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                                             EXHIBIT 10.8



                                 EMPLOYMENT AGREEMENT



     Agreement dated June 1, 1995, between JOHN W. GUFFEY, JR. (the "Executive")
and COLTEC INDUSTRIES INC, a Pennsylvania corporation (the "Corporation").

     WHEREAS, the Executive and the Corporation desire to set forth the terms
and conditions upon which the Executive shall be employed by the Corporation.

     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 five years commencing on the date hereof
     and terminating on the fifth anniversary of the date hereof (the "Contract
     Period").  The Contract Period shall be subject to earlier termination in
     accordance with the provisions set forth in Section 6 below.

2.   DUTIES

 2.1 The Executive shall serve, subject to the supervision and control of the
     Board of Directors of the Corporation (the "Board"), as Chairman of the
     Board, President and Chief Executive 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 its Chairman, President and Chief Executive Officer or are customarily
     delegated or granted by similarly situated corporations to an employee
     holding these positions.  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


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     Corporation or which are customarily delegated or granted by similarly
     situated corporations to an employee holding such positions.

 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 Board, 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 the Company's headquarters at 430 Park Avenue, New York, New York,
     or at such other office or location within the New York metropolitan area
     as the Board may, from time to time, deem appropriate after consultation
     with Executive, except for travel reasonably required in the performance of
     Executive's responsibilities.

3.   COMPENSATION AND BENEFITS

     Throughout the term hereof, unless otherwise specifically provided
     elsewhere herein:

 3.1 Executive shall receive an annual salary which is not less than his annual
     salary on the date of this Agreement 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


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     (the "Incentive Compensation Plans");  provided, however, that the
     Executive's participation in all incentive compensation plans shall be at a
     level 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 date of this Agreement.  Any payout
     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.

 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 and limousines, 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, Benefits Equalization Plan (the "BE
     Plan") and 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 Corporation
     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
     delegated in Section 2.1 above, provided that the Executive properly
     accounts for such expenses in accordance with the Corporation's established
     policies and the requirements of the Internal Revenue Code of 1986, as
     amended.

4.   INDEMNIFICATION

     The Executive shall be entitled to indemnification by the Corporation to
     the fullest extent permitted by law in respect


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     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.   MANAGEMENT OF THE CORPORATION

     During the Contract Period and subject to its fiduciary duties, the Board
     shall not interfere with Executive's responsibilities in connection with
     the normal day-to-day management of the Corporation's business matters and
     will involve Executive, as a director, in determining the strategic
     direction of the Corporation consistent with the Board's past practice and
     its fiduciary duties to management and the Corporation's shareholders.

6.   TERMINATION OF EMPLOYMENT

     The Contract Period shall terminate prior to its term on the Date of
     Termination  as defined in Sections 6.2 and 6.3 below, following receipt by
     the Executive or the Corporation, as the case may be, of a Notice of
     Termination, as defined in Section 6.1 below.

6.1  "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 9 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.

6.2  "Date of Termination" shall mean:

     (a)  thirty (30) days after Notice of Termination is given 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;


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     (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 for termination of employment for Good
          Reason in respect of a termination  covered by Sections 7.6 or 7.7
          below;

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

     (e)  at least fifteen days (15) after Notice of Termination is given 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.

6.3  This Agreement shall automatically terminate upon the earlier of
     Executive's 65th birthday or the receipt by the Corporation of a Notice of
     Termination for Early Retirement as provided in Paragraph 6.2(e) above
     ("Retirement Termination").

7.   COMPENSATION UPON TERMINATION OR DURING DISABILITY

 7.1 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:

          (i)  the prolonged or repeated absence from duty without the consent
               of the Board for reasons other than the


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               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 Board;

        (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;

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

         (vi)  the breach of Executive's Agreement set forth in Section 11.1
               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 6.2
          above), specified in the Notice of Termination:

          (i)  the terms of this Agreement are materially


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               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 8 below, from any successor to
               assume and perform this Agreement (a copy of the agreement
               evidencing such assumption shall be provided by the Corporation
               to Executive);

        (iii)  any purported termination of Executive's employment which is not
               effected pursuant to a Notice of Termination satisfying the
               requirements set forth in Section 6 above; for purposes of this
               Agreement, no such purported termination shall be effective; or

         (iv)  Executive makes a determination in good faith that the cumulative
               effect of actions by one or more of the members of the Board or
               their 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 Board which
               demand specifically identifies the manner in which Executive
               believes that such 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 Board members in regular
               reviews of those items which have, consistent with the
               Corporation's past practices, been normally within the purview of
               the Board's responsibilities shall not be taken into account by
               Executive in making his determination under this Agreement.

          (v)  Relocation of the Executive's place of employment to a location
               outside New York City without the concurrence of Executive.


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          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 waiver of Executive's rights under
          this Paragraph (c) nor constitute 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 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 was 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-11 of Regulation


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                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.

 7.2 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 salary plus all amounts or benefits payable or due  to him
     (including, but not limited to, a pro rata share under Incentive
     Compensation Plans earned during 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.


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

     (a)  The Corporation shall pay to Executive's estate as soon as practicable
          after the date of Executive's death, Executive's full 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 the Executive'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.

 7.4 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
     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 earned during 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.

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


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     (a)  The Corporation shall pay Executive, 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
          only to the extent required by the terms of such plans, or to the
          extent required by Federal or state law.

 7.6 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 specified in Section 7.7 below ("Section 7.7 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 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 (including but not limited to  a pro rata share under
          Incentive Compensation Plans earned during the year in which
          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 full base salary plus the highest annual bonus received by
          the Executive or by any individual serving as Chairman and CEO of the
          Corporation during any of the three previous years multiplied by the
          higher of three (3) or the number of years (including fractions
          thereof) remaining under the Contract Period.

     (c)  At Executive's option and as soon as practicable after


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          his request, the Corporation shall pay to Executive, a sum of money
          equal to the value of Executive's accrued balance of the BE Plan.

     (d)  For the longer of three years from the Date of Termination or until
          the end of the Contract 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 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 7.9, 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 participate
          in any such plan, the Corporation will provide Executive with a
          comparable level of compensation or benefit.

7.7  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
     benefits provided below.

     (a)  The Corporation shall pay Executive his 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


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          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 as severance pay a lump sum equal to five times (5x) the sum
          of Executive's full base salary for one calendar year 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 any
          individual serving as Chairman and CEO of 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 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 five 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 7.9, 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


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

 7.8 In addition to the benefits set forth in Sections 7.6 and 7.7, 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 7.7
     Good Reason, or (3) by Executive for Section 7.7 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 the event that Executive becomes entitled to payments under the
          provisions of either Section 7.6 or 7.7 (the "Severance Payments"), if
          Executive will be subject to the tax (the "Excise Tax") imposed by
          Section 4999 of the


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          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 tax 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 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 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 (A) the total amount of the Severance Payments or (B)
          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


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          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
          payment of such Excise Taxes; 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,


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          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).

7.9  Executive shall be required immediately after the Date of Termination to
     take reasonable steps to seek appropriate employment elsewhere; provided,
     however, that if Executive obtains employment that would result in a
     violation of the noncompetition provisions of Section 11 of this Agreement
     and if Executive is unable to accept such employment because the
     Corporation will not release Executive from Executive's noncompetition
     obligation, Executive shall nevertheless be deemed to have satisfied the
     requirement of this Section to seek other employment.  Upon receipt of
     written notice from Executive that Executive has been reemployed by another
     company or entity on a full-time basis (or would have been reemployed but
     for the noncompetition provisions of Section 11 of this Agreement) benefits
     otherwise receivable by Executive pursuant to Subsections 7.6(d) or 7.7(e)
     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, where the duties,
     status, responsibilities, compensation and benefits are not at least equal
     to that of his current position.

8.   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


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<PAGE>


     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.

9.   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
     at Two Sutton Place South, Apt. 5D, New York, New York 10022, and to the
     Corporation at 430 Park Avenue, New York, New York 10022 to the attention
     of the Board 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.

10.  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.

11.  NONCOMPETITION

 11.1  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


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<PAGE>


     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 ten percent (10%) or more of the Corporation's gross
     revenues or earnings before taxes or derives ten percent (10%) 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 of the provisions of this Section 11.1 shall permit
     the Corporation to terminate Executive's employment for Cause in accordance
     with Section 6.1(b) hereof.


11.2 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 Sections
     7.6(b) and 7.7(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 ten percent (10%) 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 11.  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.


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<PAGE>


     11.3 Executive acknowledges and agrees that damages for breach of the
     covenant not to compete in this Section 11 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 14 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.

12.  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.

13.  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.

14.  ARBITRATION

     Except as contemplated by Section 11.3 of this Agreement, any dispute or
     controversy arising under or in connection with this Agreement shall be
     settled exclusively by arbitration in New York, New York, or 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.

15.  GOVERNING LAW


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<PAGE>


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

16.  ENTIRE AGREEMENT; SURVIVAL OF CERTAIN PROVISIONS

     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.
     The Employment Agreement dated July 1, 1991 between the Corporation and the
     Executive is hereby canceled and superseded by this Agreement.

     The obligations of the Corporation under Section 7 above and the
     Executive's obligations under Section 11 above shall survive the expiration
     of the term of this Agreement.





17.  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 day and year first above written.

                                   COLTEC INDUSTRIES INC


                                   By Laurence H. Polsky
                                      --------------------



                                   /S/ John W. Guffey, Jr.
                                   -----------------------
                                     JOHN W. GUFFEY, JR.