Document:

Ex-10.1 Second Amendment to Credit Agreement

 

Exhibit 10.1

SECOND AMENDMENT

TO CREDIT AGREEMENT

     This SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) dated as of
November 4, 2003 is among each of the parties named as a Borrower on the
signature pages hereto (collectively, the “Borrowers”; each, individually, a
“Borrower”), the financial institutions party hereto (the “Lenders”), and Bank
of America., N.A., for itself and as agent for the Lenders (the “Agent”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Credit Agreement defined below.

RECITALS:

     A.     The Agent and the Lenders are parties to that certain Credit Agreement
dated as of May 16, 2002, as amended, supplemented, restated or otherwise
modified from time to time (the “Credit Agreement”), among the Borrowers, the
Agent and the Lenders.

     B.     The Borrowers, the Agent and the Lenders have agreed to certain
amendments to the Credit Agreement as described herein and subject to the terms
and conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and for other good and valuable consideration, the receipt, adequacy
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

     1.     Amendments to Credit Agreement. Subject to the terms and conditions
contained in Section 3 herein:

     (a)  The Credit Agreement is hereby amended by deleting Section 2.5 and
replacing it with the following:

		
	 	     2.5 Unused Line Fee. On the first day of each month and on the
Termination Date the Borrowers agree to pay to the Agent, for the
account of the Lenders, in accordance with their respective Pro Rata
Shares, an unused line fee (the “Unused Line Fee”) equal to the
Applicable Unused Line Rate per annum times the amount by which the
Maximum Revolver Amount exceeded the sum of the average daily
outstanding amount of Revolving Loans and the average daily undrawn
face amount of outstanding Letters of Credit during the immediately
preceding month or shorter period if calculated on the Termination
Date. The Unused Line Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed. All principal
payments received by the Agent shall be deemed to be credited to the
Borrowers’ Loan Accounts immediately upon receipt for purposes of
calculating the Unused Line Fee pursuant to this Section 2.5.

     (b)  The Credit Agreement is hereby amended by deleting Section 5.2(e) and
replacing it with the following:

 

 

		
	 	     (e) No later than sixty (60) days after the beginning of each
Fiscal Year, annual forecasts (to include forecasted consolidated
and consolidating (by business unit) balance sheets, income
statements and cash flow statements) for each Borrower and its
Subsidiaries as at the end of and for each month of such Fiscal
Year.

     (c)  The Credit Agreement is hereby amended by deleting Section 5.2(j) and
replacing it with the following:

		
	 	     (j) As soon as available, but in any event (i) at any time
that the Excess Availability shall be greater than $30,000,000,
within fifteen (15) days after the end of each month (for such
month) and (ii) at any time that the Excess Availability shall be
equal to or less than $30,000,000, within four (4) Business Days
after the end of each calendar week, a Borrowing Base Certificate
and supporting information in accordance with Section 9 of the
Security Agreement.

     (d)  The Credit Agreement is hereby amended by deleting Section 5.3(b) and
replacing it with the following:

		
	 	     (b) Immediately after becoming aware of the assertion by the
holder of any Debt of Parent, any Borrower or any Subsidiary in a
face amount in excess of $5,000,000 that a default exists with
respect thereto or that the Parent, any Borrower or such Subsidiary
is not in compliance with the terms thereof;

     (e)  The Credit Agreement is hereby amended by deleting Section 5.3(h) and
replacing it with the following:

		
	 	     (h) Immediately after receipt of any written notice that the
Parent, any Borrower or any of their respective Subsidiaries is or
may be liable to any Person as a result of the Release or
threatened Release of any Contaminant or that the Parent, any
Borrower or any of their respective Subsidiaries is subject to
investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to the Release or threatened
Release of any Contaminant which, in either case, is reasonably
likely to give rise to liability in excess of $5,000,000;

     (f)  The Credit Agreement is hereby amended by deleting Section 5.3(j) and
replacing it with the following:

		
	 	     (j) Any change in the Parent’s, any Borrower’s or any
Guarantors’ name as it appears in the state of its incorporation
or other organization, state of incorporation or organization,
type of entity, organizational identification number, locations
where Collateral is located (other than (A) consignments of
Inventory in the ordinary course of business not to exceed
$2,000,000 at any one time, (B) other Inventory having an
aggregate value of less than $2,000,000 and (C) other immaterial
portions of the Collateral), or form of organization, trade names
under which any Borrower will sell Inventory or create Accounts,
or to which instruments in payment of Accounts may be made
payable, in each case at least thirty (30) days prior thereto;

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     (g)  The Credit Agreement is hereby amended by deleting Section 5.3(l) and
replacing it with the following:

		
	 	     (l) Upon request, or, in the event that such filing reflects a
material change with respect to the matters covered thereby, within
three (3) Business Days after the filing thereof with the PBGC, the
DOL or the IRS, as applicable, copies of the following: (i) each
annual report (form 5500 series), including Schedule B thereto,
filed with the PBGC, the DOL or the IRS with respect to each Plan,
(ii) a copy of each funding waiver request filed with the PBGC, the
DOL or the IRS with respect to any Plan and all communications
received by the Borrower or any ERISA Affiliate from the PBGC, the
DOL or the IRS any respect to such request, and (iii) a copy of
each other filing or notice filed with the PBGC, the DOL or the
IRS, with respect to each Plan by either any Borrower or any ERISA
Affiliate;

     (h)  The Credit Agreement is hereby amended by deleting Section 5.3(n) and
replacing it with the following:

		
	 	     (n) Within three (3) Business Days after the occurrence
thereof: (i) any changes in the benefits of any existing Plan which
increase the Parent’s any Borrower’s or any of their respective
Subsidiaries’ annual costs with respect thereto by an amount in
excess of $5,000,000, or the establishment of any new Plan or the
commencement of contributions to any Plan to which any Borrower or
any ERISA Affiliate was not previously contributing; or (ii) any
failure by any Borrower or any ERISA Affiliate to make a required
installment or any other required payment under Section 412 of the
Code on or before the due date for such installment or payment;

     (i)  The Credit Agreement is hereby amended by adding the following new
Section 5.3(p):

		
	 	     (p) Promptly after any Borrower has notified the Agent of any
intention by any Borrower to treat the Loans and/or Letters of
Credit as being a “reportable transaction” (within the meaning of
Treasury Regulation Section 1.6011-4), a duly completed copy of IRS
Form 8886 or any successor form.

     (j)  The Credit Agreement is hereby amended by deleting Section 6.19(c) and
replacing it with the following:

		
	 	     (c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability
in excess of the Maximum Unfunded Amount; (iii) no Borrower nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) no Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 or 4243
of ERISA with respect to a Multi-employer Plan; and (v) no Borrower

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	 	nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069(a) or 4212(c) of ERISA.

     (k)  The Credit Agreement is hereby amended by adding the following new
Section 6.31:

		
	 	     6.31 Tax Shelter Regulations. The Borrowers do not intend to
treat the Loans and/or Letters of Credit as being a “reportable
transaction” (within the meaning of Treasury Regulation Section
1.6011-4). In the event any Borrower determines to take any action
inconsistent with such intention, it will promptly notify the Agent
thereof. If any Borrower so notifies the Agent, the Borrowers
acknowledge that one or more of the Lenders may treat its Loans
and/or its interest in Non-Ratable Loans and/or Agent Advances
and/or Letters of Credit as part of a transaction that is subject
to Treasury Regulation Section 301.6112-1, and such Lender or
Lenders, as applicable, will maintain the lists and other records
required by such Treasury Regulation.

     (l)  The Credit Agreement is hereby amended by deleting Section 7.4(b) and
replacing it with the following:

		
	 	     (b) Each Borrower shall permit representatives and independent
contractors of the Agent (at the expense of the Borrowers) to visit
and inspect any of its properties, to examine its corporate,
financial and operating records, and make copies thereof or
abstracts therefrom and to discuss its affairs, finances and
accounts with its directors, officers and independent public
accountants, at such reasonable times during normal business hours
and as soon as may be reasonably desired, upon reasonable advance
notice to the Funds Administrator; provided, however, (i) if no
Revolving Loans are outstanding under this Agreement at any time
during a twelve month period, then the Borrowers shall only be
responsible for the expense of one field examination conducted
during such period, and (ii) when an Event of Default exists, the
Agent or any Lender may do any of the foregoing at the expense of
the Borrowers at any time during normal business hours and without
advance notice.

     (m)  The Credit Agreement is hereby amended by deleting Section 7.6 and
replacing it with the following:

		
	 	     7.6 Insurance and Condemnation Proceeds. The Borrowers
(through the Funds Administrator) shall promptly notify the Agent
and the Lenders of any loss, damage, or destruction to the
Collateral in excess of $3,000,000, whether or not covered by
insurance. The Agent is hereby authorized to collect all insurance
and condemnation proceeds in respect of Collateral directly and to
apply or remit them as follows:

		
	 	     (i) With respect to insurance and condemnation proceeds
relating to Collateral other than Collateral consisting of
Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such
proceeds,

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	 	ratably, to the reduction of the Obligations in the
order provided for in Section 3.8.
	 
	 	     (ii) With respect to insurance and condemnation proceeds
relating to Collateral consisting of Core Fixed Assets, the
Agent shall permit or require the Borrowers to use such
proceeds, or any part thereof, to replace, repair, restore or
rebuild the relevant Core Fixed Assets in a diligent and
expeditious manner with materials and workmanship of
substantially the same quality as existed before the loss,
damage or destruction so long as (1) no Default or Event of
Default has occurred and is continuing, and (2) Excess
Availability shall be greater than $15,000,000 at the time of
Borrowers’ receipt thereof. If at the time of the receipt of
any such insurance and condemnation proceeds either (1) a
Default or Event of Default has occurred and is continuing or
(2) Excess Availability shall not be greater than
$15,000,000, then such funds shall be paid to the Agent and
the Agent shall apply such insurance and condemnation
proceeds, ratably, to the reduction of the Obligations in the
order provided for in Section 3.8. As used herein, “Core
Fixed Assets” means Fixed Assets of the Borrowers that are
necessary to the continued operation of one or more of the
core businesses of the Borrowers.
	 
	 	     (iii) With respect to insurance and condemnation
proceeds relating to Collateral consisting of Fixed Assets
that are not Core Fixed Assets, the Agent shall permit the
Borrowers to use such proceeds, or any part thereof, for such
purpose as the Borrowers shall determine, provided that such
purpose is permitted under this Agreement, so long as no
Default or Event of Default has occurred and is continuing.
If at the time of the receipt of any such insurance and
condemnation proceeds a Default or Event of Default has
occurred and is continuing, then such funds shall be paid to
the Agent and the Agent shall apply such insurance and
condemnation proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 3.8.

     (n)    The Credit Agreement is hereby amended by deleting Section 7.9 and
replacing it with the following:

		
	 	       7.9 Mergers, Consolidations or Sales. No Borrower nor any of
their respective Subsidiaries shall enter into any transaction of
merger, reorganization, or consolidation, or transfer, sell, assign,
lease, or otherwise dispose of all or any part of its property, or
wind up, liquidate or dissolve, or agree to do any of the foregoing,
except for (i) sales of Inventory and licenses or leases of any
Proprietary Rights in the ordinary course of its business (provided
that no such license or lease shall be on an exclusive basis, if the
Proprietary Rights which are the subject thereof are necessary or
desirable to enable the Agent to sell, dispose, or complete
manufacture of, or otherwise exercise its rights with respect to,
any Collateral), (ii) sales or other dispositions of Equipment in
the ordinary course of business that are obsolete or no longer used
by Borrower in its business, (iii) so long as no Default or Event of Default shall
have occurred and be continuing at the time thereof, Permitted

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	 	Dispositions, (iv) so long as no Default or Event of Default shall
have occurred and be continuing at the time thereof, sales or other
dispositions of Fixed Assets (including Fixed Assets which
constitute Collateral) for fair market value, provided, that, (A)
Excess Availability shall be greater than $30,000,000 immediately
before and after any such sale or disposition, and (B) the aggregate
amount of all such sales and dispositions after the Closing Date
(excluding sales and dispositions permitted under clause (v) below)
shall not exceed $50,000,000, and (v) sales or other dispositions of
Fixed Assets which do not constitute Collateral by Foreign
Subsidiaries for fair market value. In addition to the foregoing,
any Borrower may merge with any other Borrower, any Subsidiary of
any Borrower may merge or consolidate with or into any Borrower, and
any Subsidiary of any Borrower may merge with any Subsidiary of such
Borrower or any other Borrower so long as (i) the surviving Person
in any such merger shall be a Wholly-Owned Subsidiary of the Parent
and (ii) in no event whatsoever shall any of Garlock Sealing,
Garrison or any Dormant Subsidiary be a party to any such merger or
consolidation.

     (o)  The Credit Agreement is hereby amended by deleting Section 7.10 and
replacing it with the following:

		
	 	     7.10 Distributions; Restricted Investments. (a) None of the
Parent, any Borrower nor any of their respective Subsidiaries shall
directly or indirectly declare or make, or incur any liability to
make, any Distribution, except (i) Distributions to a Borrower by
its Subsidiaries or by any such Subsidiary to any other Subsidiary
(provided that no Borrower nor any Subsidiary Guarantor may declare
or pay any Distribution to any Person that is not a Borrower or a
Subsidiary Guarantor), (ii) so long as no Default or Event of
Default shall have occurred and be continuing at the time of such
Distribution, Distributions from any Borrower or any Subsidiary of
any Borrower to the Parent in an amount during any twelve (12) month
period, which when added to all other amounts received by the Parent
during such period from any Borrower or any Subsidiary of any
Borrower from any source (including, without limitation, payments on
any Debt of such Borrower or any of their respective Subsidiaries
held by the Parent, but excluding Distributions received by the
Parent in accordance with clauses (iii) and (iv) below) shall not
exceed 120% of the Parent’s actual operating expenses during such
period, (iii) so long as no Default or Event of Default shall have
occurred and be continuing at the time of declaration or after
giving effect to the payment thereof, (A) the Parent may make
Distributions to the extent that, after giving effect thereto,
Excess Availability shall be at least $30,000,000, and (B) the
Borrowers and their Subsidiaries may make Distributions to the
Parent in the amount of, and concurrently with, the Distribution
permitted to be made by the Parent under clause (A) above in order
to enable the Parent to make such Distribution, and (iv) so long as
no Default or Event of Default shall have occurred and be continuing
at the time of declaration or after giving effect to the payment
thereof, the Borrowers and their Subsidiaries may make Distributions
to the Parent in the amount of, and concurrently with, any
Permitted Restricted Investment or Permitted Foreign Subsidiary
Investment permitted to be made by the Parent under Section 7.10(b)
in order to enable the Parent to make such Permitted Restricted
Investment or Permitted Foreign Subsidiary Investment.

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	 	     (b) None of the Parent, any Borrower nor any of their
respective Subsidiaries shall directly or indirectly declare or
make, or incur any liability to make, any Restricted Investment
other than (i) Permitted Restricted Investments, (ii) Permitted
Foreign Subsidiary Investments, (iii) Permitted Excess Collateral
Provider Loans, (iv) Debt among the Borrowers and their respective
Subsidiaries to the extent expressly permitted by Section 7.13(b),
(d), (e) and (f), and (v) Permitted Purchase Money Acquisitions.

     (p)  The Credit Agreement is hereby amended by deleting Section 7.12 and
replacing it with the following:

		
	 	     7.12 Guaranties. None of Parent, any Borrower nor any of
their respective Subsidiaries shall make, issue, or become liable
on any Guaranty, except (i) Guaranties of the Obligations in favor
of the Agent, (ii) unsecured Guaranties by the Parent, any Borrower
or any of their respective Subsidiaries (other than Garlock Sealing
or Garrison) with respect to Debt of the Parent, any Borrower or
any such Subsidiary in an aggregate outstanding principal amount
not to exceed $20,000,000, provided that the aggregate outstanding
principal amount of Debt guaranteed by the Borrowers and their
Subsidiaries shall not exceed $5,000,000 of such $20,000,000 limit,
(iii) unsecured Guaranties entered into by the Parent in the
ordinary course of business guaranteeing obligations and/or
liabilities not constituting Debt of any Borrower or any Borrower’s
respective Subsidiaries and (iv) to the extent permitted under
Section 7.13(b), other unsecured Guaranties and related obligations
in existence as of the Closing Date and arising from discontinued
operations.

     (q)  The Credit Agreement is hereby amended by deleting clauses (g) and (h)
of Section 7.13 and replacing such clauses with the following:

		
	 	     (g) unsecured Debt of the Borrowers (or any Borrower) in an
aggregate principal amount for all Borrowers not to exceed
$20,000,000 so long as the payment of such Debt is subordinated to
the Obligations on terms and conditions satisfactory to the
Required Lenders; (h) Debt evidencing a refunding, renewal or
extension of the Debt described on Schedule 6.9; provided that (i)
the principal amount thereof is not increased, (ii) the Liens, if
any, securing such refunded, renewed or extended Debt do not attach
to any assets in addition to those assets, if any, securing the
Debt to be refunded, renewed or extended, (iii) no Person that is
not an obligor or guarantor of such Debt as of the Closing Date
shall become an obligor or guarantor thereof, and (iv) the terms of
such refunding, renewal or extension are no less favorable in any
material respect to the applicable Borrower, the Agent or the
Lenders than the original Debt (other than increases in interest
rates to reflect the then current market interest rates, provided
that such interest rate may not exceed 125% of the interest rate on such original Debt) or
are otherwise acceptable to the Agent;

     (r)  The Credit Agreement is hereby amended by deleting Section 7.14 and
replacing it with the following:

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	 	     7.14 Prepayment. No Borrower nor any of its Subsidiaries shall
voluntarily prepay or repurchase any Debt, except (i) the
Obligations in accordance with the terms of this Agreement, (ii)
payments with respect to Debt owing to or from any Borrower or its
respective Subsidiaries to any other Borrower or its respective
Subsidiaries, to the extent such payment is permitted pursuant to
the terms of the Intercompany Subordination Agreement, and (iii)
payments and repurchases of the TIDES and other Debt listed on
Schedule 6.9 if (A) at the time of any such prepayment or repurchase
no Default or Event of Default shall have occurred and be
continuing, and (B) after giving effect to any such prepayment
Excess Availability shall exceed $30,000,000.

     (s)  The Credit Agreement is hereby amended by deleting clause (iii) in the
last sentence of Section 7.15 and replacing it with the following:

		
	 	     (iii) enter into transactions expressly permitted by the terms
of Sections 7.9, 7.10, 7.12, 7.13 and 7.14, and

     (t)  The Credit Agreement is hereby amended by deleting each reference to
“Aggregate Availability” in Sections 7.22, 7.23 and 7.25 and replacing each
such reference with “Excess Availability”.

     (u)  The Credit Agreement is hereby amended by deleting clauses (d), (k)
and (o) of Section 9.1 and replacing them with the following:

		
	 	     (d) any default shall occur or exist with respect to any
Debt (other than the Obligations) of the Parent, any Borrower or
any of their respective Subsidiaries in an outstanding principal
amount which exceeds $2,000,000, if Excess Availability is equal
to or less than $30,000,000, or which exceeds $7,500,000, if
Excess Availability is greater than $30,000,000, or under any
agreement or instrument under or pursuant to which any such Debt
may have been issued, created, assumed, or guaranteed by the
Parent, any Borrower or any of their respective Subsidiaries, and
such default shall continue for more than the period of grace, if
any, therein specified, if the effect thereof (with or without
the giving of notice or further lapse of time or both) is to
accelerate, or to permit the holders of any such Debt to
accelerate, the maturity of any such Debt; or any such Debt shall
be declared due and payable or be required to be prepaid (other
than by a regularly scheduled required prepayment) prior to the
stated maturity thereof; or the Parent, any Borrower or any of
their respective Subsidiaries shall default beyond any applicable
grace period in the payment of principal of, or interest on, any
such Debt when due (whether at the final maturity thereof or
otherwise);
	 
	 	     (k) one or more judgments, orders, decrees or arbitration
awards is entered against the Parent, any Borrower or any of
their respective Subsidiaries involving in the aggregate
liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as
to any single or related or unrelated series of transactions,
incidents or conditions, of $2,000,000 or more, if Excess
Availability is equal to or less than $30,000,000, or $7,500,000

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	 	or more, if Excess Availability is greater than $30,000,000, and
the same shall remain unsatisfied, unvacated and unstayed pending
appeal for a period of thirty (30) days after the entry thereof;

		
	 	     (o) an ERISA Event shall occur with respect to a Pension
Plan or Multi-employer Plan which has resulted or could
reasonably be expected to result in liability of any Borrower
under Title IV of ERISA to the Pension Plan, Multi-employer Plan
or the PBGC in an aggregate amount in excess of $2,000,000; (ii)
the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds the Maximum Unfunded Amount; or
(iii) any Borrower or any ERISA Affiliate shall fail to pay when
due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multi-employer Plan in an
aggregate amount in excess of $2,000,000;

     (v)  The Credit Agreement is hereby amended by deleting the addresses for
notices to the Agent and Bank, and any Borrower and the Funds Administrator,
set forth in Section 13.8 and replacing them with the following:

	 	 	 
	If to the Agent or to the Bank:
	 	 	
Bank of America, N.A.
	 	 	
600 Peachtree Street
	 	 	
10th Floor
	 	 	
Atlanta, Georgia 30308
	 	 	
Attention: Byron J. Turner, III
	 	 	
Telecopy No.: 404-607-6437
	 	 	 
	If to any Borrower or the Funds Administrator:
	 	 	
Coltec Industries Inc
	 	 	
c/o EnPro Industries, Inc.
	 	 	
5605 Carnegie Boulevard, Suite 500
	 	 	
Charlotte, North Carolina 28209-4674
	 	 	
Attention: Treasurer
	 	 	
Telecopy No.: 704-731-1569

     (w)  The Credit Agreement is hereby amended by adding the following new
language at the end of Section 13.17(b):

		
	 	     Notwithstanding anything herein to the contrary, the
information subject to this Section 13.17(b) shall not include,
and the Agent and each Lender may disclose without limitation of
any kind, any information with respect to the “tax
treatment” and “tax structure” (in each case, within the
meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that are provided to
the Agent or such Lender relating to such tax treatment and tax
structure; provided that with respect to any document or similar
item that in either case contains information concerning the tax
treatment or tax structure of the

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	 	transactions as well as other
information, this sentence shall only apply to such portions of
the document or similar item that relate to the tax treatment or
tax structure of the Loans, Letters of Credit and transactions
contemplated hereby. Each Lender represents that it does not
intend to treat the Loans and/or Letters of Credit as being a
“reportable transaction” (within the meaning of Treasury
Regulation Section 1.6011-4) and agrees that, in the event such
Lender determines to take any action inconsistent with such
intention, it will promptly notify the Funds Administrator and
the Agent thereof.

     (x)  The definitions of “Applicable Margin”, “Applicable Unused Line Rate”,
“Borrowing Base”, “Capital Expenditures”, “Facility Usage”, “Fixed Assets”,
“Fixed Charges”, “Permitted Dispositions”, “Permitted Foreign Subsidiary
Investments”, “Permitted Restricted Investment” and “Restricted Investment”
set forth in Annex A to the Credit Agreement are hereby amended by amending and
restating such definitions in their entirety to read as follows:

		
	 	     “Applicable Margin” means

		
	 	     (i) with respect to Base Rate Loans and all other
Obligations under this Agreement or any other Loan Document
(other than LIBOR Rate Loans), 1.50%; and

		
	 	     (ii) with respect to LIBOR Rate Loans, 2.75%.

		
	 	     The Applicable Margins shall be adjusted (up or down)
prospectively on a quarterly basis as determined by the
consolidated financial performance of Parent and its consolidated
Subsidiaries, commencing with the first day of the first calendar
month that occurs more than five days after delivery of Parent’s
and its consolidated Subsidiaries’ quarterly Financial Statements
to the Lenders for the fiscal quarter ending September 27, 2003.
Adjustments in Applicable Margins shall be determined by
reference to the following grids:

	 	 	 	 	 	 	 	 	 
	If the Funded Debt to EBITDA	 	Base Rate Loans	 	LIBOR Rate Loans
	Ratio is:	 	Applicable Margin	 	Applicable Margin
	
	 	
	 	

	Greater than 3.35 to 1.0
	 	 	1.50	%	 	 	2.50	%
	Less than or equal to 3.35 to 1.0
but greater than 2.75 to 1.0
	 	 	1.00	%	 	 	2.00	%
	Less than or equal to 2.75 to 1.0
	 	 	0.75	%	 	 	1.50	%

		
	 	     All adjustments in the Applicable Margins after the
adjustment for the fiscal quarter ending September 27, 2003 shall
be implemented quarterly on a prospective basis, for each
calendar month commencing at least five days after the date of
delivery to the Lenders of quarterly unaudited or annual audited
(as applicable) Financial Statements evidencing the need for an
adjustment, based on

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	 	the Funded Debt to EBITDA Ratio as of the
applicable fiscal quarter end. Concurrently with the delivery of
those Financial Statements, the Borrowers shall deliver to the
Agent and the Lenders a certificate, signed by a Responsible
Officer, setting forth in reasonable detail the basis for the
continuance of, or any change in, the Applicable Margins. In the
event that, subsequent to the setting of the Applicable Margins
based on the unaudited Financial Statements as of the end of the
last fiscal quarter of any Fiscal Year, the Borrowers deliver
audited Financial Statements as of the end of such Fiscal Year
and such audited Financial Statements call for a higher pricing
level set forth in the foregoing grid, such higher pricing level
shall apply retroactively to the date of the setting of the
Applicable Margins based on such unaudited Financial Statements.
At the election of the Agent or the Required Lenders, failure to
timely deliver such Financial Statements shall, in addition to
any other remedy provided for in this Agreement, result in an
increase in the Applicable Margins to the highest level set forth
in the foregoing grid, until the first day of the first calendar
month following the delivery of those Financial Statements
demonstrating that such an increase is not required. If a
Default or Event of Default has occurred and is continuing at the
time any reduction in the Applicable Margins is to be
implemented, no reduction may occur until the first day of the
first calendar month following the date on which such Default or
Event of Default is waived or cured.

		
	 	     “Applicable Unused Line Rate” means for any month (i)
three-quarters of one percent (0.75%) if Facility Usage is less
than or equal to 33.3%, (ii) one-half of one percent (0.50%) if
Facility Usage is greater than 33.3% and less than or equal to
66.7% and (iii) one-quarter of one percent (0.25%) if Facility
Usage is greater than 66.7%.

		
	 	     “Borrowing Base” means, at any time (i) with respect to
Garlock Sealing the Garlock Sealing Borrowing Base and (ii) with
respect to an Excess Collateral Provider, the Excess Collateral
Providers Borrowing Base. At any time that Excess Availability
shall be less than $15,000,000, until such time as the Agent
shall have received an updated Borrowing Base Certificate, all
amounts transferred to the Agent pursuant to the requirements of
Section 3.3(b) shall reduce the applicable Borrowing Base as
determined based upon the most recently delivered Borrowing Base
Certificate on a dollar for dollar basis.

		
	 	     “Capital Expenditures” means all payments due (whether or
not paid during any fiscal period) in respect of the cost of any
fixed asset or improvement, or replacement, substitution, or
addition thereto, which has a useful life of more than one year,
including, without limitation, those costs arising in connection
with the direct or indirect acquisition of such asset by way of
increased product or service charges or in connection with a
Capital Lease; provided, however, that (a)
the portion of the purchase price for any Permitted
Restricted Investment that is allocable to fixed assets purchased
pursuant to such Permitted Restricted Investment shall not
constitute a “Capital Expenditure”, and (b) the amount of Capital
Expenditures by any Borrower (or, in the case of any Borrower
that consists of more than one division, by any division of such
Borrower) during any

11

 

		
	 	fiscal period shall be reduced by the amount
of sales proceeds (net of taxes, commissions, fees and other
transaction costs and expenses) received by such Borrower (or
division) during such period from its sale of fixed assets (other
than pursuant to a Permitted Disposition) to the extent permitted
under the Agreement, but in no event shall such amount be less
than zero.

		
	 	     “Facility Usage” means for any month, a fraction expressed
as a percentage equal to the average daily outstanding amount of
Revolving Loans and average daily undrawn face amount of
outstanding Letters of Credit during such month divided by the
Maximum Revolver Amount.

		
	 	     “Fixed Assets” means the Equipment and Real Estate of the
Borrowers and their Subsidiaries.

		
	 	     “Fixed Charges” means, with respect to any fiscal period of
Parent and its consolidated Subsidiaries on a consolidated basis,
without duplication, (a) interest expense, plus (b) Capital
Expenditures (excluding Capital Expenditures funded with Debt
other than Revolving Loans, but including, without duplication,
principal payments with respect to such Debt), plus (c) scheduled
principal payments of Debt, plus (d) Federal, state, local and
foreign income taxes (excluding deferred taxes), plus (e)
payments, administrative expenses and defense costs (net of
insurance reimbursements received) relating to asbestos claims
and litigation against any Borrower or its Subsidiaries, plus (f)
all Distributions by the Parent made during such fiscal period,
but only to the extent that, at any time prior to such
Distribution, either (i) average daily Excess Availability of the
Borrowers during any fiscal month (as determined by the Agent)
was equal to or less than $30,000,000 or (ii) Excess Availability
on any day was equal to or less than $15,000,000.

		
	 	     “Permitted Dispositions” means Dispositions for fair market
value generating aggregate cash proceeds in an amount not to
exceed (i) with respect to all such Dispositions during any
twelve (12) month period, fifteen percent (15%) of the
consolidated net assets of the Borrowers and their Subsidiaries
taken as a whole as of the first day of such twelve (12) month
period and (ii) with respect to all such Dispositions from and
after the Closing Date, thirty percent (30%) of the consolidated
net assets of the Borrowers and their Subsidiaries taken as a
whole as of the Closing Date.

		
	 	     “Permitted Foreign Subsidiary Investments” means (i) Debt
owing from any Borrower or Domestic Subsidiary to any Foreign
Subsidiary so long as such Debt is subordinated to the
Obligations and all other amounts owing under the Loan Documents
(on terms and conditions satisfactory to the Required Lenders),
(ii) any Debt owing from any Foreign Subsidiary to any
Borrower (or any Borrower’s Domestic Subsidiary) or any capital
contribution made by any Borrower (or any Borrower’s Domestic
Subsidiary) in any Foreign Subsidiary which is incurred or made
after the Closing Date, so long as prior to and after the
incurrence of such Debt or the making of such capital
contribution, no Default or

12

 

		
	 	Event of Default shall exist and
Excess Availability is in excess of $30,000,000, and (iii) Debt
of any Foreign Subsidiary set forth on Schedule 6.9, but not any
refinancing or refunding thereof.

		
	 	     “Permitted Restricted Investment” means an acquisition by
the Parent, a Borrower or any of their Subsidiaries (other than a
Dormant Subsidiary) of (a) all or substantially all of the assets
of any other Person (or a division of any other Person) in a line
of business permitted to be engaged in by the Borrowers and their
Subsidiaries pursuant to Section 7.17, or (b) all of the capital
stock or other equity interests of any other Person in a line of
business permitted to be engaged in by the Borrowers and their
Subsidiaries pursuant to Section 7.17 (provided that, in the case
of any stock or equity acquisition, the Agent shall be satisfied
in its reasonable judgment with the current and potential
liabilities of the Person to be acquired, and the Borrowers shall
provide the Agent such information as the Agent may reasonably
request in order to make such judgment), and, in either case,
with respect to which (i) after giving effect thereto, Excess
Availability shall be at least $30,000,000, (ii) prior to and
after giving effect to such acquisition no Default or Event of
Default shall have occurred and be continuing, and (iii) in the
event a new Domestic Subsidiary of the Parent is formed or
acquired in connection therewith, (A) such new Subsidiary shall,
prior to or concurrently with such acquisition, execute all such
agreements, documents and instruments as the Agent may request to
either guaranty the Obligations or, with the Agent’s consent,
become a “Borrower” and “Excess Collateral Provider” under the
Agreement, and to pledge all of its personal property assets (and
to the extent the provisions of Section 7.25 shall be applicable
all of its Real Estate) as security therefor, (B) the owner of
such new Subsidiary shall pledge all (or in the case of a foreign
Subsidiary that is owned directly by a Domestic Subsidiary, 65%)
of the issued and outstanding equity securities of such new
Subsidiary as additional security for the Obligations, and (C)
the Parent, the Borrowers and such new Subsidiary shall execute
and deliver such opinions, certificates and other documents as
the Agent may request in connection with the foregoing clauses
(A) and (B). In no event shall (i) any assets of any such new
Subsidiary that becomes a “Borrower” hereunder be included in the
Borrowing Base, or any Loans be made to such new Subsidiary,
until the Agent is satisfied with the results of such field
examinations and other due diligence as the Agent may deem
appropriate with respect to such new Subsidiary, nor (ii) shall
any purchase described in this definition be permitted if as of
the last day of the last full fiscal month immediately prior to
any such purchase, the Borrowers shall not have been in
compliance with the Fixed Charge Coverage Ratio covenant set
forth in Section 7.23 hereof (without regard to any limitation on
the application of such covenant based on Excess Availability).
In addition to the foregoing, solely with the proceeds of its
cash on hand, any Foreign Subsidiary may acquire all or
substantially all of the assets of any other Person (or a
division of any other Person), or all of the capital stock or
other equity interests of any other Person, in a line of business
permitted to be engaged in by the Borrowers and its Subsidiaries
pursuant to Section 7.17.

13

 

		
	 	     “Restricted Investment” means, as to any Person, any
acquisition of property by such Person in exchange for cash or
other property, whether in the form of an acquisition of stock,
debt, or other indebtedness or obligation, or the purchase or
acquisition of any other property, or a loan, advance, capital
contribution, or subscription, except the following: (a)
acquisitions of Equipment or other assets (including licenses or
leases of Proprietary Rights) to be used in the business of such
Person so long as the acquisition costs thereof constitute
Capital Expenditures permitted hereunder; (b) acquisitions of
Inventory in the ordinary course of business of such Person; (c)
acquisitions of current assets acquired in the ordinary course of
business of such Person; (d) short term investments made in
conformity with the investment policies attached as Schedule
7.10, provided that (i) such direct or indirect obligations of
the United States of America or of the listed European
governments mature within one year from the date of acquisition
thereof and (ii) each other investment must mature not more than
one year from the date of creation thereof (or in the case of
money market and other funds, have an average maturity of not
more than one year) and be capable of being liquidated and
converted into readily available cash within ten Business Days at
any time without penalty in excess of the lesser of $500,000 or
2% of the amount of such investment); and (e) Hedge Agreements.

     (y)  Annex A to the Credit Agreement is hereby amended by adding the
following new definitions of “Excess Availability”, “Funded Debt” ,“Funded Debt
to EBITDA Ratio” and “Maximum Unfunded Amount”:

		
	 	     “Excess Availability” shall mean, at any time with respect
to the Borrowers, an amount equal to (a) the lesser of (i) the
Maximum Revolver Amount plus $5,000,000, and (ii) the sum of (A)
the Garlock Sealing Accounts and Inventory Borrowing Base, plus
(B) the Excess Collateral Providers Borrowing Base, minus (b) the
Aggregate Revolver Outstandings with respect to all Borrowers,
minus (c) without duplication, Reserves allocated by the Agent to
any of the Borrowers.

		
	 	     “Funded Debt” means (a) all principal of Debt under the
Agreement, and, without duplication, (b) (i) all Debt for money
borrowed, (ii) all Debt, whether or not in any such case the same
was for money borrowed, (A) represented by notes payable, and
drafts accepted, that represent extensions of credit, (B)
constituting obligations evidenced by bonds, debentures, notes or
similar instruments, or (C) upon which interest charges are
customarily paid or that was issued or assumed as full or partial
payment for property (other than trade credit that is incurred in
the ordinary course of business), (iii) all Debt that constitutes
an obligation under a Capital Lease, (iv) all Debt that is such
by virtue of clause (d) of the definition thereof, but only to
the extent that the obligations guaranteed are obligations that
would constitute Funded Debt, (v) the principal balance of
the TIDES, and (vi) all obligations and liabilities owing by the
Parent, any Borrower or any of their respective Subsidiaries at
any time under the Goodrich Indemnification Agreement.

14

 

		
	 	     “Funded Debt to EBITDA Ratio” means, with respect to any
fiscal quarter of the Parent and its consolidated Subsidiaries on
a consolidated basis, the ratio of (i) Funded Debt as of the last
day of such fiscal quarter to (ii) EBITDA for the four fiscal
quarter period ending as of the last day of such fiscal quarter.

		
	 	     “Maximum Unfunded Amount” means (a) at any time that Excess
Availability equals or exceeds $30,000,000, an amount of
$10,000,000, and (b) at all other times, an amount of $5,000,000.

     (z)  Annex A to the Credit Agreement is hereby amended by deleting the
definition of “Permitted Excess Expenditure Amount”.

     (aa)  Annex A to the Credit Agreement is hereby amended by deleting the
reference to “$2,000,000” in clause (a) of the definition of “Permitted Liens”
and replacing it with “$5,000,000.”

     (bb)  Schedules 1.2, 6.9, 6.16, and 6.19 to the Credit Agreement are hereby
amended by replacing such Schedules with the corresponding Schedules attached
to the Amendment.

     (cc)  Coltec has recently purchased all of the stock of Corrosion Control
Corporation, a Colorado corporation (“Corrosion Control”). The Borrowers agree
that, on or before January 1, 2004, the Borrowers shall (i) cause Corrosion
Control to become a “Borrower” under the Credit Agreement pursuant to a joinder
agreement in form and substance satisfactory to the Agent, and (ii) execute and
deliver, and cause Corrosion Control to execute and deliver, to the Agent such
guaranties, security agreements, pledge agreements, legal opinions, UCC
financing statements, and such other certificates and agreements that the Agent
may require in its discretion in connection with the joinder agreement
described above. The parties hereto agree that, at such time as the Borrowers
have complied with clauses (i) and (ii) above, the Credit Agreement shall be
deemed to be amended without any further action to include Corrosion Control as
a “Borrower” and “Excess Collateral Provider”, but that no Accounts or
Inventory of Corrosion Control shall be included in the Excess Collateral
Providers Accounts and Inventory Borrowing Base until the Agent has completed a
field examination satisfactory to it with respect to Corrosion Control and its
assets.

     2.     Dissolution of Inactive Subsidiaries. The parties hereto agree that
CCC- Accuseal, Inc., the 100% owned Subsidiary of Corrosion Control, shall be
treated as a “Dormant Subsidiary” pending the dissolution of CCC Accuseal. The
Agent and the Lenders hereby consent to the dissolution of the following
Subsidiaries: (a) Coltec Automotive Inc.; (b) Coltec Charitable Foundation,
Inc.; (c) Coltec Technical Services, Inc.; (d) EXH Automotive Holdings, Inc.;
(e) FSS Divestiture Corp.; (f) Mainland Sealing Products, LLC; (g) Salt Lick
Railroad Company; and (h) CCC Accuseal. The parties hereto agree that, upon
the dissolution of each such Subsidiary listed above, the definition of
“Dormant Subsidiary” shall be deemed to be amended without any further
action to delete such dissolved Subsidiary. The Borrowers agree to provide
the Agent evidence of the dissolution of each such Subsidiary promptly
following such dissolution.

     3.     Conditions Precedent. The effectiveness of the amendments and consent
contained in Sections 1 and 2 above is subject to, and contingent upon, the
satisfaction of each of the following conditions precedent, each in form and
substance satisfactory to the Agent and the Lenders, unless

15

 

the same shall otherwise be waived in writing by the Agent and the Lenders in
their sole and absolute discretion:

     (a)  the Agent and the Lenders shall have received duly executed
counterparts of this Amendment signed by each Borrower, the Agent and each
Lender;

     (b)  the representations and warranties of each Borrower contained herein
shall be true and correct; and

     (c)  the Agent shall have received a Reaffirmation of Guaranty from the
Parent and each Subsidiary Guarantor in the form attached hereto.

     4.     Reference to and Effect on the Credit Agreement. Except as expressly
provided herein, the Credit Agreement shall remain unmodified and in full force
and effect and each Borrower hereby ratifies and confirms all its obligations
and liabilities thereunder after giving effect to this Amendment.

     5.     Representations and Warranties. Each Borrower hereby represents and
warrants to the Agent and each Lender that: (a) this Amendment and the actions
on such Borrower’s part contemplated hereby have been duly approved by all
requisite action on the part of such Borrower; (b) this Amendment and each of
the other documents executed and delivered by such Borrower in connection
herewith have been duly executed and delivered and constitute the legal, valid,
and binding obligations of such Borrower, enforceable against such Borrower in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally, by general equitable principles or by
principles of good faith and fair dealing; and (c) the execution, delivery and
performance of this Amendment and each of the other documents executed and
delivered by such Borrower in connection herewith do not and will not violate
or conflict with any provision of such Borrower’s Articles or Certificate of
Incorporation or by-laws or other constitutive documents in effect on the date
hereof, or any contracts or agreements to which such Borrower is a party or by
which any of its assets are bound. Each Borrower further hereby represents and
warrants to the Agent and each Lender that the representations and warranties
of such Borrower contained in the Loan Documents are true and correct in all
material respects on and as of the date hereof to the same extent as though
made on and as of the date hereof. Each Borrower further represents and
warrants to the Agent and each Lender that no Event of Default exists under any
Loan Document.

     6.     Miscellaneous.

     (a)  This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
no Borrower may assign this Amendment or any of its rights or obligations
hereunder without the prior written consent of the Agent and the Lenders.

     (b)  This Amendment (together with the Credit Agreement) constitutes the
entire agreement between the parties with respect to the subject matter hereof,
and supersedes all prior

16

 

negotiations, representations, warranties, commitments, offers, letters of
interest or intent, proposal letters, contracts, writings or other agreements
or understandings with respect thereto.

     (c)  No waiver and no modification or amendment of any provision of this
Amendment shall be effective unless specifically made in writing and duly
signed by the party to be bound thereby.

     (d)  Paragraph and subparagraph titles, captions and headings herein are
inserted only as a matter of convenience and for reference and in no way
define, limit, extend or describe the scope of this Amendment or the intent of
any provision hereof.

     (e)  No failure or delay on the part of any party hereto to exercise any
right, power or privilege hereunder or under any instrument executed pursuant
hereto shall operate as a waiver nor shall any single or partial exercise of
any right, power or privilege preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.

     (f)  Each Borrower affirms and acknowledges that this Amendment shall be a
Loan Document for all purposes of the Credit Agreement.

     (g)  Any reference to the Credit Agreement contained in any notice,
request, certificate or other document executed concurrently with or before or
after the execution and delivery of this Amendment shall be deemed to include
this Amendment unless the context shall otherwise specify.

     (h)  This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute one and the same instrument.

     (i)  THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT AND ANY
DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AMENDMENT, WHETHER SOUNDING
IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE LAWS AND
DECISIONS OF THE STATE OF NORTH CAROLINA.

     (j)  The Borrowers agree to pay all of the Agent’s out-of-pocket costs and
expenses incurred in connection with this Amendment (including, without
limitation, the reasonable fees and expenses of outside counsel).

[Signature Page Follows]

17

 

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

	 	 	 	 	 
	 	 	“BORROWERS”:
	 	 	 	 	 
	 	 	COLTEC INDUSTRIES INC
	 	 	 	 	 
	 	 	
By:
	 	/s/ William Dries
	 	 	 	 	

	 	 	
Name:
	 	William Dries
	 	 	
Title:
	 	Senior Vice President and CFO
	 	 	 	 	 
	 	 	COLTEC INDUSTRIAL PRODUCTS LLC
	 	 	 	 	 
	 	 	
By:
	 	/s/ Donald G. Pomeroy
	 	 	 	 	

	 	 	
Name:
	 	Donald G. Pomeroy
	 	 	
Title:
	 	Vice President and Treasurer
	 	 	 	 	 
	 	 	GARLOCK SEALING TECHNOLOGIES LLC
	 	 	 	 	 
	 	 	
By:
	 	/s/ Donald G. Pomeroy
	 	 	 	 	

	 	 	
Name:
	 	Donald G. Pomeroy
	 	 	
Title:
	 	Vice President and Treasurer
	 	 	 	 	 
	 	 	GLACIER GARLOCK BEARINGS LLC
	 	 	 	 	 
	 	 	
By:
	 	/s/ Donald G. Pomeroy
	 	 	 	 	

	 	 	
Name:
	 	Donald G. Pomeroy
	 	 	
Title:
	 	Vice President and Treasurer
	 	 	 	 	 
	 	 	HABER TOOL COMPANY INC
	 	 	 	 	 
	 	 	
By:
	 	/s/ William Dries
	 	 	 	 	

	 	 	
Name:
	 	William Dries
	 	 	
Title:
	 	Vice President
	 	 	 	 	 
	 	 	STEMCO LLC
	 	 	 	 	 
	 	 	
By:
	 	/s/ Donald G. Pomeroy
	 	 	 	 	

	 	 	
Name:
	 	Donald G. Pomeroy
	 	 	
Title:
	 	Treasurer

18

 

	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as the Agent and a

Lender
	 	 	 	 	 
	 	 	
By:
	 	/s/ Byron J. Turner III
	 	 	 	 	

	 	 	
Name:
	 	Byron J. Turner III
	 	 	
Title:
	 	Vice President
	 	 	 	 	 
	 	 	CITICORP USA, INC., as a Lender
	 	 	 	 	 
	 	 	
By:
	 	/s/ Miles D. McManus
	 	 	 	 	

	 	 	
Name:
	 	Miles D. McManus
	 	 	
Title:
	 	Vice President and Director
	 	 	 	 	 
	 	 	CONGRESS FINANCIAL CORPORATION

(SOUTHWEST), as a Lender
	 	 	 	 	 
	 	 	
By:
	 	/s/ Joe T. Curdy
	 	 	 	 	

	 	 	
Name:
	 	Joe T. Curdy
	 	 	
Title:
	 	Vice President

19

 

Schedule 1.2

Commitments

	 	 	 	 	 	 	 	 	 
	Lender	 	Commitment	 	Pro Rata Share
	
	 	
	 	

	Bank of America, N.A
	 	$	20,000,000	 	 	 	33.33	%
	Citicorp USA, Inc.
	 	$	20,000,000	 	 	 	33.33	%
	Congress Financial Corporation
(Southwest)
	 	$	20,000,000	 	 	 	33.33	%

 

 

Schedule 6.9

Debt/Liens

Debt Owed to Third Parties

Estimated Balances at September 27, 2003

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Principal @	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	9/27/03	 	Maturity Date	 	 	 	 
	Coltec Corporate Debt
	 	 	 	 	 	 	 	 	 	 	 	 
	 	IRB’s:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	City of Bay Minette, Alabama - 6.5%
	 	 	6,055,000	 	 	 	2/15/2009	 	 	 	 	 
	 	 	City of Bowling Green, Kentucky - 6.55%
	 	 	1,000,000	 	 	 	3/1/2009	 	 	 	 	 
	 	 	City of Quincy, Illinois - 6.4%
	 	 	2,500,000	 	 	 	3/1/2009	 	 	 	 	 
	 	 	County of Winnebago, Illinois - 6.455%
	 	 	2,500,000	 	 	 	3/1/2009	 	 	 	 	 
	 	Total Unamortized Issuance Costs for 1993 IRB Issuances
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	
	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total
	 	 	12,055,000	 	 	 	 	 	 	 	 	 
	 	Other:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	City of Quincy - 4.0%
	 	 	50,197	 	 	 	2/1/2004	 	 	 	 	 
	 	 	City of Quincy - 4.0%
	 	 	80,101	 	 	 	9/1/2004	 	 	 	 	 
	 
	 	 	
	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total
	 	 	130,298	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total Coltec Corporate
	 	 	12,185,298	 	 	 	 	 	 	 	 	 
	Divisional Debt
	 	 	 	 	 	 	 	 	 	 	 	 
	 	FM Engine:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Alliant 99 - 3.0%
	 	 	83,259	 	 	various interim payments	 	(final payment in Dec. 2004)
	 	 	Alliant 00 - 3.0%
	 	 	57,861	 	 	various interim payments	 	(final payment in April 2005)
	 	 	Alliant 01 - 3.0%
	 	 	345,726	 	 	various interim payments	 	(final payment in Dec. 2006)
	 	Other GGB Debt
	 	 	7,286	 	 	 	 	 	 	 	 	 
	 
	 	 	
	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total Divisional Debt
	 	 	494,133	 	 	 	 	 	 	 	 	 
	“Other”
	 	 	 	 	 	 	 	 	 	 	 	 
	 	Preferred Securities:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Coltec Tides - 5.25%
	 	 	144,974,000	 	 	 	4/15/2028	 	 	 	 	 
	 	Senior Debt - 7.5%:
	 	 	3,100,000	 	 	 	4/15/2008	 	 	 	 	 
	 	Keyman Life Ins – LIBOR + 1.75%
	 	 	9,489,284	 	 	varies*	 	 	 	 
	 	 	 	 	Total Estimated EnPro Debt at 9/27/03
	 	 	170,242,714	 	 	 	 	 	 	 	 	 
	 
	 	 	
	 	 	 	 	 	 	 	 	 

*Maturity is the earliest of termination of the policies, death of persons insured under the policy, or 60 days prior to the expiration of the policy.

 

 

Debt of EnPro Industries, Inc. or any of its subsidiaries in connection with
the Wisconsin Runoff Bond in the amount of $1,000,000.

All guaranties of operating leases or debt listed on this schedule by EnPro
Industries, Inc. or its Subsidiaries in existence as of the date of the Credit
Agreement.

The obligations of Coltec Industries Inc to make contingent “earn-out” payments
in an aggregate amount not to exceed $1,100,000 per year relating to its
purchase of Air Science Engineering.

All Liens against specific equipment that are either purchase money security
interests or leased equipment that are disclosed in the UCC search results
obtained by Latham & Watkins, counsel to the Agent, prior to the Closing Date.
The Borrowers shall deliver a listing of all such Liens to the Agent on or
prior to the Closing Date.

Debt evidenced by (i) the PECFA Demand Note of Coltec Industries Inc, dated
August 12, 1998, in favor of Firstar Bank Wisconsin, in the original principal
amount of $500,000, and (ii) the PECFA Demand Note of Coltec Industries Inc,
dated January 28, 2000, in favor of Firstar Bank Wisconsin, in the original
principal amount of $500,000 and the Liens of Firstar Bank Wisconsin against
any funds payable to Coltec Industries Inc under the Wisconsin Petroleum
Environmental Clean-Up Fund Act securing the Debt evidenced by such notes.

Intercompany Debt

1.     Debt evidenced by Demand Grid Note of Garlock Sealing Technologies LLC,
dated September 13, 1996, in the original principal amount of $200,000,000.

2.     Debt evidenced by Revolving Note of Garrison Litigation Management Group,
Ltd., dated September 13, 1996, in the original principal amount of
$200,000,000.

3.     Debt evidenced by Demand Promissory Note of Garlock Sealing Technologies
LLC, dated August 31, 1996, in the original principal amount of $314,781,121.

4.     Debt evidenced by Promissory Note of Stemco LLC, dated August 1, 1996, in
the original principal amount of $375,000,000.

5.     Coltec 7.5% Debenture in the principal amount of $201,900,000 held by EnPro
Industries, Inc.

6.     Debt pursuant to Agreement among Coltec Industries Inc, Garrison Litigation
Management Group, Ltd. and Garlock Sealing Technologies LLC, to be executed
simultaneously with this Credit Agreement, whereby Coltec will (i) pay Garrison
$1 million per year as partial consideration for the collateral assignment of
certain insurance proceeds and (ii) indemnify Garrison in the event the lenders
enforce their security interest in those proceeds.

 

 

7.     Debt evidenced by promissory note of Coltec Holdings Sarl in favor of
Glacier Garlock Bearings, Inc. in the principal amount of approximately
$16,226,785.

8.     Debt evidenced by promissory note of GIB Germany GmbH in favor of Glacier
Garlock Bearings, Inc. in the principal amount of approximately $22,320,267.

9.     Debt evidenced by promissory note of Glacier IHG Gleitlager GmbH & Co. KG in
favor of GIB Germany Gmbh in the principal amount of approximately $22,320,267.

10.     Debt evidenced by promissory note of GIB Holdings UK Limited in favor of
Glacier Garlock Bearings, Inc. in the principal amount of approximately
$9,386,054.

11.     Debt evidenced by promissory note of Glacier Garlock Bearings S.r.l. in
favor of Glacier Garlock Bearings, Inc. in the principal amount of
approximately $4,725,961.

12.     Debt evidenced by promissory note of GIB Real Estate Germany GmbH in favor
of Glacier Garlock Bearings, Inc. in the principal amount of approximately
$3,589,794.

13.     Debt evidenced by promissory note of Glacier Garlock Bearings s.r.o. in
favor of Glacier Garlock Bearings, Inc. in the principal amount of
approximately $641,855.

14.     Debt evidenced by promissory note of Coltec Industries France SAS in favor
of Coltec Industries Inc in the principal amount of approximately
€
21,059,547 (or USD equivalent).

15.     Debt evidenced by promissory note of Holley Automotive GmbH in favor of
Coltec Industries Inc in the principal amount of approximately € 8,235,770
(or USD equivalent).

16.     Debt evidenced by Demand Grid Note of The Anchor Packing Company in favor
of Garrison Litigation Management Group, Ltd. in the maximum principal amount
of $10,000,000.

17.     Debt of Coltec Industries Inc in favor of Liard S.A. in the principal
amount of €1,372,041 (or USD equivalent).

18.     Debt of Garlock Overseas Corporation in favor of Garlock GmbH in the
principal amount of € 281,211 (or USD equivalent).

19.     Debt of Coltec Industries Inc in favor of Garlock Great Britain Limited in
the principal amount of £ 402,116 (or USD equivalent).

20.     Debt of Coltec Industries Inc in favor of Garlock GmbH in the principal
amount of € 24,667 (or USD equivalent).

21.     Debt of Garlock GmbH in favor of Coltec Industries Inc in the principal
amount of € 2,464,305 (or USD equivalent).

 

 

22.     Debt of Coltec Industries Inc in favor of Garlock GmbH in the principal
amount of € 724,804 (or USD equivalent).

23.     Debt of Coltec Industries Inc in favor of Garlock of Canada Ltd. in the
principal amount of CAD $12,879,441 (or USD equivalent).

Letters of Credit

	 	 	 
	Beneficiary:	 	
Chinese Naval Logistics Command
	Amount:	 	
US $31,500.00
	Expiry Date:	 	
05/31/2004
	Issuing Bank:	 	
Bank of America (Taipei, Taiwan)
	L/C Number:	 	
3056785
	Issue Date:	 	
06/12/2003
	Amendment Date(s):	 	
06/20/2003
	Applicant:	 	
Coltec Industries Inc / Fairbanks Morse Engine
	 	 	 
	Beneficiary:	 	
Reliant Energy
	Amount:	 	
US $64,180.00
	Expiry Date:	 	
09/01/2004
	Issuing Bank:	 	
Bank of America, N.A.
	L/C Number	 	
3058214
	Issue Date:	 	
08/14/2003
	Amendment Date(s):	 	 
	Applicant:	 	
EnPro Industries, Inc. on behalf of GST, Coltec and CIP
	 	 	 
	Beneficiary:	 	
Division Achat et Transit de l’Armee de Mer (Tunisian
Navy)
	Amount:	 	
US $21,710.00
	Expiry Date:	 	
12/31/2004
	Issuing Bank:	 	
Bank of America, N.A.
	L/C Number:	 	
3058556
	Issue Date:	 	
09/10/2003
	Amendment Date(s):	 	 
	Applicant:	 	
Coltec Industries Inc / Fairbanks Morse Engine
	 	 	 
	Total Outstanding	 	
$117,390.00

 

 

Contingent Liabilities

     Contingent liabilities of EnPro Industries, Inc. or any of its
subsidiaries relating to (i) custom bonds, insurance bonds and performance
bonds issued at the request of EnPro Industries, Inc. or any of its
subsidiaries in the ordinary course of business consistent with past practices
or (ii) retained liabilities or obligations under indemnity agreements with
respect to discontinued operations of predecessors of EnPro Industries, Inc. or
its subsidiaries, including guaranteed debt and lease payments to be made by
Colt Industries (Firearms) and Central Maloney with respect to certain
industrial development revenue bonds and certain leases of equipment from
Woodmen of the World Life Insurance Company; provided, however, that the
aggregate amount of liabilities described in the preceding clauses (i) and (ii)
that are accrued and payable at any time from and after the Closing Date shall
not exceed $5,000,000.

 

 

Schedule 6.16

Environmental Law

     Coltec or one of its subsidiaries has been notified that it is among the
potentially responsible parties under environmental laws for the cost of
investigating and in some cases, remediating contamination by hazardous
materials at 15 sites at which the costs to it at each site are expected to
exceed $100 thousand. The majority of these sites relate to remediation
projects at former operating facilities that have been sold or closed and
primarily deal with soil and groundwater remediation. Investigations have been
completed for 13 sites and are in progress at two sites.

SITE

Garlock Sealing Technologies LLC Plant (including Byron Barrel site) - Palmyra, NY

Fairbanks Morse Engine Plant - Beloit, WI

Quincy Landfill (off-site disposal) - Quincy, IL

Liberty Industrial Finishing Site (Closed Plant) - Long Island, NY

Crucible Sites, NY

Central Maloney Plant - Pine Bluff, AK

Central Maloney Plant (closed) - Arcadia, FL

Holley Automotive Plant - Water Valley, MS

Holley Plant (Clare Municipal Well Field) - Clare, MI

Holley Automotive Plant (including Hardage Criner site) – Sallisaw, OK

Holley Automotive Plant – Paris, TN

Utility Services Inc. (off-site disposal) - Pine Bluff, AK

Necedah Landfill - Necedah, WI

Pratt Whitney Machine Tool Plant - Hinsdale, NH

Semple Ave - Saint Louis, MO

 

 

Schedule 6.19

ERISA Compliance

No disclosure required.

 

 

REAFFIRMATION OF PARENT GUARANTEE

November 4, 2003

Bank of America, N.A., as Agent

600 Peachtree Street, 10th Floor

Atlanta, GA 30308

Please refer to (1) the Credit Agreement dated as of May 16, 2002 (as amended,
supplemented, restated or otherwise modified from time to time, the “Credit
Agreement”), among each of the “Borrowers” named therein, the “Lenders” named
therein and Bank of America, N.A., as agent for the Lenders (the “Agent”) and
(2) the Parent Guarantee dated May 16, 2002 (as amended, the “Guarantee”) by
EnPro Industries, Inc. (“Guarantor”) in favor of the Agent. Pursuant to the
Second Amendment to Credit Agreement (the “Amendment”) dated as of even date
herewith among the Borrowers, the Agent, and the Lenders signatory thereto, the
Credit Agreement has been amended in accordance with the terms and conditions
of the Amendment.

Guarantor hereby (i) acknowledges and reaffirms all of its obligations and
undertakings under the Guarantee, and (ii) acknowledges and agrees that
subsequent to, and taking into account all of the terms and conditions of the
Amendment, the Guarantee is and shall remain in full force and effect in
accordance with the terms thereof

	 	 	 	 	 
	 	 	ENPRO INDUSTRIES, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ William Dries
	 	 	 	

	 	 	
Name:
	William Dries
	 	 	
Title:
	Senior Vice President and CFO

 

 

REAFFIRMATION OF SUBSIDIARY GUARANTEE

November 4, 2003

Bank of America, N.A., as Agent

600 Peachtree Street, 10th Floor

Atlanta, GA 30308

Please refer to (1) the Credit Agreement dated as of May 16, 2002 (as amended,
supplemented, restated or otherwise modified from time to time, the “Credit
Agreement”), among each of the “Borrowers” named therein, the “Lenders” named
therein and Bank of America, N.A., as agent for the Lenders (the “Agent”) and
(2) the Subsidiary Guarantee dated May 16, 2002 (as amended, the “Guarantee”)
by each of the undersigned (each, a “Guarantor”) in favor of the Agent.
Pursuant to the Second Amendment to Credit Agreement (the “Amendment”) dated as
of even date herewith among the Borrowers, the Agent, and the Lenders signatory
thereto, the Credit Agreement has been amended in accordance with the terms and
conditions of the Amendment.

Each Guarantor hereby (i) acknowledges and reaffirms all of its obligations and
undertakings under the Guarantee, and (ii) acknowledges and agrees that
subsequent to, and taking into account all of the terms and conditions of the
Amendment, the Guarantee is and shall remain in full force and effect in
accordance with the terms thereof

	 	 	 	 	 
	 	 	QFM SALES AND SERVICES, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ William Dries
	 	 	 	

	 	 	
Name:
	William Dries
	 	 	
Title:
	Vice President
	 	 	 	 	 
	 	 	COLTEC TECHNICAL SERVICES INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ William Dries
	 	 	 	

	 	 	
Name:
	William Dries
	 	 	
Title:
	Vice President
	 	 	 	 	 
	 	 	COLTEC INTERNATIONAL SERVICES CO.
	 	 	 	 	 
	 	 	
By:
	 	/s/ William Dries
	 	 	 	

	 	 	
Name:
	William Dries
	 	 	
Title:
	Vice President

 

 

	 	 	 	 	 
	 	 	GARRISON LITIGATION MANAGEMENT

GROUP, LTD.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Donald G. Pomeroy
	 	 	 	

	 	 	
Name:
	Donald G. Pomeroy
	 	 	
Title:
	Vice President and Treasurer
	 	 	 	 	 
	 	 	GLACIER GARLOCK BEARINGS, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ William Dries
	 	 	 	

	 	 	
Name:
	William Dries
	 	 	
Title:
	Vice President
	 	 	 	 	 
	 	 	GARLOCK INTERNATIONAL INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Donald G. Pomeroy
	 	 	 	

	 	 	
Name:
	Donald G. Pomeroy
	 	 	
Title:
	Vice President and Treasurer
	 	 	 	 	 
	 	 	GARLOCK OVERSEAS CORPORATION
	 	 	 	 	 
	 	 	
By:
	 	/s/ Donald G. Pomeroy
	 	 	 	 	

	 	 	
Name:
	 	Donald G. Pomeroy
	 	 	
Title:
	 	Vice President and Treasurer<PAGE>

                                                                    EXHIBIT 10.1

                                 AMENDMENT NO. 1

                                       TO

                             NOTE PURCHASE AGREEMENT

         This Amendment No. 1 (this "Amendment"), dated as of October 21, 2003
by and among Horizon Medical Products, Inc., a Georgia corporation (the
"Company"); Comvest Venture Partners, L.P., a Delaware limited partnership
("ComVest," and together with its successors and assigns, the "Purchaser") and
the Additional Note Purchasers (as defined in the Note Purchase Agreement
(defined below)), amends that certain Note Purchase Agreement among the parties
hereto dated as of March 1, 2002 (the "Note Purchase Agreement").

         WHEREAS, the Company has requested an extension of the time to repay
the indebtedness and certain other modifications to the Note Purchase Agreement;
and

         WHEREAS, the Lenders have agreed to such modification subject to
certain terms and conditions.

         NOW, THEREFORE, in consideration of the premises and mutual covenants
of the parties hereunder, the Company, the Purchaser and the Additional Note
Purchasers agree as follows:

         Section 1. All capitalized terms used but not otherwise defined herein
shall have the meaning ascribed to such terms in the Note Purchase Agreement.

         2.       Amendments. The Note Purchase Agreement and to the extent
applicable the Notes are hereby modified as follows:

<PAGE>

                  (a)      The definition "Maturity Date" shall be amended in
its entirety to read as follows: ""Maturity Date" means July 16, 2005".

                  (b)      The definition "Securityholders Agreement" shall be
amended in its entirety to read as follows: ""Securityholders Agreement" shall
mean that certain Amended and Restated Securityholders Agreement, dated as of
the date hereof in the form attached hereto as Exhibit E, as may from time to
time be amended, modified, or supplemented according to its terms among the
Company and certain holders of the capital stock of the Company at the time of
the Closing."

                  (c)      Section 3.1(c) shall be amended in its entirety to
read as follows:

         "(c) The premium to be paid on the principal amount of any prepayment
shall be as follows:

<TABLE>
<CAPTION>
          Payment Date                              Principal Premiums
          ------------                              ------------------
<S>                                       <C>
Closing Date through the one year         No Premium - 100% of the principal
anniversary of the Closing Date           amount of the Note

The one year anniversary of the           5% Premium - 105% of the principal
Closing Date through the 15 month         amount of the Note
anniversary of the Closing Date

The 15 month anniversary of the           5% Premium - 105% of the principal
Closing Date through March 16, 2004       amount of the Note

After March 17, 2004                      No Premiums - 100% of the principal
                                          amount of the Note"
</TABLE>

         (d)      After Section 9.7, the following section shall be added:

         "Section 9.8. Additional Covenants. For so long as any of the Notes
remain outstanding the prior written approval of ComVest and Medtronic shall be
required in order to affect any of the following:

                                       2

<PAGE>

                  (a)      Hiring the CEO or any employee of similar status;
paying annual compensation of $200,000 or more to any employee; or granting
options to purchase 100,000 or more shares of Stock to any employee;

                  (b)      The acquisition of the Company by another entity by
means of any transaction or series of related transactions with the Company
(including, without limitation, any stock purchase, reorganization, merger or
consolidation but, excluding any merger effected exclusively for the purpose of
changing the domicile of this Corporation); or any other transaction which
results in the disposition of 50% or more of the voting power of all classes of
capital stock of the Company unless the Company's stockholders of record as
constituted immediately prior to such acquisition or sale will, immediately
after such acquisition or sale (solely by virtue of securities issued as
consideration for this Corporation's acquisition or sale or otherwise) hold at
least 50% of the voting power of the surviving or acquiring entity;

                  (c)      The sale of all or any material portion of the assets
of the Company;

                  (d)      The liquidation, dissolution or winding up of the
Company;

                  (e)      Making, or permitting any subsidiary to make, any
loan or advance to, or own any stock or other securities of, any subsidiary or
other corporation, partnership, or other entity unless it is wholly owned by the
Company;

                  (f)      Making, or permitting any subsidiary to make, any
loan or advance to any person (other than expense advances), including, without
limitation, any executive employee or director of the Company or any subsidiary;

                  (g)      Guaranteeing, directly or indirectly, or permitting
any subsidiary to guarantee, directly or indirectly, any indebtedness except for
trade accounts of the Company or any subsidiary arising in the ordinary course
of business;

                  (h)      Any capital expenditures exceeding $150,000 in any
single instance or $500,000 in the aggregate in any Fiscal Year;

                  (i)      Entering into, modifying or terminating any Material
Contract, having an aggregate economic impact to the Company of $500,000 or more
in any Fiscal Year; or

                  (j)      The redemption by the Company of any of its
securities;

         (e)      Effective Date. This amendment shall be effective upon such
time as the additional independent director is selected pursuant to Section
5.1(d) of the Amended and Restated Securityholders Agreement.

                                       3

<PAGE>

         (f)      Original Agreement. Except as modified herein the Original
Agreement remains in full force and effect.

                                COMPANY

                                HORIZON MEDICAL PRODUCTS, INC.

                                By:      /s/ Marshall B. Hunt
                                   ---------------------------------------------
                                         Marshall B. Hunt
                                         Chairman and CEO

                                PURCHASER

                                COMVEST VENTURE PARTNERS

                                By:      /s/ Carl Kleidman
                                   ---------------------------------------------
                                         Carl Kleidman
                                         Managing Director

                                ADDITIONAL NOTE PURCHASERS

                                MEDTRONIC, INC.

                                By:      /s/ Michael D. Ellwein
                                   ---------------------------------------------
                                   Name:        Michael D. Ellwein
                                   Title:       Vice President and Chief
                                                Development Officer

                                       4

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