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                       FIRST RESTATED EMPLOYMENT AGREEMENT

     The Employment Agreement dated July 11, 1997 (the "Employment Agreement")
between David D. Harrison (the "Executive") and Coltec Industries Inc, a
Pennsylvania corporation (the "Corporation"), is amended, clarified and restated
as of this 18th day of December, 1997 (the "Restatement Date") as if originally
entered into and effective as of July 11, 1997 (the "Effective Date"),

     WHEREAS, the Employment Agreement has been amended from time to time since
its original execution, and

     WHEREAS, the Corporation and the Executive desire to further modify the
Employment Agreement in order to clarify certain provisions thereof, and

     WHEREAS, the Executive and the Corporation desire to combine all new and
previous amendments to the Employment Agreement into this First Restated
Employment Agreement setting forth the terms and conditions upon which the
Executive shall be employed by the Corporation to be effective as if originally
entered into on the Effective Date.

     NOW, THEREFORE, in consideration of the foregoing and the mutual promises
herein contained, the parties agree as follows:

1.   Employment Term

     The Corporation agrees to employ the Executive and the Executive agrees to
     be employed by the Corporation, upon the terms and conditions contained in
     this Agreement, for a period of four years commencing on the Effective
     Date and terminating on the fourth anniversary of the Effective Date (the
     "Contract Period") The Contract Period shall be subject to earlier
     termination in accordance with the provisions set forth in Section 5 below.

2.   Duties

     2.1 The Executive shall serve, subject to the supervision and control of
     the Corporation's President and Chief Operating Officer as the Executive
     Vice President and Chief Financial Officer of the Corporation with the
     responsibilities and authority, and status and perquisites which have,
     consistent with past practice, been delegated or granted by the
     Corporation to an employee holding such position(s) or which are
     customarily delegated or granted by similarly situated corporations to
     an employee holding similar position(s). If Executive is appointed to
     additional offices by the Corporation during the Contract Period, the
     Executive shall have the responsibilities and authority, and status and
     perquisites consistent with the past practices of the Corporation or
     which are customarily delegated or granted by 



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     similarly situated corporations to an employee holding such position(s).

     Executive shall also perform any additional lawful services and assume any
     reasonable additional responsibilities, not inconsistent with his then
     current position, as shall from time to time be assigned to him by the
     Board of Directors of the Corporation (the "Board") or by the Chairman and
     Chief Executive Officer of the Corporation.

     2.2 Executive agrees that during the Contract Period, he shall devote
     substantially all of his full working time and attention and give his best
     effort, skill and abilities exclusively to the business and interests of
     the Corporation; provided, however, that the foregoing shall not be
     construed to prohibit Executive's service as a (i) director or officer of
     any trade association, civic, educational or charitable organization or
     governmental entity or, subject to approval by the Chairman and Chief
     Executive Officer as (ii) a director of any corporation which is not a
     competitor of the Corporation, provided that such service by Executive does
     not materially interfere with the performance by Executive of the
     responsibilities delegated under Section 2.1 above.

     2.3 Executive shall carry out all responsibilities delegated in Section 2.1
     above at such location within the continental United States as the
     President and Chief Executive Officer may from time to time, after
     consultation with Executive, deem appropriate, except for travel reasonably
     required in the performance of Executive's responsibilities.

3.   Compensation and Benefits

     Throughout the contract period hereof, unless otherwise specifically
     provided elsewhere herein:

     3.1 Executive shall receive an annual base salary which is not less than
     his annual base salary on the Effective Date and shall have the opportunity
     for periodic increases in accordance with the Corporation's regular
     practices.

     3.2 Executive shall be entitled to participate, to the extent determined by
     the Board, in all currently existing and future incentive compensation
     plans of the Corporation including, but not limited to: the Annual
     Incentive Plan for Certain Employees of Coltec Industries Inc and Its
     Subsidiaries, the 1994 Long-Term Incentive Plan of Coltec Industries Inc
     and the Coltec Industries Inc 1992 Stock Option and Incentive Plan (the
     "Incentive Compensation Plans"), provided, however, that the Executive's
     participation in all incentive compensation plans shall be at a level not
     less than the customarily approved by the Board for an employee with
     Executive's responsibilities and shall not in any case be less than
     Executive's level of participation in such plans on the Effective Date. Any
     payment to Executive under an Incentive Compensation Plan shall be
     calculated and made in accordance with the provisions of the respective
     plan, except as elsewhere provided for in this Agreement.

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     3.3 Executive shall be entitled to receive all employee benefits, fringe

     benefits and perquisites (including but not limited to the use of company
     cars, club memberships and financial planning services ("Company
     Perquisites")) customarily made available to an employee with Executive's
     responsibilities, and Executive shall be entitled to participate in all
     applicable group, life, health, disability and accident insurance plans and
     programs including, and not limited to, the Retirement Savings Plan, the
     Retirement Program, the Benefits Equalization Plan (collectively the
     "Retirement Plans") and the Family Protection Plan as well as any other
     applicable Corporation benefit plans and programs maintained currently upon
     terms and at levels no less favorable than now exist or that shall be
     established or maintained in the future for employees generally or for the
     Corporation's executives.

     3.4 Executive shall be entitled to annual vacation and holidays in
     accordance with the Corporation's established practice for its employees.

     3.5 The Executive shall be entitled to receive reimbursement for all
     reasonable out-of-pocket expenses incurred in performing his
     responsibilities described in Section 2.1 above, provided that the
     Executive properly accounts for such expenses in accordance with the
     Corporation's established policies.

4.   Indemnification

     The Executive shall be entitled to indemnification by the Corporation to
     the fullest extent permitted by law and the By-Laws of the Corporation in
     respect of any actions or omissions which Executive has taken or has failed
     to take as an employee, officer or director of the Corporation while
     carrying out the responsibilities delegated under Section 2.1 above.

5.   Termination of Employment

     The Contract Period shall terminate prior to the completion of its term on
     the Date of Termination as defined in Sections 5.2 or 5.3 below following
     receipt by the Executive or the Corporation, as the case may be, of a
     Notice of Termination as defined in Section 5.1 below.

     5.1 "Notice of Termination" shall mean any purported termination of
     Executive's employment by the Corporation or by Executive which shall be
     communicated by written notice to the other party hereto in accordance with
     Section 8 of this Agreement, and which shall (1) indicate the specific
     termination provision in this Agreement relied upon, (2) set forth in
     reasonable detail the facts and circumstances claimed to provide a basis
     for termination of Executive's employment under the provision so indicated,
     and (3) set forth the date on which the Executive's employment with the
     Corporation shall terminate.

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     5.2 "Date of Termination" shall mean:

          a. thirty (30) days after Notice of Termination is given by the

          Corporation for termination of employment due to Disability; provided
          that Executive shall not have returned to the full-time performance of
          his duties during such thirty (30) day period;

          b. the date of death in the event of Executive's death;

          c. at least thirty days (30) but not more than sixty (60) days after
          Notice of Termination is given by Executive for termination of
          employment for Good Reason in respect of a termination covered by
          Sections 6.6 or 6.7 below;

          d. at least fifteen days (15) after Notice of Termination is given by
          the Corporation for termination of employment for Cause;

          e. at least fifteen days (15) after Notice of Termination is given by
          Executive for retirement after the age of 55 years but before the age
          of 65 years to the extent such retirement is permitted under the
          Retirement Savings Plan, the Retirement Program or the BE Plan ("Early
          Retirement"); or

          f. the date specified in the Notice of Termination for termination of
          employment for any other reason.

     5.3 This Agreement shall automatically terminate upon the earlier of
     Executive's 65th birthday or the date set forth in the Notice of
     Termination for Early Retirement as provided in Paragraph 5.2(e) above
     ("Retirement Termination")

6.   Compensation Upon Termination or During Disability

     6.1 For purposes of this Agreement, "Disability", "Cause", "Good Reason"
     and "Change-in-Control" shall have the meanings set forth below:

     a. Disability - If, as a result of Executive's incapacity due to physical
     or mental illness, Executive shall have become eligible for benefits under
     the applicable long-term disability plan or policy of the Corporation,
     Executive's employment may be terminated by the Corporation for
     "Disability".

     b. Cause - Termination by the Corporation of Executive's employment for
     "Cause" shall mean termination upon:

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          i.   the prolonged or repeated absence from duty without the consent
               of the Board for reasons other than the Executive's incapacity
               due to physical or mental illness;

          ii.  the acceptance by Executive of a position with another employer
               which conflicts with his duties as an employee of the Corporation
               without the consent of the Chairman and Chief Executive Officer;


          iii. the willful engaging by Executive in conduct relating to the
               Corporation which is demonstrably and materially injurious to the
               Corporation after a written demand for cessation of such conduct
               is delivered to Executive by the Board, which demand specifically
               identifies the manner in which the Board believes the Executive
               has engaged in such conduct and the injury to the Corporation;

          iv.  a willful material breach of an established written policy or
               procedure of the Corporation which breach is materially injurious
               to the Corporation;

          v.   Executive's conviction for a crime involving moral turpitude; or

          vi.  the breach of Executive's Agreement set forth in Section 10.1
               below. 

     For purposes of this Paragraph, no act, or failure to act, on Executive's
     part shall be deemed "willful" unless knowingly done, or omitted to be
     done, by Executive not in good faith and without reasonable belief that
     Executive's action or omission was in the best interests of the
     Corporation.

     c. Good Reason - Executive shall be entitled to terminate his employment
     for Good Reason. For purposes of this Agreement, "Good Reason" shall mean
     the occurrence, without Executive's express written consent, of any of the
     following circumstances unless such circumstances are fully corrected prior
     to the Date of Termination (as defined in Section 5.2 above), specified in
     the Notice of Termination:

          i.   the terms of this Agreement are materially adversely altered by
               action of the Corporation or the Corporation breaches in any
               material respect any of its agreements set forth herein;

          ii.  the failure of the Corporation to obtain a satisfactory
               agreement, required in Section 7 below, from any successor to
               assume and perform this Agreement (a copy of the agreement
               evidencing


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               such assumption shall be provided by the Corporation to
               Executive);

          iii. any purported termination of Executive's employment by the
               Corporation which is not effected pursuant to a Notice of
               Termination satisfying the requirements set forth in Section 5
               above; for purposes of this Agreement, no such purported
               termination shall be effective;

          iv.  Executive makes a determination in good faith that the cumulative
               effect of actions by one or more of the members of the Board, the

               Chairman and Chief Executive Officer, the President and Chief
               Operating Officer or their respective agents or associates
               constitutes harassment or unreasonable interference with the
               performance of Executive's day-to-day duties under this Agreement
               (after a written demand for cessation of such actions is
               delivered by Executive to the President and Chief Operating
               Officer, the Chairman and Chief Executive Officer or to the Board
               which demand specifically identifies the manner in which
               Executive believes that such President and Chief Operating
               Officer, Chairman and Chief Executive Officer or Board members
               (or their agents or associates) have harassed Executive or
               unreasonably interfered with Executive's ability to perform his
               day-to-day duties); provided, however, that appropriate
               involvement of the President and Chief Operating Officer, the
               Chairman and Chief Executive Officer or the Board members in
               regular reviews of those items which have, consistent with the
               Corporation's past practices, been normally within the purview of
               the President and Chief Operating Officer, the Chairman and Chief
               Executive Officer or the Board's responsibilities as well as any
               bona fide business disagreements between the Executive and the
               Corporation shall not be taken into account by Executive in
               making his determination under this Agreement;

          v.   the Corporation or any successor during the two year period
               following a Change-in-Control delivers to the Executive a Notice
               of Termination other than for Cause or takes any other action or
               actions, including, but not limited to, a material decrease in
               duties or authority or change in reporting relationships, which
               may have an adverse effect upon Executive's employment or which
               purport to terminate Executive's employment other than for Cause;

          vi.  relocation of the Executive's place of employment to a location
               outside the continental United States or relocation of the



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               Executive's place of employment within the continental United
               States without reimbursing Executive his cost of relocation at a
               level at least as favorable as that provided under the
               Corporation' s policy and practice in effect on the date of this
               Agreement; or

          vii. after a Change-in-Control as hereafter defined, the Corporation
               a) reduces Executive's annual salary, b) impairs Executive's
               opportunity to earn incentive compensation on a basis comparable
               to that before the Change-in-Control, c) reduces the Company
               perquisites made available to Executive before the
               Change-in-Control or d) eliminates or impairs Executive's ability
               to participate in the Retirement Plans.


         viii. the Executive chooses to terminate his employment with the
               Corporation for any reason during the thirty (30) day period
               immediately preceding either, at the option of the Executive, the
               twelve (12) month anniversary or the twenty-four (24) month
               anniversary of a Change-in-Control as hereafter defined.

     Executive's right to terminate his employment pursuant to this Paragraph
     shall not be affected by his incapacity due to physical illness. In
     addition, Executive's continued employment with the Corporation shall not
     constitute a waiver of Executive's rights under this Paragraph (c) nor
     constitute a consent to any act or omission by the Corporation constituting
     Good Reason.

     d. Change-in-Control - A Change-in-Control shall be deemed to occur as of
     the date on which any of the following occur:

          i.   the acquisition, other than from the Corporation, by any
               individual, entity or group (within the meaning of Section 13 (d)
               (3) or 14 (d) (2) of the Securities and Exchange Act of 1934, as
               amended (the "Exchange Act") of beneficial ownership (within the
               meaning of Rule 13d-3 promulgated under the Exchange Act) of 20
               percent or more of either the then outstanding shares of common
               stock of the Corporation or the combined voting power of the then
               outstanding voting securities of the Corporation entitled to vote
               generally in the election of directors; or

          ii.  Individuals who, as of the date of this Agreement, constitute the
               Board (the "Incumbent Board") cease for any reason to constitute
               at least a majority of the Board, provided that any individual
               becoming a director subsequent to the date hereof whose election,
               or nomination for election by the Corporation's


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               shareholders, was approved by a vote of at least a majority of
               the directors then comprising the Incumbent Board shall be
               considered as though such individual as a member of the Incumbent
               Board, but excluding, for this purpose, any such individual whose
               initial assumption of office is in connection with an actual or
               threatened election contest relating to the election of the
               directors of the Corporation (as such terms are used in Rule
               14a-ll of Regulation 14A promulgated under the Exchange Act); or

          iii. Approval by the shareholders of the Corporation of (1) a
               reorganization, merger or consolidation, in each case, with
               respect to which the individuals and entities who were the
               respective beneficial owners of the common stock and voting
               securities of the Corporation immediately prior to such
               reorganization, merger or consolidation do not, following such
               reorganization, merger or consolidation, beneficially own,
               directly or indirectly, more than 50 percent of, respectively,

               the then outstanding shares of common stock, and the combined
               voting power of the then outstanding voting securities entitled
               to vote generally in the election of directors, as the case may
               be, of the corporation resulting from such reorganization, merger
               or consolidation; (2) a complete liquidation or dissolution of
               the Corporation; or of (3) the sale or other disposition of all
               or substantially all of the assets of the Corporation.

     6.2 During any period of Disability and until the earlier of the end of the
     Contract Period or Executive's death, Executive shall receive all accrued
     but unpaid base salary plus all amounts or benefits payable or due to him
     (including a pro rata share under Incentive Compensation Plans targeted for
     the year in which the Disability occurs) under the Corporation ' s
     compensation and benefit plans and programs in which Executive is
     participating at the commencement of any such period, plus an additional
     payment from the Corporation (if necessary) such that the aggregate amount
     received by Executive in the nature of salary continuation from all sources
     equals Executive's base salary at the rate in effect at the commencement of
     any such period. Thereafter, Executive shall be entitled to participate in
     all applicable group, life, Family Protection Plan, health, disability and
     accident insurance plans and programs as well as any other applicable
     Corporation benefit plans and programs (including, but not limited to, the
     1992 Stock Option and Incentive Plan) in accordance with the terms of such
     plans and programs; provided that such terms shall not be less advantageous
     to Executive than the terms in effect as of the date hereof.

     6.3 If Executive's employment shall be terminated by reason of Executive's
     death, the Executive shall be entitled to the benefits provided below:



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          a. The Corporation shall pay to Executive's estate as soon as
          practicable after the date of Executive's death, Executive's accrued
          but unpaid base salary through the date of Executive's death, at the
          rate in effect at the time of Executive's death, plus all other
          amounts to which Executive is entitled under any benefit or
          compensation plan of the Corporation including, but not limited to, a
          pro rata share under Incentive Compensation Plans earned during the
          year in which Employee's death occurs.

          b. After Executive's death, Executive's beneficiaries shall be
          entitled to participate in all applicable group, life, health,
          disability and accident insurance plans and programs as well as any
          other applicable Corporation benefit plans and programs including, but
          not limited to, the 1992 Stock Option and Incentive Plan, in
          accordance with the terms of such plans and programs.

     6.4 If Executive's employment shall be terminated as a result of a
     Retirement Termination or as a result of a voluntary resignation for other
     than Good Reason ("Resignation"), then Executive shall receive all accrued
     but unpaid base salary plus all amounts payable to him under the

     Corporation's compensation (including, but not limited to, a pro rata share
     under Incentive Compensation Plans targeted for the year the Retirement
     Termination or Resignation occurs) and benefit plans and programs in which
     Executive is participating at the time the Retirement Termination or
     Resignation becomes effective. In the event of a Retirement Termination,
     Executive shall be entitled to participate in all retirement and other
     plans and programs effective on the Date of Termination to which he is
     eligible in accordance with their terms.

     6.5 If Executive's employment shall be terminated by the Corporation for
     Cause, then Executive shall be entitled to the following benefits:

          a. The Corporation shall pay Executive's full base salary through the
          Date of Termination at the rate in effect at the time Notice of
          Termination is given plus all other amounts to which Executive is
          entitled under any benefit or compensation plan of the Corporation,
          excluding any bonus, other incentive compensation and vacation pay, if
          any, otherwise payable to Executive pursuant to the terms of the
          applicable plan or program of the Corporation, at the time such
          payments are due.

          b. Executive shall be entitled to participate in all applicable group,
          life, health, disability and accident insurance plans and programs,
          but only to the extent required by the terms of such plans, or only to
          the extent specifically required by Federal or state law.

          6.6 If Executive's employment shall be terminated (1) by the
          Corporation for other than Cause, (2) by Executive for Good Reason
          other than Good Reason as

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          specified in Section 6.7 below ("Section 6.7 Good Reason") then
          Executive shall be entitled to the following benefits:

               a. The Corporation shall pay Executive, as soon as practicable
               following the Date of Termination a sum equal to Executive's
               accrued but unpaid base salary through the Date of Termination at
               the rate in effect at the time Notice of Termination is given
               plus all other amounts to which Executive is entitled under any
               benefit or compensation plan of the Corporation (including but
               not limited to a pro rata share under Incentive Compensation
               Plans targeted for the year in which Executive's employment is
               terminated).

               b. The Corporation shall pay Executive as soon as practicable
               following the Date of Termination an additional payment equal to
               the sum of Executive's annual base salary plus the highest annual
               bonus received by the Executive or, if the Executive has not
               received an annual bonus while serving as a Executive Vice
               President, Chief Financial Officer, by any individual serving as
               Executive Vice President, for the Corporation during any of

               the three previous calendar years multiplied by the higher of
               two (2) or the number of years (including fractions thereof)
               remaining under the Contract Period.

               c. In accordance with a valid election on file with the
               Corporation the Corporation shall pay to Executive a sum of money
               equal to the value of Executive' s accrued balance of the
               Benefits Equalization Plan (the "BE Plan").

               d. For the longer of two years from the Date of Termination or
               until the end of the Contract Period (the "Relevant Employment
               Period"), the Corporation shall continue to make available to
               Executive all Company Perquisites, or, in the alternative, the
               Corporation shall pay to Executive as soon as practicable after
               the Date of Termination a sum of money reasonably approximating
               the cash value of the Company Perquisites. Additionally, for such
               period of time Executive shall, subject to Section 6.9, be
               allowed to participate in all applicable group, life, health,
               disability and accident insurance plans and programs as well as
               any other applicable Corporation benefit plans and programs
               (including, but not limited to, the 1992 Stock Option and
               Incentive Plan) as if he were an active employee (limited, in the
               case of coverage under life insurance plans, to the level of
               coverage that the Corporation is able to obtain on Executive's
               behalf based upon the annual premium cost of providing Executive
               with life insurance during Executive's last twelve months of
               employment with the Corporation), in which Executive was
               participating 30 days prior to the time Notice of Termination is
               given or comparable plans substituted therefor; provided,
               however, that if Executive is ineligible (e.g., by operation of
               law or the terms of the applicable plan) to continue to

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               participate in any such plan, the Corporation will provide
               Executive with a comparable level of compensation or benefit.

               e. For purposes of Section 6.6(d), Executive's participation in
               respect to the Corporation's 1994 Long Term Incentive Plan (the
               "LTIP") shall be as follows (the defined terms within this
               section and not otherwise defined within this Agreement being the
               same as defined in the LTIP as in effect on the date hereof):

                    i.   all of the Executive's Restricted Shares previously
                         issued under the LTIP and not yet vested by the Date of
                         Termination shall become 100% vested, nonforfeitable
                         and fully transferable as of such date; and

                    ii.  the Corporation will pay the Executive as soon as
                         practicable following the Date of Termination an amount
                         in cash equal to three times the product of (x) the
                         number of Performance Units previously granted under

                         the LTIP to the Executive and still outstanding, times
                         (y) the Award Value at the Threshold Target level.

               f. For purposes of Section 6.6(d), Executive's benefits with
               respect to the Corporation's Retirement Plan for Salaried
               Employees and the BE Plan or any equivalent or superior plans or
               arrangements in which the Executive participated prior to the
               Date of Termination (any such Plan or arrangement, the "Pension
               Plans") and the Corporation's welfare benefit plans in which the
               Executive participates on the date hereof or any equivalent or
               superior successor plans or arrangements in which the Executive
               participates prior to the Date of Termination ("Welfare Benefit
               Plans") the contemplated continued participation shall require
               the Corporation to pay or provide the executive with the
               benefits, earnings credits for benefits and service credits for
               benefits which the Executive would have received under the
               Pension Plans and Welfare Benefit Plans if (x) the Executive's
               employment and his coverage under the Pension Plans and the
               Welfare Benefit Plans had continued during the Relevant Damage
               Period, and (y) the compensation described in Section 6.6 (b)
               which would have been credited under the Pension Plans and/or the
               Welfare Plans were paid to the Executive ratably over the
               Relevant Damage Period.

               g. All restrictions, if any, on shares of restricted stock
               previously granted to Executive which would have lapsed if
               Executive had been employed throughout the Relevant Damage Period
               shall immediately lapse as of the Date of Termination, and
               Executive shall be entitled to the possession of the shares of
               such stock as of such date upon the payment of any applicable
               withholding taxes.



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         6.7 If Executive's employment by the Corporation shall be terminated by
         Executive for Good Reason where Executive has given Notice of
         Termination to the Corporation within two years from the occurrence of
         an event constituting a Change-of-Control, then Executive shall be
         entitled to the following benefits in lieu of the benefits under
         Section 6.6:

               a. The Corporation shall pay Executive his accrued but unpaid
               base salary through the Date of Termination at the rate in effect
               at the time Notice of Termination is given, plus all other
               amounts to which Executive is entitled under any benefit or
               compensation plan of the Corporation (including, but not limited
               to, a pro rata share under Incentive Compensation Plans earned
               during the year in which employment is terminated).

               b. In lieu of any further base salary payments to Executive for

               period subsequent to the Date of Termination, the Corporation
               shall pay to Executive a lump sum equal to four times (4x) the
               sum of Executive's annual base salary at the rate in effect
               immediately prior to the time Notice of Termination is given plus
               the highest annual bonus received by the Executive or, if the
               Executive has not received an annual bonus while serving as an
               Executive Vice President, Chief Financial Officer, any
               individual serving as Executive Vice President, Chief Financial
               Officer for the Corporation during any of the three preceding
               calendar years.

               c. In lieu of any further participation by Executive in the
               Family Protection Plan, the Corporation shall transfer to
               Executive a fully paid up insurance policy or policies then
               insuring the life of the Executive pursuant to the terms of the
               Family Protection Plan, plus an amount of money (the "Tax
               Adjustment") calculated to reimburse Executive for any local,
               state or Federal income, employment or other taxes which he may
               be liable as a result of receiving the insurance policy or
               policies and the Tax Adjustment amount.

               d. At Executive's option and as soon, as practicable after his
               request, the Corporation shall pay Executive a sum of money equal
               to the value of Executive's accrued balance of the BE Plan.

               e. For four years from the Date of Termination, the Corporation
               shall continue to make available to Executive all Company
               Perquisites, or, in the alternative, the Corporation shall pay to
               Executive as soon as practicable after the Date of Termination a
               sum of money reasonably approximating the cash value of the
               Company Perquisites. Additionally, Executive shall, subject to
               Section 6.9, be allowed to participate in all applicable group,
               life, health, disability and accident insurance plans and
               programs as well as any other applicable Corporation benefit
               plans and programs (including, but not limited to the 1992 Stock
               Option and Incentive Plan) as if he were an active employee
               (limited, in the case of 


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<PAGE>

               coverage under life insurance plans, to the level of coverage
               that the Corporation is able to obtain on Executive's behalf
               based upon the annual premium cost of providing Executive with
               life insurance during Executive's last twelve months of
               employment with the Corporation), in which Executive was
               participating 30 days prior to the time Notice of Termination is
               given or comparable plans substituted therefor; provided,
               however, that if Executive is ineligible (e.g., by operation of
               law or the terms of the applicable plan) to continue to
               participate in any such plan, the Corporation will provide
               Executive with a comparable level of compensation or benefit.


               f. For purposes of Section 6.7(e), Executive's participation in
               respect to the LTIP shall be as follows (the defined terms within
               this section and not otherwise defined within this agreement
               being the same as defined in the LTIP):

                    i.   all of the Executive's Restricted Shares previously
                         issued under the LTIP and not yet vested by the Date of
                         Termination shall become 100% vested, nonforfeitable
                         and fully transferable as of such date; and

                    ii.  all LTIP awards issued prior to the Date of Termination
                         ("Existing Awards") of Performance Units ("Existing
                         Units") shall be deemed to have been outstanding
                         throughout the Performance Cycle to which each relates;
                         and

                    iii. the Executive shall be deemed to have received an LTIP
                         award in each of the four years following the Date of
                         Termination ("Deemed Awards") in an amount equal in
                         units to the highest number of Performance Units
                         received by the Executive in any of the three years
                         prior to the Date of Termination ("Deemed Units") and
                         all of the Deemed Units shall be deemed to have been
                         outstanding throughout the Performance Cycle to which
                         each relates; and

                    iv.  except as set forth in Section 6.7(f)(v), the
                         Corporation will pay the Executive as soon as
                         practicable following the Date of Termination an amount
                         in cash equal to th e number of Existing and Deemed
                         Units to which he is entitled multiplied by an Award
                         Value the result of which is further multiplied by 1.10
                         (the "LTIP Payout"). The Operating Income Threshold
                         Target for each Deemed Award shall be that established
                         for the Existing Award issued just prior to the Date of
                         Termination. The Award Value shall be calculated in
                         accordance with the provisions of the LTIP applying
                         actual operating profit of the Corporation whenever
                         such has actually been achieved and applying those
                         projections of operating profit


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<PAGE>

                         contained in the Corporation's Coltec 2000 Plan for
                         those years which do not have actual results. If any
                         Performance Cycle of any Existing or Deemed Unit shall
                         extend beyond the projections contained in the
                         Corporation's Coltec 2000 Plan, then the operating
                         profit contained in the Coltec 2000 Plan for the year
                         ending December 31, 1999 shall be the operating profit
                         applied to each year of any Performance Cycle for which
                         actual operating profit cannot be calculated increased

                         for each year after 1999 at the average rate of annual
                         increase of operating profit actually realized for the
                         period between January 1, 1997 and December 31, 1999.

                    v.   in the event that the independent accountants of the
                         Corporation shall determine that if the payment of the
                         LTIP Payout is made entirely in cash it shall prevent
                         the Corporation from consummating any business
                         combination approved by the Board of Directors which
                         combination is intended to be accounted for under the
                         pooling of interests method of accounting ("Pooling"),
                         then the LTIP Payout shall be made 2/3 in cash and 1/3
                         in the Corporation's Common Stock (the "Share
                         Portion"). If a merger or acquisition of the
                         Corporation has taken place prior to the time that the
                         Executive has given Notice of Termination setting forth
                         his intent to terminate his employment for Good Reason
                         and the Common Stock of the Corporation is no longer
                         traded on a national securities exchange, then the
                         Share Portion of the LTIP Payout shall be made in the
                         publicly traded stock of the Corporation's parent or
                         successor corporation (collectively, a "Successor"),
                         which stock is traded on a national securities exchange
                         or on an over the counter securities market. The number
                         of shares payable in respect to the Share Portion shall
                         be determined by dividing the dollar value of the Share
                         Portion by the price of a share of the Common Stock of
                         the Corporation, or a Successor, as the case may be, on
                         the last business day immediately preceding the date of
                         the Notice of Termination.

               g. For purposes of Section 6.7(e), Executive's benefits with
               respect to the Pension Plans and the Welfare Benefit Plans, the
               contemplated continued participation shall require the
               Corporation to pay or provide the Executive with the benefits,
               earnings credits for benefits and service credits for benefits
               which the Executive would have received under the Pension Plans
               and Welfare Benefit Plans if (x) the Executive's employment and
               his coverage under the Pension Plans and the Welfare Benefit
               Plans had continued for an additional three year period, and (y)
               the compensation described in Section 6.7 (b) which would have
               been credited under the Pension Plans and/or the Welfare Plans
               were paid to the Executive ratably over a three year period.

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<PAGE>

          h. All restrictions, if any, on shares of restricted stock previously
          granted to Executive shall immediately lapse as of the Date of
          Termination, and Executive shall be entitled to the possession of the
          shares of such stock as of such date upon the payment of any
          applicable withholding taxes.


     6.8 In addition to the benefits set forth in Sections 6.6 and 6.7, in the
     event that Executive's employment shall be terminated (1) by the
     Corporation for other than Cause, (2) by Executive for Good Reason other
     than Section 6.7 Good Reason, or (3) by Executive for Section 6.7 Good
     Reason then:

          a. The Company shall also pay to Executive all reasonable legal fees
          and expenses incurred by Executive as a result of such termination
          (including all such fees and expenses, if any, incurred in contesting
          or disputing any such termination (including cost associated with
          legal consultation even if no actual contest or dispute results) or in
          seeking to obtain or enforce any right or benefit provided by this
          Agreement or in connection with any tax audit or proceeding to the
          extent attributable to the application of Section 4999 of the Internal
          Revenue Code of 1986, as amended (the "Code"), to any payment or
          benefit provided hereunder), except any such fees or expenses incurred
          by Executive in seeking to enforce a claim which is determined by an
          arbitrator, pursuant to Section 14 below, to have been frivolous in
          nature or not brought or pursued in good faith.

          b. In addition to all other benefits provided hereunder, in the event
          that Executive becomes entitled to any payments or benefits from the
          Corporation (whether or not provided under this Agreement (the
          "Severance Payments") that will be subject to the tax (the "Excise
          Tax") imposed by Section 4999 of the Code, the Corporation shall pay
          to Executive at the time or times specified in Paragraph (h) below, an
          additional amount (the "Gross-Up Payment") such that the net amount
          retained by Executive, after deduction of (I) any additional Excise
          Tax payable by Executive as a result of Executive's receipt of the
          Severance Payments, and (ii) any additional Federal, state and local
          income and employment taxes and Excise tax payable by Executive as a
          result of Executive's receipt of the Gross-Up Payments shall be equal
          to the Severance Payments. For purposes of determining whether any of
          the Severance Payments will be subject to the Excise Tax and the
          amount of such Excise Tax, (i) the Severance Payments, payments
          provided for in this paragraph and any other payments or benefits
          received or to be received by Executive in connection with a
          change-in-control of the Corporation (as defined in Section 280G of
          the Code) or Executive's termination of employment (whether pursuant
          to the terms of this Agreement or any other plan, arrangement or
          agreement with the Corporation, any person whose actions result in a
          Change-in-Control or any person affiliated with the Corporation or
          such person) shall be treated as "parachute payments" within the
          meaning of Section 280G(b) (2) of the 


                                       15

<PAGE>

          Code, and all "excess parachute payments" within the meaning of
          Section 280G(b) (1) shall be treated as subject to the Excise Tax,
          unless and to the extent that in the opinion of tax counsel selected
          by the Corporation's independent auditors and acceptable to Executive,

          such other payments or benefits (in whole or in part) do not
          constitute parachute payments, or such excess parachute payments (in
          whole or in part) and represent reasonable compensation for services
          actually rendered within the meaning of Section 280G(b) (4) of the
          Code in excess of the base amount within the meaning of Section
          280G(b) (3) of the Code, or are otherwise not subject to the Excise
          Tax, (ii) the amount of the Severance Payments which shall be treated
          as subject to the Excise Tax shall be equal to the lesser of (x) the
          total amount of the Severance Payments or (y) the amount of excess
          parachute payments within the meaning of Section 280G(b) (1) (after
          applying clause (i) above), (iii) any payment pursuant to this
          Paragraph shall be treated as subject to the Excise Tax in its
          entirety and (iv) the value of any non-cash benefits or any deferred
          payment of benefit shall be determined by the Corporation's
          independent auditors in accordance with the principles of Sections
          280G(d) (3)and (4) of the Code. For purposes of determining the amount
          of the Gross-Up Payment, Executive shall be deemed to pay Federal
          income taxes at the highest marginal rate of federal income taxation
          in the calendar year in which the Gross-Up Payment is to be made and
          state and local income taxes at the highest marginal rate of taxation
          in the state and locality of Executive residence on the Date of
          Termination, not of the maximum reduction in federal income taxes
          which could be obtained from deduction of such state and local taxes.
          In the event that the Excise Tax is subsequently determined to be less
          than the amount taken into account hereunder at the time of
          termination of Executive's employment, Executive shall repay to the
          Corporation at the time that the amount of such reduction in Excise
          Tax is finally determined, the portion of the Gross-Up Payment
          attributable to such reduction (plus the portion of the Gross-Up
          Payment attributable to the Excise Tax and federal and state and local
          income tax imposed on the Gross-Up Payment being repaid by Executive)
          plus interest accrued from the date such Gross-Up Payment is made to
          Executive to the date of such repayment on the amount of such
          repayment at the rate provided in Section 1274(b) (2) (B) of the Code.
          In the event that the Excise Tax is determined to exceed the amount
          taken into account hereunder at the time of the termination of
          Executive's employment (including by reason of any payment the
          existence or amount of which cannot be determined at the time of the
          Gross-Up Payment), the Corporation shall make an additional gross-up
          payment in respect of such excess (plus any interest payable with
          respect to such excess) at the time that the amount of such excess is
          finally determined.

          c. The payments provided for in Paragraph (b) above shall be made at
          any time during the 90-day period preceding each due date for making


                                       16

<PAGE>

          payment of such Excise Taxes to the appropriate taxing authority;
          provided, however, that if the amounts of such payments cannot be
          finally determined on or before each such date, the Corporation shall

          pay to Executive on such date an estimate, as determined in good faith
          by the Corporation, of the minimum amount of such payments and shall
          pay the remainder of such payments then due as soon as the amount
          thereof can be determined. In the event that the amount of the
          estimated payments exceeds the amount subsequently determined to have
          been due, such excess shall constitute a loan by the Corporation to
          Executive on the fifth day after demand by the Corporation (together
          with interest at the rate provided in Section 1274 (b) (2) (B) of the
          Code).

     6.9 Upon receipt of written notice from Executive that Executive has been
     reemployed by another company or entity on a full-time basis , benefits
     otherwise receivable by Executive pursuant to Subsections 6.6(d) or 6.7(e)
     related solely to life, health disability and accident insurance plans and
     programs and other similar benefits (but not Incentive Compensation , LTIP,
     Pension Plans or other similar plans and programs) shall be reduced to the
     extent comparable benefits are made available to Executive at his new
     employment and any such benefits actually received by Executive shall be
     reported to the Corporation. Nothing herein contained shall obligate
     Executive to accept employment elsewhere .

     6.10. Any stock of the Corporation which is delivered to the Executive
     pursuant to Subsection 6.6 or 6.7 shall be delivered to him fully
     registered for immediate sale to the public under all applicable securities
     laws.

7.   Successors; Binding Agreement

     The Corporation will require any successor (whether direct or indirect, by
     purchase, merger, consolidation or otherwise) to all or substantially all
     of the business and/or assets of the Corporation to expressly assume and
     agree to perform this Agreement in the same manner and to the same extent
     that the Corporation would be required to perform it if no such succession
     had taken place. Failure of the Corporation to obtain such assumption and
     agreement prior to the effectiveness of any such succession shall be a
     breach of this Agreement and shall entitle Executive to terminate this
     Agreement for Good Reason. As used in this Agreement, "Corporation" shall
     mean the Corporation and any successor to its business and or assets as
     aforesaid which assumes and agrees to perform this Agreement by operation
     of law, or otherwise.

8.   Notice

     For the purpose of this Agreement, notices and all other communications
     provided for in the Agreement shall be in writing and shall be deemed to
     have been duly given when delivered or mailed by United States registered
     mail, return receipt requested, postage prepaid, addressed to the
     Executive's most recent home


                                       17

<PAGE>


     address on file with the Corporation, and to the Corporation at 3 Coliseum
     Centre, 2550 West Tyvola Road, Charlotte, NC 28217 to the attention of the
     Chairman of the Board of Directors with a copy to the Secretary of the
     Corporation or to such other address as either party may have furnished to
     the other in writing in accordance herewith, except that notice of change
     of address shall be effective only upon receipt.

9.   Modification - Waiver

     No provision of this Agreement may be modified, waived or discharged unless
     such waiver, modification or discharge is agreed to in writing and signed
     by Executive and such officer of the Corporation as may be specifically
     designated by the Board. No waiver by either party hereto at any time of
     any breach by the other party hereto of, or compliance with, any condition
     or provision of this Agreement to be performed by such other party shall be
     deemed a waiver of similar or dissimilar provisions or conditions at the
     same or at any prior or subsequent time. In the event that the independent
     accountants of the Corporation shall determine that anything contained
     herein shall prevent the Corporation from consummating any business
     combination approved by the Board of Directors which combination is
     intended to be accounted for as a Pooling, then Executive agrees to
     negotiate in good faith concerning amendments to such portions of this
     Agreement as may be requested by the Corporation so as to allow such
     business combination to be accounted for as a Pooling; provided, however,
     that any such amendment shall: (a) be as limited in scope as is absolutely
     necessary in the opinion of the Corporation's advisors to allow the
     business combination to be accounted for as a Pooling, and (b) be designed
     to have as minimal an economic detriment to the Executive as is possible
     while still allowing the business combination to be accounted for as a
     Pooling.

10.  Non-competition

     10.1 Until the Date of Termination, Executive agrees not to enter into
     competitive endeavors and not to undertake any commercial activity which is
     contrary to the best interests of the Corporation or its affiliates,
     including becoming an employee, owner (except for passive investments of
     not more than three percent of the outstanding shares of, or any other
     equity interest in, any company or entity listed or traded on a national
     securities exchange or in an over-the-counter securities market), officer,
     agent or director of (a) any firm or person engaged in the operation of a
     business engaged in the acquisition of industrial businesses or (b) any
     firm or person which either directly competes with a line or lines of
     business of the Corporation accounting for five percent (5%) or more of the
     Corporation's gross revenues or earnings before taxes or derives five
     percent (5%) or more of such firm's or person's gross revenues or earnings
     before taxes from a line or lines of business which directly compete with
     the Corporation. Notwithstanding any provision of this Agreement to the
     contrary, Executive agrees that his breach


                                       18
<PAGE>


     of the provisions of this Section 10.1 shall permit the Corporation to
     terminate Executive's employment for Cause in accordance with Section
     6.l(b) hereof.

     10.2 After the Date of Termination and for a period of time equal in years
     to the multiple of annual salary received by Executive pursuant to either
     Sections 6.6(b) or 6.7(b) (the "Non-Competition Period"), Executive agrees
     not to become an employee, owner (except for passive investments of not
     more than three percent of the outstanding shares of, or any other equity
     interest in, any company or entity listed or traded on a national
     securities exchange or in an over-the-counter securities market), officer,
     agent or director of any firm or person which directly and substantially
     competes with a business of the Corporation accounting for five percent
     (5%) or more of the Corporation's gross revenues or earnings before taxes.
     During the Non-Competition Period, Executive will be available to answer
     questions and provide advice to the Corporation; provided, however, that
     such requirement shall not unreasonably interfere with any other of
     Executive's activities which Executive is then pursuing and which are not
     otherwise prohibited by this Section 10. Also, during the Non-Competition
     Period, Executive will retain in confidence any and all confidential
     information known to him concerning the Corporation and its business and
     shall not use or disclose such information without the approval of the
     Corporation except to the extent such information becomes public or as may
     be required by law.

     10.3 Executive acknowledges and agrees that damages for breach of the
     covenant not to compete in this Section 10 will be difficult to determine
     and will not afford a full and adequate remedy, and therefore Executive
     agrees that the Corporation, in addition to seeking actual damages pursuant
     to the procedures set forth in Section 13 below, may seek specific
     enforcement of the covenant not to compete in any court of competent
     jurisdiction, including, without limitation, by the issuance of a temporary
     or permanent injunction, without the necessity of a bond. Executive and the
     Corporation agree that the provisions of this covenant not to compete are
     reasonable. However, should any court or arbitrator determine that any
     provision of this covenant not to compete is unreasonable, either in period
     of time, geographical area, or otherwise, the parties agree that this
     covenant not to compete should be interpreted and enforced to the maximum
     extent which such court or arbitrator deems reasonable.

11.  Validity

     The invalidity or unenforceability of any provision of this Agreement shall
     not affect the validity or enforceability of any other provision of this
     Agreement, which shall remain in full force and effect.  

12.  Counterparts

     This Agreement may be executed in several counterparts, each of which shall
     be deemed to be an original but all of which together will constitute one
     and the same instrument.




                                       19
<PAGE>

13.  Arbitration

     Except as contemplated by Section 10.3 of this Agreement, any dispute or
     controversy arising under or in connection with this Agreement shall be
     settled exclusively by arbitration in Charlotte, NC or such other location
     mutually agreed upon by the parties to the arbitration, in accordance with
     rules of the American Arbitration Association, and judgment upon such award
     rendered by the arbitrator may be entered in any court having jurisdiction
     over such proceeding.

14.  Governing Law

     This Agreement shall be governed by and construed and enforced in
     accordance with the laws of the State of North Carolina.

15.  Entire Agreement; Survival of Certain Provisions

     15.1 This Agreement constitutes the whole agreement of the Corporation and
     the Executive. No agreements or representations, oral or otherwise, express
     or implied, with respect to the subject matter of this Agreement have been
     made by either party which are not expressly set forth in this Agreement

     15.2 The obligations of the Corporation under Section 9 above and the
     Executive's obligations under Section 6.8 above shall survive the
     expiration of the term of this Agreement.

16.  Withholding

     Any payments made to Executive under this Agreement shall be paid net of
     any applicable withholding required under Federal, state or local law.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.

                                                   COLTEC INDUSTRIES INC


                                            By _________________________________



                                            ____________________________________
                                               EXECUTIVE






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