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Published: 2008-03-26

Company Stock Option Agreement - BFGoodrich Co. and Coltec Industries Inc.



                         COMPANY STOCK OPTION AGREEMENT

         This COMPANY STOCK OPTION AGREEMENT, dated as of November 22, 1998 (the
'Company  Stock  Option  Agreement')  is between  THE  B.F.GOODRICH  COMPANY,  a
corporation formed under the laws of the State of New York ('Parent') and COLTEC
INDUSTRIES  INC, a  corporation  formed  under the laws of the  Commonwealth  of
Pennsylvania (the 'Company').

                                    RECITALS

         Parent and the  Company  are  entering  into an  Agreement  and Plan of
Merger (the 'Merger Agreement').  As a condition and inducement to entering into
the Merger  Agreement,  the Company and Parent are entering  into certain  stock
option  agreements  dated as of the date  hereof  (of which this  Company  Stock
Option  Agreement  is one)  pursuant  to which the  parties  grant each other an
option with respect to certain  shares of each other's common stock on the terms
and subject to the conditions set forth therein (referred to collectively as the
'Cross Stock Option Agreements').

         NOW,  THEREFORE,  to induce Parent to enter into the Merger  Agreement,
and  in  consideration  of  the  representations,   warranties,   covenants  and
agreements  set  forth  in the  Merger  Agreement  and the  Cross  Stock  Option
Agreements, the parties agree as follows:

         1.       GRANT OF OPTION.

         (a) Subject to the terms and conditions  set forth herein,  the Company
hereby grants to Parent an  irrevocable  option (the 'Option') to purchase up to
12,550,638  shares,  subject   to  adjustment  as  provided  in  Section 11 (the
'Company  Shares'),  of common stock,  $.01 par value per share,  of the Company
(the  'Company  Common  Stock ')  (being  19.9% of the  number  of shares of the
Company  Common Stock  (excluding  any shares of Company  Common Stock held by a
subsidiary of the Company) outstanding as of November 20, 1998 in the manner set
forth below,  at a price per Company Share of $20.125,  subject to adjustment as
provided  in Section 11 (the  'Exercise  Price').  The  Exercise  Price shall be
payable in cash in accordance with Section 4.

(b) Notwithstanding  the foregoing,  in no event shall the number of the Company
Shares for which the Option is exercisable  exceed 19.9% of the number of issued
and outstanding  shares of Company Common Stock (excluding any shares of Company
Common Stock held by a subsidiary of the Company).

(c) Capitalized terms used herein but not defined herein shall have the meanings
set forth in the Merger Agreement. 'Acquisition Proposal' shall have the meaning
set forth in Section 9.2(b) of the Merger Agreement.




         2.       EXERCISE OF OPTION.

         (a) The Option may be exercised by Parent,  in whole,  but not in part,
at any time after the Merger  Agreement is terminated and the Company has become
obligated to pay the Termination Fee ('Trigger Event').

(b) (i) The Company shall notify Parent promptly in writing of the occurrence of
any Trigger  Event,  it being  understood  that the giving of such notice by the
Company shall not be a condition to the right of Parent to exercise the Option.

(ii) In the event Parent wishes to exercise the Option,  Parent shall deliver to
the Company written notice thereof (the 'Exercise Notice').

(iii) Upon the giving by Parent to the  Company of the  Exercise  Notice and the
tender of the aggregate Exercise Price, Parent,  provided that the conditions to
the  Company's  obligation to issue the Company  Shares to Parent  hereunder set
forth in  Section 3 have been  satisfied  or  waived,  shall be deemed to be the
holder  of  record  of  the  Company   Shares   issuable  upon  such   exercise,
notwithstanding  that the stock  transfer  books of the  Company  shall  then be
closed or that  certificates  representing  the Company Shares shall not then be
actually delivered to Parent.

(iv) The closing of the purchase of Company Shares (the  'Closing')  shall occur
at a place, on a date, and at a time designated by Parent in the Exercise Notice
delivered at least two business days prior to the date of the Closing.

         (c) The  Option  shall  terminate upon the earliest to occur of:

(i)      the Effective Date of the Merger;

(ii) the  termination  of the Merger  Agreement  pursuant to Section 9.1 thereof
other than pursuant to (x) Section 9.1(g) thereof,  (y) 9.1(j) thereof or (z) if
an Acquisition  Proposal with respect to the Company has been publicly disclosed
to the  shareholders  of the Company (and not withdrawn or terminated)  prior to
the Company Meeting, Section 9.1(c) thereof;

(iii) to the extent that (x) an Acquisition Proposal with respect to the Company
has  been  publicly  disclosed  to the  shareholders  of the  Company  (and  not
withdrawn or terminated) prior to the Company Meeting,  (y) the Merger Agreement
is terminated  pursuant to Section  9.1(c)  thereof and (z) the Company does not
enter  into any  agreement  providing  for the  consummation  of an  Acquisition
Proposal   with   respect  to  the   Company  (it  being   understood   that  no
confidentiality   agreement  with  respect  to  an  Acquisition  Proposal  shall
constitute  such an agreement) and no  Acquisition  Proposal with respect to the
Company  shall  have been  consummated,  in each case,  during the twelve  month
period  following the termination of the Merger  Agreement,  twelve months after
the date of such termination; and

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(iv) 30 days  following a Trigger Event (or if, at the expiration of such 30 day
period,  the Option  cannot be exercised by reason of any  applicable  judgment,
decree,  order,  law or regulation,  ten business days after such  impediment to
exercise  shall have been  removed or shall have become final and not subject to
appeal,  but in no event under this  clause  (iv) later than 180 days  following
such Trigger Event).

(d)  Notwithstanding  the  foregoing,  the Option may not be exercised and shall
terminate if (x) any of the  representations  and warranties of Parent contained
in this  Company  Stock  Option  Agreement  or the Merger  Agreement,  which are
qualified as to materiality,  were or shall be inaccurate in any respect, or any
of the  representations  and warranties of Parent  contained  herein or therein,
which are not so qualified, were or shall be inaccurate in any material respect,
in each case, (1) when made, (2) as of the date of any termination of the Merger
Agreement and (3) as of the date of any purported exercise of the Option, in the
case of clauses  (2) and (3), as if made as of the date of such  termination  or
purported exercise, respectively (except for representations and warranties that
by their express provisions are made as of a specific date or dates, which shall
only be deemed  inaccurate  to the  extent  that  they  were or shall  have been
inaccurate at such times as stated  therein),  or (y) at the time of termination
of the Merger  Agreement or any purported  exercise of the Option,  Parent is in
material breach of any of its covenants  contained in the Merger Agreement or in
this Company Stock Option Agreement.

         3.  CONDITIONS TO CLOSING.  The  obligation of the Company to issue the
Company Shares to Parent hereunder is subject to the conditions that:

         (a) the waiting  periods,  if any,  applicable  to the  issuance of the
Company  Shares under the HSR Act and the  Competition  Act (Canada)  shall have
expired or been  terminated and all other Company  Required  Consents and Parent
Required  Consents in each case relating to this Company Stock Option  Agreement
and required to be obtained  prior to issuance of the Company  Shares shall have
been  obtained,  except where the failure to obtain such other Company  Required
Consents or Parent Required Consents would not have a Material Adverse Effect on
the Company or Parent, as the case may be;

         (b) the Company  Shares shall have been  authorized  for listing on the
NYSE upon official notice of issuance; and

         (c) no preliminary or permanent  injunction or other order by any court
or other  Governmental  Entity of  competent  jurisdiction  (i)  prohibiting  or
preventing  such issuance or (ii) having any of the effects set forth in Section
8.1(f)(ii) of the Merger Agreement shall have been issued and remain in effect.

The  condition  set forth in paragraph  (b) above may be waived by Parent in its
sole discretion.

         4.       CLOSING.  At the Closing,

         (a) The  Company  shall  deliver  to  Parent  a single  certificate  in
definitive  form  representing  the  Company  Shares,  such  certificate  to  be
registered in the name of Parent and to bear the legend set forth in Section 12;
and

                                      - 3 -



         (b) Parent shall  deliver to the Company the aggregate  Exercise  Price
for the Company  Shares by wire transfer of  immediately  available  funds to an
account to be designated in writing by the Company.

         (c) The Company  shall pay all expenses  that may be payable in respect
of the  preparation,  issuance  and  delivery of stock  certificates  under this
Section 4.

         5.   REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.   The  Company
represents and warrants to Parent that:

         (a) the Company has taken all necessary  corporate  action to authorize
and reserve for issuance and (subject to the  satisfaction of the conditions set
forth in Section 3) to permit it to issue, upon exercise of the Option,  and, at
all times from the date hereof  through the  expiration  of the Option will have
reserved,  authorized and unissued shares of Company Common Stock sufficient for
the  exercise  of the Option and the  Company  Shares,  upon  issuance  pursuant
hereto, will be duly and validly issued, fully paid and nonassessable; and

         (b) upon delivery of the Company  Shares to Parent upon the exercise of
the Option, Parent will acquire the Company Shares free and clear of all claims,
liens, charges, encumbrances and security interests of any nature whatsoever.

         6.  REPRESENTATIONS  AND  WARRANTIES OF PARENT.  Parent  represents and
warrants to the Company that:

         (a) any Company  Shares  acquired by Parent upon exercise of the Option
will be acquired for Parent's own account, for investment purposes only and will
not be,  and the  Option is not  being,  acquired  by Parent  with a view to the
public  distribution  of the Company  Shares,  in  violation  of any  applicable
provision of the Securities Act; and

         (b) any Company  Shares  acquired by Parent upon exercise of the Option
will not be  transferred  or  otherwise  disposed  of  except  in a  transaction
registered, or exempt from registration,  under the Securities Act and otherwise
in accordance with this Company Stock Option Agreement.

         7.       CERTAIN REPURCHASES.

         (a) At the request of Parent by written notice (the 'Cash-Out  Notice')
at any time during  which the Option is  exercisable  pursuant to Section 2, the
Company (or any successor  entity  thereof)  shall,  to the extent  permitted by
applicable  law and  subject  to the  receipt  by it of any  consent  or  waiver
required  by it  under  the  terms  of any  indenture,  loan  document  or other
contract,  pay to Parent,  in  consideration  of the redelivery and cancellation
without  exercise  of the Option  (in whole and not in part),  an amount in cash
(the 'Cash-Out Amount') equal to the difference between the 'Market/Offer Price'
(as defined  below) for shares of the Company Common Stock as of the date Parent
delivers the Cash-Out  Notice and the Exercise  Price,  multiplied  by the total

                                      - 4 -




number of the Company Shares, but only if the Market/Offer Price is greater than
the Exercise  Price.  For purposes of this Section 7, the  'Market/Offer  Price'
shall mean, as of any date,  the higher of (x) the price per share offered as of
such date  pursuant to any tender or exchange  offer or other  public offer with
respect to the highest  Acquisition  Proposal  with respect to the Company which
was made prior to such date and not terminated or withdrawn as of such date (the
'Offer  Price') and (y) Fair Market Value (as defined below) as of such date. As
used herein, 'Fair Market Value' shall be the average of the daily closing sales
price for a share of the  Company  Common  Stock on the NYSE during the ten NYSE
trading days prior to the fifth NYSE trading day immediately  preceding the date
such Fair Market Value is to be determined.  In the event that the consideration
offered pursuant to any Acquisition  Proposal includes any  consideration  other
than  cash,  such  consideration  shall be valued as  follows  for  purposes  of
calculating  the Offer Price:  (i) any  securities  that are either  listed on a
national  securities  exchange (as defined under the  Securities  Act) or on any
designated  offshore  securities  market (as defined in  Regulation  S under the
Securities  Act) or  included  in a  national  securities  quotation  system (as
defined in the Securities  Act)  (collectively,  'Listed  Securities')  shall be
valued  based on the  average of the daily  closing  sale  price of such  Listed
Securities  for the ten  trading  days on  such  national  securities  exchange,
designated offshore  securities market or national  securities  quotation system
prior to the fifth trading day immediately preceding the date of delivery of the
Cash-Out Notice; and (ii) any consideration other than cash or Listed Securities
shall be valued based on the written  opinion of an  investment  banking firm of
nationally  recognized  reputation selected by Parent,  which firm is reasonably
acceptable to the Company. The costs and fees of such investment banking firm in
connection with such valuation shall be borne equally by Parent and the Company.

         (b) In the event Parent  exercises  its right under this Section 7, the
Company shall,  within ten business days thereafter,  pay the required amount to
Parent in immediately  available funds and Parent shall surrender to the Company
the Option, and Parent shall warrant that it owns the Option and that the Option
is then free and clear of all liens, claims,  damages,  charges and encumbrances
of any kind or nature whatsoever.

         8. VOTING OF SHARES.  Following  the date hereof and prior to the fifth
anniversary of the date hereof (the  'Expiration  Date'),  Parent shall vote any
shares of capital  stock of the  Company  acquired  by Parent  pursuant  to this
Company  Stock  Option  Agreement or otherwise  beneficially  owned  (within the
meaning of Rule 13d-3 promulgated under the Securities  Exchange Act of 1934, as
amended (the 'Exchange  Act')),  by Parent on each matter submitted to a vote of
shareholders  of the Company for and against such matter in the same  proportion
as the vote of all other shareholders of the Company are voted (whether by proxy
or otherwise) for and against such matter.

         9.       RESTRICTIONS ON TRANSFER.

         (a)  The  Company  Shares  shall  not be  directly  or  indirectly,  by
operation of law or otherwise, sold, assigned, pledged, or otherwise disposed of
or transferred, other than in accordance with Section 9(b) or Section 10.

                                      - 5 -



         (b) Parent shall be permitted to sell,  assign,  transfer or dispose of
any Company Shares beneficially owned by it if such sale is made (i) pursuant to
a transaction that has been approved or recommended,  or otherwise determined to
be fair to and in the best interests of the  shareholders  of the Company,  by a
majority of the members of the Board of Directors of the Company, which majority
shall  include  a  majority  of  directors  who  were  directors  prior  to  the
announcement  of such  transaction  or (ii) to any purchaser or  transferee  who
would not, to Parent's knowledge after reasonable inquiry, immediately following
such sale, assignment, transfer or disposal beneficially own more than 1% of the
Company  Common Stock on a fully diluted basis  (excluding any shares of Company
Common Stock held by a subsidiary of the Company).

         10.      REGISTRATION RIGHTS.

         (a) On or  prior  to the  second  anniversary  of the  exercise  of the
Option, Parent may by written notice (the 'Registration  Notice') to the Company
request the Company to register  under the Securities Act all or any part of the
Company  Shares  beneficially  owned by Parent  (the  'Registrable  Securities')
pursuant to a bona fide firm commitment  underwritten public offering,  in which
Parent  and  the  underwriters  shall  effect  as  wide a  distribution  of such
Registrable  Securities  as is reasonably  practicable  and shall use their best
efforts to prevent any person  (including any group (as used in Rule 13d-5 under
the Exchange  Act)) and its  affiliates  from  purchasing  through such offering
Company Shares  representing  more than 1% of the outstanding  shares of Company
Common Stock  on  a  fully diluted basis (excluding any shares of Company Common
Stock held by a subsidiary of the Company) (a 'Permitted Offering').

         (b) The  Registration  Notice shall include a  certificate  executed by
Parent and its proposed  managing  underwriter,  which  underwriter  shall be an
investment  banking firm of  nationally  recognized  standing  (the  'Manager'),
stating that

(i)  they have a good faith intention to commence promptly a Permitted Offering,
and

(ii) the  Manager  in good faith  believes  that,  based on the  then-prevailing
market conditions,  it will be able to sell the Registrable  Securities at a per
share price equal to at least 80% of the then Fair Market Value of such shares.

         (c) The Company  (and/or any person  designated  by the Company)  shall
thereupon have the option  exercisable by written notice delivered to the Parent
within  ten  business  days  after  the  receipt  of  the  Registration  Notice,
irrevocably to agree to purchase all or any part of the  Registrable  Securities
proposed  to be so sold for cash at a price (the  'Option  Price')  equal to the
product of (i) the number of  Registrable  Securities  to be so purchased by the
Company and (ii) the then Fair Market Value of such shares.

         (d) Any  purchase  of  Registrable  Securities  by the  Company (or its
designee)  under  Section  10(c) shall take place at a closing to be held at the
principal  executive  offices of the Company or at the offices of its counsel at
any reasonable  date and time  designated by the Company and/or such designee in
such notice within twenty  business days after delivery of such notice,  and any
payment for the shares to be so purchased  shall be made by delivery at the time
of such closing in immediately available funds.

                                      - 6 -




         (e) If the Company  does not elect to exercise  its option  pursuant to
this Section 10 with  respect to all  Registrable  Securities,  it shall use its
reasonable  efforts  to effect,  as  promptly  as  reasonably  practicable,  the
registration under the Securities Act of the unpurchased  Registrable Securities
proposed to be so sold; provided, however, that

(i)  Parent  shall  not  be  entitled to more than an aggregate of two effective
registration statements hereunder, and

(ii) the Company  will not be required to file any such  registration  statement
during any period of time (not to exceed 180 days after such request) when:

(A) the Company is in possession  of material  non-public  information  which it
reasonably  believes  would be  detrimental to be disclosed at such time and, in
the  opinion  of  counsel  to the  Company,  such  information  would have to be
disclosed if a registration statement were filed at that time;

(B) the  Company  is  required  under  the  Securities  Act to  include  audited
financial  statements  for any period in such  registration  statement  and such
financial  statements  are not yet available for inclusion in such  registration
statement; or

(C) the Company determines,  in its reasonable judgment,  that such registration
would  interfere with any financing,  acquisition or other material  transaction
involving the Company or any of its affiliates.

         (f) The  Company  shall use its  reasonable  best  efforts to cause any
Registrable  Securities  registered  pursuant to this Section 10 to be qualified
for sale under the securities or Blue Sky laws of such  jurisdictions  as Parent
may reasonably  request and shall continue such registration or qualification in
effect in such jurisdiction;  provided,  however,  that the Company shall not be
required to qualify to do business in, or consent to general  service of process
in, any jurisdiction by reason of this provision.

         (g) The registration rights set forth in this Section 10 are subject to
the condition that Parent shall provide the Company with such  information  with
respect to its Registrable  Securities,  the plans for the distribution thereof,
and such other  information  with  respect to such holder as, in the  reasonable
judgment  of counsel  for the  Company,  is  necessary  to enable the Company to
include  in such  registration  statement  all  material  facts  required  to be
disclosed with respect to a registration thereunder.

         (h) A registration  effected under this Section 10 shall be effected at
the Company's expense, except for underwriting discounts and commissions and the
fees and the expenses of counsel to Parent, and the Company shall provide to the
underwriters such documentation (including certificates, opinions of counsel and
'comfort' letters from auditors) as is customary in connection with underwritten
public offerings as such underwriters may reasonably require.

                                      - 7 -



         (i) In connection with any registration effected under this Section 10,
the parties agree

(i)      to indemnify each other and the underwriters in the customary manner,

(ii) to enter into an underwriting agreement in form and substance customary for
transactions  of  such  type  with  the  Manager  and  the  other   underwriters
participating in such offering, and

(iii) to take  further  reasonable  actions  which are  necessary to effect such
registration and sale.

         (j)  The  Company  shall  be  entitled  to  include  (at  its  expense)
additional  shares of its common stock in a  registration  effected  pursuant to
this  Section  10 only if and to the  extent the  Manager  determines  that such
inclusion will not adversely affect the prospects for success of such offering.

         11. ADJUSTMENT UPON CHANGES IN  CAPITALIZATION.  Without  limitation to
any restriction on the Company  contained in this Company Stock Option Agreement
or in the Merger  Agreement,  in the event of any change in Company Common Stock
by  reason  of stock  dividends,  splitups,  mergers  (other  than the  Merger),
recapitalizations,  combinations,  exchange of shares or the like,  the type and
number of shares or  securities  subject to the Option  and the  Exercise  Price
shall  be  adjusted  appropriately  and  proper  provision  will  be made in the
agreements governing such transaction, so that Parent will receive upon exercise
of the Option the number  and class of shares or other  securities  or  property
that Parent would have received in respect of Company Common Stock if the Option
had been exercised  immediately prior to such event or the record date therefor,
as applicable.  Subject to Section 1, and without limiting the parties' relative
rights and obligations under the Merger  Agreement,  if any additional shares of
Company  Common  Stock are issued  after the date of this  Company  Stock Option
Agreement  (other than pursuant to an event  described in the first  sentence of
this  Section  11(a)),  the number of Company  Shares  will be adjusted so that,
after such  issuance,  it equals 19.9% of the number of shares of Company Common
Stock  (excluding any shares of Company Common Stock held by a subsidiary of the
Company)  then  issued  and  outstanding,  without  giving  effect to any shares
subject to the Option.

         12. RESTRICTIVE  LEGENDS.  Each certificate  representing shares of the
Company  Common  Stock  issued to  Parent  hereunder  shall  include a legend in
substantially the following form:

                                      - 8 -



THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR ANY STATE  SECURITIES OR BLUE SKY
LAWS, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM
SUCH  REGISTRATION IS AVAILABLE.  SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS  ON TRANSFER AS SET FORTH IN THE COMPANY  STOCK  OPTION  AGREEMENT,
DATED AS OF NOVEMBER 22,  1998, A COPY OF WHICH MAY BE OBTAINED  FROM THE ISSUER
UPON REQUEST.

It is understood and agreed that:

(i) the reference to the resale  restrictions  of the  Securities  Act and state
securities  or Blue Sky laws in the above legend shall be removed by delivery of
substitute certificate(s) without such reference, if Parent shall have delivered
to the  Company  a copy of a letter  from the  staff  of the  Commission,  or an
opinion of counsel,  in form and substance  satisfactory to the Company,  to the
effect that such legend is not required for  purposes of the  Securities  Act or
such laws;

(ii) the reference to the  provisions to this Company Stock Option  Agreement in
the above  legend  shall be removed by  delivery  of  substitute  certificate(s)
without such reference if the shares have been sold or transferred in compliance
with  the   provisions  of  this  Company  Stock  Option   Agreement  and  under
circumstances that do not require the retention of such reference; and

(iii) the legend  shall be  removed in its  entirety  if the  conditions  in the
preceding clauses (i) and (ii) are both satisfied.

In addition, such certificates shall bear any other legend as may be required by
law.  Certificates  representing  shares sold in a  registered  public  offering
pursuant  to  Section 10 shall not be  required  to bear the legend set forth in
this Section 12.

         13.   BINDING EFFECT: NO ASSIGNMENT: NO THIRD PARTY BENEFICIARIES.  (a)
This  Company  Stock  Option Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their respective successors  and  permitted
assigns.

         (b) Except as  expressly  provided  for in this  Company  Stock  Option
Agreement,  neither  this  Company  Stock  Option  Agreement  nor the  rights or
obligations  of either  party  hereto are  assignable  except  with the  written
consent of the other party.

         (c) Nothing contained in this Company Stock Option  Agreement,  express
or implied,  is intended to confer upon any person other than the parties hereto
and their respective permitted assigns any rights or remedies hereunder.

                                      - 9 -



         (d) Any Company Shares sold by Parent in compliance with the provisions
of Section 10 shall, upon consummation of such sale, be free of the restrictions
imposed with respect to such shares by this Company Stock Option Agreement.

         14.  SPECIFIC  PERFORMANCE.  The parties hereto agree that  irreparable
harm would occur in the event that any of the  provisions  of this Company Stock
Option  Agreement were not performed in accordance with their specified terms or
were otherwise breached.  It is accordingly agreed that the parties hereto shall
be entitled to an injunction or injunctions to prevent  breaches of this Company
Stock Option  Agreement  and to enforce  specifically  the terms and  provisions
hereof in any court of the United States or any state having jurisdiction,  this
being in  addition to any other  remedy to which they are  entitled at law or in
equity.

         15. VALIDITY.  (a) The invalidity or  unenforceability of any provision
of this  Company  Stock  Option  Agreement  shall not  affect  the  validity  or
enforceability  of the other provisions of this Company Stock Option  Agreement,
which shall remain in full force and effect.

         (b) In the  event  any  court or other  competent  authority  holds any
provision  of  this  Company  Stock  Option   Agreement  to  be  null,  void  or
unenforceable,  the parties  hereto shall  negotiate in good faith the execution
and delivery of an amendment to this Company Stock Option Agreement in order, as
nearly as possible, to effectuate, to the extent permitted by law, the intent of
the parties  hereto with  respect to such  provision  and the  economic  effects
thereof.

         (c) Each  party  agrees  that,  should  any  court  or other  competent
authority  hold any  provision  of this Company  Stock Option  Agreement or part
hereof to be null, void or unenforceable,  or order any party to take any action
inconsistent  herewith,  or not take any action required herein, the other party
shall not be entitled to specific  performance  of such provision or part hereof
or to any other remedy,  including but not limited to money damages,  for breach
hereof or of any other provision of this Company Stock Option  Agreement or part
hereof as the result of such holding or order.

         16. NOTICES.  All notices and other  communications  under this Company
Stock  Option  Agreement  shall be in  writing  and shall be given (and shall be
deemed to have been duly given  upon  receipt)  by  delivery  in person,  if (a)
delivered  personally,  by  overnight  courier,  telecopy  or by  registered  or
certified mail, postage prepaid, return receipt requested addressed as follows:

         A.       If to Parent, to:

                  The B.F.Goodrich Company
                  4020 Kinross Lakes Pkwy.
                  Richfield, OH  44286-9368

                  Attention:  Terrence G. Linnert
                              Sr. Vice President and General Counsel
                              Fax:  (330) 659-7737

                                      - 10 -



                  with a copy to:

                  Squire, Sanders & Dempsey L.L.P.
                  4900 Key Tower
                  127 Public Square
                  Cleveland, Ohio  44114-1304

                  Attention:  Gordon S. Kaiser, Esq.
                              Fax: (216) 479-8780

         B.       If to the Company, to:

                  Coltec Industries Inc
                  3 Coliseum Centre
                  2550 West Tyvola Road
                  Charlotte, NC  28217

                  Attention:  Corporate Secretary
                              Fax:  (704) 423-7011

                  with a copy to:

                  Cravath, Swaine & Moore
                  825 Eighth Avenue
                  New York, New York 10019

                  Attention:   George W. Bilicic, Jr., Esq. and
                               Allen Finkelson, Esq.
                               Fax: (212) 474-3700

or to such other  address as either party may have  furnished to the other party
in writing in accordance with this Section.

         17. GOVERNING LAW: CHOICE OF FORUM. This Company Stock Option Agreement
shall be governed in all respects, including validity, interpretation and effect
by and construed in accordance with the laws of the Commonwealth of Pennsylvania
without giving effect to the provisions  thereof relating to conflicts of law to
the extent that the  application  of the laws of another  jurisdiction  would be
required thereby.

         18.      INTERPRETATION.

         (a) When  reference is made in this Company  Stock Option  Agreement to
Articles,  Sections,  Schedules  or  Exhibits,  such  reference  shall  be to an
Article, Section, Schedule or Exhibit of this Company Stock Option Agreement, as
the case may be, unless otherwise indicated.

                                      - 11 -



         (b) The headings  contained in this Company Stock Option  Agreement are
for  reference  purposes  only and shall not  affect in any way the  meaning  or
interpretation of the Company Stock Option Agreement.

         (c) Whenever the words  'include,'  'includes,' or 'including' are used
in this  Company  Stock  Option  Agreement  and are not  followed  by the  words
'without limitation',  they shall be deemed to be followed by the words 'without
limitation.'  The words 'hereof',  'herein' and 'hereunder' and words of similar
import when used in this  Company  Stock  Option  Agreement  shall refer to this
Company Stock Option Agreement as a whole and not to any particular provision of
this Company Stock Option Agreement.

         (d)  Whenever  'or' is used in this Company  Stock Option  Agreement it
shall be construed in the nonexclusive sense.

         19.  COUNTERPARTS;  EFFECT.  This Company Stock Option Agreement may be
executed  in one or more  counterparts,  each of which  shall be deemed to be an
original,  but all of which shall constitute one and the same agreement and each
of which shall only become  effective  when one or more  counterparts  have been
signed by each party and delivered to the other party.

         20.  AMENDMENTS;  WAIVER.  This Company  Stock Option  Agreement may be
amended by the parties hereto and the terms and conditions  hereof may be waived
but, in the case of an amendment,  only by an  instrument  in writing  signed on
behalf  of each of the  parties  hereto,  or,  in the  case of a  waiver,  by an
instrument signed on behalf of the party waiving compliance.

         21.  LOSS OR  MUTILATION.  Upon  receipt  by the  Company  of  evidence
reasonably  satisfactory to it of the loss, theft,  destruction or mutilation of
this  Company  Stock  Option  Agreement,  and (in the  case of  loss,  theft  or
destruction) of reasonably satisfactory indemnification,  and upon surrender and
cancellation of this Company Stock Option Agreement,  if mutilated,  the Company
will execute and deliver a new Company Stock Option  Agreement of like tenor and
date.

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

                                THE B.F.GOODRICH COMPANY


                                By:  
                                    Name:  David L. Burner
                                    Title: Chairman and Chief Executive Officer


                                COLTEC INDUSTRIES INC


                                By:
                                    Name:  John W. Guffey, Jr.
                                    Title: Chairman and Chief Executive Officer

                                      - 12 -




                          PARENT STOCK OPTION AGREEMENT

         This PARENT STOCK OPTION AGREEMENT,  dated as of November 22, 1998 (the
'Parent  Stock  Option  Agreement')  is  between  THE  B.F.GOODRICH  COMPANY,  a
corporation formed under the laws of the State of New York ('Parent') and COLTEC
INDUSTRIES  INC, a  corporation  formed  under the laws of the  Commonwealth  of
Pennsylvania (the 'Company').

                                    RECITALS

         Parent and the  Company  are  entering  into an  Agreement  and Plan of
Merger (the 'Merger Agreement').  As a condition and inducement to entering into
the Merger  Agreement,  the Company and Parent are entering  into certain  stock
option agreements dated as of the date hereof (of which this Parent Stock Option
Agreement is one)  pursuant to which the parties grant each other an option with
respect to certain  shares of each other's common stock on the terms and subject
to the  conditions  set forth therein  (referred to  collectively  as the 'Cross
Stock Option Agreements').

         NOW,  THEREFORE,  to  induce  the  Company  to enter  into  the  Merger
Agreement,  and in consideration of the representations,  warranties,  covenants
and  agreements  set forth in the Merger  Agreement  and the Cross Stock  Option
Agreements, the parties agree as follows:

         1.       GRANT OF OPTION.

         (a) Subject to the terms and conditions set forth herein, Parent hereby
grants to the Company an  irrevocable  option (the  'Option')  to purchase up to
14,792,612  shares,  subject  to  adjustment  as  provided  in  Section  11 (the
'Parent  Shares'),  of common  stock,  $5 par value per  share,  of Parent  (the
'Parent  Common  Stock')  (being 19.9% of the number of shares of Parent  Common
Stock outstanding as of November 18,  1998  in  the manner set forth below, at a
price per Parent Share of $35.9375, subject to adjustment as provided in Section
11 (the 'Exercise  Price').  The Exercise Price  shall  be  payable  in  cash in
accordance with Section 4.

(b)  Notwithstanding  the foregoing,  in no event shall the number of the Parent
Shares for which the Option is exercisable  exceed 19.9% of the number of issued
and outstanding shares of Parent Common Stock.

(c) Capitalized terms used herein but not defined herein shall have the meanings
set forth in the Merger Agreement.

         2.       EXERCISE OF OPTION.

         (a) The Option may be exercised by the  Company,  in whole,  but not in
part, at any time after the Merger Agreement is terminated and Parent has become
obligated to pay the Termination Fee ('Trigger Event').





(b) (i) Parent shall notify the Company promptly in writing of the occurrence of
any Trigger Event, it being  understood that the giving of such notice by Parent
shall not be a condition to the right of the Company to exercise the Option.

(ii) In the event the Company  wishes to exercise the Option,  the Company shall
deliver to Parent written notice thereof (the 'Exercise Notice').

(iii) Upon the giving by the  Company to Parent of the  Exercise  Notice and the
tender  of  the  aggregate  Exercise  Price,  the  Company,  provided  that  the
conditions  to  Parent's  obligation  to issue the Parent  Shares to the Company
hereunder set forth in Section 3 have been satisfied or waived,  shall be deemed
to be the holder of record of the Parent  Shares  issuable  upon such  exercise,
notwithstanding  that the stock transfer books of Parent shall then be closed or
that  certificates  representing  the Parent  Shares  shall not then be actually
delivered to the Company.

(iv) The closing of the purchase of Parent Shares (the 'Closing') shall occur at
a place,  on a date,  and at a time  designated  by the Company in the  Exercise
Notice delivered at least two business days prior to the date of the Closing.

         (c) The  Option  shall  terminate upon the earliest to occur of:

(i)      the Effective Date of the Merger;

(ii) the  termination  of the Merger  Agreement  pursuant to Section 9.1 thereof
other than pursuant to (x) Section 9.1(i) thereof,  (y) 9.1(k) thereof or (z) if
an  Acquisition  Proposal with respect to Parent has been publicly  disclosed to
the shareholders of Parent (and not withdrawn or terminated) prior to the Parent
Meeting, Section 9.1(d) thereof;

(iii) to the extent that (x) an Acquisition  Proposal with respect to Parent has
been  publicly  disclosed to the  shareholders  of Parent (and not  withdrawn or
terminated) prior to the Parent Meeting,  (y) the Merger Agreement is terminated
pursuant  to  Section  9.1(d)  thereof  and (z)  Parent  does not enter into any
agreement providing for the consummation of an Acquisition Proposal with respect
to Parent (it being understood that no confidentiality agreement with respect to
an Acquisition  Proposal shall  constitute such an agreement) and no Acquisition
Proposal  with  respect  to Parent  shall have been  consummated,  in each case,
during  the  twelve  month  period  following  the  termination  of  the  Merger
Agreement, twelve months after the date of such termination; and

(iv) 30 days  following a Trigger Event (or if, at the expiration of such 30 day
period,  the Option  cannot be exercised by reason of any  applicable  judgment,
decree,  order,  law or regulation,  ten business days after such  impediment to
exercise  shall have been  removed or shall have become final and not subject to
appeal,  but in no event under this  clause  (iv) later than 180 days  following
such Trigger Event).

                                      - 2 -



(d)  Notwithstanding  the  foregoing,  the Option may not be exercised and shall
terminate  if (x)  any of the  representations  and  warranties  of the  Company
contained in this Parent Stock Option Agreement or the Merger  Agreement,  which
are qualified as to materiality,  were or shall be inaccurate in any respect, or
any of the  representations  and warranties of the Company  contained  herein or
therein, which are not so qualified, were or shall be inaccurate in any material
respect,  in each case, (1) when made, (2) as of the date of any  termination of
the Merger  Agreement  and (3) as of the date of any  purported  exercise of the
Option,  in the case of clauses  (2) and (3),  as if made as of the date of such
termination or purported exercise,  respectively (except for representations and
warranties  that by their express  provisions  are made as of a specific date or
dates,  which  shall only be deemed  inaccurate  to the extent that they were or
shall have been inaccurate at such times as stated therein),  or (y) at the time
of termination of the Merger Agreement or any purported  exercise of the Option,
the  Company is in  material  breach of any of its  covenants  contained  in the
Merger Agreement or in this Parent Stock Option Agreement.

         3. CONDITIONS TO CLOSING.  The obligation of Parent to issue the Parent
Shares to the Company hereunder is subject to the conditions that:

         (a) the waiting  periods,  if any,  applicable  to the  issuance of the
Parent  Shares under the HSR Act and the  Competition  Act  (Canada)  shall have
expired or been  terminated  and all other  Company  Required  Consents  and the
Parent  Required  Consents in each case  relating to this  Parent  Stock  Option
Agreement  and  required to be obtained  prior to issuance of the Parent  Shares
shall have been obtained,  except where the failure to obtain such other Company
Required  Consents  or the Parent  Required  Consents  would not have a Material
Adverse Effect on the Company or Parent, as the case may be;

         (b) the Parent  Shares  shall have been  authorized  for listing on the
NYSE upon official notice of issuance; and

         (c) no preliminary or permanent  injunction or other order by any court
or other  Governmental  Entity of  competent  jurisdiction  (i)  prohibiting  or
preventing  such issuance or (ii) having any of the effects set forth in Section
8.1(f)(ii) of the Merger Agreement shall have been issued and remain in effect.

The  condition  set forth in paragraph (b) above may be waived by the Company in
its sole discretion.

         4.       CLOSING.  At the Closing,

         (a)  Parent  shall  deliver  to the  Company  a single  certificate  in
definitive  form  representing  the  Parent  Shares,   such  certificate  to  be
registered  in the name of the  Company  and to bear  the  legend  set  forth in
Section 12; and

                                      - 3 -



         (b) The Company shall deliver to Parent the  aggregate  Exercise  Price
for the Parent  Shares by wire  transfer of  immediately  available  funds to an
account to be designated in writing by Parent.

         (c) Parent shall pay all expenses that may be payable in respect of the
preparation, issuance and delivery of stock certificates under this Section 4.

         5.  REPRESENTATIONS  AND  WARRANTIES OF PARENT.  Parent  represents and
warrants to the Company that:

         (a) Parent has taken all  necessary  corporate  action to authorize and
reserve for issuance  and (subject to the  satisfaction  of the  conditions  set
forth in Section 3) to permit it to issue, upon exercise of the Option,  and, at
all times from the date hereof  through the  expiration  of the Option will have
reserved,  authorized and unissued shares of Parent Common Stock  sufficient for
the exercise of the Option and the Parent Shares, upon issuance pursuant hereto,
will be duly and validly issued, fully paid and nonassessable; and

         (b) upon delivery of the Parent Shares to the Company upon the exercise
of the Option,  the Company will acquire the Parent Shares free and clear of all
claims,  liens,  charges,  encumbrances  and  security  interests  of any nature
whatsoever.

         6.   REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.   The  Company
represents and warrants to Parent that:

         (a) any Parent  Shares  acquired  by the Company  upon  exercise of the
Option will be acquired for the Company's own account,  for investment  purposes
only and will not be, and the Option is not being,  acquired by the Company with
a view to the public  distribution  of the Parent  Shares,  in  violation of any
applicable provision of the Securities Act; and

         (b) any Parent  Shares  acquired  by the Company  upon  exercise of the
Option will not be transferred or otherwise  disposed of except in a transaction
registered, or exempt from registration,  under the Securities Act and otherwise
in accordance with this Parent Stock Option Agreement.

         7.       CERTAIN REPURCHASES.

         (a) At the  request of the  Company by written  notice  (the  'Cash-Out
Notice') at any time during which the Option is exercisable  pursuant to Section
2, Parent (or any successor  entity thereof)  shall, to the extent  permitted by
applicable  law and  subject  to the  receipt  by it of any  consent  or  waiver
required  by it  under  the  terms  of any  indenture,  loan  document  or other
contract,   pay  to  the  Company,   in  consideration  of  the  redelivery  and
cancellation  without  exercise  of the  Option  (in whole and not in part),  an
amount in cash (the  'Cash-Out  Amount')  equal to the  difference  between  the
'Market/Offer  Price' (as defined below) for shares of Parent Common Stock as of
the date the  Company  delivers  the  Cash-Out  Notice and the  Exercise  Price,
multiplied  by  the  total  number  of  the  Parent  Shares,  but  only  if  the

                                      - 4 -




Market/Offer  Price is greater  than the  Exercise  Price.  For purposes of this
Section 7, the  'Market/Offer  Price' shall mean, as of any date,  the higher of
(x) the price per  share  offered  as of such  date  pursuant  to any  tender or
exchange  offer or other public  offer with  respect to the highest  Acquisition
Proposal  with  respect  to  Parent  which  was made  prior to such date and not
terminated or withdrawn as of such date (the 'Offer  Price') and (y) Fair Market
Value (as defined  below) as of such date.  As used herein,  'Fair Market Value'
shall be the  average  of the daily  closing  sales  price for a share of Parent
Common  Stock on the NYSE  during the ten NYSE  trading  days prior to the fifth
NYSE trading day immediately  preceding the date such Fair Market Value is to be
determined.  In  the  event  that  the  consideration  offered  pursuant  to any
Acquisition   Proposal  includes  any   consideration   other  than  cash,  such
consideration  shall be valued as follows for purposes of calculating  the Offer
Price:  (i) any  securities  that are  either  listed on a  national  securities
exchange (as defined under the  Securities  Act) or on any  designated  offshore
securities  market (as  defined in  Regulation  S under the  Securities  Act) or
included in a national securities quotation system (as defined in the Securities
Act) (collectively, 'Listed Securities') shall be valued based on the average of
the daily closing sale price of such Listed  Securities for the ten trading days
on such national securities  exchange,  designated offshore securities market or
national securities  quotation system prior to the fifth trading day immediately
preceding  the  date  of  delivery  of  the  Cash-Out   Notice;   and  (ii)  any
consideration  other than cash or Listed Securities shall be valued based on the
written  opinion  of  an  investment  banking  firm  of  nationally   recognized
reputation  selected by the  Company,  which firm is  reasonably  acceptable  to
Parent.  The costs and fees of such  investment  banking firm in connection with
such valuation shall be borne equally by Parent and the Company.

         (b) In the event the Company  exercises its right under this Section 7,
Parent shall,  within ten business days  thereafter,  pay the required amount to
the Company in immediately  available  funds and the Company shall  surrender to
Parent the Option,  and the Company  shall  warrant  that it owns the Option and
that the Option is then free and clear of all liens,  claims,  damages,  charges
and encumbrances of any kind or nature whatsoever.

         8. VOTING OF SHARES.  Following  the date hereof and prior to the fifth
anniversary of the date hereof (the 'Expiration  Date'),  the Company shall vote
any shares of capital stock of Parent  acquired by the Company  pursuant to this
Parent  Stock  Option  Agreement or  otherwise  beneficially  owned  (within the
meaning of Rule 13d-3 promulgated under the Securities  Exchange Act of 1934, as
amended (the 'Exchange Act')), by the Company on each matter submitted to a vote
of  shareholders of Parent for and against such matter in the same proportion as
the vote of all other  shareholders  of Parent  are voted  (whether  by proxy or
otherwise) for and against such matter.

         9.       RESTRICTIONS ON TRANSFER.

         (a) The Parent Shares shall not be directly or indirectly, by operation
of law or  otherwise,  sold,  assigned,  pledged,  or  otherwise  disposed of or
transferred, other than in accordance with Section 9(b) or Section 10.

                                      - 5 -



         (b) The Company shall be permitted to sell, assign, transfer or dispose
of any Parent Shares  beneficially owned by it if such sale is made (i) pursuant
to a transaction that has been approved or recommended,  or otherwise determined
to be fair to and in the best  interests  of the  shareholders  of Parent,  by a
majority  of the members of the Board of  Directors  of Parent,  which  majority
shall  include  a  majority  of  directors  who  were  directors  prior  to  the
announcement  of such  transaction  or (ii) to any purchaser or  transferee  who
would not, to the Company's  knowledge  after  reasonable  inquiry,  immediately
following such sale, assignment, transfer or disposal beneficially own more than
1% of Parent Common Stock on a fully diluted basis.

         10.      REGISTRATION RIGHTS.

         (a) On or  prior  to the  second  anniversary  of the  exercise  of the
Option, the Company may by written notice (the 'Registration  Notice') to Parent
request  Parent  to  register  under the  Securities  Act all or any part of the
Parent Shares  beneficially owned by the Company (the 'Registrable  Securities')
pursuant to a bona fide firm commitment  underwritten public offering,  in which
the Company and the  underwriters  shall effect as wide a  distribution  of such
Registrable  Securities  as is reasonably  practicable  and shall use their best
efforts to prevent any person  (including any group (as used in Rule 13d-5 under
the Exchange  Act)) and its  affiliates  from  purchasing  through such offering
Parent  Shares  representing  more than 1% of the  outstanding  shares of Parent
Common Stock on a fully diluted basis (a 'Permitted Offering').

         (b) The Registration Notice shall include a certificate executed by the
Company and its proposed  managing  underwriter,  which  underwriter shall be an
investment  banking firm of  nationally  recognized  standing  (the  'Manager'),
stating that

(i)  they have a good faith intention to commence promptly a Permitted Offering,
and

(ii) the  Manager  in good faith  believes  that,  based on the  then-prevailing
market conditions,  it will be able to sell the Registrable  Securities at a per
share price equal to at least 80% of the then Fair Market Value of such shares.

         (c) Parent (and/or any person designated by the Parent) shall thereupon
have the option  exercisable by written  notice  delivered to the Company within
ten business days after the receipt of the Registration  Notice,  irrevocably to
agree to purchase all or any part of the Registrable  Securities  proposed to be
so sold for cash at a price (the 'Option Price') equal to the product of (i) the
number of Registrable  Securities to be so purchased by Parent and (ii) the then
Fair Market Value of such shares.

         (d) Any purchase of Registrable  Securities by Parent (or its designee)
under  Section  10(c) shall take place at a closing to be held at the  principal
executive  offices of Parent or at the offices of its counsel at any  reasonable
date and time  designated  by Parent  and/or such designee in such notice within
twenty  business  days after  delivery of such  notice,  and any payment for the
shares to be so purchased  shall be made by delivery at the time of such closing
in immediately available funds.

                                      - 6 -



         (e) If Parent  does not elect to exercise  its option  pursuant to this
Section  10  with  respect  to all  Registrable  Securities,  it  shall  use its
reasonable  efforts  to effect,  as  promptly  as  reasonably  practicable,  the
registration under the Securities Act of the unpurchased  Registrable Securities
proposed to be so sold; provided, however, that

(i) The Company shall not be entitled to more than an aggregate of two effective
registration statements hereunder, and

(ii) Parent will not be required to file any such registration  statement during
any period of time (not to exceed 180 days after such request) when:

(A)  Parent  is in  possession  of  material  non-public  information  which  it
reasonably  believes  would be  detrimental to be disclosed at such time and, in
the opinion of counsel to Parent, such information would have to be disclosed if
a registration statement were filed at that time;

(B) Parent is required  under the Securities  Act to include  audited  financial
statements  for any period in such  registration  statement  and such  financial
statements are not yet available for inclusion in such  registration  statement;
or

(C) Parent determines,  in its reasonable judgment, that such registration would
interfere  with  any  financing,   acquisition  or  other  material  transaction
involving Parent or any of its affiliates.

         (f)  Parent  shall  use  its  reasonable  best  efforts  to  cause  any
Registrable  Securities  registered  pursuant to this Section 10 to be qualified
for sale  under the  securities  or Blue Sky laws of such  jurisdictions  as the
Company  may  reasonably   request  and  shall  continue  such  registration  or
qualification in effect in such  jurisdiction;  provided,  however,  that Parent
shall not be  required  to  qualify  to do  business  in, or  consent to general
service of process in, any jurisdiction by reason of this provision.

         (g) The registration rights set forth in this Section 10 are subject to
the condition that the Company shall provide Parent with such  information  with
respect to its Registrable  Securities,  the plans for the distribution thereof,
and such other  information  with  respect to such holder as, in the  reasonable
judgment of counsel for Parent, is necessary to enable Parent to include in such
registration  statement all material facts required to be disclosed with respect
to a registration thereunder.

         (h) A registration  effected under this Section 10 shall be effected at
Parent's expense, except for underwriting discounts and commissions and the fees
and the  expenses of counsel to the  Company,  and Parent  shall  provide to the
underwriters such documentation (including certificates, opinions of counsel and
'comfort' letters from auditors) as is customary in connection with underwritten
public offerings as such underwriters may reasonably require.

                                      - 7 -



         (i) In connection with any registration effected under this Section 10,
the parties agree

(i)  to indemnify each other and the underwriters in the customary manner,

(ii) to enter into an underwriting agreement in form and substance customary for
transactions  of  such  type  with  the  Manager  and  the  other   underwriters
participating in such offering, and

(iii) to take  further  reasonable  actions  which are  necessary to effect such
registration and sale.

         (j) Parent  shall be entitled to include  (at its  expense)  additional
shares of its common stock in a registration  effected  pursuant to this Section
10 only if and to the extent the Manager determines that such inclusion will not
adversely affect the prospects for success of such offering.

         11. ADJUSTMENT UPON CHANGES IN  CAPITALIZATION.  Without  limitation to
any restriction on Parent  contained in this Parent Stock Option Agreement or in
the  Merger  Agreement,  in the event of any  change in Parent  Common  Stock by
reason  of  stock  dividends,   splitups,   mergers  (other  than  the  Merger),
recapitalizations,  combinations,  exchange of shares or the like,  the type and
number of shares or  securities  subject to the Option  and the  Exercise  Price
shall  be  adjusted  appropriately  and  proper  provision  will  be made in the
agreements  governing  such  transaction,  so that the Company will receive upon
exercise  of the Option the  number and class of shares or other  securities  or
property  that the Company would have received in respect of Parent Common Stock
if the Option had been exercised  immediately  prior to such event or the record
date  therefor,  as applicable.  Subject to Section 1, and without  limiting the
parties'  relative rights and  obligations  under the Merger  Agreement,  if any
additional  shares of Parent  Common  Stock  are  issued  after the date of this
Parent Stock Option  Agreement (other than pursuant to an event described in the
first  sentence  of this  Section  11(a)),  the number of Parent  Shares will be
adjusted so that,  after such issuance,  it equals 19.9% of the number of shares
of Parent Common Stock then issued and outstanding, without giving effect to any
shares subject to the Option.

         12. RESTRICTIVE LEGENDS. Each certificate representing shares of Parent
Common  Stock  issued  to the  Company  hereunder  shall  include  a  legend  in
substantially the following form:

THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR ANY STATE  SECURITIES OR BLUE SKY
LAWS, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM
SUCH  REGISTRATION IS AVAILABLE.  SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS  ON TRANSFER  AS SET FORTH IN THE PARENT  STOCK  OPTION  AGREEMENT,
DATED AS OF NOVEMBER 22,  1998, A COPY OF WHICH MAY BE OBTAINED  FROM THE ISSUER
UPON REQUEST.

                                      - 8 -



It is understood and agreed that:

(i) the reference to the resale  restrictions  of the  Securities  Act and state
securities  or Blue Sky laws in the above legend shall be removed by delivery of
substitute  certificate(s)  without such  reference,  if the Company  shall have
delivered to Parent a copy of a letter from the staff of the  Commission,  or an
opinion of counsel, in form and substance  satisfactory to Parent, to the effect
that such legend is not  required  for  purposes of the  Securities  Act or such
laws;

(ii) the reference to the  provisions  to this Parent Stock Option  Agreement in
the above  legend  shall be removed by  delivery  of  substitute  certificate(s)
without such reference if the shares have been sold or transferred in compliance
with  the   provisions   of  this  Parent  Stock  Option   Agreement  and  under
circumstances that do not require the retention of such reference; and

(iii) the legend  shall be  removed in its  entirety  if the  conditions  in the
preceding clauses (i) and (ii) are both satisfied.

In addition, such certificates shall bear any other legend as may be required by
law.  Certificates  representing  shares sold in a  registered  public  offering
pursuant  to  Section 10 shall not be  required  to bear the legend set forth in
this Section 12.

         13.   BINDING EFFECT: NO ASSIGNMENT: NO THIRD PARTY BENEFICIARIES.  (a)
This Parent Stock Option Agreement shall be binding upon and inure solely to the
benefit  of  each  party  hereto  and  their respective successors and permitted
assigns.

         (b)  Except as  expressly  provided  for in this  Parent  Stock  Option
Agreement,  neither  this  Parent  Stock  Option  Agreement  nor the  rights  or
obligations  of either  party  hereto are  assignable  except  with the  written
consent of the other party.

         (c) Nothing contained in this Parent Stock Option Agreement, express or
implied, is intended to confer upon any person other than the parties hereto and
their respective permitted assigns any rights or remedies hereunder.

         (d) Any  Parent  Shares  sold by the  Company  in  compliance  with the
provisions of Section 10 shall,  upon  consummation of such sale, be free of the
restrictions  imposed  with  respect to such shares by this Parent  Stock Option
Agreement.

         14.  SPECIFIC  PERFORMANCE.  The parties hereto agree that  irreparable
harm would occur in the event that any of the  provisions  of this Parent  Stock
Option  Agreement were not performed in accordance with their specified terms or
were otherwise breached.  It is accordingly agreed that the parties hereto shall
be entitled to an injunction or injunctions  to prevent  breaches of this Parent
Stock Option  Agreement  and to enforce  specifically  the terms and  provisions
hereof in any court of the United States or any state having jurisdiction,  this
being in  addition to any other  remedy to which they are  entitled at law or in
equity.

                                      - 9 -



         15. VALIDITY.  (a) The invalidity or  unenforceability of any provision
of this  Parent  Stock  Option  Agreement  shall  not  affect  the  validity  or
enforceability  of the other  provisions of this Parent Stock Option  Agreement,
which shall remain in full force and effect.

         (b) In the  event  any  court or other  competent  authority  holds any
provision  of  this  Parent  Stock  Option   Agreement  to  be  null,   void  or
unenforceable,  the parties  hereto shall  negotiate in good faith the execution
and delivery of an amendment to this Parent Stock Option  Agreement in order, as
nearly as possible, to effectuate, to the extent permitted by law, the intent of
the parties  hereto with  respect to such  provision  and the  economic  effects
thereof.

         (c) Each  party  agrees  that,  should  any  court  or other  competent
authority  hold any  provision  of this Parent  Stock  Option  Agreement or part
hereof to be null, void or unenforceable,  or order any party to take any action
inconsistent  herewith,  or not take any action required herein, the other party
shall not be entitled to specific  performance  of such provision or part hereof
or to any other remedy,  including but not limited to money damages,  for breach
hereof or of any other  provision of this Parent Stock Option  Agreement or part
hereof as the result of such holding or order.

         16.  NOTICES.  All notices and other  communications  under this Parent
Stock  Option  Agreement  shall be in  writing  and shall be given (and shall be
deemed to have been duly given  upon  receipt)  by  delivery  in person,  if (a)
delivered  personally,  by  overnight  courier,  telecopy  or by  registered  or
certified mail, postage prepaid, return receipt requested addressed as follows:

         A.       If to Parent, to:

                  The B.F.Goodrich Company
                  4020 Kinross Lakes Pkwy.
                  Richfield, OH  44286-9368

                  Attention:  Terrence G. Linnert
                              Sr. Vice President and General Counsel
                              Fax:  (330) 659-7737

                  with a copy to:

                  Squire, Sanders & Dempsey L.L.P.
                  4900 Key Tower
                  127 Public Square
                  Cleveland, Ohio  44114-1304

                  Attention:  Gordon S. Kaiser, Esq.
                              Fax: (216) 479-8780


                                      - 10 -



         B.       If to the Company, to:

                  Coltec Industries Inc
                  3 Coliseum Centre
                  2550 West Tyvola Road
                  Charlotte, NC  28217

                  Attention:  Corporate Secretary
                              Fax:  (704) 423-7011

                  with a copy to:

                  Cravath, Swaine & Moore
                  825 Eighth Avenue
                  New York, New York 10019

                  Attention:  George W. Bilicic, Jr., Esq. and
                              Allen Finkelson, Esq.
                              Fax: (212) 474-3700

or to such other  address as either party may have  furnished to the other party
in writing in accordance with this Section.

         17. GOVERNING LAW: CHOICE OF FORUM.  This Parent Stock Option Agreement
shall be governed in all respects, including validity, interpretation and effect
by and construed in accordance with the laws of the Commonwealth of Pennsylvania
without giving effect to the provisions  thereof relating to conflicts of law to
the extent that the  application  of the laws of another  jurisdiction  would be
required thereby.

         18.      INTERPRETATION.

         (a) When  reference is made in this Parent  Stock  Option  Agreement to
Articles,  Sections,  Schedules  or  Exhibits,  such  reference  shall  be to an
Article,  Section, Schedule or Exhibit of this Parent Stock Option Agreement, as
the case may be, unless otherwise indicated.

         (b) The headings  contained in this Parent Stock Option  Agreement  are
for  reference  purposes  only and shall not  affect in any way the  meaning  or
interpretation of the Parent Stock Option Agreement.

         (c) Whenever the words  'include,'  'includes,' or 'including' are used
in this Parent Stock Option Agreement and are not followed by the words 'without
limitation',  they  shall  be  deemed  to be  followed  by  the  words  'without
limitation.'  The words 'hereof',  'herein' and 'hereunder' and words of similar
import  when used in this  Parent  Stock  Option  Agreement  shall refer to this
Parent Stock Option Agreement as a whole and not to any particular  provision of
this Parent Stock Option Agreement.

                                      - 11 -



         (d)  Whenever  'or' is used in this Parent  Stock  Option  Agreement it
shall be construed in the nonexclusive sense.

         19.  COUNTERPARTS;  EFFECT.  This Parent Stock Option  Agreement may be
executed  in one or more  counterparts,  each of which  shall be deemed to be an
original,  but all of which shall constitute one and the same agreement and each
of which shall only become  effective  when one or more  counterparts  have been
signed by each party and delivered to the other party.

         20.  AMENDMENTS;  WAIVER.  This Parent  Stock Option  Agreement  may be
amended by the parties hereto and the terms and conditions  hereof may be waived
but, in the case of an amendment,  only by an  instrument  in writing  signed on
behalf  of each of the  parties  hereto,  or,  in the  case of a  waiver,  by an
instrument signed on behalf of the party waiving compliance.

         21. LOSS OR MUTILATION.  Upon receipt b y Parent of evidence reasonably
satisfactory to it of the loss, theft,  destruction or mutilation of this Parent
Stock  Option  Agreement,  and (in the case of loss,  theft or  destruction)  of
reasonably satisfactory indemnification,  and upon surrender and cancellation of
this Parent  Stock  Option  Agreement,  if  mutilated,  Parent will  execute and
deliver a new Parent Stock Option Agreement of like tenor and date.

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


                              THE B.F.GOODRICH COMPANY


                               By:
                                    Name:   David L. Burner
                                    Title:  Chairman and Chief Executive Officer


                               COLTEC INDUSTRIES INC


                               By:
                                    Name:   John W. Guffey, Jr.
                                    Title:  Chairman and Chief Executive Officer



                                      - 12 -