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                                                                     EXHIBIT 4.1


                 ENPRO INDUSTRIES, INC. RETIREMENT SAVINGS PLAN

                               FOR HOURLY WORKERS

   (FORMERLY KNOWN AS THE COLTEC INDUSTRIES INC RETIREMENT ACCUMULATION PLAN)




                           EFFECTIVE NOVEMBER 1, 1992
                 AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1997
                    AND FURTHER AMENDED THROUGH JUNE 2, 1998
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                 ENPRO INDUSTRIES, INC. RETIREMENT SAVINGS PLAN
                               FOR HOURLY WORKERS
   (FORMERLY KNOWN AS THE COLTEC INDUSTRIES INC RETIREMENT ACCUMULATION PLAN)

Coltec Industries Inc adopted this Plan for eligible hourly employees of Coltec
Industries Inc and its subsidiary corporations effective November 1, 1992.

The Plan was amended:

-        effective January 1, 1996 to provide for Company matching
         contributions, new investment elections, and additional distribution
         options;

-        effective January 1, 1997 to reflect the provisions of the Small
         Business Job Protection Act of 1996, new administrative rules resulting
         from changes in Plan design, and the merger of the Menasco California
         Hourly Employee Savings Plan into the Plan;

-        effective as of December 30, 1997, a change in the Plan Year from a
         calendar year basis to a Plan Year ending annually on December 30;

-        effective as of January 1, 1998, the incorporation of the maximum
         automatic cash-out provision of the Taxpayer Relief Act of 1997; and

-        effective as of June 2, 1998, the incorporation of daily valuation
         processing, the establishment of an after-tax contribution feature, and
         the increase in the maximum combined pre-tax deferral/after-tax
         contribution limit from 15 percent to 18 percent.

Except as otherwise specifically provided herein, the rights and benefits of any
Participant who retires or whose employment is terminated on or before the
effective date of a particular amendment is determined in accordance with the
provisions of the Plan in effect and operative at the time of such retirement or
termination.
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                                TABLE OF CONTENTS

<TABLE>
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                                                                                                               PAGE
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<S>      <C>                                                                                                   <C>
ARTICLE I.  DEFINITIONS...........................................................................................6


ARTICLE II.  PARTICIPATION.......................................................................................18

         2.01 ELIGIBILITY TO PARTICIPATE.........................................................................18
         2.02 TERMINATION OF MEMBERSHIP..........................................................................18
         2.03 TRANSFERRED PARTICIPANTS...........................................................................19

ARTICLE III.  CONTRIBUTIONS......................................................................................20

         3.01 DEFERRED CONTRIBUTIONS.............................................................................20
         3.02 AFTER-TAX CONTRIBUTIONS............................................................................24
         3.03 EMPLOYER CONTRIBUTIONS.............................................................................25
         3.04 CHANGES IN, SUSPENSION OF, AND RESUMPTION OF CONTRIBUTIONS.........................................28
         3.05 ACTUAL DEFERRAL PERCENTAGE TEST....................................................................29
         3.06 CONTRIBUTION PERCENTAGE TEST.......................................................................31
         3.07 AGGREGATE CONTRIBUTION LIMITATION..................................................................34
         3.08 ADDITIONAL DISCRIMINATION TESTING PROVISIONS.......................................................34
         3.09 MAXIMUM ANNUAL ADDITIONS...........................................................................36
         3.10 CONTRIBUTIONS DURING PERIOD OF MILITARY LEAVE......................................................38

ARTICLE IV.  ROLLOVER CONTRIBUTIONS AND LOANS....................................................................40

         4.01 ROLLOVER CONTRIBUTIONS.............................................................................40
         4.02 LOANS..............................................................................................40

ARTICLE V.  INVESTMENT OF CONTRIBUTIONS..........................................................................43

         5.01 INVESTMENT FUNDS...................................................................................43
         5.02 INVESTMENT OF ACCOUNTS.............................................................................43
         5.03 CHANGE OF ELECTION.................................................................................43
         5.04 REALLOCATION OF ACCOUNTS AMONG THE FUNDS...........................................................44
         5.05 RESPONSIBILITY FOR INVESTMENTS.....................................................................44
         5.06 INVESTMENT OF EMPLOYER CONTRIBUTIONS...............................................................45
         5.07 ERISA SECTION 404(C) COMPLIANCE....................................................................45

ARTICLE VI.  MAINTENANCE AND VALUATION OF PARTICIPANTS' ACCOUNTS.................................................46

         6.01 VALUATION OF ACCOUNTS..............................................................................46
         6.02 ANNUAL STATEMENTS..................................................................................46
</TABLE>

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<TABLE>
<S>      <C>                                                                                                     <C>
ARTICLE VII.  WITHDRAWALS DURING EMPLOYMENT......................................................................47

         7.01 REGULAR WITHDRAWALS................................................................................47
         7.02 HARDSHIP WITHDRAWALS...............................................................................48
         7.03 DETERMINATION OF VESTED PORTION OF EMPLOYER CONTRIBUTION ACCOUNT...................................50

ARTICLE VIII.  DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT......................................................51

         8.01 VESTING............................................................................................51
         8.02 SERVICE............................................................................................52
         8.03 FORMS OF DISTRIBUTIONS.............................................................................54
         8.04 DATE OF PAYMENT OF DISTRIBUTION....................................................................55
         8.05 MINIMUM REQUIRED DISTRIBUTION......................................................................56
         8.06 STATUS OF ACCOUNTS PENDING DISTRIBUTION............................................................57
         8.07 REEMPLOYMENT.......................................................................................57
         8.08 DISTRIBUTION LIMITATION............................................................................58
         8.09 DIRECT ROLLOVER OF CERTAIN DISTRIBUTIONS...........................................................58
         8.10 WAIVER OF NOTICE PERIOD............................................................................59

ARTICLE IX.  DISBURSEMENT FROM FUNDS.............................................................................61


ARTICLE X.  TRUSTEESHIP AND INVESTMENT OF CONTRIBUTIONS..........................................................62

         10.01 TRUSTEE...........................................................................................62
         10.02 VOTING RIGHTS.....................................................................................62
         10.03 INVESTMENT OF CONTRIBUTIONS.......................................................................63
         10.04 CONTRIBUTIONS.....................................................................................64

ARTICLE XI.  ADMINISTRATION OF PLAN..............................................................................65

         11.01 ESTABLISHMENT OF COMMITTEE........................................................................65
         11.02 DUTIES OF COMMITTEE...............................................................................65
         11.03 MEETINGS..........................................................................................65
         11.04 ACTION OF MAJORITY................................................................................66
         11.05 COMPENSATION AND BONDING..........................................................................66
         11.06 ESTABLISHMENT OF RULES............................................................................66
         11.07 LIMITATION OF LIABILITY...........................................................................66
         11.08 RESIGNATION OR REMOVAL............................................................................67
         11.09 PLAN ADMINISTRATOR................................................................................67
         11.10 DETERMINATION OF ACCOUNT BALANCES.................................................................68
         11.11 NAMED FIDUCIARIES.................................................................................68

ARTICLE XII.  AMENDMENT, TERMINATION OR PERMANENT DISCONTINUANCE OF CONTRIBUTIONS................................70

         12.01 AMENDMENT.........................................................................................70
         12.02 TERMINATION OF PLAN...............................................................................70
</TABLE>

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                                                                          Page 5


<TABLE>
<S>      <C>                                                                                                     <C>
         12.03 DISTRIBUTION OF ACCOUNTS UPON A SALE OF ASSETS OR A SALE OF A SUBSIDIARY..........................71

ARTICLE XIII.  GENERAL PROVISIONS................................................................................72

         13.01 EXCLUSIVE BENEFIT.................................................................................72
         13.02 WRITTEN STATEMENT.................................................................................72
         13.03 MARKET RISK.......................................................................................72
         13.04 COSTS AND EXPENSES................................................................................72
         13.05 FACILITY OF PAYMENT...............................................................................72
         13.06 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN.....................................................73
         13.07 INFORMATION.......................................................................................73
         13.08 NONALIENATION.....................................................................................73
         13.09 RECORDS...........................................................................................74
         13.10 DETERMINATION OF ACCOUNTS UPON TRANSFER OR MERGER.................................................74
         13.11 MERGER, CONSOLIDATION, OR TRANSFER................................................................75
         13.12 ADDITIONAL PARTICIPATING EMPLOYERS................................................................75

ARTICLE XIV.  CONSTRUCTION.......................................................................................77


APPENDIX A.  TOP HEAVY PROVISIONS................................................................................78


APPENDIX B.  SCHEDULE OF MATCHING CONTRIBUTIONS..................................................................81
</TABLE>

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                             ARTICLE I. DEFINITIONS

1.01     "ACTUAL DEFERRAL PERCENTAGE" means, with respect to a specified group
         of Employees, the average of the ratios, calculated separately for each
         Employee in that group, of the amount of Deferred Contributions made
         pursuant to Section 3.01 for a Plan Year (including Deferred
         Contributions returned to a Highly Compensated Employee under Section
         3.01(c) and Deferred Contributions returned to any Employee pursuant to
         Section 3.01(d)), to the Employees' Statutory Compensation for the
         entire calendar year ending within that Plan Year (provided that upon
         direction of the Committee, Statutory Compensation shall only be
         counted if received during the period an Employee is a Participant or
         eligible to become a Participant). The Actual Deferral Percentage for
         each group and the ratio determined for each Employee in the group
         shall be calculated to the nearest one one-hundredth of 1 percent. For
         purposes of determining the Actual Deferral Percentage for a Plan Year,
         Deferred Contributions may be taken into account for a Plan Year only
         if they:

                  (a)      relate to compensation that either would have been
                  received by the Employee in the Plan Year but for the deferral
                  election, or are attributable to services performed by the
                  Employee in the Plan Year and would have been received by the
                  Employee within 2 1/2 months after the close of the Plan Year
                  but for the deferral election,

                  (b)      are allocated to the Employee as of a date within
                  that Plan Year and the allocation is not contingent on the
                  participation or performance of service after such date, and

                  (c)      are actually paid to the Trustee no later than 12
                  months after the end of the Plan Year to which the
                  contributions relate.
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                                                                          Page 7


1.02     "ADDITIONS" means, for each Limitation Year, the total of Deferred
         Contributions and Employer Contributions made on behalf of a
         Participant under Sections 3.01 and 3.03, plus, on and after June 2,
         1998, any After-Tax Contributions made under Section 3.02. Any Deferred
         Contributions distributed under Section 3.05, and Employer
         Contributions or After-Tax Contributions which may have been
         distributed or forfeited under the provisions of Section 3.05, 3.06, or
         3.07 shall be included in the annual addition for the year allocated.

1.03     "AFTER-TAX CONTRIBUTIONS" means amounts contributed pursuant to Section
         3.02 effective as of June 2, 1998.

1.04     "ANNUAL DOLLAR LIMIT" means $150,000, as adjusted from time to time for
         cost-of-living in accordance with Section 401(a)(17)(B) of the Code.

1.05     "BENEFICIARY" means the person or persons designated from time to time,
         in writing, on a form provided by and filed with the Plan
         Administrator, by a Participant to receive benefits under the Plan
         after his death, which designation shall not have been revoked by
         written notice filed with the Plan Administrator by the Participant
         prior to his date of death, provided, however, that the Beneficiary of
         a Participant shall be his spouse, if any, unless the spouse consents
         to the designation of someone else as Beneficiary in a document filed
         with the Plan Administrator that acknowledges the effect of such
         election and is witnessed by a representative of the Plan or a notary
         public. The spouse's consent to the designation of someone else as the
         Participant's Beneficiary shall not be required if it is established to
         the satisfaction of the Plan Administrator that the consent cannot be
         obtained because there is no spouse, the spouse cannot be located or
         because of such other circumstances as may be prescribed in regulations
         issued by the Secretary
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                                                                          Page 8


         of the Treasury. In the event that a Participant or former Participant
         dies without a surviving spouse and without having in effect at the
         time of his death a designation of a Beneficiary made as aforesaid, his
         Beneficiary shall be his estate. For purposes of Section 8.03(b), the
         Participant's Beneficiary shall be his surviving spouse or any one
         individual effectively designated by the Participant as his
         Beneficiary.

         Each Participant shall specify on the beneficiary designation form
         whether the benefits are to be paid to his Beneficiary in a lump sum or
         in equal annual installments, in accordance with Section 8.03(b) and
         (c).

         If a Beneficiary commences receiving annual payments by reason of a
         Participant's death and dies before all such payments have been made,
         the amount represented by the unpaid installments shall be paid in a
         lump sum to the person designated by the Beneficiary or in the absence
         of such designation, to the Beneficiary's estate.

1.06     "BENEFIT COMMENCEMENT DATE" means the first day of the first period for
         which an amount is paid in installments or in a lump sum.

1.07     "BOARD" means the Board of Directors of the Corporation.

1.08     "BREAK IN SERVICE" means a Break in Service as described in Section
         8.02.

1.09     "CODE" means the Internal Revenue Code of 1986, as it may be amended
         from time to time.

1.10     "COLTEC STOCK" means the Common Stock of the Corporation, par value
         $.01 per share.
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                                                                          Page 9


1.11     "COMMITTEE" means the Retirement Savings Committee provided for in
         Article XI.

1.12     "COMPENSATION" means the regular base salary, plus overtime pay,
         bonuses or incentive compensation paid by the Employer to an Eligible
         Employee for services rendered to such Employer, including all regular
         commissions, but excluding any special pay or benefits (other than
         special pay or benefits included as "Compensation" as shall be
         determined from time to time by the Plan Administrator with the
         concurrence of the Committee under uniform rules consistently applied)
         and any contributions made by the Employer under this Plan or under any
         retirement, investment, savings or pension plan of any Employer.
         However, Compensation for all purposes of the Plan shall not exceed the
         Annual Dollar Limit.

1.13     "CONTRIBUTION PERCENTAGE" means, with respect to a specified group of
         Employees, the average of the ratios, calculated separately for each
         Employee in that group, of (a) the sum of the Employee's Employer
         Contributions and After-Tax Contributions for that Plan Year, to (b)
         his Statutory Compensation for the entire calendar year ending within
         that Plan Year (provided that, upon direction of the Committee,
         Statutory Compensation shall only be counted if received during the
         period an Employee is a Participant or eligible to become a
         Participant). The Contribution Percentage for each group and the ratio
         determined for each Employee in the group shall be calculated to the
         nearest one one-hundredth of 1 percent.

1.14     "CONTROLLED GROUP" means any company that is a member of a controlled
         group of corporations (as defined in Section 414(b) of the Code) of
         which the Corporation is also a member; any trade or business under
         common control (as defined in Section 414(c) of the Code) with the
         Corporation; any organization (whether or not incorporated) which is a
         member of an affiliated
<PAGE>

                                                                         Page 10


         service group (as defined in Section 414(m) of the Code) which includes
         the Corporation; and any other entity required to be aggregated with
         the Corporation pursuant to regulations under Section 414(o) of the
         Code. Notwithstanding the foregoing, for purposes of Sections 1.33 and
         3.09, the definitions in Sections 414(b) and (c) of the Code shall be
         modified by substituting the phrase "more than 50 percent" for the
         phrase "at least 80 percent" each place it appears in Section
         1563(a)(1) of the Code.

1.15     "CORPORATION" or "COMPANY" means Coltec Industries Inc or any successor
         by merger, purchase or otherwise.

1.16     "DEFERRAL ELECTION" means an election filed by a Participant with the
         Plan Administrator by which the Participant agrees to have his
         Compensation reduced by a specified percentage and to have the
         commensurate amount contributed to the Plan on his behalf as a Deferred
         Contribution.

1.17     "DEFERRED CONTRIBUTIONS" means the money contributed to a Participant's
         account by the Employer pursuant to the Participant's Deferral
         Election. Deferred Contributions include Basic Deferred Contributions
         and Additional Deferred Contributions.

1.18     "DISABILITY" means total and permanent physical or mental disability,
         as evidenced by certification by a physician or physicians chosen by
         the Participant and satisfactory to the Plan Administrator.

1.19     "EARNINGS" means the amount of earnings to be returned with any excess
         contributions or excess aggregate contributions under Sections 3.05 or
         3.06, as determined in accordance with regulations
<PAGE>

                                                                         Page 11


         prescribed by the Secretary of the Treasury under the provisions of
         Sections 401(k) and 401(m) of the Code.

1.20     "EFFECTIVE DATE" means November 1, 1992.

1.21     "ELIGIBLE EMPLOYEE" means a person employed as an hourly employee by
         the Company, or Controlled Group participating herein, and employed at
         a location or operating unit designated by the Board of Directors as a
         location or operating unit whose hourly employees may participate in
         the Plan and who receives stated compensation other than a pension,
         severance pay, retainer or fee under contract; however the term
         "Eligible Employee" excludes any person who is included in a unit of
         employees covered by a collective bargaining agreement which does not
         provide for his or her membership in the Plan.

1.22     "EMPLOYEE" means any person employed by the Corporation or Controlled
         Group, excluding any Leased Employee.

1.23     "EMPLOYER" means the Corporation, any division thereof, any Subsidiary
         or Controlled Group or any division of any Subsidiary or Controlled
         Group, that shall be authorized by the Board to participate in the Plan
         and that shall participate in the Plan.

1.24     "EMPLOYER CONTRIBUTIONS" means the amounts contributed by the Employer
         (other than Deferred Contributions) in respect of a Participant,
         whether before or after the Restatement Date.

1.25     "EMPLOYMENT COMMENCEMENT DATE" means the date on which the Employee
         first performs an Hour of Service.
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                                                                         Page 12


1.26     "ENROLLMENT DATE" means, effective as of January 1, 1997, the first day
         of each month. Prior to January 1, 1997, "Enrollment Date" means the
         Effective Date and each January 1, April 1, July 1, and October 1 of
         each Plan Year.

1.27     "ENROLLMENT FORM" means the administrative form furnished by the Plan
         Administrator and completed by the Participant by which he elects to
         participate in the Plan, agrees to be bound by its terms, authorizes
         deductions from his Compensation of Deferred Contributions, directs the
         investment of such contributions as provided in Section 5.01,
         designates a Beneficiary and authorizes the sale or redemption of any
         securities purchased for his account when necessary or advisable in
         implementing the provisions of the Plan.

1.28     "ERISA" means the Employee Retirement Income Security Act of 1974, as
         it may be amended from time to time.

1.29     "FIVE PERCENT OWNER" means with respect to a corporation, any person
         who owns (or is considered to own within the meaning of Code Section
         318) more than 5 percent of the outstanding stock of the corporation or
         stock possessing more than 5 percent of the total combined voting power
         of all stock of the corporation.

1.30     "FUNDS" means the investment funds in which contributions under the
         Plan are invested, as described in Section 5.01.
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                                                                         Page 13


1.31     "HIGHLY COMPENSATED EMPLOYEE" means for a Plan Year commencing on or
         after January 1, 1997 any employee of the Employer or Controlled Group
         (whether or not eligible for membership in the Plan) who:

              (a)      was a Five Percent Owner for such Plan Year or the
              preceding 12-month period;

              (b)      for the preceding 12-month period received Statutory
              Compensation in excess of $80,000, and if the Employer so elects,
              was among the highest 20 percent of employees for the preceding
              12-month period when ranked by Statutory Compensation paid for
              that period excluding, for purposes of determining the number of
              such employees, such employees as the Employer may determine on a
              consistent basis pursuant to Section 414(q) of the Code. The
              $80,000 dollar amount in the preceding sentence shall be adjusted
              from time to time for cost-of-living in accordance with
              Section 414(q) of the Code.

         Notwithstanding the foregoing, Employees who are nonresident aliens and
         who receive no earned income from the Employer or Controlled Group
         which constitutes income from sources within the United States shall be
         disregarded for all purposes of this Section.

         The provisions of this Section shall be further subject to such
         additional requirements as shall be described in Code Section 414(q)
         and its applicable regulations, which shall override any aspects of
         this Section inconsistent herewith.

1.32     "HOUR OF SERVICE" means each hour for which an Employee is or was
         directly or indirectly paid or entitled to payment by the Company or
         Controlled Group.
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                                                                         Page 14


1.33     "LEASED EMPLOYEE" means any person performing services for the Employer
         or Controlled Group as a leased employee as defined in Section 414(n)
         of the Code. In the case of any person who is a Leased Employee before
         or after a period of service as an Employee, the entire period during
         which he has performed services as a Leased Employee shall be counted
         as service as an Employee for all purposes of the Plan, except that he
         shall not, by reason of that status, become a Participant.

1.34     "LIMITATION YEAR" means the calendar year.

1.35     "MINIMUM EMPLOYER CONTRIBUTION" means the contributions made by the
         Employer under the Plan in accordance with the provisions of Section
         3.03(e).

1.36     "NON-HIGHLY COMPENSATED EMPLOYEE" means for any Plan Year, an employee
         of the Employer or the Controlled Group who is not a Highly Compensated
         Employee for that Plan Year.

1.37     "NOTICE" means the indication by the Employee of his or her wishes
         through the means written, electronic, or telephonic, provided for the
         particular purpose by the Committee.

1.38     "OPERATING PROFIT" means, for each Plan Year, net earnings of the
         Corporation plus interest expense and provisions for Federal and state
         income taxes, minus interest income and excluding extraordinary items
         and discontinued operations (as such terms are defined under generally
         accepted accounting principles as in effect from time to time) as
         reflected in the Corporation's Consolidated Statement of Earnings for
         the calendar year that ends with or within such Plan Year.
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                                                                         Page 15


1.39     "PARTICIPANT" means a person who has become a participant in the Plan
         in accordance with Section 2.01 and whose participation has not ended
         in accordance with Section 2.02.

1.40     "PERIOD OF SEVERANCE" means a period of time commencing on an
         individual's Severance from Service Date and ending on his Reemployment
         Commencement Date.

1.41     "PLAN" means, prior to January 1, 1996, the Coltec Industries Inc
         Hourly Employee Savings Plan. Effective January 1, 1996, the Plan shall
         be known as the Coltec Industries Inc Retirement Accumulation Plan, as
         herein set forth and as it may be amended from time to time.

1.42     "PLAN ADMINISTRATOR" means the person appointed as plan administrator
         pursuant to Section 11.09.

1.43     "PLAN YEAR" means:

              (a)      for Plan Years beginning prior to January 1, 1997, the
              12-month period ending on each December 31;

              (b)      for the Plan Year beginning on January 1, 1997, the
              period commencing on January 1, 1997, and ending on December 30,
              1997; and

              (c)      for Plan Years beginning after December 30, 1997, the
              12-month period ending on each December 30.

1.44     "REEMPLOYMENT COMMENCEMENT DATE" means the date following an
         individual's Severance from Service Date on which he again completes an
         Hour of Service.
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                                                                         Page 16


1.45     "RETIREMENT" means ceasing to be an employee of the Company or
         Controlled Group (a) at or after the attainment of age 65, or (b) while
         eligible for an early retirement benefit under a pension plan sponsored
         by the Company or Controlled Group, or (c) due to Disability.

1.46     "ROLLOVER CONTRIBUTIONS" means the money transferred to a Participant's
         account pursuant to Section 4.01.

1.47     "SERVICE" means Service as provided in Section 8.02.

1.48     "SEVERANCE FROM SERVICE DATE" or "SEVERANCE FROM SERVICE" means the
         earlier of:

              (a)      the date on which an Employee quits, retires, is
              discharged, or dies, or

              (b)      the first anniversary of the date the Employee is absent
              from Service (with or without pay) for any other reason (such as
              sickness, disability, layoff, leave of absence, vacation or
              holiday).

         Solely for the purpose of determining if an individual has incurred a
         Period of Severance, in the event the individual is absent from Service
         beyond the first anniversary of the first date of absence occurring as
         a result of pregnancy or to care for a child of the individual
         immediately following the child's birth or adoption, his Severance from
         Service Date shall not occur until the second anniversary of the date
         the Employee is first absent from Service. The period between the first
         and second anniversary of the first date of absence from Service shall
         not count either as Service or as a Break in Service.

1.49     "STATUTORY COMPENSATION" means the wages, salaries, and other amounts
         paid in respect of an employee for services actually rendered to the
         Employer or Controlled Group, including by way
<PAGE>

                                                                         Page 17


         of example, overtime, bonuses and commissions, but excluding deferred
         compensation, stock options and other distributions which receive
         special tax benefits under the Code. Statutory Compensation shall
         include amounts contributed by the Employer pursuant to a salary
         reduction agreement which are not includible in the gross income of the
         employee under Sections 125, 402(e)(3), 402(h), or 403(b) of the Code.
         For all other purposes, Statutory Compensation shall also include the
         amounts referred to in the preceding sentence, unless the Employer
         directs otherwise for a particular Plan Year. Statutory Compensation
         for Plan purposes shall not exceed the Annual Dollar Limit, provided
         that such limitation shall not be applied in determining the status of
         an employee as a Highly Compensated Employee under Section 1.31.

1.50     "SUBSIDIARY" means any corporation, 50 percent or more of the
         outstanding voting securities of which are owned, controlled or held
         with power to vote by the Corporation and/or by one or more
         subsidiaries of the Corporation.

1.51     "TRUSTEE" means the respective trustee or trustees by whom the assets
         of the Plan are held, as provided in Article X.

1.52     "VALUATION DATE" means, on and after June 2, 1998, each business day in
         a calendar month on which any valuation of the Plan is made. Prior to
         June 2, 1998, "Valuation Date" means the last business day of each
         calendar month.

Where used herein, unless the context otherwise indicates, words in the
masculine form shall be deemed to refer to females as well as to males.
<PAGE>

                                                                         Page 18


                            ARTICLE II. PARTICIPATION

2.01     ELIGIBILITY TO PARTICIPATE

(a)      An Eligible Employee may become a Participant on any Enrollment Date by
         filing an Enrollment Form with the Plan Administrator on such prior
         notice as the Plan Administrator shall prescribe. Notwithstanding the
         preceding sentence, for purposes of Section 3.03(e), an Eligible
         Employee shall become a Participant as of the first day of such Plan
         Year if such Eligible Employee completes one Hour of Service on or
         before the first day of such Plan Year.

(b)      In the case of (i) a Participant who had ceased to be an Eligible
         Employee, or (ii) a former Participant who again becomes an Eligible
         Employee, eligibility to participate in the Plan shall commence on the
         date he again becomes an Eligible Employee.

(c)      An Eligible Employee who was a participant in the Menasco California
         Hourly Savings Plan on December 31, 1996 shall become a Participant in
         this Plan on January 1, 1997, provided he is then an Eligible Employee.

2.02     TERMINATION OF MEMBERSHIP

         A Participant whose employment with all Employers, Subsidiaries and the
         Controlled Group terminates shall cease to be a Participant unless the
         Participant is entitled to benefits under the Plan, in which event his
         participation shall terminate when those benefits are distributed to
         him. However, a Participant's rights under the Plan following his
         termination until the distribution of his benefit shall be limited to
         those provided in Sections 8.03 and 8.04.
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                                                                         Page 19


2.03     TRANSFERRED PARTICIPANTS

         A Participant who remains in the employ of the Company or Controlled
         Group but ceases to be an Eligible Employee shall continue to be a
         Participant of the Plan but shall not be eligible to have Deferred
         Contributions or Employer Contributions made on his or her behalf while
         his or her employment status is other than as an Eligible Employee.
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                                                                         Page 20


                           ARTICLE III. CONTRIBUTIONS

3.01     DEFERRED CONTRIBUTIONS

(a)      Subject to the limitation on Deferred Contributions described in
         Section 3.02, each Employer shall contribute to the Plan during any
         Plan Year, in respect of each Participant in its employ, a Deferred
         Contribution equal to that percentage of each Participant's
         Compensation that such Participant authorized in his Deferral Election
         for such month. Deferred Contributions shall be made in accordance with
         the following:

                  (i)      BASIC DEFERRED CONTRIBUTIONS - Effective as of the
                  first full pay period following a Participant's Enrollment
                  Date, a Participant's Compensation shall be reduced by the
                  percentage specified in his Deferral Election, which shall be
                  no less than 1 percent and no more than 3 percent, in 1
                  percent multiples, and a commensurate amount shall be
                  contributed to the Plan as a Basic Deferred Contribution.
                  Notwithstanding the foregoing, if the Participant is employed
                  by an Employer that has not elected to make matching
                  contributions under Section 3.03(a), the Participant may elect
                  to have his Compensation reduced by no less than 1 percent and
                  no more than 15 percent, and a commensurate amount shall be
                  contributed to the Plan as a Basic Deferred Contribution;
                  however, effective June 2, 1998, such Participant may elect to
                  have his Compensation reduced by no less than 1 percent and no
                  more than 18 percent.

                  (ii)     ADDITIONAL DEFERRED CONTRIBUTIONS - A Participant who
                  has currently authorized that Basic Deferred Contributions be
                  made on his behalf equal to 3 percent of his Compensation, may
                  authorize in his Deferral Election that his Compensation shall
                  be further reduced by no less than 1 percent and no more than
                  12 percent, in multiples of 1 percent as elected by the
                  Participant, and that such amounts shall be contributed to the
                  Plan as Additional Deferred Contributions. Effective June 2,
                  1998, a Participant who has
<PAGE>

                                                                         Page 21


                  authorized that Basic Deferred Contributions made on his
                  behalf equal to 3 percent of his Compensation may authorize an
                  additional amount that is no less than 1 percent and no more
                  than 15 percent, in multiples of 1 percent, to be contributed
                  to the Plan as Additional Deferred Contributions. This Section
                  3.01(a)(ii) shall not apply to a Participant who is employed
                  by an Employer that has not elected to make matching
                  contributions under Section 3.03(a).

         Deferred Contributions shall be paid to the Trustee as soon as
         practicable, but in not event later than the 15th day of the month
         following the month in which the amounts would otherwise have been
         payable to the Participant in cash.

(b)      In no event shall the Participant's Deferred Contributions and similar
         contributions made on his behalf by the Employer or the Controlled
         Group to all plans, contracts, or arrangements subject to the
         provisions of Section 401(a)(30) of the Code in any calendar year
         exceed $7,000 as adjusted from time to time for cost-of-living pursuant
         to Section 402(g)(5) of the Code. If a Participant's Deferred
         Contributions in a calendar year reach that dollar limitation, his
         election of Deferred Contributions for the remainder of the calendar
         year will be canceled and then recharacterized as an election to make
         After-Tax Contributions under Section 3.02 to be matched by Employer
         Contributions, at the same rate as was previously in effect for his
         Deferred Contributions. Each Participant affected by this paragraph (b)
         may elect to change or suspend the rate at which he makes After-Tax
         Contributions. As of the first pay period of the calendar year
         following such cancellation, the Participant's election of Deferred
         Contributions shall again become effective in accordance with his
         previous election.
<PAGE>

                                                                         Page 22


(c)      In the event that the sum of the Deferred Contributions and similar
         contributions to any other qualified defined contribution plan
         maintained by the Employer or Controlled Group exceeds the dollar
         limitation in Section 3.01(b) for any calendar year, the Participant
         shall be deemed to have elected a return of Deferred Contributions in
         excess of such limit ("excess deferrals") from this Plan. The excess
         deferrals, together with Earnings, shall be returned to the Participant
         no later than the April 15 following the end of the calendar year in
         which the excess deferrals were made. The amount of excess deferrals to
         be returned for any calendar year shall be reduced by any Deferred
         Contributions previously returned to the Participant under Section 3.05
         for that calendar year. In the event any Deferred Contributions
         returned under this paragraph (c) were matched by Employer
         Contributions under Section 3.03, those Employer Contributions,
         together with Earnings, shall be forfeited and used to reduce Employer
         Contributions. In the event those Employer Contributions subject to
         forfeiture have been distributed to the Participant, the Employer shall
         make reasonable efforts to recover the contributions from the
         Participant. Notwithstanding the foregoing, if the Participant is a
         Non-Highly Compensated Employee, then, in lieu of a return of the
         excess deferrals, the Participant may elect to have the Plan treat all
         or a portion of the excess deferrals as After-Tax Contributions,
         subject to the limitations of Section 3.02. For this purpose, the
         excess deferrals, together with Earnings, shall be deemed distributed
         to the Participant and then recontributed to the Plan by the
         Participant as After-Tax Contributions for the Plan Year in which the
         excess deferrals were made. Recharacterized excess deferrals shall be
         considered After-Tax Contributions made in the Plan Year to which the
         excess deferrals relate for purposes of Section 3.06 and shall be
         subject to the withdrawal provisions applicable to After-Tax
         Contributions under Article VII. If the excess deferrals were matched
         by Employer Contributions, the corresponding Employer Contributions
         shall remain allocated to the Participant's employer account to the
         extent such excess deferrals if made as After-Tax Contributions would
         have been matched under the provisions of Section 3.03. The
         Participant's election to recharacterize excess deferrals
<PAGE>

                                                                         Page 23


         shall be made no later than April 1 following the close of the Plan
         Year in which the excess deferrals were made, or within such shorter
         period as the Committee may prescribe. Any excess deferrals, together
         with Earnings, which are not recharacterized under this paragraph shall
         be returned to the Participant as provided above.

(d)      If a Participant makes tax-deferred contributions under another
         qualified defined contribution plan maintained by an employer other
         than the Employer or Controlled Group for any calendar year and those
         contributions when added to his Deferred Contributions exceed the
         dollar limitation under Section 3.01(b) for that calendar year, the
         Participant may allocate all or a portion of such excess deferrals to
         this Plan. In that event, such excess deferrals, together with
         Earnings, shall be returned to the Participant no later than the April
         15 following the end of the calendar year in which such excess
         deferrals were made. However, the Plan shall not be required to return
         excess deferrals unless the Participant notifies the Committee, in
         writing, by March 1 of that following calendar year of the amount of
         the excess deferrals allocated to this Plan. The amount of any such
         excess deferrals to be returned for any calendar year shall be reduced
         by any Deferred Contributions previously returned to the Participant
         under Section 3.05 for that calendar year. In the event any Deferred
         Contributions returned under this paragraph (d) were matched by
         Employer Contributions under Section 3.03, those matching
         contributions, together with Earnings, shall be forfeited and used to
         reduce Employer Contributions. In the event those Employer
         Contributions subject to forfeiture have been distributed to the
         Participant, the Employer shall make reasonable efforts to recover the
         contributions from the Participant. Notwithstanding the foregoing, if
         the Participant is a Non-Highly Compensated Employee, then, in lieu of
         a return of the excess deferrals, the Participant may elect to have the
         Plan treat all or a portion of the excess deferrals as After-Tax
         Contributions, subject to the limitations of Section 3.02. For this
         purpose, the excess deferrals, together with Earnings, shall be deemed
         distributed to the Participant
<PAGE>

                                                                         Page 24


         and then recontributed to the Plan by the Participant as After-Tax
         Contributions for the Plan Year in which the excess deferrals were
         made. Recharacterized excess deferrals shall be considered After-Tax
         Contributions made in the Plan Year to which the excess deferrals
         relate for purposes of Section 3.06 and shall be subject to the
         withdrawal provisions applicable to After-Tax Contributions under
         Article VII. If the excess deferrals were matched by Employer
         Contributions, the corresponding Employer Contributions shall remain
         allocated to the Participant's employer account to the extent such
         excess deferrals if made as After-Tax Contributions would have been
         matched under the provisions of Section 3.03. The Participant's
         election to recharacterize excess deferrals shall be made no later than
         April 1 following the close of the Plan Year in which the excess
         deferrals were made, or within such shorter period as the Committee may
         prescribe.

3.02     AFTER-TAX CONTRIBUTIONS

         Effective June 2, 1998, any Participant may make After-Tax
         Contributions under this Section whether or not he has elected to have
         Deferred Cash Contributions made on his behalf pursuant to Section
         3.01. The amount of After-Tax Contributions shall be at least 1 percent
         and not more than 18 percent of his Compensation while a Participant,
         in multiples of 1 percent; provided, however, if the Participant has
         made an election under Section 3.01, the maximum percentage of
         Compensation which the Participant may elect to contribute under this
         Section shall be equal to the excess of 18 percent over the percentage
         elected by the Participant under Section 3.01. The first 3 percent of a
         Participant's After-Tax Contributions shall be considered his Basic
         After-Tax Contributions. After-Tax Contributions in excess of 3 percent
         shall be considered Additional After-Tax Contributions. The After-Tax
         Contributions of a Participant shall be made through payroll deductions
         and shall be paid to the Trustee as soon as practicable, but in no
         event later than the 15th day of the month following the month in which
         such amounts would otherwise have been payable to the Participant in
         cash.
<PAGE>

                                                                         Page 25


3.03     EMPLOYER CONTRIBUTIONS

(a)      Effective January 1, 1996, each Employer shall contribute to the Plan
         from its Operating Profit for each month during each Plan Year in
         respect of each Participant in its employ, an amount as described in
         Appendix B that is a percentage of his Basic Deferred Contributions
         determined under Section 3.01(a) for such month. Notwithstanding the
         foregoing, solely with respect to a Participant whose Deferred
         Contributions have reached the limit described under Section 402(g) of
         the Code prior to the end of a Plan Year, the Employer's contribution
         as described in Appendix B shall be a percentage of such Participant's
         Basic After-Tax Contributions determined under Section 3.02, if any,
         for each month (or fraction thereof) in the portion of such Plan Year
         following the imposition of said Section 402(g) limit.

(b)      The amount of Employer Contributions for each month, determined in
         accordance with the applicable percentage set forth above, shall be
         paid to the Trustee as soon as feasible after the end of such month. In
         the event that Operating Profit for the calendar year that ends with or
         within the Plan Year has not yet been determined as of the close of any
         month, the Employer may, in its discretion, contribute to the Plan for
         such month a percentage based on its reasonable estimate of Operating
         Profit, or it can defer until a later month the making of Employer
         Contributions.

(c)      Notwithstanding the foregoing, the amount of Employer Contributions
         contributed on behalf of a Participant employed by Coltec Metallic
         Gasket for each month during the Plan Year in respect of each such
         Participant in its employ shall be 50 percent of the first 6 percent of
         his Basic Deferred Contributions determined under Section 3.01(a) for
         such month.
<PAGE>

                                                                         Page 26


(d)      Any amount forfeited as a result of the termination of employment of
         any Participant, in accordance with the provisions of Section 8.01,
         shall be applied to reduce future Employer Contributions.

(e)               (i)      For each Plan Year, each Employer shall make
                  contributions to the Plan in the form of employer
                  contributions (within the meaning of Section 404 of the Code),
                  in cash, or Coltec Stock, at least equal to a specified dollar
                  amount, on behalf of those individuals who are entitled to an
                  allocation under Sections 3.03(e)(ii)(A) through (D). Such
                  amount shall be determined by the Committee by appropriate
                  resolution on or before the last day of the Employer's taxable
                  year that ends within such Plan Year.

                           The Minimum Employer Contribution for a Plan Year
                  shall be paid by the Employer in one or more installments
                  without interest. The Employer shall pay the Minimum Employer
                  Contribution at any time during the Plan Year. Notwithstanding
                  any other provisions of the Plan to the contrary, the Minimum
                  Employer Contribution shall not revert to, or be returned to,
                  the Employer and may be made whether or not the Employer has
                  Operating Profit.

                  (ii)     The Minimum Employer Contribution for the Plan Year
                  shall be allocated as follows:

                                    (A)      First, the Minimum Employer
                           Contribution for the Plan Year shall be allocated
                           during the Plan Year to each individual who is a
                           Participant on the first day of the Plan Year as
                           Basic Deferred Contributions or Additional Deferred
                           Contributions pursuant to the provision of Sections
                           3.01(a)(i) and (ii) and as Employer Contributions
                           pursuant to the provision of Sections 3.03(a) or (c).
<PAGE>

                                                                         Page 27


                                    (B)      Second, the balance of the Minimum
                           Employer Contribution remaining after the allocation
                           in Section 3.03(e)(ii)(A) shall be allocated to each
                           Non-Highly Compensated Employee (as defined in
                           Section 1.36 of the Plan) who is a Participant on the
                           first day of the Plan Year and is employed on the
                           last day of the Plan Year, in the ratio that the sum
                           of such Non-Highly Compensated Employees' Deferred
                           Contributions made during the Plan Year bears to the
                           sum of Deferred Contributions of all such Non-Highly
                           Compensated Employees made during the Plan Year.

                                    (C)      Third, notwithstanding Section 3.09
                           of the Plan, if the total contributions allocated to
                           a Participant's accounts including the Minimum
                           Employer Contribution exceeds the Participant's
                           maximum annual addition limit for any Limitation
                           Year, then such excess shall be held in a suspense
                           account. Such amounts shall be used to reduce
                           employer contributions in the next, and succeeding,
                           Limitation Years.

                                    (D)      Fourth, the balance of the Minimum
                           Employer Contribution remaining after the allocation
                           under Sections 3.03(e)(ii)(A), (B), and (C) shall be
                           allocated as a nonelective contribution to each
                           Non-Highly Compensated Employee (as defined in
                           Section 1.36 of the Plan) who is a Participant on the
                           first day of the Plan Year in the ratio that such
                           Non-Highly Compensated Employee's Compensation for
                           the Plan Year bears to the Compensation of all
                           Non-Highly Compensated Employees. A separate account
                           will be established for contributions made pursuant
                           to this Section 3.03(e)(ii)(D). Contributions made
                           pursuant to this subparagraph (D) shall be subject to
                           the vesting schedule set forth in Section 8.01(a).
                           Such contribution shall be invested in the trust in
                           the
<PAGE>

                                                                         Page 28


                           same proportion that the Non-Highly Compensated
                           Employee designates in accordance with Section 5.02
                           hereof.

                                    (E)      Each installment of the Minimum
                           Employer Contribution shall be held in a contribution
                           suspense account unless, or until, allocated on or
                           before the end of the Plan Year in accordance with
                           this Section 3.03(e). Such suspense account shall not
                           participate in the allocation of investment gains,
                           losses, income, and deductions of the trust as a
                           whole, but shall be invested separately, and all
                           gains, losses, income, and deductions attributable to
                           such investment shall be applied to reduce Plan
                           expenses, and thereafter, to reduce Employer
                           Contributions.

                                    (F)      The Minimum Employer Contribution
                           allocated to the Participant account of a Participant
                           pursuant to Section 3.03(e)(ii)(B) shall be treated
                           in the same manner as Employer Contributions for all
                           purposes of the Plan.

                                    (G)      Notwithstanding any other provision
                           of the Plan to the contrary, any allocation of
                           Deferred Contributions shall be made under either
                           Section 3.01 or this Section 3.03(e), as applicable,
                           but not both Sections; and any allocation of Employer
                           Contributions shall be made under Section 3.03(a),
                           3.03(c), or 3.03(e), as applicable, but not under
                           more than one Section.

3.04     CHANGES IN, SUSPENSION OF, AND RESUMPTION OF CONTRIBUTIONS

(a)      A Participant may, upon such advance Notice to the Plan Administrator
         as the Administrator shall prescribe suspend or change the rate of his
         Deferred Contributions. Such suspension or change shall be effective as
         of the Valuation Date next following the end of the Notice period.
<PAGE>

                                                                         Page 29


(b)      The amount of such contributions so suspended may not subsequently be
         made up.

(c)      A Participant who has suspended his Deferred Contributions may, upon
         such advance Notice to the Plan Administrator as the Administrator
         shall prescribe, resume such contributions as of the first day of the
         month next following the end of the notice period.

3.05     ACTUAL DEFERRAL PERCENTAGE TEST

         With respect to each Plan Year beginning on or after January 1, 1997,
         the Actual Deferral Percentage for that Plan Year for Highly
         Compensated Employees who are Participants or eligible to become
         Participants for that Plan Year shall not exceed the Actual Deferral
         Percentage for the preceding Plan Year for all Non-Highly Compensated
         Employees for the preceding Plan Year who were Participants or eligible
         to become Participants during the preceding Plan Year, multiplied by
         1.25. If the Actual Deferral Percentage for such Highly Compensated
         Employees for that Plan Year does not meet the foregoing test, the
         Actual Deferral Percentage for such Highly Compensated Employees for
         that Plan Year may not exceed the Actual Deferral Percentage for the
         preceding Plan Year for all Non-Highly Compensated Employees for the
         preceding Plan Year who were Participants or eligible to become
         Participants during the preceding Plan Year by more than two percentage
         points, and such Actual Deferral Percentage for such Highly Compensated
         Employees for the Plan Year may not be more than 2.0 times the Actual
         Deferral Percentage for the preceding Plan Year for all Non-Highly
         Compensated Employees for the preceding Plan Year who were Participants
         or eligible to become Participant during the preceding Plan Year (or
         such lesser amount as the Committee shall determine to satisfy the
         provisions of Section 3.07). Notwithstanding the foregoing, the
         Employer may elect to use the Actual Deferral Percentage for Non-Highly
         Compensated Employees for the Plan Year being tested rather than the
         preceding Plan Year, provided that such election once made may not
<PAGE>

                                                                         Page 30


         be changed except as provided by the Secretary of the Treasury. The
         Committee may implement rules limiting the Deferred Contributions which
         may be made on behalf of some or all Highly Compensated Employees so
         that this limitation is satisfied. If the Committee determines that the
         limitation under this Section 3.05 has been exceeded in any Plan Year,
         the following provisions shall apply:

                  (a)      The actual deferral ratio of the Highly Compensated
                  Employee with the highest actual deferral ratio shall be
                  reduced to the extent necessary to meet the test or to cause
                  such ratio to equal the actual deferral ratio of the Highly
                  Compensated Employee with the next highest ratio. This process
                  will be repeated until the actual deferral percentage test is
                  passed. Each ratio shall be rounded to the nearest one
                  one-hundredth of 1 percent of the Participant's Statutory
                  Compensation. The amount of Deferred Contributions made by
                  each Highly Compensated Employee in excess of the amount
                  permitted under his revised deferral ratio shall be added
                  together. This total dollar amount of excess contributions
                  ("excess contributions") shall then be allocated to some or
                  all Highly Compensated Employees in accordance within
                  provisions of paragraph (b) below.

                  (b)      The Deferred Contributions of the Highly Compensated
                  Employee with the highest dollar amount of Deferred
                  Contributions shall be reduced by the lesser of (i) the amount
                  required to cause that Employee's Deferred Contributions to
                  equal the dollar amount of the Deferred Contributions of the
                  Highly Compensated Employee with the next highest dollar
                  amount of Deferred Contributions or (ii) an amount equal to
                  the total excess contributions. This procedure is repeated
                  until all excess contributions are allocated. The amount of
                  excess contributions allocated to a Highly Compensated
                  Employee, together with Earnings thereon, shall be distributed
                  to him in accordance with the provisions of paragraph (c).
<PAGE>

                                                                         Page 31


                  (c)      The excess contributions allocated to a Participant
                  shall be paid to the Participant before the close of the Plan
                  Year following the Plan Year in which the excess contributions
                  were made and, to the extent practicable, within 2 1/2 months
                  of the close of the Plan Year in which the excess
                  contributions were made. However, any excess contributions for
                  any Plan Year shall be reduced by any Deferred Contributions
                  previously returned to the Participant under Section 3.02 for
                  that Plan Year. In the event any Deferred Contributions
                  returned under this Section were matched by matching
                  contributions, such corresponding matching contributions, with
                  Earnings thereon, shall be forfeited and used to reduce
                  Employer Contributions.

                  (d)      In the event any matching contributions subject to
                  forfeiture under this Section 3.05 have been distributed to
                  the Participant, the Employer shall make reasonable efforts to
                  recover the contributions from the Participant.

3.06     CONTRIBUTION PERCENTAGE TEST

         With respect to each Plan Year beginning on or after January 1, 1997,
         the Contribution Percentage for that Plan Year for Highly Compensated
         Employees who are Participants or eligible to become Participants for
         that Plan Year shall not exceed the Contribution Percentage for the
         preceding Plan Year for all Non-Highly Compensated Employees for the
         preceding Plan Year who were Participants or eligible to become
         Participants during the preceding Plan Year, multiplied by 1.25. If the
         Contribution Percentage for such Plan Year for such Highly Compensated
<PAGE>

                                                                         Page 32


         Employees does not meet the foregoing test, the Contribution Percentage
         for such Highly Compensated Employees for the Plan Year may not exceed
         the Contribution Percentage for the preceding Plan Year for all
         Non-Highly Compensated Employees for the preceding Plan Year who are
         Participants or eligible to become Participants during the preceding
         Plan Year by more than two percentage points, and the Contribution
         Percentage for such Highly Compensated Employees for the Plan Year may
         not be more than 2.0 times the Contribution Percentage for the
         preceding Plan Year for all Non-Highly Compensated Employees for the
         preceding Plan Year who were Participant or eligible to become
         Participants during the preceding Plan Year (or such lesser amount as
         the Committee shall determine to satisfy the provisions of Section
         3.07). Notwithstanding the foregoing, the Employer may elect to use the
         Actual Contribution Percentage for Non-Highly Compensated Employee for
         the Plan Year being tested rather than the preceding Plan Year,
         provided that such election once made may not be changed except as
         provided by the Secretary of the Treasury.

         The Committee may implement rules limiting the After-Tax Contributions
         which may be made by some or all Highly Compensated Employees so that
         this limitation is satisfied. If the Committee determines that the
         limitation under this Section 3.06 has been exceeded in any Plan Year,
         the following provisions shall apply:

                  (a)      The actual contribution ratio of the Highly
                  Compensated Employee with the highest actual contribution
                  ratio shall be reduced to the extent necessary to meet the
                  test or to cause such ratio to equal the actual contribution
                  ratio of the Highly Compensated Employee with the next highest
                  actual contribution ratio. This process will be repeated until
                  the actual contribution percentage test is passed. Each ratio
                  shall be rounded to the nearest one one-hundredth of 1 percent
                  of a Participant's Statutory Compensation. The amount of
                  After-Tax Contributions and Employer Contributions made by or
                  on behalf of each Highly Compensated Employee in excess of the
                  amount permitted under his revised actual contribution ratio
                  shall be added together. This total dollar amount of excess
                  contributions ("excess aggregate contributions") shall then be
                  allocated to some or all Highly Compensated Employees in
                  accordance with the provisions of paragraph (b).
<PAGE>

                                                                         Page 33


                  (b) The After-Tax Contributions and Employer Contributions of
                  the Highly Compensated Employee with the highest dollar amount
                  of such contributions shall be reduced by the lesser of
                  (i) the amount required to cause that Employee's After-Tax
                  Contributions and Employer Contributions to equal the dollar
                  amount of such contributions of the Highly Compensated
                  Employee with the next highest dollar amount of such
                  contributions or (ii) an amount equal to the total excess
                  aggregate contributions. This procedure is repeated until all
                  excess aggregate contributions are allocated. The amount of
                  excess aggregate contributions allocated to each Highly
                  Compensated Employee, together with Earnings thereon, shall be
                  distributed or forfeited in accordance with the provisions of
                  paragraph (c) below.

                  (c)      Excess aggregate contributions allocated to a Highly
                  Compensated Employee under paragraph (b) above shall be
                  distributed or forfeited as follows:

                                    (i)      unmatched After-Tax Contributions,
                           to the extent of the excess aggregate contributions,
                           together with Earnings, shall be paid to the
                           Participant; and then, if necessary,

                                    (ii)     so much of the matched After-Tax
                           Contributions and corresponding Employer
                           Contributions, together with Earnings, as shall be
                           necessary shall be reduced, with the After-Tax
                           Contributions, together with Earnings, being paid to
                           the Participant and the Employer Contributions,
                           together with Earnings, being forfeited and applied
                           to reduce Employer contributions, then, if necessary

                                    (iii)    so much of the Employer
                           Contributions, together with Earnings, as shall be
                           necessary to equal the balance of the excess
                           aggregate contributions shall be reduced, with the
                           vested Employer Contributions being paid to the
                           Participant and
<PAGE>

                                                                         Page 34


                           the Employer Contributions which are forfeitable
                           under the Plan being forfeited and applied to reduce
                           Employer contributions.

                  (d)      Any repayment or forfeiture of excess aggregate
                  contributions shall be made before the close of the Plan Year
                  following the Plan Year for which the excess aggregate
                  contributions were made, and to the extent practicable any
                  repayment shall be made within 2 1/2 months after the close of
                  the Plan Year in which the excess aggregate contributions were
                  made. In the event any matching contributions subject to
                  forfeiture have been distributed to the Participant, the
                  Employer shall make reasonable efforts to recover the
                  contributions from the Participant.

3.07     AGGREGATE CONTRIBUTION LIMITATION

         Notwithstanding the provisions of Sections 3.05 and 3.06 above, in no
         event shall the sum of the Actual Deferral Percentage of the group of
         eligible Highly Compensated Employees and the Contribution Percentage
         of such group for any Plan Year, after applying the provisions of
         Sections 3.05 and 3.06 above, exceed the "aggregate limit" as such term
         is defined under regulations prescribed by the Secretary of the
         Treasury under Section 401(m)(9) of the Code. In the event the
         aggregate limit is exceeded for any Plan Year, the Contribution
         Percentages of the Highly Compensated Employees shall be reduced to the
         extent necessary to satisfy the aggregate limit in accordance with the
         procedure set forth in Section 3.06 above.

3.08     ADDITIONAL DISCRIMINATION TESTING PROVISIONS

(a)      If any Highly Compensated Employee is a member of another qualified
         plan of the Employer or Controlled Group, other than an employee stock
         ownership plan described in Section 4975(e)(7) of the Code or any other
         qualified plan which must be mandatorily disaggregated under
<PAGE>

                                                                         Page 35


         Section 410(b) of the Code, under which deferred contributions or
         matching employer contributions are made on behalf of the Highly
         Compensated Employee or under which the Highly Compensated Employee
         makes member contributions, the Committee shall implement rules, which
         shall be uniformly applicable to all employees similarly situated, to
         take into account all such contributions for the Highly Compensated
         Employee under all such plans in applying the limitations of Sections
         3.05, 3.06, and 3.07. If any other such qualified plan has a plan year
         other than the Plan Year defined in Section 1.43, the contributions to
         be taken into account in applying the limitations of Sections 3.05,
         3.06, and 3.07 will be those made in the plan years ending with or
         within the same calendar year.

(b)      In the event that this Plan is aggregated with one or more other plans
         to satisfy the requirements of Sections 401(a)(4) and 410(b) of the
         Code (other than for purposes of the average benefit percentage test)
         or if one or more other plans is aggregated with this Plan to satisfy
         the requirements of such sections of the Code, then the provisions of
         Sections 3.05, 3.06, and 3.07 shall be applied by determining the
         Actual Deferral Percentage and Contribution Percentage of employees as
         if all such plans were a single plan. If this Plan is permissively
         aggregated with any other plan or plans for purposes of satisfying the
         provisions of Section 401(k)(3) of the Code, the aggregated plans must
         also satisfy the provisions of Sections 401(a)(4) and 410(b) of the
         Code as though they were a single plan. For Plan Years beginning after
         December 31, 1989, plans may be aggregated under this paragraph (b)
         only if they have the same plan year.

(c)      The Employer may elect to use Deferred Contributions to satisfy the
         tests described in Sections 3.06 and 3.07, provided that the test
         described in Section 3.05 is met prior to such election, and continues
         to be met following the Employer's election to shift the application of
         those Deferred Contributions from Section 3.05 to Section 3.06.
<PAGE>

                                                                         Page 36


(d)      For Plan Years commencing on and after January 1, 1999, if the Employer
         elects to apply the provisions of Section 410(b)(4)(B) to satisfy the
         requirements of Section 401(k)(3)(A)(i) of the Code, the Employer may
         apply the provisions of Sections 3.05, 3.06, and 3.07, by excluding
         from consideration all eligible employees (other than Highly
         Compensated Employees) who have not met the minimum age and service
         requirements of Section 410(a)(1)(A) of the Code.

3.09     MAXIMUM ANNUAL ADDITIONS

(a)      The Addition to a Participant's accounts for any Limitation Year, when
         added to the Participant's annual addition for that Plan Year under any
         other qualified defined contribution plan of the Employer or Controlled
         Group, shall not exceed an amount which is equal to the lesser of (i)
         25 percent of his aggregate remuneration for that Limitation Year or
         (ii) $30,000, as adjusted pursuant to Section 415(d) of the Code.

(b)      For purposes of this Section, the Addition to a Participant's accounts
         under this Plan or any other qualified defined contribution plan
         (including a deemed qualified defined contribution plan under a
         qualified defined benefit plan) maintained by the Employer or
         Controlled Group shall be the sum of:

                  (i)      the total contributions, including Deferred
                  Contributions, made on the Participant's behalf by the
                  Employer and the Controlled Group,

                  (ii)     all Participant contributions, exclusive of any
                  Rollover Contributions, and

                  (iii)    forfeitures, if applicable,

         that have been allocated to the Participant's accounts under this Plan
         or his accounts under any other such qualified defined contribution
         plan, and solely for purposes of clause (i) of paragraph (a) above,

                  (iv)     amounts described in Sections 415(1)(1) and
                  419A(d)(2) allocated to the Participant.
<PAGE>

                                                                         Page 37


         For purposes of this paragraph (b), any Deferred Contributions
         distributed under Section 3.05 and any Employer Contributions or
         After-Tax Contributions distributed or forfeited under the provisions
         of Section 3.01, 3.05, 3.06, or 3.07 shall be included in the Addition
         for the year allocated.

(c)      For purposes of this Section, the term "remuneration" with respect to
         any Participant shall mean the wages, salaries and other amounts paid
         in respect of such Participant by the Employer or Controlled Group for
         personal services actually rendered, and shall include amounts
         contributed by the Employer pursuant to a salary reduction agreement
         which are not includible in the gross income of the employee under
         Sections 125, 402(g) or 457 of the Code, but shall exclude deferred
         compensation, stock options and other distributions which receive
         special tax benefits under the Code. Notwithstanding the foregoing, for
         limitation years commencing prior to January 1, 1998, remuneration
         shall exclude amounts contributed by the Employer pursuant to a salary
         reduction agreement which are not includible in the gross income of the
         employee under Sections 125, 402(g)(3) or 457 of the Code.

(d)      If the Addition to a Participant's accounts for any Limitation Year,
         prior to the application of the limitation set forth in paragraph (a)
         above, exceeds that limitation due to a reasonable error in estimating
         a Participant's annual compensation or in determining the amount of
         Deferred Contributions that may be made with respect to a Participant
         under Section 415 of the Code, or as the result of the allocation of
         forfeitures, the amount of contributions credited to the Participant's
         accounts in that Limitation Year shall be adjusted to the extent
         necessary to satisfy that limitation in accordance with the following
         order of priority:

                  (i)      The Participant's Employer Contributions under
                  Section 3.03 shall be reduced and held in a suspense account
                  for the Participant and shall be allocated to his account in
<PAGE>

                                                                         Page 38


                  the next Limitation Year (and succeeding years, as necessary)
                  provided that if a Participant's employment terminates, any
                  amount remaining in the suspense account for his benefit after
                  all permitted allocations to his account have been made shall
                  be used to reduce subsequent Employer Contributions.

                  (ii)     The Participant's Deferred Contributions under
                  Section 3.01 shall be reduced and held in a suspense account
                  for the Participant and shall be allocated to his account in
                  the next Limitation Year (and succeeding years, as necessary)
                  provided that if a Participant's employment terminates, any
                  amount remaining in the suspense account for his benefit after
                  all permitted allocations to his account have been made shall
                  be used to reduce subsequent Employer Contributions.

                  (iii)    The Participant's After-Tax Contributions under
                  Section 3.02 shall be reduced and held in a suspense account
                  for the Participant and shall be allocated to his account in
                  the next Limitation Year (and succeeding years, as necessary).

3.10     CONTRIBUTIONS DURING PERIOD OF MILITARY LEAVE

(a)      Without regard to any limitations on contributions set forth in this
         Article 3, a Participant who is credited with Service under the
         provisions of Section 8.02, because of a period of service in the
         uniformed services of the United States beginning on or after August 1,
         1990, may elect to contribute to the Plan the Deferred Contributions
         and/or After-Tax Contributions that could have been contributed to the
         Plan in accordance with the provisions of the Plan had he remained
         continuously employed by the Employer throughout such period of absence
         ("make-up contributions"). The amount of make-up contributions shall be
         determined on the basis of the Participant's Compensation in effect
         immediately prior to the period of absence, and the terms of the Plan
         at such time. Any Deferred Contributions so determined shall be limited
         as provided in Sections 3.01(b), 3.05, 3.06 and 3.07 with respect to
         the Plan Year or Years to which such
<PAGE>

                                                                         Page 39


         contributions relate rather than the Plan Year in which payment is
         made. Any payment to the Plan described in this paragraph shall be made
         during the applicable repayment period. The repayment period shall
         equal three times the period of absence, but not longer than five years
         and shall begin on the later of: (i) the Participant's date of
         reemployment or (ii) the date the Employer notifies the Employee of his
         rights under this Section 3.10. Earnings (or losses) on make-up
         contributions shall be credited commencing with the date the make-up
         contribution is made in accordance with the provisions of Article V.

(b)      With respect to a Participant who makes the election described in
         paragraph (a) above, the Employer shall make Employer Contributions on
         the make-up contributions in the amount described in the provisions of
         Section 3.03, as in effect for the Plan Year to which such make-up
         contributions relate. Employer Contributions under this paragraph shall
         be made during the period described in paragraph (a) above. Earnings
         (or losses) on Employer Contributions shall be credited commencing with
         the date the contributions are made in accordance with the provisions
         of Article V. Any limitations on Employer Contributions described in
         Sections 3.03, 3.05, 3.06 and 3.07 shall be applied with respect to the
         Plan Year or Years to which such contributions relate rather than the
         Plan Year or Years in which payment is made.

(c)      All contributions under this Section 3.10 are considered "annual
         additions," as defined in Section 415(c)(2) of the Code, and shall be
         limited in accordance with the provisions of Section 3.09 with respect
         to the Limitation Year or Years to which such contributions relate
         rather than the Limitation Year in which payment is made.
<PAGE>

                                                                         Page 40


                  ARTICLE IV. ROLLOVER CONTRIBUTIONS AND LOANS

4.01     ROLLOVER CONTRIBUTIONS

         With the permission of the Committee and without regard to any
         limitations on contributions set forth in this Article III, the Plan
         may receive from an Eligible Employee, whether or not he has met the
         eligibility requirements for membership, in cash, any amount previously
         received (or deemed to be received) by him from a qualified plan. The
         Plan may receive such amount either directly from the Eligible
         Employee, from an individual retirement account or from a qualified
         plan in the form of a direct rollover. Notwithstanding the foregoing,
         the Plan shall not accept any amount unless such amount is eligible to
         be rolled over to a qualified trust in accordance with applicable law
         and the Eligible Employee provides evidence satisfactory to the
         Committee that such amount qualifies for rollover treatment. Unless
         received by the Plan in the form of a direct rollover, the Rollover
         Contribution must be paid to the Trustee on or before the 60th day
         after the day it was received by the Eligible Employee.

4.02     LOANS

(a)      Upon the request of a Participant, the Committee shall, on such terms
         and conditions as it shall prescribe under uniform rules, direct the
         Trustee to make a loan to the Participant from a special loan account.

(b)      A Participant may borrow no more than an amount which, when added to
         the outstanding balance of any other loans to the Participant from this
         Plan or any other qualified plan of the Employer or Controlled Group,
         equals the lesser of (i) or (ii), where (i) is $50,000 reduced by the
         excess, if any, of (A) the highest outstanding balance of loans to the
         Participant from such Plans during the one year period ending on the
         day before the day the loan is made over (B) the outstanding
<PAGE>

                                                                         Page 41


         balance of loans to the Participant from such Plans on the date on
         which the loan is made, and (ii) is one-half of the value of his vested
         interest in the Funds.

(c)      The minimum loan shall be $1,000, except that if the loan is used to
         acquire a dwelling unit used as a principal residence of the
         Participant the minimum loan shall be $2,500. A Participant may make
         only one general purpose loan and one principal residence loan during a
         24-month period; however, effective as of January 1, 1997, only one
         loan shall be permitted during any 12-month period, and a Participant
         may have no more than four loans outstanding at once. Any loan to a
         Participant shall bear interest at a reasonable rate and shall be
         required to be repaid within five years; provided, however, that a
         25-year repayment period shall apply to a loan used to acquire a
         dwelling unit used as a principal residence of the Participant. Any
         loan may be prepaid in full or in part as of the last day of any month,
         provided that partial prepayments must be at least $1,000. In the event
         the Participant enters the uniformed services of the United States and
         retains reemployment rights under law, repayments shall be suspended
         during the period of leave and the period of repayment shall be
         extended by the number of months of the period of service in the
         uniformed services.

(e)      The interest rate to be charged on loans shall be determined by the
         Committee as of the first business day of the month preceding each
         calendar quarter. The interest rate so determined shall be fixed for
         the duration of each loan; provided, however, that a Participant who
         has taken a principal residence loan may request that the interest rate
         for his loan be changed to the then-published rate every five years.

(f)      Upon the granting of a loan to a Participant, an amount equal to the
         amount of his loan shall be redeemed in one or more of the Funds, as
         determined in nondiscriminatory guidelines issued by
<PAGE>

                                                                         Page 42


         the Committee, and shall be transferred to a special loan account. Upon
         repayment of principal and interest of the loan, under uniform rules
         established by the Committee which shall require payments no less
         frequently than quarterly, such amounts shall be applied to the
         purchase of units in the Funds in accordance with the Participant's
         direction pursuant to Section 5.02. In the event that the Participant
         does not timely repay or otherwise defaults with respect to a loan, the
         Trustee shall charge the remaining outstanding amount of the loan
         against the Participant's share of the loan account at the time of the
         default. If necessary and to the extent that the Participant's share of
         the loan account is not sufficient to satisfy the remaining outstanding
         balance of the loan, such balances shall be charged against the
         remaining Funds in which his account is invested. Notwithstanding
         anything herein to the contrary, any amounts attributable to a
         Participant's Deferred Contributions shall not be used to repay any
         portion of a defaulted loan during the Participant's Service prior to
         his attainment of age 59 1/2 unless the Participant qualifies for a
         hardship withdrawal under the provisions of Section 7.02.

(g)      To the extent required by law and under such rules as the Committee
         shall adopt, loans shall also be made available on a reasonably
         equivalent basis to any Beneficiary or former Employee (i) who
         maintains an account balance under the Plan and (ii) who is still a
         party-in-interest (within the meaning of Section 3(14) of ERISA).
<PAGE>

                                                                         Page 43


                     ARTICLE V. INVESTMENT OF CONTRIBUTIONS

5.01     INVESTMENT FUNDS

(a)      Contributions to the Plan shall be invested in one or more investment
         funds, as authorized by the Committee, which shall generally include
         (i) fixed income funds investing in government and corporate bonds,
         (ii) various equity funds investing in common and preferred stocks,
         mutual funds, and other similar investments which may focus on specific
         market sectors or investment strategies, (iii) money market funds, and
         (iv) the Coltec Stock Fund.

(b)      The Coltec Stock Fund, including dividends received, shall be invested
         by the Trustee in Coltec Stock. If at any time the Coltec Stock Fund
         shall consist of securities other than Coltec Stock received by the
         Trustee through exchanges, distributions, recapitalizations or other
         similar transactions, the Trustee may, in its discretion, convert, if
         such securities are convertible, those securities into Coltec Stock or
         may sell such securities. The Trustee shall invest the proceeds
         received from such sale in Coltec Stock.

5.02     INVESTMENT OF ACCOUNTS

         Deferred Contributions and Rollover Contributions shall be invested, at
         the Participant's direction, in multiples of 10 percent in one or more
         of the Funds other than the Coltec Stock Fund. A separate election may
         be made with respect to a Participant's Deferred Contributions and his
         Rollover Contributions.

5.03     CHANGE OF ELECTION

         A Participant may, upon such advance Notice to the Plan Administrator
         as the Administrator shall prescribe, change his election under Section
         5.02 as to his subsequent Deferred Contributions and
<PAGE>

                                                                         Page 44


         Rollover Contributions no more than 12 times in any Plan Year,
         effective as of the first day of any calendar month.

5.04     REALLOCATION OF ACCOUNTS AMONG THE FUNDS

(a)      A Participant may elect to reallocate his accounts among the Funds, in
         multiples of 5 percent, by giving such advance Notice to the Plan
         Administrator as the Administrator shall prescribe. A Participant may
         elect to reallocate up to 12 times per Plan Year, but no more than once
         per month. Any such reallocation shall be effective as of the next
         Valuation Date.

(b)      If a Participant is eligible for early retirement under the applicable
         terms of the Non-Contributory Pension Plan for Employees of Coltec
         Industries Inc he shall have the one-time right to transfer all or part
         of his interest in the Coltec Stock Fund to any of the other available
         Funds as of the next following Valuation Date.

5.05     RESPONSIBILITY FOR INVESTMENTS

         The selection of an investment option is the sole responsibility of
         each Participant. The Trustee, the Plan Administrator, the Committee,
         the Corporation or any other Employer or any of their officers or
         supervisory personnel are not empowered to advise any Participant as to
         the manner in which his accounts should be invested. The fact that an
         investment fund is available to Participants under the Plan shall not
         be construed as a recommendation by the Trustee, the Plan
         Administrator, the Committee, the Corporation or any other Employer for
         investment in any such fund and the designation of any investment
         option by a Participant shall not impose any liability on the Trustee,
         the Plan Administrator, the Committee, the Corporation and any other
         Employer, or on any of their directors, officers or employees.
<PAGE>

                                                                         Page 45


5.06     INVESTMENT OF EMPLOYER CONTRIBUTIONS

         All Employer Contributions shall be invested in the Coltec Stock Fund,
         except as otherwise provided in Section 5.04(b).

5.07     ERISA SECTION 404(C) COMPLIANCE

         This Plan is intended to constitute a plan described in Section 404(c)
         of ERISA.
<PAGE>

                                                                         Page 46


         ARTICLE VI. MAINTENANCE AND VALUATION OF PARTICIPANTS' ACCOUNTS

6.01     VALUATION OF ACCOUNTS

(a)      An account shall be established for a Participant in each Fund in which
         he is participating, which accounts shall reflect separately all
         amounts contributed by the Participant and by any Employer on his
         behalf and the earnings thereon.

(b)      The interest of each Participant in the available Funds shall be
         represented by units allocated to his account in each of such Funds. As
         of each Valuation Date, the value of each Fund, other than the Coltec
         Stock Fund, shall be determined (after payment out of each such Fund of
         all brokerage fees and transfer taxes applicable to purchases and sales
         for such Fund since the preceding Valuation Date) by dividing the
         current market value of the assets in each Fund on such Valuation Date
         by the total number of units in such Fund.

(c)      A Participant's interest in the Coltec Stock Fund is represented by the
         units, if any, credited to the account of such Participant in the
         Company Stock Fund provided for in Section 5.01 of the Plan.
         Thereafter, as of each Valuation Date, the value of the Coltec Stock
         Fund shall be determined (after payment of all brokerage fees and
         transfer taxes applicable to purchases and sales for such Fund since
         the preceding Valuation Date) by dividing the current market value of
         the assets of such Fund on such Valuation Date by the total number of
         units in such Fund.

6.02     ANNUAL STATEMENTS

         At least once a year, each Participant shall be furnished with a
         statement setting forth the value of his accounts and the vested
         portion of his accounts.
<PAGE>

                                                                         Page 47


                   ARTICLE VII. WITHDRAWALS DURING EMPLOYMENT

7.01     REGULAR WITHDRAWALS

         As of any Valuation Date, but not more than twice in any Plan Year, a
         Participant may elect, upon such prior written notice to the Plan
         Administrator as the Administrator shall prescribe, to withdraw all or
         any portion of the value of the units in his accounts attributable to:

                  (a)      First, his After-Tax Contributions, with earnings
                  thereon, made on or after June 2, 1998.

                  (b)      Second, his Rollover Contributions, with earnings
                  thereon.

                  (c)      Third, his Employer Contributions in the Fund, other
                  than a Participant's interest in the Coltec Stock Fund, to the
                  extent vested pursuant to Section 8.01, with earnings thereon,
                  provided that the Participant has completed a three-year
                  Period of Service.

                  (d)      Fourth, a Participant's interest in the Coltec Stock
                  Fund, to the extent vested pursuant to Section 8.01, provided
                  that the Participant has completed a three-year Period of
                  Service.

                  (e)      Fifth, his Deferred Contributions, with earnings
                  thereon, provided the Participant has attained age 59 1/2 as
                  of the date of the withdrawal.

         No withdrawal may be made under any subsection above unless all amounts
         that may be withdrawn under all preceding subsections have been
         withdrawn. Withdrawals shall be effected pro-rata from each Fund that
         the Participant has an interest in. Withdrawals shall be made either in
         cash or Coltec Stock, as elected by the Participant.

         In the event of a withdrawal of Deferred Contributions or Employer
         Contributions pursuant to subsections (b), (c) or (d) above, the
         Participant shall not share in any Employer Contributions for
<PAGE>

                                                                         Page 48


         a period of three months after the date of the withdrawal; although he
         shall be eligible to have Deferred Contributions contributed on his
         behalf.

7.02     HARDSHIP WITHDRAWALS

(a)      In the event a Participant incurs a financial hardship, he may, upon
         such advance Notice to the Plan Administrator as the Administrator
         shall prescribe, be permitted to withdraw, effective as of the
         Valuation Date next following the end of such Notice period, all or a
         portion of the value of the units in his accounts that are attributable
         to his After-Tax Contributions, his Rollover Contributions, his
         Employer Contributions to the extent vested under Section 8.01, and his
         Deferred Contributions (excluding any earnings attributable to his
         Deferred Contributions). The amount of the hardship distribution shall
         be withdrawn from a Participant's accounts in the same order as amounts
         are withdrawn under Section 7.01. The amount of the withdrawal may not
         be in excess of the amount of the financial need of the Participant,
         including any amounts necessary to pay any federal, state or local
         taxes and any amounts necessary to pay any penalties reasonably
         anticipated to result from the hardship distribution. For the purpose
         of this Section 7.02, the term "hardship" shall mean circumstances such
         that the Participant is confronted with immediate and heavy financial
         needs for any of the following expenses:

                  (i)      expenses for medical care described in Section 213(d)
                  of the Code incurred by the Participant, the Participant's
                  spouse or any dependents of the Participant (as defined in
                  Section 152 of the Code), or necessary for those persons to
                  obtain such medical care;

                  (ii)     costs directly related to the purchase of the
                  principal residence of the Participant (excluding mortgage
                  payments);

                  (iii)    payment of tuition and related education fees, and
                  room and board expenses, for the next 12 months of
                  post-secondary education for the Participant, his or her
                  spouse, children or dependents (as defined in Section 152 of
                  the Code), or
<PAGE>

                                                                         Page 49


                  (iv)     payment of amounts necessary to prevent the eviction
                  of the Participant from his principal residence or to avoid
                  foreclosure on the mortgage of the Participant's principal
                  residence.

(b)      All of the following requirements must also be satisfied:

                  (i)      The distribution is not in excess of the amount of
                  the immediate and heavy financial need of the Participant,

                  (ii)     The Participant has obtained all distributions, other
                  than hardship distributions, and all nontaxable loans
                  currently available under all plans maintained by the Employer
                  and Controlled Group,

                  (iii)    The Participant's Deferred Contributions and
                  After-Tax Contributions under this Plan and all other plans of
                  the Employer and Controlled Group will be suspended for twelve
                  (12) months after receipt of the hardship distribution, and

                  (iv)     The Participant may not make Deferred Contributions
                  or After-Tax Contributions for the Participant's taxable year
                  immediately following the taxable year of the hardship
                  distribution in excess of the limitation specified in Section
                  3.01 for such next taxable year reduced by the amount of such
                  Participant's Deferred Contributions for the taxable year of
                  the hardship distribution.

         For purposes of subsection (iii), all plans of the Employer and
         Controlled Group shall include stock option plans, stock purchase
         plans, qualified and non-qualified deferred compensation plans, and
         such other plans as may be designated under regulations issued under
         Section 401(k) of the Code, but shall not include the mandatory
         employee contribution portion of a defined benefit plan or health and
         welfare benefit plans.
<PAGE>

                                                                         Page 50


(c)      The Committee shall establish a uniform and nondiscriminatory policy
         for reviewing Participant applications for withdrawals in the event of
         hardship.

7.03     DETERMINATION OF VESTED PORTION OF EMPLOYER CONTRIBUTION ACCOUNT

         If a Participant is not fully vested in his Employer Contributions at
         the time he makes a withdrawal from funds attributable to those
         contributions, as of any subsequent Valuation Date such Participant's
         vested portion of his interest in Employer Contributions shall be
         determined in accordance with the following formula:

                              X = P x (AB + D) - D

         where X is the value of the Participant's Vested Portion of such
         interest, P is the nonforfeitable percentage at the relevant time, AB
         is the value of his interest in Employer Contributions at the relevant
         time, and D is the amount of the prior distribution from his interest
         in such contributions.
<PAGE>

                                                                         Page 51


           ARTICLE VIII. DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT

8.01     VESTING

(a)      If a Participant terminates employment other than by death, Disability
         or Retirement, there shall be paid to him in a lump sum, subject to the
         provisions of Section 8.04, (a) his entire interest attributable to his
         After-Tax Contributions, Deferred Contributions and Rollover
         Contributions and (b) a percentage of that part of his interest in such
         Funds attributable to Employer Contributions made on his behalf,
         determined in accordance with the following schedule:

<TABLE>
<CAPTION>
                                                              PERCENTAGE
                      PERIOD OF SERVICE                       OF VESTING
                      -----------------                       ----------
                      <S>                                     <C>
                      less than 1 year                             0%
                      1 year but less than 2 years                10%
                      2 years but less than 3 years               30%
                      3 years but less than 4 years               50%
                      4 years but less than 5 years               60%
                      5 years but less than 6 years               70%
                      6 years but less than 7 years               80%
                      7 years or more                            100%
</TABLE>

         Notwithstanding the foregoing, a Participant who was a member of the
         Menasco California Hourly Employee Savings Plan on December 31, 1996,
         and who becomes a Participant in the Plan on January 1, 1997, shall
         continue to vest in his Employer Contributions in accordance with the
         vesting schedule under the Menasco plan to the extent that such
         schedule provides for more rapid vesting for such Participant than the
         schedule provided above.

(b)      Any portion of a Participant's interest in the Funds that is not
         distributed to him in accordance with the foregoing schedule shall be
         forfeited upon the Participant's termination of employment and applied
         to reduce future Employer Contributions.
<PAGE>

                                                                         Page 52


(c)      The entire amount credited to a Participant's account in all Funds
         shall be nonforfeitable upon his Retirement, Disability or attainment
         of age 65 or termination of employment as a result of a permanent plant
         shutdown or sale of business operation.

8.02     SERVICE

         The Service of an Employee is the aggregate period or periods (whether
         or not successive), beginning on an Employee's Employment Commencement
         Date (or Reemployment Commencement Date) and ending on his next
         following Severance from Service Date, subject to the provisions of
         paragraphs (b), (c), and (d). If an Employee incurs a Severance from
         Service and is subsequently reemployed, his period of Service for
         purposes of determining his rights and benefits after reemployment
         shall be the period of time beginning on his Reemployment Commencement
         Date and ending on his subsequent Severance from Service Date. In
         addition, his period of Service for this purpose may also include
         periods prior to his Reemployment Commencement Date pursuant to the
         following rules:

                  (i)      A PERIOD OF SEVERANCE OF LESS THAN TWELVE MONTHS: the
                  period of Service of an Employee prior to a Period of
                  Severance of less than twelve months and the Period of
                  Severance shall both be included in determining such an
                  Employee's period of Service. In addition, if an Employee
                  incurs a Severance from Service by reason of a quit, discharge
                  or retirement during an absence from Service for any reason
                  other than on account of a quit, discharge or retirement and
                  the duration of such absence was twelve months or less and if
                  the Employee has a Reemployment Commencement Date within
                  twelve months of the date he was first absent from Service,
                  his Period of Severance shall commence for purposes of this
                  subsection (i) on the date he was first absent from Service;
<PAGE>

                                                                         Page 53


                  (ii)     A BREAK IN SERVICE: the period of Service prior to a
                  Break in Service of an Employee who was vested in any portion
                  of his account attributable to Employer Contributions as of
                  his Severance from Service Date shall be included in
                  determining his period of Service. The period of Service prior
                  to such a Break in Service for an Employee who was not vested
                  in any portion of his account attributable to Employer
                  Contributions at the time of the Break in Service shall be
                  included for all purposes under the Plan only if the length of
                  the Period of Severance was less than the greater of (A) 60
                  months or (B) the Participant's prior period of Service. A
                  Break in Service occurs if any Employee incurs a Period of
                  Severance of twelve months or longer.

         Notwithstanding anything herein contained to the contrary, if an
         Employee incurs a Period of Severance of at least 60 months, his
         Service after the Period of Severance shall not count for vesting
         purposes with respect to Employer Contributions attributable to his
         Service before the Period of Severance. If an Employee returns to
         Service before he incurs a Period of Severance of at least 60 months,
         his Service after the Period of Severance shall be counted for vesting
         purposes with respect to Employer Contributions attributable to his
         Service before the Period of Severance.

(b)      Any Service rendered to an Employer while such Employer was not
         Controlled Group shall not be counted.

(c)      Under uniform rules established by the Plan Administrator, with the
         concurrence of the Committee and applied in a nondiscriminatory manner
         to all Participants similarly situated, a period of absence from
         employment without pay due to an approved leave shall not be considered
         a break in employment or a Break in Service and the period of any such
         absence shall count as Service for the purpose of vesting of any such
         Participant's interest under Section 8.01.
<PAGE>

                                                                         Page 54


(d)      A Participant who is transferred to a group of employees of the
         Employer that does not participate in the Plan shall receive credit for
         Service for vesting purposes under Section 8.01 for any such period of
         his employment other than as an Eligible Employee but he shall not be
         eligible to receive allocations of Deferred Contributions or Employer
         Contributions or make After-Tax Contributions while his employment
         status is other than as an Eligible Employee.

(e)      The Service of an Eligible Employee who was a member of the Menasco
         California Hourly Employee Savings Plan on December 31, 1996 and who
         becomes a Participant in the Plan as of January 1, 1997 shall include
         his service with Menasco Inc and the Company.

8.03     FORMS OF DISTRIBUTIONS

(a)      Except as provided in paragraphs (b), (c), and (d) below, distribution
         of a Participant's accounts in all Funds shall be distributed in a lump
         sum.

(b)      In the event a Participant's termination of employment is on account of
         his Retirement or Disability or occurs on or after his attaining age
         65, the Participant may elect in writing within the 90 day period
         ending on his Benefit Commencement Date to receive his entire interest
         in any or all Funds in either five or ten annual installments;
         provided, however, that the period over which such installments shall
         be paid may not exceed the life expectancy of the Participant or the
         joint life expectancy of the Participant and his Beneficiary, if any,
         determined as of the date of the Participant's Benefit Commencement
         Date. Each installment shall be equal to a fraction of the value of his
         account to which this election is applicable as of the date any such
         installment is due, the numerator of which fraction shall be 1 and the
         denominator of which shall be the number of installments then remaining
         to be paid. Payment of such installments shall commence as of the
<PAGE>

                                                                         Page 55


         Participant's Benefit Commencement Date and shall be made as of each
         subsequent anniversary of such date for the duration of the period
         during which installments are to be paid. If he shall die prior to
         receiving all of such installments, the remaining installments shall be
         paid to his Beneficiary in a lump sum.

(c)      Upon the death of a Participant while an Employee, the entire amount
         credited to his account shall be paid to his Beneficiary in a lump sum,
         or in equal annual installments not to exceed five as elected by the
         Participant on the beneficiary designation form filed with the Plan
         Administrator and in effect at the time of the Participant's death.

(d)      Notwithstanding the foregoing provisions of this Section 8.03, a
         Participant who was a member of the Menasco California Hourly Employee
         Savings Plan on December 31, 1996 and who became a Participant on
         January 1, 1997 may elect, in addition to the forms of benefit
         described in paragraphs (a), (b), and (c) above, any of the forms of
         benefit previously available to him under the Menasco plan.

8.04     DATE OF PAYMENT OF DISTRIBUTION

(a)      Except as otherwise provided below, distribution of the Participant's
         vested interest in the Funds shall commence as soon as administratively
         practicable following the later of (i) the Participant's termination of
         employment or (ii) the 65th anniversary of the Participant's date of
         birth (but not more than 60 days after the close of the Plan Year in
         which the later of (i) or (ii) occurs). However, if a Participant is
         entitled to a distribution pursuant to Section 8.01, and the amount of
         that distribution does not exceed $3,500 ($5,000, effective January 1,
         1998), then such amount shall be paid as soon as practicable following
         the Participant's termination of employment.
<PAGE>

                                                                         Page 56


(b)      In the event payment of a Participant's account is deferred under the
         provisions of paragraph (a) above, a Participant may, in accordance
         with such procedures as the Plan Administrator prescribes, elect to
         have the distribution of his vested interest in the Funds commence as
         of any Valuation Date coincident with or following his termination of
         employment which is before the date described in paragraph (a) above.

(c)      In the case of the death of a Participant before his benefits commence,
         his vested account shall be distributed to his Beneficiary as soon as
         administratively practicable following the Participant's date of death.

8.05     MINIMUM REQUIRED DISTRIBUTION

(a)      Notwithstanding any provisions of the Plan to the contrary, if a
         Participant is a Five Percent Owner, distribution of the Participant's
         accounts shall begin no later than the April 1 following the calendar
         year in which he attains age 70 1/2. No minimum distribution payments
         will be made to a Participant under the provisions of Section 401(a)(9)
         of the Code on or after January 1, 1997 if the Participant is not a
         Five Percent Owner.

(b)      In the event a Participant in active service is required to begin
         receiving payments while in service under the provisions of paragraph
         (a) above, the Company shall distribute to the Participant in each
         distribution calendar year the minimum amount required to satisfy the
         provisions of Section 401(a)(9) of the Code provided, however, that the
         payment for the first distribution calendar year shall be made on or
         before April 1 of the following calendar year. Such minimum amount will
         be determined on the basis of the Participant's life expectancy. Such
         life expectancy will not be recalculated. The amount of the withdrawal
         shall be allocated between the investment Funds in proportion to the
         value of the Accounts as of the date of each withdrawal.
<PAGE>

                                                                         Page 57


8.06     STATUS OF ACCOUNTS PENDING DISTRIBUTION

         If a Participant does not consent to a distribution within 60 days
         following his termination of employment for a reason other than
         Retirement, and if his account is not otherwise immediately
         distributable to him upon his termination of employment, such amount as
         is due him shall continue to be invested in the Funds the Participant
         elected, and the Participant shall retain investment transfer rights as
         described in Section 5.04.

8.07     REEMPLOYMENT

(a)      If a Participant whose Service was terminated other than by death or
         Retirement and who received a distribution of less than 100 percent of
         his account pursuant to Section 8.01 is rehired prior to the occurrence
         of a 60-month Period of Severance, the Company will pay (in cash) to
         his accounts any amounts forfeited under Section 8.01 on his
         termination, together with such dividends as would have been credited
         on such forfeited amount had such amount been invested in the Coltec
         Stock Fund during the period beginning on the Participant's date of
         termination and ending on the date of restoration.

(b)      A rehired Participant who has received a distribution of his vested
         interest and who has incurred a 60-month Period of Severance and a
         rehired Participant who has received a distribution of 100 percent of
         his account shall be eligible to become a Participant on his date of
         rehire. Such Participant shall be credited only with contributions
         subsequent to his becoming a Participant again but he shall be credited
         with all years of Service in determining his vested percentage of these
         contributions.
<PAGE>

                                                                         Page 58


8.08     DISTRIBUTION LIMITATION

         Notwithstanding any other provision of this Article 8, all
         distributions from this Plan shall conform to the regulations issued
         under Section 401(a)(9) of the Code, including the incidental death
         benefit provisions of Section 401(a)(9)(G) of the Code. Further, such
         regulations shall override any Plan provision that is inconsistent with
         Section 401(a)(9) of the Code.

8.09     DIRECT ROLLOVER OF CERTAIN DISTRIBUTIONS

         Notwithstanding any provision of the Plan to the contrary that would
         otherwise limit a distributee's election under this Section, a
         distributee may elect, at the time and in the manner prescribed by the
         Committee, to have any portion of an eligible rollover distribution
         paid directly by the Plan to an eligible retirement plan specified by
         the distributee in a direct rollover. The following definitions apply
         to the terms used in this Section:

                  (a)      "Eligible rollover distribution" means any
                  distribution of all or any portion of the balance to the
                  credit of the distributee, except that an eligible rollover
                  distribution does not include any distribution that is one of
                  a series of substantially equal periodic payments (not less
                  frequently than annually) made for the life (or life
                  expectancy) of the distributee or the joint lives (or the
                  joint life expectancies) of the distributee and the
                  distributee's designated beneficiary, or for a specified
                  period of ten years or more, any distribution to the extent
                  such distribution is required under Section 401(a)(9) of the
                  Code, and the portion of any distribution that is not
                  includible in gross income (determined without regard to the
                  exclusion for net unrealized appreciation with respect to
                  employer securities);

                  (b)      "Eligible retirement plan" means an individual
                  retirement account described in Section 408(a) of the Code, an
                  individual retirement annuity described in Section 408(b) of
                  the Code, an annuity plan described in Section 403(a) of the
                  Code, or a qualified trust
<PAGE>

                                                                         Page 59


                  described in Section 401(a) of the Code, that accepts the
                  distributee's eligible rollover distribution. However, in the
                  case of an eligible rollover distribution to the surviving
                  spouse, an eligible retirement plan is an individual
                  retirement account or individual retirement annuity;

                  (c)      "Distributee" means an employee or former employee.
                  In addition, the employee's or former employee's surviving
                  spouse and the employee's or former employee's spouse or
                  former spouse who is the alternate payee under a qualified
                  domestic relations order as defined in Section 414(p) of the
                  Code, are distributees with regard to the interest of the
                  spouse or former spouse; and

                  (d)      "Direct rollover" means a payment by the Plan to the
                  eligible retirement plan specified by the distributee.

8.10     WAIVER OF NOTICE PERIOD

         Except as provided in the following sentence, if the value of the
         vested portion of a Participant's accounts exceeds $3,500 ($5,000,
         effective January 1, 1998), an election by the Participant to receive a
         distribution shall not be valid unless the written election is made (a)
         after the Participant has received the notice required under Section
         1.411(a)-11(c) of the Income Tax Regulations and (b) within a
         reasonable time before the effective date of the commencement of the
         distribution as prescribed by said regulations. Such distribution may
         commence less than 30 days after the notice required under Section
         1.411(a)-11(c) of the Income Tax Regulations is given, provided that:

                  (i)      the Committee clearly informs the Participant that he
                  has a right to a period of at least 30 days after receiving
                  the notice to consider the decision of whether or not to elect
                  a distribution (and, if applicable, a particular distribution
                  option), and
<PAGE>

                                                                         Page 60


                  (ii)     the Participant, after receiving the notice under
                  Sections 411 and 417, affirmatively elects a distribution.
<PAGE>

                                                                         Page 61


                       ARTICLE IX. DISBURSEMENT FROM FUNDS

The amount of disbursements from Funds other than the Coltec Stock Fund shall be
determined by multiplying the number of a Participant's units in each such Fund
to be withdrawn by the value of a unit therein as of the Valuation Date
coincident with or next succeeding the date of the event giving rise to such
disbursement. Disbursements from such Funds shall be made in cash. Disbursements
from the Coltec Stock Fund shall be made in full shares of Coltec Stock and cash
in lieu of any fractional shares. A Participant may elect to receive cash in
lieu of all or part of the shares of Coltec Stock to be distributed to the
Participant.
<PAGE>

                                                                         Page 62


             ARTICLE X. TRUSTEESHIP AND INVESTMENT OF CONTRIBUTIONS

10.01    TRUSTEE

         The Corporation shall enter into a trust agreement with a Trustee
         appointed by the Board. The trust agreement shall provide, among other
         things, that all funds received by the Trustee thereunder will be held,
         managed, invested and distributed by the Trustee in accordance with the
         trust agreement and the Plan, that any funds paid to the Trustee shall
         not under any circumstances revert to the Employers and that the Board
         may change the Trustee from time to time in its sole discretion.

10.02    VOTING RIGHTS

(a)      Subject to the requirements of applicable law, all shares of Coltec
         Stock, including fractional shares, allocated to a Participant's
         accounts shall be voted by the Trustee in accordance with written
         instructions in one of the three following methods, as determined from
         time to time by the Company:

         (i)      at the direction of the Company, in the manner and proportion
         directed by the Company,

         (ii)     upon the specific request of the Company, at the discretion of
         the Trustee, or

         (iii)    at the direction of each Participant, or if applicable, his
         Beneficiary; provided, however, that the Trustee shall vote shares of
         Coltec Stock allocated to accounts under the Plan for which the Trustee
         received no valid voting instructions in the same manner and proportion
         as the shares of Coltec Stock for which valid voting instructions were
         received are voted.
<PAGE>

                                                                         Page 63


(b)      Any instructions received by the Trustee from a Member or Beneficiary
         regarding the voting of Coltec Stock shall be confidential and shall
         not be divulged by the Trustee to the Company or to any director,
         officer, employee, or agent of the Company.

(c)      For purposes of this Section 10.02, a Participant shall be a named
         fiduciary within the meaning of Section 402(a)(2) of ERISA with respect
         to voting shares of Coltec Stock allocated to his accounts, to the
         extent such Participant exercises the right to vote. Failure to provide
         instructions with respect to the shares of Coltec Stock allocated to
         his accounts shall constitute a delegation by the Participant to the
         Trustee of the right to vote such shares.

10.03    INVESTMENT OF CONTRIBUTIONS

(a)      The Trustee shall purchase Coltec Stock from Coltec Holdings Inc. or,
         if directed by the Committee, shall purchase Coltec Stock held by the
         Corporation.

(b)      As soon as practicable after receipt of Deferred Contributions and
         After-Tax Contributions, the Trustee, subject to the terms of the trust
         agreement entered into with the Corporation pursuant to Section 10.01,
         shall purchase in the open market securities for Funds other than the
         Coltec Stock Fund (which may include investments in any commingled
         trust managed by the Trustee which meets the requirements of Code
         Section 401(a) and is exempt from taxation under Code Section 501(a)
         and which is invested primarily in similar securities).
<PAGE>

                                                                         Page 64


10.04    CONTRIBUTIONS

         No contribution to the Plan shall be refunded to the Employer unless
         such contribution was:

                  (a)      conditioned upon the tax deductibility of such
         contribution and the deduction is disallowed; and it shall be presumed
         that all contributions are conditioned upon deductibility; or

                  (b)      as a result of a mistake of fact.

         Such refund must be made, if requested by the Employer, within one year
         from the date of a contribution made as a result of a mistake of fact,
         or from the date of disallowance of a deduction, as the case may be.
         Any contribution returned pursuant to paragraph (a) or (b) above shall
         only be adjusted to reflect its proportionate share of the trust's
         loss, if any.
<PAGE>

                                                                         Page 65


                       ARTICLE XI. ADMINISTRATION OF PLAN

11.01    ESTABLISHMENT OF COMMITTEE

         The general administration of the Plan and the responsibility for
         carrying out the provisions of the Plan shall be placed in a Retirement
         Savings Committee of not less than three persons appointed from time to
         time by the Board. The members of the Committee are "named fiduciaries"
         within the meaning of Section 402(a)(2) of ERISA.

11.02    DUTIES OF COMMITTEE

         The Committee may appoint such officers and/or subcommittees with such
         powers as it shall determine and may authorize one or more of its
         number or any agent to execute or deliver any instrument or make any
         payment on its behalf. The Committee may designate and allocate any
         fiduciary responsibility to one or more of its members or to any other
         person or persons. It may retain counsel, employ agents and provide for
         clerical and accounting services as it may require. The foregoing
         sentence shall in no way affect the duty and obligation of the Plan
         Administrator to retain such agents as it may require in connection
         with the carrying out of his duties and to engage an independent,
         qualified public accountant as provided in Section 11.09.

11.03    MEETINGS

         The Committee shall hold meetings upon such notice, at such places and
         at such times as it may from time to time determine. A meeting may be
         held in any manner as may be determined by the Committee, but in any
         event, where all members are not physically present, the actions of the
         Committee shall be reduced to writing and sent to all members within 10
         days of the date of such meeting.
<PAGE>

                                                                         Page 66


11.04    ACTION OF MAJORITY

         A majority of the Committee shall constitute a quorum, and any action
         which the Plan authorizes or requires the Committee to take shall
         require the written approval or the affirmative vote of a majority of
         its members.

11.05    COMPENSATION AND BONDING

         Participants of the Committee shall not be paid any compensation from
         the assets of the Plan. Except as may otherwise be required by law, no
         bond or other security need be required of any member in that capacity
         in any jurisdiction.

11.06    ESTABLISHMENT OF RULES

         Subject to the provisions of the Plan, the Committee shall from time to
         time establish rules for the transaction of its business. The
         determination of the Committee as to any disputed question pertaining
         to the Plan shall be conclusive.

11.07    LIMITATION OF LIABILITY

(a)      The Company shall maintain and keep in force such insurance as the
         Company shall deem necessary to insure and protect the Company's
         directors, officers, employees and any appropriately authorized
         delegates or appointees of them against any and all claims, damages,
         liability, loss, cost or expenses (including attorneys' fees) arising
         out of or resulting from (including failure to act with respect to) any
         responsibility, duty, function or activity of any such person in
         relation to the Plan.

(b)      In lieu of, as a supplement to or in addition to the insurance referred
         to in the foregoing sentence, the Company may elect to indemnify and
         hold harmless the Company's directors, officers,
<PAGE>

                                                                         Page 67


         employees and any appropriately authorized delegates or appointees of
         them (who shall be in the employ of the Company) against any and all
         claims, damages, liability, cost or expenses (including attorneys'
         fees) arising out of or resulting from (including failure to act with
         respect to) any responsibility, duty, function or activity of any such
         person in relation to the Plan; provided, however, that no such
         indemnification shall extend to any matter as to which it shall have
         been adjudged by any court of competent jurisdiction that such person
         or persons had acted in bad faith or was guilty of negligence in the
         performance of his or their duties, unless such court shall, in view of
         all the circumstances of the case, determine that such person is fairly
         and reasonably entitled to indemnification.

11.08    RESIGNATION OR REMOVAL

         Any member of the Committee may resign by delivering his written
         resignation to the Board and the Secretary of the Company. Any member
         of the Committee may be removed by the Board and such removal shall be
         effective at such time as is provided for by the Board. Notice of such
         removal shall be conveyed to the member so removed in the manner
         provided by the Board.

11.09    PLAN ADMINISTRATOR

         The Committee shall designate one person (and, if it so elects, remove
         such person and appoint another), who may be a member of the Committee,
         to be the "Plan Administrator" within the meaning of Section 3(16)(A)
         of ERISA. (In addition, the Committee shall designate and appoint an
         alternate Plan Administrator (and, if it so elects, remove such person
         and appoint another), who shall serve as Plan Administrator during any
         ongoing absence of the Plan Administrator). The Plan Administrator
         shall be responsible for the day-to-day administration of the Plan and
         for the duties and obligations imposed on the Plan Administrator by
         ERISA. In fulfilling such duties and obligations, the Plan
         Administrator may engage such agents as he shall require to perform
<PAGE>

                                                                         Page 68


         clerical, recordkeeping and other services in connection with the
         administration of the Plan. In addition, the Plan Administrator shall,
         subject to the approval of the Committee, engage an independent,
         qualified public accountant (and, if the Plan Administrator elects,
         subject to the approval of the Committee, remove and appoint another
         such accountant) which in either case shall audit the Plan and its
         assets in accordance with ERISA.

11.10    DETERMINATION OF ACCOUNT BALANCES

         The Plan Administrator shall be responsible for the determination of
         the number of units in a Participant's account. Any notice from the
         Plan Administrator to a Participant or Beneficiary with respect to the
         Plan Administrator's determination of such individual's account balance
         shall be in writing. In the event that the Participant or Beneficiary
         shall dispute such determination of the Plan Administrator, he shall
         give written notice thereof, setting forth the specified reason for so
         questioning the determination of the Plan Administrator. Any
         Participant or Beneficiary who so disputes any such determination of
         the Plan Administrator shall have the right to request the Committee to
         review the determination of the Plan Administrator. Such request shall
         be in writing and must be made within 60 days of the receipt of the
         written notice of the Plan Administrator, or such longer time as the
         Committee, under uniform rules, determines. Such review by the
         Committee shall be held within a reasonable time of the receipt of the
         request for a review.

11.11    NAMED FIDUCIARIES

         This Article provides for "named fiduciaries" as required by Section
         402(a)(1) of ERISA and a procedure for the allocation of
         responsibilities as required by Section 402(b)(2) of ERISA. Any
         fiduciary hereunder, including a named fiduciary, who allocates
         responsibility as herein provided
<PAGE>

                                                                         Page 69


         shall not be responsible for the actions of the person to whom the
         responsibility is allocated except as provided in Section 405(c)(2) of
         ERISA.
<PAGE>

                                                                         Page 70


                     ARTICLE XII. AMENDMENT, TERMINATION OR
                    PERMANENT DISCONTINUANCE OF CONTRIBUTIONS

12.01    AMENDMENT

         The Board reserves the right at any time and from time to time to
         modify or amend, in whole or in part, any or all provisions of the Plan
         in accordance with any manner permitted under its charter, provided
         that no modification or amendment shall be made that shall affect
         adversely any right or obligation of any Participant with respect to
         contributions theretofore made, or that shall make it possible for any
         funds paid to the Trustee to revert to the Employer. Notwithstanding
         the foregoing, any modification or amendment of the Plan may be made,
         retroactively if necessary, that the Board deems necessary or proper to
         bring the Plan into conformity with any law or governmental regulation
         relating to plans or trusts of this character, including the
         qualification of any trust created under the Plan as an exempt trust
         under the Code or any amendment thereof.

12.02    TERMINATION OF PLAN

(a)      The Board may terminate the Plan or completely discontinue
         contributions under the Plan for any reason at any time. In case of
         termination or partial termination of the Plan, or complete
         discontinuance of Employer contributions to the Plan, the rights of
         affected Participants to their accounts under the Plan as of the date
         of the termination or discontinuance shall be nonforfeitable. The total
         amount in each Participant's accounts shall be distributed, as the
         Committee shall direct, to him or for his benefit or continued in trust
         for his benefit.

(b)      Upon termination of the Plan, Deferred Contributions, with earnings
         thereon, shall only be distributed to Participants if (i) neither the
         Employer nor a member of the Controlled Group establishes or maintains
         a successor defined contribution plan, and (ii) payment is made to the
         Participants in the form of a lump sum distribution (as defined in
         Section 402(d)(4) of the Code,
<PAGE>

                                                                         Page 71


         without regard to clauses (i) through (iv) of subparagraph (A),
         subparagraph (B), or subparagraph (F) thereof). For purposes of this
         paragraph, a "successor defined contribution plan" is a defined
         contribution plan (other than an employee stock ownership plan as
         defined in Section 4975(e)(7) of the Code ("ESOP") or a simplified
         employee pension as defined in Section 408(k) of the Code ("SEP"))
         which exists at the time the Plan is terminated or within the 12 month
         period beginning on the date all assets are distributed. However, in no
         event shall a defined contribution plan be deemed a successor plan if
         fewer than two percent of the employees who are eligible to participate
         in the Plan at the time of its termination are or were eligible to
         participate under another defined contribution plan of the Employer or
         a member of the Controlled Group (other than an ESOP or a SEP) at any
         time during the period beginning 12 months before and ending 12 months
         after the date of the Plan's termination.

12.03    DISTRIBUTION OF ACCOUNTS UPON A SALE OF ASSETS OR A SALE OF A
         SUBSIDIARY

         Upon the disposition by the Employer of at least 85 percent of the
         assets (within the meaning of Section 409(d)(2) of the Code) used by
         the Employer in a trade or business or upon the disposition by the
         Employer of its interest in a subsidiary (within the meaning of Section
         409(d)(3) of the Code), Deferred Contributions, with earnings thereon,
         may be distributed to those Participants who continue in employment
         with the employer acquiring such assets or with the sold subsidiary,
         provided that (a) the Employer maintains the Plan after the
         disposition, (b) the buyer does not adopt the Plan or otherwise become
         a participating employer in the Plan and does not accept any transfer
         of assets or liabilities from the Plan to a plan it maintains in a
         transaction subject to Section 414(l)(1) of the Code, (c) payment is
         made to the Participant in the form of a lump sum distribution (as
         defined in Section 402(d)(4) of the Code, without regard to clauses (i)
         through (iv) of subparagraph (A), subparagraph (B), or subparagraph (F)
         thereof), and (d) payment is made by the end of the second calendar
         year following the calendar year in which the disposition occurred.
<PAGE>

                                                                         Page 72


                        ARTICLE XIII. GENERAL PROVISIONS

13.01    EXCLUSIVE BENEFIT

         No part of the trust fund shall be used for or diverted to purposes
         other than for the exclusive benefit of Participants or their
         Beneficiaries.

13.02    WRITTEN STATEMENT

         As soon as practicable after the close of each Plan Year, the Plan
         Administrator shall cause to be sent to each Participant a written
         statement of his account as of the close of the calendar year.

13.03    MARKET RISK

         Each Participant assumes all risk connected with any decrease in the
         market price of any securities in the respective Funds, and such Funds
         shall be the sole source of payments to be made under the Plan, and the
         Employers assume no liability or responsibility therefor.

13.04    COSTS AND EXPENSES

         Brokerage commissions, transfer taxes and other charges and expenses in
         connection with the purchase or sale of securities shall be added to
         the cost of such securities or deducted from the proceeds thereof, as
         the case may be. All other costs and expenses incurred in administering
         the Plan shall be paid by the Plan unless they are paid by the
         Employers.

13.05    FACILITY OF PAYMENT

         In the event that the Plan Administrator shall find that a Participant
         or any other person entitled to any payment under the Plan is unable to
         care for his affairs because of illness or accident, or for any other
         reason, any such payments due may, unless claim shall have been made
         therefor by a
<PAGE>

                                                                         Page 73


         duly appointed guardian, conservator, committee or other legal
         representative, be paid by the Plan Administrator to the spouse, child,
         parent or other blood relative, or to any person deemed by the Plan
         Administrator to have incurred expenses for such Participant or other
         person entitled to payments under the Plan, and any such payment so
         made by the Plan Administrator shall be a complete discharge of the
         liabilities of the Plan therefor.

13.06    CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN

         The establishment of the Plan shall not be construed as conferring any
         legal rights upon any Employee or any person for a continuation of
         employment, nor shall it interfere with the rights of an Employer to
         discharge any Participant and to treat him without regard to the effect
         that such treatment may have upon him as a Participant.

13.07    INFORMATION

         Each Participant shall be required to furnish the Plan Administrator
         with such information and data as may be considered necessary by the
         Plan Administrator for the proper administration of the Plan. Evidence
         and data submitted in conjunction with the retirement program of the
         Corporation may be accepted and used by the Plan Administrator under
         the Plan.

13.08    NONALIENATION

(a)      Except as may be required to comply with a qualified domestic relations
         order in accordance with Code Section 414(p), no right or interest of
         any Participant or Beneficiary under the Plan or in any Fund
         established hereunder shall be subject in any manner to anticipation,
         alienation, sale, transfer, assignment, pledge, encumbrance or charge,
         and any attempt so to anticipate, alienate, sell, transfer, assign,
         pledge, encumber or charge the same shall be void; nor shall any right
         or interest be in any manner liable for or subject to the debts,
         contracts, liabilities, engagements or
<PAGE>

                                                                         Page 74


         torts of the person entitled thereto; and if any Participant or
         Beneficiary becomes bankrupt or attempts to anticipate, alienate, sell,
         transfer, assign, pledge, encumber or charge any rights or interest in
         the Plan, except as specifically provided herein, then the Plan
         Administrator, to the extent permitted by law, shall hold or apply the
         right or interest hereunder of such Participant or Beneficiary to or
         for the benefit of such Participant or Beneficiary, as the case may be,
         or his spouse, children, or other dependents or any of them.

(b)      Any distribution due an alternate payee under a qualified domestic
         relations order may be made as soon as practicable following the
         earliest date specified in such order, or as otherwise permitted under
         such order pursuant to an agreement between the Plan and the alternate
         payee, provided, however, that if the amount of the distribution
         exceeds $3,500 ($5,000, effective January 1, 1998), the alternate payee
         must consent to the distribution; otherwise it may not be payable
         before the earliest of (i) the Participant's termination of employment,
         (ii) the time such amount could be withdrawn under Article VII, or
         (iii) the Participant's attainment of age 50.

13.09    RECORDS

         The records of the Employers concerning Compensation and the data and
         circumstances of termination of employment may be accepted by the Plan
         Administrator as conclusive for purposes of the Plan.

13.10    DETERMINATION OF ACCOUNTS UPON TRANSFER OR MERGER

         Anything in the Plan to the contrary notwithstanding, if the employment
         of a group of Participants is terminated as a result of the transfer of
         a part of the business of the Corporation or any other Employer to
         another corporation (whether or not affiliated with the Corporation) or
         if as a result of the merger of the Corporation or any other Employer
         with another corporation,
<PAGE>

                                                                         Page 75


         Participants become employees of such other corporation, the Committee,
         with the approval of the Board or the board of directors of such other
         Employer (as the case may be) and to the extent not inconsistent with
         the terms of any applicable purchase and sale agreement, may determine
         or cause to be determined the value of the account of each such
         Participant at the Valuation Date next following or coinciding with the
         date of such transfer or merger and amounts equal in value thereto in
         cash (or at the election of the Committee and, if feasible, in kind)
         may be vested in each such Participant and may be transferred as of the
         Valuation Date next following or coincident with the date of such
         transfer or merger as a vested benefit of each such Participant to the
         trustee of an employee benefit plan meeting the requirement of Code
         Section 401(a) with respect to which such other corporation is an
         employer or, to the extent permitted under applicable law, may be paid
         directly to each such Participant.

13.11    MERGER, CONSOLIDATION, OR TRANSFER

         In the event of any merger or consolidation of the Plan with, or
         transfer in whole or in part of the assets and liabilities of the Funds
         to another trust fund held under any other plan of deferred
         compensation maintained or to be established for the benefit of all or
         some of the Participants of this Plan, the assets of the Plan
         applicable to such Participants shall be transferred to the other trust
         fund only if each Participant would (if either this Plan or the other
         plan then terminated) receive a benefit immediately after the merger,
         consolidation, or transfer that is equal to or greater than the benefit
         he would have been entitled to receive immediately before the merger,
         consolidation, or transfer (if this Plan had then terminated).

13.12    ADDITIONAL PARTICIPATING EMPLOYERS

(a)      If any company is or becomes a subsidiary of or associated with an
         Employer, the Board may include the employees of that subsidiary or
         associated company in the membership of the Plan
<PAGE>

                                                                         Page 76


         upon appropriate action by that company necessary to adopt the Plan. In
         that event, or if any persons become Eligible Employees of an Employer
         as the result of merger or consolidation or as the result of
         acquisition of all or part of the assets or business of another
         company, the Board shall determine to what extent, if any, previous
         service with the subsidiary, associated or other company shall be
         recognized under the Plan, but subject to the continued qualification
         of the trust for the Plan as tax-exempt under the Code.

(b)      Any subsidiary or associated company may terminate its participation in
         the Plan upon appropriate action by it. In that event the funds of the
         Plan held on account of Participants in the employ of that company, and
         any unpaid balances of the accounts of all Participants who have
         separated from the employ of that company, shall be determined by the
         Committee. Those funds shall be distributed as provided in Section
         12.02 if the Plan should be terminated, or shall be segregated by the
         Trustee as a separate trust, pursuant to certification to the Trustee
         by the Committee, continuing the Plan as a separate plan for the
         employees of that company under which the board of directors of that
         company shall succeed to all the powers and duties of the Board,
         including the appointment of the members of the Committee.
<PAGE>

                                                                         Page 77


                            ARTICLE XIV. CONSTRUCTION

This Plan shall be construed and its provisions enforced and administered in
accordance with the laws of the State of New York to the extent that any of such
laws shall not have been preempted by Federal law.
<PAGE>

                                                                         Page 78


                        APPENDIX A. TOP HEAVY PROVISIONS

The following special provisions shall apply to determine if the Plan is a
Top-Heavy Plan in accordance with Section 416 of the Code and any special rules
that will apply based on such status. In the event that the provisions contained
in this Appendix A are inconsistent with the terms contained in the remainder of
the Plan, the provisions contained in this Appendix A shall take precedence.

                             ARTICLE I. DEFINITIONS

AGGREGATION GROUP: All plans maintained by the Employer or Controlled Group that
are qualified under the Code; provided that each such plan satisfies at least
one of the following requirements:

(a)      one or more Key Employees are participants;

(b)      the plan enables any plan in which a Key Employee is a participant to
         comply with the coverage and nondiscrimination requirements of Sections
         401(a)(4) and 410 of the Code; or

(c)      such plan has been designated as a part of the Aggregation Group;
         provided that the resulting Aggregation Group meets the coverage and
         nondiscrimination requirements of Sections 401(a)(4) and 410 of the
         Code.

DETERMINATION DATE: With respect to any Plan Year, the last day of the preceding
Plan Year.

KEY EMPLOYEE: With respect to any Plan Year, an employee or former employee of
the Employer or Controlled Group (or beneficiary of such individual) who is a
key employee determined in accordance with Code Section 416 and any regulations
issued thereunder. The determination as to whether an individual is a Key
Employee shall be based, where applicable, on a Participant's annual total pay
as described in Treasury Regulation 1.415-2(d)(8).
<PAGE>

                                                                         Page 79


NON-KEY EMPLOYEE: With respect to any Plan Year, a Participant who is not a Key
Employee.

TOP-HEAVY PLAN: With respect to any Plan Year, the Plan, if it is included in
the Aggregation Group, and as of the Determination Date for such Plan Year, the
sum of:

(a)      the aggregate accounts of all Key Employees under the Plan; and

(b)      the aggregate account values and the aggregate present values of
         accrued benefits (excluding amounts attributable to rollover
         contributions) for all Key Employees under all other plans in the
         Aggregation Group exceed 60 percent of all such aggregate values for
         all individuals under all plans in the Aggregation Group.

         In determining the value of any individual's account or the present
value of his accrued benefit:

                  (1)      the value of such account or the present value of
                  such accrued benefit shall be increased by the sum of the
                  distributions made with respect to such individual from such
                  plan during the five-year period ending on the Determination
                  Date; and

                  (2)      the present value of his accrued benefit under a
                  defined benefit plan shall be determined by using a 5 percent
                  interest rate assumption and the mortality table used to
                  determine a benefit that is the actuarial equivalent of
                  another benefit under such plan.

The value of an individual's account or the present value of his accrued benefit
shall not be considered in determining if the Plan is a Top-Heavy Plan if the
individual has not performed services for the Employer or Controlled Group at
any time within the five-year period ending on the Determination Date.

TOP-HEAVY PLAN YEAR:  A Plan Year in which the Plan is a Top-Heavy Plan.
<PAGE>

                                                                         Page 80


                        ARTICLE II. VESTING REQUIREMENTS

In any Top-Heavy Plan Year, each Participant's entire interest in the Funds
shall be fully vested and nonforfeitable if he has credit for three years of
Service. In the event the Plan ceases to be a Top-Heavy Plan for any Plan Year
subsequent to a Top-Heavy Plan Year, the Participant's interest in the Funds
that has become fully vested in accordance with the preceding sentence shall
remain fully vested.

                         ARTICLE III. MINIMUM ALLOCATION

Each Participant, and each Employee eligible to become a Participant, who on the
last day of any Top-Heavy Plan Year (a) is a Non-Key Employee and (b) does not
participate in a defined benefit plan maintained by the Employer or Controlled
Group that provides that the minimum benefit requirements applicable to
top-heavy plans will be satisfied in such other plan shall receive a minimum
allocation of aggregate Employer Contributions for such Plan Year equal to a
percentage of his Statutory Compensation. Such percentage shall be equal to the
lesser of 3 percent or the highest percentage at which Employer Contributions
and Deferred Contributions are allocated to the account of any Key Employee for
such Plan Year (when expressed as a percentage of such Key Employee's Statutory
Compensation). To the extent necessary to provide this minimum allocation, the
allocation of Employer Contributions to the accounts of Key Employees shall be
reduced proportionately.
<PAGE>

                                                                         Page 81


                 APPENDIX B. SCHEDULE OF MATCHING CONTRIBUTIONS

              (MATCH EQUAL TO 50 PERCENT OF THE FIRST 3 PERCENT OF
      DEFERRED CONTRIBUTIONS (AND, IF APPLICABLE, AFTER-TAX CONTRIBUTIONS))

<TABLE>
<CAPTION>
                          UNIT                                  EFFECTIVE DATE OF MATCH
----------------------------------------------------------   -------------------------------
<S>                                                          <C>
Menasco Texas                                                           10/1/96
Holley Automotive Division - Sallisaw                                    1/1/96
Holley Performance Products - Bowling Green                              1/1/96
Holley Performance Products -Springfield                                 1/1/96
Holley Performance Products - Goodlettsville                             1/1/96
Des Moines                                                               4/1/96
Carroll                                                                 10/1/96
Delavan Commercial Products - Bamberg                                    1/1/96
Delavan Commercial Products - Lexington                                  1/1/96
Mechanical Packing Palmyra                                               3/1/96
Garlock Bearings                                                         1/1/96
Stemco                                                                   1/1/97
France Compressor (Bargaining)                                           1/1/97
Plastomer                                                                1/1/97
Quincy Compressor - Bay Minette                                          1/1/96
Quincy Compressor - Illinois                                             7/1/97
France Compressor (Non-Bargaining)                                       1/1/97
FMD Electronics                                                          1/1/97
Beloit                                                                   1/1/97
Haber Tool Operation                                                     1/1/96
Sterling Die Operation                                                   1/1/96
Lubrikup                                                                 3/1/96
Mechanical Packing Sodus                                                 3/1/96
Lewis Engineering                                                        9/1/97
</TABLE>


              (MATCH EQUAL TO 50 PERCENT OF THE FIRST 6 PERCENT OF
      DEFERRED CONTRIBUTIONS (AND, IF APPLICABLE, AFTER-TAX CONTRIBUTIONS))

<TABLE>
<CAPTION>
                          UNIT                                   EFFECTIVE DATE OF MATCH
----------------------------------------------------------    ------------------------------
<S>                                                           <C>
Metallic Gasket                                                          1/1/96
</TABLE>


                NO MATCH
-----------------------------------------
Chandler Evans