EXHIBIT 10.3
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EMPLOYEE MATTERS AGREEMENT
by and between
XXXXXXXX CORPORATION
and
ENPRO INDUSTRIES, INC.
dated as of
May 31, 2002
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TABLE OF CONTENTS
Page
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ARTICLE 1 CONTINUATION OF EMPLOYMENT........................................................ 2
Section 1.01 Continuation of Employment............................................... 2
ARTICLE 2 COLLECTIVE BARGAINING............................................................. 2
Section 2.01 Collective Bargaining Agreements and Compliance
with Local Customs and Law............................................... 2
ARTICLE 3 BENEFIT PLANS..................................................................... 2
Section 3.01 Defined Benefit Pension Plans............................................ 2
Section 3.02 Defined Contribution Plans............................................... 3
Section 3.03 Health and Welfare Plans................................................. 4
Section 3.04 Retiree Medical and Life Insurance Coverage.............................. 4
Section 3.05 Certain Non-qualified Benefit Plans...................................... 5
ARTICLE 4 EXECUTIVE COMPENSATION............................................................ 5
Section 4.01 Executive Compensation................................................... 5
ARTICLE 5 EMPLOYEE CLAIMS................................................................... 6
Section 5.01 Claims of Employees...................................................... 6
ARTICLE 6 GENERAL........................................................................... 7
Section 6.01 Notices.................................................................. 7
Section 6.02 Interpretation........................................................... 8
Section 6.03 Amendments; No Waivers................................................... 8
Section 6.04 Nonexclusive Remedies.................................................... 8
Section 6.05 Successors and Assigns................................................... 9
Section 6.06 Third-Party Beneficiaries................................................ 9
Section 6.07 Governing Law............................................................ 9
Section 6.08 Counterparts; Effectiveness.............................................. 9
Section 6.09 Entire Agreement......................................................... 9
Section 6.10 Severability............................................................. 9
Section 6.11 Termination.............................................................. 9
Section 6.12 Survival................................................................. 10
EMPLOYEE MATTERS AGREEMENT
Employee Matters Agreement, dated as of May 31, 2002 (this
"AGREEMENT") by and between Xxxxxxxx Corporation, a New York corporation, with
its principal corporate offices located in Charlotte, North Carolina
("XXXXXXXX"), and EnPro Industries, Inc., a North Carolina corporation, with
its principal corporate offices located in Charlotte, North Carolina. For
purposes of this Agreement, the term "ENPRO" shall refer to EnPro Industries,
Inc. and all the subsidiaries of EnPro Industries, Inc. on or after the
Distribution Date (as defined below) including Coltec Industries Inc ("COLTEC")
and its direct and indirect subsidiaries.
RECITALS
A. The Board of Directors of Xxxxxxxx has determined that it is
in the best interests of Xxxxxxxx and its shareholders to separate Xxxxxxxx'x
engineered industrial products business from its other existing businesses.
B. The Board of Directors of Xxxxxxxx, after consultation with
Xxxxxxxx'x management and financial and legal advisors, has determined that it
is appropriate and in the best interests of Xxxxxxxx and the Xxxxxxxx
Shareholders to divest Xxxxxxxx'x indirect ownership interest in the EnPro
Business, through a pro rata distribution of all of the EnPro Common Stock to
the Xxxxxxxx Shareholders pursuant to the terms and subject to the conditions
of this Agreement (the "DISTRIBUTION"). The date of such distribution, for
purposes of this Agreement, shall be referred to as the "DISTRIBUTION DATE".
X. Xxxxxxxx and EnPro are entering into a Distribution Agreement
(the "DISTRIBUTION AGREEMENT") and other Ancillary Agreements (as defined in
the Distribution Agreement), including this Agreement, that set forth the
matters relating to the relationship and the respective rights and obligations
of Xxxxxxxx and EnPro to one another following the Distribution.
D. In connection with the Distribution, Xxxxxxxx and EnPro have
agreed to enter into this Agreement for the purpose of allocating
responsibilities, liabilities and assets associated with employee compensation,
employee benefits and other employment-related matters.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and undertakings contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Xxxxxxxx and EnPro hereby agree as follows:
ARTICLE 1
CONTINUATION OF EMPLOYMENT
Section 1.01 Continuation of Employment. For purposes of this
Agreement, the term "EIP EMPLOYEES" refers to employees within the Engineered
Industrial Products Segment of Xxxxxxxx who will become or continue to be
employees of EnPro or U.S. subsidiaries of EnPro following the Distribution
Date as well as those Xxxxxxxx corporate employees who have been designated as
EnPro employees. EnPro shall not be obligated under this Agreement to continue
the employment of any EIP Employee after the Distribution Date. EIP Employees
on long-term disability ("LTD") on the Distribution Date shall not become
employees of EnPro unless such employee is covered under the plan known as the
"Long Term Disability Benefit Plan for Eligible Employees of Xxxxxxx Inc" (the
"GARLOCK LTD PLAN"). Any employee receiving benefits under the Garlock LTD Plan
shall remain an employee of Xxxxxxx Sealing Technologies LLC or a subsidiary
thereof. With respect to any employee or retiree of any foreign subsidiary of
EnPro, the compensation and benefits payable to such employee or retiree shall
continue to be the responsibility of such foreign subsidiary.
ARTICLE 2
COLLECTIVE BARGAINING
Section 2.01 Collective Bargaining Agreements and Compliance with
Local Customs and Law. Effective as of the Distribution Date, EnPro or its
subsidiaries shall assume each collective bargaining agreement that relates to
any EIP Employees and shall assume all liabilities, responsibilities and
obligations, including the obligation to negotiate in good faith with respect
to such collective bargaining agreements. EnPro shall continue to observe any
foreign national master agreements applicable to any EIP Employees. EnPro shall
comply with local customs and legislation relating to employment including
staff councils, where required.
ARTICLE 3
BENEFIT PLANS
Section 3.01 Defined Benefit Pension Plans.
(a) Neither EnPro nor any of its subsidiaries shall
become sponsoring employers of the following plans which are sponsored by
Xxxxxxxx:
(i) Xxxxxxxx Corporation Employees' Pension
Plan (the "XXXXXXXX PLAN"); and
(ii) Xxxxxxxx Corporation Wage Employees'
Pension Plan.
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(b) Neither Xxxxxxxx nor any of its subsidiaries shall
become sponsoring employers of the following plans which are sponsored by
Coltec or Xxxxxxx Sealing Technologies LLC (the "COLTEC PLANS"):
(i) Retirement Program for Employees of Coltec
Industries Inc and Affiliated Companies (the "COLTEC PENSION PLAN");
(ii) Quincy Division Unit Pension Plan; and
(iii) Pension Plan for Hourly Employees of the
Xxxxxxx Sealing Technologies Division (Palmyra, New York) of Xxxxxxx
Inc.
(c) With respect to any EIP Employee who is a
participant in the Xxxxxxxx Plan, the Distribution Date shall constitute a
termination of employment for purposes of such plan; provided, however, that
all such employees shall be deemed vested under such plan on the Distribution
Date. The Coltec Pension Plan shall be amended to provide that EIP Employees
who are participants in the Xxxxxxxx Plan and who do not elect to commence the
payment of pension benefits under the Xxxxxxxx Plan prior to or on the
Distribution Date shall receive credit (for purposes of vesting and benefit
determination) for all service and earnings accrued under the Xxxxxxxx Plan;
provided, however, that the amount payable under the Coltec Plan shall be
offset by any amount payable from the Xxxxxxxx Plan. The Coltec Pension Plan
shall be further amended to provide that EIP Employees who are participants in
the Xxxxxxxx Plan who elect to commence payment of pension benefits under the
Xxxxxxxx Plan on or prior to the Distribution Date shall receive credit for
service accrued under the Xxxxxxxx Plan for vesting purposes, but shall receive
no such credit for benefit determination purposes and such participant's
benefit under the Coltec Pension Plan shall not be offset by benefits paid
under the Xxxxxxxx Plan.
(d) In December 2001, all liabilities and associated
assets relating to current retirees within the Coltec Pension Plan, active
employees who will be employed by Xxxxxxxx or a subsidiary of Xxxxxxxx after
the Distribution Date, and former employees who were vested in the Coltec
Pension Plan were transferred from the Coltec Pension Plan to the Xxxxxxxx
Plan. Xxxxxxxx shall cause one or more transfers of liabilities and assets
between the Xxxxxxxx Plan and the Coltec Pension Plan to reflect changes in the
employment status of EIP Employees or other employees that participate in these
plans that occur between November 2001 and the Distribution Date. Any transfer
of assets pursuant to this true-up process shall reflect the termination value
of the liabilities; provided, however that such transfer shall comply with
Section 414 of the Internal Revenue Code.
Section 3.02 Defined Contribution Plans.
(a) Neither EnPro nor any of its subsidiaries shall
become sponsoring employers of the following plans which are sponsored by
Xxxxxxxx (the "XXXXXXXX 401(K) PLANS"):
(i) Xxxxxxxx Corporation Employees' Savings
Plan;
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(ii) Xxxxxxxx Corporation Wage Employees'
Savings Plan; and
(iii) Xxxxxxxx Corporation Savings Plan for Xxxx
Employees.
(b) Neither Xxxxxxxx nor any of its subsidiaries shall
become sponsoring employers of the following plans which are sponsored
by Coltec (the "COLTEC DC PLANS"):
(i) Coltec Industries Inc Retirement Savings
Plan; and
(ii) Coltec Industries Inc Retirement
Accumulation Plan.
(c) Xxxxxxxx shall not have any responsibilities or
obligations with respect to the Coltec DC Plans after the Distribution Date.
Any participant in the Coltec DC Plans who will not become an EIP Employee
shall have their balance transferred to one of the Xxxxxxxx 401(k) Plans,
depending on their employment status.
(d) With respect to any EIP Employee who is a
participant in a Xxxxxxxx 401(k) Plan, the Distribution Date shall constitute a
termination of employment for purposes of such plan and any affected employee
shall have the right to take any action authorized by the plan in the event of
a termination of employment, including the right to rollover the account
balance to the Coltec DC Plans.
Section 3.03 Health and Welfare Plans. EnPro shall not assume any
employee health and welfare benefit plans of Xxxxxxxx but, instead, shall enter
into contracts with third party benefit providers to maintain medical, dental,
life insurance, long-term disability insurance and flexible spending account
benefits through 2002 that are substantially the same as benefits available to
EIP Employees immediately prior to the Distribution Date. EIP Employees shall
cease participation in the health and welfare benefit plans of Xxxxxxxx as of
the Distribution Date and shall commence participation in the health and
welfare benefit plans provided by EnPro. Health and welfare benefit plan claims
incurred by EIP Employees prior to the Distribution Date shall continue to be
processed and paid under the Xxxxxxxx health and welfare plans. EnPro shall
reimburse Xxxxxxxx for Xxxxxxxx'x out-of-pocket expenses from any health and
welfare claim of an EIP Employee incurred prior to the Distribution Date but
paid by Xxxxxxxx after the Distribution Date; provided, however, that Xxxxxxxx
shall continue to pay such claims in the ordinary course prior to the
Distribution Date. For health and welfare claims incurred before the
Distribution Date, EnPro shall be entitled to the benefit of any third party
(i.e. non-captive) insurance coverage maintained by Xxxxxxxx in respect of such
claims.
Section 3.04 Retiree Medical and Life Insurance Coverage.
Following the Distribution Date, EnPro or the responsible subsidiary of EnPro,
as the case may be, shall provide retiree medical or life insurance coverage to
(i) any active, retired or terminated employee participating in the Quincy
Division Unit Pension Plan or the Pension Plan for Hourly Employees of the
Xxxxxxx Sealing Technologies Division (Palmyra, New York) of Xxxxxxx Inc who is
currently or who later becomes entitled to such coverage, (ii) any EIP Employee
who retires after the Distribution Date who is currently or who later becomes
entitled to such coverage, and (iii) any person who is
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currently or who later becomes entitled to such coverage who was an employee of
a Discontinued Operation, as defined below. Xxxxxxxx shall continue to provide
retiree medical and life insurance coverage for all other retirees entitled to
such coverage on the Distribution Date. For purposes of this Agreement, the
term "DISCONTINUED OPERATION" refers to any business owned directly or
indirectly by Coltec or its predecessors which ceased operating or was divested
prior to July 1999, including, but not limited to, Crucible Inc., Colt Firearms
Division of Colt Industries Inc, Xxxxxx Automotive Inc, Xxxxxx Performance
Products Inc, Farnam Sealing Systems, Inc, Lubrikup Company, Precision Seal
Corporation, and the Valves and Industrial Plastics Division of Coltec
Industrial Products, Inc. This Section 3.04 is not intended to create any
obligation to provide benefits to any retiree, but rather, is intended merely
to allocate such obligations to the extent they may already exist.
Section 3.05 Certain Non-qualified Benefit Plans. Xxxxxxxx shall
amend its Savings Benefit Restoration Plan ("SBRP") and the Coltec Industries
Inc Benefits Equalization Plan ("BEP") (which will be sponsored by a subsidiary
of Xxxxxxxx after the Distribution Date) to permit EIP Employees to remain
participants in such plans after the termination of employment with Xxxxxxxx or
a subsidiary of Xxxxxxxx. The accrued benefit in any non-qualified plan shall
remain frozen except to the extent such benefit may change as a result of
investment earnings pursuant to the terms of the plan after the Distribution
Date. The amendment shall provide that participation shall cease upon the
employee's termination of employment from EnPro. Xxxxxxxx shall provide EnPro
with a list of EIP Employees who are participants in the SBRP or the BEP. EnPro
shall notify Xxxxxxxx in the event any EIP Employee who is a participant in the
SBRP or the BEP ceases to be employed with EnPro.
ARTICLE 4
EXECUTIVE COMPENSATION
Section 4.01 Executive Compensation.
(a) EnPro shall be solely responsible for any cash
incentive compensation program that measures the performance of EnPro for the
entire year of 2002 as though EnPro were an independent company for that time.
EIP Employees shall not be entitled to any Management Incentive Plan or Senior
Management Incentive Plan payment from Xxxxxxxx for the year 2002.
(b) For purposes of the Xxxxxxxx Stock Option Plan, the
Distribution Date shall result in the termination of employment for EIP
Employees who are participants in such plan. As a result, all unvested options
shall be forfeited and the period for exercising vested options shall expire 90
days after the Distribution Date. Options held by EIP Employees who are
eligible to retire as of the Distribution Date will be treated as though such
employee retired as of the Distribution Date.
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(c) For purposes of the Xxxxxxxx Long-term Incentive
Compensation ("LTIP") program, EIP Employees who are participants in that
program will be entitled to a portion of the actual payout, when the applicable
performance period ends, pro-rated to reflect the period of time through the
Distribution Date; provided, however, that an EIP Employee must continue to be
employed with EnPro or a subsidiary of EnPro on the last day of the applicable
performance period to be entitled to a LTIP payout pursuant to this paragraph.
(d) Any Management Continuity Agreements with EIP
Employees will be terminated as of the Distribution Date.
(e) EnPro shall be responsible for any retention
payments payable to EIP Employees after the Distribution Date pursuant to any
retention agreements regardless of when such agreements were entered into.
Xxxxxxxx shall provide EnPro with cash (in excess of the cash to be provided to
EnPro for general working capital at the Distribution Date) in an amount
sufficient to pay the retention payments which become payable upon the
Distribution Date.
(f) EIP Employees who owned restricted shares of
Xxxxxxxx common stock shall have the Restricted Share Agreements to which they
are a party amended to provide that the restrictions regarding transfer shall
not cause a forfeiture of such shares on the Distribution Date, but instead
shall cause a forfeiture upon termination of employment with EnPro. Xxxxxxxx
shall provide EnPro with a list of EIP Employees who hold restricted shares.
EnPro shall notify Xxxxxxxx in the event any EIP Employee who holds restricted
shares ceases to be employed with EnPro.
ARTICLE 5
EMPLOYEE CLAIMS
Section 5.01 Claims of Employees. For purposes of this Agreement,
the term "EMPLOYMENT-RELATED CLAIM" shall refer to any liability or claim
relating to the employment, or the termination of employment, of any current or
former employee of EnPro or its direct or indirect subsidiaries, including
Coltec and its predecessors, which claims shall include, but not be limited to,
claims alleging wrongful termination, unlawful discrimination, breach of
employment contract, workers' injury claims covered by various workers'
compensation laws, violations of various employee health and safety
requirements and severance expenses. EnPro, or the responsible subsidiary of
EnPro, shall bear sole responsibility for any uninsured Employment-related
Claim not paid or liquidated as of the Distribution Date incurred either
before, on or after the Distribution Date, except for Employment-related Claims
related to employees of businesses and subsidiaries that are transferred to
Xxxxxxxx as part of the dividend of Coltec's aerospace business for which
Xxxxxxxx, or the responsible subsidiary of Xxxxxxxx, shall bear sole
responsibility. Xxxxxxxx shall remain responsible for all Employment-related
Claims incurred prior to the Distribution Date that are insured by third
parties. EnPro shall reimburse Xxxxxxxx for Xxxxxxxx'x out-of-pocket expenses
(including legal and
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administrative costs) from Employment-related Claims incurred prior to the
Distribution Date but paid by Xxxxxxxx after the Distribution Date; provided,
however, that Xxxxxxxx shall continue to pay uninsured liabilities and claims
in the ordinary course prior to the Distribution Date. Xxxxxxxx shall reimburse
EnPro for EnPro's out-of-pocket expenses (including legal and administrative
costs) paid by EnPro on or after the Distribution Date from Employment-related
Claims related to employees of businesses and subsidiaries that are transferred
to Xxxxxxxx as part of the dividend of Coltec's aerospace business.
ARTICLE 6
GENERAL
Section 6.01 Notices. All notices, requests, consents and other
communications hereunder must be in writing and will be deemed to have been
duly given (a) when received if personally delivered or sent by facsimile, (b)
one business day after being sent by nationally recognized overnight delivery
service, or (c) five business days after being sent by nationally registered or
certified mail, return receipt requested, postage prepaid, and in each case
addressed as follows (any party by written notice to the other party in the
manner prescribed by this section may change the address or the persons to whom
notices thereof shall be directed):
To Xxxxxxxx at:
Xxxxxxxx Corporation
Four Coliseum Centre
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
To EnPro at:
EnPro Industries, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: General Counsel
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with a copy to:
Xxxxxxxx, Xxxxxxxx & Xxxxxx P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Section 6.02 Interpretation. The headings contained in this
Agreement are solely for convenience of reference and shall not be given any
effect in the construction or interpretation of this Agreement. Whenever the
word "including" is used in this Agreement, it shall be deemed to be followed
by the words "without limitation." Whenever a reference is made in this
Agreement to a "party" or "parties," such reference shall be to a party or
parties to this Agreement unless otherwise indicated. The use of any gender
herein shall be deemed to be or include the other genders and the use of the
singular herein shall be deemed to include the plural (and vice versa),
wherever appropriate. Whenever a reference is made in this Agreement to an
Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The use of the words "hereof" and
"herein" and words of similar import shall refer to this entire Agreement and
not to any particular section, subsection, clause, paragraph or other
subdivision of this Agreement, unless the context clearly indicates otherwise.
Each party stipulates and agrees that the rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement to favor any party against the
other, and that no party, including any drafting party, shall have the benefit
of any legal presumption (including "meaning of the authors") or the detriment
of any burden of proof by reason of any ambiguity or uncertain meaning
contained in this Agreement.
Section 6.03 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by each party, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
Section 6.04 Nonexclusive Remedies. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
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Section 6.05 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that neither party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the prior written consent of the other party, which
consent shall not be unreasonably withheld.
Section 6.06 Third-Party Beneficiaries. Nothing contained in this
Agreement is intended to nor shall it confer upon any Person or entity, other
than the parties hereto and their respective subsidiaries, successors and
permitted assigns, any benefit, right or remedies under or by reason of this
Agreement.
Section 6.07 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York, without
regard to the conflict of laws principles thereof.
Section 6.08 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
Section 6.09 Entire Agreement. This Agreement, the Ancillary
Agreements and the Distribution Agreement constitute the entire understanding
of the parties with respect to the subject matter hereof and thereof and
supersede all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter hereof and
thereof. No representation, inducement, promise, understanding, condition or
warranty not set forth herein or in the Ancillary Agreements and the
Distribution Agreement has been made or relied upon by any party. This
Agreement is not intended to address, and should not be interpreted to address,
the matters specifically and expressly covered by the Distribution Agreement or
an Ancillary Agreement.
Section 6.10 Severability. If any one or more of the provisions
contained in this Agreement should be declared invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained in this Agreement shall not in any way be
affected or impaired thereby so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such a declaration, the parties shall modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby
are consummated as originally contemplated to the fullest extent possible.
Section 6.11 Termination. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Distribution and in the sole
discretion of the Xxxxxxxx Board of Directors without the approval of EnPro or
of Xxxxxxxx'x shareholders. In the event of such termination, no party shall
have any liability of any kind to any other party on account of such
termination.
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Section 6.12 Survival. All covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date first
above written.
XXXXXXXX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary
ENPRO INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President, Secretary
and General Counsel
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