SECOND AMENDMENT TO
1994 STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS
OF COLTEC INDUSTRIES INC
WHEREAS, Coltec Industries Inc, a Pennsylvania corporation
(the "Company"), adopted the 1994 Stock Option Plan for Outside Directors of
Coltec Industries Inc (the "Plan"); and
WHEREAS, the Plan was first amended in 1997, among other
things, to allow for limited transferability of stock options by outside
directors of the Company;
WHEREAS, the Board of Directors of the Company (the "Board")
desires to further amend the Plan in certain respects;
WHEREAS, Section 10.01 of the Plan states that the Plan may
be amended at any time by the Board, subject to shareholder approval if
required under applicable law; and
WHEREAS, the Board has determined that shareholder approval
of the amendments to the Plan as provided herein are not required under
applicable law.
NOW, THEREFORE, the Plan is hereby amended in the following
respects:
1. Section 5.02 of the Plan is hereby amended in its
entirety to read as follows:
5.02 Periodic Grants. "Each Outside Director who is
reelected to the Board by the shareholders of the Company at an
Annual or Special Meeting of the shareholders of the Company called
for that purpose shall be awarded, effective as of each such date of
reelection, an additional Option to purchase 3,000 shares of Common
Stock (the "Subsequent Option")".
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2. Section 6.02 of the Plan is hereby amended by adding the
following provision at the end thereof:
"Notwithstanding the foregoing provisions of Section 6.01
and 6.02, all Options shall immediately and fully vest and
become exercisable upon the occurrence of a change in
control of the Company (as defined herein); provided,
however that no such acceleration of vesting and
exercisability of Options shall occur if (x) it shall be
determined by the Company's independent auditors that such
acceleration shall prevent the Company from consummating a
business combination approved by the Board which combination
is intended to be accounted for under the pooling of
interests method of accounting and (y) the Board
affirmatively determines that such accelerated vesting and
exercisability of Options shall not occur. For purposes
hereof, a "change in control of the Company" shall be deemed
to occur if:
(i) any person (as defined in sections 13(d) and
14(d) of the Exchange Act), other than the Company, any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or any company owned,
directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of
stock of the Company, acquires "beneficial ownership" (as
defined in Rule 13d-3 under the Exchange Act) of securities
representing more than 25% of the combined voting power of
the Company; or
(ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute
the Board and any new director (other than a director
designated by a person who has entered into an agreement
with the Company to effect a transaction described in
subsections 6.02(i), 6.02(iii) or 6.02(iv) whose election by
the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease
for any reason to constitute a majority thereof; or
(iii) the shareholders of the Company approve a
merger other than (i) a merger which would result in the
voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of
any trustee or other
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fiduciary holding securities under an employee benefit plan
of the Company, at least 67% of the combined voting power of
the voting securities of the Company or such surviving
entity outstanding immediately after such merger or (ii) a
merger effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquires
more than 50% of the combined voting power of the Company's
then outstanding securities; or
(iv) the shareholders of the Company approve a plan
of complete liquidation of the Company or a sale of
substantially all of the Company's assets."
3. Except as hereinabove provided, the Plan is ratified and
confirmed in all respects.
IN WITNESS WHEREOF, this Second Amendment to the Plan is
hereby adopted effective as of , 1998.
BOARD OF DIRECTORS OF
COLTEC INDUSTRIES INC
By: _______________________