionally, our short-term strategy includes the realization of cost savings by increasing the efficiency of our manufacturing processes and focusing on opportunities for cost reduction throughout our business. We may not, however, be able to fully achieve increased efficiencies or reduce our costs. If we are not able to achieve the cost savings we expect, our profitability could be adversely affected.

We expect to realize certain synergies, business opportunities and new prospects for growth through product development and geographic market expansion resulting from the Glacier acquisition. We are in the process of integrating the Glacier business with our existing business. Even if we are able to integrate the operations of the two companies successfully, we may never fully realize these expected benefits, or we may not realize these benefits within the time frame that we currently expect. We may experience increased competition that will limit our ability to expand our business, our assumptions underlying our estimates of expected cost savings may prove to have been inaccurate, or general industry and business conditions may deteriorate. In addition, we may not be successful in integrating the operations, resulting in excess costs, operational problems and write-offs. The integration will also require significant effort from our personnel and the personnel of the Glacier business. Furthermore, our management may have its attention diverted while trying to integrate the Glacier business successfully or in a timely manner, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, our longer term strategy contemplates growth through selective acquisitions to broaden the products and services we offer and to expand our customer base. If we were to make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business. Moreover, although we expect to perform a diligence investigation before acquiring any new business, an acquisition could result in unforeseen liabilities being assumed by us. If the unforeseen liabilities prove to be significant, our business, financial condition, results of operations and cash flows could be adversely affected and our growth may be impaired.

A catastrophic event at one or more of our specialized production facilities could have a material adverse effect on our business.

As part of our business strategy, we have consolidated and expect to continue to consolidate production of some of our product lines at one or more specialized facilities. As a result, we have some products that are manufactured exclusively in one production facility. Should there be a catastrophic event, such as a fire, affecting one of these production facilities, we could be prevented from manufacturing the product that was manufactured in that facility. If we are not able to timely or effectively shift production to one of our other facilities, we could lose customers as a result and may incur significant additional costs, which could affect our profitability. Our property and business interruption insurance may not adequately compensate us for any losses that may occur.

Our business could suffer if we are unsuccessful in negotiating new collective bargaining agreements.

We currently employ approximately 4,500 employees worldwide. Approximately 3,000 employees were located within the U.S. and approximately 1,500 employees were located outside of the U.S., primarily in Europe and Canada. Approximately 40% of our U.S. employees are represented by unions. Our material collective bargaining agreements with these unions expire between October 1, 2002 and August 13, 2005. Although we believe that our relations with our employees are satisfactory and we have not experienced any material strikes or work stoppages since a strike at one of our facilities in 1996, which lasted approximately ten weeks, we cannot assure you that we will be successful in negotiating new collective bargaining agreements, that such negotiations will not result in significant increases in the cost of labor or that a breakdown in such negotiations will not result in the disruption of our operations. In addition, planned closures of some of our facilities as part of our short-term strategy may create the risk of strikes or work stoppages at those and other facilities.

If we are unable to protect our intellectual property rights and knowledge relating to our products, our business and prospects may be negatively impacted.

We believe that proprietary products and technology are important to our success. If we are unable to adequately protect our intellectual property and know-how, our business and prospects could be negatively impacted. Our efforts to protect our intellectual property through patents, trademarks, service marks, domain names, trade secrets, copyrights, confidentiality, non-compete and nondisclosure agreements and other measures may not be adequate to protect our proprietary rights. Patents issued to third parties, whether before or after the issue date of our patents, could render our intellectual property less valuable. Our ownership of our intellectual property and questions as to whether our competitors’ products infringe our

intellectual property rights may be disputed. In addition, intellectual property rights may be unavailable, limited or difficult to enforce in some jurisdictions, which could make it easier for competitors to capture market share in those jurisdictions.

Our competitors may capture market share from us by selling products that claim to mirror the capabilities of our products or technology without infringing upon our intellectual property rights. Without sufficient protection nationally and internationally for our intellectual property, our competitiveness worldwide could be impaired, which would negatively impact our growth and future revenue. As a result, we may be required to spend significant resources to monitor and police our intellectual property rights.

A loss of certain of our intellectual property licenses or failure on the part of our licensors to protect their own intellectual property under such license agreements may negatively impact our business and revenues.

We license certain intellectual property from third parties and we are dependent on the ability of these third parties to diligently protect their intellectual property rights. In several cases, such as Fairbanks Morse’s technology licenses from Cooper Cameron Corporation relating to the Enviro Design engine and from MAN Aktiengesellschaft for the Pielstick four-stroke engine and Quincy Compressor’s license from Svenska Rotor Maskiner AB for their rotary screw compressor design and technology, the intellectual property licenses are integral to the manufacture of our products. A loss of these licenses or a failure on the part of the third party to protect its own intellectual property could negatively impact our revenues. Although these licenses are all long-term and subject to renewal, it is possible that we may not successfully renegotiate these licenses or that they could be terminated for a material breach on our part. If this were to occur, our business, financial condition, results of operation and cash flows could be adversely affected.

Risks Related to Ownership of Our Common Stock

Because there has not been any public market for our common stock, the market price and trading volume of our common stock may be volatile and you may not be able to resell your shares at or above the initial market price of our stock following the distribution.

There has been no trading market for our common stock. In general, all shares of common stock distributed in the distribution will be freely tradeable and we have been approved to list our common stock on The New York Stock Exchange. We cannot, however, predict the extent to which investors’ interest will lead to a liquid trading market or whether the market price of our common stock will be volatile. The market price of our common stock could fluctuate significantly for many reasons, including in response to the risks described in this section and elsewhere in this information statement or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance, as well as industry conditions and general financial, economic and political instability. For example, to the extent that other large companies within our industry experience declines in their stock price, our stock price may decline as well.

A portion of Goodrich’s common stock is held by index funds tied to the Standard & Poor’s 500 Index or other stock indices. As we will not be included in these indices at the time of the distribution, these index funds will be required to sell our stock. Similarly, other institutional shareholders may not be allowed by their charters to hold the stock of companies that do not pay dividends. Because we currently do not intend to pay dividends, we expect that these shareholders will sell the shares of our common stock distributed to them. Sales by these investors, or the perception that they will occur, may cause our stock price to decline.

Because our quarterly revenues and operating results may vary significantly in future periods, our stock price may fluctuate.

Our revenue and operating results may vary significantly from quarter to quarter. A high proportion of our costs are fixed, due in part to significant selling and manufacturing costs. Small declines in revenues could disproportionately affect operating results in a quarter and the price of our common stock may fall. Other factors that could affect quarterly operating results include, but are not limited to:

• demand for our products;

• the timing and execution of customer contracts;

• the timing of sales of our products;

• payments related to asbestos litigation or annual costs related to asbestos litigation that are not covered by insurance or that exceed the annual limits in place with our insurance carriers on insurance recoveries in any given year;

• changes in the fair value of Coltec’s call options on Goodrich common stock purchased to reduce the economic risk of the conversion feature of the TIDES;

• increases in manufacturing costs due to equipment or labor issues;

• changes in foreign currency exchange rates;

• unanticipated delays or problems in introducing new products;

• announcements by competitors of new products, services or technological innovations;

• changes in our pricing policies or the pricing policies of our competitors;

• increased expenses, whether related to sales and marketing, raw materials or supplies, product development or administration;

• major changes in the level of economic activity in the U.S., Canada, Europe and other major regions in which we do business;

• costs related to possible future acquisitions of technologies or businesses;

• an increase in the number or magnitude of product liability claims;

• our ability to expand our operations; and

• the amount and timing of expenditures related to expansion of our operations.

Various agreements and laws could delay or prevent a change of control that you may favor.

The terms of some of the agreements relating to the distribution, particularly the tax matters arrangements with Goodrich, anti-takeover provisions of our articles of incorporation and bylaws, our shareholder rights plan and provisions of North Carolina law could delay or prevent a change of control that you may favor or may impede the ability of the holders of our common stock to change our management. An acquisition or further issuance of our stock in connection with a change-of-control transaction or otherwise could cause the distribution and associated restructuring activities to be taxable to Goodrich and Coltec. Under the tax matters arrangements, we would be required to indemnify Goodrich for the resulting tax and this indemnity obligation might discourage, delay or prevent a change of control that you may favor.

In particular, the provisions of our articles of incorporation and bylaws, among other things, will:

• require a supermajority shareholder vote to approve any business combination transaction with an owner of 5% or more of our shares unless the transaction is recommended by disinterested directors;

• divide our board of directors into three classes, with members of each class to be elected for staggered three-year terms, if our board is expanded to nine members;

• limit the right of shareholders to remove directors and fill vacancies;

• regulate how shareholders may present proposals or nominate directors for election at shareholders’ meetings; and

• authorize our board of directors to issue preferred stock in one or more series, without shareholder approval.

Our shareholder rights plan will also make an acquisition of a controlling interest in EnPro in a transaction not approved by our board of directors more difficult.

FORWARD-LOOKING STATEMENTS

This information statement contains certain forward-looking statements that state our or our management’s intentions, hopes, beliefs, expectations or predictions of the future.

These forward-looking statements are not historical or current facts but instead represent only our beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of our control. It is possible that our actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements.

We disclaim any obligation, other than as may be imposed by law, to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

This information statement contains information concerning our markets and products that is generally forward-looking in nature and is based on a variety of assumptions regarding the ways in which these markets and product categories will develop. These assumptions have been derived from information currently available to us and to third party industry analysts. The assumptions include the following general underlying expectations that:

• our subsidiaries will continue to effectively manage their asbestos liabilities and insurance assets;

• no significant market altering event will occur, such as a lengthy global recession or additional hostilities or acts of terrorism;

• our current reserves for contingent liabilities related to discontinued operations will be sufficient to meet those liabilities;

• we will be able periodically to negotiate and enter into new financing agreements as and when necessary;

• we will have adequate cash on hand or the ability to finance conversion of the TIDES;

• our strategic objectives of lowering costs, increasing operational efficiency and expanding our product offerings will be achieved;

• our agent and distributor relationships will remain stable overall;

• no significant negative impact from foreign legal and economic risks will occur;

• supply and prices of raw materials will not vary dramatically from historical trends;

• no catastrophic event will occur at any of our production facilities;

• our efforts to periodically renegotiate our collective bargaining agreements will be successful; and

• our own and our third party licensors’ intellectual property rights will remain adequately protected.

If any one or more of these expectations and assumptions proves incorrect, actual results will likely differ materially from those contemplated by the forward-looking statements. Even if all of the foregoing assumptions and expectations prove correct, actual results may still differ materially from those expressed in the forward-looking statements as a result of factors we may not anticipate or that may be beyond our control. While we cannot assess the future impact that any of these differences could have on our business, financial condition, results of operations and cash flows or the market price of shares of our common stock, the differences could be significant.

DIVIDEND POLICY

We do not anticipate paying any dividends on our common stock in the foreseeable future because we expect to retain our future earnings for use in the operation and expansion of our business and to reduce debt. The payment and amount of any dividends will be subject to the discretion of our board of directors and will depend upon, among other things, our financial condition, results of operations, cash requirements, prospects and other factors that our board of directors may deem relevant. The terms of the new senior secured revolving credit facility entered into by our primary U.S. operating subsidiaries will limit the payment of dividends. In addition, the terms of the agreements governing the TIDES and any additional debt that we may incur in the future may limit future dividends.

THE DISTRIBUTION

General

The Goodrich board of directors has approved a spin-off that would result in Goodrich becoming two independent, publicly traded companies:

The separation of these businesses will be accomplished through a pro rata distribution of 100% of our outstanding common stock to Goodrich shareholders, which we refer to as the distribution, on May 31, 2002, the distribution date. As a result of the distribution, each Goodrich shareholder will:

• receive one share of our common stock, as well as an associated preferred stock purchase right, for every five shares of Goodrich common stock they own; and

• retain their shares in Goodrich and the preferred stock purchase rights associated with those shares.

Actions to be Taken Prior to the Distribution

Prior to the distribution, Goodrich owned and operated both an aerospace business, part of which was operated by Coltec, and an engineered industrial products business, all of which was operated by Coltec. Prior to the distribution, Coltec transferred its aerospace business to Goodrich. Prior to this transfer, Coltec’s aerospace business assumed all intercompany balances outstanding between Coltec and its subsidiaries, on the one hand, and Goodrich and its subsidiaries, on the other hand. Following this transfer and prior to the distribution, Coltec will become our subsidiary. After the distribution is completed, we will own and operate all of the former engineered industrial products business, through Coltec, and Goodrich will continue to own and operate the aerospace business, including the aerospace business previously owned and operated by Coltec.

Manner of Effecting the Distribution

The general terms and conditions relating to the distribution will be set forth in a distribution agreement between Goodrich, Coltec and us. Under that distribution agreement, the distribution will be effective at 11:59 p.m. Eastern time on the distribution date, May 31, 2002. As a result of the distribution, each Goodrich shareholder will receive one share of our common stock, as well as an associated preferred stock purchase right, for every five shares of Goodrich common stock they own. In order to be entitled to receive shares of our common stock in the distribution, Goodrich shareholders must be shareholders at the close of business of The New York Stock Exchange on the record date, May 28, 2002. For most of these Goodrich shareholders, our transfer agent will credit their shares of our common stock to book-entry accounts established to hold their shares of our common stock. Our distribution agent will send these shareholders a statement reflecting their ownership of our common stock. Book-entry refers to a method of recording stock ownership in our records in which no physical certificates are used. For shareholders who own Goodrich common stock through a broker or other nominee, their shares of our common stock will be credited to these shareholders’ accounts by the broker or other nominee. As further discussed below, we will not issue fractional shares of common stock in the distribution. A delivery of a share of our common stock in connection with the distribution also will constitute the delivery of the preferred stock purchase right associated with that share. Following the distribution, shareholders whose shares are held in book-entry form may request that their shares of our common stock be transferred to a brokerage or other account at any time and may request delivery of physical stock certificates for their shares.

Goodrich shareholders will not be required to pay for shares of our common stock received in the distribution or to surrender or exchange shares of Goodrich common stock in order to receive our common stock or to take any other action in connection with the distribution. No vote of Goodrich shareholders is required or sought in connection with the distribution, and Goodrich shareholders have no appraisal rights in connection with the distribution.

Fractional shares of our common stock will not be issued to Goodrich shareholders as part of the distribution nor credited to book-entry accounts. Instead, as soon as practicable on or after the distribution date, the distribution agent will aggregate fractional shares of our common stock held by holders of record into whole shares, sell them in the open market at the prevailing market prices and then distribute the aggregate sale proceeds ratably to Goodrich shareholders who would otherwise have been entitled to receive fractional shares. The amount of this payment will depend on the prices at which the distribution agent sells the aggregated fractional shares of our common stock in the open market shortly after the distribution date. We will be responsible for any payment of brokerage fees. The amount of these brokerage fees is not expected to be material to us. The receipt of cash in lieu of fractional shares of our common stock may be taxable to the recipient shareholder. For an explanation of the U.S. federal income tax consequences of the distribution, see “— U.S. Federal Income Tax Consequences of the Distribution.”

In addition, at the time of the distribution, the exercise price of each outstanding vested option to purchase Goodrich common stock held by our employees on the distribution date will be reduced to reflect the value of the distribution, which will be calculated using the equitable adjustment approach contained in the existing awards.

Reasons for the Distribution

Goodrich’s board of directors has determined that the separation of its engineered industrial products business and its aerospace business is in the best interests of Goodrich and its shareholders because the distribution will provide the following key benefits:

• greater strategic focus for each management’s efforts and financial resources;

• increased speed and responsiveness in management decision-making and resource allocation;

• direct and differentiated access to capital markets; and

• enhanced investor choices by offering investment opportunities in two separate highly focused companies.


	*Greater Strategic Focus for Management’s Efforts and Financial Resources*

Historically, Goodrich’s engineered industrial products business has exhibited different financial and operating characteristics than its aerospace business. Additionally, Goodrich’s aerospace business has fewer and larger customers, while its engineered industrial products business has a larger number of smaller customers. Because Goodrich expects these differences to continue in the future, it believes that its engineered industrial products business and its aerospace business will require inherently different strategies in order to maximize their long-term value. Consequently, Goodrich has determined that its current structure may not be the most effective to design and implement the distinct strategies necessary to operate its engineered industrial products business and its aerospace business successfully in a manner that maximizes the long-term value of each.

Both Goodrich and we expect to have increased management attention and better use of financial resources as a result of our having board and management teams solely focused on their respective businesses. The distribution will allow us to better align our management’s attention and resources to pursue opportunities in the engineered industrial products markets and to more actively manage our cost structure. Goodrich will similarly benefit from its management’s ability to focus on the management and operation of its aerospace business.


	*Increased Speed and Responsiveness in Management Decision Making and Resource Allocation*

Both Goodrich and we believe that our respective businesses will be able to make decisions more quickly, deploy resources more rapidly and efficiently and operate with more agility than either business could as part of a combined organization. The distribution will provide Goodrich and us with the opportunity to adopt resource allocation and acquisition criteria policies that best reflect the cash flow, investment requirements, competitive environment, corporate strategy and business objectives of our respective businesses. In particular, the distribution will give both Goodrich and us flexibility to allocate resources,

including both capital and management time and attention. In addition, for Goodrich and potentially in the long-term for us, the distribution will enable each of us to pursue potential transactions in our respective industries, including acquisitions and joint ventures that each of us believes is strategically or financially desirable, without being required to satisfy the acquisition criteria of the other company. In addition, Goodrich and we expect the distribution to enhance each company’s responsiveness to customers and companies with whom each company has strategic relationships, enhance competitiveness in each company’s respective industries and enhance success in each company’s respective product initiatives.


	*Direct and Differentiated Access to Capital Markets*

As an independent company, we will be able to access the capital markets directly to issue debt or equity securities without regard to constraints on the type of capital we might otherwise be subject to in a combined company. After the distribution, we will no longer need to compete with Goodrich’s other businesses for capital resources. Although potential acquisitions are only part of our longer term strategy, we expect the distribution to enhance our ability to eventually pursue acquisitions and other investment opportunities by:

• providing differentiated access to the capital markets for such potential transactions; and

• allowing potential target companies to receive, as consideration in an acquisition, stock in a corporation that is focused solely on the industry in which the target is engaged.

Accordingly, we will be able to create more focused acquisition strategies that meet the different needs of our business as set forth above.


	*Enhanced Investor Choices by Offering Investment Opportunities in Separate Entities*

After the distribution, investors should be better able to evaluate the financial performances of Goodrich and us, as well as our respective strategies within the context of our respective industries, thereby enhancing the likelihood that they will achieve appropriate market valuations. As a result, management of both companies will be able to adjust goals and evaluate strategic opportunities in light of investor expectations within their respective industries, without undue attention to investor expectations in other industries. In addition, each company will be able to focus its public relations efforts on cultivating its own separate identity.

Results of the Distribution

After the distribution, we will be an independent public company owning and operating Goodrich’s engineered industrial products business. Immediately after the completion of the distribution, we expect to have approximately 80,000 beneficial holders of shares of our common stock and approximately 20,388,437 shares of our common stock outstanding based on the number of beneficial shareholders and outstanding shares of Goodrich common stock on May 23, 2002. The figures assume no exercise of outstanding options or conversion of TIDES and exclude shares of Goodrich common stock held directly or indirectly by Goodrich. The actual number of shares to be distributed will be determined on the record date.

For information regarding options to purchase shares of our common stock that will be outstanding after the distribution, see “Capitalization,” “Arrangements Between Goodrich and EnPro — Employee Matters Agreement” and “Management.” Before the distribution, we will enter into several agreements with Goodrich in connection with, among other things, Goodrich’s provision of transition services to us. For a more detailed description of these agreements, see “Arrangements Between Goodrich and EnPro.”

The distribution will not affect the number of outstanding shares of Goodrich common stock or any rights of Goodrich shareholders. Goodrich shares will continue to be listed on The New York Stock Exchange under the symbol “GR.”

Retention and Incurrence of Debt and Convertible Preferred Securities

EnPro expects to have approximately $166 million of debt and convertible preferred securities outstanding on a consolidated basis. The following is a description of Coltec’s existing debt and convertible preferred securities and the actions we expect to be taken with respect to each issue.

As of March 31, 2002, Coltec, which will become our subsidiary prior to the distribution, had approximately $463 million of long-term debt (excluding intercompany balances) and convertible preferred securities outstanding consisting of:

• $150 million of TIDES;

• $300 million aggregate principal amount of the Coltec Senior Notes;

• approximately $12 million of industrial revenue bonds; and

• approximately $1 million of other long-term debt.

Prior to the distribution, Goodrich offered to exchange new Goodrich securities for the outstanding Coltec Senior Notes. Goodrich acquired all $296.9 million of Coltec Senior Notes tendered pursuant to the offer. Coltec purchased all of these notes from Goodrich in exchange for a $201.9 million Coltec Debenture and $97.2 million in cash, after which such notes were cancelled. The cash portion of the purchase price was financed through an intercompany loan from Goodrich that has been assumed by Coltec’s aerospace business. The Coltec Debenture will be contributed by Goodrich to EnPro and will remain an outstanding obligation of Coltec to EnPro, which, for accounting purposes, will be eliminated upon consolidation in EnPro’s consolidated financial statements going forward. The $3.1 million of Coltec Senior Notes that remain outstanding following completion of the exchange offer will remain obligations of Coltec after the distribution.

The industrial revenue bonds, together with approximately $1 million of other long-term debt, will continue to be obligations of Coltec following the distribution.

Our primary U.S. operating subsidiaries have executed a credit agreement dated May 16, 2002 for a new senior secured revolving credit facility and we expect that the credit facility will become effective at the time we complete the distribution. The revolving credit facility will be secured by receivables, inventories, equipment, intellectual property, insurance receivables and all other personal property assets of EnPro and its U.S. subsidiaries and by a pledge of 65% of the capital stock of their direct foreign subsidiaries. The maximum available amount under the revolving credit facility will be $60 million and we anticipate that as of the date of the distribution the initial availability under this facility will be approximately $50 million. On the date of the distribution we expect that certain letters of credit will be issued under the facility in an aggregate amount of less than $2 million. We do not anticipate other borrowings under the facility for the foreseeable future.

Prior to the distribution and the transfer of Coltec’s aerospace business to Goodrich, all intercompany balances outstanding between EnPro, Coltec and their subsidiaries, on the one hand, and Goodrich and its subsidiaries, on the other hand, including the loan to finance the purchase by Coltec of Coltec Senior Notes surrendered by holders in the exchange offer, were assumed by Coltec’s aerospace business. As a result, at the time of the distribution, there will be no intercompany balances outstanding between EnPro, Coltec and their subsidiaries, on the one hand, and Goodrich and its subsidiaries, on the other hand.

See “Capitalization,” “Description of Our Debt and Convertible Preferred Securities” and Notes J and S to Coltec’s consolidated financial statements for more information.

U.S. Federal Income Tax Consequences of the Distribution

Goodrich has received an opinion from the law firm of Kronish Lieb Weiner & Hellman LLP substantially to the effect that, among other things, the distribution will qualify under Section 355 of the Internal Revenue Code as a tax-free spin-off to the holders of Goodrich common stock, except with respect to cash received in lieu of fractional EnPro shares, and will be tax-free to Goodrich. Assuming that the distribution qualifies under Section 355 of the Internal Revenue Code as a tax-free spin-off:

• no gain or loss will be recognized by, and no amount will be included in the income of, holders of Goodrich common stock upon their receipt of shares of our common stock;

• any cash received in lieu of fractional share interests in EnPro will give rise to gain or loss equal to the difference between the amount of cash received and the tax basis allocable to the fractional share interests, determined as described below, and such gain will be capital gain or loss if the Goodrich common stock on which the distribution is made is held as a capital asset on the date of the spin-off;

• the aggregate basis of the Goodrich common stock and our common stock in the hands of each Goodrich shareholder after the spin-off, including any fractional share interest to which the shareholder would be entitled, will equal the aggregate basis of Goodrich common stock held by the shareholder immediately before the spin-off, allocated between the Goodrich common stock and our common stock in proportion to the relative fair market value of each on the date of the spin-off;

• the holding period of our common stock received by each Goodrich shareholder will include the period during which the shareholder held the Goodrich common stock on which the distribution is made, provided that the Goodrich common stock is held as a capital asset on the date of the spin-off; and

• no gain or loss will be recognized by Goodrich upon the distribution of our common stock.

U.S. Treasury regulations require each shareholder that receives stock in a spin-off to attach to the shareholder’s U.S. federal income tax return for the year in which the spin-off occurs a detailed statement setting forth certain information relating to the tax-free nature of the spin-off. Shortly after the spin-off, Goodrich will provide shareholders who receive our shares in the spin-off with the information necessary to comply with that requirement.

The opinion of counsel is subject to certain factual representations and assumptions provided by Goodrich and us. If those factual representations and assumptions are incorrect in a material respect, the opinion of counsel could become inoperative. Goodrich has reviewed the facts and assumptions on which the opinion is based and is not aware of any facts or circumstances that would cause the representations and assumptions to be untrue. Both Goodrich and we have agreed to some restrictions on our future actions to provide further assurances that Section 355 of the Internal Revenue Code will apply to the distribution. If the distribution failed to qualify under Section 355 of the Internal Revenue Code, then, in general, a corporate tax, which, as noted below, could be substantial, would be payable by the consolidated group, of which Goodrich is the common parent, based upon the difference between (x) the fair market value of our common stock and (y) the adjusted basis of our common stock. In addition, under the consolidated return rules, each member of the consolidated group, including EnPro, would be severally liable for such tax liability. If the distribution occurred and it were not to qualify under Section 355 of the Internal Revenue Code, the resulting tax liability may have a material adverse effect on both our and Goodrich’s financial condition, results of operations and cash flows.

Furthermore, if the distribution were not to qualify as a tax-free spin-off, each holder of Goodrich common stock receiving shares of our common stock in the distribution would be treated as if that shareholder had received a taxable distribution in an amount equal to the fair market value of our common stock received, which would result in:

• a dividend to the extent of the shareholder’s pro rata share of Goodrich’s current and accumulated earnings and profits;

• a reduction in the shareholder’s basis in Goodrich common stock to the extent the amount received exceeds such shareholder’s share of earnings and profits; and

• a gain from the exchange of Goodrich common stock to the extent the amount received exceeds both the shareholder’s share of earnings and profits and the shareholder’s basis in Goodrich common stock.

Goodrich shareholders should consult their own advisors as to the specific tax consequences of the distribution to them, including the application and effect of foreign, state and local tax laws.

Listing and Trading of Our Common Stock

There is currently no public market for our common stock. We have been approved to list our common stock on The New York Stock Exchange under the symbol “NPO.” We anticipate that trading of our common stock will commence on a when-issued basis prior to the distribution. When-issued trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. On the first trading day following the distribution date, when-issued trading with respect to our common stock will end and regular way trading will begin. Regular way trading refers to trading after a security has been issued and typically involves a transaction that settles on the third full business day following the date of the transaction. We cannot predict what the trading prices for our common stock will be before or after the distribution date; however, we believe that the presence of a when-issued trading market before the distribution may have a stabilizing effect on the price of our common stock immediately following the distribution.

The shares of our common stock distributed to Goodrich shareholders will be freely transferable except for shares received by persons that may have a special relationship or affiliation with us. Persons that may be considered our affiliates after the distribution generally include individuals or entities that control, are controlled by or are under common control with us. This may include some or all of our officers and directors. Persons that are our affiliates will be permitted to sell their shares only pursuant to an effective registration statement under the Securities Act of 1933, as amended, or an exemption from the registration requirements of the Securities Act, such as the exemptions afforded by Section 4(1) of the Securities Act or Rule 144 thereunder.

Reason for Furnishing this Information Statement

This information statement is being furnished by Goodrich solely to provide information to Goodrich shareholders who will receive shares of our common stock in the distribution. It is not and is not to be construed as an inducement or encouragement to buy or sell any of our securities. We believe that the information contained in this information statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither Goodrich nor we undertake any obligation to update the information except in the normal course of our respective public disclosure obligations.

CAPITALIZATION

The following table presents Coltec’s historical capitalization at March 31, 2002 and our pro forma capitalization at that date reflecting the distribution and the related transactions and events described in the notes to our unaudited pro forma combined balance sheet as if the distribution and the related transactions and events had occurred on March 31, 2002.

The capitalization table below should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Coltec’s historical consolidated financial statements, Coltec’s unaudited condensed consolidated financial statements and our unaudited pro forma combined financial statements and the notes to those financial statements included elsewhere in this information statement.

We are providing the capitalization table below for informational purposes only. You should not construe it to be indicative of our capitalization or financial condition had the distribution and the related transactions and events been completed on the date assumed. The capitalization table below may not reflect the capitalization or financial condition that would have resulted had we been operated as a separate, independent entity at that date and is not necessarily indicative of our future capitalization or financial condition.



		March 31, 2002

		Historical		Pro Forma


		(dollars in millions)
Cash and cash equivalents		$	29.8	$	50.0

Current maturities of long-term debt			1.8		1.8
Long-term debt (a) (b) (c)			313.0		16.1
Mandatorily redeemable convertible preferred securities of trust (TIDES)			150.0		150.0
Shareholders’ Equity:
	Parent company investment (d)		319.6		—
	Common stock, par value $0.01 per share (e)		—		0.2
	Additional paid in capital (e)		—		364.9

	Total Shareholders’ Equity		319.6		365.1

	Total Capitalization	$	784.4	$	533.0

(a) In connection with the distribution, EnPro’s primary U.S. subsidiaries have executed a credit agreement dated May 16, 2002 for a new senior secured revolving credit facility and we expect that the credit facility will become effective at the time we complete the distribution. The maximum available amount under the credit facility will be $60 million. We anticipate that as of the date of the distribution the initial availability under this facility will be approximately $50 million. On the date of the distribution, we expect that certain letters of credit will be issued under the facility in an aggregate amount of less than $2 million. We do not anticipate other borrowings under the facility for the foreseeable future.

(b) Prior to the distribution, Goodrich offered to exchange all $300 million aggregate principal amount of the Coltec Senior Notes outstanding for new similar Goodrich securities. Goodrich acquired all $296.9 million of Coltec Senior Notes tendered pursuant to the offer. Coltec purchased all $296.9 million of these notes from Goodrich in exchange for a $201.9 million Coltec Debenture and $97.2 million in cash, after which such notes were cancelled. Pro forma amounts assume that the Coltec Debenture is contributed by Goodrich to EnPro and remains an outstanding intercompany obligation of Coltec to EnPro. The cash portion of the purchase price was financed through an intercompany loan from Goodrich that has been assumed by Coltec’s aerospace business. The $3.1 million of Coltec Senior Notes that remain outstanding following completion of the exchange offer will remain obligations of Coltec after the distribution.

(c) Pro forma long-term debt includes $16.1 million that is currently outstanding and will not be repaid at the time of the distribution. This debt consists principally of approximately $12 million in industrial revenue bonds, which were issued in 1993 and will mature in 2009, and $3.1 million of Coltec Senior Notes.

(d) On a historical basis, the amount of Goodrich’s net investment in Coltec was recorded as parent company investment.

(e) The March 31, 2002 pro forma numbers assume 20,388,437 shares issued and outstanding based on each holder of Goodrich’s common stock receiving a dividend of one share of our common stock for every five shares of Goodrich common stock. We have estimated the number of shares based on the number of Goodrich shares outstanding at May 23, 2002 excluding shares of Goodrich common stock held directly or indirectly by Goodrich. The adjustment to additional paid in capital reflects the net effect of the pro forma combined balance sheet adjustments.

ENPRO INDUSTRIES, INC.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The unaudited pro forma combined financial statements reported below consist of unaudited pro forma combined statements of income for the three months ended March 31, 2002 and for the year ended December 31, 2001 and an unaudited pro forma combined balance sheet as of March 31, 2002. The unaudited pro forma combined financial statements should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Coltec’s historical consolidated financial statements, Coltec’s unaudited condensed consolidated financial statements and the related notes included elsewhere in this information statement. The following unaudited pro forma combined financial statements have been prepared giving effect to the following transactions as if they had occurred as of March 31, 2002 for the unaudited pro forma combined balance sheet and as of January 1, 2001 for the unaudited pro forma combined statements of income:

• the distribution;

• transactions to conform the capital structure of EnPro, including:

  • the transfer to Goodrich by way of a dividend of Coltec’s aerospace business,

  • the exchange of $296.9 million of the Coltec Senior Notes for similar Goodrich securities, and

  • the entering into of a senior secured revolving credit facility with a maximum available amount of $60 million prior to the distribution;

• the Glacier acquisition;

• an adjustment of our cash balance to $50 million at the time of the distribution; and

• the purchase by Coltec of call options on shares of Goodrich common stock.

The unaudited pro forma combined financial statements included in this information statement have been derived from Coltec’s consolidated financial statements and Coltec’s unaudited condensed consolidated financial statements included elsewhere in this information statement and do not purport to represent what our financial condition and results of operations actually would have been had the distribution and related transactions and events occurred on the dates indicated or to project our financial performance for any future period. Goodrich did not account for Coltec as a separate, stand-alone entity for the periods presented.

The unaudited pro forma combined financial statements reflect pro forma adjustments for the Glacier acquisition, which was completed in September 2001. The Glacier acquisition was accounted for under the purchase method of accounting. Under this method of accounting, the identifiable assets and liabilities of Glacier were adjusted to their estimated fair values based on independent third party appraisals. The unaudited pro forma combined financial statements have been prepared using available information and the assumptions described in the notes thereto.

Goodrich will pay substantially all costs directly related to the distribution and accordingly these costs are not reflected in the historical consolidated financial statements or as a pro forma adjustment. Prior to the transfer of Coltec’s aerospace business to Goodrich, the aerospace business will assume all intercompany balances. As a result, there will be no intercompany balances outstanding between us and our subsidiaries, on the one hand, and Goodrich and its subsidiaries, on the other hand. Further, the aerospace business will also assume substantially all of Coltec’s pension and post-retirement obligations for retired and departed employees.

Following the distribution and until February 15, 2028, each TIDES will be convertible, at the option of the holder, into a combination of 0.955248 of a share of Goodrich common stock and 0.1910496 of a share of EnPro common stock, subject to adjustment. Coltec has purchased call options on 2,865,744 shares of Goodrich common stock, with an exercise price of $52.34 per share, which represents the total Goodrich shares that would be required if all TIDES holders convert. The call options provide for either an adjustment to the exercise price or a cash payment at Coltec’s option, if there is a change in the cash dividends paid on Goodrich common stock. On May 17, 2002 Goodrich announced that its board of directors approved a change to Goodrich’s quarterly dividend from 27.5 cents per share to 20 cents per share of common stock. Coltec’s management is evaluating the impact of the reduction in the dividend and has not decided which option it will elect. One-third of these call options expire in March 2005, and the remainder expire in March 2007. Until they expire, the call options provide protection against Coltec’s risk that the cash required to finance conversions of the TIDES would exceed the TIDES liquidation value.

ENPRO INDUSTRIES, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME



		Three Months Ended March 31, 2002

		Historical			Adjustments			Pro Forma


		(dollars in millions, except
		per share amounts)
Sales		$	166.9		$	—		$	166.9
Operating costs and expenses:
	Cost of sales		122.4			—			122.4
	Selling and administrative costs		34.1			1.5	(c)		35.6
	Merger-related and consolidation costs		0.4			—			0.4

			156.9			1.5			158.4

Operating income			10.0			(1.5	)		8.5
Interest expense			(6.9	)		5.7	(d)
						(0.4	)(e)		(1.6	)
Interest income			0.1			0.1	(i)		0.2
Other income (expense) — net			(0.3	)		5.8	(f)		5.5

Income from continuing operations before income taxes and distributions on convertible preferred securities of trust (TIDES)			2.9			9.7			12.6
Income tax expense			(1.1	)		(3.6	)(g)		(4.7	)
Distributions on convertible preferred securities of trust (TIDES)			(2.0	)		—			(2.0	)

Income (loss) from continuing operations			(0.2	)		6.1			5.9
Income from discontinued operations — net of taxes			13.4			(13.4	)(h)		—

Net income		$	13.2		$	(7.3	)	$	5.9

Pro forma net earnings per share (l):
	Basic							$	0.29
	Diluted							$	0.29
Average shares used in computing pro forma earnings per share (in millions) (k):
	Basic								20.4
	Diluted								20.4

See Notes to Unaudited Pro Forma Combined Financial Statements

ENPRO INDUSTRIES, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME



		Year Ended December 31, 2001

		Historical			Adjustments			Pro Forma


		(dollars in millions, except
		per share amounts)
Sales		$	628.3		$	68.1	(a)	$	696.4
Operating costs and expenses:
	Cost of sales		445.7			41.2	(a)
						3.3	(b)		490.2
	Selling and administrative costs		126.1			6.9	(c)
						15.4	(a)		148.4
	Merger-related and consolidation costs		3.8			—			3.8

			575.6			66.8			642.4

Operating income			52.7			1.3			54.0
Interest expense			(26.9	)		23.2	(d)
						(1.8	)(e)		(5.5	)
Interest income			0.5			0.5	(i)		1.0
Other expense — net			(3.1	)		(17.9	)(f)		(21.0	)

Income from continuing operations before income taxes and distributions on convertible preferred securities of trust (TIDES)			23.2			5.3			28.5
Income tax expense			(8.7	)		(2.0	)(g)		(10.7	)
Distributions on convertible preferred securities of trust (TIDES)			(7.9	)		—			(7.9	)

Income from continuing operations			6.6			3.3			9.9
Income from discontinued operations — net of taxes			94.1			(94.1	)(h)		—

Net income		$	100.7		$	(90.8	)	$	9.9

Pro forma net earnings per share (l):
Basic								$	0.49
Diluted								$	0.49
Average shares used in computing pro forma earnings per share (in millions) (k):
Basic									20.4
Diluted									20.4

See Notes to Unaudited Pro Forma Combined Financial Statements

ENPRO INDUSTRIES, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET



			March 31, 2002

			Historical		Adjustments			Pro Forma


			(dollars in millions,
			except share and per share amounts)
ASSETS
Current Assets
	Cash and cash equivalents		$	29.8	$	20.2	(i)	$	50.0
	Accounts and notes receivable			97.9		—			97.9
	Asbestos insurance receivable			91.0					91.0
	Inventories			80.3		—			80.3
	Deferred income taxes			5.2		(5.2	)(g)		—
	Prepaid expenses and other assets			5.9		—			5.9

		Total Current Assets		310.1		15.0			325.1

Property, plant and equipment — net				135.8		—			135.8
Prepaid pension				92.6		(80.6	)(b)		12.0
Goodwill — net				141.3		—			141.3
Identifiable intangible assets				65.2		—			65.2
Asbestos insurance receivable				246.2		—			246.2
Other assets				74.9		(17.7	)(b)
						(5.1	)(d)
						1.0	(e)		53.1
Assets of discontinued operations				482.9		(482.9	)(h)		—

		Total Assets	$	1,549.0	$	(570.3	)	$	978.7

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
	Accounts payable		$	46.0	$	—		$	46.0
	Accrued asbestos liability			165.0		—			165.0
	Other accrued expenses			77.8		(3.1	)(b)
						(10.4	)(d)		64.3
	Income taxes payable			86.0		(83.6	)(g)		2.4
	Deferred income taxes			—		5.1	(g)		5.1
	Current maturities of long-term debt			1.8		—			1.8

		Total current liabilities		376.6		(92.0	)		284.6

Long-term debt				313.0		(296.9	)(d)		16.1
Pension obligations				17.7		(17.7	)(b)		—
Postretirement benefits other than pensions				12.0		(5.7	)(b)		6.3
Deferred income taxes				51.2		(28.0	)(g)		23.2
Retained liabilities of previously owned businesses				57.7		—			57.7
Environmental liabilities				20.8		—			20.8
Asbestos liability				39.8		—			39.8
Minority interests				8.1		—			8.1
Other non-current liabilities				16.7		(9.7	)(b)		7.0
Liabilities of discontinued operations				165.8		(165.8	)(h)		—
Commitments and contingent liabilities				—		—			—
Mandatorily redeemable TIDES				150.0		—			150.0
Shareholders’ Equity
	Parent company investment			319.6		(319.6	)(j)		—
	Common stock, par value $0.01 per share, 20,388,437 shares issued			—		0.2	(k)		0.2
	Additional paid in capital			—		364.9	(k)		364.9

		Total Shareholders’ Equity		319.6		45.5			365.1

		Total Liabilities and Shareholders’ Equity	$	1,549.0	$	(570.3	)	$	978.7

See Notes to Unaudited Pro Forma Combined Financial Statements

NOTES TO

UNAUDITED PRO FORMA

COMBINED FINANCIAL STATEMENTS

(a) Pro forma adjustment to reflect the Glacier acquisition completed in September 2001. Approximately $59 million of the purchase price was allocated to identifiable intangible assets including customer relationships (approximately $27 million), existing technology (approximately $16 million), trademarks (approximately $14 million) and other (approximately $2 million). The trademarks are deemed to have an indefinite life and are therefore not subject to amortization. Customer relationships, existing technologies and other intangible assets are being amortized based primarily on undiscounted cash flows which reflect the patterns in which the economic benefits of the assets are expected to be consumed over 14 years, 25 years and 5 years, respectively. The weighted average life of the amortizable intangible assets is 17 years. Included in the selling and administrative cost adjustment is $3.6 million per year representing amortization of identifiable intangible assets.

(b) Pro forma adjustments to reflect the elimination of certain assets and liabilities that will be retained by Goodrich pursuant to the distribution and employee matters agreements, and the related income statement impact.

(c) The pro forma adjustment amount for administrative overhead costs is the difference between the actual administrative overhead costs recorded in the income statement and the estimated $27 million of annual administrative overhead costs that the Company expects to incur as a stand-alone company. The $27 million includes approximately $10 million of annual non-reimbursable costs associated with managing and settling asbestos claims, which is consistent with historical amounts incurred. The remaining $17 million is management’s estimate of the annual corporate headquarters cost that will be incurred as a stand-alone entity. This estimate is based on the operating budget that management has prepared and was developed based on an analysis of expected costs based on anticipated resource needs.

Goodrich has historically allocated a portion of certain headquarters department expenses to individual business units. Business units are only allocated amounts for departments providing services to the business units. These departments include tax, government relations, accounting and financial analysis, compensation and benefit administration and information technology. The portion of the department expenses which is considered to benefit headquarters only is not allocated. The determination is made by each department head and reviewed annually.

(d) Prior to the distribution, Goodrich offered to exchange the Coltec Senior Notes for debt securities of Goodrich having similar terms. Goodrich acquired all $296.9 million of Coltec Senior Notes tendered pursuant to the offer. Coltec purchased $296.9 million of these notes from Goodrich in exchange for a $201.9 million Coltec Debenture and $97.2 million in cash, after which such notes were cancelled. Pro forma amounts assume that the Coltec Debenture will be contributed to us in connection with the distribution and would thereafter be an intercompany obligation of Coltec to us, which, for accounting purposes, will be eliminated upon consolidation in our consolidated financial statements going forward. The $3.1 million of Coltec Senior Notes that remain outstanding following completion of the exchange offer will remain obligations of Coltec after the distribution.

(e) EnPro’s primary U.S. operating subsidiaries have executed a credit agreement dated May 16, 2002 for a new senior secured revolving credit facility and we expect that the credit facility will become effective at the time we complete the distribution. The revolving credit facility will be secured by receivables, inventories, equipment, intellectual property, insurance receivables, and all other personal property assets of EnPro and its U.S. subsidiaries and by a pledge of 65% of the capital stock of their direct foreign subsidiaries. The maximum available amount under the revolving credit facility will be $60 million and we anticipate that as of the date of the distribution the initial availability under this facility will be approximately

$50 million. On the date of the distribution we expect that certain letters of credit will be issued under the facility in an aggregate amount of less than $2 million. We do not anticipate other borrowings under the facility for the foreseeable future. The pro forma adjustments assume $1.0 million of financing costs associated with this facility, which will be amortized to interest expense over four years, which is the expected term of the facility. Pro forma adjustments also assume $1.5 million of annual interest expense related to unused credit facility availability and related fees based on preliminary negotiations with the lenders under the proposed credit facility.

(f) Pro forma adjustments to reflect in other expense, net the change in fair value of Coltec’s call options on Goodrich common stock purchased to reduce its economic risk created by the conversion feature of the TIDES. The fair values of Coltec’s call options were determined using an option pricing model.

(g) Pro forma adjustment to the provision for income taxes and deferred tax assets and liabilities represents the estimated income tax effect of pro forma adjustments (a) through (f) at an effective tax rate of 37.5%. Pro forma adjustment to income taxes payable reflects the assumption by Goodrich of income tax receivables and payables in accordance with the tax matters arrangements.

(h) Pro forma adjustments to reflect the transfer to Goodrich by way of a dividend of all of Coltec’s aerospace business.

(i) Pro forma adjustment to set our cash balance to $50 million at the time of the distribution. A pro forma adjustment to add interest income at a rate of 2% per annum on the estimated increase in cash balances has been included.

(j) On a historical basis, the amount of Goodrich’s net investment in us was recorded as parent company investment.

(k) Pro forma number of shares of common stock is based on each holder of Goodrich’s common stock receiving a dividend of one share of our common stock for every five shares of Goodrich common stock. We have estimated the number of shares based on the number of Goodrich shares outstanding at May 23, 2002. The pro forma weighted average number of shares used for the diluted earnings per share calculation excludes the shares issuable upon the conversion of convertible preferred securities because such conversion would be anti-dilutive. The adjustment to additional paid in capital reflects the net effect of the pro forma combined balance sheet adjustments.

(l) Basic and diluted earnings per share is computed by dividing pro forma net income by the pro forma weighted average number of common shares outstanding. Historical basic and diluted earnings per share is not presented, as our historical capital structure is not comparable to periods subsequent to the distribution.

SELECTED FINANCIAL INFORMATION

The following historical consolidated financial information as of December 31, 2001 and 2000 and for each of the three years ended December 31, 2001, has been derived from, and should be read together with, Coltec’s audited consolidated financial statements and the related notes, which are included elsewhere in this information statement. The historical consolidated financial information as of December 31, 1999 and for the year ended December 31, 1998 has been derived from and, should be read together with, Coltec’s audited consolidated financial statements and the related notes, which have not been included in this information statement. The historical consolidated financial information as of December 31, 1998 and 1997 and for the year ended December 31, 1997 has been derived from Coltec’s unaudited consolidated financial statements, which have not been included in this information statement. Total assets as of December 31, 2001 through 1997 have been reclassified to reflect the provisions of SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which requires assets and liabilities of discontinued operations to be shown separately rather than net.

The historical consolidated financial information as of and for the three months ended March 31, 2002 and 2001 has been derived from, and should be read together with, Coltec’s unaudited condensed consolidated financial statements and the related notes, which are included elsewhere in this information statement. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the interim condensed consolidated financial statements. Interim results are not necessarily indicative of the results that can be expected for a full year.

During the periods presented, Coltec effected a number of acquisitions and divestitures, some of which were significant. As a result, Coltec’s historical financial results for the periods presented may not be directly comparable. The information presented below should also be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”



	(Unaudited)
	Three Months
	Ended
	March 31,					Year Ended December 31,

	2002			2001		2001		2000		1999			1998		1997


	(dollars in millions)
STATEMENT OF INCOME DATA:
Sales	$	166.9		$	162.4	$	628.3	$	654.4	$	665.7		$	749.5	$	725.1

Income (loss) from continuing operations	$	(0.2	)	$	7.3	$	6.6	$	36.7	$	(62.0	)	$	69.0	$	37.9

BALANCE SHEET DATA:
Total assets	$	1,549.0		$	1,267.8	$	1,474.5	$	1,255.4	$	1,207.9		$	1,108.1	$	994.4
Total debt	$	314.8		$	317.9	$	314.9	$	318.0	$	326.5		$	490.2	$	704.9
Mandatorily redeemable convertible preferred securities of trust (TIDES)	$	150.0		$	149.8	$	150.0	$	149.3	$	147.3		$	145.3		—

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with Coltec’s audited consolidated financial statements and unaudited condensed consolidated financial statements, and the related notes, included elsewhere in this information statement. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See “Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

The consolidated financial statements, which are discussed below, reflect the historical financial condition, results of operations and cash flows of Coltec, which will be our subsidiary at the time of the distribution. The financial information discussed below and included in this information statement, however, may not necessarily reflect what our financial condition, results of operations and cash flows would have been had we been a stand-alone company during the periods presented or what our financial condition, results of operations and cash flows may be in the future.

Unless otherwise noted, the following discussion pertains only to the EnPro business and does not pertain to Coltec’s aerospace business, which will be transferred to Goodrich prior to the distribution.

Overview

We were incorporated under the laws of the state of North Carolina on January 11, 2002 as a wholly owned subsidiary of Goodrich. We have not commenced operations, only have nominal assets and liabilities and have no contingent liabilities or commitments. We will have no material assets, liabilities or activities as a separate corporate entity until the contribution to us by Goodrich of the industrial business described in this information statement, which is expected to occur prior to the distribution. Upon completion of the distribution we will be a leader in the design, development, manufacturing and marketing of well recognized, proprietary engineered industrial products that include sealing products, self-lubricating, non-rolling, metal polymer bearing products, air compressor systems and vacuum pumps and heavy-duty diesel and natural gas engines. We also design, manufacture and sell other engineered industrial products such as PTFE products and specialized tooling. We manufacture our products in 33 primary facilities located in nine countries in the Americas, Europe and Australia.

Coltec operated as a stand-alone company prior to its acquisition by Goodrich in July 1999. On September 1, 2001, Coltec acquired Glacier. The results of Glacier’s operations have been included in the consolidated financial statements of Coltec since that date. The combination of the Coltec bearings business and Glacier created the largest manufacturer of self-lubricating, non-rolling, metal polymer bearings in the world. We believe that the Glacier acquisition will enable us to serve worldwide customers more effectively and create economies of scale in research and development and marketing.

The following discusses Coltec’s consolidated results of operations and financial condition as it operated as a wholly owned subsidiary of Goodrich, including the adjustments and allocations necessary for a fair presentation of the business, as described in more detail in Note C to Coltec’s consolidated financial statements, included elsewhere in this information statement. The transfer of Coltec’s aerospace business to Goodrich represents the disposal of a segment under APB Opinion No. 30, or APB 30. Accordingly, Coltec’s aerospace business has been accounted for as a discontinued operation and the revenues, costs and expenses, assets and liabilities and cash flows have been segregated in Coltec’s historical consolidated financial statements included elsewhere in this information statement. Unless otherwise noted, the following discussion pertains only to Coltec’s continuing operations.

We will enter into a distribution agreement and a number of ancillary agreements with Goodrich for the purpose of accomplishing the distribution. These agreements will govern the relationship between Goodrich and us subsequent to the distribution and provide for the allocation of employee benefits, taxes and other liabilities and obligations attributable to periods prior to the distribution. The ancillary agreements include a transition services agreement, an employee matters agreement and tax matters arrangements.

As of March 31, 2002, Coltec had outstanding $150 million of TIDES, $300 million of Coltec Senior Notes, $12 million of industrial revenue bonds and $1 million of additional long-term debt. Prior to the distribution, Goodrich offered to exchange new Goodrich securities for the outstanding Coltec Senior

Notes. Goodrich acquired all $296.9 million of Coltec Senior Notes tendered pursuant to the offer. Coltec purchased all of these notes from Goodrich in exchange for a $201.9 million Coltec Debenture and $97.2 million in cash, after which such notes were cancelled. The cash portion of the purchase price was financed through an intercompany loan from Goodrich that has been assumed by Coltec’s aerospace business. The Coltec Debenture will be contributed by Goodrich to us and will remain an outstanding obligation of Coltec to us, which, for accounting purposes, will be eliminated upon consolidation in our consolidated financial statements going forward. The $3.1 million of Coltec Senior Notes that remain outstanding following completion of the exchange offer will remain obligations of Coltec after the distribution.

All significant transactions among Coltec’s operations have been eliminated in its financial statements. Intercompany balances existing between Coltec and Goodrich or its subsidiaries, including the loan from Goodrich to Coltec to finance the purchase by Coltec of the Coltec Senior Notes will be assumed by Coltec’s aerospace business prior to the distribution and the transfer of the aerospace business to Goodrich. As a result, at the time of the distribution, there will be no intercompany balances outstanding between EnPro and Coltec and their subsidiaries, on the one hand, and Goodrich and its subsidiaries, on the other hand.

The following discussion of Coltec’s consolidated results of operations does not necessarily include all the expenses that would have been incurred by Coltec had it been a separate, stand-alone entity and may not necessarily reflect what Coltec’s consolidated financial condition, results of operations and cash flows would have been had Coltec been a stand-alone entity during the periods presented or what our or Coltec’s consolidated financial condition, results of operations and cash flows may be in the future.

We manage our business as two segments, a sealing products segment (sealing and PTFE products) and an engineered products segment (metal polymer bearings, air compressor systems, heavy-duty diesel and natural gas engines and specialized tooling), which encompass our primary product lines.


	*Outlook*

We believe that our businesses are fundamentally sound and that they should generate solid operating margins and cash flows. However, we do anticipate continued softness in most of the major markets that we serve during the first half of 2002, with a modest recovery taking hold during the second half of the year. Overall capacity utilization in the U.S. fell to 74% in 2001, the lowest level since 1983, and it has increased only slightly since then. Industrial production levels continue to be lower year-over-year. With this as a backdrop, our primary markets are facing increasingly competitive environments that are characterized by severe pricing pressure. In addition, we expect to incur incremental costs, over and above the levels historically incurred as part of Goodrich, related to becoming an independent public company. These factors will combine to put further downward pressure on our operating margins.

In response to the market conditions outlined above, we have taken steps to reduce our cost base and improve our manufacturing productivity going forward. In that regard, we initiated a number of restructuring actions in late 2001 and early 2002 that will result in the reduction of headcount, the discontinuance of certain marginally profitable product lines and the closure or consolidation of some facilities. Based on the annualized savings growing out of these restructuring activities, the economic recovery anticipated during the second half of 2002 and the inclusion of Glacier’s results for the full year, we expect a modest increase in 2002 sales and operating income over 2001 results. We expect the first quarter of 2002 to be the weakest quarter of the year.

The foregoing expectations are forward-looking statements that are subject to change, perhaps materially, as a result of factors identified under “Forward-Looking Statements” included elsewhere in this information statement.

Results of Operations

The following table summarizes Coltec’s results of operations:



			(Unaudited)
			Three Months
			Ended
			March 31,						Year Ended December 31,

			2002			2001			2001			2000			1999


			(dollars in millions)
Sales
	Sealing Products		$	83.5		$	96.4		$	354.7		$	391.1		$	394.6
	Engineered Products			83.4			66.0			273.6			263.3			271.1

		Total sales	$	166.9		$	162.4		$	628.3		$	654.4		$	665.7

Operating income
	Sealing Products		$	9.2		$	15.7		$	45.0		$	67.5		$	71.0
	Engineered Products			6.7			8.8			22.2			46.8			52.6

Segment operating income				15.9			24.5			67.2			114.3			123.6
Corporate unallocated				(5.5	)		(1.9	)		(10.7	)		(10.2	)		(26.8	)
Merger-related and consolidation costs				(.4	)		—			(3.8	)		(1.4	)		(128.4	)

Operating income (loss)				10.0			22.6			52.7			102.7			(31.6	)
Interest expense, net				(6.8	)		(6.8	)		(26.4	)		(27.1	)		(35.9	)
Other income (expense) — net				(.3	)		(1.0	)		(3.1	)		(4.3	)		3.1

Income (loss) before taxes and distributions on convertible preferred securities of trust (TIDES)				2.9			14.8			23.2			71.3			(64.4	)
Income tax (expense) benefit				(1.1	)		(5.5	)		(8.7	)		(26.7	)		10.3
Distributions on convertible preferred securities of trust (TIDES)				(2.0	)		(2.0	)		(7.9	)		(7.9	)		(7.9	)

Income (loss) from continuing operations				(0.2	)		7.3			6.6			36.7			(62.0	)
Income from discontinued operations — net of taxes				13.4			20.8			94.1			64.2			61.9

Net income (loss)			$	13.2		$	28.1		$	100.7		$	100.9		$	(0.1	)

The following discussion and analysis focuses on major changes and results from period to period.

First Three Months of 2002 as Compared to the First Three Months of 2001


	*Sales*

Sealing Products. Sales of $83.5 million in the first three months of 2002 were 13% lower than the $96.4 million in the first three months of 2001. The decrease is mainly attributable to lower volume in all major markets caused by continued weakness in U.S. capacity utilization and industrial production rates. Continued quarter-over-quarter declines in production levels have contributed to longer maintenance cycles in the process industries and lower equipment and heavy-duty truck and trailer production, which are important markets for our products.

Engineered Products. Sales of $83.4 million in the first three months of 2002 were 26% higher than the $66.0 million in the first three months of 2001. The increase is due to the inclusion of sales in the first three months of 2002 from Glacier, which was acquired in September 2001. The additional Glacier sales were partially offset by lower sales of bearings in North America and air compressors. Sales of engines and tooling products were flat. Pricing pressure and weakness in key markets contributed to the decrease in North American bearing sales. Weak capital spending in the industrial manufacturing sector and foreign competition due to a strong U.S. dollar adversely affected sales of air compressors.


	*Segment Operating Income*

Sealing Products. Operating income decreased $6.5 million, or 41%, from $15.7 million in the first three months of 2001 to $9.2 million in the first three months of 2002. The decrease is attributable to lower volume, cost increases partially offset by savings from recent restructuring activities, and increased pension costs, which were partially offset by the elimination of goodwill amortization (approximately $770 thousand).

Engineered Products. Operating income decreased $2.1 million, or 24%, from $8.8 million in the first three months of 2001 to $6.7 million in the first three months of 2002. Additional operating income from Glacier was offset mainly by lower volume, competitive pricing pressure, increased pension costs and inventory adjustments.


	*Corporate Unallocated Costs*

Corporate unallocated costs of $5.5 million in the first three months of 2002 increased $3.6 million over 2001 first quarter costs of $1.9 million. The increase was due to higher costs associated with managing and settling asbestos claims. The significant increase between the first three months of 2002 and the first three months of 2001 was due to the type of insurance policies applicable to two subsidiaries of Coltec, Garlock and Anchor, during the respective periods. During the first three months of 2002, the insurance available provided a lower level of legal cost reimbursements than during the first three months of 2001. Based on the level of legal costs expected during the remainder of the year, as well as the type of insurance policies applicable, the total charge to operations during 2002 is expected to be between $8 million and $9 million.


	*Merger-Related and Consolidation Costs*

Coltec incurred $0.4 million of consolidation costs during the first three months of 2002. Of this amount, $0.2 million was for building modifications for facility consolidations and $0.2 million was for equipment relocation.

The merger-related and consolidation reserves were reduced by cash payments of $1.6 million during the first three months of 2002.

No merger-related and consolidation costs were recorded during the first three months of 2001.

See Note C to Coltec’s unaudited condensed consolidated financial statements included elsewhere in this information statement for additional discussion.


	*Other Income (Expense) — Net*

Other income (expense) — net decreased $0.7 million from $1.0 million in the first three months of 2001 to $0.3 million in the first three months of 2002 due to lower amortization of issuance costs related to the TIDES.


	*Income Tax Expense*

Coltec’s effective tax rate from continuing operations was 37.5% during the first three months of 2002 and 2001.


	*Income from Discontinued Operations*

Income from discontinued operations decreased $7.4 million, or 36%, from $20.8 million in the first three months of 2001 to $13.4 million in the first three months of 2002. The decrease was due to lower sales and operating income generated by Coltec’s aerospace business.

2001 Compared with 2000


	*Sales*

Sealing Products. Sales of $354.7 million in 2001 were 9% lower than the $391.1 million in 2000. The lower sales volumes were due to continued softness in all major markets, including chemical processing, heavy-duty truck and trailer assembly and pulp and paper production. The terrorist attacks on September 11,

2001 contributed further to the weakness in our major markets and caused a temporary drop in orders to varying degrees by product line and market in the fourth quarter. This event and its negative impact contributed to our decision to take certain restructuring measures discussed below. New truck and trailer production throughout 2001 was approximately half the levels of early 2000. In addition, capacity utilization in U.S. factories declined to levels well below the historical average in 2001 while U.S. industrial production has fallen nearly every month since mid-2000. These factors have contributed to a decrease in capital spending and delays in scheduled maintenance programs throughout the process industries.

Engineered Products. Sales of $273.6 million in 2001 were 4% higher than the $263.3 million in 2000. Lower North American bearings sales in 2001 due, in part, to weak automotive markets and competitive pricing pressure were offset by the impact of the Glacier acquisition completed in September 2001 ($27.6 million). Weak automotive markets also negatively impacted sales of tooling products. Sales of diesel engines increased slightly due to increased shipments of commercial engines in the fourth quarter. Weak capital spending in the industrial manufacturing sector adversely affected sales of air compressors. This segment also experienced a decline in orders after September 11, 2001 as mentioned above.


	*Segment Operating Income*

Sealing Products. Operating income of $45.0 million in 2001 was 33% lower than the $67.5 million in 2000. The decline was principally attributable to lower sales volumes including lower sales volumes in some of our higher margin products. In addition, operating margins declined from 17.2% to 12.7% due to weaker pricing in certain market segments and an inability in the short term to reduce fixed costs at the same rate as sales declined. Increased expenses associated with the write-down of inventories and other assets, severance and labor costs not associated with a formal restructuring plan also contributed to reduced margins.

Engineered Products. Operating income of $22.2 million in 2001 was 53% lower than the $46.8 million in 2000. In addition to the impact of lower sales volumes, operating margins declined from 17.8% in 2000 to 8.1% in 2001. Profitability of diesel engines declined due to a combination of reduced pricing in the commercial power generation market, increased warranty costs and the completion of a very profitable project in 2000. Lower sales volumes, competitive pricing pressures, wage and benefit cost increases and an inability in the short term to reduce fixed costs at the same rate as sales declined combined to reduce earnings in all other product lines as well.


	*Corporate Unallocated Costs*

Corporate unallocated costs increased $0.5 million, or 5%, from $10.2 million in 2000 to $10.7 million in 2001. The increase was mainly due to lower reimbursements of Garrison’s administrative costs from insurance carriers, which is dependent on the mix of insurance policies during a given period.


	*Merger-Related and Consolidation Costs*

Coltec incurred a total of $3.8 million of consolidation costs in 2001. Coltec incurred $2.4 million of personnel-related costs related to the termination of 170 positions of which approximately 90 were terminated by December 31, 2001, including early retirement medical continuation ($0.2 million) and pension continuation costs ($0.4 million) for 22 employees. Coltec also incurred $1.4 million for facility closures and asset write-downs.

The merger-related and consolidation reserves were reduced by $2.0 million in 2001, of which $1.1 million represented cash payments. The remaining $0.9 million of reserve reductions represented asset impairment charges or reserves that were transferred to, and subsequently administered by, Goodrich.

Coltec incurred $1.4 million of consolidation costs in 2000 consisting of $1.3 million of personnel-related costs associated with workforce reductions and $0.1 million related to an asset write-down. The merger-related and consolidation reserves were reduced by $7.5 million in 2000, of which $4.0 million represented cash payments. The remaining $3.5 million of reserve reductions represented the remaining reserves associated with Goodrich’s acquisition of Coltec, which were transferred to, and subsequently administered by, Goodrich.

See Note E to Coltec’s consolidated financial statements included elsewhere in this information statement for additional discussion.


	*Net Interest Expense*

Net interest expense decreased by $0.7 million from $27.1 million in 2000 to $26.4 million in 2001. The decrease was primarily attributable to a $1.3 million reduction in interest expense related to the sale of certain trade accounts receivable.


	*Other Income (Expense) — Net*

Other income (expense) — net decreased $1.2 million or 28% from $4.3 million in 2000 to $3.1 million in 2001 due to lower amortization of issuance costs related to the TIDES. Issuance costs related to the TIDES were fully amortized in mid-2001.


	*Income Tax Expense*

Coltec’s effective tax rate from continuing operations was 37.5% in 2001 and 2000.


	*Income from Discontinued Operations*

Income from discontinued operations increased $29.9 million, or 47%, from $64.2 million in 2000 to $94.1 million in 2001. The increase was due to higher sales and operating income generated by Coltec’s aerospace business.

2000 Compared With 1999


	*Sales*

Sealing Products. Sales of $391.1 million in 2000 were down slightly (1%) from $394.6 million in 1999. The primary factor behind the decline was the industry-wide decline in heavy-duty truck and trailer production, a major market for this segment, in the second half of 2000. Sales to the process industries were flat.

Engineered Products. Sales of $263.3 million declined in 2000 by 3% from $271.1 million in 1999. Revenue declines were experienced in all product lines except air compressors. The loss of significant customers accounted for a drop in bearings sales, while the completion of a large engine project in late 1999 accounted for a decrease in engines sales in 2000. Inventory reduction efforts and cutbacks in spending by the major automotive companies in late 2000 resulted in a revenue decline for tooling products. Compressor sales increased as a result of strong capital spending and a higher proportion of aftermarket sales.


	*Segment Operating Income*

Sealing Products. Operating income declined 5% from $71.0 million in 1999 to $67.5 million in 2000. The decline in heavy-duty truck and trailer volumes was partially offset by cost-saving programs involving both headcount reductions and raw materials. Overall operating margins decreased to 17.3% in 2000 from 18.0% in 1999.

Engineered Products. Operating income decreased by 11% from $52.6 million in 1999 to $46.8 million in 2000. Strong volume gains accounted for improved profitability in compressor products. Lower sales volumes in other product lines were partially offset by cost reduction programs in a number of businesses.


	*Corporate Unallocated Costs*

Corporate unallocated costs decreased $16.6 million, or 61.9%, from $26.8 million in 1999 to $10.2 million in 2000. Prior to Goodrich’s acquisition of Coltec in 1999, Coltec operated as a separate public company with a separate corporate headquarters. Subsequent to Goodrich’s acquisition of Coltec, the majority of corporate costs were incurred by Goodrich and have not been reflected in Coltec’s financial statements unless allocated by Goodrich. Allocated costs from Goodrich are discussed in Note C to Coltec’s consolidated

financial statements and are included in the operating income of the business, discussed above. The corporate unallocated costs reported in 2000 primarily represent non-reimbursable costs associated with managing and settling asbestos claims.


	*Merger-Related and Consolidation Costs*

During 2000, Coltec incurred $1.3 million of personnel related costs associated with workforce reductions and $0.1 million related to an asset write-down. The merger-related and consolidation reserves were reduced by $7.5 million during 2000, of which $4.0 million represented cash payments. The additional $3.5 million of reserve reductions represented the remaining reserves associated with the acquisition of Coltec by Goodrich, which were transferred to, and subsequently administered by, Goodrich.

Coltec incurred $128.4 million of merger-related and consolidation costs in 1999:

• Coltec incurred $68.4 million of personnel related costs in 1999. Personnel related costs associated with Goodrich’s acquisition of Coltec were $66.3 million, consisting of $61.8 million incurred under change-in-control provisions in employment agreements and $4.5 million in employee severance costs. Personnel related costs also include employee severance costs of $2.1 million for reductions at Coltec’s Garlock, France Compressor Products and Stemco operating units (approximately 125 positions);

• $57.9 million of transaction costs; and

• $2.1 million of asset write-down and facility consolidation costs.

See Note E to Coltec’s consolidated financial statements included elsewhere in this information statement for additional discussion.


	*Net Interest Expense*

Net interest expense decreased by $8.8 million, or 24.5%, from $35.9 million in 1999 to $27.1 million in 2000. The reduction in interest expense was primarily a result of Coltec’s termination of its revolving credit facility following Goodrich’s acquisition of Coltec. Interest expense associated with this facility was $7.9 million in 1999.


	*Other Income (Expense) — Net*

Included within other income (expense) — net are gains and losses from the sale of businesses. Excluding a $5.0 million gain on the sale of a business in 1999, other income (expense) — net was expense of $4.3 million and $1.9 million in 2000 and 1999, respectively. The increase in costs between 1999 and 2000 was primarily attributable to increased earnings attributable to minority interests.


	*Income Tax Expense*

Coltec’s effective tax rate from continuing operations was 37.5% and 16.0% in 2000 and 1999, respectively. In 1999, Coltec accrued a tax benefit due to reported book losses. The benefit in 1999 was reduced mainly due to non-deductible merger-related costs.


	*Income from Discontinued Operations*

Income from discontinued operations increased $2.3 million, or 3.7%, from $61.9 million in 1999 to $64.2 million in 2000. Pre-tax income from discontinued operations in 2000 was approximately $5 million lower than in 1999. The decrease in pre-tax income from discontinued operations was offset by a reduction in the effective tax rate from 39% in 1999 to 34% in 2000. The higher rate in 1999 was a result of taxes attributable to Coltec’s foreign aerospace operations.

Liquidity and Capital Resources


	*Operating Cash Flows*

Operating activities provided cash of $24.8 million during the first three months of 2002 compared to a use of $19.3 million during the first three months of 2001. The cash provided by operating activities in the first three months of 2002 is mainly due to receiving a tax refund associated with prior tax years. Expenditures related to asbestos-related claims exceeded proceeds from asbestos-related insurance by $14.3 million and $17.8 million during the first three months of 2002 and 2001, respectively. For a further discussion of asbestos-related matters, see “ — Contingencies” below.

Operating activities used $62.7 million, $114.8 million and $82.6 million of cash in 2001, 2000 and 1999, respectively. The use of cash in 2001 was attributable to the termination of a receivables securitization program ($30.5 million) and an increase in working capital and other non-current assets and liabilities, net. The use of cash in 2000 was attributable to a $113.7 million payment to the Internal Revenue Service for a disputed income tax assessment and the related accrued interest. Coltec is pursuing its judicial remedies for a refund of this payment. A reasonable estimate of the potential refund cannot be made at this time; accordingly, no receivable has been recorded. If Coltec receives a refund after the distribution, the refund will be remitted to Goodrich. The use of cash in 1999 was attributable to payments of $120.9 million for merger-related and consolidation costs, primarily related to payments in connection with Goodrich’s acquisition of Coltec. Also contributing to the trend in operating cash flows during these periods was the trend in asbestos litigation related payments and recoveries. In 2001, 2000 and 1999, asbestos-related expenditures exceeded proceeds from asbestos-related insurance by $74.8 million, $36.4 million and $19.3 million, respectively, as a result of the short-term aggressive settlement strategy implemented during 1999 and 2000, as described below under “— Contingencies.”


	*Investing Cash Flows*

Coltec used $14.3 million and $4.4 million of cash for investing activities during the first three months of 2002 and 2001, respectively. In March 2002, Coltec used $14.9 million to purchase call options on 2,865,744 shares of Goodrich common stock, which represents the total Goodrich shares required if all TIDES holders convert. For a further discussion of the TIDES, see “— Capital Resources” below. In February 2002, Coltec received a $4.8 million purchase price adjustment related to the Glacier acquisition.

Coltec used $169.8 million, $13.8 million and $24.1 million in investing activities in 2001, 2000 and 1999, respectively. Coltec’s investing activities related solely to capital expenditures, with the exception of 2001 during which it used approximately $150 million to acquire Glacier. The reduction in capital expenditures between 1999 and 2000 reflects decisions made in response to the continued softness in the industrial markets.


	*Financing Cash Flows*

Financing activities provided cash of $29.3 million during the first three months of 2002 compared to $101.4 million in the first three months of 2001. The decrease in cash provided by financing activities was a result of lower net transfers from Goodrich.

Financing activities provided $191.8 million and $74.3 million in 2001 and 1999, respectively, and used $54.5 million in 2000. Goodrich provided $203.3 million of cash in 2001 which was used for the Glacier acquisition and to fund operating cash requirements and capital expenditures. In 2000, cash was used to repay debt and was transferred to Goodrich. Goodrich provided $246.0 million of cash in 1999, which was used to reduce outstanding borrowings under Coltec’s revolving credit facility that was terminated in July 1999.


	*Discontinued Operations Cash Flow*

Cash used by discontinued operations was $35.7 million during the first three months of 2002 compared to $80.1 million in the first three months of 2001. The change resulted from lower operating cash flows (approximately $35 million) in the first three months of 2002, and repayment of approximately $80 million on a short-term revolving credit facility during the first three months of 2001 and no activity in this short-term facility in the first three months of 2002.

Discontinued operations provided $44.6 million, $190.4 million and $25.7 million of cash in 2001, 2000 and 1999. The decrease in 2001 compared to 2000 was a result of lower operating cash flows ($13 million approximately), and repaying approximately $80 million on a short-term credit facility in 2001 compared to borrowing approximately $35 million against the same facility in 2000. The change in 2000 versus 1999 resulted from higher operating cash flows (approximately $100 million), cash of $15.4 million paid for an acquisition versus proceeds of $15.8 million from the sale of a business in 1999, and repayment of approximately $80 million on a short-term revolving credit facility in 1999.


	*Capital Resources*

In April 1998, Coltec Capital Trust, all of the common equity securities of which are owned by Coltec, placed with institutional investors $150 million of TIDES. In connection with the issuance of the TIDES, Coltec issued an equivalent aggregate principal amount of its TIDES Debentures, all of which were acquired by Coltec Capital Trust with the proceeds from the private placement of the TIDES. Coltec Capital Trust has essentially no other assets or liabilities other than the TIDES Debentures. Coltec and Goodrich have guaranteed certain payments with respect to the TIDES. Also, in April 1998, Coltec issued $300 million aggregate principal amount of the Coltec Senior Notes. In 1993, Coltec issued $12 million of industrial revenue bonds that mature in 2009. For more information about these securities, see “Description of Our Debt and Convertible Preferred Securities.”

Coltec’s principal sources of liquidity are intercompany loans and contributions from Goodrich.

Prior to the distribution, Goodrich offered to exchange new Goodrich securities for the outstanding Coltec Senior Notes. Goodrich acquired all $296.9 million of Coltec Senior Notes tendered pursuant to the offer. Coltec purchased all of these notes from Goodrich in exchange for a $201.9 million Coltec Debenture and $97.2 million in cash, after which such notes were cancelled. The cash portion of the purchase price was financed through an intercompany loan from Goodrich that has been assumed by Coltec’s aerospace business. The Coltec Debenture will be contributed by Goodrich to us and will remain an outstanding obligation of Coltec to us, which, for accounting purposes, will be eliminated upon consolidation in our consolidated financial statements going forward. The $3.1 million of Coltec Senior Notes that remain outstanding following completion of the exchange offer will remain obligations of Coltec after the distribution.

Our primary U.S. operating subsidiaries have executed a credit agreement dated May 16, 2002 for a new senior secured revolving credit facility and we expect that the credit facility will become effective at the time we complete the distribution. The revolving credit facility will be secured by receivables, inventories, equipment, intellectual property, insurance receivables and all other personal property assets of EnPro and its U.S. subsidiaries and by a pledge of 65% of the capital stock of their direct foreign subsidiaries. The maximum available amount under the revolving credit facility will be $60 million and we anticipate that as of the date of the distribution the initial availability under this facility will be approximately $50 million. The senior credit facility will contain customary restrictions, covenants and events of default for financings of these types, including a limitation against the payment of dividends. We do not expect compliance with these restrictions and covenants to materially affect our operations. On the date of the distribution we expect that certain letters of credit will be issued under the facility in an aggregate amount of less than $2 million. We do not anticipate other borrowings under the facility for the foreseeable future.

Prior to the distribution and the transfer of Coltec’s aerospace business to Goodrich, all intercompany balances outstanding between EnPro, Coltec and their subsidiaries, on the one hand, and Goodrich and its subsidiaries on the other hand, including the loan to finance the purchase by Coltec of Coltec Senior Notes surrendered by holders in the exchange offer, were assumed by Coltec’s aerospace business. As a result, at the time of the distribution, there will be no intercompany balances outstanding between EnPro, Coltec and their subsidiaries, on the one hand, and Goodrich and its subsidiaries, on the other hand.

Our ability to make payments on and to refinance our indebtedness, including the debt retained or incurred pursuant to the new revolving credit facility as well as any future indebtedness, and to fund working capital, capital expenditures, asbestos claims against our subsidiaries and strategic acquisitions and investments, will depend on our ability to generate cash in the future from operations, financings and sales of assets.

Our primary recurring cash needs will be working capital, capital expenditures, asbestos claims against our subsidiaries and debt service. We believe that our cash flow from operations, together with available borrowings under the new revolving credit facility, will be sufficient to meet our recurring cash needs during the next 12 months. Depending upon conditions in the capital markets and other factors, we will from time to time consider the issuance of debt or other securities, or other possible capital markets transactions, the proceeds of which could be used to refinance current indebtedness or for other corporate purposes. Our ability to raise capital through the issuance of additional equity is constrained as described later in this section. We cannot be certain that we will be successful in obtaining additional financing if needed or that, if obtained, any additional financing will be on terms favorable to us.

Following the distribution and until April 15, 2028, each TIDES will be convertible, at the option of the holder, into a combination of 0.955248 of a share of Goodrich common stock and 0.1910496 of a share of EnPro common stock, subject to adjustment. Should the holders exercise their right to convert the TIDES, Coltec would be required to deliver shares of Goodrich and EnPro common stock to the holders as promptly as practicable after the conversion date and in connection therewith would be required to purchase shares of Goodrich common stock on the open market, directly from Goodrich or by exercising its call options on Goodrich common stock discussed below. Coltec may not have sufficient cash on hand or the ability to finance these transactions in the time period required by the TIDES agreements. Failure to honor conversion rights would be a default under those agreements.

Further, the value of Goodrich and EnPro common stock may increase to the level where Coltec’s cost to acquire shares in a conversion could exceed, with no maximum, the aggregate liquidation value of the TIDES of $150 million. Coltec has purchased call options on 2,865,744 shares of Goodrich common stock with an exercise price of $52.34 per share, which represents the total Goodrich shares that would be required if all TIDES holders convert. The call options provide for either an adjustment to the exercise price or a cash payment, at Coltec’s option, if there is a change in the cash dividends paid on Goodrich common stock. On May 17, 2002 Goodrich announced that its board of directors approved a change to Goodrich’s quarterly dividend from 27.5 cents per share to 20 cents per share of common stock. Coltec’s management is evaluating the impact of the reduction in the dividend and has not decided which option it will elect. One-third of these call options expire in March 2005, and the remainder expire in March 2007. Until they expire, the call options provide protection against Coltec’s risk that the cash required to finance conversions of the TIDES would exceed the TIDES liquidation value. While Coltec has hedged its exposure to conversion costs in excess of the aggregate liquidation value of the TIDES as described earlier, we cannot assure you that Coltec will have the financial resources to redeem these securities or effectively hedge this exposure to potential conversion costs in excess of the aggregate liquidation value of the TIDES beyond the term of the call options.

If we are unable to obtain the capital we require to implement our business strategy, or to obtain the capital we will require on acceptable terms or in a timely manner, we would attempt to take appropriate responsive actions to tailor our activities to our available financing, including making revisions to our business strategies to accommodate the reduced financing. Our ability to raise capital through the issuance of additional equity is constrained because it may cause the distribution to be taxable under Section 355(e) of the Internal Revenue Code and under the tax matters arrangements we would be required to indemnify Goodrich against that tax. For a discussion of Section 355(e), see “The Distribution — U.S. Federal Income Tax Consequences of the Distribution.”


	*Dividends*

The terms of Coltec’s senior secured revolving credit facility as well as the terms of the TIDES will impact directly or indirectly our ability to pay dividends. The senior secured revolving credit facility contains limitations on dividend payments. In connection with the TIDES, Coltec is entitled to withhold interest payments to Coltec Capital Trust for up to 20 quarters. If these interest payments are withheld, Coltec would be unable to pay dividends to EnPro, which would limit our ability to pay dividends to our shareholders during this period.

Off Balance Sheet Arrangements

Lease Agreements

We have several operating leases for real estate, equipment and vehicles. Operating lease arrangements are generally utilized to secure the use of assets from time to time if the terms and conditions of the lease or the nature of the asset makes the lease arrangement more favorable than a purchase. As of December 31, 2001, approximately $32 million of future minimum lease payments were outstanding under these agreements. See Note K of the accompanying consolidated financial statements for additional disclosure.

Sale of Receivables

At December 31, 2000, we had in place a trade receivables securitization program pursuant to which we could sell receivables up to a maximum of $95.0 million. Accounts receivable sold under this program as of December 31, 2000 were $81.5 million, of which $51 million were related to our discontinued operations and $30.5 million related to our continuing operations. In December 2001, this program was terminated. The termination of the program resulted in an increase of $30.5 million in our trade receivables, which is reflected in our accompanying consolidated balance sheets and consolidated statements of cash flows. We do not have any plans to enter into a new trade receivables securitization at this time, but our primary U.S. operating subsidiaries have executed a senior secured revolving credit facility as discussed in “— Liquidity and Capital Resources — Capital Resources.”

Contingencies


	*General*

There are pending or threatened against Coltec or its subsidiaries various claims, lawsuits and administrative proceedings, all arising from the ordinary course of business with respect to commercial, product liability, asbestos and environmental matters, which seek remedies or damages. Coltec believes that any liability that may finally be determined with respect to commercial and non-asbestos product liability claims should not have a material effect on Coltec’s consolidated financial condition, results of operations and cash flows. From time to time, Coltec and its subsidiaries are also involved as plaintiffs in legal proceedings involving contract, patent protection, environmental and other matters. Gain contingencies, if any, are recognized when they are realized.


	*Environmental*

Our facilities and operations are subject to federal, state and local environmental and occupational health and safety requirements of the U.S. and foreign countries. We take a proactive approach in addressing the applicability of all environmental, health and safety laws as they relate to our manufacturing operations and in proposing and implementing any remedial plans that may be necessary. We believe that Coltec and its subsidiaries are in material compliance with all currently applicable regulations.

Coltec or one of its subsidiaries has been notified that it is among the potentially responsible parties under environmental laws for the cost of investigating and, in some cases, remediating contamination by hazardous materials at 17 sites at which the costs to it at each site are expected to exceed $100 thousand. The majority of these sites relate to remediation projects at former operating facilities that have been sold or closed and primarily deal with soil and groundwater remediation. Investigations have been completed for 14 sites and are in progress at three sites. The laws governing investigation and remediation of these sites can impose joint and several liability for the associated costs. Liability for these costs can be imposed on present and former owners or operators of the properties or on parties that generated the wastes that contributed to the contamination. Coltec’s policy is to accrue environmental investigation and remediation costs when it is both probable that a liability has been incurred and the amount can be reasonably estimated. The measurement of the liability is based on an evaluation of currently available facts with respect to each individual situation and takes into consideration factors such as existing technology, presently enacted laws and regulations and prior experience in remediation of contaminated sites. Accruals are provided for all sites based on the factors discussed above. As assessments and remediation progress at individual sites, these liabilities are reviewed periodically and adjusted to reflect additional technical data and legal information.

At our operating facilities we initiate corrective and preventive environmental projects in an effort to ensure safe and lawful operations at our facilities. We also conduct comprehensive compliance and management system audits at our facilities to maintain compliance and improve operational efficiency. We believe that maintaining compliance with current governmental regulations and capital expenditures associated therewith will not have a material adverse effect on our results of operations or competitive position.

As of March 31, 2002, Coltec had an accrued liability of $26.5 million for expenditures relating to environmental contingencies. Although Coltec is pursuing insurance recovery in connection with certain of the underlying matters, no receivable has been recorded with respect to any potential recovery of costs in connection with any environmental matter.

Actual costs to be incurred for identified situations in future periods may vary from estimates because of the inherent uncertainties in evaluating environmental exposures due to unknown conditions, changing government regulations and legal standards regarding liability. Subject to the imprecision in estimating future environmental costs, we believe that maintaining compliance with current environmental laws and government regulations will not require significant capital expenditures or have a material adverse effect on our financial condition, results of operations and cash flows.

In connection with the distribution, we have undertaken a review of Coltec’s strategies for managing its environmental liabilities, including its litigation and settlement strategies. Changes in strategy resulting from this review could result in adjustments to our accruals for environmental matters. The amounts of any such adjustments are not likely to have a material adverse effect on our financial condition or cash flows, but could be material to our results of operations in a particular period.


	*Other Contingent Liability Matters*

Coltec has contingent liabilities related to discontinued operations of its predecessors for which it retained liability or is obligated under indemnity agreements. These contingent liabilities include potential product liability and associated claims related to Coltec’s former Colt Firearms subsidiary for firearms manufactured prior to 1990 and related to Coltec’s former Central Maloney subsidiary for electrical transformers manufactured prior to 1994. There are currently no claims pending against Coltec related to these former subsidiaries. However, such claims could arise in the future. Coltec also has ongoing obligations with regard to workers compensation, retiree medical and other retiree benefit matters associated with discontinued operations that relate to Coltec’s periods of ownership of those operations. In the second quarter of 2002 Coltec paid approximately $8 million to satisfy a judgment in a lawsuit arising under the Coal Industry Retiree Health Benefit Act of 1992. Coltec is also currently involved in court proceedings related to the closure of a Crucible plant in Pennsylvania prior to 1985. The court proceedings may be finalized in 2002. While we anticipate a payment in satisfaction of the related judgment in late 2002 or 2003, such payment could have a material adverse effect on our cash flows in the period in which it is paid.


	*Asbestos*

Garlock and Anchor. Two subsidiaries of Coltec, Garlock and Anchor, have been among a number of defendants (typically 15 to 40) in actions filed in various states by plaintiffs alleging injury or death as a result of exposure to asbestos fibers. Among the products at issue in those actions are industrial sealing products, predominantly gaskets, manufactured and/or sold by Garlock or Anchor. The damages claimed vary from action to action and in some cases plaintiffs seek both compensatory and punitive damages. To date, neither Garlock nor Anchor has been required to pay any punitive damage awards, although we cannot assure you that they will not be required to do so in the future. Liability for compensatory damages has historically been allocated among all responsible defendants, thus limiting the potential monetary impact of a particular judgment or settlement on any individual defendant.

We believe that Garlock and Anchor are in a favorable position compared to many other asbestos defendants because, among other things, the asbestos-containing products sold by Garlock and Anchor are encapsulated, which means the asbestos fibers are incorporated into the product during the manufacturing process and sealed in a binder. They are also nonfriable, which means they cannot be crumbled by hand pressure. The Occupational Safety and Health Administration, which began generally requiring warnings on

asbestos-containing products in 1972, has never required that a warning be placed on products such as our gaskets. Notwithstanding that no warning label has been required, Garlock included one on all of its asbestos-containing products beginning in 1978. Further, gaskets such as those previously manufactured and sold by Garlock are one of the few asbestos-containing products permitted to be manufactured under regulations of the Environmental Protection Agency. Since the mid-1980s, U.S. sales of asbestos-containing industrial sealing products have not been a material part of Garlock’s sales and those sales have been predominantly to sophisticated purchasers such as the U.S. Navy and large petrochemical facilities. These purchasers generally have extensive health and safety procedures and are familiar with the risks associated with the use and handling of industrial sealing products that contain asbestos. Garlock discontinued distributing asbestos-containing products in the U.S. during 2000 and worldwide in mid-2001.

Garlock settles and disposes of actions on a regular basis. In addition, some actions are disposed of at trial. Garlock’s historical settlement strategy has been to try to match the timing of payments with recoveries received from insurance. However, in 1999 and 2000, Garlock implemented a short-term aggressive settlement strategy. The purpose of this short-term strategy was to achieve a permanent reduction in the number of overall asbestos claims through the settlement of a larger than normal number of claims, including some claims not yet filed as lawsuits. Garlock believes that these settlements were at a lower overall cost to Garlock than would eventually have been paid even though the timing of payment was accelerated. Mainly due to this short-term aggressive settlement strategy and because settlements are made over a period of time, the settlement amounts paid in 2001, 2000 and 1999 increased over prior periods. In 2001, Garlock resumed its historical settlement strategy. However, because of commitments made in 1999 and 2000 that will be paid over a number of years, we expect that the settlement amounts that will be paid in 2002 will be affected by the short-term strategy.

Settlements are generally made on a group basis with payments made to individual claimants over a period of one to four years and are made without any admission of liability. Settlement amounts vary depending upon a number of factors, including the jurisdiction where the action was brought, the nature of the disease alleged, the occupation of the plaintiff, the presence or absence of other possible causes of the plaintiff’s alleged illness, the availability of legal defenses, such as the statute of limitations, and whether the action is an individual one or part of a group. Garlock’s allocable portion of the total settlement amount for an action typically ranges from 1% to 2% of the total amount.

Before any payment on a settled claim is made, the claimant is required to submit a medical report acceptable to Garlock substantiating the asbestos-related illness and meeting specific criteria of disability. In addition, sworn testimony that the claimant worked with or around Garlock asbestos-containing products is required. Generally, the claimant is also required to sign a full and unconditional release of Garlock, its subsidiaries, parent, officers, directors, affiliates and related parties from any liability for asbestos-related injuries or claims.

When a settlement demand is not reasonable given the totality of the circumstances, Garlock generally will try the case. Garlock has been successful in winning a substantial majority of the cases it has tried to verdict. Garlock’s share of adverse verdicts in these cases in the first three months of 2002, and in the years 2001, 2000 and 1999 totaled less than $7 million in the aggregate, and some of those verdicts are on appeal.

Anchor is an inactive and insolvent subsidiary of Coltec. The insurance coverage available to it is fully committed. Anchor continues to pay settlement amounts covered by its insurance but has not committed to settle any further actions since 1998. As cases reach the trial stage, Anchor is typically dismissed without payment.

The insurance coverage available to Garlock is substantial. As of March 31, 2002, Garlock had available $987 million of insurance coverage from carriers that we believe to be solvent. Of that amount, $128 million is allocated to claims that have been paid by Garlock and submitted to its insurance companies for reimbursement and $144 million has been committed to claim settlements not yet paid by Garlock. Thus, at March 31, 2002, $715 million remained available for coverage of future claims. Insurance coverage for asbestos claims is not available to cover exposures initially occurring on and after July 1, 1984. Garlock and Anchor continue to be named as defendants in new actions, a few of which allege initial exposure after July 1, 1984. To date, no payments with respect to these claims, pursuant to a settlement or otherwise, have

been made. In addition, Garlock and Anchor believe that they have substantial defenses to these claims and therefore automatically reject them for settlement. However, we cannot assure you that any or all of these defenses will be successful in the future.

Arrangements with Garlock’s insurance carriers limit the amount that can be received by it in any one year. The amount of insurance available to cover claims paid by Garlock currently is limited to $80 million per year and reimbursements of legal fees. Similar amounts were limited to $80 million per year in 2001 and 2000 and $60 million in 1999. This limit automatically increases by 8% every three years. Amounts paid by Garlock in excess of this annual limit that would otherwise be recoverable from insurance may be collected from the insurance companies in subsequent years so long as insurance is available but subject to the annual limit in each subsequent year. As a result, Garlock is required to pay out of its own cash any amounts paid to settle or dispose of asbestos-related claims in excess of the annual limit and collect these amounts from its insurance carriers in subsequent years. Various options, such as raising the annual limit, are being pursued to ensure as close a match as possible between payments by Garlock and recoveries received from insurance. We cannot assure you that Garlock will be successful as to any or all of these options.

In accordance with internal procedures for the processing of asbestos product liability actions and due to the proximity to trial or settlement, certain outstanding actions against Garlock and Anchor have progressed to a stage where the cost to dispose of these actions can reasonably be estimated. These actions are classified as actions in advanced stages and are included in the table as such below. With respect to outstanding actions against Garlock and Anchor that are in preliminary procedural stages, as well as any actions that may be filed in the future, insufficient information exists upon which judgments can be made as to the validity or ultimate disposition of such actions, thereby making it difficult to reasonably estimate what, if any, potential liability or costs may be incurred. Accordingly, no estimate of future liability has been included in the table below for such claims.

We record an accrual for liabilities related to Garlock and Anchor asbestos-related matters that are deemed probable and can be reasonably estimated, which consist of settled claims and actions in advanced stages of processing. We also record an asset equal to the amount of those liabilities that is expected to be recovered by insurance. A table is provided below depicting quantitatively the items discussed above.



		Three Months Ended
		March 31,						Year Ended December 31,

		2002			2001			2001			2000			1999

(number of cases)
	New Actions Filed During the Period(1)		7,400			9,500			37,600			36,200			30,200
	Actions in Advanced Stages at Period-End		7,000			3,200			2,500			5,800			8,300
	Open Actions at Period-End		98,500			85,200			95,400			96,300			96,000

(dollars in millions at period-end)
	Estimated Liability for Settled Claims and Actions in Advanced Stages of Processing(2)	$	204.8		$	208.2		$	170.9		$	231.2		$	163.1
	Estimated Amounts Recoverable From Insurance(2)(3)	$	337.2		$	278.6		$	293.7		$	285.7		$	188.2

(dollars in millions)
	Payments(2)	$	35.6		$	42.9		$	162.7		$	119.7		$	84.5
	Insurance Recoveries(2)		21.3			25.1			87.9			83.3			65.2

	Net Cash Flow(3)	$	(14.3	)	$	(17.8	)	$	(74.8	)	$	(36.4	)	$	(19.3	)

(2) Includes amounts with respect to all claims settled, whether or not an action has actually been filed with a court of competent jurisdiction, claims which have been dismissed or tried and claims otherwise closed during the period.

(3) Payments made during the period for which Garlock does not receive a corresponding insurance recovery due to the annual limit imposed under Garlock’s insurance policies will be recovered in future periods to the extent insurance is available. When estimating the amounts recoverable, Garlock only includes insurance coverage available from carriers believed to be solvent.

As shown in the table above, the number of new actions filed during 2001 increased slightly over 2000, while the number of new actions filed during 2000 increased significantly over 1999. We believe these increases represent an acceleration of claims from future periods mostly attributable to bankruptcies of other asbestos defendants. The acceleration of claims may have the impact of accelerating the associated settlement payments. This trend appears to have moderated in 2002 and we believe the number of new actions will decrease in future years due, in part, to the previously-described acceleration of future claims and because the largest asbestos exposures occurred prior to the mid-1970s. However, we cannot assure you that the number of new claims filed will not remain at current levels or increase in future years.

Garlock and Anchor recorded charges to operations amounting to approximately $5 million and $2 million during the first three months of 2002 and 2001, respectively, and approximately $8.0 million in each of 2001, 2000 and 1999, representing payments and related expenditures made during the periods which are not recoverable at all under insurance, whether in the present period or in future periods. The significant increase between the first quarter of 2002 and the first quarter of 2001 was due to the type of insurance policies applicable to Garlock and Anchor claims during the respective periods. During the first quarter of 2002, the applicable insurance policies provided a lower level of legal cost reimbursements than during the first quarter of 2001. Based on the level of legal costs expected during the remainder of the year, as well as the applicable type of insurance policies, the total charge to operations during 2002 is expected to be between $8 million and $9 million.

Garlock and Anchor paid $14.3 million and $17.8 million during the first three months of 2002 and 2001, respectively, and $74.8 million, $36.4 million and $19.3 million for the defense and disposition of asbestos-related actions, net of amounts received from insurance carriers, during 2001, 2000 and 1999, respectively. The amount of payments in 2001 was consistent with the expectation that payments during 2001 would be higher than in 2000 and 1999. During 2001, Garlock was able to negotiate the receipt of $10 million from one of its excess insurance carriers. Garlock was able to securitize this cash flow stream during the third quarter of 2001 and we have reflected the cash received ($9.9 million) in the amounts presented above.

Considering the foregoing, as well as the experience of Coltec’s subsidiaries and other defendants in asbestos litigation, the likely sharing of judgments among multiple responsible defendants, recent bankruptcies of other defendants, legislative efforts and given the substantial amount of insurance coverage that Garlock expects to be available from its solvent carriers, we believe that pending actions against Garlock and Anchor are not likely to have a material adverse effect on our financial condition, but could be material to our results of operations or cash flows in a given period. However, because of the uncertainty as to the number and timing of potential future actions, as well as the amount that will have to be paid to settle or satisfy any such actions in the future, we cannot assure you that those future actions will not have a material adverse effect on our financial condition, results of operations and cash flows.

Other . Some of our subsidiaries (other than Garlock and Anchor) have also been named as defendants in various actions by plaintiffs alleging injury or death as a result of exposure to asbestos fibers. The number of claims to date has not been significant and we have substantial insurance coverage available to us. Based on the above, we believe that these pending and reasonably anticipated future actions are not likely to have a material adverse effect on our financial condition, results of operations and cash flows and are therefore not discussed above.

Garlock, Anchor and some of our other subsidiaries are also defendants in other asbestos-related lawsuits or claims involving maritime workers, medical monitoring claimants and co-defendants. Based on our past experience, we believe that these categories of claims are not likely to have a material adverse effect on our financial condition, results of operations and cash flows and are therefore not discussed above.

Transition to the Euro

Coltec successfully addressed the many areas involved with the introduction of the Euro on January 1, 2002, including information technology, business and finance systems, as well as the impact on the pricing and distribution of the Company’s products.

The effect of the introduction of the Euro, as well as any related costs of conversion, did not have a material impact on Coltec’s financial condition, results of operations or cash flows.

New Accounting Standards

Effective July 1, 2001, Coltec adopted the provisions of Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”) applicable to business combinations completed after June 30, 2001. Effective January 1, 2002, additional provisions of SFAS 142, relating to business combinations completed prior to June 30, 2001 became effective and were adopted by Coltec. Under the provisions of the standard, intangible assets deemed to have indefinite lives and goodwill are not subject to amortization. All other intangible assets are amortized over their estimated useful lives. Indefinite lived intangible assets and goodwill are subject to annual impairment testing using the guidance and criteria described in the standard. This testing requires comparison of carrying values to fair values, and when appropriate, the carrying value of impaired assets is reduced to fair value. In the second quarter of 2002, Coltec will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets. Any impairment charge resulting from these transitional impairment tests would be reflected as the cumulative effect of a change in accounting principle. Coltec has not yet determined what the effect of these tests will be on its financial position or results of operations. As of March 31, 2002, Coltec has recognized no impairment of goodwill, but there can be no assurance that future goodwill impairments will not occur.

In June 2001, the FASB issued Statement No. 143 “Accounting for Asset Retirement Obligations,” or SFAS 143. SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset, except for certain obligations of lessees. SFAS 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. Coltec has not yet determined what the effect of SFAS 143 will be on its consolidated financial condition or results of operations.

In October 2001, the FASB issued Statement No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets,” or SFAS 144. SFAS 144 supersedes FASB Statement No. 121 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” or SFAS 121; however, it retains the fundamental provisions of that statement related to the recognition and measurement of the impairment of long-lived assets to be “held and used.” In addition, SFAS 144 provides more guidance on estimating cash flows when performing a recoverability test, requires that a long-lived asset (group) to be disposed of other than by sale (e.g. abandoned) be classified as “held and used” until it is disposed of, and establishes more restrictive criteria to classify an asset (group) as “held for sale.” Coltec adopted SFAS 144 as of January 1, 2002. The adoption of SFAS 144 did not have a material impact on Coltec’s consolidated financial condition or results of operations.

In April 2002, the FASB issued Statement No. 145 “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections,” or SFAS 145. SFAS 145 rescinds FASB Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt , and an amendment of that Statement, FASB Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements . SFAS 145 also rescinds FASB Statement No. 44, Accounting for Intangible Assets of Motor Carriers . SFAS 145 amends FASB Statement No. 13, Accounting for Leases , to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. SFAS 145 is effective for fiscal years beginning after May 15, 2002, for transactions occurring after May 15, 2002, and for financial statements issued on or after May 15, 2002, as applicable to each of its various sections. Coltec has not yet

determined what the effect of SFAS 145 will be on its consolidated financial condition or results of operations.


	Critical Accounting Policies

Coltec’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires Coltec to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, Coltec evaluates its estimates, including those related to product returns, bad debts, inventories, investments, intangible assets, income taxes, financing operations, warranty obligations, restructuring, pensions and other post-retirement benefits, and contingencies and litigation. Coltec bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Coltec believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.


	*Revenue Recognition*

Revenue is recognized at the time products are shipped, or services are rendered.


	*Asbestos*

Coltec records an accrual for asbestos-related matters that are deemed probable and can be reasonably estimated, which consist of settled claims and actions in advanced stages of processing. Coltec also records an asset equal to the amount of this liability that is expected to be recovered from insurance.

In accordance with internal procedures for the processing of asbestos product liability actions and due to the proximity to trial or settlement, certain outstanding actions progress to a stage where the cost to dispose of these actions can be reasonably estimated. These actions are classified as actions in advanced stages. With respect to outstanding actions that are in preliminary procedural stages, as well as any actions that may be filed in the future, insufficient information exists upon which judgments can be made as to the validity or ultimate disposition of such actions, thereby making it difficult to reasonably estimate what, if any, potential liability or costs may be incurred. Accordingly, no estimate of future liability has been included for such claims. See “— Contingencies — Asbestos”, Note H of the accompanying condensed consolidated financial statements and Note V of the accompanying consolidated financial statements for additional discussion of asbestos matters.


	*TIDES and Derivative Instruments and Hedging Activities*

Following the distribution and until February 15, 2028, each TIDES will be convertible, at the option of the holder, into a combination of 0.955248 of a share of Goodrich common stock and 0.1910496 of a share of EnPro common stock, subject to adjustment. Upon the adoption of Statement of Financial Accounting Standards No. 133, Coltec elected not to apply the provisions of the statement to embedded derivatives existing before January 1, 1999 as permitted by the transition provisions of the statement. As a result, the feature of the TIDES that allows them to be converted into Goodrich common stock will not be accounted for separately as a derivative. Coltec purchased call options on 2,865,744 shares of Goodrich common stock, with an exercise price of $52.34 per share, which represents the total Goodrich shares that would be required if all TIDES holders convert. The call options provide for either an adjustment to the exercise price or a cash payment, at Coltec’s option, if there is a change in the cash dividends paid on Goodrich common stock. One-third of these call options expire in March 2005, and the remainder expire in March 2007. Until they expire, the call options provide protection against Coltec’s risk that the cash required to finance conversions of the TIDES would exceed the TIDES liquidation value.

The call options are a derivative instrument and are carried at fair value in our balance sheet with changes in the fair value reflected currently in our earnings as other income (expense) — net. Such changes may have a material effect on our financial condition or results of operations in a given period, but will not result in any current cash obligation to Coltec. If the call options expire unexercised and the market price of Goodrich common stock at that time is less than the exercise price per share, then the cumulative net charges to earnings for the call options for financial reporting purposes will be limited to the original cost.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to certain market risks as part of our ongoing business operations, including risks from changes in interest rates and foreign currency exchange rates, that could impact our financial condition, results of operations and cash flows. Goodrich historically has managed these types of risks on our behalf as part of its company-wide management of market risks. We plan to manage our exposure to these and other market risks through regular operating and financing activities, and on a limited basis, through the use of derivative financial instruments. We intend to use such derivative financial instruments as risk management tools and not for speculative investment purposes.


	*Interest Rate Risk*

We are exposed to interest rate risk as a result of our outstanding debt obligations. We expect that our interest rate risk profile will change substantially as a result of changes in the nature and amount of our indebtedness made in connection with the distribution.

The table below provides information about Coltec’s debt obligations as of December 31, 2001. The table represents principal cash flows and related weighted average interest rates by expected (contractual) maturity dates. There have been no significant changes to the information below as of March 31, 2002.

Expected Maturity Date

(dollars in millions)


																							Fair
		2002			2003			2004			2005			2006			Thereafter			Total			Value

Debt
	Fixed Rate	$	1.6		$	0.4		$	0.3		$	0.2		$	0.0		$	312.1		$	314.6		$	330.0
	Average Interest Rate		1.2	%		3.3	%		3.3	%		3.0	%		3.0	%		7.5	%		7.4	%


	*Foreign Currency Risk*

We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances of our foreign subsidiaries, intercompany loans with foreign subsidiaries and transactions denominated in foreign currencies. Our objective is to minimize our exposure to these risks through our normal operating activities and, where appropriate, through foreign currency forward contracts. In 2001, approximately 30% of our total sales consisted of sales outside the United States, with approximately 20% of total sales denominated in currencies other than the United States dollar. At December 31, 2001, we had no outstanding foreign currency forward contracts. There have been no significant changes to the information above as of March 31, 2002.


	*Risk Due to Convertibility of TIDES*

Following the distribution and until April 15, 2028, each TIDES will be convertible, at the option of the holder, into a combination of 0.955248 of a share of Goodrich common stock and 0.1910496 of a share of EnPro common stock, subject to adjustment. Should the holders exercise their right to convert the TIDES, Coltec would be required to deliver shares of Goodrich and EnPro common stock to the holders as promptly as practicable on or after the conversion date and in connection therewith would be required to purchase shares of Goodrich common stock on the open market, directly from Goodrich or by exercising its call options on Goodrich common stock discussed below. Coltec may not have sufficient cash on hand or the ability to finance these transactions in the time period required by the agreements relating to the TIDES. Failure to honor conversion rights would be a default under the TIDES agreements.

Further, the value of Goodrich and EnPro common stock may increase to the level where Coltec’s cost to acquire shares in a conversion could exceed, with no maximum, the aggregate liquidation value of the TIDES of $150 million. Coltec has purchased call options on 2,865,744 shares of Goodrich common stock, with an exercise price of $52.34 per share, which represents the total Goodrich shares that would be required if all TIDES holders convert. The call options provide for either an adjustment to the exercise price or a cash payment, at Coltec’s option, if there is a change in the cash dividends paid on Goodrich common stock. On May 17, 2002 Goodrich announced that its board of directors approved a change to Goodrich’s quarterly dividend from 27.5 cents per share to 20 cents per share of common stock. Coltec’s management is evaluating the impact of the reduction in the dividend and has not decided which option it will elect. One-third of these call options expire in March 2005, and the remainder expire in March 2007. Until they expire, the call options provide protection against Coltec’s risk that the cash required to finance conversions of the TIDES would exceed the TIDES liquidation value. While Coltec has hedged its exposure to conversion costs in excess of the aggregate liquidation value of the TIDES as described earlier, we cannot be certain that Coltec will have the financial resources to redeem these securities or effectively hedge this exposure to potential conversion costs in excess of the aggregate liquidation value of the TIDES beyond the term of the call options.

The feature of the TIDES that allows them to be converted into Goodrich common stock will not be accounted for separately as a derivative. The call options are a derivative instrument and are carried at fair value in our balance sheet with changes in the fair value reflected currently in our earnings as other income (expense) — net. Such changes may have a material effect on our financial condition or results of operations in a given period, but will not result in any current cash obligation to Coltec. If the call options expire unexercised and the market price of Goodrich common stock at that time is less than the exercise price per share, then the cumulative net charges to earnings for the call options for financial reporting purposes will be limited to the original cost.

THE ENPRO BUSINESS

Overview

We are a leader in the design, development, manufacturing and marketing of proprietary engineered industrial products, including sealing products, self-lubricating, non-rolling, metal polymer bearing products, air compressor systems and vacuum pumps and heavy-duty diesel and natural gas engines. We also design, manufacture and sell other engineered industrial products such as PTFE products and specialized tooling. We have 33 primary manufacturing facilities located in nine countries in the Americas, Europe and Australia. We sell our products through approximately 2,600 independent agents and distributors worldwide and we have over 200 internal sales managers and representatives. These sales managers and representatives are complemented by teams of highly experienced engineers. In 2001 on a pro forma basis, we had revenues of $696.4 million, operating income of $54.0 million and net income of $9.9 million.

Our net sales by geographic region in 2001, 2000 and 1999 are as follows:


		2001		2000		1999


		(dollars in millions)
Geographic Areas Net Sales
United States		$	438.4	$	480.0	$	496.2
Canada			43.1		41.7		44.6
Europe			91.4		48.5		67.3
Other Foreign			55.4		84.2		57.6

	Total	$	628.3	$	654.4	$	665.7

Business Strengths

Market Leader. We are a leading supplier of engineered industrial products and services in each of our major product categories and we hold leading market shares in the product categories that generate a majority of our revenues. In addition, we believe that our global presence provides us with the ability to effectively serve our global customers, particularly as many of those customers undergo global consolidation themselves and consolidate business among a few preferred suppliers.

Comprehensive Product Offerings and Leading Brand Names. We offer one of the most comprehensive ranges of products and services in our key product categories. For example, in our sealing and polymer bearing product lines, we have over 300,000 and 20,000 stock keeping units, or SKUs, respectively, which we believe are the broadest product lines in their respective industries. Many of our products are sold under leading brand names, including Garlock, Glacier Garlock, Quincy, Stemco and Fairbanks Morse. We believe that our products are widely recognized for industry leading performance and service. Our leading brand names, which are built upon our products’ long-standing reputation for reliability and durability, allow us to achieve premium pricing and have made us a preferred supplier among our over 2,600 independent agents and distributors.

We have also developed a number of new products, new applications for existing products and proprietary manufacturing processes that provide us with a competitive advantage. In 2001, new products introduced during the past five years accounted for approximately 15% of our total sales. We intend to continue our efforts to develop innovative sealing and other industrial products and manufacturing processes to better serve our customers and increase margins.

Recurring Revenues From Aftermarket Sales and Installed Equipment Base. We have strong aftermarket sales, which management estimates represented 62% of our revenues in 2001. Sales to the aftermarket tend to be recurring and are generally less cyclical and generate higher margins than sales to OEMs. For example, many of the industries that use our sealing products do so in high-temperature and highly corrosive environments, requiring constant maintenance, repair and replacement of parts. As a result of the proven reliability and durability of our products, we believe that our customers are less likely to look to other manufacturers for aftermarket products and services. In addition, the cost of many of our sealing and bearing products is low, especially compared to the very high cost of failure of a product in a critical application. We also have a large, installed base of air compressors and engines that routinely need replacement parts and service. Many of the applications for which our key products are used have long life cycles and require durable components.

Extensive and Diverse Customer Base. We sell our products to approximately 50,000 customers worldwide that operate in a wide range of industries. In 2001, no single customer accounted for more than 2% of our revenues and our largest 25 customers accounted for less than 19% of those revenues. Management estimates that our percentages of revenues by industry are chemical and petrochemical 28%, automotive and heavy-duty vehicle 19%, utility 13%, marine 8%, other transportation 5% and general and other industries 27%. Representative end users of our products include companies such as The Dow Chemical Company, ChevronTexaco Corporation, BASF Corporation, General Electric Company, E.I. du Pont de Nemours and Company, Emerson Electric Co., United Parcel Service, Inc., Applied Materials, Inc. and the U.S. Navy. Management estimates that our percentages of revenues by geographic region are North America 71%, Europe 24% and the rest of the world 5%. This diversified customer base provides a stable source of revenue and helps reduce our exposure to the volatility and economic cycles in a particular industry or geographic region.

Superior Distribution System and Customer Service. Our business requires us to deliver a complex product mix to a diverse customer base. We sell our products to over 2,600 independent agents and distributors worldwide and we have over 200 internal sales managers and representatives. These sales managers and representatives are complemented by teams of highly experienced engineers specialized in each of our product lines. Our sales and technical staff work closely with customers to identify specific needs and develop innovative solutions. We believe that this distribution network, combined with our global manufacturing capabilities, allows us to offer superior customer service through customized solutions, excellent on-time order fill rates, shorter order turn-around times and responsive customer service centers.

Experienced Management Team. Our senior management team has substantial experience in the management of public industrial companies, the acquisition and integration of businesses, supply chain management and lean manufacturing techniques, as well as effective management of asbestos claims and insurance assets.

Business Strategy

Our strategic objectives are to develop and maintain leading positions for our products while improving margins through cost efficiencies, technological innovation, new product introduction, product differentiation and superior quality and service. In pursuing these objectives, we intend to continue to:

Expand Our Product Offerings and Customer Base. We intend to continue to focus on innovative product offerings as well as to expand into new markets and industries. Our efforts to date have been focused on developing and introducing innovative products that offer superior performance or differentiating qualities. Our efforts going forward will also be focused on developing new products and applications for industries that we currently do not serve. We also plan to expand the global scope of our operations through a mix of joint ventures and product development, expanding our international sales force and distribution capabilities as well as our global manufacturing presence. We believe that enhanced global manufacturing capabilities will reduce relative fixed and variable costs, make our products more cost competitive and allow us to take advantage of opportunities as our customers expand globally and consolidate their business among a few preferred suppliers. Our longer term strategy may also include selective acquisitions to broaden the products and services we offer and to expand our customer base.

Lower Costs and Increase Operational Efficiency. In 2001, we lowered our annualized operating costs by approximately $12 million. Some of our cost reduction initiatives include the continued rationalization of facilities and personnel within each of our operations and the establishment of

manufacturing operations in lower cost regions such as Central and South America and Eastern Europe. We plan to continue to lower production costs and be more cost competitive without sacrificing quality by focusing and capitalizing on the best practices of each of our operations. We plan to continue to increase our operational efficiency by implementing lean manufacturing techniques such as optimization of workflow, investing in upgraded manufacturing technologies and computer numerically controlled, or CNC, equipment. A number of productivity initiatives designed to reduce lead times, curtail scrap and enhance throughput have already been implemented. These initiatives have, among other things, improved inventories management, such as at our Longview, Texas manufacturing facility, where we reduced inventories by 50% over five years, improving our return on capital investment and reducing our need for warehouse space. We are in the process of implementing similar and other initiatives at many of our facilities. In addition, we have implemented new enterprise reporting systems in many of our facilities. These new systems are enhancing shop floor reporting, materials management, order entry and cost evaluation and control. Management believes that these programs will continue to lead to further productivity and efficiency improvements and have a positive impact on operating performance. We intend to continue to work with our customers and end users to design and manufacture our products in ways that enable us to manage costs and increase performance and value to the customer or end user. As we integrate the Glacier operations with our existing bearing business, we also expect to realize marketing synergies and economies of scale in research and development.

Effectively Manage Our Asbestos Exposure. Our subsidiary, Garrison Litigation Management Group, Ltd., employs a team of in-house attorneys that has an average of approximately 20 years of experience in trying and managing asbestos claims and managing insurance assets. This team and its staff of paralegals, assistants and accounting personnel manage our subsidiaries’ asbestos claims and insurance assets from Garrison’s office in Rochester, New York. The team continuously works with a group of experienced outside trial attorneys, industrial hygienists, medical experts and Garlock personnel to remain prepared to defend Garlock’s interests in trials on short notice when and where necessary. As a result, Garlock has been successful in winning a substantial majority of cases that it tries to verdict.

In addition, Garrison maintains constructive relationships with many of the asbestos plaintiffs’ lawyers and Garlock’s insurance carriers, thereby enabling the team to settle efficiently a large number of cases on a regular basis. We believe that Garrison’s experienced in-house team, trial-ready defense teams and experts and their past successes, well established outside relationships and Garlock’s product defenses together enable us to manage asbestos cases as well as or better than any other asbestos defendant.

We believe that Garrison’s ability to continue to effectively manage our asbestos claims and insurance assets will be critical to our long-term success.

Operations

We manage our business as two segments, a sealing products segment, which includes our sealing and PTFE products, and an engineered products segment, which includes our metal polymer bearings, air compressor systems, medium-speed engines and specialized tooling.


	*Sealing Products Segment*

Overview. Our sealing products segment designs, manufactures and sells sealing products with over 300,000 styles of sealing designs, including products such as sheet gaskets, metallic gaskets, resilient metal seals, compression packing, rotary lip seals, elastomer seals, hydraulic components, expansion joints, reciprocating compressor components and PTFE products. These products are used in a variety of industries such as chemical and petrochemical processing, petroleum refining, pulp and paper processing, heavy-duty trucking, power generation, food and pharmaceutical processing, primary metal manufacturing, mining, water and waste treatment and semiconductor fabrication. In many of these industries, performance and durability are vital for safety and environmental concerns. Many of our products are also used in applications that are demanding due to extreme temperatures and corrosive environments.

Products. The primary product lines in our sealing products segment are described below.

This segment’s gasketing products are used for sealing flange joints in chemical, petrochemical and pulp and paper processing facilities where high pressures, high temperatures and corrosive chemicals create the need for specialized and highly engineered sealing products. In addition to the Garlock® brand name

these gasketing products are sold under the Gylon®, BLUE-GARD®, STRESS-SAVER®, EDGE®, GRAPHONIC® and FLEXSEAL® brand names. These products have a long-standing reputation within the industries we serve for performance and reliability.

This segment’s rotary lip seals are used in rotating applications to contain the lubricants that protect the bearings from excessive friction and heat generation. Because these sealing products are utilized in dynamic applications they are subject to wear. Durability, performance, and reliability are, therefore, critical requirements of our customers. These rotary lip seals are used in demanding applications in the steel industry, mining and pulp and paper processing under well known brand names including KLOZURE® and MODEL 64®. This segment also supplies bath and rotary lip seals to the heavy-duty truck market for wheel-end and pinion seal applications under the Stemco® brand name as well as GRIT GUARD®, GUARDIAN®, GUARDIAN HP®, VOYAGER® and DISCOVER®.

This segment’s compression packing is used to provide sealing in pressurized, rotating applications such as pumps and valves. Major markets for this segment’s compression packing product line are in the pulp and paper and chemical processing industries. Branded products for these markets include EVSP® and SYNTHEPAK®.

This segment’s resilient metal seals provide extremely tight sealing performance for highly demanding applications such as semiconductor fabrication facilities, specific chemical processing applications, nuclear power generation and race car engines. Branded products for these markets include HELICOFLEX® and CEFILAC®.

This segment also manufactures PTFE thin tape, formed PTFE products and PTFE sheets and shapes. These PTFE products provide highly specialized and engineered solutions to our customers in the aircraft and fluid handling industries.

New Product Development. Our sealing products segment has historically placed significant emphasis on research and development and introduction of new and innovative products. We utilize a formal innovation system to seek new opportunities for growth through innovative product development. Under this system, the goal is to continue to balance a product portfolio for traditional markets while simultaneously creating distinctive and breakthrough products and new applications for markets such as the semiconductor, food and pharmaceuticals, biotech and mechanical seals industries. We also have established a structured standard operating procedure for product research and development. The procedure covers our research approach and outlines the process for moving product innovations from concept to commercialization. We have established guidelines and procedures for systematically identifying, analyzing, developing and implementing new product line concepts and opportunities aimed at business growth in this area.

Customers. Our sealing products segment sells products to more than 1,000 global customers including industrial agents and distributors, OEMs, engineering and construction firms and end users encompassing more than 3,500 ship-to locations worldwide. Sealing products are offered to global customers, with more than 29% of sales originating from outside North America in 2001. Representative customers include The Dow Chemical Company, Morgan Construction Company, BASF Corporation, General Electric Company, Georgia-Pacific Corporation, Eastman Chemical Company, Exxon Mobil Corporation, AK Steel Corporation, Volvo Corporation, Wabash National Corporation, Great Dane, Consolidated Freightways Corporation, CNF Inc., United Parcel Services, Inc. and Southeastern Freight Lines, Inc. In 2001, no single customer accounted for more than 3% of segment revenues.

Competition. Competition in the sealing markets in which we operate is based on proven product performance and reliability, as well as price, customer service, application expertise, delivery terms, breadth of product offering, reputation for quality and the availability of the product. Our leading brand names, including Garlock® and Stemco®, have been built upon our long-standing reputation for reliability and durability. In addition, the breadth, performance and quality of our product offerings allow us to achieve premium pricing and have made us a preferred supplier among our agents and distributors. We believe that our record of product performance in the major markets in which this segment operates is a significant competitive advantage for us. Major competitors include A.W. Chesterton Company, Richard Klinger Pty, The Flexitallic Group, Inc., SKF USA Inc., Freudenberg-NOK and Federal-Mogul Corporation.

Raw Materials and Components. Our sealing products segment uses PTFE resins, aramid fibers, ceramics, specialty elastomers, elastomeric compounds, graphite and carbon, common and exotic metals,

cold-rolled steel, leather, aluminum die castings, nitrile rubber, powdered metal components, various fibers. We believe that all of these raw materials and components are readily available from enough suppliers to continue to operate the sealing products segment in the future. Our strategic focus for this segment includes an expansion of supply chain management to minimize procurement costs and support company-wide lean initiatives.


	*Engineered Products Segment*

Overview. Our engineered products segment includes operations that produce a variety of engineered products. These operations design, manufacture and sell self-lubricating, non-rolling, metal polymer bearing products, air compressor systems and vacuum pumps, heavy-duty medium-speed diesel and natural gas engines and specialized tooling for use in the automotive and precision machining industries.

Products. The product lines in our engineered products segment include the products described below, which are designed, manufactured and sold by the various operations, including Glacier Garlock Bearings, Quincy Compressor, Fairbanks Morse, Haber Tool and Sterling Die.

Glacier Garlock Bearings produces self-lubricating non-rolling, metal polymer bearing products. The metal or epoxy-backed bearing surfaces are made of PTFE, or a mixture that includes PTFE, to provide maintenance-free performance and reduced friction. These products typically perform as sleeve bearings or thrust washers under conditions of no lubrication, minimal lubrication or pre-lubrication. These products are used in a wide variety of markets such as the automotive, pump and compressor, construction, power generation and machine tool markets. We have over 20,000 bearings part numbers of different designs and physical dimensions. Glacier and Garlock are well recognized, leading brand names in this product area.

Quincy Compressor designs and manufactures rotary screw and reciprocating air compressors and vacuum pumps, ranging from one-third to 350 horsepower, used in a variety of industrial applications, including plant air, pneumatic temperature and instrument control, automotive service and light construction. Quincy also performs comprehensive compressed air system audits under the Air Science brand name.

Fairbanks Morse designs and manufactures heavy-duty diesel, natural gas and dual-fuel engines, ranging from 640 to 29,320 horsepower for diesel engines and four to 18 cylinders for dual-fuel gas and diesel engines, used by the government and the general industrial market. Fairbanks Morse engines are used for marine propulsion, power generation and pump and compressor applications. Fairbanks Morse has been building engines for over 108 years under the Fairbanks Morse brand name and has a large installed base of engines for which it supplies aftermarket parts and services. Additionally, Fairbanks Morse has been the U.S. Navy’s supplier of choice for medium-speed diesel engines and has supplied engines to the U.S. Navy for over 60 years. All engines are offered in multiple cylinder sizes and power ratings to suit the customer’s specific needs.

Sterling Die manufactures specialized tooling such as cold-heading punches and thread-rolling dies used on machines that form nuts, bolts, screw heads and other fastener shapes, primarily for use in the automotive industry. Haber Tool performs precision machining of round and flat geometry print tooling, and is a specialist in cold extrusion tooling, which serves the high-speed header and forging markets. Additional market areas include carbide and jig and fixture tooling.

New Product Development. Our engineered products segment has an established track record in research and development and continues to develop proprietary materials and technologies for the next generation of products in our key markets. We continually seek to improve our existing products and develop new products. For instance, in 1998, Quincy Compressor enhanced one of its lines of products to include air dryers, moisture separators and compressor air filters. We have research and development facilities in the U.S., U.K., France and Germany and our research and development departments in this segment employ numerous scientists, engineers and technicians.

Customers. Our engineered products segment sells its products to a diverse customer base using a combination of direct sales and highly developed independent distribution networks. Glacier Garlock Bearings has approximately 50,000 customers worldwide in all major industrial sectors and supplies products into more than 70 countries both directly to customers through their own local distribution system and indirectly to the market through independent agents and distributors with their own local network. Quincy Compressor products are sold through a global network of more than 250 independent agents and distributors, which are

independent businesses that bring air expertise, customer dedication and Quincy Compressor products to their geographic area. Quincy Compressor also sells directly to over 500 national accounts, OEMs and climate control houses. Fairbanks Morse has sold its products to more than 1,700 customers worldwide, including major shipyards, the U.S. Navy, U.S. Coast Guard, municipal utilities, institutional and industrial organizations, sewage treatment plants, nuclear power plants and offshore oil and gas platforms. Fairbanks Morse markets its products through a centralized sales force located in Beloit, Wisconsin, a regional sales force and independent agents and distributors. Fairbanks Morse’s representative customers include Avondale Industries, Inc., YPF Ecuador, Inc., Ingersoll-Dresser Pumps, Arco Oriente Inc. and the U.S. Navy. In 2001, no single customer accounted for more than 4% of segment revenues.

Competition. Glacier Garlock Bearings competes with a number of competitors, including Kolbenschmidt Pierburg Aktiengesellschaft, Norton Company and Federal-Mogul Corporation. However, no single competitor competes with Glacier Garlock Bearings across all of its bearing product lines or offers as complete a portfolio of products as Glacier Garlock Bearings does. In the markets in which Glacier Garlock Bearings competes, competition is based primarily on performance of the product for specific applications, product reliability, delivery and price. Quincy Compressor’s major competitors include Gardner Denver, Inc., Sullair Corporation, Ingersoll-Rand Company, Atlas Copco North America Inc. and Kaeser Compressors, Inc. In the markets in which Quincy Compressor competes, competition generally is based on reliability, quality, delivery times, energy efficiency and service. Fairbanks Morse’s major competitors include Caterpillar Inc. and Wärtsilä Corporation. Price, delivery time, and engine efficiency relating to fuel consumption and emissions drive competition.

Raw Materials and Components. Glacier Garlock Bearings’ major raw material purchases include steel coil, bronze powder and PTFE. Glacier Garlock Bearings sources components from a number of external suppliers, the most important being Deva F-M, Ltd., L&S Kunstoftechnologie GmbH and GKN Italia. Quincy Compressor’s primary raw materials are iron castings components used in motors, coolers and accessories such as air dryers, filters and electronic controls. Fairbanks Morse purchases multiple ferrous and non-ferrous castings, forgings, plate stock and bar stock for fabrication and machining of the engines. The majority of this material is purchased domestically. In addition, Fairbanks Morse manufactures a considerable amount of precision machined engine components. We believe that all of these raw materials and components are readily available from enough suppliers to continue to operate the engineered products segment in the future.

Research and Development

We employ approximately 130 scientists, engineers and technicians throughout our operations to develop, design and test new and improved products. Our research and development efforts are directed at solving customer problems and we work closely with our customers to identify issues and develop technical solutions. The majority of our research and development expenditures is directed at the development of new sealing products for hostile environments, the development of bearing products with superior friction and wear characteristics and the extension of our air compressor product line. Prior to introduction, new products are subject to extensive testing both at our various facilities and at beta test sites in conjunction with our customers.

Total research and development spending for continuing operations was $12.7 million in 2001, $12.3 million in 2000, and $15.0 million in 1999 and represented 2.0%, 1.9% and 2.3% as a percentage of sales, respectively. While these research and development expenditures are a low percentage of our total sales, they are consistent with industry norms and, in some cases, are greater than some of our competitors. We intend to continue our efforts to develop innovative sealing and other industrial products and manufacturing processes to better serve our customers and increase margins.

Backlog

At March 31, 2002, we had backlog of $166.4 million compared with $130.0 million at March 31, 2001. The increase is primarily due to the acquisition of Glacier. Approximately 40% of the backlog, mainly at Fairbanks Morse, is expected to be fulfilled beyond 2002. Backlog is one indicator of our operating condition. However, for most of our business, backlog is not particularly predictive of future performance because of our short lead times and some seasonality. Backlog represents orders on hand that we believe to

be firm. However, there is no certainty that the backlog orders will in fact result in actual sales at the times or in the amounts ordered.

Quality Assurance

We believe that product quality is among the most important factors in developing and maintaining strong, long-term relationships with our customers. In order to meet the exacting requirements of our customers, we maintain among the most stringent standards of quality control in the industry. We routinely employ in-process inspection by using testing equipment as a process aid during all stages of the development, design and production phases to ensure product quality and reliability. These include state-of-the-art CAD/ CAM equipment, statistical process control systems, laser tracking devices, failure mode and effect analysis and coordinate measuring machines. We are also able to extract numerical quality control data as a statistical measurement of the quality of the parts being manufactured from our CNC machines. We also perform quality control tests on all parts that we outsource. As a result, we are able to significantly reduce defective parts and therefore improve efficiency, quality and reliability.

As of December 31, 2001, 25 of our manufacturing facilities were ISO 9000 and/or QS 9000 certified with the remaining facilities working towards obtaining ISO and/or QS certification. OEMs are increasingly requiring these standards in lieu of individual certification procedures and as a condition to awarding business.

Patents, Trademarks and Other Intellectual Property

We maintain a number of patents and trademarks issued by the U.S. and other countries relating to the name and design of our products and have granted licenses to some of these trademarks and patents. We continually evaluate the need to protect new and existing products through the patent and trademark systems in the U.S. and other countries. In addition, we license patented and other proprietary technology and processes from various companies and individuals in order to broaden our product offerings. We also have a pool of proprietary information, consisting of know-how and trade secrets relating to the design, manufacture and operation of our products and their use. Management does not consider our business as a whole to be materially dependent upon any particular patent, patent right, trademark, trade secret or license. In general, we are the owner of the rights to the products that we manufacture and sell.

We license certain intellectual property from third parties and we are dependent on the ability of these third parties to diligently protect their intellectual property rights. In several cases, such as Fairbanks Morse’s technology licenses from Cooper Cameron Corporation relating to the Enviro Design engine and from MAN Aktiengesellschaft for the Pielstick four-stroke engine and Quincy Compressor’s license from Svenska Rotor Maskiner AB of their rotary screw compressor design and technology, the intellectual property licenses are integral to the manufacture of our products. A loss of these licenses or a failure on the part of the third party to protect its own intellectual property could negatively impact our revenues. Although these licenses are all long-term and subject to renewal, it is possible that we may not successfully renegotiate these licenses or that they could be terminated for a material breach on any part. If this were to occur, our business, financial condition, results of operations and cash flows could be adversely affected.

Facilities

We are headquartered in Charlotte, North Carolina and have 33 primary manufacturing facilities in eleven states within the U.S. and eight countries outside of the U.S. The following table outlines the location, use and size of our most significant facilities, all of which are owned by us.


		Size
Location	Segment	(Square Feet)

U.S.
Palmyra, New York	Sealing Products		677,000
Longview, Texas	Sealing Products		205,000
Bay Minette, Alabama	Engineered Products		130,000
Quincy, Illinois	Engineered Products		350,000
Thorofare, New Jersey	Engineered Products		106,000
Beloit, Wisconsin	Engineered Products		856,000

Foreign
Annecy, France	Engineered Products		220,000
Heilbronn, Germany	Engineered Products		120,000

Our manufacturing capabilities are flexible and allow us to customize the manufacturing process to increase performance and value for our customers and meet particular specifications. We also maintain numerous sales offices and warehouse facilities in strategic locations in the U.S., Canada and other countries. We believe that all of our facilities and equipment are in good condition and are well maintained and able to continue to operate at present levels and as anticipated by our present business strategy.

Employees and Labor Relations

We currently employ approximately 4,500 employees worldwide. Approximately 3,000 employees are located within the U.S. and approximately 1,500 employees are located outside of the U.S., primarily in Europe and Canada. Approximately 40% of our U.S. employees are members of trade unions covered by a collective bargaining agreements. Union agreements relate, among other things, to wages, hours and conditions of employment. The wages and benefits furnished are generally comparable to industry and area practices.

We believe that we generally have a satisfactory relationship with our employees throughout our operations and the unions that represent them. We have collective bargaining agreements in place at five of our facilities. The hourly employees who are unionized are covered by collective bargaining agreements with a number of labor unions and with varying contract termination dates ranging from October 1, 2002 to August 13, 2005. In addition, some of our employees located outside of the U.S. are subject to national collective bargaining agreements. The last significant strike or work stoppage experienced by any of our facilities was in 1996 and lasted approximately ten weeks.

Legal and Environmental Matters

A description of legal and environmental matters is included in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations — Contingencies.”

In addition to the litigation and matters noted above, we are from time to time subject to and are presently involved in, litigation or other legal proceedings arising out of the ordinary course of business. We believe that the outcome of such proceedings will not have a material adverse affect on our financial condition, results of operations and cash flows.

Insurance

Historically, Goodrich has self-insured against many primary property and casualty losses and purchased commercial insurance to protect against catastrophic risks. We intend to secure property and casualty and business interruption insurance that will take effect immediately after the distribution in amounts and with retentions that we believe to be reasonable for our business and in our industry. Given the current challenging state of world insurance markets and the fact that we will be a stand-alone company, we cannot be certain of our ability to obtain property and casualty and business interruption insurance on commercially reasonable terms or on terms consistent with the past.

ARRANGEMENTS BETWEEN GOODRICH AND ENPRO

Prior to the distribution, we will enter into a distribution agreement and a number of ancillary agreements with Goodrich for the purpose of accomplishing the distribution. These agreements will govern the relationship between Goodrich and us subsequent to the distribution and provide for the allocation of employee benefits, tax and other liabilities and obligations attributable to periods prior to the distribution. The ancillary agreements will cover:

• services and support arrangements;

• employee matters;

• tax matters arrangements; and

• obligations in respect of the TIDES.

The definitive material agreements summarized below will be filed as exhibits to the registration statement of which this information statement forms a part and the summaries of these agreements are qualified in their entirety by reference to the full text of such agreements. The terms of these agreements have not yet been finalized and are being reviewed by us and Goodrich. None of these agreements will restrict either us or Goodrich from developing or acquiring products that may compete against the products offered by the other party.

Distribution Agreement

We plan to enter into a distribution agreement with Coltec and Goodrich prior to the distribution. The distribution agreement will set forth the agreements between us and Goodrich with respect to the principal corporate transactions required to effect the distribution of shares of our common stock to Goodrich’s shareholders and other agreements governing the relationship between Goodrich and us.


	*The Distribution*

The distribution agreement will provide that, subject to the terms and conditions contained in the agreement, Goodrich and we will take all reasonable steps necessary and appropriate to cause all conditions to the distribution to be satisfied, and to effect the distribution as of 11:59 p.m. Eastern time on May 31, 2002. Goodrich’s agreement to consummate the distribution is subject to the satisfaction or waiver by Goodrich, in its sole discretion, of a number of conditions including the following:

• prior to the record date, an opinion of tax counsel shall have been obtained and shall continue in effect, to the effect that, among other things, the distribution will qualify as a tax-free distribution for U.S. federal income tax purposes under Section 355 of the Internal Revenue Code and the transfer to us of the assets and the assumption by us of the liabilities in connection with the distribution will not result in recognition of any gain or loss for U.S. federal income tax purposes to Goodrich’s or our shareholders except with respect to cash received in lieu of fractional shares of our common stock; and this opinion shall be in form and substance satisfactory to Goodrich, in its sole discretion;

• prior to the record date, the transfer of Coltec’s aerospace business to Goodrich shall have been completed;

• any material governmental approvals and consents necessary to consummate the distribution shall have been obtained and be in full force and effect;

• no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the distribution shall be in effect, and no other event outside the control of Goodrich shall have occurred or failed to occur that prevents the consummation of the distribution; and

• no other events or developments shall have occurred that, in the judgment of the board of directors of Goodrich, would result in the distribution having an adverse effect on Goodrich or Goodrich’s shareholders.


	*Releases and Indemnification*

The distribution agreement will provide for a full and complete release and discharge of all liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the date of the agreement, between or among us or any of our subsidiaries or affiliates, on the one hand, and Goodrich or any of its subsidiaries or affiliates other than us, on the other hand, except as expressly set forth in the agreement. The liabilities released or discharged will include liabilities arising under any contractual agreements or arrangements existing or alleged to exist between or among any such parties on or before the date of the agreement. The distribution agreement will also provide that EnPro and Coltec, on the one hand, and Goodrich, on the other hand, will indemnify each other with respect to contingent liabilities primarily relating to our respective businesses or otherwise assigned to each of us. Additionally, the distribution agreement will also specify procedures with respect to claims subject to indemnification and related matters.


	*Termination; Amendments*

The distribution agreement will provide that it may be terminated and the distribution may be amended, modified or abandoned at any time prior to the record date in the sole discretion of Goodrich without our approval or the approval of the Goodrich shareholders. In the event of a termination of the distribution agreement, no party shall have any liability of any kind to any other party or any other person. After the record date, the distribution agreement will also provide that it may not be terminated except by an agreement in writing signed by Goodrich, Coltec and us.

Transition Services Agreement

We and Goodrich will enter into a transition services agreement pursuant to which Goodrich will provide to us, on a transitional basis, various services, including, but not limited to, treasury administration and information technology services. The agreed upon charges for such services are generally intended to allow Goodrich to recover fully the allocated costs of providing the services, plus all incremental out-of-pocket costs and expenses directly related to the provision of such services.

In general, the services will commence on the distribution date and will expire on a specified date following the distribution date. The agreement may be extended, either in whole or in part, by the parties in writing. With respect to particular services, we may terminate the agreement with respect to one or more of those services upon prior written notice.

Employee Matters Agreement

We and Goodrich will enter into an employee matters agreement to allocate liabilities and responsibilities relating to employee compensation, benefit plans and programs and other related matters.

The employee matters agreement will provide that as of the distribution date, we generally will assume, retain and be liable for all wages, salaries, welfare, incentive compensation and other employee-related obligations and liabilities for all current employees of our business, except as specifically provided in the employee benefits agreement. Active employees of our business generally participate in retirement plans maintained by Coltec. These Coltec retirement plans will remain as part of our business and our employees will remain covered by the plans. To the extent that any employees of our business participate in retirement plans or other benefit plans sponsored by Goodrich, such employees will cease to be active participants in the Goodrich plans and will become eligible to participate in our applicable plans as of a date to be specified for each applicable plan in the employee matters agreement. In connection with the distribution, we expect to continue our retirement plans and we expect to adopt a variety of other employee benefit plans for our employees, in both the U.S. and jurisdictions outside of the U.S., comparable to the plans of Goodrich. Once we establish our own benefit plans, we may modify or terminate each plan in accordance with the terms of that plan and our policies.

In general, we will credit each active employee in our business for his or her service with Goodrich for purposes of determining eligibility to participate, eligibility for benefits, benefit forms and vesting under plans maintained by us, to the extent the corresponding Goodrich plans gave credit for such service. In

addition, we expect to give credit under our plans for deductibles, coinsurance payments, cafeteria plan deferrals and payments, and other welfare benefit plan payments and credits applicable to our employees while they were covered under a Goodrich plan, to the extent the corresponding Goodrich plans would have given credit for such deferrals or payments.

For the most part, current retirees of our business receive, and will continue to receive, pension benefits out of the Goodrich Pension Plan. However, our subsidiaries will continue to sponsor two plans covering certain union-represented employees at Garlock and Quincy Compressor, both of which provide pension benefits to current retirees. To the extent any current retirees are entitled to additional benefits, such as medical insurance or life insurance, Goodrich will continue to provide those benefits except for retirees of certain discontinued operations (such as Crucible Inc. and Colt Firearms) and retirees who receive pension benefits under the Garlock plan referred to in the preceding sentence, for which the benefits will be provided by us or one of our subsidiaries. We will also provide retiree medical or life insurance benefits to any of our active employees upon their retirement to the extent that the employee is entitled to such coverage.

Tax Matters Arrangements

We and Goodrich will enter into arrangements that govern our and Goodrich’s respective post-distribution rights, responsibilities and obligations with respect to taxes. Except as provided below, the tax matters arrangements will provide that the benefits and burdens of all taxes and payments with respect to taxes attributable to all periods prior to the distribution, including periods prior to Goodrich’s acquisition of Coltec, will be for the account of Goodrich.

The tax matters arrangements will provide that we are liable for taxes incurred by Goodrich and Coltec if the distribution and certain associated restructuring activities are taxable to Goodrich and Coltec (i) as a result of our taking or failing to take, as the case may be, certain actions, or (ii) as a result of certain acquisitions or issuances of our stock.

Guarantee Agreement and Indemnification Agreement Relating to the TIDES

Coltec and Goodrich have guaranteed on a joint and several basis amounts owed by Coltec Capital Trust with respect to the TIDES and Goodrich has guaranteed Coltec’s performance of its obligations with respect to the TIDES and the TIDES Debentures. We expect that we will enter into a similar guarantee with respect to the TIDES and the TIDES Debentures. Goodrich has not nor will it guarantee any of our obligations with respect to the TIDES.

We, Goodrich, Coltec and Coltec Capital Trust will enter into an indemnification agreement that outlines the obligations of the various parties with respect to the TIDES and under which we, Coltec and Coltec Capital Trust will indemnify Goodrich from any costs and liabilities arising under or related to the TIDES after the distribution. Goodrich has no indemnity obligations to us, Coltec or Coltec Capital Trust under the indemnification agreement.

MANAGEMENT

Our Directors and Executive Officers

Our board of directors following the distribution will be comprised of seven directors. William R. Holland, a director of Goodrich, will serve as our non-executive Chairman of the Board. Ernest F. Schaub, our President and Chief Executive Officer, will also serve as a director following the distribution.

In general, our directors will serve until the next annual meeting of shareholders, which is scheduled to be held in 2003. Our articles of incorporation provide that if the size of the board of directors is increased to nine or more, the board will be divided as equally as possible into three classes. If the board of directors is divided into classes, the members of each class would generally serve three-year terms, although the initial terms of the first and second classes would expire at the next and the second succeeding annual shareholders meetings, respectively. Our articles of incorporation permit the board of directors to increase the size of the board up to 11 members.

The following table sets forth information as to persons who serve or who are currently expected to serve as our directors or executive officers immediately following the distribution. We anticipate appointing each of our executive officers listed below to his position at or before the effective date of the distribution, unless otherwise noted. With the exception of Mr. Holland, none of the identified directors will have any relationship with Goodrich after the distribution. The identified executive officers will resign their positions, if any, with Goodrich at the time of the distribution.


Name	Age	Position

Ernest F. Schaub	58	President, Chief Executive Officer and Director
J.P. Bolduc	62	Director
Peter C. Browning	60	Director
Joe T. Ford	64	Director
James H. Hance, Jr.	57	Director
Gordon D. Harnett	58	Director
William R. Holland	63	Chairman of the Board
William Dries	50	Senior Vice President and Chief Financial Officer
Richard C. Driscoll	61	Senior Vice President — Human Resources
Michael J. Leslie	42	Senior Vice President and Chief Operating Officer
Richard L. Magee	44	Senior Vice President, General Counsel and Secretary

Mr. Schaub is currently employed by Goodrich as its Executive Vice President and President and Chief Operating Officer of Goodrich’s engineered industrial products segment and has held these positions since 1999. From 1990 to 1999, Mr. Schaub was Group President, Landing Systems of Goodrich. Mr. Schaub joined Goodrich in 1971. Mr. Schaub held a variety of engineering and manufacturing positions with Goodrich industrial and aerospace operations until moving into general management in 1983. Mr. Schaub was general manager of the Goodrich aircraft and wheel brake division until 1986 when he became Group Vice President of the Goodrich aerospace segment.

Mr. Bolduc is currently Chairman of the Board and Chief Executive Officer of JPB Enterprises, Inc., a merchant banking, venture capital and real estate investment holding company and has held these positions since 1995. Prior to that, from 1986 to 1995, Mr. Bolduc served in various positions, including President and Chief Executive Officer, Vice Chairman and Chief Operating Officer of W.R. Grace & Co., a specialty chemicals and health care company. He is also a director of Unisys Corporation.

Mr. Browning is currently the Dean of the McColl School of Business at Queens College and has held this position since March 1, 2002. Mr. Browning has also been the non-executive Chairman of Nucor Corporation, a steel manufacturer, since September 2000 and has been a director of Nucor Corporation since 1999. Prior to that, from 1998 to 2000, Mr. Browning was the President and Chief Executive Officer and,

from 1995 to 1998, President and Chief Operating Officer of Sonoco Products Company, a manufacturer of industrial and consumer products and a provider of packaging services. Mr. Browning is also a director of Wachovia Corporation, Acuity Brands, Inc., Lowe’s Companies, Inc., Sykes Enterprises, Incorporated and The Phoenix Companies.

Mr. Ford is currently Chairman of the Board and Chief Executive Officer, as well as a director, of ALLTEL Corporation, a communications and information services provider, and has been employed by ALLTEL Corporation since June 1959. Mr. Ford is also a Director of The Dial Corporation and Textron Inc.

Mr. Hance is Vice Chairman and Chief Financial Officer of Bank of America Corporation, a financial services holding company, since October 1993 and is currently a director of Bank of America Corporation. Mr. Hance is also a director of Caraustar Industries, Inc., Family Dollar Stores, Inc., Lance, Inc. and Summit Properties Inc.

Mr. Harnett is currently the President, Chairman of the Board, Chief Executive Officer and a director of Brush Engineered Materials Inc., a provider of metal-related products and engineered material systems, and has held these positions or similar positions at Brush Wellman, Inc. since January 1991. Mr. Harnett is also a director of The Lubrizol Corporation, PolyOne Corporation and National City Bank.

Mr. Holland is currently the non-executive chairman of J.A. Jones Construction Company and serves as a consultant to Goodrich. Prior to that, he held various executive positions at United Dominion Industries Limited, a diversified manufacturing company, including Vice President and General Counsel from 1973 to 1986, Chief Executive Officer from 1986 to 2000 and Chairman from 1987 to 2001. Mr. Holland is also a director of Goodrich Corporation and Lance, Inc.

Mr. Dries served as a consultant to Goodrich from September 2001 through December 2001. Since then, he has been an employee of Coltec. Prior to that, Mr. Dries was employed by United Dominion. He was named Senior Vice President and Chief Financial Officer of United Dominion in December 1999 and served in these positions until the sale of United Dominion in May 2001. From 1998 to 1999, he served as Senior Vice President — Finance; and, from 1990 to 1998, as Vice President and Controller of United Dominion. Mr. Dries, a certified public accountant, was with Ernst & Young LLP in New York prior to joining United Dominion in 1985.

Mr. Driscoll is employed by Goodrich as its Vice President — Human Resources and has held this position since 1990. Mr. Driscoll joined Goodrich in 1964 and has held a number of human resources management positions in several different operations, at the corporate office and with the aerospace segment at Goodrich.

Mr. Leslie is employed by Goodrich as Group President of its engineered industrial products segment and has held this position since July 2000 and also held it from July 1999 to February 2000. Previously, he had served as Group President from June 1997 to June 1999 and as Division President — Stemco from September 1995 to May 1997 for Coltec Industries Inc. Mr. Leslie was Vice President, Strategic Planning for Arvin Industries, Inc. from March 2000 to June 2000.

Mr. Magee served as a consultant to Goodrich from October 2001 through December 2001. Since then, he has been an employee of Coltec. Prior to that, Mr. Magee was Senior Vice President, General Counsel and Secretary of United Dominion from April 2000 until the sale of United Dominion in May 2001, having served as Vice President since July 1996, Secretary since July 1997 and General Counsel since 1998. Mr. Magee was a partner in the Charlotte, North Carolina law firm Robinson, Bradshaw & Hinson, P.A. prior to joining United Dominion in 1989.

Annual Meeting

We expect to hold the first annual shareholders’ meeting after the distribution in April 2003. The annual meeting will be held at our principal office or at such other place or by electronic means as permitted by the laws of the State of North Carolina and on such date as may be fixed from time to time by resolution of our board of directors.

Committees of the Board of Directors

We will be managed under the direction of our board of directors. Our board has established four committees: an executive committee, an audit and risk management committee, a nominating and corporate governance committee and a compensation and human resources committee. All members of the audit and risk management and compensation and human resources committees are independent directors under the rules of the New York Stock Exchange. The board of directors anticipate adopting a formal written charter for each of its committees following the distribution.


	*Executive Committee*

The executive committee has the same powers as the board of directors, except to the extent that its powers are limited by law, our articles of incorporation or bylaws or our board. During the intervals between meetings of the board of directors, the executive committee may exercise all of the powers of the board of directors in the management and control of our business. All action taken by the executive committee is required to be reported at the board’s first meeting after the action is taken. The executive committee will initially be comprised of Mr. Schaub, its chairman, and Messrs. Bolduc, Hance and Holland.


	*Audit and Risk Management Committee*

Our board of directors appointed an audit and risk management committee to assist in monitoring the integrity of our financial statements, our compliance with legal and regulatory requirements, our management of insurance, pension, environmental, litigation and other significant risk areas and the independence and performance of our internal and external auditors. The audit and risk management committee will also recommend to the board of directors a charter for the committee and review and reassess the adequacy of the charter each year. We expect that the charter will also provide that the committee will, among other things:

• recommend the selection of the outside auditor to the board each year;

• review results of the annual external audit with management and the auditors;

• review with the auditors any problems or difficulties encountered, any management letter issued by the auditors and the response of management to that letter;

• review and approve the auditors’ budget and fees submitted to us;

• review current accounting rules and changes affecting us;

• meet with the internal auditors of the corporation to discuss the financial reviews they perform;

• review financial control mechanisms and risk management procedures;

• review our major financial risk exposures including material environmental issues and legal claims affecting us; and

• review all material matters relating to our pension plans.

The committee will meet regularly and privately with the external auditors, the internal audit staff and our internal financial and legal personnel. The audit and risk management committee will initially be comprised of Mr. Hance, its chairman, and Messrs. Ford and Harnett.

While the audit and risk management committee will have the powers and responsibilities set forth in its charter, it will not be the responsibility of the audit and risk management committee to plan or conduct audits or to determine that our financial statements are complete and accurate or are in compliance with generally accepted accounting principles. This is the responsibility of management and the independent auditors. Likewise, it will not be the responsibility of the audit and risk management committee to conduct investigations, resolve disputes, if any, between management and the independent auditors, or to assure compliance with laws and regulations of our legal and ethical compliance policies.


	*Compensation and Human Resources Committee*

Our board of directors has appointed a compensation and human resources committee to assist the board and management in overseeing the appropriateness and cost of our compensation and benefit program, particularly for our senior executives. The committee will administer our stock option plan and other long-term incentive plans and also has responsibility for:

• overseeing management development and succession planning programs;

• assessing performance of the chief executive officer and reviewing and recommending to the board of directors his compensation;

• providing a report to shareholders addressing compensation decisions;

• approving the terms and conditions of awards under stock option plans; and

• making awards under the stock option and other long-term incentive plans.

The compensation and human resources committee will also consider management’s recommendation for stock ownership guidelines for directors and participants in our long-term incentive plans. The compensation and human resources committee will initially be comprised of Mr. Bolduc, its chairman, and Messrs. Browning and Ford.


	*Nominating and Corporate Governance Committee*

Our board of directors has appointed a nominating and corporate governance committee to assist the board and management in fulfilling their responsibilities to exercise sound corporate governance. The nominating and corporate governance committee will initially be comprised of Mr. Holland, its chairman, and Messrs. Browning, Harnett and Schaub. The committee will also be responsible for:

• recommending candidates for our board of directors;

• considering the size and composition of the board of directors;

• considering the ratio of non-employee to employee directors;

• recommending compensation and retirement of directors;

• recommending the frequency and format of board of directors meetings,

• reviewing committee structure,

• recommending service on committees; and

• assessing the effectiveness of the board of directors and its committees.

All candidates for director will be considered and selected on the basis of their ability to contribute to the deliberations of our board of directors. Shareholders wishing to recommend candidates for our board of directors may submit the names of candidates, together with any desired supporting information, to our Secretary. This information will be made available to the nominating and corporate governance committee to assist it in fulfilling its duties in this area.

Director Compensation

Each of our non-employee directors will receive fixed compensation for serving as a director at the rate of $58,000 per year, of which $38,000 will be paid in cash and $20,000 will be in the form of phantom shares as described below. In addition, each director will receive $1,500 for each board meeting attended and $1,000 for each committee meeting attended. The chairperson of a committee will receive $4,000 in cash annually. Upon his or her initial election to the board, each director will be credited $30,000 in the form of phantom shares.

Our board of directors believes that a portion of each director’s compensation should be based on common stock similar to executive compensation to more closely align the financial interests of directors with the financial interest of shareholders. To meet these goals, we will establish a non-employee directors’

phantom share plan, under which our outside directors will receive grants of phantom shares of our common stock as part of their compensation. This amount will be deferred into a phantom share account for the director’s benefit. Dividend equivalents will accrue on all phantom shares credited to a director’s account. Following termination of service as a director, the cash value of the number of phantom shares credited to a director’s account will be paid to the director in 12 monthly installments. The value of each phantom share is determined on the relevant date by the fair market value of our common stock. Directors may also elect to defer a portion or all of the remaining fixed compensation and meeting fees into the phantom share account.

In addition to the fees he will be paid as a non-employee director, Mr. Holland will be paid a monthly consulting fee of $36,000 for the period from the distribution date through June 30, 2002 and $15,000 per month from July 2002 through April 30, 2003 pursuant to a consulting agreement with us.

Historical Compensation of Executive Officers

The following tables set forth information concerning the annual and long-term compensation for services rendered in all capacities to Goodrich and its subsidiaries for fiscal year 2001 of the three Goodrich officers who will serve as our executive officers following the distribution, whom we refer to in this information statement as the named executive officers. The compensation described in these tables was paid by Goodrich or an affiliate of Goodrich. The services rendered to Goodrich were, in some cases, in capacities not equivalent to those to be provided to us and this table does not reflect the compensation to be paid to our executive officers in the future.

The following table sets forth summary compensation information paid by Goodrich to the named executive officers in fiscal year 2001.

SUMMARY COMPENSATION TABLE

Long-term

Compensation

Annual Compensation

Awards

Securities

Other

Restricted

Underlying

Annual

Stock

Options/

All Other

Salary

Bonus

Compensation

Awards

SARS

Compensation

Name and Principal Position (1)

($)

($)(2)

($)(3)

(#)

($)(4)

Ernest F. Schaub

410,000

-0-

493,403

150,660

50,000

75,406

Chief Executive Officer

Michael J. Leslie

290,000

-0-

12,840

-0-

19,400

41,114

Chief Operating Officer

Richard C. Driscoll

261,250

5,217

18,500

54,505

10,600

25,927

Senior Vice President — Human Resources

(1) The positions reflected in the table are the positions to be held by the named executive officers with us at the time of the distribution and were not the positions held by them with Goodrich during the period covered by the table.

(2) Represents reimbursement for (i) payment of taxes and (ii) personal benefits, if the benefits total $50,000 or more for a named executive officer. The amount shown for Mr. Schaub includes $213,813 for moving and relocation expenses.

(3) Represents the value as of the date of grant (February 19, 2002) of discretionary annual incentive compensation awards earned in 2001 that were paid in restricted Goodrich common stock with a three-year vesting period. Dividends are paid on restricted Goodrich common stock as and when dividends are paid on Goodrich common stock. The named executive officers held no restricted Goodrich common stock at December 31, 2001.

(4) Includes: (a) matching contributions by Goodrich on behalf of the named individuals to defined contribution plans in the following amounts: E.F. Schaub, $44,350; M.J. Leslie, $19,800; and R.C. Driscoll, $25,927; and (b) premiums paid by Goodrich on behalf of the named individuals pursuant

to “split dollar” insurance programs in the following amounts: E.F. Schaub, $31,056; and M.J. Leslie, $21,314.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

The following table sets forth information concerning stock option grants made to the named executive officers during fiscal year 2001 pursuant to the Goodrich stock option plan. The Goodrich stock option plan provides for the awarding of or the granting of stock options to purchase shares of common stock of Goodrich. Generally, options granted are exercisable at the rate of 35% after one year, 70% after two years and 100% after three years. Options granted to Goodrich executive officers, including Mr. Schaub, are fully exercisable immediately after the grant. All options granted under the Goodrich stock option plan have been granted at not less than 100% of fair market value on the date of the grant.

Individual Grants


	Number of		% of Total
	Securities		Options/						Potential Realizable Value at
	Underlying		SARS						Assumed Annual Rates of
	Options/		Granted to						Stock Price Appreciation for
	SARS		Goodrich		Exercise or				Option Term(s)(1)
	Granted		Employees		Base Price		Expiration
Name	(#)		in 2001		($/sh)		Date		0% ($)		5% ($)		10% ($)

Ernest F. Schaub (2)		10,000		0.49		35.6875		1/1/11		—		224,474		568,502
		40,000		1.96		38.6200		1/1/11		—		971,679		2,460,866
Michael J. Leslie		3,880		0.19		35.6875		1/1/11		—		87,096		220,579
		15,520		0.76		38.6200		1/1/11		—		377,012		954,816
Richard C. Driscoll		2,120		0.10		35.6875		1/1/11		—		47,589		120,522
		8,480		0.41		38.6200		1/1/11		—		205,996		521,704

(1) The dollar amounts under the potential realizable value column are the result of calculations of assumed annual compound rates of appreciation over the ten-year life of the options in accordance with the proxy regulations of the Securities and Exchange Commission and are not intended to forecast possible future appreciation, if any, of the Goodrich common stock. The actual value, if any, an executive may realize will depend on the excess of the market price of the shares over the exercise price on the date the option is exercised. We did not use an alternative formula for a grant date valuation, as we are not aware of any formula that will determine with reasonable accuracy a present value based on future unknown or volatile factors.

(2) The options granted to Mr. Schaub were immediately exercisable and were granted with limited stock appreciation rights which generally entitle him to elect to receive the appreciation on the option in cash for a 60 day period following a “change in control,” which generally is deemed to have occurred if (i) any person becomes the beneficial owner of 20% or more of Goodrich common stock or combined voting power of Goodrich’s outstanding securities, subject to certain exceptions, (ii) during any two-year period there generally has been a change in the majority of the Goodrich directors, or (iii) certain corporate reorganizations are approved by Goodrich shareholders where the existing Goodrich shareholders will not retain at least 70% of the voting securities of the surviving entity.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR

AND FISCAL YEAR-END OPTIONS/SAR VALUE

The following table sets forth information about stock options exercised during fiscal year 2001 by the named executive officers and the fiscal year-end values of unexercised options held by the named executive officers. All of these options were granted under the Goodrich stock option plan.



					Number of Securities				Value of Unexercised In-
	Shares				Underlying Unexercised				The-Money Options/SARS
	Acquired				Options/SARS At				At December 31,
	on		Value		December 31, 2001				2001($)(1)
	Exercise		Realized
Name	(#)		($)		Exercisable		Unexercisable		Exercisable		Unexercisable

Ernest F. Schaub		8,900		160,630		174,750		0		114,923		0
Michael J. Leslie		0		0		6,510		31,490		0		0
Richard C. Driscoll		0		0		33,773		20,927		27,823		205

(1) Based on a closing price of $26.62 per share of Goodrich common stock on December 31, 2001.

LONG-TERM INCENTIVE PLANS AWARDS IN LAST FISCAL YEAR

The following table sets forth information about long-term incentive awards granted during fiscal year 2001 to the named executive officers and the estimated future payouts to the named executive officers. All of these awards were granted under the Goodrich stock option plan.

Estimated Future Payouts

Performance or

Under Non Stock Price-Based Plans

Number of Shares,

Other Period Until

Units or Other

Maturation or

Threshold

Target

Maximum

Name

Rights (#)

Payout

# Shares

Shares

Ernest F. Schaub

18,000

3 years

—

18,000

36,000

Michael J. Leslie

6,500

3 years

—

6,500

13,000

Richard C. Driscoll

3,500

3 years

—

3,500

7,000

The Goodrich stock option plan provides that payouts will be based on Goodrich’s Relative Total Shareholder Return, as defined in the plan, and Total Business Return, as defined in the plan, over the performance period indicated. At the end of the performance period, each participant will earn actual shares of Goodrich common stock, less applicable tax withholding, only if the threshold performance standard is met. The number of shares of Goodrich common stock to be received will range from 0% to 200% of the total phantom performance share account, including shares credited through dividend equivalents, based on the level of performance against the financial objectives.

PENSION PLANS

For 2001, Mr. Schaub and Mr. Driscoll participated in the Goodrich Corporation Employees’ Pension Plan. The Goodrich plan is a traditional final average pay pension plan that pays benefits on retirement based on an employee’s final average earnings over a consecutive 48-month period and years of service. In addition, because of Internal Revenue Code limitations on the amount of pension benefits that can be paid to employees from qualified pension plans, the Goodrich retirement program includes a nonqualified plan that allows executives to receive all of the promised benefits under the Goodrich plan notwithstanding the Internal Revenue Code limitations. The following table shows the annual pension amounts an executive covered by the Goodrich plan would receive at retirement based on the amount of the executive’s final average earnings. Mr. Schaub has 30 years of service and Mr. Driscoll has 37 years of service under the Goodrich plan.

YEARS OF SERVICE


Final
Average
Earnings		5		10		15		20		30		40

$	250,000	$	19,163	$	38,325	$	57,488	$	76,651	$	114,976	$	148,514
	300,000		23,163		46,325		69,488		92,651		138,976		179,389
	350,000		27,163		54,325		81,488		108,651		162,976		210,264
	400,000		31,163		62,325		93,488		124,651		186,976		241,139
	450,000		35,163		70,325		105,488		140,651		210,976		272,014
	500,000		39,163		78,325		117,488		156,651		234,976		302,889
	550,000		43,163		86,325		129,488		172,651		258,976		333,889
	600,000		47,163		94,325		141,488		188,651		282,976		364,639
	650,000		51,163		102,325		153,488		204,651		306,976		395,514
	700,000		55,163		110,325		165,488		220,651		330,976		426,389
	750,000		59,163		118,325		177,488		236,651		354,976		457,264
	800,000		63,163		126,325		189,488		252,651		378,976		488,139

(1) Earnings includes salary and certain incentive payments including annual cash bonuses, but excludes awards under long-term incentive programs and Goodrich match in the Goodrich savings plans. For the named executive officers, only the amounts shown in the Summary Compensation Table as Salary and Bonus under Annual Compensation constitute final average earnings.

(2) In computing the pension amounts shown, it was assumed that an employee would retire at age 65 and elect to receive a five-year certain and continuous annuity under the pension plan and that the employee would not elect any of the available “survivor options,” which would result in a lower annual pension. Pensions are not subject to any deduction for social security or any other offset amounts.

(3) Certain executives, including Mr. Schaub, earn an additional benefit of 1.6% of final average earnings for up to 15 years of service following October 1, 1999. As of December 31, 2001, the accrued additional benefit per year for Mr. Schaub was $21,371.

(4) Any benefits shown in the chart which exceed the level of benefits permitted to be paid from a tax-qualified pension plan under the Internal Revenue Code are payable under a non-qualified supplemental pension plan, funded in part with life insurance policies.

For 2001, Mr. Leslie participated in the Coltec Retirement Program. The Coltec program is a traditional final average pay pension plan that pays benefits on retirement based on an employee’s final average earnings over a consecutive 60-month period and years of service. In addition, because of Internal Revenue Code limitations on the amount of pension benefits that can be paid to employees from qualified pension plans, the Coltec program includes a non-qualified plan that allows executives to receive all of the promised benefits under the Coltec program notwithstanding the Internal Revenue Code limitations. The

following table shows the annual pension amounts an executive covered by the Coltec program would receive at retirement based on the amount of the executive’s final average earnings. Mr. Leslie has six years of service under the Coltec program.

YEARS OF SERVICE


Final
Average
Earnings		5		10		15		20		30		40

$	250,000	$	19,855	$	39,709	$	59,564	$	79,418	$	119,127	$	152,732
	300,000		24,105		48,209		72,314		96,418		144,627		185,232
	350,000		28,355		56,709		85,064		113,418		170,127		217,732
	400,000		32,605		65,209		97,814		130,418		195,627		250,232
	450,000		36,855		73,709		110,564		147,418		221,127		282,732
	500,000		41,105		82,209		123,314		164,418		246,627		315,232
	550,000		45,355		90,709		136,064		181,418		272,127		347,732
	600,000		49,605		99,209		148,814		198,418		297,627		380,232
	650,000		53,855		107,709		161,564		215,418		323,127		412,732
	700,000		58,105		116,209		174,314		232,418		348,627		445,232
	750,000		62,355		124,709		187,064		249,418		374,127		477,732
	800,000		66,605		133,209		199,814		266,418		399,627		510,232

(1) Earnings includes salary and certain incentive payments including annual cash bonuses, but excludes awards under long-term incentive programs and Coltec match in the Coltec savings plans. For the named executive officers, only the amounts shown in the Summary Compensation Table as Salary and Bonus under Annual Compensation constitute final average earnings.

(2) In computing the pension amounts shown, it was assumed that an employee would retire at age 65 and elect to receive a five-year certain and continuous annuity under the pension plan and that the employee would not elect any of the available “survivor options,” which would result in a lower annual pension. Pensions are not subject to any deduction for social security or any other offset amounts.

(3) Any benefits shown in the chart which exceed the level of benefits permitted to be paid from a tax-qualified pension plan under the Internal Revenue Code are payable under a non-qualified supplemental pension plan.

Compensation and Benefit Plans Following the Distribution

Our executive compensation program is expected to be based upon a pay-for-performance philosophy. Under our program an executive’s compensation will be based on three components:

• base salary;

• an annual incentive or bonus payment; and

• long-term incentives, which may include cash-based awards, stock-based awards and/or stock options.

The executive compensation program will be designed to provide value to the executive based on considerations such as the extent of individual performance, our performance versus budgeted earnings targets and other financial measures, our longer term financial performance and total return to shareholders. Under this program design, only when superior performance is achieved can incentive payments exceed targeted levels.

To implement this philosophy, our board of directors has adopted a number of incentive compensation plans: the senior executive annual performance plan, the 2002 equity compensation plan and

the long-term incentive and performance share deferred compensation programs. The senior executive annual performance plan provides for annual incentive awards to senior executive officers. The awards are expressed as a percentage of the executive’s base salary and are payable in cash based on our performance compared to targets established under the plan. Payments will not be made under the plan if performance does not satisfy minimum thresholds and are limited to a maximum amount if performance substantially exceeds the targets.

Our 2002 equity compensation plan provides for the award of stock options, stock appreciation rights, performance share awards, restricted share awards and other awards the value of which is based on our common stock. Up to 3,000,000 shares of our common stock may be issued under this plan, and of that amount no more than 1,000,000 shares may be issued as performance share awards and no more than 150,000 shares may be issued as restricted share awards.

Under our long-term incentive program, key employees are eligible for annual grants of awards with multi-year cycles. Under this program, we will credit a participant’s account with a number of phantom shares at the time of the award. We will make payments on these accounts at the end of the multi-year cycle only if our performance during the period exceeds minimum thresholds for performance targets established at the beginning of the cycle. The amount of the payment will depend on our performance during the period compared to the performance targets, with the maximum payment amount being limited to 200% of the value of the phantom shares. Payment will be made 50% in cash and 50% in performance shares under the 2002 equity compensation plan. Under the performance share deferred compensation program, participants in the long-term incentive plan may elect to defer receipt of performance shares until termination of employment. If a participant elects to defer receipt, an amount of phantom shares equal to the deferred performance shares are credited to the participant’s account and paid out following termination of employment 50% in cash and 50% in performance shares under the 2002 equity compensation plan.

No grants have been made under any of the senior executive performance plan, the 2002 equity compensation plan or the long-term incentive and performance share deferred compensation programs.

The Coltec Retirement Program will be renamed the EnPro Retirement Program and will continue to cover our employees. The plan will not be available to non-employee directors. All executives employed by us will receive these retirement benefits. The amount of an employee’s pension will depend on a number of factors, including final average earnings for the highest 60 consecutive months of an employee’s earnings and years of service with us. Prior years of employment with EnPro or Goodrich will be counted as years of service under the plan, however, to the extent a pension liability remains at Goodrich, it will be used as an offset against the benefits from the EnPro plan. In addition, because of Internal Revenue Code limitations on the amount of pension benefits that can be paid to employees from qualified pension plans, the EnPro program includes a non-qualified plan that allows executives to receive all of the promised benefits under the EnPro program notwithstanding the Internal Revenue Code limitations.

Management Continuity Agreements

Goodrich has entered into management continuity agreements with each of the named executive officers.

The purpose of the continuity agreements is to encourage the individuals to carry out their duties in the event of the possibility of a change in control of Goodrich. The continuity agreements are not ordinary employment agreements and do not provide any assurance of continued employment unless there is a “change in control.” They generally provide for a two-year period of employment commencing upon a change in control which generally is deemed to have occurred if:

• any person becomes the beneficial owner of 20% or more of the Goodrich common stock or combined voting power of our outstanding securities, subject to certain exceptions;

• during any two-year period there generally has been a change in the majority of Goodrich directors; or

• certain corporate reorganizations occur where the existing shareholders do not retain at least 70% of the voting securities of the surviving entity.

The continuity agreements generally provide for the continuation of employment of the individuals in the same positions and with the same responsibilities and authorities that they possessed immediately prior to the change in control and generally with the same benefits and level of compensation, including average annual increases.

If Goodrich or its successor terminates the individual’s employment for reasons other than “cause” or the individual voluntarily terminates his or her employment for “good reason,” in each case as defined in the continuity agreements, the individual would be entitled to:

• a lump sum cash payment equal to one-twelfth of the individual’s annualized base salary in effect immediately prior to termination, multiplied by the number of months in such individual’s payment period (as used in the agreement, “payment period” means 36 months in the case of Mr. Schaub and 24 months in the case of Messrs. Leslie and Driscoll);

• a lump sum cash payment equal to one-twelfth of the greater of the individual’s most recent annual bonus or the individual’s target incentive amount under Goodrich’s management incentive program, multiplied by a factor equal to the number of months in the individual’s payment period;

• an accelerated payout of outstanding long-term incentive plan awards under the Goodrich stock option plan;

• continuation of all health and welfare benefit plans and programs and all fringe benefit programs, perquisites and similar arrangements during the payment period;

• a cash payment equal to the sum of the number of stock options in the last annual grant of stock options by Goodrich to the individual, multiplied by the number of years in the payment period, multiplied by the calculated market value of Goodrich common stock on the date of the stock option grant, multiplied by a factor used by Goodrich in valuing fully vested stock options with a ten-year life in its most recent Annual Report on Form 10-K for options held by senior executives pursuant to the Black-Scholes method of valuing stock options, or, if the valuation was not made in the Form 10-K, then under the Black-Scholes method assuming options would be outstanding for ten years; and

• in addition to the benefits to which the individual is entitled under the retirement plans or programs in which he or she participates, a lump sum cash payment at retirement in an amount equal to the actuarial equivalent of the retirement pension to which the individual would have been entitled under the terms of such retirement plans or programs had the individual accumulated additional years of continuous service under such plans equal in length to the payment period.

The continuity agreements provide for a tax gross-up for any excise tax due under the Internal Revenue Code for these types of agreements. The continuity agreements will terminate as of the distribution.

EnPro Change-in-Control Agreements

We anticipate that we will enter into interim change-in-control agreements prior to the distribution with our officers who currently have continuity agreements with Goodrich, including Messrs. Schaub, Driscoll and Leslie. These interim change-in-control agreements will be similar in all material respects to the current Goodrich continuity agreements. After the distribution, we anticipate entering into change-in-control agreements with each of our executive officers. These new agreements will replace the interim change-in-control agreements.

Indebtedness to Goodrich

In connection with the relocation of Goodrich’s corporate and aerospace business headquarters to Charlotte, North Carolina in 1999, Goodrich established a real estate loan program to assist relocating executives. Under the program, an executive was permitted to obtain a no-interest loan from Goodrich, the proceeds of which were to be used solely for the construction of a new principal residence. The loan is secured by a first priority lien on the new residence and is payable in full on demand and in any event, not

later than 30 days after the executive obtains a certificate of occupancy for the new residence. Mr. Schaub received a loan under this program, which was repaid in full in August 2001. The largest aggregate amount outstanding under Mr. Schaub’s loan during 2001 was $1,675,000.

Goodrich Executive Stock Purchase Program

In March 2000, Goodrich adopted an executive stock purchase program to encourage direct, long-term ownership of its common stock by its officers, including Mr. Schaub. Under the program, selected officers may use the proceeds of personal full-recourse bank loans to purchase Goodrich common stock in open market or negotiated transactions with independent parties. Goodrich has agreed to guarantee the loans in the event of default, but has recourse to the executives if it incurs a loss under the guarantee. Participants in the program are fully liable for any losses, as well as for the repayment of the loans when they come due. As of December 31, 2001, the aggregate principal balance of Mr. Schaub’s loan outstanding under the program was $381,001. Mr. Schaub repaid the loan in full in April 2002.

We will not have an executive stock purchase program at the time of the distribution.

OWNERSHIP OF OUR COMMON STOCK

Before the distribution, all of the outstanding shares of our common stock are and will be owned beneficially and of record by Goodrich and thus none of our officers, directors or director nominees own or will own any of our common stock. The following table sets forth information with respect to the projected beneficial ownership of our outstanding common stock, immediately following completion of the distribution, by:

• each person who is known by us to be the beneficial owner of 5% or more of Goodrich’s outstanding common stock and, following the distribution, will be the beneficial owner of 5% or more of our outstanding common stock;

• each director, each director nominee and the named executive officers; and

• all of our directors, director nominees and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock and options, warrants and convertible securities that are currently exercisable or convertible within 60 days of the date of this information statement into shares of Goodrich common stock are deemed to be outstanding and to be beneficially owned by the person holding the options, warrants or convertible securities for the purpose of computing the percentage ownership of the person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

Some of our directors and executive officers own shares of Goodrich common stock and vested Goodrich options, or are employees or former employees of Goodrich. To the extent our directors and officers own shares of Goodrich common stock at the time of the distribution, they will participate in the distribution on the same terms as other holders of Goodrich common stock. Following the distribution, assuming the exercise of all outstanding vested options to purchase Goodrich common stock held by our executive officers, we expect our directors and executive officers to beneficially own approximately 76,779 shares of EnPro common stock in the aggregate, based on their Goodrich holdings as of May 23, 2002. Ownership of Goodrich common stock and Goodrich options by our directors and officers, or the employment by Goodrich of any of our directors after the distribution, could create, or appear to create, potential conflicts of interest for such directors and officers when faced with decisions that could have disparate implications for Goodrich and us.

The projections below are based on the number of shares of Goodrich common stock beneficially owned by each person or entity as of May 23, 2002, except as otherwise indicated. The share amounts in the table reflect the distribution ratio of one share of our common stock compared to five shares of Goodrich common stock held by the listed person or entity. The percentage ownership of our common stock of each listed person or entity immediately following the distribution will be approximately the same as the percentage ownership of such person or entity immediately prior to the distribution and is calculated based on the number of shares of Goodrich common stock outstanding as of May 23, 2002.

Except as otherwise noted in the footnotes below, the individual director or executive officer or their family members had sole voting and investment power with respect to the identified securities. Upon completion of the distribution, we will have outstanding an aggregate of 20,388,437 shares of our common stock based upon the shares of Goodrich common stock outstanding on May 23, 2002, excluding Goodrich common stock held directly or indirectly by Goodrich.

DIRECTORS’ AND EXECUTIVE OFFICERS’ AND FIVE PERCENT HOLDERS’

OWNERSHIP AFTER THE DISTRIBUTION


				Percentage of Shares
Name And Address Of	Number of Shares			Beneficially Owned After
Beneficial Owner	Beneficially Owned			the Distribution(1)

Five Percent Holders :
Goodrich Corporation Employees’ Savings Plan and other Goodrich defined contribution plans(2)		1,629,571			7.99	%
AXA and related companies(3)		1,309,218			6.42	%
Morgan Stanley Dean Witter & Co.(4)		1,141,524			5.59	%
Directors and Executive Officers :
Ernest F. Schaub		57,309	(5)			*
J.P. Bolduc		0
Peter C. Browning		0
Joe T. Ford		0
James H. Hance, Jr.		0
Gordon D. Harnett		60
William R. Holland		1,000				*
William Dries		0
Richard C. Driscoll		15,009	(5)			*
Michael J. Leslie		3,401	(5)			*
Richard L. Magee		0
All directors and executive officers as a group (11 persons)		76,779				*

* less than 1%

(1) Applicable percentage ownership is based on 101,942,188 shares of Goodrich common stock outstanding as of May 23, 2002, excluding Goodrich common stock held directly or indirectly by Goodrich.

(2) Participants in the plans have voting rights. Under the terms of the plans, the trustee is required to vote shares for which it does not receive any voting instructions in the same ratio as shares as to which it does receive voting instructions. As of May 23, 2002, the plans beneficially owned 8,147,858 Goodrich shares, which would be 1,629,571 shares of our common stock.

(3) This information is based on a Schedule 13G/A for Goodrich filed with the Securities and Exchange Commission on February 12, 2002 by AXA, 25, avenue Matignon, 75008 Paris, France; AXA Financial, Inc., 1290 Avenue of the Americas, New York, New York 10104, and the Mutuelles AXA as a group as follows: AXA Conseil Vie Assurance Mutuelle, AXA Assurances I.A.R.D. Mutuelle and AXA Assurances Vie Mutuelle, 370, rue Saint Honore, 75001 Paris, France; and AXA Courtage Assurance Mutuelle, 26, rue Louis le Grand, 75002 Paris, France. The above described persons reported voting and dispositive power as of December 31, 2001 as follows: (a) AXA, AXA Financial, Inc. and the Mutuelles AXA as a group each reported no voting or dispositive power; (b) AXA Rosenberg Investment Management LLC (U.S.), a subsidiary of AXA, reported sole voting power as to 51,700 Goodrich shares, which would be 10,340 shares of our common stock, and shared dispositive power as to 92,300 Goodrich shares, which would be 18,460 shares of our common stock; (c) Alliance Capital Management L.P., a subsidiary of AXA Financial, Inc., reported sole voting power as to 3,953,443 Goodrich shares, which would be 790,688 shares of our common stock, shared voting power as to 131,863 Goodrich shares, which would be 26,372 shares of our common stock, and sole dispositive power as to 6,453,094 Goodrich shares, which would be 1,290,618 shares of our common stock; and (d) The Equitable Life

Assurance Society of the United States, a subsidiary of AXA Financial, Inc., reported sole dispositive power as to 700 Goodrich shares, which would be 140 shares of our common stock.

(4) Morgan Stanley Dean Witter & Co. is located at 1585 Broadway, New York, New York 10036. This information is based on a Schedule 13G/A for Goodrich filed with the Securities and Exchange Commission on January 29, 2002, which stated that the reporting person has shared voting power as to 5,447,640 Goodrich shares, which would be 1,089,528 shares of our common stock, and shared dispositive power as to all 5,707,624 Goodrich shares, which would be 1,141,524 shares of our common stock.

(5) Includes shares not presently owned by the individuals but which are subject to Goodrich stock options exercisable within 60 days after May 23, 2002 as follows: Ernest F. Schaub, 229,400 Goodrich shares, which would be 45,880 shares of our common stock; Michael J. Leslie, 13,300 Goodrich shares, which would be 2,660 shares of our common stock; and Richard C. Driscoll, 42,341 Goodrich shares, which would be 8,468 shares of our common stock.

DESCRIPTION OF OUR CAPITAL STOCK

Your rights as our shareholders will be governed by North Carolina law and our articles of incorporation and bylaws. This description of our capital stock reflects the anticipated state of affairs upon completion of the distribution. The following summarizes the material terms of the capital stock but does not purport to be complete and is qualified in its entirety by reference to the applicable provisions of North Carolina law and the articles of incorporation and bylaws, which are filed as exhibits to the registration statement of which this information statement forms a part.

Common Stock

Authorized Shares. We are authorized to issue up to 100 million shares of common stock, par value $0.01 per share.

Voting and Other Rights. Subject to the rights of any holders of any class of preferred stock outstanding, holders of our common stock will be entitled to one vote per share, and, in general, a majority of votes cast with respect to a matter will be sufficient to authorize action upon routine matters. Directors are to be elected by a plurality of the votes cast, and our shareholders will not have the right to cumulate their votes in the election of directors.

No Preemptive or Conversion Rights. Our common stock will not entitle its holders to any preemptive rights, subscription rights or conversion rights.

Assets upon Dissolution. In the event of liquidation, holders of common stock would be entitled to receive proportionately any assets legally available for distribution to shareholders with respect to shares held by them, subject to any prior rights of any of our preferred stock then outstanding.

Distributions. Subject to the rights of holders of any class of preferred stock outstanding, holders of our common stock will be entitled to receive the dividends or distributions that the board of directors may declare out of funds legally available for these payments. Our payment of distributions will be subject to the restrictions of North Carolina law applicable to the declaration of distributions by a corporation. Under North Carolina law, a corporation may not make a distribution if as a result of the distribution the company would not be able to pay its debts or would not be able to satisfy any preferential rights preferred shareholders would have if the company were to be dissolved at the time of the distribution.

Dividends. The terms of the new senior secured revolving credit facility entered into by our primary U.S. operating subsidiaries as well as the terms of the TIDES will impact directly or indirectly our ability to pay dividends. The senior secured revolving credit facility is expected to contain a limitation on dividend payments. In connection with the TIDES, Coltec is entitled to withhold interest payments to Coltec Capital Trust for up to 20 quarters. If these interest payments are withheld, Coltec would be unable to pay dividends to EnPro, which would limit our ability to pay a dividend to our shareholders during this period.

Antitakeover Provisions. Our articles of incorporation and bylaws contain various provisions that may discourage or delay attempts to gain control of us. The articles of incorporation include provisions:

• authorizing the board of directors to fix the size of the board between five and 11 directors and, upon an increase in the size of the board to nine or more directors, fixing the minimum size of the board thereafter at nine and classifying the board of directors into three classes, each class to serve for three years, with one class elected annually;

• authorizing only the directors to fill vacancies on the board occurring between annual shareholder meetings, including vacancies created by an increase in the size of the board, except that upon the removal of a director by the shareholders at a meeting, the shareholders may fill the resulting vacancy at the same meeting;

• permitting the removal of directors by shareholders only for cause by a vote of the holders of a majority of shares entitled to be voted in electing directors, voting as a single class;

• authorizing only the board of directors, an executive committee of the board of directors, our Chairman and President to call a special meeting of shareholders;

• requiring, for the approval of any business combination transaction with a person beneficially owning 5% or more of the outstanding shares of common stock, an 80% shareholder vote by holders entitled to vote in electing directors, voting as a single class, and a 66 2/3% vote of shares other than shares held by the 5% shareholder, unless the business combination is approved by disinterested directors; and

• requiring an 80% shareholder vote by holders entitled to vote in electing directors, voting as a single class, to alter any of the above provisions.

North Carolina has two takeover-related statutes: the Shareholder Protection Act and the Control Share Acquisition Act. The Shareholder Protection Act restricts business combination transactions involving a North Carolina public corporation and a beneficial owner of 20% or more of its voting stock. The Control Share Acquisition Act precludes an acquiror of the shares of a North Carolina public corporation who crosses one of three voting thresholds, 20%, 33 1/3% or 50%, from obtaining voting control of the shares unless a majority in interest of the disinterested shareholders of the corporation votes to grant voting power to the shares. Neither of these statutes applies to us because, as permitted by these statutes, we have elected not to be covered by them and have included a provision in our initial articles of incorporation reflecting that election.

Advance Notice Requirements. Our bylaws include specific conditions governing the conduct of business at annual and special shareholders’ meetings and the nominations of persons for election as directors at annual shareholders’ meetings. Under our bylaws, any shareholder entitled to vote at an annual meeting may bring business before the meeting if the shareholder provides written notice to, and the notice is received by us, to the attention to the Office of Secretary at our principal executive offices, generally not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. For our annual meeting to be held in 2003, which will be our first annual meeting to be held after the distribution, the notice must be received between December 31, 2002 and January 30, 2003. Each notice must include:

• for each matter, a brief description thereof and the reasons for conducting such business at the annual meeting;

• the name and address of the shareholder proposing such business as well as any of the shareholders believed to be supporting the proposal;

• the number of shares of each class of stock owned by such shareholders; and

• any material interest of such shareholders in the proposal.

If a shareholder wants to include a proposal in our proxy statement for presentation at the 2003 annual meeting, the proposal must be received by us, attention of the Office of the Secretary at our principal executive offices, by December 1, 2002. We suggest that proposals for inclusion in the proxy statement, as well as any notice of a proposal or nomination to be present at an annual meeting, be sent by certified mail, return receipt requested.

Preferred Stock

We are authorized to issue up to 50 million shares of preferred stock, $0.01 par value per share, which will include shares designated as Series A Junior Participating Preferred Stock in connection with our adoption of the shareholder rights plan described below. Our board of directors is authorized to issue preferred stock in one or more series, to fix the number of shares in each series, and to determine dividend rates, liquidation prices, liquidation rights of holders, redemption, conversion and voting rights and other series terms. Our ability to issue an indeterminate number of shares of preferred stock with such rights, privileges and preferences as our board of directors may fix, as well as the existence of our shareholder rights plan, may have the effect of delaying or preventing a takeover or other change in control of EnPro.

Shareholder Rights Plan

Our board of directors has approved, and before the date the distribution is completed we will adopt, a shareholder rights plan. The following is a summary of the terms of the rights plan. This summary does not include a detailed description of all of the terms of the proposed rights plan. We urge you to read

carefully our rights plan, the form of which is filed as an exhibit to our registration statement on Form 10. Once the rights plan is adopted, we will provide a copy to shareholders free of charge upon request.

Under the rights plan, we will issue as a dividend one preferred stock purchase right for each outstanding share of our common stock, effective immediately prior to the time of the distribution. The rights generally will not become exercisable until the earlier of:

• the close of business on the tenth day after our public announcement that a person, entity or group (other than a subsidiary or employee benefit or stock ownership plan of EnPro and other specified persons) has acquired beneficial ownership of 15% or more of our outstanding common stock (such a person or group that acquires beneficial ownership in excess of 15% is called an “acquiring person”); and

• the close of business on the tenth business day after a person, entity or group commences a tender or exchange offer, which if completed would result in that person, entity or group becoming an acquiring person.

After a person, entity or group becomes an acquiring person, all holders of rights, except the acquiring person, will be able to exercise the rights upon payment of the purchase price to purchase shares of our common stock, or other securities or assets as determined by our board of directors, with a market value of two times the purchase price. The initial purchase price for the rights will be $65.00. If we are acquired in a merger or similar transaction, all holders of rights, except the acquiring person, will be able to exercise the rights upon payment of the purchase price to purchase shares of the acquiring corporation with a market value of two times the purchase price. The rights held by an acquiring person will be null and void.

At any time before a person, entity or group becomes an acquiring person, our board of directors would be able to redeem the rights in whole, but not in part, at a price of $0.01 per right. At any time after a person, entity or group becomes an acquiring person, but before an acquiring person owns 50% or more of our outstanding common stock, our board of directors would be able to exchange each right, except for rights held by any acquiring person, for one share of our common stock or an equivalent security. The rights will expire on the tenth anniversary of the date they were issued if they have not been previously exercised, exchanged or redeemed.

As long as the rights are not exercisable, we will issue one right with each new share of common stock issued after the distribution, including shares of common stock issued under our proposed stock option plan.

The rights plan is designed to protect our interests and the interests of our shareholders against coercive takeover tactics. The rights plan may have the effect of deterring unsolicited takeover proposals, as the rights would cause substantial dilution to an acquiring person.

Transfer Agent

The transfer agent and registrar for our common stock is The Bank of New York.

DESCRIPTION OF OUR DEBT AND CONVERTIBLE PREFERRED SECURITIES

Overview

In April 1998, Coltec Capital Trust, a Delaware business trust, placed with institutional investors $150 million principal amount of TIDES. Coltec, which will be our wholly owned subsidiary following the distribution, owns all of the common securities of Coltec Capital Trust. In connection with the issuance of the TIDES, Coltec issued the TIDES Debentures. Coltec Capital Trust has essentially no other assets or liabilities other than the TIDES Debentures. The obligations of Coltec Capital Trust with respect to the TIDES are guaranteed jointly and severally by Coltec and Goodrich. In April 1998, Coltec also issued $300 million aggregate principal amount of the Coltec Senior Notes.

Following the distribution, the TIDES will remain an obligation of Coltec Capital Trust and the TIDES Debentures and Coltec’s guarantee of amounts owed by Coltec Capital Trust with respect to the TIDES will remain obligations of Coltec. Goodrich will continue to be a guarantor of amounts owed by Coltec Capital Trust with respect to the TIDES on a joint and several basis with Coltec and a guarantor of Coltec’s performance of its obligations with respect to the TIDES and TIDES Debentures. In connection with the distribution, we expect that EnPro will enter into a similar guarantee with respect to the TIDES and the TIDES Debentures. Goodrich has not nor will it guarantee any obligations of EnPro with respect to the TIDES. EnPro, Goodrich, Coltec and Coltec Capital Trust will enter into an indemnification agreement that outlines the obligations of the various parties with respect to the TIDES and under which EnPro, Coltec and Coltec Capital Trust indemnify Goodrich from any costs and liabilities arising under or related to the TIDES after the distribution. Goodrich has no indemnity obligations to EnPro, Coltec or Coltec Capital Trust under the indemnification agreement.

Prior to the distribution, Goodrich offered to exchange new Goodrich securities for the outstanding Coltec Senior Notes. Goodrich purchased all $296.9 million of Coltec Senior Notes tendered pursuant to the offer. Coltec intends to purchase all of these notes from Goodrich in exchange for a $201.9 million Coltec Debenture and $95 million in cash, after which such notes will be cancelled. The cash portion of the purchase price will be financed through an intercompany loan from Goodrich. The Coltec Debenture will be contributed by Goodrich to EnPro and those notes will remain an outstanding obligation of Coltec to us, which, for accounting purposes, will be eliminated upon consolidation in our financial statements going forward. The $3.1 million of Coltec Senior Notes that remain outstanding following completion of the exchange offer will remain obligations of Coltec after the distribution.

Approximately $12 million of industrial revenue bonds, together with approximately $1 million of other long-term debt, will continue to be obligations of Coltec following the distribution.

We expect to have approximately $166 million of total debt and TIDES outstanding at the time of the distribution.

The terms of the senior secured revolving credit facility as well as the terms of the TIDES, TIDES Debentures and the Coltec Senior Notes are described below in more detail.

Existing Debt


	*TIDES*

There are currently 3,000,000 TIDES outstanding.

TIDES Liquidation Preference. In the event of the liquidation of the trust, the holders of the TIDES will be entitled to receive, for each TIDES, a liquidation preference of $50 plus accrued and unpaid distributions thereon to the date of payment, unless the TIDES Debentures are distributed to the holders of the TIDES in connection with the liquidation.

TIDES Distributions. Holders of the TIDES are entitled to receive cumulative cash distributions at an annual rate of 5 1/4% of the liquidation preference of $50 per TIDES, accruing from the date of original issuance and payable quarterly in arrears on each January 15, April 15, July 15 and October 15. All TIDES distributions have been paid when due since the original issuance of the TIDES. Since the only assets of Coltec Capital Trust are the TIDES Debentures, Coltec Capital Trust is dependent upon the interest payments due from time to time on the TIDES Debentures in order to make the required distributions on the TIDES.

Under the terms of the indenture governing the TIDES and the TIDES Debentures, Coltec has the right to defer the interest payments due from time to time on the TIDES Debentures for successive periods not exceeding 20 consecutive quarters for each such period. As a consequence, quarterly distributions on the TIDES would be deferred by Coltec Capital Trust, but would continue to accumulate quarterly and accrue interest, to the extent permitted by law, until the end of any such interest deferral period.

Guarantees. The payment of TIDES distributions and any payments due to holders of the TIDES upon liquidation of the trust are fully and unconditionally guaranteed by Coltec and Goodrich on a joint and several basis. Following the distribution, these obligations are also expected to be guaranteed by EnPro, on the same basis. Goodrich has not nor will it guarantee any obligations of EnPro with respect to the TIDES. The obligations of Coltec and Goodrich and, following the distribution, EnPro, under their respective guarantees, however, are or, in the case of EnPro, will be, subordinate and junior in right of payment to all of their respective senior debt. The guarantees do not cover payment of distributions if the failure to make a distribution is because the trust does not have sufficient funds to make the distribution, even if the failure to have such funds is as a result of Coltec’s failure to pay interest, when due, on the TIDES Debentures or if Coltec defers interest payments on the TIDES Debentures as it is permitted to do. In this situation, the only remedy would be to cause the trust to pursue its remedies as the sole holder of the TIDES Debentures.

Conversion. Following the distribution and until April 15, 2028, each TIDES will be convertible, at the option of the holder, into a combination of 0.955248 of a share of Goodrich common stock and 0.1910496 of a share of EnPro common stock, subject to adjustment. Should the holders exercise their right to convert the TIDES, Coltec would be required to deliver shares of Goodrich and EnPro common stock to the holders as promptly as practicable on or after the conversion date and in connection therewith would be required to purchase shares of Goodrich common stock on the open market, directly from Goodrich or by exercising its call options on Goodrich common stock discussed below. Coltec may not have sufficient cash on hand or the ability to finance these transactions in the time period required by the agreements relating to the TIDES. Failure to honor conversion rights would be a default under the TIDES agreements.

Further, the value of Goodrich and EnPro common stock may increase to the level where Coltec’s cost to acquire shares in a conversion could exceed, with no maximum, the aggregate liquidation value of the TIDES of $150 million. Coltec has purchased call options on 2,865,744 shares of Goodrich common stock, with an exercise price of $52.34 per share, which represents the total Goodrich shares that would be required if all TIDES holders convert. The call options provide for either an adjustment to the exercise price or a cash payment, at Coltec’s option, if there is a change in the cash dividends paid on Goodrich common stock. On May 17, 2002 Goodrich announced that its board of directors approved a change to Goodrich’s quarterly dividend from 27.5 cents per share to 20 cents per share of common stock. Coltec’s management is evaluating the impact of the reduction in the dividend and has not decided which option it will elect. One-third of these call options expire in March 2005, and the remainder expire in March 2007. Until they expire, the call options provide protection against Coltec’s risk that the cash required to finance conversions of the TIDES would exceed the TIDES liquidation value. While Coltec has hedged its exposure to conversion costs

in excess of the aggregate liquidation value of the TIDES as described earlier, we cannot be certain that Coltec will have the financial resources to redeem these securities or effectively hedge this exposure to potential conversion costs in excess of the aggregate liquidation value of the TIDES beyond the term of the call options.

Dissolution of Trust. In the event of changes in applicable law or legal interpretations thereof that have certain adverse tax consequences or which cause the trust to be required to register as an “investment company” under the Investment Company Act of 1940, Coltec is required to cause the trust to be dissolved. The trust may be dissolved at any time by Coltec, as the holder of the trust’s common securities, and will automatically be dissolved upon certain events of bankruptcy and insolvency relating to Coltec. If the trust is dissolved for any reason, after satisfaction of liabilities to creditors of the trust as provided by applicable law, Coltec is required to cause TIDES Debentures to be distributed to the holders of the TIDES on a pro rata basis.

Redemption. Upon the repayment in full of the TIDES Debentures, at maturity or upon earlier redemption, in whole or in part, the proceeds of such repayment or redemption must be used by the trust to redeem, on a pro rata basis, a like amount of TIDES at a redemption price equal to (i) in the case of a repayment or redemption of the TIDES Debentures at maturity or upon a tax event which would cause the trust to be dissolved as described above, the liquidation amount of the TIDES plus any accrued and unpaid distributions to the date of redemption, and (ii) in the case of any optional redemption of the TIDES Debentures, at the redemption price for the TIDES Debentures redeemed as described below under “— TIDES Debentures,” plus any accrued and unpaid distributions to the date of redemption.

Restrictive Covenants. The terms of the TIDES limit the ability of Coltec Capital Trust to merge with or into, consolidate, amalgamate or be replaced, or to convey, transfer or lease its assets and properties substantially as an entirety.

Events of Default. The TIDES contain customary events of default, including:

• the occurrence of an event of default with respect to the TIDES Debentures;

• a failure by the trust to make any distribution when due, subject to a 30-day grace period;

• a failure by the trust to pay any redemption price when due;

• a default in the performance or breach, in any material respect of any other covenant contained in the trust declaration, subject to a 60-day grace period; and

• certain events of bankruptcy or insolvency of the property trustee, if a successor is not appointed within 60 days.

If there is an event of default with respect to the TIDES, the TIDES will have a preference as to any and all dividends and distributions made by the trust.


	*TIDES Debentures*

Interest and Maturity. There are currently $150 million aggregate principal amount of TIDES Debentures outstanding. The TIDES Debentures bear interest at the rate of 5 1/4% per annum and mature April 15, 2028. Interest is payable quarterly in arrears on each January 15, April 15, July 15 and October 15. Coltec has the right to defer the interest payments due from time to time on the TIDES Debentures for successive periods not exceeding 20 consecutive quarters for each such period.

Ranking. The TIDES Debentures are subordinate and junior in right of payment to all existing and future senior debt of Coltec, including the Coltec Senior Notes. In the event of certain payment and other defaults with respect to Coltec senior debt, the holders of the senior debt have the right to suspend payments on the TIDES Debentures, including interest payments, for a period of time.

Redemption. The TIDES Debentures are redeemable, at Coltec’s option, in whole or in part, from time to time, until maturity at a price of $50.88 per $50 principal amount of the TIDES Debentures through April 20, 2003, $50.44 per TIDES through April 20, 2004, and $50 per TIDES thereafter, plus accrued and unpaid distributions thereon to the redemption date. The TIDES Debentures are also redeemable, at Coltec’s

option, in whole but not in part, in the event of changes in applicable law or legal interpretations thereof that have certain adverse tax consequences.

Restrictive Covenants. If an event of default with respect to the TIDES or TIDES Debentures shall have occurred and be continuing or if Coltec defers interest payments on the TIDES Debentures, during the continuance of any such event of default or deferral, Coltec will be subject to restrictions on its activities, subject to limited exceptions, including its ability to, among other things:

• declare and pay dividends and other distributions;

• redeem, repay or repurchase any other debt securities that rank equal with or junior in right of payment to the TIDES Debentures; and

• make any payment with respect to a guarantee of indebtedness of any of its subsidiaries.

In addition, the terms of the indenture governing the TIDES Debentures limit the ability of Coltec to consolidate or merge with or into any other person or entity or sell or lease its assets as, or substantially as, an entirety to any person or entity.

Events of Default. The indenture governing the TIDES Debentures contains customary events of default, including:

• nonpayment of principal, premium or interest when due;

• noncompliance with covenants or other obligations;

• failure to issue and deliver Goodrich and, after the distribution, EnPro common stock upon conversion;

• Coltec’s bankruptcy or insolvency; and

• the voluntary or involuntary dissolution of the trust.

If an event of default with respect to the TIDES Debentures occurs and is continuing, the trust, as the holder of the TIDES Debentures, will have the right to declare the entire principal amount of, plus any accrued and unpaid interest, to be immediately due and payable.


	*Coltec Senior Notes*

There are currently $3.1 million aggregate principal amount of Coltec Senior Notes outstanding.

Interest and Maturity. The Coltec Senior Notes bear interest at a rate of 7 1/2% per annum and mature April 15, 2008. Interest is payable semi-annually in arrears on each April 15 and October 15.

Ranking. The Coltec Senior Notes are senior obligations of Coltec and rank equal in right of payment with all other existing and future senior debt of Coltec and senior in right of payment to all existing and future obligations of Coltec that are expressly subordinated to the Coltec Senior Notes, including the TIDES Debentures.

Redemption. The Coltec Senior Notes are redeemable, in whole or in part, at any time and from time to time, at Coltec’s option, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes and (ii) the sum of the present value of the remaining scheduled payments of principal and interest on the notes from the redemption date to the maturity date, discounted to the redemption date on a semiannual basis, assuming a 360-day year consisting of twelve 30-day months, at a comparable treasury rate plus 37.5 basis points, plus accrued interest thereon to the date of redemption.

Restrictive Covenants. The indenture governing the Coltec Senior Notes limits the ability of Coltec to:

• incur liens;

• enter into sale-leaseback transactions; and

• merge or consolidate or sell all or substantially all of its assets.

Events of Defaults. The indenture governing the Coltec Senior Notes contains customary events of default, including:

• nonpayment of principal, premium or interest when due;

• noncompliance with covenants or other obligations;

• payment defaults in respect of, or acceleration of, other indebtedness in an aggregate amount equal to or greater than $30 million;

• any judgment for the payment of money in excess of $30 million is entered against Coltec and remains unpaid for a period of 60 days; and

• Coltec’s bankruptcy or insolvency.

If an event of default with respect to the Coltec Senior Notes occurs and is continuing, the trustee and/or the holders of at least 25% of the aggregate principal amount of the Coltec Senior Notes have the right to declare the entire principal amount of, plus any accrued and unpaid interest, to be immediately due and payable.


	*Industrial Revenue Bonds*

We have additional long-term debt of approximately $12 million related to industrial revenue bonds issued in 1993 that mature in 2009.

New Senior Secured Revolving Credit Facility

General. EnPro’s primary U.S. operating subsidiaries have executed a credit agreement dated May 16, 2002 for a new senior secured revolving credit facility and we expect that the credit facility will become effective at the time we complete the distribution. We expect to be able to use the new revolving credit facility for working capital and general corporate purposes.

The credit agreement for the senior secured revolving credit facility is with a syndicate of lenders and Bank of America, N.A. as administrative agent and collateral agent for these lenders. Although the credit agreement has been signed, the related loan documents remain subject to finalization and approval and the closing of this facility will not be completed unless specified conditions have been met. These conditions include, among other things, the satisfactory completion of the distribution and the delivery of a satisfactory legal opinion relating to the security interest in insurance receivables. We cannot assure you that we will be able to satisfy all of these conditions. Even if we satisfy these conditions at closing, our ability to borrow under the new revolving credit facility from time to time thereafter will be subject to our compliance with certain covenants and a borrowing base.

Revolving Credit Facility. The maximum available amount under the revolving credit facility will be $60 million and we anticipate that as of the date of the distribution the initial availability under this facility will be approximately $50 million. On the date of the distribution we expect that certain letters of credit will be issued under the facility in an aggregate amount of less than $2 million. Up to $15 million of availability under the revolving credit facility can be used by us for letters of credit. We do not anticipate other borrowings under the facility for the foreseeable future.

The amount available at any time under the revolving credit facility will be determined based on the borrowing base of the borrowers. For the borrowers other than Garlock, the borrowing base is a percentage of their eligible accounts receivable and inventory. Subject to various restrictions, Garlock may borrow revolving loans based upon a percentage of its borrowing base of accounts receivables plus an additional percentage of receivables due to it under various insurance policies. The ability to use the insurance receivables in the Garlock borrowing base is subject to the consent of the insurance companies, the delivery of legal opinions and various other conditions and we cannot assure you that we can obtain the required consents or opinions or meet the other conditions.

Interest Rates. The interest rates per annum applicable to the revolving credit facility are LIBOR plus a margin of 2.75% or, at our option, the Bank of America, N.A. prime rate plus a margin of 1.5%. In addition, we are obligated to pay a per annum commitment fee on the unused portion of the revolving credit

facility. The commitment fee will be 1% when we are using less than one-third of the facility, .75% if we are using between one-third and two-thirds of the facility, and .50% if we are using more than two-thirds of the facility.

Guarantees. All of the obligations under the revolving credit facility will be unconditionally and irrevocably guaranteed jointly and severally by us and by our existing and future domestic subsidiaries, with the exception of certain dormant subsidiaries having no material assets.

Security. The revolving credit facility will be secured by receivables, inventories, equipment, intellectual property, insurance receivables and all other personal property assets of EnPro and its U.S. subsidiaries and by a pledge of 65% of the capital stock of their direct foreign subsidiaries.

Financial and Other Covenants. The revolving credit facility will include a financial covenant that sets a minimum fixed charge coverage ratio requirement. The financial covenant will be effective only when the unused borrowing availability under the facility is $30 million or less. The revolving credit facility also will include customary affirmative and negative covenants, including limitations on liens, limitations on mergers, consolidations and dispositions of assets, limitations on acquisitions and other investments, limitations on incurrence of debt and prepayment of debt (other than the facility), limitations on sale leaseback transactions, limitations on dividends, limitations on transactions with affiliates and limitations on the nature of business conducted, in each case subject to certain exceptions as set forth in the credit agreement.

Events of Default. The revolving credit facility will include events of default consistent with transactions of this type, including nonpayment of principal, interest or fees, violations of covenants, inaccuracy of representations and warranties, a cross-default to other material indebtedness, bankruptcy events, and a change in control.

SHARES ELIGIBLE FOR FUTURE SALE

Sales or the availability for sale of substantial amounts of our common stock in the public market could adversely affect the prevailing market price of our common stock. Upon completion of the distribution, we will have outstanding an aggregate of 20,388,437 shares of our common stock based upon the shares of Goodrich common stock outstanding as of May 23, 2002, assuming no exercise of outstanding options and excluding Goodrich common stock held directly or indirectly by Goodrich. We expect the shares owned by the Goodrich subsidiary to be eliminated prior to the distribution and/or that this subsidiary will waive any rights that it would have to receive EnPro shares in the distribution. All of the shares will be freely tradeable without restriction or further registration under the Securities Act of 1933 unless the shares are owned by our affiliates, as that term is defined in Rule 405 under the Securities Act. Shares held by affiliates may be sold in the public market only if registered under the Securities Act or if they qualify for an exemption from registration under the Securities Act such as Rule 144, which is summarized below. Further, as described below, we plan to file a registration statement to cover the shares issued under our new option plans.

Rule 144

In general, under Rule 144 as currently in effect, an affiliate would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

• 1% of the number of shares of our common stock then outstanding, which will equal approximately 203,884 shares of common stock immediately after the distribution based on the number of Goodrich shares outstanding as of May 23, 2002; or

• the average weekly trading volume of our common stock on The New York Stock Exchange during the four calendar weeks preceding the filing of a notice of Form 144 with respect to the sale.

Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

Employee Stock Options

We intend to grant shares of our common stock pursuant to the stock plans we expect to adopt subject to restrictions. In the future, we may adopt new plans and issue options to purchase shares of our common stock. We currently expect to file a registration statement under the Securities Act to register shares to be issued under these stock plans. Shares issued pursuant to awards after the effective date of the registration statement, other than shares issued to affiliates, generally will be freely tradable without further registration under the Securities Act.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our articles of incorporation provide for indemnification of our officers and directors to the extent permitted by North Carolina law, which generally permits indemnification for actions taken by officers or directors as our representatives except if the officer or director knew or believed at the time that the action was clearly in conflict with the best interests of our corporation. We have entered into indemnification agreements with our officers and directors to specify the terms of our indemnification obligations. In general, these indemnification agreements provide that we will:

• indemnify our directors and officers to the fullest extent now permitted under current law and to the extent the law later is amended to increase the scope of permitted indemnification;

• advance payment of expenses to a director or officer incurred in connection with an indemnifiable claim, subject to repayment if it is later determined that the director or officer was not entitled to be indemnified;

• reimburse the director or officer for any expenses incurred by the director or officer in seeking to enforce the indemnification agreement; and

• have the opportunity to participate in the defense of any indemnifiable claims against the director or officer.

In accordance with North Carolina law, the articles of incorporation contain a provision eliminating the personal liability of directors to EnPro and its shareholders for monetary damages for breaches of their fiduciary duties, except for acts or omissions that the director knew or believed at the time to be clearly in conflict with our best interests, for authorizing unlawful distributions to shareholders and for transactions in which the director receives an improper personal benefit. Under North Carolina law, an “improper personal benefit” does not include reasonable compensation and incidental benefits for service as a director. The applicable provisions of North Carolina law pertain only to breaches of duty by directors as directors and not in any other corporate capacity, including as officers. As a result of the inclusion of these provisions, shareholders may be unable to recover monetary damages against directors for actions taken by them which constitute negligence or gross negligence or which are in violation of their fiduciary duties, although it may be possible to obtain injunctive or other equitable relief with respect to such actions. If equitable remedies are found not to be available to shareholders in any particular case, shareholders may not have any effective remedy against the challenged conduct.

The distribution agreement that we will enter into with Coltec and Goodrich provides for indemnification by us of Goodrich and its directors, officers and employees for some liabilities, including liabilities under the Securities Act and the Securities Exchange Act of 1934, in connection with the distribution.

AVAILABLE INFORMATION

We have filed with the Securities and Exchange Commission a registration statement under the Securities Exchange Act of 1934 and the rules and regulations promulgated under the Securities Exchange Act with respect to the shares of our common stock and the associated preferred stock purchase rights being distributed to Goodrich’s shareholders in the distribution. This information statement does not contain all of the information set forth in the registration statement and its exhibits and schedules, to which reference is made. Statements in this information statement as to the contents of any contract, agreement or other document are qualified in all respects by reference to the contract, agreement or document. If we have filed any of those contracts, agreements or other documents as an exhibit to the registration statement, we urge you to read the full text of such contract, agreement or document for a more complete understanding of the document or matter involved. For further information with respect to us and our common stock, we refer you to the registration statement, including its exhibits and the schedules filed as a part of it. You may read and copy the registration statement and its exhibits and schedules at the Securities and Exchange Commission’s headquarters located at SEC Headquarters, 450 Fifth Street, N.W., Washington, D.C. 20549.

You may also obtain copies of the registration statement by mail from the Office of Investor Education and Assistance of the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 or by telephone at 800/SEC-0330. You may obtain information on the operation of the Office of Investor Education and Assistance by calling the Securities and Exchange Commission at 800/SEC-0330. The registration statement is available to the public from commercial document retrieval services and at the Securities and Exchange Commission’s World Wide Website located at www.sec.gov.

We intend to furnish the holders of our common stock with annual reports containing financial statements audited by an independent public accounting firm. We also intend to furnish other reports as we may determine or as required by law. In addition, after the date of distribution, we intend to maintain a world wide website located at www.enproindustries.com.

After the distribution, we will be subject to the informational requirements of the Securities Exchange Act and will therefore be required to file reports, proxy statements and other information with the Securities and Exchange Commission. Information that we file with the Securities and Exchange Commission after the date of this information statement will automatically supersede the information in this information statement and any earlier filed incorporated information. You may read these reports, proxy statements and other information and obtain copies of these documents and information as described above.

No person is authorized to give any information or to make any representations other than those contained in this information statement, and, if given or made, such information or representations must not be relied upon as having been authorized. Neither the delivery of this information statement nor any distribution of securities made hereunder shall imply that there has been no change in the information set forth herein or in our affairs since the date hereof.

INDEX TO FINANCIAL STATEMENTS


Audited Balance Sheet of EnPro Industries, Inc.
	Report of Independent Auditors	F-2
	Balance Sheet at January 23, 2002	F-3
	Note to Balance Sheet	F-4

Audited Consolidated Financial Statements of Coltec Industries Inc (a subsidiary of Goodrich Corporation):
	Report of Independent Auditors	F-5
	Consolidated Balance Sheets at December 31, 2001 and 2000	F-6
	Consolidated Statements of Income for the Years Ended December 31, 2001, 2000 and 1999	F-7
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999	F-8
	Consolidated Statements of Parent Company Investment (Deficit) for the Years Ended December 31, 2001, 2000 and 1999	F-9
	Notes to Consolidated Financial Statements	F-10

Interim Condensed Consolidated Financial Statements of Coltec Industries Inc (A subsidiary of Goodrich Corporation):
	Condensed Consolidated Balance Sheets at March 31, 2002 (Unaudited) and December 31, 2001	F-33
	Condensed Consolidated Statements of Income (Unaudited) for the Three Months Ended March 31, 2002 and 2001	F-34
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2002 and 2001	F-35
	Notes to Unaudited Condensed Consolidated Financial Statements	F-36

F-1

Report of Ernst & Young LLP, Independent Auditors

To the Board of Directors of
EnPro Industries, Inc.

We have audited the accompanying balance sheet of EnPro Industries, Inc. (a wholly-owned subsidiary of Goodrich Corporation) as of January 23, 2002. This balance sheet is the responsibility of the Company’s management. Our responsibility is to express an opinion on this balance sheet based on our audit.

We conducted our audit in accordance with auditing standard generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion.

In our opinion, such balance sheet presents fairly, in all material respects, the financial position of EnPro Industries, Inc. (a wholly-owned subsidiary of Goodrich Corporation) as of January 23, 2002 in conformity with accounting principles generally accepted in the United States.

Charlotte, North Carolina

January 23, 2002

F-2

ENPRO INDUSTRIES, INC.

BALANCE SHEET

January 23, 2002


ASSETS
Cash	$	1,000

	$	1,000

SHAREHOLDERS’ EQUITY
Preferred stock — $0.01 par value — Authorized 50,000,000 shares	$	—
Common stock — $0.01 par value — Authorized 100,000,000 shares; issued 1,000 shares		10
Additional paid-in capital		990

	$	1,000

See Note to Balance Sheet

F-3

ENPRO INDUSTRIES, INC.

NOTE TO BALANCE SHEET

BASIS OF PRESENTATION

The balance sheet of EnPro Industries, Inc. (“EnPro”) consists of the accounts of a wholly owned subsidiary of Goodrich Corporation (“Goodrich”). EnPro was incorporated in North Carolina on January 11, 2002 in anticipation of a proposed distribution of Goodrich’s engineered industrial products business. The distribution, which is expected to be completed in 2002, will result in the transfer to EnPro of the assets and liabilities of Goodrich’s engineered industrial products business. Shares of EnPro common stock (including the associated preferred stock purchase rights) will be distributed in a tax free spin-off, with each Goodrich shareholder receiving one share of EnPro common stock (including an associated preferred stock purchase right) for every five shares of Goodrich common stock owned.

F-4

Report of Ernst & Young LLP, Independent Auditors

To the Board of Directors of

Goodrich Corporation

We have audited the accompanying consolidated balance sheets of Coltec Industries Inc and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, cash flows and parent company investment (deficit) for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Coltec Industries Inc and subsidiaries at December 31, 2001 and 2000, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

Charlotte, North Carolina

March 14, 2002, except for

Note W, as to which the date is

May 21, 2002

F-5

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

CONSOLIDATED BALANCE SHEETS


			December 31,		December 31,
			2001		2000


			(dollars in millions)
ASSETS
Current Assets
	Cash and cash equivalents		$	25.9	$	21.6
	Accounts and notes receivable			82.2		45.0
	Asbestos insurance receivable			90.8		90.3
	Inventories			83.0		65.9
	Deferred income taxes			5.2		5.2
	Prepaid expenses and other assets			5.6		3.9

		Total Current Assets		292.7		231.9

Property, plant and equipment — net				138.2		124.9
Prepaid pension				90.8		71.7
Goodwill — net				146.1		79.9
Identifiable intangible assets — net				64.5		7.0
Asbestos insurance receivable				202.8		195.4
Other assets				64.2		62.4
Assets of discontinued operations				475.2		482.2

		Total Assets	$	1,474.5	$	1,255.4

LIABILITIES AND PARENT COMPANY INVESTMENT (DEFICIT)
Current Liabilities
	Short-term bank debt		$	0.3	$	0.7
	Accounts payable			47.1		37.4
	Accrued asbestos liability			150.3		182.8
	Other accrued expenses			69.0		50.7
	Income taxes payable			59.8		86.5
	Current maturities of long-term debt			1.6		2.5

		Total Current Liabilities		328.1		360.6

Long-term debt				313.0		314.8
Pension obligations				17.3		13.7
Postretirement benefits other than pensions				12.1		12.6
Deferred income taxes				46.2		7.5
Retained liabilities of previously owned businesses				57.8		55.9
Environmental liabilities				21.8		29.3
Asbestos liability				20.6		48.4
Minority interests				9.0		7.1
Other non-current liabilities				14.9		19.4
Liabilities of discontinued operations				207.3		263.6
Commitments and contingent liabilities				—		—
Mandatorily redeemable convertible preferred securities of trust (TIDES)				150.0		149.3
Parent Company Investment (Deficit)				276.4		(26.8	)

		Total Liabilities and Parent Company Investment (Deficit)	$	1,474.5	$	1,255.4

See Notes to Consolidated Financial Statements

F-6

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

CONSOLIDATED STATEMENTS OF INCOME



		Year Ended December 31,

		2001			2000			1999


		(dollars in millions)
Sales		$	628.3		$	654.4		$	665.7
Operating Costs and Expenses:
	Cost of sales		445.7			430.1			418.3
	Selling and administrative expenses		126.1			120.2			150.6
	Merger-related and consolidation costs		3.8			1.4			128.4

			575.6			551.7			697.3

Operating income (loss)			52.7			102.7			(31.6	)
Interest expense			(26.9	)		(27.4	)		(36.8	)
Interest income			0.5			0.3			0.9
Other income (expense) — net			(3.1	)		(4.3	)		3.1

Income (loss) before income taxes and distributions on convertible preferred securities of trust (TIDES)			23.2			71.3			(64.4	)
Income tax (expense) benefit			(8.7	)		(26.7	)		10.3
Distributions on convertible preferred securities of trust (TIDES)			(7.9	)		(7.9	)		(7.9	)

Income (loss) from continuing operations			6.6			36.7			(62.0	)
Income from discontinued operations — net of taxes			94.1			64.2			61.9

Net income (loss)		$	100.7		$	100.9		$	(0.1	)

See Notes to Consolidated Financial Statements

F-7

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

CONSOLIDATED STATEMENTS OF CASH FLOWS



				Year Ended December 31,

				2001			2000			1999


				(dollars in millions)
OPERATING ACTIVITIES
	Net income (loss)			$	100.7		$	100.9		$	(0.1	)
		Net income from discontinued operations			(94.1	)		(64.2	)		(61.9	)
	Adjustments to reconcile net income (loss) to net cash used by operating activities:
		Merger-related and consolidation costs:
			Expenses		3.8			1.4			128.4
			Payments		(1.1	)		(4.0	)		(120.9	)
		Expenditures for asbestos-related litigation			(162.7	)		(119.7	)		(84.5	)
		Proceeds from asbestos-related insurance			87.9			83.3			65.2
		Depreciation and amortization			28.8			26.6			24.4
		Deferred income taxes			38.7			18.0			(30.6	)
		Net gain on sale of businesses			—			—			(5.0	)
		Change in assets and liabilities, net of effects of acquisitions and divestitures of businesses:
			Receivables		12.7			1.4			7.0
			Sale of receivables		(30.5	)		2.5			—
			Inventories		(8.1	)		4.1			10.2
			Other current assets		(0.9	)		1.5			4.9
			Accounts payable		7.9			(16.0	)		—
			Accrued expenses		5.3			4.6			(12.4	)
			Income taxes payable		(26.5	)		(118.9	)		27.8
			Other non-current assets and liabilities		(24.6	)		(36.3	)		(35.1	)

		Net cash used by operating activities of continuing operations			(62.7	)		(114.8	)		(82.6	)

INVESTING ACTIVITIES
	Purchases of property				(16.4	)		(14.3	)		(24.1	)
	Proceeds from sale of property				1.7			0.5			—
	Payments made in connection with acquisitions, net of cash acquired				(155.1	)		—			—

	Net cash used by investing activities of continuing operations				(169.8	)		(13.8	)		(24.1	)

FINANCING ACTIVITIES
	Increase (decrease) in short-term debt				(0.7	)		0.7			—
	Decrease in long-term revolving credit facility, net				—			—			(159.5	)
	Repayment of long-term debt				(2.7	)		(9.2	)		(4.3	)
	Distributions on convertible preferred securities of trust (TIDES)				(7.9	)		(7.9	)		(7.9	)
	Net transfers (to)/from Parent				203.1			(38.1	)		246.0

	Net cash provided (used) by financing activities of continuing operations				191.8			(54.5	)		74.3

DISCONTINUED OPERATIONS
	Net cash provided by discontinued operations				44.6			190.4			25.7
Effect of Exchange Rate Changes on Cash and Cash Equivalents					0.4			(0.8	)		—

Net Increase (Decrease) in Cash and Cash Equivalents					4.3			6.5			(6.7	)
Cash and Cash Equivalents at Beginning of Period					21.6			15.1			21.8

Cash and Cash Equivalents at End of Period				$	25.9		$	21.6		$	15.1

See Notes to Consolidated Financial Statements

F-8

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

CONSOLIDATED STATEMENTS OF PARENT COMPANY INVESTMENT (DEFICIT)



	Year Ended December 31,

	2001			2000			1999


	(dollars in millions)
Parent Company Deficit, Beginning of Year	$	(26.8	)	$	(86.1	)	$	(331.9	)
Net income (loss)		100.7			100.9			(0.1	)
Cumulative translation adjustment		(0.5	)		(3.9	)		(0.1	)
Minimum pension liability adjustment		(0.1	)		0.4			—

Comprehensive income (loss)		100.1			97.4			(0.2	)
Net transfers (to)/from Parent		203.1			(38.1	)		246.0

Parent Company Investment (Deficit), End of Year	$	276.4		$	(26.8	)	$	(86.1	)

See Notes to Consolidated Financial Statements

F-9

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. Overview and Basis of Presentation

Coltec Industries Inc (“Coltec” or “the Company”) is a leader in the design, development, manufacturing and marketing of well recognized, proprietary engineered industrial products that include sealing products, bearings, air compressors and heavy-duty diesel and natural gas engines.

Overview

In September 2001, Goodrich Corporation (“Goodrich” or the “Parent”) announced that its Board of Directors had approved in principle the tax-free spin-off of its Engineered Industrial Products (“EIP”) business to shareholders (the “Distribution”). The Distribution will be effected through a tax-free distribution to Goodrich shareholders of all of the capital stock of EnPro Industries, Inc. (“EnPro”), a newly formed wholly owned subsidiary of Goodrich.

The EIP business, as well as an aerospace business, is currently owned by Coltec, a wholly owned subsidiary of Goodrich. Prior to the Distribution, Coltec’s aerospace business (“Coltec Aerospace”) will assume all intercompany balances outstanding between Coltec and Goodrich and Coltec will then transfer to Goodrich by way of a dividend (the “Aerospace Dividend”) all of the assets, liabilities and operations of Coltec Aerospace, including these assumed balances. Following the Distribution, Coltec will be a wholly owned subsidiary of EnPro and Coltec Aerospace will be owned by Goodrich.

The Distribution is subject to certain conditions. No consents are required from Goodrich security holders or the holders of Coltec’s outstanding debt securities to complete the Distribution.

Basis of Presentation

These financial statements present Coltec’s consolidated financial condition, results of operations and cash flows as it operated as a wholly owned subsidiary of Goodrich, including certain adjustments and allocations necessary for a fair presentation of the business (see Note C). As noted above, prior to the Distribution, Coltec will transfer Coltec Aerospace to Goodrich. The transfer of Coltec Aerospace to Goodrich represents the disposal of a segment under APB Opinion No. 30 (“APB 30”). Accordingly, Coltec Aerospace has been accounted for as a discontinued operation and the revenues, costs and expenses, assets and liabilities, and cash flows have been segregated in the Company’s Consolidated Statements of Income, Consolidated Balance Sheets and Consolidated Statements of Cash Flows. Unless otherwise noted, disclosures herein pertain to the Company’s continuing operations.

As a result of the Aerospace Dividend, Goodrich will retain the net assets of Coltec Aerospace, which have been reflected as Assets and Liabilities of Discontinued Operations in the Company’s Consolidated Balance Sheets. Coltec Aerospace will also retain certain other assets and liabilities of the Company, including the assumed intercompany balances and other assets and liabilities relating primarily to pensions, postretirement benefits other than pensions and income taxes.

Coltec has outstanding certain debt the most significant of which are Coltec’s 7 1/2% Senior Notes due 2008 (the “Coltec Senior Notes”) and convertible trust preferred securities (the “TIDES”). The TIDES will remain obligations of Coltec after the distribution. Goodrich intends to make an offer to exchange the Coltec Senior Notes for debt securities of Goodrich having similar terms. There can be no guarantee, however, that this exchange offer will occur. Coltec intends to purchase a portion of the Coltec Senior Notes surrendered for exchange in the exchange offer, which will be financed through an intercompany loan from Goodrich. The remaining portion of Coltec Senior Notes accepted by Goodrich for exchange will be contributed to EnPro in connection with the Distribution and would thereafter be an intercompany obligation of Coltec to EnPro, which will be eliminated upon consolidation in EnPro’s consolidated financial statements going forward.

F-10

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

All significant transactions among the Company’s operations have been eliminated. Intercompany balances existing between the Company and Goodrich or its subsidiaries, including the loans from Goodrich to Coltec to finance the purchase by Coltec of the Coltec Senior Notes, will be assumed by Coltec Aerospace prior to the Distribution and the Aerospace Dividend, and, accordingly, have been or will be reflected within the Parent Company Investment line within the accompanying Consolidated Balance Sheets.

Management believes that the assumptions underlying the consolidated financial statements are reasonable. However, the financial information in these financial statements does not necessarily include all of the expenses that would have been incurred by Coltec had it been a separate, stand-alone entity and may not necessarily reflect what Coltec’s consolidated financial condition, results of operations and cash flows would have been had Coltec been a stand-alone entity during the periods presented or what Coltec’s consolidated financial condition, results of operations and cash flows may be in the future.

B. Significant Accounting Policies

Principles of Consolidation The Consolidated Financial Statements reflect the accounts of the Company and its majority-owned subsidiaries. Intercompany accounts and transactions are eliminated.

Cash Equivalents Cash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase.

Inventories Certain domestic inventories are valued by the last-in, first-out (“LIFO”) cost method. Inventories not valued by the LIFO method are valued using first-in, first-out (“FIFO”), and are recorded at the lower of cost or market.

Long-Lived Assets Property, plant and equipment is recorded at cost. Depreciation and amortization is computed principally using the straight-line method over the following estimated useful lives: buildings and improvements, 15 to 40 years; machinery and equipment, 5 to 15 years. Repairs and maintenance costs are expensed as incurred.

Goodwill represents the excess of the purchase price over the fair value of the net assets of acquired businesses and is amortized using the straight-line method, in most cases over 20 to 40 years. Goodwill amortization is recorded in cost of sales.

Identifiable intangible assets are recorded at cost, or when acquired as a part of a business combination, at estimated fair value. These assets include patents and other technology agreements, trademarks, licenses and non-compete agreements. They are amortized using a method that reflects the pattern in which the economic benefits of the assets are consumed or the straight-line method over estimated useful lives of 5 to 25 years.

Impairment of long-lived assets and related goodwill is recognized when events or changes in circumstances indicate that the carrying value of the asset, or related groups of assets, may not be recoverable and the estimate of undiscounted cash flows over the asset’s remaining estimated useful life are less than the asset’s carrying value. Measurement of the amount of impairment is based on appraisal, market values of similar assets or estimated discounted future cash flows resulting from the use and ultimate disposition of the asset.

Revenue and Income Recognition Revenue is recognized at the time products are shipped, or services are rendered.

Financial Instruments Financial instruments recorded on the balance sheet include cash and cash equivalents, accounts and notes receivable, asbestos insurance receivable, accounts payable and debt. Because of their short maturity, the carrying value of cash and cash equivalents, accounts and notes receivable, asbestos insurance receivable, accounts payable and short-term bank debt approximates fair value. Fair value of long-term investments is based on quoted market prices. Fair value of long-term debt is based on quoted market prices or on rates available to the Parent for debt with similar terms and maturities (which may not be indicative of rates available to the Company as an unaffiliated entity).

F-11

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Derivative Instruments Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”), as amended, which requires that all derivative instruments be reported on the balance sheet at fair value and that changes in a derivative’s fair value be recognized currently in earnings unless specific hedge criteria are met. In its adoption of SFAS 133, the Company, as permitted by the transition provisions therein, elected not to apply the provisions of SFAS 133 to embedded derivatives existing before January 1, 1999. As such, the conversion feature of the TIDES will not be bifurcated from the host instrument and accounted for separately as a derivative. Further, the Company does not believe that the spin-off creates any substantial modification to the terms of the TIDES and therefore, the TIDES will continue to be “grandfathered” subsequent to the spin-off.

The Company purchased a call option in March 2002 to mitigate its financial exposure created by the conversion feature of the TIDES. The call option is a derivative instrument and will be carried at fair value with changes reflected currently in income beginning in 2002.

Stock-Based Compensation The Company accounts for stock-based employee compensation in accordance with the provisions of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations.

Income Taxes The Company’s operations are included in the consolidated income tax returns filed by the Parent. Income taxes in the Company’s consolidated statement of income are calculated on a separate tax return basis as if the Company had operated as a stand-alone entity. The provision for income taxes is calculated in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”, which requires the recognition of deferred income taxes using the liability method.

Research and Development Expense Costs related to research and development activities are expensed as incurred. The Company performs research and development under Company-funded programs for commercial products. Total research and development expenditures from continuing operations in 2001, 2000 and 1999 were $12.7 million, $12.3 million and $15.0 million, respectively.

Reclassifications Certain amounts in the financial statements have been reclassified to reflect the adoption of FASB Statement No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”).

Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

New Accounting Standards In July 2001, the FASB issued Statement No. 141 “Business Combinations” (“SFAS 141”) and Statement No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”). SFAS 141 is effective as follows: a) the use of the pooling-of-interest method is prohibited for business combinations initiated after June 30, 2001; and b) the provisions of SFAS 141 and SFAS 142 apply to all business combinations accounted for by the purchase method that are completed after June 30, 2001. There are also transition provisions that apply to business combinations completed before July 1, 2001, that were accounted for by the purchase method. SFAS 142 is effective for fiscal years beginning after December 15, 2001 and applies to all goodwill and other intangible assets recognized in an entity’s statement of financial condition at that date, regardless of when those assets were initially recognized.

The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002 and for acquisitions made subsequent to July 1, 2001. Application of the provisions of SFAS 142, other than those relating to amortization of goodwill and other intangibles, is expected to result in an increase in pre-tax income of approximately $4 million per year. By June 30, 2002, the Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible

F-12

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

assets as of January 1, 2002. As a result, the Company has not yet determined what the effect of these tests will be on the Company’s consolidated financial condition or results of operations.

In June 2001, the FASB issued Statement No. 143 “Accounting for Asset Retirement Obligations” (“SFAS 143”). SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset, except for certain obligations of lessees. SFAS 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company has not yet determined what the effect of SFAS 143 will be on its consolidated financial condition or results of operations.

In October 2001, the FASB issued SFAS 144. SFAS 144 supersedes FASB Statement No. 121 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” (“SFAS 121”), however it retains the fundamental provisions of that statement related to the recognition and measurement of the impairment of long-lived assets to be “held and used.” In addition, SFAS 144 provides more guidance on estimating cash flows when performing a recoverability test, requires that a long-lived asset (group) to be disposed of other than by sale (e.g. abandoned) be classified as “held and used” until it is disposed of, and establishes more restrictive criteria to classify an asset (group) as “held for sale.”

C. Parent Company Investment and Allocations

Parent company investment represents the Parent’s equity investment in the Company. The Company receives funding for its operations from the Parent as necessary. Interest expense associated with the Parent’s general corporate debt and the Parent’s funding of the Company’s operations is not charged to the Company and has not been allocated to the Company. All transfers to and from the Parent have been reported in the parent company investment account. All funding for the Company is included in the parent company investment account and there are no other balances due to or from any related parties.


	*Corporate and Segment Administrative Costs Reflected in Operating Income*

During 2001, 2000 and 1999 the Company’s operating units were allocated $3.4 million, $6.1 million and $9.1 million in corporate costs from the Parent, respectively. The Parent has historically allocated a portion of certain headquarters department expenses to individual business units. Business units are only allocated amounts for departments providing services to the business units. These departments include Tax, Government Relations, Accounting and Financial Analysis, Compensation and Benefit Administration and Information Technology. The portion of the department expenses which is considered to benefit headquarters only is not allocated. The determination is made by each department head and reviewed annually.

To determine how much to allocate to each business unit, management identifies certain items which, in management’s opinion, drive the costs of the benefits that are being allocated. These items include Employee Compensation Costs, Trade Sales, Net Inventory and Net Property, Plant and Equipment. Each business unit is then allocated an amount based on their percentage of the total. The Company also participates in certain benefit plans of the Parent, the cost of which is allocated to the Company and is included in the accompanying consolidated financial statements but is not reflected in the amounts above (see Note L). Management believes these allocations are reasonable.

During 2001 and 2000, operating income also includes $6.0 million and $3.4 million, respectively, of costs associated with segment headquarters expense. As segment headquarters was established after the Coltec Acquisition, there are no comparable costs in 1999.

F-13

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	*Unallocated Corporate Administrative Costs*

Corporate unallocated costs were $10.7 million, $10.2 million and $26.8 million in 2001, 2000 and 1999, respectively. These costs represent general corporate administrative costs, and have not been included in segment operating income. These costs include approximately $10.0 million in each of 2001, 2000 and 1999 related to non-reimbursable costs associated with managing and settling asbestos claims.


	*Corporate and Segment Administrative Costs Subsequent to the Distribution*

Prior to the acquisition of Coltec by Goodrich (the “Coltec Acquisition”), Coltec operated as a separate public company with separate corporate headquarters. Subsequent to the Coltec Acquisition, the majority of corporate costs were incurred by Goodrich, and have not been reflected in these consolidated financial statements unless allocated by the Parent. Accordingly, the financial information in these financial statements does not necessarily include all the expenses that would have been incurred had Coltec been a separate, stand-alone entity and may not necessarily reflect Coltec’s consolidated financial condition, results of operations and cash flows in the future or what its consolidated financial condition, results of operations and cash flows would have been had Coltec been a stand-alone entity during all of the periods presented.

D. Acquisitions

On September 4, 2001, the Company acquired Dana Corporation’s Glacier Industrial Bearings business (“GIB”). The results of GIB’s operations have been included in the consolidated financial statements of the Company since that date. The business manufactures and distributes industrial metal polymer bearings and will be integrated with the Company’s Garlock Bearings business, which is included in the Engineered Products segment. The integrated business will be referred to as Garlock Glacier Bearings (“GGB”). The acquisition extends the Company’s reach geographically and results in a global position in the metal polymer bearings market; broadens its current product offerings; is expected to result in economies of scale relating to raw material purchases; and includes the use of the Glacier brand name trademarks and intellectual property. The acquisition was recorded using the purchase method of accounting.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition. The purchase price allocation is based on independent third party appraisals.


		At September 4, 2001

		(dollars in millions)
Current assets		$	22.8
Property, plant and equipment			22.3
In-process research and development			.5
Goodwill			63.5
Identifiable intangible assets			59.1

	Total assets acquired		168.2
Current and non-current liabilities			(14.9	)
Deferred income taxes			(.3	)

	Total liabilities assumed		(15.2	)

	Net assets acquired	$	153.0

Approximately $64 million of the aggregate purchase price was allocated to goodwill, all of which is expected to be deductible for income tax purposes. Approximately $59 million of the purchase price was allocated to identifiable intangible assets including customer relationships (approximately $27 million), existing technology (approximately $16 million), trademarks (approximately $14 million) and other (approximately $2 million). The trademarks are deemed to have an indefinite life and are therefore not subject to amortization. Customer relationships, existing technologies and other intangible assets are being

F-14

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

amortized based primarily on undiscounted cash flows which reflect the patterns in which the economic benefits of the assets are expected to be consumed over 14 years, 25 years and 5 years, respectively. The weighted average life of the amortizable intangible assets is 17 years.

The $.5 million assigned to in-process research and development was expensed at the date of acquisition in accordance with FASB Interpretation No. 4, Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method . This expense was included in selling and administrative expenses.

In February 2002, the Company received $4.8 million in satisfaction of the final post-closing settlements. The proceeds from the settlements will reduce goodwill in 2002.

The following pro forma information assumes that the acquisition occurred as of January 1 of each period.



	Year Ended December 31, 2001

	Historical		GIB		Pro Forma


	(dollars in millions)
Sales	$	628.3	$	68.1	$	696.4
Operating income	$	52.7	$	11.5	$	64.2
Income from discontinued operations	$	94.1	$	—	$	94.1
Net income	$	100.7	$	7.2	$	107.9



	Year Ended December 31, 2000

	Historical		GIB		Pro Forma


	(dollars in millions)
Sales	$	654.4	$	99.1	$	753.5
Operating income	$	102.7	$	16.9	$	119.6
Income from discontinued operations	$	64.2	$	—	$	64.2
Net income	$	100.9	$	10.6	$	111.5

In March 2001, the Company also acquired a small product line which is included in the Engineered Products segment. The cost of this acquisition was $2.1 million and resulted in an increase in working capital of $0.1 million and an increase in goodwill of $2.0 million.

E. Merger-Related and Consolidation Costs

The Company incurred $3.8 million of consolidation costs in 2001. Merger-related and consolidation reserves at December 31, 2001, as well as activity during the year, consisted of:


	Balance							Balance
	December 31,							December 31,
	2000		Provision		Activity			2001


	(dollars in millions)
Personnel related costs	$	1.3	$	2.4	$	(1.6	)	$	2.1
Asset write-down and facility consolidation costs		0.1		1.4		(.4	)		1.1

	$	1.4	$	3.8	$	(2.0	)	$	3.2

During 2001, the Company incurred $2.4 million of personnel-related costs associated with workforce reductions at the Company’s Garlock Sealing Technologies, Stemco, Fairbanks Morse Engine and Sterling Die operating units (approximately 170 positions of which approximately 90 had been terminated by December 31, 2001) and $1.4 million related to facility closures and asset write-downs. The merger-related and consolidation reserves were reduced by $2.0 million during 2001, of which $1.1 million represented cash

F-15

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

payments. The remaining $0.9 million of reserve reductions represented asset impairment charges or reserves which were transferred to, and subsequently administered by, the Parent.

The Company incurred $1.4 million of consolidation costs in 2000. Merger-related and consolidation reserves at December 31, 2000, as well as activity during the year, consisted of:


	Balance							Balance
	December 31,							December 31,
	1999		Provision		Activity			2000


	(dollars in millions)
Personnel related costs	$	5.3	$	1.3	$	(5.3	)	$	1.3
Transaction costs		1.5		—		(1.5	)		—
Asset write-down and facility consolidation costs		0.7		0.1		(0.7	)		0.1

	$	7.5	$	1.4	$	(7.5	)	$	1.4

During 2000, the Company incurred $1.3 million of personnel-related costs associated with workforce reductions and $0.1 million related to an asset write-down. The merger-related and consolidation reserves were reduced by $7.5 million during 2000, of which $4.0 million represented cash payments. The remaining $3.5 million of reserve reductions represented the remaining reserves associated with the Coltec Acquisition, which were transferred to, and subsequently administered by, the Parent.

The Company incurred $128.4 million of merger-related and consolidation costs in 1999. Merger-related and consolidation reserves at December 31, 1999, as well as activity during the year, consisted of:


	Balance							Balance
	December 31,							December 31,
	1998		Provision		Activity			1999


	(dollars in millions)
Personnel related costs	$	—	$	68.4	$	(63.1	)	$	5.3
Transaction costs		—		57.9		(56.4	)		1.5
Asset write-down and facility consolidation costs		—		2.1		(1.4	)		0.7

	$	—	$	128.4	$	(120.9	)	$	7.5

The Company incurred $68.4 million of personnel-related costs in 1999. Personnel-related costs associated with the Coltec Acquisition were $66.3 million, consisting of $61.8 million incurred under change in control provisions in employment agreements and $4.5 million in employee severance costs. Personnel-related costs also include employee severance costs of $2.1 million for reductions at the Company’s Garlock Sealing Technologies, France Compressor Products and Stemco operating units (approximately 125 positions).

The Company incurred $57.9 million of transaction costs in 1999. Transaction costs were associated with the Coltec Acquisition and include investment banking fees, accounting fees, legal fees, litigation settlement costs and other transaction costs.

The Company also incurred $2.1 million of asset write-down and facility consolidation costs in 1999. Facility consolidation costs associated with the Coltec Acquisition were $0.4 million. Asset-write down and facility consolidation costs also include $1.7 million for consolidation activities at the Company’s Garlock Sealing Technologies and France Compressor Products operating units. The $1.7 million was comprised of $0.8 million of equipment relocation, $0.8 million of facility closure costs and $0.1 million in asset write-offs.

The $120.9 million in activity during 1999 represented cash payments.

F-16

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

F. Sale of Accounts Receivable

The Company had an agreement to sell certain trade accounts receivable, up to a maximum of $95.0 million until the agreement was terminated in December 2001. At December 31, 2000, $81.5 million of the Company’s receivables were sold under this agreement, of which $51.0 million related to discontinued operations and $30.5 million related to continuing operations. Accordingly, $30.5 million of the Company’s receivables sold under this agreement were reflected as a reduction of accounts receivable in the 2000 balance sheet. The receivables were sold at a discount, which was included in interest expense in the 2001, 2000 and 1999 income statements.

G. Inventories

Inventories consisted of the following:


		2001			2000


		(dollars in millions)
Finished products		$	66.2		$	49.2
In process			58.4			51.6
Raw materials and supplies			17.3			12.6

			141.9			113.4
Reserve to reduce certain inventories to LIFO basis			(13.8	)		(12.9	)
Progress payments and advances			(45.1	)		(34.6	)

	Total	$	83.0		$	65.9

Approximately 57% and 58% of inventories were valued by the LIFO method in 2001 and 2000, respectively.

H. Property, Plant and Equipment – Net

Property, plant and equipment – net consisted of the following:


		2001			2000


		(dollars in millions)
Land		$	3.8		$	3.1
Buildings and improvements			82.4			76.2
Machinery and equipment			272.3			253.8
Construction in progress			8.4			8.0

			366.9			341.1
Less allowances for depreciation			(228.7	)		(216.2	)

	Total	$	138.2		$	124.9

Amounts charged to expense for depreciation from continuing operations were approximately $21.0 million in 2001 and 2000 and $20.0 million in 1999.

F-17

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

I. Other Accrued Expenses

Other accrued expenses consisted of the following:


		2001		2000


		(dollars in millions)
Wages, vacations, pensions and other employment costs		$	35.0	$	18.2
Taxes, other than federal and foreign taxes on income			7.6		4.9
Accrued environmental liabilities			5.2		2.6
Accrued interest			7.7		7.6
Merger-related and consolidation reserves			3.2		1.4
Warranty			5.8		5.2
Other			4.5		10.8

	Total	$	69.0	$	50.7

J. Long-Term Debt

At December 31, 2001 and 2000, long-term debt, which is debt payable after one year, consisted of:


		2001		2000


		(dollars in millions)
7.5% senior notes, maturing in 2008		$	300.0	$	300.0
Other debt			13.0		14.8

	Total	$	313.0	$	314.8

Coltec Senior Notes. In 1998, the Company privately placed, with institutional investors, $300.0 million of 7.5% senior notes due in 2008. As discussed in Note A, Goodrich intends to offer to exchange all $300.0 million of the principal amount of these notes for new, similar Goodrich securities.

Other debt includes approximately $12.0 million of industrial revenue bonds issued in 1993, with interest rates ranging from 6.4% to 6.55%, which mature in 2009.

Maturities of long-term debt in years subsequent to December 31, 2001 are as follows (in millions): 2002 — $1.6; 2003 — $0.4; 2004 — $0.3; 2005 — $0.2; 2006 — $0.0; thereafter — $312.1.

K. Lease Commitments

Future minimum lease payments from continuing operations, by year and in the aggregate, under noncancelable operating leases with initial or remaining noncancelable lease terms in excess of one year, consisted of the following at December 31, 2001:


		(dollars in millions)

2002		$	7.8
2003			6.1
2004			4.5
2005			3.0
2006			2.5
Thereafter			8.5

	Total minimum payments	$	32.4

F-18

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net rent expense from continuing operations was $8.2 million, $6.3 million, and $7.8 million at December 31, 2001, 2000 and 1999, respectively.

L. Pensions and Postretirement Benefits

The Parent and its subsidiaries have several noncontributory defined benefit pension plans covering eligible employees. Salaried employees’ benefit payments are generally determined using a formula that is based on an employees’ compensation and length of service. Hourly employees’ benefit payments are generally determined using stated amounts for each year of service.

The Parent and its subsidiaries also sponsor unfunded defined benefit postretirement plans that provide certain health-care and life insurance benefits to eligible employees. The health-care plans are contributory, with retiree contributions adjusted periodically, and contain other cost-sharing features, such as deductibles and coinsurance. The life insurance plans are generally noncontributory.

The qualified pension plans sponsored by the Parent and its subsidiaries were fully funded on an accumulated benefit obligation basis at December 31, 2001 and 2000. Assets for these plans consist principally of corporate and government obligations and commingled funds invested in equities, debt and real estate.

Amortization of unrecognized transition assets and liabilities, prior service cost and gains and losses (if applicable) are recorded using the straight-line method over the average remaining service period of active employees, or approximately 12 years.

The employees of the Company are eligible to participate in the pension plans, non-qualified plans and postretirement benefit plans sponsored by the Parent and its subsidiaries. Prior to the Coltec Acquisition, the Company maintained its own pension and postretirement plans since it operated as a separate company. Beginning in 2000, the Parent allocated its combined pension and postretirement benefit cost to its operating divisions. Accordingly, the Coltec pension and postretirement costs in 2001 and 2000 reflect amounts allocated to Coltec by the Parent. The pension service cost identifiable to a business is assigned to that business. The remainder of the Parent’s pension expense (or income) for domestic operations, regardless of the plan, is netted and allocated based on each active business’s pension benefit obligation (PBO). For international plans, the subsidiary sponsor records the pension expense or income. Post-retirement expense is actuarially determined by business. Management believes these allocations are reasonable.

The following table summarizes information regarding the Company’s pension and postretirement benefit amounts recorded in the Consolidated Balance Sheets at December 31, 2001 and 2000.



		Pension Benefits						Other Benefits

		2001			2000			2001			2000


		(dollars in millions)
Amounts Recognized in the Consolidated Balance Sheets Consist of:
	Prepaid benefit cost	$	90.8		$	71.7		$	—		$	—
	Intangible asset		4.1			2.2			—			—
	Accumulated other comprehensive income		5.3			3.2			—			—
	Accrued benefit liability		(20.3	)		(13.8	)		(12.3	)		(12.8	)

	Net amount recognized	$	79.9		$	63.3		$	(12.3	)	$	(12.8	)

The Company’s income from continuing operations includes $5.6 million, $7.2 million and $13.3 million of pension income in 2001, 2000 and 1999, respectively. The Company’s income from

F-19

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

continuing operations includes $0.5 million, $0.4 million and $0.6 million of postretirement benefit expense in 2001, 2000 and 1999, respectively.

The Company’s employees also participate in voluntary retirement savings plans for salaried and wage employees maintained by the Parent and its subsidiaries. Under provisions of these plans, eligible employees can receive matching contributions on up to the first 6% of their eligible earnings.

M. Income Taxes

Income (loss) from continuing operations before income taxes as shown in the Consolidated Statements of Income consists of the following:


		2001		2000		1999


		(dollars in millions)
Domestic		$	6.7	$	62.1	$	(72.6	)
Foreign			16.5		9.2		8.2

	Total	$	23.2	$	71.3	$	(64.4	)

A summary of income tax (expense) benefit from continuing operations in the Consolidated Statements of Income is as follows:


			2001			2000			1999


			(dollars in millions)
Current:
	Federal		$	32.1		$	(3.7	)	$	(16.1	)
	Foreign			(4.7	)		(4.8	)		(3.2	)
	State			2.6			(0.2	)		(1.0	)

				30.0			(8.7	)		(20.3	)
Deferred:
	Federal			(36.1	)		(16.8	)		28.6
	State			(2.6	)		(1.2	)		2.0

				(38.7	)		(18.0	)		30.6

		Total	$	(8.7	)	$	(26.7	)	$	10.3

F-20

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Significant components of deferred income tax assets and liabilities at December 31, 2001 and 2000, are as follows:


				2001			2000


				(dollars in millions)
Deferred income tax assets:
	Accrual for postretirement benefits other than pensions			$	4.6		$	4.8
	Environmental reserves				12.6			11.1
	Retained liabilities of previously owned businesses				21.5			20.9
	Other				15.0			15.9

		Total deferred income tax assets			53.7			52.7

Deferred income tax liabilities:
	Inventories				(4.4	)		(2.9	)
	Tax over book depreciation				(17.6	)		(14.5	)
	Pensions				(19.9	)		(19.0	)
	Payments in excess of insurance recoveries				(38.6	)		(10.5	)
	Other				(14.2	)		(8.1	)

			Total deferred income tax liabilities		(94.7	)		(55.0	)

			Net deferred income taxes	$	(41.0	)	$	(2.3	)

Management has determined, based on the Company’s history of prior earnings and its expectations for the future, that taxable income of the Company will more likely than not be sufficient to recognize fully its deferred tax assets. In addition, management’s analysis indicates that the turnaround periods for certain of these assets are for long periods of time or are indefinite. The remaining deferred tax assets and liabilities approximately match each other in terms of timing and amounts and should be realizable in the future, given the Company’s operating history.

The effective income tax rate from continuing operations varied from the statutory federal income tax rate as follows:



	Percent of Income
	Pretax

	2001			2000			1999*

Statutory federal income tax rate		35.0	%		35.0	%		35.0	%
Credits		(2.1	)		(0.1	)		—
State and local taxes		—			1.2			1.1
Tax exempt income from foreign sales corporation		(3.3	)		(1.3	)		(2.3	)
Trust distributions		(11.6	)		(3.8	)		(4.3	)
Non-deductible merger-related costs		—			—			(15.9	)
Repatriation of non-U.S. earnings		1.7			1.5			1.3
Differences in rates on consolidated foreign subsidiaries		(4.6	)		2.2			0.6
Capital loss transaction		20.9			2.4			—
Other items		1.5			0.4			0.5

Effective income tax rate		37.5	%		37.5	%		16.0	%

* Coltec’s effective tax rate in 1999 was a benefit due to a pre-tax loss.

F-21

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company has not provided for U.S. federal and foreign withholding taxes on $56.4 million of foreign subsidiaries’ undistributed earnings as of December 31, 2001, because such earnings are intended to be reinvested indefinitely. It is not practical to determine the amount of income tax liability that would result had such earnings actually been repatriated. On repatriation, certain foreign countries impose withholding taxes. The amount of withholding tax that would be payable on remittance of the entire amount of undistributed earnings would approximate $3.6 million.

N. Business Segment Information

The Company has two reportable segments. The sealing products segment manufactures sealing and PTFE products. The engineered products segment manufacturers metal polymer bearings, air compressors, engines and specialized tooling. The Company’s reportable segments are managed separately based on differences in their products and services. Segment operating income is total segment revenue reduced by operating expenses identifiable with the segment. Corporate unallocated includes general corporate administrative costs (See Note C for a discussion of corporate unallocated costs). Merger-related and consolidation costs are presented separately.

The Company’s business is conducted on a global basis with manufacturing, service and sales undertaken in various locations throughout the world. Sealing and Engineered Products’ goods and services, however, are principally sold to customers in North America and Europe.

The Company evaluates performance and allocates resources based on operating income. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. There are no significant intersegment sales.


		2001			2000			1999


		(dollars in millions)
Sales
Sealing Products		$	354.7		$	391.1		$	394.6
Engineered Products			273.6			263.3			271.1

	Total Sales	$	628.3		$	654.4		$	665.7


Operating Income (Loss)
Sealing Products		$	45.0		$	67.5		$	71.0
Engineered Products			22.2			46.8			52.6

			67.2			114.3			123.6
Corporate unallocated			(10.7	)		(10.2	)		(26.8	)
Merger-related and consolidation costs			(3.8	)		(1.4	)		(128.4	)

	Total Operating Income (Loss)	$	52.7		$	102.7		$	(31.6	)

Assets
Sealing Products		$	210.7		$	219.9		$	206.0
Engineered Products			332.6			151.1			184.5
Assets of discontinued operations			475.2			482.2			532.8
Corporate			456.0			402.2			284.6

	Total Assets	$	1,474.5		$	1,255.4		$	1,207.9

F-22

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


		2001		2000		1999


		(dollars in millions)
Capital Expenditures
Sealing Products		$	6.5	$	6.7	$	9.8
Engineered Products			9.9		7.6		13.3
Corporate			—		—		1.0

	Total Capital Expenditures	$	16.4	$	14.3	$	24.1

Depreciation and Amortization Expense
Sealing Products		$	14.6	$	14.1	$	12.4
Engineered Products			13.7		10.8		9.8
Corporate			0.5		1.7		2.2

	Total Depreciation and Amortization	$	28.8	$	26.6	$	24.4

Geographic Areas Net Sales
United States		$	438.4	$	480.0	$	496.2
Canada			43.1		41.7		44.6
Europe			91.4		48.5		67.3
Other Foreign			55.4		84.2		57.6

	Total	$	628.3	$	654.4	$	665.7

Property
United States		$	109.5	$	111.1	$	125.8
Canada			1.9		1.9		1.5
Europe			25.3		8.2		5.8
Other Foreign			1.5		3.7		0.6

	Total	$	138.2	$	124.9	$	133.7

No customer accounted for 10% or more of net sales in 2001, 2000 or 1999.

O. Accounts Receivable Allowance


			Charged
	Balance		to Costs								Balance
	Beginning		and								End
	of Year		Expense			Deductions(1)			Other(2)		of Year


	(dollars in millions)
2001	$	1.8	$	0.7		$	(0.6	)	$	0.4	$	2.3
2000		2.3		(0.2	)		(0.3	)		—		1.8
1999		2.6		0.6			(0.9	)		—		2.3

(1) Write-off of doubtful accounts, net of recoveries

(2) Acquisitions

F-23

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

P. Fair Values Of Financial Instruments

The Company’s accounting policies with respect to financial instruments are described in Note B.

The carrying values of the Company’s significant financial instruments reflected in the consolidated balance sheets approximate their respective fair values at December 31, 2001 and 2000, except for the following instruments:



	2001				2000

	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value


	(dollars in millions)
Long-term investments	$	23.7	$	24.2	$	22.5	$	22.3
Long-term debt	$	314.6	$	330.0	$	317.3	$	318.6
Mandatorily redeemable convertible preferred securities of trust (TIDES)	$	150.0	$	106.7	$	149.3	$	123.9

The Company has an outstanding contingent liability for guaranteed debt and lease payments of $22.5 million, and for letters of credit of $0.2 million. It was not practical to obtain independent estimates of the fair values for the contingent liability for guaranteed debt and lease payments and for letters of credit without incurring excessive costs. In the opinion of management, non-performance by the other parties to the contingent liabilities will not have a material effect on the Company’s consolidated financial condition or results of operations.

Q. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) consisted of the following:


	2001			2000


	(dollars in millions)
Unrealized translation adjustments	$	(12.3	)	$	(11.8	)
Minimum pension liability		(3.3	)		(3.2	)

Accumulated other comprehensive income (loss)	$	(15.6	)	$	(15.0	)

R. Supplemental Cash Flow Information

The following table sets forth supplemental cash flow information related to acquisitions accounted for under the purchase method and interest paid:


	2001			2000		1999


	(dollars in millions)
Estimated fair value of tangible assets acquired	$	45.4		$	—	$	—
Goodwill and identifiable intangible assets acquired		125.1			—		—
Cash paid		(155.1	)		—		—

Liabilities assumed or created	$	15.4		$	—	$	—

Interest paid (net of amount capitalized)	$	23.7		$	28.4	$	37.2

S. Mandatorily Redeemable Convertible Preferred Securities of Trust (TIDES)

In April 1998, Coltec Capital Trust, a Delaware business trust and a wholly owned subsidiary of the Company privately placed with institutional investors $150 million (3,000,000 shares at liquidation value of $50 per Convertible Preferred Security) of 5 1/4% Convertible Preferred Securities — Term Income Deferred

F-24

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Equity Securities, or TIDES. The TIDES represent undivided beneficial ownership interests in the trust. In connection with the issuance of the TIDES, Coltec issued an equivalent aggregate principal amount of its 5 1/4% Convertible Junior Subordinated Deferrable Interest Debentures due April 15, 2028, or TIDES Debentures, all of which were acquired by Coltec Capital Trust with the proceeds from the private placement of the TIDES. Coltec Capital Trust has essentially no other assets or liabilities other than the TIDES Debentures. The obligations of Coltec Capital Trust with respect to the TIDES are guaranteed jointly and severally by Coltec and Goodrich. The TIDES are convertible at the option of the holders at any time into the common stock of the Parent at an effective conversion price of $52.34 per share and are redeemable at the Parent’s option after April 20, 2001 at 102.63% of the liquidation amount declining ratably to 100% after April 20, 2004.

Following the distribution and until April 15, 2028, each TIDES will be convertible, at the option of the holder, into a combination of 0.955248 of a share of Goodrich common stock and 0.1910496 of a share of EnPro common stock, subject to adjustment. In March 2002, Coltec purchased call options on 2,865,744 shares of Goodrich common stock with an exercise price of $52.34 per share, which represents the total Goodrich shares that would be required if all TIDES holders convert. The call options provide for either an adjustment to the exercise price or a cash payment, at Coltec’s option, if there is a change in the cash dividends paid on Goodrich common stock. On May 17, 2002 Goodrich announced that the board of directors approved a change to the company’s quarterly dividend from 27.5 cents per share to 20 cents per share of common stock. Coltec’s management is evaluating the impact of the reduction in the dividend and has not decided which option it will elect. One-third of these call options expire in March 2005, and the remainder expire in March 2007. Until they expire, the call options provide protection against Coltec’s risk that the cash required to finance conversions of the TIDES would exceed the TIDES liquidation value. The cost of these call options was approximately $15 million.

T. Stock Option Plan

As a business unit of the Parent, the Company has no employee stock option plan; however, certain eligible employees of the Company participate in the Parent’s Stock Option Plan (the “Plan”). Generally, options granted by the Parent are exercisable at the rate of 35% after one year, 70% after two years and 100% after three years. Certain options are fully exercisable immediately after grant. The term of each option cannot exceed 10 years from the date of grant. All options granted under the Plan have been granted at not less than 100% of market value (as defined) on the date of grant.

Pro forma information regarding net income is required by FASB Statement No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), and has been determined as if the Parent had accounted for its employee stock options under the fair value method described within that statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:


	2001		2000		1999

Risk-Free Interest Rate (%)		5.0		5.0		6.7
Dividend Yield (%)		3.5		3.4		3.5
Volatility Factor (%)		44.2		37.5		36.0
Weighted Average Expected Life of the Options (years)		7.0		7.0		7.0

The option valuation model requires the input of highly subjective assumptions, primarily stock price volatility, changes in which can materially affect the fair value estimate. The weighted-average fair values of stock options granted by the Parent during 2001, 2000 and 1999 were $13.78, $8.65 and $12.13, respectively.

During 1999, restricted stock awards for 89,910 shares were made under the Parent’s stock option plan including those made to employees of discontinued operations. Restricted stock awards may be subject

F-25

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

to conditions established by the Board of Directors. Under the terms of the restricted stock awards, the granted stock vests two years and 10 months after the award date. Restricted shares held by all employees will continue to vest under their original terms after the Distribution. The cost of these awards, determined as the market value of the shares at the date of grant, is being amortized over the vesting period. In 2001, 2000 and 1999, $0.2 million, $0.1 million and $0.9 million, respectively, was charged to expense of continuing operations for restricted stock awards. Of the $0.9 million of expense recognized in 1999, $0.8 million related to acceleration of vesting in connection with the Coltec Acquisition.

The Stock Option Plan of the Parent also provides that shares of common stock may be awarded as performance shares to certain key executives having a critical impact on long-term performance. Dividends are earned on phantom shares and are reinvested in additional phantom shares. Under this plan, compensation expense is recorded based on the extent performance objectives are expected to be met. Employees of the Company received grants in 2001 and 2000 only, as they were not participants in the plan before the Coltec Acquisition. In 2001 and 2000, $.4 million and $1.1 million, respectively, was charged to expense of continuing operations for performance shares. If the provisions of SFAS 123 had been used to account for awards of performance shares, the weighted-average grant-date fair value of performance shares granted in 2001 and 2000 would have been $38.62 and $23.12 per share, respectively.

U. Discontinued Operations

Prior to the Distribution, Coltec will dividend Coltec Aerospace to Goodrich. The dividend of Coltec Aerospace to Goodrich represents the disposal of a segment under APB 30. Accordingly, Coltec Aerospace has been accounted for as a discontinued operation and the revenues, costs and expenses, assets and liabilities, and cash flows have been segregated in the Company’s Consolidated Statements of Income, Consolidated Balance Sheets and Consolidated Statements of Cash Flows.

The following summarizes the results of discontinued operations, which consist solely of the results of Coltec Aerospace:


	2001		2000		1999


	(dollars in millions)
Sales	$	843.3	$	782.1	$	790.9

Pretax income from discontinued operations	$	140.6	$	97.2	$	101.9
Income tax expense		46.5		33.0		40.0

Income from discontinued operations	$	94.1	$	64.2	$	61.9

V. Commitments and Contingencies

The Company and its subsidiaries have numerous purchase commitments for materials and supplies incident to the ordinary course of business.

Contingencies

General

There are pending or threatened against the Company or its subsidiaries various claims, lawsuits and administrative proceedings, all arising from the ordinary course of business with respect to commercial, product liability, asbestos and environmental matters, which seek remedies or damages. The Company believes that any liability that may finally be determined with respect to commercial and non-asbestos product liability claims should not have a material effect on the Company’s consolidated financial condition or results of operations. From time to time, the Company and its subsidiaries are also involved in legal

F-26

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

proceedings as plaintiffs involving contract, patent protection, environmental and other matters. Gain contingencies, if any, are recognized when they are realized.

Environmental

The Company and its subsidiaries are generators of both hazardous wastes and non-hazardous wastes, the treatment, storage, transportation and disposal of which are subject to various laws and governmental regulations. Although past operations were in substantial compliance with the then-applicable regulations, the Company has been designated as a potentially responsible party (“PRP”) by the U.S. Environmental Protection Agency (“EPA”), or similar state agencies, in connection with several sites.

The Company initiates corrective and/or preventive environmental projects of its own to ensure safe and lawful activities at its current operations. It also conducts a compliance and management systems audit program. The Company believes that compliance with current laws and governmental regulations concerning the environment will not have a material adverse effect on its capital expenditures, earnings or competitive position.

The Company’s environmental engineers and consultants review and monitor environmental issues at past and existing operating sites, as well as off-site disposal sites at which the Company has been identified as a PRP. This process includes investigation and remedial selection and implementation, as well as negotiations with other PRPs and governmental agencies.

The environmental amounts recorded in the financial statements have been recorded on an undiscounted basis. The Company believes that its reserves are adequate based on currently available information. Management believes that it is reasonably possible that additional costs may be incurred beyond the amounts accrued as a result of new information. However, the amounts, if any, cannot be estimated and management believes that they would not be material to the Company’s consolidated financial condition, but could be material to the Company’s consolidated results of operations in a given period.

Other Contingent Liability Matters

The Company has contingent liabilities related to discontinued operations of its predecessors for which it retained liability or is obligated under indemnity agreements. These contingent liabilities include potential product liability and associated claims related to the Company’s former Colt Firearms subsidiary for firearms manufactured prior to 1990 and related to the Company’s former Central Maloney subsidiary for electrical transformers manufactured prior to 1994. There are currently no claims pending against the Company related to these former subsidiaries. However, such claims could arise in the future. The Company also has ongoing obligations with regard to workers compensation, retiree medical and other retiree benefit matters associated with discontinued operations that relate to the Company’s periods of ownership of those operations.

Asbestos

Garlock and Anchor. Two subsidiaries of the Company, Garlock Sealing Technologies, LLC (“Garlock”) and The Anchor Packing Company (“Anchor”), have been among a number of defendants (typically 15 to 40) in actions filed in various states by plaintiffs alleging injury or death as a result of exposure to asbestos fibers. Among the products at issue in those actions are industrial sealing products, predominantly gaskets, manufactured and/or sold by Garlock or Anchor. The damages claimed vary from action to action and in some cases plaintiffs seek both compensatory and punitive damages. To date, neither Garlock nor Anchor has been required to pay any punitive damage awards, although there can be no assurance that they will not be required to do so in the future. Liability for compensatory damages has historically been allocated among all responsible defendants, thus limiting the potential monetary impact of a particular judgment or settlement on any individual defendant.

F-27

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company believes that Garlock and Anchor are in a favorable position compared to many other asbestos defendants because, among other things, the asbestos-containing products sold by Garlock and Anchor are encapsulated, which means the asbestos fibers are incorporated into the product during the manufacturing process and sealed in a binder. They are also nonfriable, which means they cannot be crumbled by hand pressure. The Occupational Safety and Health Administration, which began generally requiring warnings on asbestos-containing products in 1972, has never required that a warning be placed on products such as Garlock’s gaskets. Notwithstanding that no warning label has been required, Garlock included one on all of its asbestos-containing products beginning in 1978. Further, gaskets such as those previously manufactured and sold by Garlock are one of the few asbestos-containing products permitted to be manufactured under regulations of the EPA. Since the mid-1980s, U.S. sales of asbestos-containing industrial sealing products have not been a material part of Garlock’s sales and those sales have been predominantly to sophisticated purchasers such as the U.S. Navy and large petrochemical facilities. These purchasers generally have extensive health and safety procedures and are familiar with the risks associated with the use and handling of industrial sealing products that contain asbestos. Garlock discontinued distributing asbestos-containing products in the U.S. during 2000 and worldwide in mid-2001.

When a settlement demand is not reasonable given the totality of the circumstances, Garlock generally will try the case. Garlock has been successful in winning a substantial majority of the cases it has tried to verdict. Garlock’s share of adverse verdicts in these cases in 2001, 2000 and 1999 totaled less than $7 million in the aggregate, and some of those verdicts are on appeal.

F-28

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The insurance coverage available to Garlock is substantial. As of December 31, 2001, Garlock had available $1.011 billion of insurance coverage from carriers that it believes to be solvent. Of that amount, $119 million is allocated to claims that have been paid by Garlock and submitted to its insurance companies for reimbursement and $161 million has been committed to claim settlements not yet paid by Garlock. Thus, at December 31, 2001, $731 million remained available for coverage of future claims. Insurance coverage for asbestos claims is not available to cover exposures initially occurring on and after July 1, 1984. Garlock and Anchor continue to be named as defendants in new actions, a few of which allege initial exposure after July 1, 1984. To date, no payments with respect to these claims, pursuant to a settlement or otherwise, have been made. In addition, Garlock and Anchor believe that they have substantial defenses to these claims and therefore automatically reject them for settlement. However, there can be no assurance that any or all of these defenses will be successful in the future.

Arrangements with Garlock’s insurance carriers limit the amount that can be received by it in any one year. The amount of insurance available to cover claims paid by Garlock and reimbursements of legal fees currently is limited to $80 million per year. Similar amounts were limited to $80 million per year in 2001 and 2000 and $60 million in 1999. This limit automatically increases by 8% every three years. Amounts paid by Garlock in excess of this annual limit that would otherwise be recoverable from insurance may be collected from the insurance companies in subsequent years so long as insurance is available but subject to the annual limit in each subsequent year. As a result, Garlock is required to pay out of its own cash any amounts paid to settle or dispose of asbestos-related claims in excess of the annual limit and collect these amounts from its insurance carriers in subsequent years. Various options, such as raising the annual limit, are being pursued to ensure as close a match as possible between payments by Garlock and recoveries received from insurance. There can be no assurance that Garlock will be successful as to any or all of these options.

The Company records an accrual for liabilities related to Garlock and Anchor asbestos-related matters that are deemed probable and can be reasonably estimated, which consist of settled claims and actions in advanced stages of processing. The Company also records an asset equal to the amount of those

F-29

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

liabilities that is expected to be recovered by insurance. A table is provided below depicting quantitatively the items discussed above.


		Year ended			Year ended			Year ended
		2001			2000			1999

(number of cases)
	New Actions Filed During the Year(1)		37,600			36,200			30,200
	Actions in Advanced Stages at Year-End		2,500			5,800			8,300
	Open Actions at Year-End		95,400			96,300			96,000

(dollars in millions at Year-End)
	Estimated Liability for Settled Claims and Actions in Advanced Stages of Processing(2)	$	170.9		$	231.2		$	163.1
	Estimated Amounts Recoverable From Insurance(2)(3)	$	293.7		$	285.7		$	188.2

(dollars in millions)
	Payments(2)	$	162.7		$	119.7		$	84.5
	Insurance Recoveries(2)		87.9			83.3			65.2

	Net Cash Flow(3)	$	(74.8	)	$	(36.4	)	$	(19.3	)

(1) Consists only of actions actually filed with a court of competent jurisdiction. To the extent that a particular action names both Garlock and Anchor as defendants, for purposes of this table the action is treated as a single action.

(2) Includes amounts with respect to all claims settled, whether or not an action has actually been filed with a court of competent jurisdiction, claims which have been dismissed or tried and claims otherwise closed during the period.

(3) Payments made during the period for which Garlock does not receive a corresponding insurance recovery due to the annual limit imposed under Garlock’s insurance policies will be recovered in future periods to the extent insurance is available. When estimating the amounts recoverable, Garlock only includes insurance coverage available from carriers believed to be solvent.

As shown in the table above, the number of new actions filed during 2001 increased slightly over 2000, while the number of new actions filed during 2000 increased significantly over 1999. The Company believes these increases represent an acceleration of claims from future periods mostly attributable to bankruptcies of other asbestos defendants. The acceleration of claims may have the impact of accelerating the associated settlement payments. The Company believes the number of new actions will decrease in future years due, in part, to the previously-described acceleration of future claims and because the largest asbestos exposures occurred prior to the mid-1970s. However, there can be no assurance that the number of new claims filed will not remain at current levels or increase in future years.

Garlock and Anchor recorded charges to operations amounting to approximately $8.0 million in each of 2001, 2000 and 1999, representing payments and related expenditures made during the periods which are not recoverable at all under insurance, whether in the present period or in future periods.

Garlock and Anchor paid $74.8 million, $36.4 million and $19.3 million for the defense and disposition of asbestos-related actions, net of amounts received from insurance carriers, during 2001, 2000 and 1999, respectively. The amount of payments in 2001 was consistent with the expectation that payments during 2001 would be higher than in 2000 and 1999.

Considering the foregoing, as well as the experience of the Company’s subsidiaries and other defendants in asbestos litigation, the likely sharing of judgments among multiple responsible defendants, recent bankruptcies of other defendants, legislative efforts and given the substantial amount of insurance coverage that Garlock expects to be available from its solvent carriers, the Company believes that pending

F-30

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

actions against Garlock and Anchor are not likely to have a material adverse effect on the Company’s consolidated financial condition, but could be material to the Company’s consolidated results of operations or cash flows in a given period. However, because of the uncertainty as to the number and timing of potential future actions, as well as the amount that will have to be paid to settle or satisfy any such actions in the future, there can be no assurance that those future actions will not have a material adverse effect on the Company’s consolidated financial condition, results of operations and cash flows.

Other. The Company, and some of its subsidiaries (other than Garlock and Anchor) have also been named as defendants in various actions by plaintiffs alleging injury or death as a result of exposure to asbestos fibers. The number of claims to date has not been significant and insurance coverage is available to the Company. Based on the above, the Company believes that these pending and reasonably anticipated future actions are not likely to have a material adverse effect on the Company’s consolidated financial condition, results of operations and cash flows and are therefore not discussed above.

The Company, Garlock, Anchor and some of the Company’s other subsidiaries are also defendants in other asbestos-related lawsuits or claims involving maritime workers, medical monitoring claimants and co-defendants. Based on past experience, the Company believes that these categories of claims are not likely to have a material adverse effect on the Company’s consolidated financial condition, results of operations and cash flows and are therefore not discussed above.

W. Subsequent Event

Upon completion of the exchange offer, referred to in Note A, Goodrich exchanged new Goodrich securities for $296.9 million of the $300.0 million outstanding Coltec Senior Notes which were tendered at the time of the exchange. On May 21, 2002, Coltec purchased all of these notes from Goodrich in exchange for a $201.9 million debenture and $97.2 million in cash. As a result of the transaction, all Coltec Senior Notes purchased by Coltec were cancelled. The cash portion of the purchase price was financed through an intercompany loan from Goodrich that has been assumed by Coltec’s aerospace business. The debenture will be contributed by Goodrich to EnPro and will remain an outstanding obligation of Coltec to EnPro, which, for accounting purposes, will be eliminated upon consolidation in EnPro’s financial statements going forward. The $3.1 million of Coltec Senior Notes that are outstanding following the exchange offer remain obligations of Coltec after the distribution.

F-31

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Quarterly Financial Data (Unaudited)



		2001												2000

		First			Second			Third			Fourth			First			Second			Third			Fourth


		(dollars in millions)
Total Sales		$	162.4		$	158.2		$	144.7		$	163.0		$	176.3		$	172.6		$	154.8		$	150.7
Gross Profit(1)			52.8			50.6			42.8			36.4			61.5			59.6			53.7			49.5
	Selling and Administrative Costs		(30.2	)		(31.1	)		(29.3	)		(35.5	)		(32.3	)		(29.9	)		(29.7	)		(28.3	)
	Merger-Related and Consolidation Costs		—			(1.3	)		0.5			(3.0	)		—			—			—			(1.4	)

Total Operating Income (Loss)		$	22.6		$	18.2		$	14.0		$	(2.1	)	$	29.2		$	29.7		$	24.0		$	19.8

Income (Loss) From:
	Continuing Operations	$	7.3		$	4.6		$	2.4		$	(7.7	)	$	10.7		$	12.5		$	8.2		$	5.3
	Discontinued Operations		20.8			25.5			26.8			21.0			21.1			13.9			17.0			12.2

Net Income		$	28.1		$	30.1		$	29.2		$	13.3		$	31.8		$	26.4		$	25.2		$	17.5

(1) Gross profit represents total sales less cost of sales.

The second, third and fourth quarters of 2001 include $1.3 million, $(0.5) million and $3.0 million of pre-tax charges (credit), respectively, for restructuring activities at the Garlock Sealing Technologies, Stemco, Fairbanks Morse and Sterling Die operating units.

The fourth quarter of 2000 includes a $1.4 million pre-tax charge for restructuring activities.

F-32

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


				March 31,		December 31,
				2002		2001


				(dollars in millions)
ASSETS
Current Assets
	Cash and cash equivalents			$	29.8	$	25.9
	Accounts and notes receivable				97.9		82.2
	Asbestos insurance receivable				91.0		90.8
	Inventories				80.3		83.0
	Deferred income taxes				5.2		5.2
	Prepaid expenses and other assets				5.9		5.6

		Total Current Assets			310.1		292.7

Property, plant and equipment — net					135.8		138.2
Prepaid pension					92.6		90.8
Goodwill — net					141.3		146.1
Identifiable intangible assets — net					65.2		64.5
Asbestos insurance receivable					246.2		202.8
Other assets					74.9		64.2
Assets of discontinued operations					482.9		475.2

			Total Assets	$	1,549.0	$	1,474.5

LIABILITIES AND PARENT COMPANY INVESTMENT
Current Liabilities
	Short-term bank debt			$	—	$	0.3
	Accounts payable				46.0		47.1
	Accrued asbestos liability				165.0		150.3
	Other accrued expenses				77.8		69.0
	Income taxes payable				86.0		59.8
	Current maturities of long-term debt				1.8		1.6

		Total Current Liabilities			376.6		328.1

Long-term debt					313.0		313.0
Pension obligations					17.7		17.3
Postretirement benefits other than pensions					12.0		12.1
Deferred income taxes					51.2		46.2
Retained liabilities of previously owned businesses					57.7		57.8
Environmental liabilities					20.8		21.8
Asbestos liability					39.8		20.6
Minority interest					8.1		9.0
Other non-current liabilities					16.7		14.9
Liabilities of discontinued operations					165.8		207.3
Commitments and contingent liabilities					—		—
Mandatorily redeemable convertible preferred securities of trust (TIDES)					150.0		150.0
Parent Company Investment					319.6		276.4

			Total Liabilities and Parent Company Investment	$	1,549.0	$	1,474.5

See Notes to Condensed Consolidated Financial Statements

F-33

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)



		Three Months Ended
		March 31,

		2002			2001


		(dollars in millions)
Sales		$	166.9		$	162.4
Operating Costs and Expenses:
	Cost of sales		122.4			109.6
	Selling and administrative expenses		34.1			30.2
	Merger-related and consolidation costs		0.4			—

			156.9			139.8

Operating income			10.0			22.6
Interest expense			(6.9	)		(7.0	)
Interest income			0.1			0.2
Other expense — net			(0.3	)		(1.0	)

Income before income taxes and distributions on convertible preferred securities of trust (TIDES)			2.9			14.8
Income tax expense			(1.1	)		(5.5	)
Distributions on convertible preferred securities of trust (TIDES)			(2.0	)		(2.0	)

Income (loss) from continuing operations			(0.2	)		7.3
Income from discontinued operations — net of taxes			13.4			20.8

Net income		$	13.2		$	28.1

See Notes to Condensed Consolidated Financial Statements

F-34

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



				Three Months Ended
				March 31,

				2002			2001


				(dollars in millions)
OPERATING ACTIVITIES
	Net income			$	13.2		$	28.1
		Net income from discontinued operations			(13.4	)		(20.8	)
	Adjustments to reconcile net income to net cash provided (used) by operating activities:
		Consolidation costs:
			Expenses		0.4			—
			Payments		(1.5	)		(0.4	)
		Expenditures for asbestos-related litigation			(35.6	)		(42.9	)
		Proceeds from asbestos-related insurance			21.3			25.1
		Depreciation and amortization			7.6			6.5
		Deferred income taxes			5.0			—
		Change in assets and liabilities, net of effects of acquisitions and dispositions of businesses:
			Receivables		(10.1	)		(4.4	)
			Inventories		2.7			(4.9	)
			Other current assets		(0.3	)		(0.3	)
			Accounts payable		(1.1	)		0.5
			Accrued expenses		9.3			4.1
			Income taxes payable		26.2			(3.0	)
			Other non-current assets and liabilities		1.1			(6.9	)

	Net cash provided (used) by operating activities of continuing operations				24.8			(19.3	)

INVESTING ACTIVITIES
	Purchases of property				(4.2	)		(2.7	)
	Proceeds from sale of property				—			0.4
	Purchase of call options				(14.9	)		—
	Payments made in connection with acquisitions, net of cash acquired				4.8			(2.1	)

	Net cash used by investing activities of continuing operations				(14.3	)		(4.4	)

FINANCING ACTIVITIES
	Increase (decrease) in short-term debt				(0.3	)		0.8
	Repayment of long-term debt				—			(0.9	)
	Distributions on convertible preferred securities of trust (TIDES)				(2.0	)		(2.0	)
	Net transfers from Parent				31.6			103.5

	Net cash provided by financing activities of continuing operations				29.3			101.4

DISCONTINUED OPERATIONS
	Net cash used by discontinued operations				(35.7	)		(80.1	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents					(0.2	)		0.4

Net Increase (Decrease) in Cash and Cash Equivalents					3.9			(2.0	)
Cash and Cash Equivalents at Beginning of Period					25.9			21.6

Cash and Cash Equivalents at End of Period				$	29.8		$	19.6

See Notes to Condensed Consolidated Financial Statements

F-35

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A. Overview, Basis of Presentation and New Accounting Standards

Overview

The Distribution is subject to certain conditions. No consents are required from Goodrich security holders or the holders of Coltec’s outstanding debt securities to complete the Distribution.

Basis of Presentation

These financial statements present Coltec’s consolidated financial condition, results of operations and cash flows as it operated as a wholly owned subsidiary of Goodrich, including certain adjustments and allocations necessary for a fair presentation of the business. As noted above, prior to the Distribution, Coltec will transfer Coltec Aerospace to Goodrich. The transfer of Coltec Aerospace to Goodrich represents the disposal of a segment under APB Opinion No. 30 (“APB 30”). Accordingly, Coltec Aerospace has been accounted for as a discontinued operation and the revenues, costs and expenses, assets and liabilities, and cash flows have been segregated in the Company’s Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flows. Unless otherwise noted, disclosures herein pertain to the Company’s continuing operations. There are no other operations shown as discontinued operations other than Coltec Aerospace.

As a result of the Aerospace Dividend, Goodrich will retain the net assets of Coltec Aerospace, which have been reflected as Assets and Liabilities of Discontinued Operations in the Company’s Condensed Consolidated Balance Sheets. Coltec Aerospace will also retain certain other assets and liabilities of the Company, including the assumed intercompany balances and other assets and liabilities relating primarily to pensions, postretirement benefits other than pensions and income taxes.

Coltec has outstanding certain debt, the most significant of which are Coltec’s 7 1/2% Senior Notes due 2008 (the “Coltec Senior Notes”) and convertible preferred securities (the “TIDES”). The TIDES will remain obligations of Coltec after the distribution. Goodrich intends to make an offer to exchange the Coltec Senior Notes for debt securities of Goodrich having similar terms. Coltec intends to purchase a portion of the Coltec Senior Notes surrendered for exchange in the exchange offer, which will also be financed through an intercompany loan from Goodrich. The remaining portion of Coltec Senior Notes accepted by Goodrich for exchange will be contributed to EnPro in connection with the Distribution and would thereafter be an intercompany obligation of Coltec to EnPro, which will be eliminated upon consolidation in EnPro’s consolidated financial statements going forward.

F-36

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Certain prior year amounts have been reclassified to conform with the current year presentation.

Management believes that the assumptions underlying the consolidated financial statements are reasonable. However, the financial information in these financial statements does not necessarily include all of the expenses that would have been incurred by Coltec had it been a separate, stand alone entity and may not necessarily reflect what Coltec’s consolidated financial condition, results of operations and cash flows would have been had Coltec been a stand alone entity during the periods presented or what Coltec’s consolidated financial condition, results of operations and cash flows may be in the future.

New Accounting Standards

Effective July 1, 2001, the Company adopted the provisions of Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”) applicable to business combinations completed after June 30, 2001. Effective January 1, 2002, additional provisions of SFAS 142, relating to business combinations completed prior to June 30, 2001 became effective and were adopted by the Company. Under the provisions of the standard, intangible assets deemed to have indefinite lives and goodwill are not subject to amortization. All other intangible assets are amortized over their estimated useful lives. Indefinite lived intangible assets and goodwill are subject to annual impairment testing using the guidance and criteria described in the standard. This testing requires comparison of carrying values to fair values, and when appropriate, the carrying value of impaired assets is reduced to fair value. In the second quarter of 2002, the Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets. Any impairment charge resulting from these transitional impairment tests would be reflected as the cumulative effect of a change in accounting principle. The Company has not yet determined what the effect of these tests will be on its financial position or results of operations. As of March 31, 2002, the Company has recognized no impairment of goodwill, but there can be no assurance that future goodwill impairments will not occur.

Net income for the quarters ended March 31, 2002 and March 31, 2001 adjusted to exclude amounts no longer being amortized are as follows:



			Three Months Ended
			March 31,

			2002			2001


			(dollars in millions)
Reported Income (Loss) from Continuing Operations			$	(0.2	)	$	7.3
	Adjustments:
		Goodwill amortization		—			1.0
		Income taxes		—			(0.4	)

Adjusted Income (Loss) from Continuing Operations			$	(0.2	)	$	7.9

Application of the nonamortization provisions of SFAS 142 is expected to result in an increase in net income of $2.4 million in 2002.

F-37

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and/or the normal operation of a long-lived asset, except for certain obligations of lessees. SFAS 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company has not yet determined what the effect of SFAS 143 will be on its consolidated financial condition or results of operations.

In October 2001, the FASB issued Statement No. 144 “Accounting for the Impairment of Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144 supersedes FASB Statement No. 121 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” (“SFAS 121”), however it retains the fundamental provisions of that statement related to the recognition and measurement of the impairment of long-lived assets to be “held and used.” In addition, SFAS 144 provides more guidance on estimating cash flows when performing a recoverability test, requires that a long-lived asset (group) to be disposed of other than by sale (e.g. abandoned) be classified as “held and used” until it is disposed of, and establishes more restrictive criteria to classify an asset (group) as “held for sale.” The Company adopted SFAS 144 as of January 1, 2002. The adoption of SFAS 144 did not have a material impact on the Company’s consolidated financial condition or results of operations.

B. Acquisition

In September 2001, the Company acquired Dana Corporation’s Glacier Industrial Bearings business (“GIB”). The results of GIB’s operations have been included in the consolidated financial statements of the Company since that date. The business manufactures and distributes industrial metal polymer bearings and was integrated with the Company’s Garlock Bearings business, which is included in the Engineered Products segment. The integrated business is referred to as Garlock Glacier Bearings (“GGB”). The acquisition extends the Company’s reach geographically and results in a global position in the metal polymer bearings market; broadens its current product offerings; is expected to result in economies of scale relating to raw material purchases; and includes the use of the Glacier brand name trademarks and intellectual property. The acquisition was recorded using the purchase method of accounting.

F-38

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following pro forma information assumes that the acquisition occurred as of January 1, 2001.



	Three Months Ended
	March 31, 2001

	Historical		GIB		Pro Forma


	(dollars in millions)
Sales	$	162.4	$	28.9	$	191.3
Operating income	$	22.6	$	5.8	$	28.4
Income from discontinued operations	$	20.8	$	—	$	20.8
Net income	$	28.1	$	3.6	$	31.7

C. Merger-Related and Consolidation Costs

The Company incurred $0.4 million of consolidation costs in the first quarter of 2002. Merger-related and consolidation reserves at March 31, 2002, as well as activity during the three months ended March 31, 2002, consisted of:


	Balance							Balance
	December 31,							March 31,
	2001		Provision		Activity			2002


	(dollars in millions)
Personnel related costs	$	2.1	$	—	$	(1.0	)	$	1.1
Asset write-down and facility consolidation costs		1.1		0.4		(0.6	)		0.9

	$	3.2	$	0.4	$	(1.6	)	$	2.0

The Company incurred a total of $0.4 million of consolidation costs during the first three months of 2002. Of this amount, $0.2 million was for building modifications for facility consolidations and $0.2 million was for equipment relocation.

The merger-related and consolidation reserves were reduced by cash payments of $1.6 million during the first three months of 2002.

No merger-related and consolidation costs were recorded during the first three months of 2001.

D. Inventories

Inventories consisted of the following:


		March 31,			December 31,
		2002			2001


		(dollars in millions)
Finished products		$	64.2		$	66.2
In process			67.7			58.4
Raw materials and supplies			13.9			17.3

			145.8			141.9
Reserve to reduce certain inventories to LIFO basis			(13.8	)		(13.8	)
Progress payments and advances			(51.7	)		(45.1	)

	Total	$	80.3		$	83.0

F-39

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

E. Comprehensive Income

Total comprehensive income consisted of the following:



		Three Months Ended
		March 31,

		2002			2001


		(dollars in millions)
Net income		$	13.2		$	28.1
Unrealized translation adjustments			(1.6	)		(2.0	)

	Total comprehensive income	$	11.6		$	26.1

F. Discontinued Operations

Prior to the Distribution, Coltec will dividend Coltec Aerospace to Goodrich. The transfer of Coltec Aerospace to Goodrich represents the disposal of a segment under APB Opinion No. 30, “Reporting the Results of Operations — Reporting the Effects of Disposal of a segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” Accordingly, Coltec Aerospace is being accounted for as a discontinued operation and the revenues, costs and expenses, assets and liabilities, and cash flows have been segregated in the Company’s Condensed Consolidated Statements of Income, Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows.

The following summarizes the results of discontinued operations, which consist solely of the results of Coltec Aerospace:



	Three Months Ended
	March 31,

	2002		2001


	(dollars in millions)
Sales	$	181.6	$	209.6
Pretax income from continuing operations	$	22.1	$	30.9
Income tax expense	$	8.7	$	10.1
Income from discontinued operations	$	13.4	$	20.8

G. Business Segment Information

The Company has two reportable segments. The sealing products segment manufacturers sealing and PTFE products. The engineered products segment manufactures metal polymer bearings, air compressors, engines and specialized tooling. The Company’s reportable segments are managed separately based on differences in their products and services. Segment operating income is total segment revenue reduced by operating expenses identifiable with the segment. Corporate unallocated includes general corporate administrative costs. Merger-related and consolidation costs are presented separately.

F-40

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The accounting policies of the reportable segments are the same as those for the consolidated Company. There are no significant intersegment sales.



			Three Months Ended
			March 31,

			2002			2001


			(dollars in millions)
Sales
	Sealing Products		$	83.5		$	96.4
	Engineered Products			83.4			66.0

		Total sales	$	166.9		$	162.4

Operating Income
	Sealing Products		$	9.2		$	15.7
	Engineered Products			6.7			8.8

				15.9			24.5
Corporate unallocated				(5.5	)		(1.9	)
Merger-related and consolidation costs				(0.4	)		—

		Total operating income	$	10.0		$	22.6


		March 31,		December 31,
		2002		2001


		(dollars in millions)
Assets
	Sealing Products	$	202.8	$	210.7
	Engineered Products		330.2		332.6
	Assets of discontinued operations		482.9		475.2
	Corporate		533.1		456.0

		$	1,549.0	$	1,474.5

H. Contingencies

General

Environmental

F-41

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	*Other Contingent Liability Matters*

The Company has some contingent liabilities related to discontinued operations of its predecessors for which it retained liability or is obligated under indemnity agreements. These contingent liabilities include potential product liability and associated claims related to the Company’s former Colt Firearms subsidiary for firearms manufactured prior to 1990 and related to the Company’s former Central Maloney subsidiary for electrical transformers manufactured prior to 1994. There are currently no claims pending against the Company related to these former subsidiaries. However, such claims could arise in the future. The Company also has ongoing obligations with regard to workers compensation, retiree medical and other retiree benefit matters associated with discontinued operations that relate to the Company’s periods of ownership of those operations. In the second quarter of 2002, Coltec paid approximately $8 million to satisfy a judgment arising under the Coal Industry Retiree Health Benefit Act of 1992.


	*Asbestos*

Garlock and Anchor. Two subsidiaries of the Company, Garlock Sealing Technologies, LLC (“Garlock”) and The Anchor Packing Company (“Anchor”), have been among a number of defendants (typically 15 to 40) in actions filed in various states by plaintiffs alleging injury or death as a result of exposure to asbestos fibers. Among the products at issue in those actions are industrial sealing products, predominantly gaskets, manufactured and/or sold by Garlock or Anchor. The damages claimed vary from action to action and in some cases plaintiffs seek both compensatory and punitive damages. To date, neither Garlock nor Anchor has been required to pay any punitive damage awards, although there can be no assurance that they will not be required to do so in the future. Liability for compensatory damages historically has been allocated among all responsible defendants, thus limiting the potential monetary impact of a particular judgment or settlement on any individual defendant.

F-42

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

manufactured under regulations of the Environmental Protection Agency. Since the mid-1980s, U.S. sales of asbestos-containing industrial sealing products have not been a material part of Garlock’s sales and those sales have been predominantly to sophisticated purchasers such as the U.S. Navy and large petrochemical facilities. These purchasers generally have extensive health and safety procedures and are familiar with the risks associated with the use and handling of industrial sealing products that contain asbestos. Garlock discontinued distributing asbestos-containing products in the U.S. during 2000 and worldwide in mid-2001.

When a settlement demand is not reasonable given the totality of the circumstances, Garlock generally will try the case. Garlock has been successful in winning a substantial majority of the cases it has tried to verdict. Garlock’s share of adverse verdicts in these cases in the first three months of 2002 and in the years 2001, 2000 and 1999 totaled less than $7 million in the aggregate, and some of those verdicts are on appeal.

The insurance coverage available to Garlock is substantial. As of March 31, 2002 Garlock had available $987 million of insurance coverage from carriers that it believes to be solvent. Of that amount, $128 million is allocated to claims that have been paid by Garlock and submitted to its insurance companies for reimbursement and $144 million has been committed to claim settlements not yet paid by Garlock. Thus, at March 31, 2002, $715 million remained available for coverage of future claims. Insurance coverage for asbestos claims is not available to cover exposures initially occurring on and after July 1, 1984. Garlock and Anchor continue to be named as defendants in new actions, a few of which allege initial exposure after

F-43

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

July 1, 1984. To date, no payments with respect to these claims, pursuant to a settlement or otherwise, have been made. In addition, Garlock and Anchor believe that they have substantial defenses to these claims and therefore automatically reject them for settlement. However, there can be no assurance that any or all of these defenses will be successful in the future.

Arrangements with Garlock’s insurance carriers limit the amount that can be received by it in any one year. The amount of insurance available to cover claims and reimbursements of legal fees paid by Garlock currently is limited to $80 million per year. This limit automatically increases by 8% every three years. Amounts paid by Garlock in excess of this annual limit that would otherwise be recoverable from insurance may be collected from the insurance companies in subsequent years so long as insurance is available but subject to the annual limit in each subsequent year. As a result, Garlock is required to pay out of its own cash any amounts paid to settle or dispose of asbestos-related claims in excess of the annual limit and collect these amounts from its insurance carriers in subsequent years. Various options, such as raising the annual limit, are being pursued to ensure as close a match as possible between payments by Garlock and recoveries received from insurance. There can be no assurance that Garlock will be successful as to any or all of these options.

In accordance with internal procedures for the processing of asbestos product liability actions and due to the proximity to trial or settlement, certain outstanding actions against Garlock and Anchor have progressed to a stage where the cost to dispose of these actions can reasonably be estimated. These actions are classified as actions in advanced stages and are included in the table as such below. With respect to outstanding actions against Garlock and Anchor that are in preliminary procedural stages, as well as any actions that may be filed in the future, insufficient information exists upon which judgments can be made as to the validity or ultimate disposition of such actions, thereby making it difficult to reasonably estimate what, if any, potential liability or costs may be incurred. Accordingly, no estimate of future liabilities has been included in the table below for such claims.

F-44

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

liabilities that is expected to be recovered by insurance. A table is provided below depicting quantitatively the items discussed above.



	Three Months Ended
	March 31,

	2002			2001


	(dollars in millions)
(number of cases)
New Actions Filed During The Period(1)		7,400			9,500
Actions in Advanced Stages at Period-End		7,000			3,200
Open Actions at Period-End		98,500			85,200

(dollars in millions at Period-End)
Estimated Liability for Settled Claims and Actions in Advanced Stages of Processing(2)	$	204.8		$	208.2
Estimated Amounts Recoverable From Insurance(2)(3)	$	337.2		$	278.6

(dollars in millions)

Payments(2)	$	35.6		$	42.9
Insurance Recoveries(2)	$	21.3		$	25.1

Net Cash Flow(3)	$	(14.3	)	$	(17.8	)

Garlock and Anchor recorded charges to operations amounting to approximately $5 million and $2 million during the first three months of 2002 and 2001, respectively, representing payments and related expenditures made during the periods which are not recoverable at all under insurance, whether in the present period or in future periods. The significant increase between periods was due to the type of insurance policies applicable to Garlock and Anchor claims during the respective periods. During the first quarter of 2002, the applicable insurance policies provided a lower level of legal cost reimbursements than during the first quarter of 2001. Based on the level of legal costs expected during the remainder of the year, as well as the applicable type of insurance policies, the Company expects the total charge to operations during 2002 to be between $8 million to $9 million.

Garlock and Anchor paid $14.3 million and $17.8 million for the defense and disposition of asbestos-related actions, net of amounts received from insurance carriers, during the first three months of 2002 and 2001, respectively.

F-45

COLTEC INDUSTRIES INC

(A Subsidiary of Goodrich Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

consolidated financial condition, but could be material to the Company’s consolidated results of operations or cash flows in a given period. However, because of the uncertainty as to the number and timing of potential future actions, as well as the amount that will have to be paid to settle or satisfy any such actions in the future, there can be no assurance that those future actions will not have a material adverse effect on the Company’s consolidated financial condition, results of operations and cash flows.

Other

The Company and some of its subsidiaries (other than Garlock and Anchor) have also been named as defendants in various actions by plaintiffs alleging injury or death as a result of exposure to asbestos fibers. The number of claims to date has not been significant and we have substantial insurance coverage available to the Company. Based on the above, the Company believes that these pending and reasonably anticipated future actions are not likely to have a material adverse effect on the Company’s consolidated financial condition, results of operations and cash flows and are therefore not discussed above.

I. Subsequent Event

F-46

(ENPRO INDUSTRIES LOGO)

Information Statement

May 24, 2002


	Richard L. Magee
	Senior Vice President, Secretary
	and General Counsel


	•	Goodrich Corporation, a leading worldwide supplier of aerospace components, systems and services; and

	•	EnPro Industries, Inc., a leading provider of engineered industrial products for the processing and general manufacturing industries.


	•	receive one share of EnPro common stock, as well as an associated preferred stock purchase right, for every five shares of Goodrich common stock they own; and

	•	retain their Goodrich shares and the preferred stock purchase rights associated with those shares.


	Sincerely,



	David L. Burner
	Chairman and Chief Executive Officer


	•	expand our product offerings and the markets we serve through internal development;

	•	improve our manufacturing processes and cost structure to attain additional operating efficiencies and customer responsiveness; and


	•	strengthen the mix of our businesses with opportunistic acquisitions that are of an appropriate scale and that create additional value.


	Sincerely,



	Ernest F. Schaub
	President and Chief Executive Officer


	•	Goodrich, a leading worldwide supplier of aerospace components, systems and services; and

	•	EnPro, a leading provider of engineered industrial products for the processing and general manufacturing industries.


	•	greater strategic focus for each management’s efforts and financial resources;

	•	increased speed and responsiveness in management decision making and resource allocation;

	•	direct and differentiated access to capital markets; and

	•	enhanced investor choices by offering investment opportunities in two separate highly focused companies.


	•	$150 million of 5 1/4% Convertible Preferred Securities — Term Income Deferred Equity Securities, or the TIDES, issued by Coltec Capital Trust, a Delaware business trust, all of the common equity of which is owned by Coltec, which are supported by an equivalent aggregate principal amount of 5 1/4% Convertible Junior Subordinated Deferrable Interest Debentures due April 15, 2028, or the TIDES Debentures, issued by Coltec to Coltec Capital Trust;

	•	$300 million aggregate principal amount of 7 1/2% Senior Notes due April 15, 2008, which we refer to in this information statement as the Coltec Senior Notes;

	•	approximately $12 million of industrial revenue bonds; and

	•	approximately $1 million of other long-term debt.


	Aerostructures and Aviation Technical Services: Aerostructures is a leading supplier of nacelles, pylons, thrust reversers and related aircraft engine housing components. The aviation technical sales division performs comprehensive total aircraft maintenance, repair, overhaul and modification for many commercial airlines, independent operations, aircraft leasing companies and airfreight carriers.

	Landing Systems: Landing Systems provides systems and components pertaining to aircraft taxi, take-off, landing and stopping. Several divisions within the segment are linked by their ability to contribute to the integration, design, manufacture and service of entire aircraft undercarriage systems, including sensors, landing gear, certain brake controls and wheels and brakes.

	Engine and Safety Systems: Engine and Safety Systems produces engine and fuel controls, pumps, fuel delivery systems, as well as structural and rotating components such as disks, blisks, shafts and airfoils for both aerospace and industrial gas turbine applications. This segment also produces aircraft evacuation, de-icing and passenger restraint systems, as well as ejection seats and crew and attendant seating.


	•	we are a leading supplier of engineered industrial products and services in each of our major product categories;

	•	we offer a comprehensive range of products and services in each of our major product categories and sell products under leading brand names;

	•	we have strong aftermarket sales that produce recurring revenues and a large installed equipment base that routinely needs replacement parts and services;

	•	we sell our products to a diverse, worldwide customer base operating in a wide range of industries;


	•	we have a superior distribution network that combines with global manufacturing capabilities to offer superior customer service; and

	•	we have an experienced senior management team.


	•	expand our product offerings and customer base;

	•	lower costs and increase operational efficiency; and

	•	effectively manage our subsidiaries’ asbestos exposure.


	•	public and investor relations;

	•	accounting consolidation;

	•	treasury administration;

	•	insurance administration;

	•	internal audit;

	•	human resources functions;

	•	information technology services;

	•	telecommunications;

	•	corporate income tax administration; and

	•	selected legal functions.


	•	the potential for a large volume of future asbestos claims to the extent such claims are not covered by insurance because insurance coverage is, or will be, depleted;

	•	the uncertainty of the per claim value of current and potential future asbestos claims;

	•	the timing of payout of claims relative to recoveries of amounts covered by insurance from our subsidiaries’ insurance carriers and limitations imposed on the amount that may be recovered in any given year;

	•	the financial viability of our subsidiaries’ insurance carriers and their reinsurance carriers, and our subsidiaries’ ability to collect on claims from them;

	•	an increase in litigation or other costs that are not covered by insurance;

	•	the unavailability of any insurance for claims alleging first exposure to asbestos after July 1, 1984; and

	•	bankruptcies of other defendants.


	•	unfavorable fluctuations in foreign currency exchange rates;

	•	adverse changes in foreign tax, legal and regulatory requirements;

	•	difficulty in protecting intellectual property;

	•	trade protection measures and import or export licensing requirements;

	•	differing labor regulations;

	•	political and economic instability; and

	•	acts of hostility, terror or war.


	•	demand for our products;

	•	the timing and execution of customer contracts;

	•	the timing of sales of our products;


	•	payments related to asbestos litigation or annual costs related to asbestos litigation that are not covered by insurance or that exceed the annual limits in place with our insurance carriers on insurance recoveries in any given year;

	•	changes in the fair value of Coltec’s call options on Goodrich common stock purchased to reduce the economic risk of the conversion feature of the TIDES;

	•	increases in manufacturing costs due to equipment or labor issues;

	•	changes in foreign currency exchange rates;

	•	unanticipated delays or problems in introducing new products;

	•	announcements by competitors of new products, services or technological innovations;

	•	changes in our pricing policies or the pricing policies of our competitors;

	•	increased expenses, whether related to sales and marketing, raw materials or supplies, product development or administration;

	•	major changes in the level of economic activity in the U.S., Canada, Europe and other major regions in which we do business;

	•	costs related to possible future acquisitions of technologies or businesses;

	•	an increase in the number or magnitude of product liability claims;

	•	our ability to expand our operations; and

	•	the amount and timing of expenditures related to expansion of our operations.


	•	require a supermajority shareholder vote to approve any business combination transaction with an owner of 5% or more of our shares unless the transaction is recommended by disinterested directors;

	•	divide our board of directors into three classes, with members of each class to be elected for staggered three-year terms, if our board is expanded to nine members;

	•	limit the right of shareholders to remove directors and fill vacancies;

	•	regulate how shareholders may present proposals or nominate directors for election at shareholders’ meetings; and

	•	authorize our board of directors to issue preferred stock in one or more series, without shareholder approval.


	•	our subsidiaries will continue to effectively manage their asbestos liabilities and insurance assets;

	•	no significant market altering event will occur, such as a lengthy global recession or additional hostilities or acts of terrorism;

	•	our current reserves for contingent liabilities related to discontinued operations will be sufficient to meet those liabilities;

	•	we will be able periodically to negotiate and enter into new financing agreements as and when necessary;

	•	we will have adequate cash on hand or the ability to finance conversion of the TIDES;

	•	our strategic objectives of lowering costs, increasing operational efficiency and expanding our product offerings will be achieved;

	•	our agent and distributor relationships will remain stable overall;

	•	no significant negative impact from foreign legal and economic risks will occur;

	•	supply and prices of raw materials will not vary dramatically from historical trends;

	•	no catastrophic event will occur at any of our production facilities;

	•	our efforts to periodically renegotiate our collective bargaining agreements will be successful; and

	•	our own and our third party licensors’ intellectual property rights will remain adequately protected.


	•	receive one share of our common stock, as well as an associated preferred stock purchase right, for every five shares of Goodrich common stock they own; and

	•	retain their shares in Goodrich and the preferred stock purchase rights associated with those shares.


	•	providing differentiated access to the capital markets for such potential transactions; and

	•	allowing potential target companies to receive, as consideration in an acquisition, stock in a corporation that is focused solely on the industry in which the target is engaged.


	•	$150 million of TIDES;

	•	$300 million aggregate principal amount of the Coltec Senior Notes;

	•	approximately $12 million of industrial revenue bonds; and

	•	approximately $1 million of other long-term debt.


	•	no gain or loss will be recognized by, and no amount will be included in the income of, holders of Goodrich common stock upon their receipt of shares of our common stock;

	•	any cash received in lieu of fractional share interests in EnPro will give rise to gain or loss equal to the difference between the amount of cash received and the tax basis allocable to the fractional share interests, determined as described below, and such gain will be capital gain or loss if the Goodrich common stock on which the distribution is made is held as a capital asset on the date of the spin-off;

	•	the aggregate basis of the Goodrich common stock and our common stock in the hands of each Goodrich shareholder after the spin-off, including any fractional share interest to which the shareholder would be entitled, will equal the aggregate basis of Goodrich common stock held by the shareholder immediately before the spin-off, allocated between the Goodrich common stock and our common stock in proportion to the relative fair market value of each on the date of the spin-off;

	•	the holding period of our common stock received by each Goodrich shareholder will include the period during which the shareholder held the Goodrich common stock on which the distribution is made, provided that the Goodrich common stock is held as a capital asset on the date of the spin-off; and

	•	no gain or loss will be recognized by Goodrich upon the distribution of our common stock.


	•	a dividend to the extent of the shareholder’s pro rata share of Goodrich’s current and accumulated earnings and profits;


	•	a reduction in the shareholder’s basis in Goodrich common stock to the extent the amount received exceeds such shareholder’s share of earnings and profits; and

	•	a gain from the exchange of Goodrich common stock to the extent the amount received exceeds both the shareholder’s share of earnings and profits and the shareholder’s basis in Goodrich common stock.


	•	the distribution;

	•	transactions to conform the capital structure of EnPro, including:


	•	the transfer to Goodrich by way of a dividend of Coltec’s aerospace business,

	•	the exchange of $296.9 million of the Coltec Senior Notes for similar Goodrich securities, and

	•	the entering into of a senior secured revolving credit facility with a maximum available amount of $60 million prior to the distribution;


	•	the Glacier acquisition;

	•	an adjustment of our cash balance to $50 million at the time of the distribution; and

	•	the purchase by Coltec of call options on shares of Goodrich common stock.


	•	Coltec incurred $68.4 million of personnel related costs in 1999. Personnel related costs associated with Goodrich’s acquisition of Coltec were $66.3 million, consisting of $61.8 million incurred under change-in-control provisions in employment agreements and $4.5 million in employee severance costs. Personnel related costs also include employee severance costs of $2.1 million for reductions at Coltec’s Garlock, France Compressor Products and Stemco operating units (approximately 125 positions);

	•	$57.9 million of transaction costs; and

	•	$2.1 million of asset write-down and facility consolidation costs.