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                                                                  EXECUTION COPY


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                RECEIVABLES TRANSFER AND ADMINISTRATION AGREEMENT


                         Dated as of September 19, 1997

                                      Among

                              COLTEC INDUSTRIES INC

             as a Seller, the Collection Agent and as Sellers' Agent


                     certain subsidiaries and affiliates of
                              Coltec Industries Inc

                     as Sellers and as Sub-Collection Agents


                                       and


                            COLTEC NORTH CAROLINA INC

                                  as Purchaser


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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I  DEFINITIONS.........................................................1
         SECTION 1.01. Certain Defined Terms...................................1
         SECTION 1.02. Other Terms.............................................6
ARTICLE II  AMOUNTS AND TERMS OF PURCHASES.....................................6
         SECTION 2.01. Facility................................................6
         SECTION 2.02. Making Purchases........................................6
         SECTION 2.03. Collections; Purchase Price.............................7
         SECTION 2.04. Settlement Procedures...................................7
         SECTION 2.05. Payments and Computations, Etc..........................8
ARTICLE III  [reserved]........................................................9
ARTICLE IV  REPRESENTATIONS AND WARRANTIES.....................................9
         SECTION 4.01. Representations and Warranties of the Sellers...........9
ARTICLE V  COVENANTS..........................................................11
         SECTION 5.01. Covenants of the Sellers...............................11
         SECTION 5.02. Covenant of the Sellers and the Purchaser..............16
ARTICLE VI  ADMINISTRATION AND COLLECTION.....................................16
         SECTION 6.01. Designation of Collection Agent........................16
         SECTION 6.02. Duties of Collection Agent.............................17
         SECTION 6.03. Collection Agent Fee...................................17
         SECTION 6.04. Certain Rights of the Purchaser........................18
         SECTION 6.05. Rights and Remedies....................................19
         SECTION 6.06. Transfer of Records to Purchaser.......................19
         SECTION 6.07. Designation of Sub-Collection Agents...................19
         SECTION 6.08. Duties of Sub-Collection Agent.........................20
         SECTION 6.09. Sub-Collection Agent Fee...............................21
ARTICLE VII  EVENTS OF TERMINATION............................................21
         SECTION 7.01. Events of Termination..................................21
         SECTION 7.02 Individual Seller Termination...........................22
ARTICLE VIII  INDEMNIFICATION.................................................23
         SECTION 8.01. Indemnities............................................23
ARTICLE IX  MISCELLANEOUS.....................................................25
         SECTION 9.01. Amendments, Etc........................................25
         SECTION 9.02. Notices, Etc...........................................25
         SECTION 9.03. Binding Effect; Assignability..........................25
         SECTION 9.04. Costs, Expenses and Taxes..............................26
         SECTION 9.05. [reserved].............................................26
         SECTION 9.06. [reserved].............................................26
         SECTION 9.07. Governing Law..........................................26
         SECTION 9.08. Third Party Beneficiary................................27


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         SECTION 9.09. Execution in Counterparts..............................27



EXHIBITS

EXHIBIT A           Form of Opinion of Counsel for the Sellers
EXHIBIT B           Credit and Collection Policy
EXHIBIT C           Lock-Box Banks


Attachment 1 - Form of Sale Assignment

SCHEDULES

Schedule 4.01(n)    List of Tradenames
Schedule 5.01(b)    Addresses of Sellers


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                RECEIVABLES TRANSFER AND ADMINISTRATION AGREEMENT


     RECEIVABLES TRANSFER AND ADMINISTRATION AGREEMENT, dated as of September
19, 1997 (this "Agreement"), by and among COLTEC INDUSTRIES INC, a Pennsylvania
corporation ("Coltec"), as agent for the Sellers (the "Sellers' Agent"), as
collection agent (the "Collection Agent") and as a Seller, each of the persons
listed on the signature page to this Agreement under the heading "Sellers" (each
a "Seller" and collectively, the "Sellers") and as sub-collection agents (each a
"Sub-Collection Agent" and collectively, the "Sub-Collection Agents"), and
COLTEC NORTH CAROLINA INC, a North Carolina corporation (the "Purchaser").

                             PRELIMINARY STATEMENTS

     1. Certain terms which are capitalized and used throughout this Agreement
(in addition to those defined above) are defined in Article I of this Agreement.

     2. Each Seller has Receivables that it wishes to sell to the Purchaser, and
the Purchaser is prepared to purchase such Receivables on the terms set forth
herein.

     3. The Purchaser wishes to engage Coltec to act as Collection Agent to
collect certain Receivables acquired by the Purchaser hereunder and Coltec
desires to engage each of the other Sellers as sub-collection agents to collect
the portion of the Receivables acquired by the Purchaser from such Seller.

     NOW, THEREFORE, the parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     SECTION 1.01. Certain Defined Terms.

     As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):

Adverse Claim: means a lien, security interest, or other charge or encumbrance,
or any other type of preferential arrangement other than inchoate liens, such as
for taxes not yet due.

Affiliate: means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person.



                                     
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Alternate Base Rate: means a fluctuating interest rate per annum as shall be in
effect from time to time, which rate shall be at all times equal to the lower
of:

     (a) the rate of interest announced publicly by Credit Lyonnais, New York
Branch in New York, New York, from time to time as its prime rate, less 1.50%
and

     (b) the Federal Funds Rate plus 0.50%.

Business Day means any day on which banks are not authorized or required to
close in the cities of New York, New York and Charlotte, North Carolina.

Closing Date:  means September 22, 1997.

Collection Agent: means at any time the Person then authorized pursuant to
Section 6.01 to service, administer and collect Purchased Receivables.

Collection Agent Fee:  has the meaning specified in Section 6.03.

Collections: means, with respect to any Receivable, all cash collections and
other cash proceeds of such Receivable, including, without limitation, all cash
proceeds of Related Security with respect to such Receivable, and all funds
deemed to have been received by the Seller or any other Person as a Collection
pursuant to Section 2.04.

Contract: means an agreement between a Seller and an Obligor pursuant to or
under which such Obligor shall be obligated to pay for merchandise or services
from time to time.

Credit Agreement: means the credit agreement, dated as of March 24, 1992, as
amended and restated as of January 11, 1994 and as further amended and restated
as of December 18, 1996, supplemented or restated from time to time, among
Coltec Industries Inc, various banks, Bankers Trust Company, as administrative
agent, Bank of America Illinois, as documentation agent, and The Chase Manhattan
Bank, as syndication agent.

Credit and Collection Policy: means those receivables credit and collection
policies and practices of the Sellers in effect on the date of this Agreement
applicable to the Receivables and described in Exhibit B hereto, as modified in
compliance with this Agreement.

Defaulted Receivable:  means a Receivable:

          (i) as to which any payment, or part thereof, remains unpaid for 60
     days (or 90 days, subject to receipt by the Sellers' Agent of the
     Purchaser's written consent following revision by the Sub-Collection Agents
     of their reporting systems to further specify the aging of the Receivables)
     from the original due date for such payment;


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          (ii) as to which the Obligor thereof or any other Person obligated
     thereon or owning any Related Security in respect thereof has taken any
     action, or suffered any event to occur, of the type described in Section
     7.01(e); or

          (iii) which, consistent with the Credit and Collection Policy, would
     be written off as uncollectible.

Dilution: means, with respect to any Receivable, the aggregate amount of any
reductions or adjustments in the Outstanding Balance of such Receivable as a
result of any defective, rejected, returned, repossessed or foreclosed
merchandise or services or any cash discount or other adjustment or setoff.

Discount Percentage: means, with respect to any Seller on any day prior to the
day on which the Sellers' Agent completes its initial fair market valuation
methodology, 2.50 % and, thereafter, shall mean for each Fiscal Month the
percentage set forth in such fair market valuation methodology with respect to
such Seller, as adjusted periodically from time to time.

ERISA: means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.

Event of Termination: has the meaning specified in Section 7.01.

Facility: means the commitment of the Purchaser to make Purchases of Receivables
from the Seller pursuant to the terms of this Agreement.

Facility Termination Date: means the earlier of (i) the date of termination of
the Facility pursuant to Section 7.01 and (ii) the date which the Sellers' Agent
designates by at least two Business Days' notice to the Purchaser.

Federal Funds Rate: means, for any period, a fluctuating interest rate per annum
equal for each day during such period to the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent under the Sale Agreement from three federal funds brokers
of recognized standing selected by it.

Fiscal Month: means each period specified as a "Fiscal Month" by the Seller's
Agent to the Purchaser on a schedule provided as of the beginning of each fiscal
year of the Seller's Agent.

General Trial Balance: of a Seller on any date means such Seller's accounts
receivable trial balance (whether in the form of a computer printout, magnetic
tape or diskette) on such date,


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listing Obligors and the Receivables respectively owed by such Obligors on such
date together with the aged Outstanding Balances of such Receivables, in form
and substance satisfactory to the Purchaser.

Indemnified Amounts: has the meaning specified in Section 8.01.

Lock-Box Account: means one or more accounts maintained for the purpose of
receiving Collections.

Lock-Box Agreement: means an agreement relating to a Lock-Box Account between a
Seller and any Lock-Box Bank in form and substance satisfactory to the Purchaser
(or its assignees or designees).

Lock-Box Bank: means any of the banks or other financial institutions holding
one or more Lock-Box Accounts.

Long Term Contract: means any agreement between a Seller and an Obligor pursuant
to or under which such Obligor shall be obligated to pay for merchandise or
services from time to time, the term of which exceeds 12 months.

Monthly Report: means a report, in form and substance satisfactory to the
Purchaser, furnished by the Collection Agent to the Purchaser pursuant to
Section 6.02(b).

Obligor: means a Person obligated to make payments to a Seller pursuant to a
Contract.

Outstanding Balance: of any Receivable on any date means the outstanding
principal balance thereof on such date.

Person: means an individual, partnership, corporation (including a business
trust), joint stock company, limited liability company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.

Purchase: means a purchase by the Purchaser of Receivables from a Seller
pursuant to Article II.

Purchase Price: means, for any Receivable sold by a Seller during a Fiscal
Month, the product of (a) the Outstanding Balance of such Receivable on the date
such Receivable is sold to the Purchaser, and (b) the excess of 100% over the
Discount Percentage in effect for such Fiscal Month.

Purchased Receivable: means any Receivable which has been sold by a Seller
hereunder.


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Receivable: means the indebtedness of any Obligor resulting from the provision
or sale of merchandise or services by a Seller under a Contract, and includes
the right to payment of any interest or finance charges and other obligations of
such Obligor with respect thereto.


Related Security:  means with respect to any Receivable:

          (i) all of the related Seller's interest in any merchandise (including
     returned merchandise) relating to any sale giving rise to such Receivable;

          (ii) all security interests or liens and property subject thereto from
     time to time purporting to secure payment of such Receivable, whether
     pursuant to the Contract related to such Receivable or otherwise, together
     with all financing statements signed by an Obligor describing any
     collateral securing such Receivable;

          (iii) all guaranties, proceeds from insurance policies and other
     agreements or arrangements of whatever character from time to time
     supporting or securing payment of such Receivable whether pursuant to the
     Contract related to such Receivable or otherwise;

          (iv) the Contract and all other books, records and other information
     (including, without limitation, computer programs, tapes, discs, punch
     cards, data processing software and related property and rights) relating
     to such Receivable and the related Obligor to the extent assignable or
     licensable under the related contract or license and applicable law; and

          (v) rights to payment under Long Term Contracts.

Sale Agreement: means that certain Receivables Purchase Agreement, dated as of
the date hereof, among CNC Finance LLC, as seller, Atlantic Asset Securitization
Corp., as a purchaser, The Industrial Bank of Japan, Limited, Lloyds Bank PLC,
The Sumitomo Bank, Limited, Credit Lyonnais New York Branch, individually and as
agent, and the Sellers' Agent, as collection agent, as amended or restated from
time to time.

Securitized Receivables: means any Purchased Receivables that are transferred by
the Purchaser to CNC Finance LLC under the Receivables Purchase and Contribution
Agreement, dated as of the date hereof, by and between the Purchaser and CNC
Finance LLC and, with respect to which Receivables, CNC Finance LLC sells,
transfers or grants a security interest, or otherwise transfers an interest, in
such Purchased Receivables in connection with a securitization transaction.

Settlement Date: means the thirteenth Business Day of each Fiscal Month (or if
such day is not a Business Day, the immediately succeeding Business Day);
provided, however, that following the 


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occurrence of an Event of Termination, Settlement Dates shall occur on such days
as are selected from time to time by the Purchaser or its designee in a written
notice to the Collection Agent.

Sub-Collection Agent: means at any time the Person then authorized pursuant to
Section 6.07 to service, administer and collect the portion of the Purchased
Receivables acquired by the Purchaser from a Seller.


Sub-Collection Agent Fee:  has the meaning specified in Section 6.09.

UCC: means the Uniform Commercial Code as from time to time in effect in the
specified jurisdiction or other equivalent local statute.

     SECTION 1.02. Other Terms.

     All accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles.


                                   ARTICLE II

                         AMOUNTS AND TERMS OF PURCHASES

     SECTION 2.01. Facility.

     On the terms and conditions hereinafter set forth and without recourse
(except to the extent as is specifically provided herein), the Purchaser agrees
to purchase Receivables from the Sellers as such Receivables arise during the
period from the date hereof to the Facility Termination Date.

     SECTION 2.02. Making Purchases.

     (a) On the Closing Date, each Seller hereby sells, transfers, absolutely
assigns, sets-over and conveys to the Purchaser all Receivables owned by such
Seller as of the close of business on the Business Day immediately preceding the
Closing Date. Each Seller hereby agrees, on each Business Day occurring after
the Closing Date and prior to the Facility Termination Date, to sell, transfer,
absolutely assign, set-over and convey to the Purchaser all Receivables owned by
such Seller as of the close of business on the immediately preceding Business
Day. Each Seller and the Purchaser shall enter into a certificate of assignment
(the "Sale Assignment"), dated as of the date hereof, in the form of Attachment
1 hereto, evidencing such sale, transfer, absolute assignment, set-over and
conveyance of such Receivables.

     (b) Upon the sale, transfer, absolute assignment, set-over and conveyance
of the Purchased Receivables the ownership of each such Receivable shall be
vested in the Purchaser and 


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no Seller shall take any action inconsistent with such ownership and shall not
claim any ownership interest in any such Purchased Receivable.

     (c) Each Seller shall indicate in its records that ownership of each
Purchased Receivable is held by the Purchaser or its assignee. In addition, each
Seller shall respond to any inquiries with respect to ownership of a Purchased
Receivable by stating that it is no longer the owner of such Receivable and that
ownership of such Purchased Receivable is held by the Purchaser or its assignee.


     SECTION 2.03. Collections; Purchase Price.

     (a) On the Business Day following the Closing Date, the Purchaser shall pay
each Seller an amount equal to the Purchase Price for all Receivables owned by
such Seller as of the close of business on the last Business Day of the Seller's
August Fiscal Month and sold to the Purchaser on the Closing Date. On each
Settlement Date, (i) the Collection Agent shall deposit into an account of the
Purchaser or the Purchaser's assignee all Collections of Purchased Receivables
received during the related Fiscal Month and then held by the Collection Agent,
and (ii) the Purchaser shall pay each Seller in respect of all Receivables sold,
transferred, absolutely assigned, set-over and conveyed by such Seller to the
Purchaser during the immediately preceding Fiscal Month (except for the first
Settlement Date, which shall relate only to Receivables sold, transferred,
absolutely assigned, set-over and conveyed after the Closing Date) an amount
equal to the aggregate Purchase Price of such Receivables. Each party's
obligation to make payment of any amount under this Section 2.03(a) will be
automatically satisfied and discharged and, if the aggregate amount that would
otherwise have been payable by one party exceeds the aggregate amount that would
otherwise have been payable by the other party, replaced by an obligation upon
the party by whom the larger aggregate amount would have been payable to pay to
the other party the excess of the larger aggregate amount over the smaller
aggregate amount.

     (b) In the event that the Sellers' Agent believes that amounts which are
not Collections of Purchased Receivables have been deposited into an account of
the Purchaser or the Purchaser's assignee, the Sellers' Agent shall so advise
the Purchaser and, on the Business Day following such identification, the
Purchaser shall remit, or shall cause to be remitted, to the Sellers' Agent for
the account of the applicable Seller, all amounts so deposited which are
identified, to the Purchaser's satisfaction, as not being Collections of
Receivables which are Purchased Receivables.

     SECTION 2.04. Settlement Procedures.

     (a) If on any day the Outstanding Balance of any Purchased Receivable is
reduced or adjusted as a result of any defective, rejected, returned,
repossessed or foreclosed merchandise or services or any cash discount or other
adjustment made by a Seller, or any set-off or dispute in respect of any claim
by the Obligor thereof against a Seller (whether such claim arises out of the
same or a related transaction or an unrelated transaction but excluding
adjustments, reductions or 


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cancellations in respect of such Obligor's bankruptcy, insolvency or similar
event), such Seller shall be deemed to have received on such day a Collection of
such Purchased Receivable in the amount of such reduction or adjustment. If such
Seller is not the Collection Agent, such Seller shall pay to the Collection
Agent on or prior to the next Settlement Date all amounts deemed to have been
received pursuant to this subsection during the related Fiscal Month.

     (b) Upon discovery by a Seller or the Purchaser of a breach of any of the

representations and warranties made by such Seller in Section 4.01(j) with
respect to any Purchased Receivable transferred by such Seller, such party shall
give prompt written notice thereof to the other party, as soon as practicable
and in any event within three Business Days following such discovery. If such
breach cannot be cured, such Seller shall, upon not less than two Business Days'
notice from the Purchaser or its assignee or designee, repurchase such Purchased
Receivable on the next succeeding Settlement Date for a repurchase price equal
to the Outstanding Balance of such Purchased Receivable. Each repurchase of a
Purchased Receivable shall include the Related Security with respect to such
Purchased Receivable. The proceeds of any such repurchase shall be deemed to be
a Collection in respect of such Purchased Receivable. If such Seller is not the
Collection Agent, such Seller shall pay to the Collection Agent on or prior to
the next Settlement Date the repurchase price required to be paid pursuant to
this subsection.

     (c) Except as stated in subsection (a) or (b) of this Section 2.04 or as
otherwise required by law or the underlying Contract, all Collections from an
Obligor of any Purchased Receivable shall be applied to the Receivables of such
Obligor in the order of the age of such Receivables, starting with the oldest
such Receivable, unless such Obligor designates its payment for application to
specific Receivables.

     SECTION 2.05. Payments and Computations, Etc.

     (a) All amounts to be paid or deposited by any Party hereunder shall be
paid or deposited no later than 11:00 A.M. (New York City time) on the day when
due in same day funds to the account specified by the recipient of such funds to
the payor as set forth in a written notice from time to time.

     (b) Each Seller shall, to the extent permitted by law, pay to the Purchaser
interest on any amount not paid or deposited by such Seller (whether as
Collection Agent or otherwise) when due hereunder at an interest rate per annum
equal to 2.0% per annum above the Alternate Base Rate, payable on demand.

     (c) All computations of interest and all computations of fees hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed. Whenever any payment
or deposit to be made hereunder shall be due on a day other than a Business Day,
such payment or deposit shall be made on the next succeeding


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Business Day and such extension of time shall be included in the computation of
such payment or deposit.

                                   ARTICLE III

                                   [reserved]

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES


     SECTION 4.01. Representations and Warranties of the Sellers.

     Each Seller represents and warrants as follows:

     (a) Such Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified to do business, and is in good standing, in every jurisdiction where
the nature of its business requires it to be so qualified.

     (b) The execution, delivery and performance by such Seller of this
Agreement and the other documents to be delivered by it hereunder, including
such Seller's sale of Receivables hereunder and such Seller's use of the
proceeds of Purchases, (i) are within such Seller's corporate powers, (ii) have
been duly authorized by all necessary corporate action, (iii) do not contravene
(1) such Seller's charter or by-laws, (2) any law, rule or regulation applicable
to such Seller, (3) any contractual restriction binding on or affecting such
Seller or its property or (4) any order, writ, judgment, award, injunction or
decree binding on or affecting such Seller or its property, and (iv) do not
result in or require the creation of any Adverse Claim upon or with respect to
any of its properties (except for the transfer of such Seller's interest in the
Purchased Receivables pursuant to this Agreement). This Agreement has been duly
executed and delivered by such Seller.

     (c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by such Seller of this Agreement or any
other document to be delivered by it hereunder other than the filings of
financing statements and similar documents contemplated in Section 5.01(k)(i).

     (d) This Agreement constitutes the legal, valid and binding obligation of
such Seller enforceable against such Seller in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws


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affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).

     (e) Each sale made pursuant to this Agreement will constitute a valid sale,
transfer, and assignment of the Purchased Receivables to the Purchaser,
enforceable against creditors of, and purchasers from, such Seller. Following
each such sale, such Seller shall have no remaining property interest in any
Purchased Receivable.

     (f) The balance sheets of the Sellers' Agent and its consolidated
subsidiaries for the most recently ended fiscal year, and the related statements
of income and retained earnings of the Sellers' Agent and its consolidated
subsidiaries for such fiscal year, copies of which have been furnished to the
Purchaser, fairly present the financial condition of the Sellers' Agent and its

subsidiaries as at the date of such balance sheets and the results of the
operations of the Sellers' Agent and its consolidated subsidiaries for the
period ended on such date, all in accordance with generally accepted accounting
principles consistently applied, and since the date of such balance sheets there
has been no material adverse change in the business, operations, property or
financial or other condition of such Seller.

     (g) There are no actions, suits or proceedings pending or, to the best
knowledge of such Seller, threatened (i) with respect to this Agreement or any
documentation executed in connection herewith or the transactions contemplated
hereby, (ii) with respect to the Credit Agreement or (iii) that are reasonably
likely to materially and adversely affect the business, property, assets,
condition (financial or otherwise) or prospects of Coltec Industries Inc or
Coltec Industries Inc and its Subsidiaries (as defined in the Sale Agreement)
taken as a whole. Such Seller is not in default with respect to any order of any
court, arbitration or governmental body, except for defaults that are not
material to the business or operation of Coltec Industries Inc and its
Subsidiaries (as defined in the Sale Agreement) taken as a whole.

     (h) No proceeds of any Purchase will be used to acquire any equity security
of a class which is registered pursuant to Section 12 of the Securities Exchange
Act of 1934.

     (i) No transaction contemplated hereby requires compliance with any bulk
sales act or similar law.

     (j) Each Purchased Receivable, together with the Related Security, is owned
(prior to its sale hereunder) by such Seller free and clear of any Adverse Claim
(other than any Adverse Claim arising solely as the result of any action taken
by the Purchaser). When the Purchaser makes a Purchase and when a Seller sells a
Receivable to the Purchaser, the Purchaser shall acquire a valid and perfected
first priority ownership or security interest of each such Purchased Receivable
and the Related Security and Collections with respect thereto free and clear of
any Adverse Claim (other than any Adverse Claim arising solely as the result of
any action taken by the Purchaser), and no effective financing statement or
other instrument similar in effect covering any Purchased Receivable, any
interest therein, the Related Security or Collections with respect


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thereto is on file in any recording office except such as may be filed in favor
of Purchaser in accordance with this Agreement or in connection with any Adverse
Claim arising solely as the result of any action taken by the Purchaser.

     (k) All written information and each exhibit, financial statement,
document, book, record or report furnished by such Seller to the Purchaser in
connection with this Agreement is accurate in all material respects as of its
date (except as otherwise disclosed in writing to the Purchaser at such time),
and no such document contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.


     (l) The principal place of business and chief executive office of such
Seller and the office where such Seller keeps its records concerning the
Purchased Receivables are located at the address or addresses referred to in
Section 5.01(b).

     (m) The names and addresses of all the Lock-Box Banks, together with the
account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified
in Exhibit C (as the same may be updated from time to time pursuant to Section
5.01(h)), together with a notation indicating which such Lock-Box Accounts will
receive collections of Receivables that constitute Securitized Receivables.

     (n) Except as specified in Schedule 4.01(n), such Seller is not known by
and does not use any tradename or doing-business-as name.

     (o) The transfers of Purchased Receivables by such Seller to the Purchaser
pursuant to this Agreement, and all other transactions between such Seller and
the Purchaser, have been and will be made in good faith and without intent to
hinder, delay or defraud creditors of such Seller.

                                    ARTICLE V

                                    COVENANTS

     SECTION 5.01. Covenants of the Sellers.

     From the date hereof until the first day following the Facility Termination
Date on which all of the Purchased Receivables are either collected in full or
are written off the books of the Purchaser as uncollectible:

     (a) Compliance with Laws, Etc. Each Seller will comply in all material
respects with all applicable laws, rules, regulations and orders and preserve
and maintain its corporate existence, rights, franchises, qualifications and
privileges except to the extent that the failure so 


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<PAGE>

to comply with such laws, rules and regulations or the failure so to preserve
and maintain such existence, rights, franchises, qualifications, and privileges
would not materially adversely affect the collectibility of the Purchased
Receivables or the ability of such Seller to perform its obligations under this
Agreement.

     (b) Offices, Records and Books of Account. Each Seller will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Purchased Receivables at the addresses set
forth in Schedule 5.01(b) hereto or, upon 30 days' prior written notice to the
Purchaser, at any other locations in jurisdictions where all actions required by
Section 5.01(k) shall have been taken and completed. Each Seller also will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Purchased
Receivables and related Contracts in the event of the destruction of the

originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Purchased Receivables (including, without limitation, records adequate to permit
the daily identification of each new Purchased Receivable and all Collections of
and adjustments to each existing Purchased Receivable). Each Seller shall make a
notation in its books and records, including its computer files, to indicate
which Receivables have been sold to the Purchaser hereunder.

     (c) Performance and Compliance with Contracts and Credit and Collection
Policy. Each Seller will, at its expense, timely and fully perform and comply
with all material provisions, covenants and other promises required to be
observed by it under the Contracts related to the Purchased Receivables, and
timely and fully comply in all material respects with the Credit and Collection
Policy in regard to each Purchased Receivable and the related Contract.

     (d) Sales, Liens, Etc. Except for the sales of Receivables contemplated
herein, each Seller will not sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse Claim upon or
with respect to, any Purchased Receivable, Related Security or Collections, or
upon or with respect to any account to which any Collections of any Purchased
Receivable are sent, or assign any right to receive income in respect thereof;
provided, however, that the provisions of this paragraph shall not prevent the
existence of inchoate liens for taxes, assessments and governmental charges or
claims not yet due or being contested in good faith and by appropriate
proceedings; notwithstanding anything to the contrary, the Purchaser understands
that each Seller, each Sub-Collection Agent and the Collection Agent will not
segregate any Collections from other funds of such Person and that such
Collections will be commingled with other funds of such Persons in the Sellers'
Agent's cash management operations.

     (e) Extension or Amendment of Purchased Receivables. Except as provided in
Section 6.02(c), each Seller will not extend, amend or otherwise modify the
terms of any Purchased Receivable.



                                       12
<PAGE>

     (f) Change in Business or in Credit and Collection Policy. No Seller will
make any change in either (i) the character of its business or (ii) its Credit
and Collection Policy if such change would impair the collectibility of the
Purchased Receivables.

     (g) Audits. Each Seller will, from time to time during regular business
hours as requested by the Purchaser, permit the Purchaser and each Seller whose
Purchased Receivables at such time constitute Securitized Receivables will, from
time to time during regular business hours as requested by the Agent under the
Sale Agreement, permit the Agent under the Sale Agreement:

          (i) to conduct an annual audit (or more frequently if an Event of
     Termination occurs) of the Purchased Receivables, the Related Security and
     the related books and records and collections systems of such Seller, the
     first such audit by the Agent under the Sale Agreement shall occur prior to

     March 1, 1998,

          (ii) semi-annually (or more frequently if an Event of Termination
     occurs) to examine and make copies of and abstracts from all books, records
     and documents (including, without limitation, computer tapes and disks) in
     the possession or under the control of the Collection Agent relating to
     Purchased Receivables and the Related Security, including, without
     limitation, the Contracts, and

          (iii) semi-annually (or more frequently if an Event of Termination
     occurs) to visit the offices and properties of the Collection Agent and
     such Seller for the purpose of examining such materials described in clause
     (ii) above, and to discuss matters relating to Purchased Receivables and
     the Related Security or such Seller's or the Collection Agent's performance
     hereunder with any of the officers or employees of such Seller or the
     Collection Agent having knowledge of such matters.

     (h) Change in Payment Instructions to Obligors. Each Seller whose
Receivables constitute Securitized Receivables will not add or terminate any
bank or bank account as a Lock-Box Bank or Lock-Box Account from those listed in
Exhibit C to this Agreement, or make any change in its instructions to Obligors
regarding payments to be made to any Lock-Box Bank, unless the Purchaser shall
have received notice of such addition, termination or change (including an
updated Exhibit C) and executed copies of Lock-Box Agreements with each new
Lock-Box Bank or with respect to each new Lock-Box Account.

     (i) Deposits to Lock-Box Accounts. Each Seller of Receivables that
constitute Securitized Receivables will deposit, or cause to be deposited, all
Collections of Purchased Receivables that constitute Securitized Receivables
into Lock-Box Accounts, and such Seller will not deposit or otherwise credit, or
cause or permit to be so deposited or credited, to any Lock-Box Account cash or
cash proceeds other than Collections of Purchased Receivables that constitute
Securitized Receivables; provided, however, that notwithstanding the foregoing,

                                       13
<PAGE>

failure to comply with the provisions hereof prior to December 19, 1997 shall
not be a breach of this subsection (i).

     (j) Marking of Records. At its expense, each Seller will mark its master
data processing records evidencing Purchased Receivables with a legend
evidencing or otherwise mark its records to indicate that such Purchased
Receivables have been sold in accordance with this Agreement.

     (k) Further Assurances.

          (i) Each Seller agrees from time to time, at its expense, promptly to
     execute and deliver all further instruments and documents, and to take all
     further actions, that may be necessary or desirable, or that the Purchaser
     or its assignee may reasonably request, to perfect, protect or more fully
     evidence the sale of Receivables under this Agreement, or to enable the
     Purchaser or its assignee to exercise and enforce its respective rights and
     remedies under this Agreement. Without limiting the foregoing, such Seller

     will, upon the request of the Purchaser or its assignee, (x) execute and
     file such financing or continuation statements, or amendments thereto, and
     such other instruments and documents, that may be necessary or desirable to
     perfect, protect or evidence such Purchased Receivables; and (y) deliver to
     the Purchaser copies of all Contracts (other than Long Term Contracts)
     relating to the Purchased Receivables and all records relating to such
     Contracts and the Purchased Receivables, whether in hard copy or in
     magnetic tape or diskette format (which if in magnetic tape or diskette
     format shall be compatible with the Purchaser's computer equipment).

          (ii) Each Seller authorizes the Purchaser or its assignee to file
     financing or continuation statements, and amendments thereto and
     assignments thereof, relating to the Purchased Receivables and the Related
     Security, the related Contracts and the Collections with respect thereto
     without the signature of such Seller where permitted by law. A photocopy or
     other reproduction of this Agreement shall be sufficient as a financing
     statement where permitted by law.

          (iii) Each Seller shall perform its obligations under the Contracts
     related to the Purchased Receivables to the same extent as if the Purchased
     Receivables had not been sold or transferred.

     (l) Reporting Requirements. The Sellers' Agent will provide to the
Purchaser the following:

          (i) as soon as available and in any event within 45 days after the end
     of the first three quarters of each fiscal year of the Sellers' Agent
     balance sheets of the Sellers' Agent and its consolidated subsidiaries as
     of the end of such quarter and statements of income and retained earnings
     of the Sellers' Agent and its subsidiaries for the period 


                                       14
<PAGE>

     commencing at the end of the previous fiscal year and ending with the end
     of such quarter, certified by the chief financial officer of the Sellers'
     Agent;

          (ii) as soon as available and in any event within 90 days after the
     end of each fiscal year of the Sellers' Agent, a copy of the Annual Report
     on Form 10-K for such year for the Sellers' Agent and its consolidated
     subsidiaries, containing financial statements for such year audited by
     Arthur Andersen & Co. or other nationally recognized independent public
     accountants;

          (iii) as soon as possible and in any event within five days after the
     occurrence of each Event of Termination or event that, but for notice or
     the lapse of time or both, would constitute an Event of Termination, a
     statement of the chief financial officer of the Sellers' Agent setting
     forth details of such Event of Termination or event that, but for notice or
     the lapse of time or both, would constitute an Event of Termination and the
     action that the Sellers' Agent has taken and proposes to take with respect
     thereto;


          (iv) promptly after the filing or receiving thereof, copies of all
     reports and notices that the Sellers' Agent or any Affiliate files under
     ERISA with the Internal Revenue Service or the Pension Benefit Guaranty
     Corporation or the U.S. Department of Labor or that the Sellers' Agent or
     any Affiliate receives from any of the foregoing or from any multiemployer
     plan (within the meaning of Section 4001(a)(3) of ERISA) to which the
     Sellers' Agent or any Affiliate is or was, within the preceding five years,
     a contributing employer, in each case in respect of the assessment of
     withdrawal liability or an event or condition which could, in the
     aggregate, result in the imposition of liability on the Sellers' Agent
     and/or any such Affiliate in excess of $1,000,000;

          (v) at least ten Business Days prior to any change in each Seller's
     name, a notice setting forth the new name and the effective date thereof;
     and

          (vi) such other information respecting the Purchased Receivables or
     the condition or operations, financial or otherwise, of the Sellers as the
     Purchaser may from time to time reasonably request.

     (m) No Seller will direct or participate in the management of CNC Finance
LLC.

     (n) Each Seller will: (i) maintain separate corporate records and books of
account from those of the Purchaser and CNC Finance LLC; (ii) conduct its
business from an office separate from that of the Purchaser and CNC Finance LLC,
which office may be located in identifiable space within the headquarters of any
such other Person; (iii) ensure that all oral and written communications,
including without limitation, letters, invoices, purchase orders, contracts,
statements and applications, will be made solely in its own name; (iv) have
stationery and other business forms and a telephone listing separate from those
of the Purchaser or CNC Finance LLC; (v) not hold itself out as having agreed to
pay, or as being liable for, the 


                                       15
<PAGE>

obligations of the Purchaser or CNC Finance LLC; (vi) continuously maintain as
official records the resolutions, agreements and other instruments underlying
the transactions contemplated by this Agreement; and (vii) disclose on its
annual financial statements the effects of the transactions contemplated by this
Agreement in accordance with generally accepted accounting principles.

     SECTION 5.02. Covenant of the Sellers and the Purchaser.

     The Sellers and the Purchaser have structured this Agreement with the
intention that each Purchase of Receivables hereunder be treated as a sale of
such Receivables by the Sellers to the Purchaser for all purposes. The Sellers
and the Purchaser shall record each Purchase as a sale or purchase, as the case
may be, on its books and records, and reflect, to the extent required or
permitted by applicable law and/or accounting rules, each Purchase in its
financial statements and tax returns as a sale or purchase, as the case may be.

In the event that, contrary to the mutual intent of the Sellers and the
Purchasers, any Purchase of Receivables hereunder is not characterized as a
sale, the Sellers shall, effective as of the date hereof, be deemed to have
granted (and the Sellers hereby do grant) to the Purchaser a first priority
security interest in and to any and all Purchased Receivables, Related Security
and the proceeds thereof to secure the repayment of all amounts advanced to the
Sellers hereunder with accrued interest thereon, and this Agreement shall be
deemed to be a security agreement.


                                   ARTICLE VI

                          ADMINISTRATION AND COLLECTION

     SECTION 6.01. Designation of Collection Agent.

     (a) The servicing, administration and collection of the Purchased
Receivables other than the Securitized Receivables shall be conducted by such
Person (the "Collection Agent") so designated hereunder from time to time. The
Sellers' Agent is hereby designated as, and hereby agrees to perform the duties
and obligations of, the Collection Agent pursuant to the terms hereof until
receipt of written notice by the Seller's Agent, following the occurrence of an
Event of Termination, from the Purchaser or its assignee of the designation of a
new Collection Agent. The Collection Agent may, with the prior consent of the
Purchaser, subcontract with any other Person for the servicing, administration
or collection of Purchased Receivables. Any such subcontract shall not affect
the Collection Agent's liability for performance of its duties and obligations
pursuant to the terms hereof.

     (b) It is the intent of the parties hereto that the servicing,
administration and collection of Securitized Receivables will be arranged for
pursuant to the terms and conditions of the Sale Agreement and related documents
upon the sale of the portion of the Purchased 


                                       16
<PAGE>

Receivables constituting Securitized Receivables by the Purchaser hereunder to
CNC Finance LLC.

     SECTION 6.02. Duties of Collection Agent.

     (a) The Collection Agent shall take or cause to be taken all such actions
as may be necessary or advisable to collect each Purchased Receivable from time
to time, all in accordance with applicable laws, rules and regulations, with
reasonable care and diligence, and in accordance with the Credit and Collection
Policy. The Purchaser hereby appoints the Collection Agent, from time to time
designated pursuant to Section 6.01, as agent to enforce its ownership and other
rights in the Purchased Receivables, the Related Security and the Collections
with respect thereto. In performing its duties as Collection Agent, the
Collection Agent shall exercise the same care and apply the same policies as it
would exercise and apply if it owned the Purchased Receivables and shall act in
the best interests of the Purchaser and its assignees.


     (b) On or before the tenth Business Day after the end of each Fiscal Month,
the Collection Agent shall prepare and forward to the Purchaser (i) a Monthly
Report, relating to all then outstanding Purchased Receivables, and the Related
Security and Collections with respect thereto, in each case, as of the close of
business of the Collection Agent on the last day of the immediately preceding
Fiscal Month, and (ii) if requested by the Purchaser, a listing by Obligor of
all Purchased Receivables, together with an aging report of such Purchased
Receivables.

     (c) The Collection Agent, may, in accordance with the Credit and Collection
Policy, extend the maturity or adjust the Outstanding Balance of any Purchased
Receivable or amend or otherwise modify the terms of any Purchased Receivable as
the Sellers' Agent deems appropriate to maximize Collections thereof.

     (d) The Collection Agent shall as soon as practicable following receipt
turn over to the applicable Seller any cash collections or other cash proceeds
received with respect to Receivables not constituting Purchased Receivables sold
by such Seller, less, in the event the Sellers' Agent is not the Collection
Agent, all reasonable and appropriate out-of-pocket costs and expenses of the
Collection Agent of servicing, collecting and administering the Receivables to
the extent not covered by the Collection Agent Fee received by it.

     (e) The Collection Agent also shall perform the other obligations of the
"Collection Agent" set forth in this Agreement with respect to the Purchased
Receivables.

     SECTION 6.03. Collection Agent Fee.

     The Purchaser shall pay to the Collection Agent, so long as it is acting as
the Collection Agent hereunder, a periodic collection fee (the "Collection Agent
Fee") of 1% per annum on the Outstanding Balance of all Purchased Receivables
(excluding Securitized Receivables) at the end of each Fiscal Month, payable in
arrears on each Settlement Date.

                                       17
<PAGE>

     SECTION 6.04. Certain Rights of the Purchaser.

     (a) The Purchaser may, at any time, give notice of ownership and/or direct
the Obligors of Purchased Receivables and any Person obligated on any Related
Security, or any of them, that payment of all amounts payable under any
Purchased Receivable shall be made directly to the Purchaser or its designee.
Each Seller and the Collection Agent hereby transfers to the Purchaser (and its
assigns and designees) the exclusive ownership and control of the Lock-Box
Accounts maintained by such Seller and the Collection Agent for the purpose of
receiving Collections.

     (b) Each Seller shall, at any time upon the Purchaser's request and at such
Seller's expense, give notice of such ownership to each Obligor of Purchased
Receivables and direct that payments of all amounts payable under such Purchased
Receivables be made directly to the Purchaser or its designee.


     (c) At the Purchaser's request and at each Seller's expense, each Seller
shall (x) assemble all of the documents, instruments and other records
(including, without limitation, computer tapes and disks) that evidence or
relate to the Purchased Receivables acquired from such Seller, and the related
Contracts (excluding the Long Term Contracts themselves) and Related Security,
or that are otherwise necessary or desirable to collect the Purchased
Receivables, and shall make the same available to the Collection Agent at a
place selected by the Collection Agent, and (y) segregate all cash, checks and
other instruments received by it from time to time constituting Collections of
such Purchased Receivables in a manner acceptable to the Purchaser and, promptly
upon receipt, remit all such cash, checks and instruments, duly endorsed or with
duly executed instruments of transfer, to the Purchaser or its designee. The
Purchaser shall also have the right to make copies of all such documents,
instruments and other records at any time.

     (d) At the Purchaser's request and at the Collection Agent's expense, the
Collection Agent shall (x) assemble all of the documents, instruments and other
records (including, without limitation, computer tapes and disks), maintained by
the Collection Agent that relate to the Purchased Receivables, and the related
Contracts (excluding the Long Term Contracts themselves) and Related Security,
and shall make the same available to the Purchaser at a place selected by the
Purchaser, and (y) segregate all cash, checks and other instruments received by
it from time to time constituting Collections of Purchased Receivables in a
manner acceptable to the Purchaser and, promptly upon receipt, remit all such
cash, checks and instruments, duly endorsed or with duly executed instruments of
transfer, to the Purchaser or its designee. The Purchaser shall also have the
right to make copies of all such documents, instruments and other records at any
time.



                                       18
<PAGE>

     SECTION 6.05. Rights and Remedies.

     (a) If a Seller or the Collection Agent fails to perform any of its
obligations under this Agreement, the Purchaser may (but shall not be required
to) itself perform, or cause performance of, such obligation, and, if such
Seller (as Collection Agent or otherwise) fails to so perform, the costs and
expenses of the Purchaser incurred in connection therewith shall be payable by
such Seller or the Collection Agent, as the case may be, as provided in Section
8.01 or Section 9.04 as applicable.

     (b) Each Seller shall perform all of its obligations under the Contracts
related to the Purchased Receivables to the same extent as if such Seller had
not sold Receivables hereunder and the exercise by the Purchaser of its rights
hereunder shall not relieve such Seller from such obligations or its obligations
with respect to the Purchased Receivables. The Purchaser shall not have any
obligation or liability with respect to any Purchased Receivables or related
Contracts, nor shall the Purchaser be obligated to perform any of the
obligations of such Seller thereunder.

     (c) Each Seller shall cooperate with the Collection Agent in collecting

amounts due from Obligors in respect of the Purchased Receivables.

     SECTION 6.06. Transfer of Records to Purchaser.

     Each Purchase of Receivables hereunder shall include the transfer to the
Purchaser of all of the Seller's right and title to and interest in the records
relating to such Receivables.

     Each Seller shall take such action requested by the Purchaser, from time to
time hereafter, that may be necessary or appropriate to ensure that the
Purchaser has an enforceable ownership interest in the records relating to the
Purchased Receivables.

     SECTION 6.07. Designation of Sub-Collection Agents.

     The Collection Agent hereby designates each Seller to perform, as agent of
the Collection Agent, the servicing, administration and collection of the
portion of the Purchased Receivables (excluding Securitized Receivables) owned
by the Purchaser that were acquired from such Seller. Until the Collection Agent
gives notice to a Sub-Collection Agent of the designation of a new
Sub-Collection Agent, each such Sub-Collection Agent is hereby designated as,
and hereby agrees to perform the duties and obligations of, a Sub-Collection
Agent pursuant to the terms hereof. Each such Sub-Collection Agent agrees that
such notice may be given at any time in the Collection Agent's discretion. Upon
receipt of such notice, the Sub-Collection Agent receiving such notice agrees
that it will terminate its activities as Sub-Collection Agent hereunder in a
manner which the Collection Agent believes will facilitate the transition of the
performance of such activities to a new Sub-Collection Agent or to the
Collection Agent, and such Sub-Collection Agent shall use its best efforts to
assist the new Sub-Collection Agent or to the Collection Agent to take over the
servicing, administration and collection of the Purchased


                                       19
<PAGE>

Receivables then being serviced by such Sub-Collection Agent, including, without
limitation, providing access to and copies of all computer tapes or disks and
other documents or instruments that evidence or relate to such Purchased
Receivables maintained in its capacity as Sub-Collection Agent and access to all
employees and officers of such Sub-Collection Agent responsible with respect
thereto. The Collection Agent at any time after giving such notice may designate
as Sub-Collection Agent any Person (including itself) to succeed such
Sub-Collection Agent or any successor Sub-Collection Agent, if such Person shall
consent and agree to the terms hereof. The Collection Agent liability for
performance of its duties and obligations pursuant to the terms hereof shall not
be affected by the provision of this section.

     SECTION 6.08. Duties of Sub-Collection Agent.

     (a) Each Sub-Collection Agent shall take or cause to be taken all such
actions as may be necessary or advisable to collect each Purchased Receivable
that was sold by it to the Purchaser hereunder from time to time, all in
accordance with applicable laws, rules and regulations, with reasonable care and

diligence, and in accordance with the Credit and Collection Policy. The
Purchaser hereby appoints each Sub-Collection Agent, from time to time
designated pursuant to Section 6.07, as agent to enforce its ownership and other
rights in the Purchased Receivables sold by such Sub-Collection Agent hereunder
and the Related Security and the Collections with respect thereto. In performing
its duties as Sub-Collection Agent, each Sub-Collection Agent shall exercise the
same care and apply the same policies as it would exercise and apply if it owned
such Purchased Receivables and shall act in the best interests of the Purchaser
and its assignees.

     (b) On or before the tenth Business Day after the end of each Fiscal Month,
each Sub-Collection Agent shall prepare and forward to the Purchaser (i) a
Monthly Report, relating to all then outstanding Purchased Receivables sold by
such Sub-Collection Agent hereunder and the Related Security and Collections
with respect thereto, in each case, as of the close of business of such
Sub-Collection Agent on the last day of the immediately preceding Fiscal Month,
and (ii) if requested by the Purchaser, a listing by Obligor of all Purchased
Receivables, together with an aging report of such Purchased Receivables.

     (c) A Sub-Collection Agent, may, in accordance with the Credit and
Collection Policy, extend the maturity or adjust the Outstanding Balance of any
Purchased Receivable that was sold by it to the Purchaser hereunder or amend or
otherwise modify the terms of any Purchased Receivable that was sold by it to
the Purchaser hereunder as such Seller deems appropriate to maximize Collections
thereof.

     (d) Each Sub-Collection Agent shall retain for the benefit of the
Collection Agent and shall hold in trust, for the Purchaser, all documents,
instruments and records (including, without limitation, computer tapes or disks)
which evidence or relate to Purchased Receivables sold by such Sub-Collection
Agent hereunder.



                                       20
<PAGE>

     (e) Each Sub-Collection Agent shall retain any cash collections or other
cash proceeds received by it with respect to Receivables not constituting
Purchased Receivables sold by it hereunder, unless such Collections or proceeds
related to Purchased Receivables sold by a different Sub-Collection Agent, in
which case, such collections or proceeds shall constitute Collections of such
Purchased Receivables and shall be forthwith paid to the Purchaser.

     SECTION 6.09. Sub-Collection Agent Fee.

     The Collection Agent shall pay to each Sub-Collection Agent, so long as it
is acting as the Sub-Collection Agent hereunder, a periodic fee (the
"Sub-Collection Agent Fee") of 1% per annum on the Outstanding Balance of all
Purchased Receivables at the end of each Fiscal Month for which such
Sub-Collection Agent has the servicing, administration and collection
responsibilities, payable in arrears on each Settlement Date.

                                   ARTICLE VII


                              EVENTS OF TERMINATION

     SECTION 7.01. Events of Termination.

     If any of the following events ("Events of Termination") shall occur and be
continuing:

     (a) The Sellers' Agent shall fail (i) to transfer to the Purchaser when
requested any rights, pursuant to this Agreement, which the Sellers' Agent then
has as Collection Agent and such failure shall have a material adverse effect
upon the interest of the Purchaser and shall remain unremedied for thirty (30)
days after written notice thereof shall have been given to the Sellers' Agent by
the Purchaser, or (ii) to make any payment required under Section 2.04(a) or
2.04(b); or

     (b) Any representation or warranty made or deemed made by a Seller (or any
of its officers) under or in connection with this Agreement or any written
information or report delivered by a Seller pursuant to this Agreement shall
prove to have been incorrect or untrue in any material respect when made or
deemed made or delivered and such breach shall have a material adverse effect
upon the interest of the Purchaser and shall remain unremedied for thirty (30)
days after written notice thereof shall have been given to the Sellers' Agent by
the Purchaser; or

     (c) A Seller shall fail to perform or observe any other term, covenant or
agreement contained in this Agreement on its part to be performed or observed
and any such failure shall remain unremedied for thirty (30) days after written
notice thereof shall have been given to the Sellers' Agent by the Purchaser (or,
with respect to a failure to deliver the Monthly Report pursuant to this
Agreement, such failure shall remain unremedied for five days, without a

                                       21
<PAGE>

requirement for notice) and such failure shall have a material adverse effect on
the interest of the Purchaser; or

     (d) Any Purchase of Receivables hereunder, the Related Security and the
Collections with respect thereto shall for any reason cease to constitute valid
and perfected ownership interest or security interest in such Purchased
Receivables, Related Security and Collections free and clear of any Adverse
Claim; or

     (e) A Seller or any of its subsidiaries shall generally not pay its debts
as such debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against a Seller or any
of its subsidiaries seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding

instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of sixty (60) days, or any of the
actions sought in such proceeding (including, without limitation, the entry of
an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Seller or any of its subsidiaries shall take any
corporate action to authorize any of the actions set forth above in this
subsection (e); or

     (f) The occurrence of an Event of Default under the Credit Agreement, and
such Event of Default shall remain unremedied for five (5) days after written
notice thereof shall have been given to the Sellers' Agent by the Purchaser; or

     (g) An Event of Termination shall have occurred under the Sale Agreement;

then, and in any such event, the Purchaser may, by notice to the Sellers' Agent,
declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred); provided, that,
automatically upon the occurrence of any event (without any requirement for the
passage of time or the giving of notice) described in paragraph (e) of this
Section 7.01, the Facility Termination Date shall occur. Upon any such
declaration or designation or upon such automatic termination, the Purchaser
shall have, in addition to the rights and remedies under this Agreement, all
other rights and remedies with respect to the Purchased Receivables provided
after default under the UCC and under other applicable law, which rights and
remedies shall be cumulative.

     SECTION 7.02 Individual Seller Termination.

     Except for any Seller constituting a division of Coltec Industries Inc,
if all or, in the case of Garlock Bearings Inc., 80% or more, of the outstanding
capital stock of a Seller shall cease to


                                       22
<PAGE>

be owned, directly or indirectly, by Coltec Industries Inc, such Seller shall
immediately cease selling Receivables and the Purchaser shall immediately cease
purchasing such Seller's Receivables hereunder.

                                  ARTICLE VIII

                                 INDEMNIFICATION

     SECTION 8.01. Indemnities.

     Without limiting any other rights which the Purchaser may have hereunder or
under applicable law, each Seller, severally and not jointly, and Coltec,
jointly and severally with each other Seller, hereby agree to indemnify the
Purchaser and its assigns and transferees (each, an "Indemnified Party") from
and against any and all damages, claims, losses, liabilities and related costs
and expenses, including reasonable attorneys' fees and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts"), awarded

against or incurred by any Indemnified Party arising out of or as a result of:

          (i) any representation or warranty or statement made or deemed made by
     such Seller (or any of its officers) under or in connection with this
     Agreement, which shall have been incorrect in any material respect when
     made;

          (ii) the failure by such Seller to comply with any applicable law,
     rule or regulation with respect to any Purchased Receivable sold by such
     Seller; or the failure of any Purchased Receivable sold by such Seller or
     the related Contract to conform to any such applicable law, rule or
     regulation;

          (iii) the failure to vest in the Purchaser absolute ownership of the
     Receivables that are, or that purport to be, the subject of a Purchase from
     such Seller under this Agreement and the Related Security and Collections
     in respect thereof, free and clear of any Adverse Claim;

          (iv) the failure of such Seller to have filed, or any delay in filing,
     financing statements or other similar instruments or documents under the
     UCC of any applicable jurisdiction or other applicable laws with respect to
     any Receivables that are, or that purport to be, the subject of a Purchase
     sold by such Seller under this Agreement and the Related Security and
     Collections in respect thereof, whether at the time of any Purchase from
     such Seller or at any subsequent time;

          (v) any dispute, claim, offset or defense (other than discharge in
     bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
     that


                                       23
<PAGE>

     is, or that purports to be, the subject of a Purchase from such Seller
     under this Agreement (including, without limitation, a defense based on
     such Receivable or the related Contract not being a legal, valid and
     binding obligation of such Obligor enforceable against it in accordance
     with its terms), or any other claim resulting from the sale of the
     merchandise or services related to such Receivable or the furnishing or
     failure to furnish such merchandise or services or relating to collection
     activities with respect to such Receivable (if such collection activities
     were performed by such Seller acting as Sub-Collection Agent) except to the
     extent that such dispute, claim, offset or defense results solely from
     actions or failures to act of the Purchaser or its assigns;

          (vi) any failure of such Seller, as Sub-Collection Agent or otherwise,
     to perform its duties or obligations in accordance with the provisions
     hereof or to perform its duties or obligations under any Contract related
     to a Purchased Receivable sold by such Seller;

          (vii) any products liability or other claim arising out of or in
     connection with merchandise, insurance or services which are the subject of
     any Contract related to a Purchased Receivable sold by such Seller;


          (viii) the commingling by such Seller or an affiliate of such Seller
     of Collections of Purchased Receivables sold by such Seller, at any time
     with other funds of such Seller or an Affiliate of such Seller;

          (ix) any investigation, litigation or proceeding related solely to
     this Agreement or the ownership of Purchased Receivables sold by such
     Seller and the Related Security, or Collections with respect thereto or in
     respect of any Purchased Receivable sold by such Seller and the Related
     Security or related Contract, except to the extent any such investigation,
     litigation or proceeding relates to a possible matter involving an
     Indemnified Party for which neither such Seller nor any of its Affiliates
     is at fault;

          (x) any failure of such Seller to comply with its covenants contained
     in Section 5.01;

          (xi) any claim brought by any Person other than an Indemnified Party
     arising from any activity by such Seller or any Affiliate of such Seller in
     servicing, administering or collecting any Purchased Receivable sold by
     such Seller; or

          (xii) any Dilution with respect to any Purchased Receivable sold by
     such Seller.



                                       24
<PAGE>

     It is expressly agreed and understood by the parties hereto (i) that the
foregoing indemnification is not intended to, and shall not, constitute a
guarantee of the collectibility or payment of the Purchased Receivables and (ii)
that nothing in this Section 8.01 shall require a Seller to indemnify any Person
(x) for Receivables which are not collected, not paid or uncollectible on
account of the insolvency, bankruptcy, or financial inability to pay of the
applicable Obligor, (y) for damages, losses, claims or liabilities or related
costs or expenses resulting from such Person's gross negligence or willful
misconduct, or (z) for any income taxes or franchise taxes incurred by such
Person arising out of or as a result of this Agreement or in respect of any
Purchased Receivable or any Contract.

                                   ARTICLE IX

                                  MISCELLANEOUS

     SECTION 9.01. Amendments, Etc.

     No amendment or waiver of any provision of this Agreement or consent to any
departure by a Seller therefrom shall be effective unless in a writing signed by
the Purchaser and, in the case of any amendment, also signed by the Sellers'
Agent, and then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No failure on
the part of the Purchaser to exercise, and no delay in exercising, any right

hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right.

     SECTION 9.02. Notices, Etc.

     All notices and other communications hereunder shall, unless otherwise
stated herein, be in writing (which shall include electronic transmission) shall
be personally delivered, express couriered, electronically transmitted (whether
by facsimile, e-mail or otherwise) or mailed by registered or certified mail and
shall, unless otherwise expressly provided herein, be effective when received at
the address set forth under a party's name on the signature pages hereof or at
such other address as shall be designated by such party in a written notice to
the other parties hereto.

     SECTION 9.03. Binding Effect; Assignability.

          (a) This Agreement shall be binding upon and inure to the benefit of
     the Sellers, the Purchaser and their respective successors and assigns;
     provided, however, that a Seller may not assign its rights or obligations
     hereunder or any interest herein without the prior written consent of the
     Purchaser.

                                       25
<PAGE>

          (b) This Agreement shall create and constitute the continuing
     obligations of the parties hereto in accordance with its terms, and shall
     remain in full force and effect until such time, after the Facility
     Termination Date, when all of the Purchased Receivables are either
     collected in full or become Defaulted Receivables; provided, however, that
     rights and remedies with respect to any breach of any representation and
     warranty made by the Seller pursuant to Article IV and the provisions of
     Article VIII and Section 9.04 shall be continuing and shall survive any
     termination of this Agreement.

     SECTION 9.04. Costs, Expenses and Taxes.

          (a) In addition to the rights of indemnification granted to the
     Purchaser pursuant to Article VIII hereof, each Seller agrees to pay on
     demand all costs and expenses in connection with the preparation, execution
     and delivery of this Agreement and the other documents and agreements to be
     delivered hereunder, including, without limitation, the reasonable fees and
     out-of-pocket expenses of counsel for the Purchaser with respect thereto
     and with respect to advising the Purchaser as to its rights and remedies
     under this Agreement, and each Seller agrees to pay all costs and expenses,
     if any (including reasonable counsel fees and expenses), in connection with
     the enforcement of this Agreement against such Seller and the other
     documents to be delivered hereunder excluding, however, any costs of
     enforcement or collection of Purchased Receivables.

          (b) In addition, each Seller agrees to pay any and all stamp and other
     taxes and fees payable in connection with the execution, delivery, filing
     and recording of this Agreement or the other documents or agreements to be

     delivered hereunder with respect to such Seller, and each Seller agrees to
     save each Indemnified Party harmless from and against any liabilities with
     respect to or resulting from any delay in paying or omission to pay such
     taxes and fees.

     SECTION 9.05. [reserved]

     SECTION 9.06. [reserved]

     SECTION 9.07. Governing Law.

     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NORTH CAROLINA (WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE
PURCHASER'S OWNERSHIP OF OR SECURITY INTEREST IN THE RECEIVABLES OR REMEDIES
HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NORTH CAROLINA.

                                       26
<PAGE>

     SECTION 9.08. Third Party Beneficiary.

     Each of the parties hereto hereby acknowledges that the Purchaser is
transferring the Securitized Receivables and certain of its rights under this
Agreement to CNC Finance LLC under the Receivables Purchase and Contribution
Agreement, dated as of the date hereof (the "CNCI Purchase Agreement") between
the Purchaser and CNC Finance LLC and that CNC Finance LLC is transferring an
interest in the Securitized Receivables and certain of its rights under the CNCI
Purchase Agreement pursuant to the Sale Agreement and each Seller hereby
consents to all such transfers and assignments. CNC Finance LLC and the other
parties to the Sale Agreement shall be third-party beneficiaries of and shall,
following the occurrence of an Event of Termination under the Sale Agreement, be
entitled to enforce the Purchaser's rights and remedies under this Agreement
solely with respect to the Securitized Receivables to the same extent as if they
were parties hereto, except to the extent specifically limited under the terms
of the CNCI Purchase Agreement or the Sale Agreement.

     SECTION 9.09. Execution in Counterparts.

     This Agreement may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. Delivery of an executed
counterparty of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

                  [Remainder of Page Intentionally Left Blank]



                                       27

<PAGE>


     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

SELLERS:                         COLTEC INDUSTRIES INC, as a Seller,
                                 as Collection Agent and as Seller's Agent


                                 By: ___________________________________________
                                 Name:: ________________________________________
                                 Title: ________________________________________


                                 Address:

                                 3 Coliseum Centre
                                 2550 West Tyvola Road
                                 Charlotte, North Carolina  28217
                                 Attention:  Thomas B. Jones, Jr.,
                                             Treasury Department
                                 Facsimile No.:  (704) 423-7069


                                 Account Information:

                                 _____________________

                                 [INSERT OTHER SELLERS]

PURCHASER:                       COLTEC NORTH CAROLINA INC

                                 By: ___________________________________________
                                 Name:: ________________________________________
                                 Title: ________________________________________


                                 Address:

                                 3 Coliseum Centre
                                 2550 West Tyvola Road
                                 Charlotte, North Carolina  28217
                                 Attention:  Thomas B. Jones, Jr.,
                                             Treasury Department
                                 Facsimile No.:  (704) 423-7069



<PAGE>



                                    EXHIBIT A

                   FORM OF OPINION OF COUNSEL FOR THE SELLERS







<PAGE>


                                    EXHIBIT B

                          CREDIT AND COLLECTION POLICY



<PAGE>



                                    EXHIBIT C

                                 LOCK-BOX BANKS


Bank Name                                           Contains Collections of
and Address                  Account No.            Securitized Receivables
-----------                  -----------            -----------------------



<PAGE>


                                                                    Attachment 1
                                                                              To
                                                        Receivables Transfer and
                                                        Administration Agreement

                            [FORM OF SALE ASSIGNMENT]

     SALE ASSIGNMENT, dated as of ______________ ___ 19___, between [SELLER]
(the "Seller") and Coltec North Carolina Inc ("CNCI").

     1. We refer to the Receivables Transfer and Administration Agreement, dated
as of September _, 1997, by and among Coltec Industries Inc, the Seller, certain
affiliates of Coltec Industries Inc and CNCI (the "Agreement"). All provisions
of the Agreement are incorporated herein by reference. All capitalized terms
shall have the meanings set forth in the Agreement.

     2. The Seller does hereby sell, transfer, absolutely assign, set over
and convey to CNCI, without recourse, all right, title and interest of the
Seller in and to all Receivables from time to time arising and owned by the
Seller.

     3. The Seller does hereby make the representations and warranties referred
to in Section 4.01 of the Agreement with respect to each Purchased Receivable
with full force and effect as if fully set forth herein.

     IN WITNESS WHEREOF, the parties have caused this Sale Assignment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                    [SELLER]

                                     By: _________________________________
                                     Name:
                                     Title:


                                     COLTEC NORTH CAROLINA INC

                                     By: _________________________________
                                     Name:
                                     Title:



                                       


<PAGE>


                                                                Schedule 4.01(n)



                               List of Tradenames


                                       3

<PAGE>



SELLERS:                             AMI INDUSTRIES, INC., as a Seller


                                     By: _______________________________________
                                     Name: _____________________________________
                                     Title: ____________________________________


                                     Address:

                                     ___________________________________________
                                     Attention: ________________________________
                                     Facsimile No.: (___) ___-____


                                     Account Information:

                                     ____________________






                                     COLTEC CANADA INC, as a Seller


                                     By: _______________________________________
                                     Name: _____________________________________
                                     Title: ____________________________________


                                     Address:

                                     ___________________________________________
                                     Attention: ________________________________
                                     Facsimile No.: (___) ___-____



                                     Account Information:

                                     ____________________




                                       4
<PAGE>


                                     COLTEC INDUSTRIAL PRODUCTS, as a Seller


                                     By: _______________________________________
                                     Name: _____________________________________
                                     Title: ____________________________________


                                     Address:

                                     ___________________________________________
                                     Attention: ________________________________
                                     Facsimile No.: (___) ___-____


                                     Account Information:

                                     ____________________


                                     DELAVAN-DELTA INC, as a Seller


                                     By: _______________________________________
                                     Name: _____________________________________
                                     Title: ____________________________________


                                     Address:

                                     ___________________________________________
                                     Attention: ________________________________
                                     Facsimile No.: (___) ___-____


                                     Account Information:

                                     ____________________



                                       5

<PAGE>


                                     DELAVAN INC, as a Seller


                                     By: _______________________________________
                                     Name: _____________________________________
                                     Title: ____________________________________


                                     Address:

                                     ___________________________________________
                                     Attention: ________________________________
                                     Facsimile No.: (___) ___-____


                                     Account Information:

                                     ____________________



                                     GARLOCK BEARINGS INC, as a Seller


                                     By: _______________________________________
                                     Name: _____________________________________
                                     Title: ____________________________________


                                     Address:

                                     ___________________________________________
                                     Attention: ________________________________
                                     Facsimile No.: (___) ___-____


                                     Account Information:

                                     ____________________




                                       6
<PAGE>


                                     GARLOCK INC, as a Seller


                                     By: _______________________________________

                                     Name: _____________________________________
                                     Title: ____________________________________


                                     Address:

                                     ___________________________________________
                                     Attention: ________________________________
                                     Facsimile No.: (___) ___-____


                                     Account Information:

                                     ____________________




                                     HOLLEY PERFORMANCE PRODUCTS, as a
                                     Seller


                                     By: _______________________________________
                                     Name: _____________________________________
                                     Title: ____________________________________


                                     Address:

                                     ___________________________________________
                                     Attention: ________________________________
                                     Facsimile No.: (___) ___-____


                                     Account Information:

                                     ____________________




                                       7
<PAGE>

                                     MENASCO AEROSYSTEMS INC, as a Seller


                                     By: _______________________________________
                                     Name: _____________________________________
                                     Title: ____________________________________


                                     Address:


                                     ___________________________________________
                                     Attention: ________________________________
                                     Facsimile No.: (___) ___-____


                                     Account Information:

                                     ____________________


                                     STEMCO INC, as a Seller


                                     By: _______________________________________
                                     Name: _____________________________________
                                     Title: ____________________________________


                                     Address:

                                     ___________________________________________
                                     Attention: ________________________________
                                     Facsimile No.: (___) ___-____


                                     Account Information:

                                     ____________________




                                       8
<PAGE>


                                     WALBAR INC, as a Seller


                                     By: _______________________________________
                                     Name: _____________________________________
                                     Title: ____________________________________



                                     Address:

                                     ___________________________________________
                                     Attention: ________________________________
                                     Facsimile No.: (___) ___-____


                                     Account Information:

                                     ____________________



                                       9

<PAGE>


     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

SELLERS:                         COLTEC INDUSTRIES INC, as a Seller,
                                 as Collection Agent, and as Sellers' Agent


                                 By:____________________________________________
                                 Name:__________________________________________
                                 Title:_________________________________________


                                 Address:

                                 3 Coliseum Centre
                                 2550 West Tyvola Road
                                 Charlotte, North Carolina 28217
                                 Attention:  Thomas B. Jones, Jr.,
                                             Treasury Department
                                 Facsimile No.:  (704) 423-7069


                                 Account Information:


                                 ______________


PURCHASER:                       COLTEC NORTH CAROLINA INC


                                 By:____________________________________________
                                 Name:__________________________________________
                                 Title:_________________________________________



                                 Address:

                                 3 Coliseum Centre
                                 2550 West Tyvola Road
                                 Charlotte, North Carolina 28217
                                 Attention:  Thomas B. Jones, Jr.,
                                             Treasury Department
                                 Facsimile No.:  (704) 423-7069


                                 Account Information:


                                 ______________

                                       10