<PAGE>
                                                                     EXHIBIT 4.2

                 ENPRO INDUSTRIES, INC. RETIREMENT SAVINGS PLAN

                             FOR SALARIED EMPLOYEES

                  (FORMERLY KNOWN AS THE COLTEC INDUSTRIES INC
                RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES)


                              AMENDED AND RESTATED
                           EFFECTIVE JANUARY 1, 1997
                    AND FURTHER AMENDED THROUGH JUNE 2, 1998


<PAGE>


                 ENPRO INDUSTRIES, INC. RETIREMENT SAVINGS PLAN
                             FOR SALARIED EMPLOYEES
                  (FORMERLY KNOWN AS THE COLTEC INDUSTRIES INC
                RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES)

Effective as of January 1, 1975, Coltec Industries Inc amended, restated, and
continued the Colt Industries Inc Retirement Savings Plan for Salaried
Employees (the "Plan").

The Plan was amended and restated, effective April 1, 1976, to comply with the
requirements of the Employee Retirement Income Security Act of 1974. The Plan,
as amended and restated, was submitted to the Internal Revenue Service and a
determination was received that the Plan is qualified under Section 401(a) of
the Internal Revenue Code and that the related trust established thereunder is
tax-exempt under Section 501(a) of the Internal Revenue Code.

The Plan has been further amended from time to time to satisfy certain
requirements of the Internal Revenue Service and to make other changes deemed
advisable by the Corporation, including changing the plan year to the calendar
year effective January 1, 1984. The Plan was amended and restated as of July 1,
1984 and January 1, 1986, to include all prior amendments. The Plan was then
restated as of January 1, 1989 to comply with the requirements of the Tax
Reform Act of 1986 and to reflect certain administrative changes, and further
amended, also as of January 1, 1989, to comply with the applicable requirements
of legislation, regulations, and Internal Revenue Service rulings and notices
enacted or issued subsequent to the Tax Reform Act of 1986.

The most recent amendments to the Plan include:

         -        effective as of January 1, 1997, amendments to reflect the
                  provisions of the Small Business Job Protection Act of 1996,
                  certain administrative changes and the merger of the Walbar
                  Inc Savings Plan into the Plan;


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                                                                         Page 2


         -        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.


<PAGE>


                 ENPRO INDUSTRIES, INC. RETIREMENT SAVINGS PLAN
                             FOR SALARIED EMPLOYEES
                  (FORMERLY KNOWN AS THE COLTEC INDUSTRIES INC
                RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES)


                               TABLE OF CONTENTS


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ARTICLE I.  DEFINITIONS...........................................................................................7


ARTICLE II.  PARTICIPATION.......................................................................................20

         2.01     ELIGIBILITY TO PARTICIPATE.....................................................................20
         2.02     TERMINATION OF MEMBERSHIP......................................................................20

ARTICLE III.  CONTRIBUTIONS......................................................................................21

         3.01     DEFERRED CONTRIBUTIONS.........................................................................21
         3.02     AFTER-TAX CONTRIBUTIONS........................................................................26
         3.03     EMPLOYER CONTRIBUTIONS.........................................................................26
         3.04     CHANGES IN, SUSPENSION OF, AND RESUMPTION OF CONTRIBUTIONS.....................................31
         3.05     ACTUAL DEFERRAL PERCENTAGE TEST................................................................31
         3.06     CONTRIBUTION PERCENTAGE TEST...................................................................33
         3.07     AGGREGATE CONTRIBUTION LIMITATION..............................................................36
         3.08     ADDITIONAL DISCRIMINATION TESTING PROVISIONS...................................................37
         3.09     MAXIMUM ANNUAL ADDITIONS.......................................................................39
         3.10     CONTRIBUTIONS DURING PERIOD OF MILITARY LEAVE..................................................41

ARTICLE IV.  ROLLOVER CONTRIBUTIONS & LOANS......................................................................43

         4.01     ROLLOVER CONTRIBUTIONS.........................................................................43
         4.02     LOANS..........................................................................................43

ARTICLE V.  INVESTMENT OF CONTRIBUTIONS..........................................................................46

         5.01     INVESTMENT FUNDS...............................................................................46
         5.02     INVESTMENT OF ACCOUNTS.........................................................................46
         5.03     CHANGE OF ELECTION.............................................................................47
         5.04     REALLOCATION OF ACCOUNTS AMONG THE FUNDS.......................................................47
         5.05     RESPONSIBILITY FOR INVESTMENTS.................................................................47
         5.06     INVESTMENT OF EMPLOYER CONTRIBUTIONS...........................................................48
         5.07     ERISA SECTION 404(C) COMPLIANCE................................................................48

ARTICLE VI.  MAINTENANCE AND VALUATION OF PARTICIPANTS' ACCOUNTS.................................................49

         6.01     VALUATION OF ACCOUNTS..........................................................................49
         6.02     ANNUAL STATEMENTS..............................................................................49
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ARTICLE VII.  WITHDRAWALS DURING EMPLOYMENT......................................................................50

         7.01     REGULAR WITHDRAWALS............................................................................50
         7.02     HARDSHIP WITHDRAWALS...........................................................................51
         7.03     DETERMINATION OF VESTED PORTION OF EMPLOYER CONTRIBUTION ACCOUNT...............................53

ARTICLE VIII.  DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT......................................................54

         8.01     VESTING........................................................................................54
         8.02     SERVICE........................................................................................56
         8.03     FORMS OF DISTRIBUTIONS.........................................................................59
         8.04     DATE OF PAYMENT OF DISTRIBUTION................................................................60
         8.05     MINIMUM REQUIRED DISTRIBUTION..................................................................61
         8.06     STATUS OF ACCOUNTS PENDING DISTRIBUTION........................................................62
         8.07     REEMPLOYMENT...................................................................................62
         8.08     DISTRIBUTION LIMITATION........................................................................63
         8.09     DIRECT ROLLOVER OF CERTAIN DISTRIBUTIONS.......................................................63
         8.10     WAIVER OF NOTICE PERIOD........................................................................65

ARTICLE IX.  DISBURSEMENT FROM FUNDS.............................................................................66


ARTICLE X.  TRUSTEESHIP AND INVESTMENT OF CONTRIBUTIONS..........................................................67

         10.01    TRUSTEE........................................................................................67
         10.02    VOTING RIGHTS..................................................................................67
         10.03    INVESTMENT OF CONTRIBUTIONS....................................................................68
         10.04    CONTRIBUTIONS..................................................................................69

ARTICLE XI.  ADMINISTRATION OF PLAN..............................................................................70

         11.01    ESTABLISHMENT OF COMMITTEE.....................................................................70
         11.02    DUTIES OF COMMITTEE............................................................................70
         11.03    MEETINGS.......................................................................................70
         11.04    ACTION OF MAJORITY.............................................................................71
         11.05    COMPENSATION...................................................................................71
         11.06    ESTABLISHMENT OF RULES.........................................................................71
         11.07    LIMITATION OF LIABILITY........................................................................71
         11.08    RESIGNATION OR REMOVAL.........................................................................72
         11.09    PLAN ADMINISTRATOR.............................................................................72
         11.10    DETERMINATION OF ACCOUNT BALANCES..............................................................73
         11.11    NAMED FIDUCIARIES..............................................................................74

</TABLE>


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ARTICLE XII.  AMENDMENT, TERMINATION, OR PERMANENT DISCONTINUANCE OF CONTRIBUTIONS...............................75

         12.01    AMENDMENT......................................................................................75
         12.02    TERMINATION OF PLAN............................................................................75
         12.03    DISTRIBUTION OF ACCOUNTS UPON A SALE OF ASSETS OR A SALE OF A SUBSIDIARY.......................76

ARTICLE XIII.  GENERAL PROVISIONS................................................................................77

         13.01    EXCLUSIVE BENEFIT..............................................................................77
         13.02    WRITTEN STATEMENT..............................................................................77
         13.03    MARKET RISK....................................................................................77
         13.04    COSTS AND EXPENSES.............................................................................77
         13.05    FACILITY OF PAYMENT............................................................................78
         13.06    CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN..................................................78
         13.07    INFORMATION....................................................................................78
         13.08    NONALIENATION..................................................................................79
         13.09    RECORDS........................................................................................80
         13.10    DETERMINATION OF ACCOUNTS UPON TRANSFER OR MERGER..............................................80
         13.11    MERGER, CONSOLIDATION, OR TRANSFER.............................................................81
         13.12    ADDITIONAL PARTICIPATING EMPLOYERS.............................................................81

ARTICLE XIV.  CONSTRUCTION.......................................................................................82


APPENDIX A.  TOP HEAVY PROVISIONS................................................................................83


APPENDIX B.  PARTICIPANTS FORMERLY SUBJECT TO THE ANCHOR PACKING COMPANY 401(K) INCENTIVE SAVINGS PLAN...........86
</TABLE>


<PAGE>


                 ENPRO INDUSTRIES, INC. RETIREMENT SAVINGS PLAN
                             FOR SALARIED EMPLOYEES
                  (FORMERLY KNOWN AS THE COLTEC INDUSTRIES INC
                RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES


                             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


<PAGE>
                                                                         Page 8


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

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, with respect to
         Limitation Years prior to January 1, 1987, the lesser of (a) one-half
         of his Participant Contributions or (b) the amount of his Participant
         Contributions in excess of 6 percent of his total pay for such
         Limitation Year, on and after January 1, 1987 and prior to January 1,
         1989, any Participant Contributions made under Section 3.04 as in
         effect prior to the Restatement Date and, on or after June 2, 1998,
         any After-Tax Contributions made under Section 3.02. Any Deferred
         Contributions distributed under Section 3.05 and Employer
         Contributions, Participant 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


<PAGE>
                                                                         Page 9


         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 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 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.


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                                                                        Page 10


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.

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 any amounts
         of Deferred Contributions made on behalf of a Participant and 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 (other than
         Deferred Contributions) or under any retirement, investment, savings,
         or pension plan of any Employer. However, for Plan Years beginning
         after 1988, 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


<PAGE>
                                                                        Page 11


         the Employee's Participant Contributions, After-Tax Contributions and
         Employer Contributions for that Plan Year (excluding any Employer
         Contributions forfeited under the provisions of Sections 3.01 and
         3.05) 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). For Plan Years beginning after 1988, 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 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 Section 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.


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                                                                        Page 12


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 a disability that qualifies the Participant for
         long-term disability benefits under the Employer's long-term
         disability plan.

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 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 with respect to any Employer, the later of
         April 1, 1976, or the date as of which it commences participation in
         the Plan.

1.21     "ELIGIBLE EMPLOYEE" means any Employee employed by the Employer whose
         compensation is paid on a salaried basis except that (a) no person who
         is represented by a recognized collective bargaining agent shall be
         deemed to be an Eligible Employee unless there is a written agreement
         with such bargaining agent providing for his inclusion in the Plan and
         (b) no person


<PAGE>
                                                                        Page 13


         shall be deemed to be an Eligible Employee if he is a member of a
         class of Employees which is prohibited by the Employer from
         participating 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.

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


<PAGE>
                                                                        Page 14


         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.

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


<PAGE>
                                                                        Page 15


                  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.

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.


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                                                                        Page 16


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(f).

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.

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     "PARTICIPANT CONTRIBUTIONS" means the amount of money that a
         Participant elected to contribute to the Plan while an Eligible
         Employee pursuant to Section 3.04 of the Plan as in


<PAGE>
                                                                        Page 17


         effect prior to the Restatement Date. No Participant Contributions
         shall be made to the Plan on and after January 1, 1989.

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

1.42     "PLAN" means the Coltec Industries Inc Retirement Savings Plan for
         Salaried Employees, as herein set forth and as it may be amended from
         time to time.

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

1.44     "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.

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

1.46     "RESTATEMENT DATE" means January 1, 1989.


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                                                                        Page 18


1.47     "RETIREMENT" means retirement in accordance with the provisions of the
         Retirement Program for Employees of Coltec Industries Inc and
         Affiliated Companies.

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

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

1.50     "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 (which
         absence begins after 1984), 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 a Break in Service.


<PAGE>
                                                                        Page 19


1.51     "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 of example, overtime,
         bonuses, and commissions, but excluding deferred compensation, stock
         options and other distributions which receive special tax benefits
         under the Code. For purposes of determining Highly Compensated
         Employees under Section 1.31 and key employees under Article I of
         Appendix A, 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. For Plan Years beginning after 1988, 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.

1.52     "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.

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

1.54     "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 20


                           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(f), an Eligible
         Employee shall become a Participant as of the first day of the Plan
         Year if such 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 Walbar 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.


<PAGE>
                                                                        Page 21


                           ARTICLE III. CONTRIBUTIONS


3.01     DEFERRED CONTRIBUTIONS

(a)      Subject to the limitations on Deferred Contributions described below
         and in Sections 3.05, 3.08, and 3.09, 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
                  later of July 1, 1984, or 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 at least 2 percent and not more than
                  6 percent, in 1 percent multiples, and a commensurate amount
                  shall be contributed to the Plan as a Basic Deferred
                  Contribution. Notwithstanding the foregoing, a Participant
                  who was a member of the Walbar Savings Plan may elect to have
                  his Compensation reduced by at least 1 percent but not more
                  than 8 percent, in 1 percent multiples, and a commensurate
                  amount shall be contributed to the Plan as a Basic Deferred
                  Contribution.

                  (ii)     ADDITIONAL DEFERRED CONTRIBUTIONS - A Participant who
                  has currently authorized that Basic Deferred Contributions be
                  made on his behalf equal to 6 percent of his Compensation may
                  authorize in his Deferral Election that his Compensation shall
                  be further reduced by not less than 1 percent and not more
                  than 9 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. Notwithstanding the
                  foregoing, a Participant who was a member of the Walbar
                  Savings Plan may elect to have his
<PAGE>
                                                                         Page 22

                  Compensation reduced by at least 1 percent but not more than 4
                  percent, and a commensurate amount shall be contributed to the
                  Plan as an Additional Deferred Contribution. Effective June 2,
                  1998, a Participant who has authorized that Basic Deferred
                  Contributions be made on his behalf equal to 6 percent of his
                  Compensation may authorize an additional amount that is not
                  less than 1 percent and not more than 12 percent, in multiples
                  of 1 percent, to be contributed to this Plan as Additional
                  Deferred Contributions.

         Deferred Contributions 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 the amounts would otherwise have been
         payable to the Participant in cash.

         Any Deferral Election made by a Participant to contribute Basic
         Deferred Contributions at a rate of 8 percent under the provisions of
         the Plan in effect prior to the Restatement Date shall cease to be
         effective after December 31, 1988. Any affected Participant shall be
         given an opportunity to make a new Deferral Election in accordance
         with the preceding provisions of this Section 3.01.

(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


<PAGE>
                                                                        Page 23


         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.

(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


<PAGE>
                                                                        Page 24


         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 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


<PAGE>
                                                                        Page 25


         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 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 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.


<PAGE>
                                                                        Page 26


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 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 6 percent of a
         Participant's After-Tax Contributions shall be considered his Basic
         After-Tax Contributions. After-Tax Contributions in excess of 6
         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.

3.03     EMPLOYER CONTRIBUTIONS

(a)      Each Employer shall contribute to the Plan for each month during any
         Plan Year in respect of each Participant in its employ, an amount that
         is a percentage (determined in the manner set forth in the following
         sentence) 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 shall be a percentage (as
         determined below) of such Participant's After-Tax Contributions
         determined under Section 3.02, if any, for each month (or fraction
         thereof) in the portion of such Plan Year


<PAGE>
                                                                        Page 27


         following the imposition of said Section 402(g) limit. Such percentage
         shall be computed on the basis of Operating Profit for the immediately
         preceding Plan Year according to the following formula:

                  2 percent for each full $1,000,000 of Operating Profit up to,
                  but not in excess of, $24,000,000 and 1 percent for each full
                  $1,000,000 of Operating Profit in excess of $24,000,000 but
                  not in excess of the next $52,000,000, so that such matching
                  Employer Contributions will equal 100 percent of a
                  Participant's Basic Deferred Contributions when Operating
                  Profit equals or exceeds $76,000,000.

(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 or Garlock Rubber Technologies for each month during any 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.

(d)      Notwithstanding the foregoing, the amount of Employer Contributions
         contributed on behalf of a Participant who was a member of the Walbar
         Savings Plan for each month during any Plan Year in respect of each
         such Participant in its employ shall be 50 percent of the first 8
         percent of his Basic Deferred Contributions determined under Section
         3.01(a) for such month.


<PAGE>
                                                                        Page 28


(e)      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.

(f)               (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(f)(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) and (b)


<PAGE>
                                                                        Page 29


                           and as Employer Contributions pursuant to the
                           provision of Sections 3.03(a), (c), or (d).

                                    (B)      Second, the balance of the Minimum
                           Employer Contribution remaining after the allocation
                           in Section 3.03(f)(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(f)(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(f)(ii)(D). Contributions


<PAGE>
                                                                        Page 30

                           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 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(f). 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(f)(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(f),
                           as applicable, but not both Sections; and any
                           allocation of Employer Contributions shall be made
                           under Section 3.03(a), 3.03(c), 3.03(d), or 3.03(f),
                           as applicable, but not under more than one Section.


<PAGE>
                                                                        Page 31


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 will be
         effective as of the Valuation Date next following the end of the
         Notice period.

(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 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


<PAGE>
                                                                        Page 32


         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 (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 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 with the
                  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


<PAGE>
                                                                        Page 33


                  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).

                  (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


<PAGE>
                                                                        Page 34


         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 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 Participants 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 below). Notwithstanding the foregoing, the
         Employer may elect to use the Actual Contribution 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 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


<PAGE>
                                                                        Page 35


                  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).

                  (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,

<PAGE>
                                                                        Page 36


                                    (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 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 commencing on or after January 1,


<PAGE>
                                                                        Page 37


         1989, 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
         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 1.44, the contributions to
         be taken into account in applying the limitations 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


<PAGE>
                                                                        Page 38


         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.

(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.


<PAGE>
                                                                        Page 39


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 Limitation 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.

         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


<PAGE>
                                                                        Page 40


         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
                  the next Limitation Year (and succeeding years, as
                  necessary), provided that if a


<PAGE>
                                                                        Page 41


                  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 III, 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
         contributions relate rather than the Plan Year in which payment is
         made. Any


<PAGE>
                                                                        Page 42


         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 43


                   ARTICLE IV. ROLLOVER CONTRIBUTIONS & 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)      On and after such time as the Committee shall approve the granting of
         loans under the Plan, this Section 4.02 shall become effective and the
         granting of any loan hereunder shall be in accordance with the
         provisions described below.

(b)      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.


<PAGE>
                                                                        Page 44


(c)      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
         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. Any loans made, renewed, renegotiated,
         modified, or extended on or after January 1, 1987 shall be subject to
         the provisions of this Section 4.02 as amended effective January 1,
         1987. Except as provided in the preceding sentence, all loans
         previously made shall be subject to the rules in effect under the Plan
         at the time the loan was made.

(d)      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 not 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


<PAGE>
                                                                        Page 45


         during the period of leave of absence, 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 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 who (i)
         maintains an account balance under the Plan and (ii) is still a
         party-in-interest (within the meaning of Section 3(14) of ERISA).


<PAGE>
                                                                        Page 46


                     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, into Coltec Stock or may sell such
         securities. The Trustee shall invest the proceeds received from such
         sale in Coltec Stock. The Trustee shall reinvest the proceeds received
         by the Coltec Stock Fund from the redemption of Participating
         Cumulative Preferred Stock of Coltec Holdings Inc 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.


<PAGE>
                                                                        Page 47


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 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 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.

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 48


5.06     INVESTMENT OF EMPLOYER CONTRIBUTIONS

         All Employer Contributions shall be invested in the Coltec Stock Fund.
         If a Participant terminates employment by reason of his Retirement and
         he elects the installment method of distribution in Section 8.07(b),
         he shall have the right to transfer all or part of his interest in the
         Coltec Stock Fund to any of the other available funds within 60 days
         of his Retirement.

5.07     ERISA SECTION 404(C) COMPLIANCE

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


<PAGE>
                                                                        Page 49


        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. Such accounts shall also reflect at
         all times any amounts contributed by the Participant and by any
         Employer on his behalf for Plan Years ending prior to July 1, 1984,
         and the earnings thereon under provisions of the Plan as in effect at
         all times prior to July 1, 1984.

(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 50


                   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 Participant Contributions made before
                  January 1, 1987, not to exceed his non-taxable basis,
                  excluding earnings thereon.

                  (b)      Second, his Participant Contributions made on or
                  after January 1, 1987, with earnings thereon, and his
                  After-Tax Contributions, with earnings thereon, made on or
                  after June 2, 1998.

                  (c)      Third, earnings on his Participant Contributions
                  made before January 1, 1987.

                  (d)      Fourth, his Rollover Contributions, with earnings
                  thereon.

                  (e)      Fifth, 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.

                  (f)      Sixth, 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.

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


<PAGE>
                                                                        Page 51


         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 made pursuant to
         subsection (f) above shall be made in either cash or Coltec Stock as
         elected by the Participant.

         In the event of a withdrawal of Deferred Contributions or Employer
         Contributions pursuant to subsections (e), (f), or (g) above, the
         Participant shall not share in any Employer Contributions for 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 Participant Contributions, 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 credited on and after January 1, 1989). 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


<PAGE>
                                                                        Page 52


         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 previously 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 a
                  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

                  (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 12
                  months after receipt of the hardship distribution; and


<PAGE>
                                                                        Page 53


                  (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.

(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 54


           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 Participant Contributions, 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
         Walbar 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 in Section 6.02
         of the Walbar Savings Plan to the extent that such schedule provides
         for more rapid vesting for such Participant than the schedule provided
         above.


<PAGE>
                                                                        Page 55


(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.

(c)      The entire amount credited to a Participant's account in all Funds
         shall be nonforfeitable upon his Retirement, Disability, attainment of
         age 65 or termination of employment as a result of a permanent plant
         shutdown or sale of business operation. The entire amount credited to
         a Participant's account in all Funds shall also be nonforfeitable in
         the event of a change in control which results in the termination of
         the Plan or a loss of employment within one year of the change in
         control, whichever occurs first.

         For purposes of this Plan, "change in control" shall be deemed to have
         occurred if:

                  (i)      any "person" (as defined in Sections 13(d) and 14(d)
                  of the Exchange Act), other than the Corporation, any trustee
                  or other fiduciary holding securities under an employee
                  benefit plan of the Corporation, or any corporation owned,
                  directly or indirectly, by the shareholders of the
                  Corporation in substantially the same proportions as their
                  ownership of stock of the Corporation, acquires "beneficial
                  ownership" (as defined in Rule 13d-3 under the Exchange Act)
                  of securities representing more than 25 percent of the
                  combined voting power of the Company;

                  (ii)     during any period of two consecutive years,
                  individuals who at the beginning of such period constitute
                  the Board of Directors and any new director (other than a
                  director designated by a person who has entered into an
                  agreement with the Corporation to effect a transaction
                  described in Sections 8.01(c)(i), 8.02(c)(iii), and
                  8.01(c)(iv)), whose election by the Board of Directors or
                  nomination for election by the


<PAGE>
                                                                        Page 56


                  Corporation's shareholders was approved by a vote of at least
                  two-thirds of the directors then still in office who either
                  were directors at the beginning of the period or whose
                  election or nomination for election was previously so
                  approved, cease for any reason to constitute a majority
                  thereof;

                  (iii)    the shareholders of the Corporation approve a merger
                  other than (A) a merger which would result in the voting
                  securities of the Corporation outstanding immediately prior
                  thereto continuing to represent (either by remaining
                  outstanding or by being converted into voting securities of
                  the surviving entity), in combination with the ownership of
                  any trustee or other fiduciary holding securities under an
                  employee benefit plan of the Corporation, at least 67 percent
                  of the combined voting power of the voting securities of the
                  Corporation or such surviving entity outstanding immediately
                  after such merger, or (B) a merger effected to implement
                  recapitalization of the Corporation (or similar transaction)
                  in which no person acquires no more than 50 percent of the
                  combined voting power of the Corporation's then outstanding
                  securities; or

                  (iv)     the shareholders of the Corporation approve a plan
                  of complete liquidation of the Corporation or a sale of
                  substantially all of the Corporation's assets.

8.02     SERVICE

(a)      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


<PAGE>
                                                                        Page 57


         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 12 MONTHS: the
                  period of Service of an Employee prior to a Period of
                  Severance of less than 12 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 12 months or less and if the
                  Employee has a Reemployment Commencement Date within 12
                  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;

                  (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 12 months or longer.


<PAGE>
                                                                        Page 58


         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.

(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.


<PAGE>
                                                                        Page 59


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

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 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.


<PAGE>
                                                                        Page 60


(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 (i) was a member of the Walbar Savings Plan on
         December 31, 1996, (ii) became a Participant on January 1, 1997, and
         (iii) terminates employment on account of Retirement or Disability may
         elect to receive his entire interest in any or all Funds in annual
         installments as described in paragraph (b) above; provided, however,
         that the five or ten year restriction shall not apply to such
         Participant, and provided further that the installment period shall
         not exceed the life expectancy of the Participant or joint life
         expectancy of the Participant and his Beneficiary. The Beneficiary of
         a Participant who (i) was a member of the Walbar Savings Plan on
         December 1, 1996, (ii) became a Participant on January 1, 1997, and
         (iii) dies may elect to receive the entire amount credited to the
         account of the Participant in annual installments as described in
         paragraph (c) above; provided, however, that the five year restriction
         shall not apply to such distributions, and provided further that such
         annual installment period, as designated by the Participant before his
         death, cannot exceed the life expectancy of the last survivor of the
         Participant and his Beneficiary.

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


<PAGE>
                                                                        Page 61


         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.

(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.


<PAGE>
                                                                        Page 62


(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.

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


<PAGE>
                                                                        Page 63


         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.

8.08     DISTRIBUTION LIMITATION

         Notwithstanding any other provision of this Article VIII, 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


<PAGE>
                                                                        Page 64


                  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 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.


<PAGE>
                                                                        Page 65


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

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


<PAGE>
                                                                        Page 66


                      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 67


             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 68


(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 Colt Stock (Coltec Stock after May 3, 1990)
         from Colt Holdings Inc (Coltec Holdings Inc after May 24, 1990), or if
         directed by the Committee, shall purchase Colt Stock (Coltec Stock
         after May 3, 1990) held by the Corporation. Notwithstanding anything
         in this Plan to the contrary, the Trustee shall purchase Coltec Stock
         for the Coltec Stock Fund with the proceeds from the redemption of
         Participating Cumulative Preferred Stock of Coltec Holdings Inc at
         such time and pursuant to such terms as are acceptable to the Trustee.

(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 69


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 70


                       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 officers or
         directors of the Corporation 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 ten days of the date of such meeting.


<PAGE>
                                                                        Page 71


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

         Members of the Committee shall not be paid any compensation from the
         assets of the Plan.

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,


<PAGE>
                                                                        Page 72


         officers, 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


<PAGE>
                                                                        Page 73


         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 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
         as reasonable time of the receipt of the request for a review.


<PAGE>
                                                                        Page 74


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 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.


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                                                                        Page 75


               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


<PAGE>
                                                                        Page 76


         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, 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.


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                                                                        Page 77


                        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.


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                                                                        Page 78


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 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.


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                                                                        Page 79


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 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.


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                                                                        Page 80


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, 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.


<PAGE>
                                                                        Page 81


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 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 82


                           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.


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                                                                        Page 83


                        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


<PAGE>
                                                                        Page 84


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).

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 made after December 31, 1983) 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.

Effective January 1, 1985, 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


<PAGE>
                                                                        Page 85


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.

                        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 86


    APPENDIX B. PARTICIPANTS FORMERLY SUBJECT TO THE ANCHOR PACKING COMPANY
                         401(K) INCENTIVE SAVINGS PLAN

B.1.     IN GENERAL

         The Anchor Packing Company 401(k) Incentive Savings Plan (the "Anchor
         Packing Plan") shall be merged into the Coltec Industries Inc
         Retirement Savings Plan for Salaried Employees (the "Plan") on April
         1, 1990. Subsequent to such merger and until the Plan is further
         modified, it is intended that the program of benefits provided by the
         Anchor Packing Plan shall be continued as set forth in this Schedule
         with respect to former Participants of the Anchor Packing Plan with
         account balances in the Anchor Packing Plan on March 31, 1990. In all
         other respects, the various provisions of the Plan shall apply to such
         Participants. Accordingly, the Plan applies to such Participants
         except to the extent inconsistent with this Schedule.

         Nothing in this Schedule shall be construed to restrict the
         availability of the assets of the Plan to meet, on an ongoing basis,
         the benefit obligations to the Participants of the Plan, including the
         Participants described in this Schedule. The Plan, as modified by this
         Schedule, shall constitute a single plan within the meaning of Section
         414(1) of the Internal Revenue Code of 1986, as amended.

B.2.     DEFINITIONS

(a)      The definitions provided under Article 1 of the Anchor Packing Plan as
         in effect on March 31, 1990, are hereby incorporated into this
         Schedule, except as otherwise provided in the Section B.2. The
         following definition shall apply, in lieu of the provisions of Article
         1 of the Plan, with respect to the Anchor Packing Plan:


<PAGE>
                                                                        Page 87


                  (1)      "Plan" means, with respect to the period before
                  April 1, 1990, the Anchor Packing Plan and with respect to
                  the period on and after April 1, 1990, this Schedule B of the
                  Plan.

B.3.     VESTING

         Notwithstanding the vesting schedule set forth at Section 8.01 of the
         Plan, the vested percentage applicable to each Participant under this
         Schedule shall in no event be less than the vested percentage
         specified in Section 5.01 of the Anchor Packing Plan as in effect on
         March 31, 1990.

B.4.     TRANSFER UPON MERGER

         Prior to April 1, 1990 the assets of the Anchor Packing Plan will be
         sold for cash and the proceeds thereof will be transferred to the
         Trust for the Plan on or after April 1, 1990.

         Prior to April 1, 1990 Participants in the Anchor Packing Plan will
         each direct in writing on forms provided to the participant that
         balances credited to the Participant's account in the Anchor Packing
         Plan will be transferred to Funds A, B, D, or E of the Plan in
         multiplies of 10 percent.

         The balances in the Anchor Packing Plan of any Participant thereof who
         fails to provide the direction referred to above will be transferred
         to Fund E of the Plan.