EX-10.28






Exhibit 10.28




December 16, 2008




Coltec Industries Inc,

     as Borrower Representative

5605 Carnegie Boulevard

Charlotte, North Carolina 28209-4674

Attention: Robert D. Rehley




     Re:      Consent to Proposed European Restructuring Transactions



Ladies and Gentlemen:




     Reference is hereby made to that certain Amended and Restated Loan and Security Agreement
dated April 26, 2006 (as at any time amended, restated, modified or supplemented, the “Loan
Agreement”), by and among 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”), GGB
LLC, a Delaware limited liability company (“Garlock Bearing”), Corrosion Control
Corporation, a Colorado corporation (“CCC”), Stemco LP, a Texas limited partnership
(“Stemco LP (TX)”) and V.W. Kaiser Engineering, Incorporated, a Michigan corporation
(“Kaiser”); Coltec, CIP, Garlock Sealing, Garlock Bearing, CCC, Stemco LP (TX), and Kaiser
each being individually referred to herein as a “Borrower” and collectively as
“Borrowers”); EnPro Industries, Inc., a North Carolina corporation (“Parent”); QFM
Sales and Services, Inc., a Delaware corporation (“QFM”), Coltec International Services
Co., a Delaware corporation (“Coltec International”), Garrison Litigation Management Group,
Ltd., a Delaware corporation (“Garrison”), GGB, Inc., a Delaware corporation
(“GGB”), Garlock International Inc., a Delaware corporation (“Garlock
International”), Garlock Overseas Corporation, a Delaware corporation (“Garlock
Overseas”), Stemco Holdings, Inc., a Delaware corporation (“Stemco Holdings”),
Compressor Products Holdings, Inc., a Delaware corporation (“CPH”), and Compressor Services
Holdings, Inc., a Delaware corporation (“CSH”; QFM, Coltec International, Garrison, GGB,
Garlock International, Stemco Holdings, CPH, Garlock Overseas and CSH each being individually
referred to herein as a “Subsidiary Guarantor” and collectively as “Subsidiary
Guarantors”, and together with Parent, “Guarantors”); the various financial
institutions listed on the signature pages hereof (together with their respective successors and
permitted assigns, the “Lenders”); Bank of America, N.A., a national banking association
(“Bank of America”), in its capacity as a Lender, as collateral and administrative agent
for Lenders (together with its successors in such capacity, “Agent”) and as Issuing Bank
(as such term is defined in the Loan Agreement), pursuant to which Agent and Lenders have made
revolving credit and term loans and other financial accommodations available to Borrowers, which
loans and extensions of credit are secured by a security interest in and liens upon all or
substantially all of the assets of Borrowers and Guarantors.



     Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed
to such terms in the Loan Agreement.



     Borrowers and Guarantors have advised Agent and Lenders of the proposed restructuring of the
ownership of certain of their European Subsidiaries. In connection with this proposed
restructuring, Borrowers and Guarantors have informed Agent and Lenders of Borrowers’ and
Guarantors’ desire to form certain limited limited liability companies, including (i) EnPro
Luxembourg Holding Company Sarl, a Luxembourg limited liability company (“Luxco”), and (ii)
EnPro German Holding GmbH, a German limited liability company (“New German Holdco”) (each



 









 





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of the foregoing referred to as a “New European Company” and collectively as the
“New European Companies”).




     Once formed, Luxco and New German Holdco will comprise a new vertical branch of the Credit
Parties’ corporate structure immediately beneath GGB, and the Equity Interests of certain of the
Obligors’ existing European Subsidiaries will be transferred to either Luxco or New German Holdco
by the current Obligors and/or their Subsidiaries holding such Equity Interests by means of a
series of third party and intercompany loans, transfers and intercompany investments.



     In particular, Borrowers have advised Agent and Lenders of the following transactions and
events related to the proposed restructuring:




     (i) GGB has formed Luxco, a new Wholly Owned Subsidiary, and has capitalized
Luxco with an investment of approximately € 30,000 (the “Luxco Formation and
Investment”);




     (ii) GGB Heilbronn GmbH, a current Wholly Owned Subsidiary of GGB
(“Heilbronn”), has provided a non-interest bearing intercompany loan to
Luxco in the principal amount of € 200,000 (the “Heilbronn Intercompany
Loan”);




     (iii) Luxco has formed New German Holdco, a new Wholly Owned Subsidiary, and
has capitalized New German Holdco with an investment of approximately € 25,000 in
subscribed capital and € 175,000 in additional paid in capital in exchange for 100%
of the share capital of New German Holdco (the “New German Holdco Formation and
Investment”);




     (iv) Coltec intends to contribute to GGB all of the Equity Interests it holds
in Holley Automotive Systems GmbH (“Holley”), a current Wholly Owned
Subsidiary of Coltec, causing Holley to become a Wholly Owned Subsidiary of GGB
(the “Initial Holley Stock Transfer”);




     (v) Coltec intends to contribute to Holley all of the Equity Interests it
holds in Coltec Industries France SAS (“Coltec France”), causing Coltec
France to become a Wholly Owned Subsidiary of Holley (the “Coltec France Stock
Transfer”);




     (vi) GGB intends to transfer to Luxco all of the Equity Interests it then
holds in Holley and Heilbronn, along with a note receivable owing by Heilbronn in
the original principal amount of $22,320,267, thereby causing Holley and Heilbronn
to become the Wholly Owned Subsidiaries of Luxco, in exchange for an investment in
additional share capital and multi-currency preferred equity certificates
(respectively, the “Second Holley Stock Transfer” and the “Initial
Heilbronn Stock Transfer”);




     (vii) GGB Verwaltungsgesellschaft mbH intends to withdraw as the limited
partner of GGB Germany GmbH & Co. KG (“GGB KG”), causing GGB KG, by
operation of German law, to be merged into its general partner, Heilbronn (the
“GGB KG Merger”);



 









 





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     (viii) New German Holdco intends to acquire the Equity Interests of Holley
and GGB Heilbronn from Luxco in exchange for € 175,000 and a combination of equity
and debt (such debt, “Note A”), thereby causing Holley and Heilbronn to
become Wholly Owned Subsidiaries of New German Holdco (respectively, the “Third
Holley Stock Transfer” and the “Second Heilbronn Stock Transfer”);




     (ix) Luxco intends to utilize a portion of its initial capitalization and the
proceeds of the Third Holley Stock Transfer and the Second Heilbronn Stock Transfer
to repay the € 200,000 Heilbronn Intercompany Loan (the “Heilbronn Intercompany
Loan Repayment”);




     (x) Coltec intends to contribute to GGB all of the Equity Interests it holds
in Coltec Finance Company Limited (“CFCL”), Compressor Products Holdings
Limited, (“CPHL”), and Garlock (Great Britain) Limited “Garlock
GB”), thereby causing each of CFCL, CPHL and Garlock GB to become a Wholly
Owned Subsidiary of GGB (respectively, the “Initial CFCL Stock Transfer”,
the “Initial CPHL Stock Transfer” and the “Initial Garlock GB Stock
Transfer”, and collectively, the “Initial UK Stock Transfers”);




     (xi) GGB intends to transfer to Luxco all of the Equity Interests it holds in
CFCL, CPHL and Garlock GB, thereby causing each of CFCL, CPHL and Garlock GB to
become the Wholly Owned Subsidiaries of Luxco, in exchange for an investment in
additional share capital and multi-currency preferred equity certificates
(respectively, the “Second CFCL Stock Transfer”, the “Second CPHL Stock
Transfer” and the “Second Garlock GB Stock Transfer”, and collectively,
the “Second UK Stock Transfers”);




     (xii) Coltec France intends to transfer to CPI SARL (“CPI SARL”) all
of the Equity Interests it holds in Liard SAS (France) (“Liard”), thereby
causing Liard (France) to become the Wholly Owned Subsidiary of CPI SARL, in
exchange for a note receivable owing by CPI SARL (“Note B”) (the “Liard
Stock Transfer”);




     (xiii) CPI SARL then intends to merge with and into its Wholly Owned
Subsidiary, Liard, causing Liard, by operation of French law, to become the Wholly
Owned Subsidiary of Compressor Products International Ltd., the current parent of
CPI SARL (the “CPI SARL Merger”); and




     (xiv) Coltec France intends to transfer to Holley the Note B owing by Liard
(as successor-by-merger to CPI SARL) (the “Initial Note B Transfer”),
Holley then intends to distribute such Note B to New German Holdco (the “Second
Note B Transfer”), and New German Holdco then intends to assign such Note B to
Luxco (the “Third Note B Transfer”) as a partial repayment of Note A made
by New German Holdco to Luxco in connection with the Third Holley Stock Transfer
and the Second Heilbronn Stock Transfer (the “Note A Repayment”).



 









 





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     Agent and Lenders understand that Borrowers desire to consummate each of the transactions
described above in clauses (i) through (ix) on or before December 31, 2008, and each of the
transactions described above in clauses (x) through (xiv) on or before March 31, 2009 (such
transactions referred to herein collectively as the “European Restructuring Transactions”).



     Pursuant to the Loan Agreement, Borrowers and their Subsidiaries are permitted to make
Permitted Acquisitions, Permitted Asset Dispositions, Permitted Distributions, Permitted Foreign
Subsidiary Investments, and Permitted Mergers/Liquidations, in each case, subject to the terms and
conditions contained therein. Specifically, Borrowers have advised Agent and Lenders, that, as set
forth in greater detail below, certain of the European Restructuring Transactions will require the
consent of Agent and the Lenders, but that certain other European Restructuring Transactions may be
consummated by Borrowers and Guarantors without obtaining the consent of Agent and Lenders so long
as the conditions set forth in the Loan Agreement have been satisfied in accordance with the terms
thereof:




     (i) The Luxco Formation and Investment is permitted (A) pursuant to Section
10.2.10 of the Loan Agreement, so long as the Second Holley Stock Transfer and the
Initial Heilbronn Stock Transfer constitute Permitted Acquisitions under the Loan
Agreement, and (B) pursuant to Section 10.2.11, so long as the Luxco Formation and
Investment constitutes a Permitted Foreign Subsidiary Investment;




     (ii) The Heilbronn Intercompany Loan is not permitted under the Loan
Agreement in light of the restrictions on the making of such loans by a Foreign
Subsidiary to another Foreign Subsidiary pursuant to Section 10.2.2 thereof, and
thus requires the consent of the Agent and the Required Lenders;




     (iii) The New German Holdco Formation and Investment is permitted (A) pursuant
to Section 10.2.10 of the Loan Agreement, so long as the Third Holley Stock
Transfer and the Second Heilbronn Stock Transfer constitute Permitted Acquisitions
under the Loan Agreement, and (B) pursuant to Section 10.2.11, so long as the New
German Holdco Formation and Investment constitutes a Permitted Foreign Subsidiary
Investment;




     (iv) The Initial Holley Stock Transfer is not permitted under the
Loan Agreement in light of the restrictions on the making of Asset Dispositions by
an Obligor pursuant to Section 10.2.9 thereof, and thus requires the consent of the
Agent and the Required Lenders;




     (v) The Coltec France Stock Transfer is not permitted under the Loan
Agreement in light of the restrictions on the making of Asset Dispositions by an
Obligor pursuant to Section 10.2.9 thereof, and thus requires the consent of the
Agent and the Required Lenders;




     (vi) The Second Holley Stock Transfer and the Initial Heilbronn Stock
Transfer are not permitted under the Loan Agreement in light of the
restrictions on the making of Asset Dispositions by an Obligor pursuant to Section
10.2.9 thereof, and thus require the consent of the Agent and the Required Lenders;



 









 





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     (vii) The GGB KG Merger is permitted pursuant to Section 10.2.1 of the Loan
Agreement, so long as the GGB KG Merger constitutes a Permitted Merger /
Liquidation under the Loan Agreement;




     (viii) The Third Holley Stock Transfer and the Second Heilbronn Stock Transfer
are not permitted under the Loan Agreement in light of (A) the restrictions
on the making of Asset Dispositions by an Obligor pursuant to Section 10.2.9
thereof, and (B) the restrictions on the making of loans by a Foreign Subsidiary to
another Foreign Subsidiary pursuant to Section 10.2.2 thereof, and thus require the
consent of the Agent and the Required Lenders;




     (ix) The Heilbronn Intercompany Loan Repayment is permitted pursuant to
Section 10.2.6 of the Loan Agreement, so long as the Heilbronn Intercompany Loan
Repayment satisfies the conditions to the repayment of Funded Debt set forth
therein;




     (x) The Initial UK Stock Transfers are not permitted under the Loan
Agreement in light of the restrictions on the making of Asset Dispositions by an
Obligor pursuant to Section 10.2.9 thereof, and thus each Initial UK Stock Transfer
requires the consent of the Agent and the Required Lenders;




     (xi) The Second UK Stock Transfers are not permitted under the Loan
Agreement in light of the restrictions on the making of Asset Dispositions by an
Obligor pursuant to Section 10.2.9 thereof, and thus each Second UK Stock Transfer
requires the consent of the Agent and the Required Lenders;




     (xii) The Liard Stock Transfer is not permitted under the Loan
Agreement in light of (A) the restrictions on the making of Asset Dispositions by
an Obligor pursuant to Section 10.2.9 thereof, and (B) the restrictions on the
making of loans by a Foreign Subsidiary to another Foreign Subsidiary pursuant to
Section 10.2.2 thereof, and thus requires the consent of the Agent and the Required
Lenders;




     (xiii) The CPI SARL Merger is permitted pursuant to Section 10.2.1 of the
Loan Agreement so long as the CPI SARL Merger constitutes a Permitted Merger /
Liquidation under the Loan Agreement; and




     (xiv) The Initial Note B Transfer, the Second Note B Transfer and the Third
Note B Transfer are not permitted under the Loan Agreement in light of the
restrictions on the making of Asset Dispositions by an Obligor pursuant to Section
10.2.9 thereof, and thus each of the Initial Note B Transfer, the Second Note B
Transfer and the Third Note B Transfer requires the consent of the Agent and the
Required Lenders. However, the Note A Repayment is permitted pursuant to Section
10.2.6 of the Loan Agreement so long as the Note A Repayment satifies the condition
to the repayment of Funded Debt set forth therein.



 









 





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     As a result of the foregoing, Borrowers have requested that Agent and Lenders consent to each
of the following European Restructuring Transactions, as such transactions are not otherwise
expressly or conditionally permitted under the Loan Agreement: (i) the Heilbronn Intercompany
Loan, (ii) the Initial Holley Stock Transfer, (iii) the Coltec France Stock Transfer, (iv) the
Second Holley Stock Transfer, (v) the Initial Heilbronn Stock Transfer, (vi) the Third Holley Stock
Transfer, (vii) the Second Heilbronn Stock Transfer, (viii) each of the Initial UK Stock Transfers,
(ix) each of the Second UK Stock Transfers, (x) the Liard Stock Transfer, and (xi) each of the
Initial Note B Transfer, the Second Note B Transfer and the Third Note B Transfer (each of the
foregoing European Restructuring Transactions are hereinafter referred to as the
“Consent-Requested Transactions”).



     Additionally, Borrowers have requested that the Agent and Lenders agree to release (and to
authorize the Agent to execute documentation effectuating such release) the pledges, security
interests and liens granted by the Obligors to the Agent, for the benefit of itself and the
Lenders, in the Equity Interests of the following Subsidiaries that are being transferred in
accordance with the European Restructuring Transactions: (i) Holley, (ii) Coltec France, (iii) GGB
Heilbronn, (iv) CFCL, (v) CPHL and (vi) Garlock GB (collectively, the “Transferred Stock”).



     In connection for the requested release of the Transferred Stock, GGB is required under the
Loan Agreement and Pledge Agreement to grant a security interest and lien, and pledge its interests
in 65% of the Equity Interests of Luxco, to the Agent for the benefit of itself and the Lenders, as
security for all of the Obligations.



     Further, in connection with the execution of this letter agreement, the applicable Obligors
will pledge (collectively, the “Additional Foreign Pledges”) 65% of the share capital of
the following entities: (i) EnPro Hong Kong Holding Company Limited (“EnPro Hong Kong”),
(ii) GGB Bearing Technology (Suzhou) Co., Ltd. (“GGB Technology”) and (iii) GGB Holdings
E.U.R.L. (“GGB EURL”), and the Borrowers have requested a waiver of the ten (10) Business
Day delivery requirement under the Pledge Agreement for the Additional Foreign Pledges (the
“Pledge Waiver”).



     Agent and the Lenders are willing to consent to the Consent-Requested Transactions, release
the Transferred Stock (and to authorize Agent to effectuate such release) and grant the Pledge
Waiver, subject to the terms and conditions contained herein.



     In addition to the foregoing, the parties have agreed to amend the Loan Agreement as set forth
herein.



     NOW, THEREFORE, for the sum of TEN DOLLARS ($10.00) in hand paid and other good and valuable
consideration, the receipt and sufficiency of which are hereby severally acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:



     1. Pledge Waiver; Consent to Consent-Requested Transactions. At the request of
Borrowers, Agent and Lenders hereby (a) grant the Pledge Waiver, and (b) consent to (i) the
Heilbronn Intercompany Loan, (ii) the Initial Holley Stock Transfer, (iii) the Coltec France Stock
Transfer, (iv) the Second Holley Stock Transfer, (v) the Initial Heilbronn Stock Transfer, (vi) the
Third Holley Stock Transfer, (vii) the Second Heilbronn Stock Transfer, (viii) each of the Initial
UK Stock Transfers, (ix) each of the Second UK Stock Transfers, (x) the Liard Stock Transfer and
(xi) each of the Initial Note B Transfer, the Second Note B Transfer and the Third Note B Transfer
so



 









 





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long as each of the following conditions precedent thereto is met on and as of the day of each
of such Consent-Requested Transactions (or with respect to the Heilbronn Intercompany Loan, as of
the date hereof):





     (a) Agent receives a duly executed counterpart of this letter agreement from
each of the Obligors;




     (b) Each Consent-Requested Transaction is consummated in accordance with its
terms as described herein and in accordance with Applicable Law, and all of the
European Restructuring Transactions are consummated on or before December 31, 2008
(or with respect to each of the Initial UK Stock Transfers, the Second UK Stock
Transfers, the Liard Stock Transfer, the CPI SARL Merger, the Initial Note B
Transfer, the Second Note B Transfer, the Third Note B Transfer and the Note A
Repayment, on or before March 31, 2009);




     (c) No Default or Event of Default exists (other than those waived hereby
pursuant to the Pledge Waiver);




     (d) Borrowers deliver to Agent, for the benefit of itself and Lenders, an
updated organizational chart reflecting the corporate structure of all Obligors and
their Subsidiaries after giving effect to the European Restructuring Transactions;
and




     (e) GGB, Luxco and any other applicable Obligors deliver to Agent, for the
benefit of itself and Lenders, in accordance with Section 7.5 of the Loan Agreement
and Section 6(d) of the Pledge Agreements, a Pledge Amendment and original Equity
Interest certificates (to the extent certificated) with respect to 65% of the
issued and outstanding Equity Interests of Luxco, EnPro Hong Kong, GGB Technology
and GGB EURL, in each case accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Agent, and such
other instruments, assignments, or other documents as Agent may request as are
necessary under the UCC or other Applicable Law to perfect (or continue the
perfection of) Agent’s Lien upon the Equity Interests of Luxco, EnPro Hong Kong,
GGB Technology and GGB EURL.



     2. Release of Pledges of Transferred Stock; No Novation. Subject to the satisfaction
of the conditions precedent set forth above in Section 1 and the other terms contained herein, the
Lenders hereby authorize the release by Agent of, and upon satisfaction of such conditions and
terms, Agent hereby releases, (i) the pledge by Coltec of the Equity Interests of Holley, Coltec
France, CFCL, CPHL and Garlock GB, and (ii) the pledge by GGB of the Equity Interests of GGB
Heilbronn, each pursuant to the Amended and Restated Pledge Agreement dated April 26, 2006, and
Agent agrees to execute and deliver to Borrowers, without representation or warranty, such
additional release documentation with respect to the Transferred Stock as may be reasonably
requested by Borrowers. Except as otherwise provided for in this Section 2 or in any such release
documentation executed by Agent, nothing herein shall be deemed to amend or modify any provision of
any Pledge Agreement or Pledge Amendment thereto, each of which shall remain in full force and
effect and continue to secure all of the Obligations, without any novation of any of the Loan
Documents or Security Documents or any of the Obligations secured thereby.



 









 





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     3. Amendments to Loan Agreement. The Loan Agreement is hereby amended as follows:



     (a) By deleting the definitions of “Base Rate”, “Federal Funds Rate” and “Required Lenders”
contained in Section 1.1 of the Loan Agreement, and by substituting in lieu thereof the following
new definitions, in proper alphabetical sequence:




     Base Rate — for any day, a per annum rate equal to the
greater of (a) the Prime Rate for such day; (b) the Federal Funds
Rate for such day, plus 0.50%; or (c) Adjusted LIBOR Rate for a 30
day interest period as determined on such day, plus 1.00%.




     Federal Funds Rate — (a) the weighted average of
interest rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers on
the applicable Business Day (or on the preceding Business Day, if
the applicable day is not a Business Day), as published by the
Federal Reserve Bank of New York on the next Business Day; or (b) if
no such rate is published on the next Business Day, the average rate
(rounded up, if necessary, to the nearest 1/8 of 1%) charged to BofA
on the applicable day on such transactions, as determined by Agent.




     Required Lenders — subject to Section 4.2, at any date
of determination thereof, two or more Lenders having Commitments
representing at least 50.1% of the aggregate Commitments at such
time; provided, however, that (i) if at any time
there is only one Lender hereunder, the term “Required Lenders”
shall mean such Lender, (ii) if any Lender shall be in breach of any
of its obligations hereunder to Borrowers or Agent, including any
breach resulting from its failure to honor its Commitment in
accordance with the terms of this Agreement, then, for so long as
such breach continues, the term “Required Lenders” shall mean two or
more Lenders (excluding each Lender that is in breach of its
obligations under this Agreement) having Commitments representing at
least 50.1% of the aggregate Commitments (excluding the Commitments
of each Lender that is in breach of its obligations under this
Agreement) at such time, and (iii) if all of the Commitments have
been terminated, the term “Required Lenders” shall mean two or more
Lenders (excluding each Lender that is in breach of its obligations
under this Agreement) holding Loans (including Swingline Loans)
representing at least 50.1% of the aggregate principal amount of
Loans (including Swingline Loans) outstanding at such time.



     (b) By adding the following new definitions of “Defaulting Lender” and “Prime Rate” to Section
1.1 of the Loan Agreement, in proper alphabetical sequence:




     Defaulting Lender — any Lender that (a) fails to make
any payment or provide funds to Agent or any Borrower as required



 









 






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hereunder or is in breach of or fails otherwise to perform its
obligations under any Loan Document, and such failure is not cured
within one Business Day, or (b) is the subject of any Insolvency
Proceeding.




     Prime Rate — the rate of interest announced by BofA
from time to time as its prime rate. Such rate is set by BofA on
the basis of various factors, including its 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 rate. Any change in such rate announced by BofA
shall take effect at the opening of business on the day specified in
the public announcement of such change.



     (c) By adding a new subclause (z) to Section 2.3.1(i) of the Loan Agreement, so that Section
2.3.1(i) of the Loan Agreement reads in its entirety as follows:




     (i) Issuing Bank shall have no obligation to issue any Letter
of Credit unless (x) at least 3 Business Days prior to the date of
issuance of a Letter of Credit, Issuing Bank receives an LC Request,
LC Application and such other instruments and agreements as Issuing
Bank may customarily require for the issuance of a letter of credit
of equivalent type and amount as the requested Letter of Credit, (y)
each of the LC Conditions is satisfied on the date of Issuing Bank’s
receipt of the LC Request and at the time of the requested issuance
of a Letter of Credit, and (z) if a Defaulting Lender exists, such
Lender or Borrowers have entered into arrangements satisfactory to
Agent and Issuing Bank to eliminate any funding risk associated with
the Defaulting Lender. If Issuing Bank shall have received written
notice from a Lender on or before the Business Day immediately prior
to the date of Issuing Bank’s issuance of a Letter of Credit that
one or more of the conditions set forth in Section 11 has not been
satisfied, Issuing Bank shall have no obligation to issue the
requested Letter of Credit or any other Letter of Credit until such
notice is withdrawn in writing by that Lender or until the Required
Lenders shall have effectively waived such condition in accordance
with this Agreement. In no event shall Issuing Bank be deemed to
have notice or knowledge of any existence of any Default or Event of
Default or the failure of any conditions in Section 11 to be
satisfied prior to its receipt of such notice from a Lender.



     (d) By adding the following new sentence to the end of Section 2.3.3 of the Loan Agreement:




Notwithstanding the foregoing, Borrowers shall, on demand by Issuing
Bank or Agent from time to time, Cash Collateralize the LC
Obligations of any Defaulting Lender.



 









 





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     (e) By deleting Section 4.2 of the Loan Agreement, and by substituting in lieu thereof the
following new Section 4.2:




     4.2 Defaulting Lender. Agent may (but shall not be
required to), in its discretion, retain any payments or other funds
received by Agent that are to be provided to a Defaulting Lender
hereunder, and may apply such funds to such Lender’s defaulted
obligations or readvance the funds to Borrowers in accordance with
this Agreement. The failure of any Lender to fund a Loan, to make
any payment in respect of LC Obligations or to otherwise perform its
obligations hereunder shall not relieve any other Lender of its
obligations, and no Lender shall be responsible for default by
another Lender. Lenders and Agent agree (which agreement is solely
among them, and not for the benefit of or enforceable by any
Borrower) that, solely for purposes of determining a Defaulting
Lender’s right to vote on matters relating to the Loan Documents and
to share in payments, fees and Collateral proceeds thereunder, a
Defaulting Lender shall not be deemed to be a “Lender” until all its
defaulted obligations have been cured.



     (f) By deleting Section 13.17 of the Loan Agreement, and by substituting in lieu thereof the
following new Section 13.17:




     13.17 Replacement of Certain Lenders. If a Lender (a)
is a Defaulting Lender, or (b) (i) requested compensation from
Borrowers under Section 3.7 or 3.8 to recover increased costs
incurred by such Lender (or its parent or holding company) or
restore a rate of return on capital which are not being incurred and
requested generally by the other Lenders (or their respective
parents or holding companies), (ii) delivered a notice pursuant to
Section 3.6 claiming that such Lender is unable to extend LIBOR
Loans to Borrowers for reasons not generally applicable to the other
Lenders, (iii) defaulted in paying or performing any of its
obligations to Agent, or (iv) failed (within 5 Business Days after
Agent’s request) or refused to give its consent to any amendment,
waiver or action for which consent of all of the Lenders is required
and in respect of which the Required Lenders have consented, then,
in any such case and in addition to any other rights and remedies
that Agent, any other Lender or Borrowers may have against such
Lender, any Borrower or Agent may, by notice to such Lender within
120 days after such event (with a copy to Agent in the case of a
demand by Borrowers and a copy to Borrowers in the case of a demand
by Agent), require such Lender to assign all of its rights and
obligations under the Loan Documents to Eligible Assignee(s)
specified by Agent, pursuant to appropriate Assignment and
Acceptance(s) and within 20 days after Agent’s (or Borrowers’)
notice. Agent is irrevocably appointed as attorney-in-fact to
execute any such Assignment and Acceptance if the Lender fails to
execute same. Such Lender shall be entitled to receive, in cash,
concurrently with such assignment, all amounts owed to it under the



 









 






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Loan Documents, including all principal, interest and fees
through the date of assignment (but excluding any prepayment
charge).



     4. Covenants of Obligors.



     (a) Each Borrower ratifies and reaffirms the Obligations, the Loan Agreement, each of the
other Loan Documents to which it is a party and all of such Borrower’s covenants, duties,
indebtedness and liabilities under such Loan Documents; and each Guarantor ratifies and reaffirms
the Guaranteed Obligations (as defined in its respective Guaranty), and all of such Guarantor’s
covenants, duties, indebtedness and liabilities under its Guaranty, the Pledge Agreement, and the
other Loan Documents to which it is a party;



     (b) Each Borrower acknowledges and stipulates that (i) the Loan Agreement and the other Loan
Documents executed by such Borrower are legal, valid and binding obligations of such Borrower that
are enforceable against such Borrower in accordance with the terms thereof, (ii) all of the
Obligations are owing and payable without defense (other than defense that payment has been made),
offset or counterclaim (and to the extent there exists any such defense, offset or counterclaim on
the date hereof, the same is hereby waived by each Borrower), and (iii) the security interests and
Liens granted by such Borrower in favor of Agent are duly perfected, first priority security
interests and Liens (except with respect to those Permitted Liens that are permitted to have
priority pursuant to the Loan Documents); and each Guarantor acknowledges and stipulates that (i)
its respective Guaranty, the Pledge Agreement and the other Loan Documents executed by such
Guarantor are legal, valid and binding obligations of such Guarantor that are enforceable against
such Guarantor in accordance with the terms thereof, and (iii) the security interests and Liens
granted by such Guarantor in favor of Agent are duly perfected, first priority security interests
and Liens (except with respect to those Permitted Liens that are permitted to have priority
pursuant to the Loan Documents); provided, that, no representation or warranty is
made by any Obligor as to the perfection of Agent’s Lien in (i) the Insurance Receivables Rights
except with respect to the Insurance Receivables Rights arising out of any Asbestos Insurance
Policies provided by North River Insurance Company, (ii) the Mercantile Account at any time on or
prior to September 30, 2006, or (iii) any Pledged Collateral (as defined in any Pledge Agreement)
under foreign law;



     (c) Each Borrower represents and warrants to Agent and Lenders, to induce Agent and Lenders to
enter into this letter agreement, that (i) no Default or Event of Default exists on the date hereof
(other than those waived hereby pursuant to the Pledge Waiver), (ii) the execution, delivery and
performance of this letter agreement have been duly authorized by all requisite corporate or
limited liability company action on the part of such Borrower, (iii) this letter agreement has been
duly executed and delivered by such Borrower and (iv) all of the representations and warranties
made by such Borrower in the Loan Agreement are true and correct on and as of the date hereof; and
each Guarantor represents and warrants to Agent and Lenders, to induce such Agent and Lenders to
enter into this letter agreement, that (i) the execution, delivery and performance of this letter
agreement have been duly authorized by all requisite corporate action on the part of such
Guarantor, (ii) this letter agreement has been duly executed and delivered by such Guarantor and
(iii) all of the representations and warranties made by such Guarantor in its respective Guaranty
and the Pledge Agreement are true and correct on and as of the date hereof;



     (d) Each Borrower agrees that this letter agreement shall be part of the Loan Agreement and a
breach of any representation, warranty or covenant herein by such Borrower shall constitute an



 









 





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Event of Default; and each Guarantor agrees that this letter agreement shall be part of the
Pledge Agreement and a breach of any representation, warranty or covenant herein by such Guarantor
shall constitute an Event of Default;




     (e) Each Borrower and each Guarantor agrees that this letter agreement shall be governed by
and construed in accordance the internal laws (but without regard to conflict of law principles) of
the State of North Carolina, but giving effect to federal laws relating to national banks;



     (f) Each Borrower and each Guarantor agrees that this letter agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns;



     (g) Each Borrower agrees that, except as otherwise expressly provided in this letter
agreement, nothing herein shall be deemed to amend or modify any provision of the Loan Agreement or
any of the other Loan Documents, each of which shall remain in full force and effect; and each
Guarantor agrees that, except as otherwise expressly provided in this letter agreement, nothing
herein shall be deemed to amend or modify any provision of its Guaranty, the Pledge Agreement or
any of the other Loan Documents, each of which shall remain in full force and effect;



     (h) Each Borrower agrees that this letter agreement is not intended to be, nor shall it be
construed to create, a novation or accord and satisfaction, and the Loan Agreement and the other
Loan Documents shall continue in full force and effect; and each Guarantor agrees that this letter
agreement is not intended to be, nor shall it be construed to create, a novation or accord and
satisfaction, and its Guaranty, the Pledge Agreement and the other Loan Documents shall continue in
full force and effect;



     (i) Each Borrower and each Guarantor agrees that this letter agreement may be executed in any
number of counterparts and by different parties to this letter agreement on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement;



     (j) Each Borrower and each Guarantor agrees that any signature delivered by a party by
facsimile or by portable document format by electronic mail shall be deemed to be an original
signature hereto;



     (k) Each Borrower and each Guarantor agrees to take such further actions as Agents and
Lenders, as applicable, shall reasonably request from time to time in connection herewith to
evidence or give effect to any of the transactions contemplated hereby; and



     (l) Each Borrower and each Guarantor agrees that section titles and references used in this
letter agreement shall be without substantive meaning or content of any kind whatsoever and are not
a part of the agreements among the parties hereto.



[Remainder of page intentionally left blank.]




 









 





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     If this letter agreement is acceptable to the Borrowers and Guarantors, please evidence each
Borrower’s and Guarantor’s agreement with the terms hereof by executing and returning a copy of
this letter to Agent. By their signatures below, each of the Borrowers and Guarantors agrees that
each consent of Agent and Lenders contained in this letter agreement is subject to the fulfillment
(within the applicable timeframes) of the specific conditions set forth herein with respect to such
consent. This letter may be executed in any number of counterparts and by the different parties
hereto on separate counterparts, each of which when so executed and delivered shall be an original
but all of which shall together constitute one and the same instrument. This letter may be
executed and delivered by facsimile or portable document format (PDF) via electronic mail, and the
effectiveness of this letter and the signatures hereon shall have the same force and effect as
manually signed originals and shall be binding on all parties hereto. This letter shall be
effective only upon receipt by Agent of counterparts hereof from Borrowers, Guarantors and Lenders.



	 	 	 	 	 
	 

	 	Very truly yours,
	 
	 	 	 	 
	 

	 	BANK OF AMERICA, N.A.,

as Agent
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Andrew A. Doherty
	 

	 	 	 	 
	 

	 	 	 	Andrew A. Doherty,

Senior Vice President






 









 





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	Acknowledged and
Agreed to:

	 	LENDERS:
	 
	 	 	 	 
	 

	 	BANK OF AMERICA, N.A.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Andrew A. Doherty
	 

	 	 	 	 
	 

	 	 	 	Andrew A. Doherty,

Senior Vice President
	 
	 	 	 	 
	 

	 	SUNTRUST BANK
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kevin Harrison
	 

	 	 	 	 
	 

	 	Name: Kevin Harrison

Title: Managing Director
	 
	 	 	 	 
	 

	 	WACHOVIA BANK, NATIONAL ASSOCIATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Katherine Houser
	 

	 	 	 	 
	 

	 	Name: Katherine Houser

Title: Director






 









 





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Page 15




	 	 	 	 	 
	Acknowledged and
Agreed to:

	 	BORROWERS:
	 
	 	 	 	 
	 

	 	COLTEC INDUSTRIES INC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Richard L. Magee
	 

	 	 	 	 
	 

	 	Name: Richard L. Magee

Title: Vice President and Secretary
	 
	 	 	 	 
	 

	 	COLTEC INDUSTRIAL PRODUCTS LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. McKinney
	 

	 	 	 	 
	 

	 	Name: Robert P. McKinney

Title: Secretary
	 
	 	 	 	 
	 

	 	GARLOCK SEALING TECHNOLOGIES LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John R. Mayo
	 

	 	 	 	 
	 

	 	Name: John R. Mayo

Title: Vice President and Secretary
	 
	 	 	 	 
	 

	 	GGB LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. McKinney
	 

	 	 	 	 
	 

	 	Name: Robert P. McKinney

Title: Secretary
	 
	 	 	 	 
	 

	 	CORROSION CONTROL CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. McKinney
	 

	 	 	 	 
	 

	 	Name: Robert P. McKinney

Title: Secretary
	 
	 	 	 	 
	 

	 	STEMCO LP
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. McKinney
	 

	 	 	 	 
	 

	 	Name: Robert P. McKinney

Title: Vice President and Secretary
	 
	 	 	 	 
	 

	 	V. W. KAISER ENGINEERING, INCORPORATED
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. McKinney
	 

	 	 	 	 
	 

	 	Name: Robert P. McKinney

Title: Secretary






 









 





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	Acknowledged and
Agreed to:

	 	PARENT:
	 
	 	 	 	 
	 

	 	ENPRO INDUSTRIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. McKinney
	 

	 	 	 	 
	 

	 	Name: Robert P. McKinney

Title: Vice President
	 
	 	 	 	 
	 

	 	SUBSIDIARY GUARANTORS:
	 
	 	 	 	 
	 

	 	QFM SALES AND SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. McKinney
	 

	 	 	 	 
	 

	 	Name: Robert P. McKinney

Title: President and Secretary
	 
	 	 	 	 
	 

	 	COLTEC INTERNATIONAL SERVICES CO.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. McKinney
	 

	 	 	 	 
	 

	 	Name: Robert P. McKinney

Title: Secretary
	 
	 	 	 	 
	 

	 	GARRISON LITIGATION MANAGEMENT GROUP, LTD.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Elizabeth A. Barry
	 

	 	 	 	 
	 

	 	Name: Elizabeth A. Barry

Title: Director of Finance/Treasurer
	 
	 	 	 	 
	 

	 	GGB, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Richard L. Magee
	 

	 	 	 	 
	 

	 	Name: Richard L. Magee

Title: Vice President
	 
	 	 	 	 
	 

	 	GARLOCK INTERNATIONAL INC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John R. Mayo
	 

	 	 	 	 
	 

	 	Name: John R. Mayo

Title: Vice President and Secretary
	 
	 	 	 	 
	 

	 	GARLOCK OVERSEAS CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John R. Mayo
	 

	 	 	 	 
	 

	 	Name: John R. Mayo

Title: Vice President and Secretary






 









 





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	 	STEMCO HOLDINGS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. McKinney
	 

	 	 	 	 
	 

	 	Name: Robert P. McKinney

Title: Vice President
	 
	 	 	 	 
	 

	 	COMPRESSOR PRODUCTS HOLDINGS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. McKinney
	 

	 	 	 	 
	 

	 	Name: Robert P. McKinney

Title: Secretary
	 
	 	 	 	 
	 

	 	COMPRESSOR SERVICES HOLDINGS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert P. McKinney
	 

	 	 	 	 
	 

	 	Name: Robert P. McKinney

Title: Secretary