Case Doc 5947 Filed 05/12/17 Entered 05/12/17 19:31:21 Desc Main Document Page 1 of 30

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1 Document Page 1 of 30 IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA Charlotte Division IN RE: GARLOCK SEALING TECHNOLOGIES LLC, et al., Debtors. 1 Case No. 10-BK Chapter 11 Jointly Administered DEBTORS MOTION FOR AN ORDER APPROVING SETTLEMENT AGREEMENT WITH EMPLOYERS MUTUAL CASUALTY COMPANY Garlock Sealing Technologies LLC ( Garlock ), Garrison Litigation Management Group, Ltd. ( Garrison ), The Anchor Packing Company ( Anchor and collectively with Garlock and Garrison, the Garlock Debtors ), and OldCo, LLC, successor by merger to Coltec Industries Inc ( Coltec ), 2 debtors and debtors-in-possession in the above-captioned cases (collectively, the Debtors ), hereby move the Court for approval of the settlement by and among (a) the Debtors and EnPro Holdings, Inc. (collectively with the Debtors, the Coltec Parties ); and (b) Employers Mutual Casualty Company ( Employers Mutual ). The settlement is more particularly described in the agreement attached to this Motion as Exhibit 1 (the Settlement Agreement ). In support of this Motion, the Debtors respectfully state as follows: PRELIMINARY STATEMENT Under the Comprehensive Settlement (defined below) and Section of the Joint 1 The debtors in these jointly administered cases are Garlock Sealing Technologies LLC; Garrison Litigation Management Group, Ltd.; The Anchor Packing Company and OldCo, LLC, successor by merger to Coltec Industries Inc. 2 For convenience, the term Coltec in this Motion refers to OldCo, LLC s predecessor, Coltec Industries Inc, when referring to events prior to the Coltec Restructuring (as described in the Disclosure Statement filed in the Garlock Bankruptcy Case (D.E. 5444, Section 2.5.3), and refers to OldCo, LLC when referring to events subsequent to the Coltec Restructuring

2 Document Page 2 of 30 Plan, 3 the Debtors retain ownership of all their rights respecting insurance policies, and the Debtors have the sole right to sue for and compromise claims against insurance carriers. Employers Mutual issued certain policies of insurance to Coltec Parties, which provide liability coverage to the Debtors. The Debtors have sought coverage from Employers Mutual under the Employers Mutual Policy 4 for certain liabilities, costs, expenses and losses arising out of Asbestos Claims. Under the Joint Plan, Employers Mutual is an Asbestos Insurance Company and the limits remaining under the Employers Mutual Policy are Available Shared Insurance. As more fully set forth in the Settlement Agreement, Employers Mutual has agreed to pay the Coltec Parties $10,000,000 (the Settlement Amount ) in three installments. Employers Mutual will pay the first installment totaling $3,330,000 within thirty (30) days of the Effective Date (the First Installment Payment Date ); Employers Mutual will pay the second installment totaling an additional $3,330,000 within one year of the First Installment Payment Date; and Employers Mutual will pay the third and final installment totaling $3,340,000 within two years of the First Installment Payment Date. In exchange for payment of the Settlement Amount, all the Coltec Parties rights, obligations and liabilities under the Employers Mutual Policy shall be terminated. JURISDICTION, VENUE AND PREDICATES FOR RELIEF 1. This matter is a core proceeding pursuant to 28 U.S.C. 157(b), and the Court has jurisdiction pursuant to 28 U.S.C. 157 and Venue of these proceedings and this Motion is proper in this district under 28 U.S.C and The term Joint Plan refers to the Modified Joint Plan of Reorganization of Garlock Sealing Technologies LLC et al. and OldCo, LLC, Proposed Successor by Merger to Coltec Industries Inc, dated May 20, 2016 (as modified June 21, 2016, July 29, 2016 and December 2, 2016). 4 Capitalized terms not otherwise defined herein have the meanings assigned to them in the Settlement Agreement and, where applicable, the Joint Plan

3 Document Page 3 of The statutory bases for the relief requested herein are Bankruptcy Code 105 and 524(g) and Bankruptcy Rule BACKGROUND 3. On June 5, 2010 (the Garlock Petition Date ), each of the Garlock Debtors filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code in this Court (collectively, the Garlock Bankruptcy Case ). On January 30, 2017, Coltec filed its voluntary petition for relief under chapter 11 of the Bankruptcy Code (the Coltec Bankruptcy Case ). Each of the Debtors is operating its business and managing its property as a debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 4. On March 17, 2016, Coltec, Garlock and Garrison entered into the Term Sheet for Permanent Resolution of All Present and Future GST Asbestos Claims and Coltec Asbestos Claims (the Comprehensive Settlement ) with the Official Committee of Asbestos Personal Injury Claimants in the Garlock Bankruptcy Case, the Future Asbestos Claimants Representative in the Garlock Bankruptcy Case, an ad hoc committee for persons holding present Coltec Asbestos Claims (as defined below), and Joseph W. Grier, III, as ad hoc representative for persons with future Coltec Asbestos Claims (collectively, the Asbestos Claimants Representatives ). The Comprehensive Settlement provides for the permanent settlement and resolution of all present and future asbestos-related personal injury and wrongful death claims against Garlock and Garrison (as defined in the Joint Plan, collectively, GST Asbestos Claims ) and all present and future asbestos personal injury and wrongful death claims against Coltec (as defined in the Joint Plan, Coltec Asbestos Claims ) in accordance with its terms. 5. The Joint Plan has been overwhelmingly accepted by both the holders of GST Asbestos Claims and the holders of Coltec Asbestos Claims

4 Document Page 4 of Coltec purchased certain general liability insurance policies that cover losses associated with product liability claims against Coltec and certain of its subsidiaries, including, without limitation, the Employers Mutual Policy. Under the Employers Mutual Policy, the Debtors are entitled to be indemnified for losses associated with asbestos claims against the Debtors that trigger coverage under that policy. 7. Coltec and certain of its excess liability insurers entered into an Excess Insurance Company Funding Agreement, dated June 16, 1995 (the EIFA ), addressing those parties respective rights and obligations under certain excess liability insurance policies for Asbestos Claims brought against the Coltec Parties. 8. Coltec and Employers Mutual are parties to an Excess Insurance Company Funding Agreement Subscription by Employers Mutual Casualty Company dated January 24, 2006 (the Subscription Agreement ), under which Employers Mutual subscribed to the EIFA, subject to the terms and conditions set forth in the Subscription Agreement. 9. Under the EIFA and the Subscription Agreement, Employers Mutual has reimbursed defense and indemnity costs for Asbestos Claims. Under the EIFA and the Subscription Agreement, the Debtors have rights to coverage under the Employers Mutual Policy for liabilities, costs, expenses, and losses arising out of Asbestos Claims that the Debtors have incurred or may incur. pursuant to the Subscription Agreement and the EIFA, Employers Mutual has exhausted the applicable products hazard liability limits of the excess liability policies that it issued to predecessors of OldCo (as set forth in the Subscription Agreement), with the exception of the Employers Mutual Policy. As of the Garlock Petition Date, the total remaining limits under the Employers Mutual Policy are $10,000,

5 Document Page 5 of Upon consummation of the Joint Plan, Garlock and Coltec will be discharged of any further liability for Asbestos Claims and permanently protected from such claims by the Asbestos Channeling Injunction. 11. Employers Mutual filed the Objection to Confirmation of Joint Plan of Reorganization of Garlock Sealing Technologies LLC, et al. and OldCo, LLC, Proposed Successor by Merger to Coltec Industries Inc (D.E. 5612) (the Employers Mutual Objection ) objecting to the Joint Plan to the extent Employers Mutual was not identified as an Asbestos Protect Party under the Joint Plan. The Settlement 12. The Coltec Parties and Employers Mutual have entered into the Settlement Agreement to facilitate the resolution of all claims and interests arising out of the Employers Mutual Policy. 13. The primary terms of the Settlement Agreement are these: 5 a. Employers Mutual will pay the Settlement Amount of $10,000,000 to the Coltec Parties in three installments. Employers Mutual will pay the first installment totaling $3,330,000 on the First Installment Payment Date; Employers Mutual will pay the second installment totaling an additional $3,330,000 within one year of the First Installment Payment Date; and Employers Mutual will pay the third and final installment totaling $3,340,000 within two years of the First Installment Payment Date; b. So long as the Coltec Parties fulfill their obligations under the Settlement Agreement, Employers Mutual will withdraw the Employers Mutual Objection and not object to the Joint Plan or Disclosure Statement and will withdraw any Claims (including proofs of claim filed) against the Coltec Parties in the Bankruptcy Cases; c. The Debtors will designate Employers Mutual as an Asbestos Protected Party entitled to the benefits of an Asbestos Channeling Injunction for Asbestos Claims under Sections and (f) of the Plan; 5 The summary of the Settlement Agreement set forth in paragraph 13 is qualified in its entirety by the terms of the Settlement Agreement. In the event of any inconsistency between those terms and their description in this Motion, the terms of the Settlement Agreement shall control. The Parties intend to be bound by all terms of the Settlement Agreement, even if not expressly set forth in this Motion

6 Document Page 6 of 30 d. The parties will release each other from any and all Claims arising out of the Employers Mutual Policy. 14. The effectiveness of the Settlement Agreement is conditioned upon the confirmation of the Joint Plan. The Settlement Agreement becomes effective upon the occurrence of the Effective Date. BASIS FOR RELIEF The Settlement Agreement Satisfies the Requirements of Bankruptcy Rule Compromises are favored in bankruptcy. 9 Collier on Bankruptcy [1] (15th ed. 1993); see Official Comm. of Unsecured Creditors v. White Plains Joint Venture (In re Bond), No , 1994 WL 20107, at *3 (4th Cir. 1994) (quoting same). 16. Under section 105(a) of the Bankruptcy Code, courts have expansive equitable powers to issue any order that is in the interest of preserving or protecting the value of estate assets. See, e.g., Chinichian v. Campolongo (In re Chinichian), 784 F.2d 1440, 1443 (9th Cir. 1986) ( Section 105 sets out the power of the bankruptcy court to fashion orders as necessary pursuant to the purposes of the Bankruptcy Code. ); see also Bird v. Crown Convenience (In re NWFX, Inc.), 864 F.2d 588, 590 (8th Cir. 1988) ( The overriding consideration in bankruptcy... is that equitable principles govern. ); In re Cooper Props. Liquidating Trust, Inc., 61 B.R. 531, 537 (Bankr. W.D. Tenn. 1986) ( [T]he Bankruptcy Court is one of equity and as such it has a duty to protect whatever equities a debtor may have in property for the benefit of their creditors as long as that protection is implemented in a manner consistent with the bankruptcy laws. ). 17. Bankruptcy Rule 9019(a) provides that [o]n motion by the trustee and after notice and a hearing, the court may approve a compromise or settlement. Before approving a settlement under Bankruptcy Rule 9019, a court must determine that the proposed settlement is in the best interests of the debtor s estate. St. Paul Fire & Marine Ins. Co. v. Vaughn, 779 F.2d

7 Document Page 7 of , 1010 (4th Cir. 1985) (upholding bankruptcy court s approval of settlement because it was in the best interests of the estate as a whole ); In re Babb, Case No JRL, 2009 WL , at *3 (Bankr. E.D.N.C. Jan. 26, 2009) ( [T]he court must consider the probability of success in litigation and assess the wisdom of the proposed compromise in determining whether the compromise is fair and equitable and in the best interests of the estate. ). 18. The United States Supreme Court has stated that, in determining the fairness of a compromise, a court should: [F]orm an educated estimate of the complexity, expense and likely duration of such litigation, the possible difficulties of collecting on any judgment which might be obtained, and all other factors relevant to a full and fair assessment of the wisdom of the proposed compromise. Basic to this process in every instance, of course, is the need to compare the terms of the compromise with the likely rewards of the litigation. Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, (1968). Courts within the Fourth Circuit apply the TMT Trailer case in evaluating a settlement under Bankruptcy Rule 9019(a), and have identified several factors to be considered, including: whether the settlement is fair, equitable, and in the best interest of the estate; the probability of success in litigation; the complexity, duration, and expense of the litigation; inconvenience and delay attending the litigation; and the interest of the creditors. Maloy v. Sigmon (In re Maloy), Case No , 2009 WL , at *3 (Bankr. W.D.N.C. Dec. 7, 2009); In re Babb, 2009 WL , at *3; In re Lanier, 383 B.R. 302, 307 (Bankr. E.D.N.C. 2008). 19. On the probability of success, [i]t is sufficient to present the Court with the legal positions asserted by each side and the facts relevant to those issues. The Court itself can evaluate the likelihood of the parties prevailing in that litigation to determine whether the settlement is reasonable. In re Wash. Mutual, Inc., 442 B.R. 314, 330 (Bankr. D. Del. 2011)

8 Document Page 8 of But it is not for the bankruptcy court to decide the numerous questions of law and fact [presented] but rather to canvass the issues and see whether the settlement fall[s] below the lowest point in the range of reasonableness. In re Maloy, 2009 WL , at *3 (citations omitted); see also Flinn v. FMC Corp., 528 F.2d 1169, (4th Cir. 1975); In re Capmark Fin. Grp. Inc., 438 B.R. 471, 515 (Bankr. D. Del. 2010). 21. If a settlement is negotiated at arm s length and with no hint of collusion, the bankruptcy court will give deference to the exercise of each party s business judgment. In re Bond, 1994 WL 20107, at *4 ( Thus, when a proposed settlement offers benefits to the estate at the time the parties enter into the agreement, we think a bankruptcy court does not abuse its discretion by deferring to the business judgment of the parties who negotiated the compromise, especially when the parties negotiated at arm s length and there is no hint of collusion. ). 22. Here, the Settlement Agreement is a product of significant arm s-length, good faith bargaining among the Coltec Parties and Employers Mutual and resolves significant issues and potentially costly litigation for the Debtors and the estate. The Debtors believe that the proposed compromise is fair and equitable, in the best interests of the Debtors bankruptcy estate, and avoids the administrative costs and risk of loss that would arise in connection with further litigation of the issues set forth in this Motion. Accordingly, the Settlement Agreement is well within the Debtors reasonable business judgment, and in any event, exceeds the lowest point in the range of reasonableness. 23. Section of the Joint Plan a plan overwhelmingly accepted by both the holders of GST Asbestos Claims and the holders of Coltec Asbestos Claims provides that the Debtors have the sole right to sue for and compromise claims against insurance carriers. Under this authority, the Debtors have reached a Settlement Agreement that provides significant

9 Document Page 9 of 30 benefits to the Debtors and the estate. First, Employers Mutual has agreed to pay the full amount of the remaining products hazard limits under the Employers Mutual Policy. 6 Although Employers Mutual pays the Settlement Amount over time, this is appropriate because the full coverage amount under the Employers Mutual Policy will not come due until the Asbestos Trust pays future claims that trigger the Employers Mutual Policy. Second, Employers Mutual agrees to withdraw the Employers Mutual Objection, to withdraw any Claims against the estate, and to release the Coltec Parties for any Claims arising out of the Employers Mutual Policy. 24. In exchange for these benefits, Employers Mutual receives a release from the Coltec Parties for Claims arising from the Employers Mutual Policy and a designation as an Asbestos Protected Party entitled to the benefits of an Asbestos Channeling Injunction for Asbestos Claims under Sections and (f) of the Plan. These terms result in minimal detriment to the Debtors and the estate because Employers Mutual has agreed to pay the full amount of the remaining products hazard limits under the Employers Mutual Policy. NOTICE 25. The Debtors have served notice of this Motion in accordance with the notice procedures approved by the Court [D.E. 48 in the Garlock Bankruptcy Case; D.E. 49 in the Coltec Bankruptcy Case] and submit that, given the nature of the relief requested, no other or further notice need be given. No previous application for the relief requested herein has been made by the Debtors to this or any other court. 6 The Debtors asserted claims for coverage for Asbestos Claims under the products hazard coverage of the Employers Mutual Policy because those claims result from the claimants alleged exposure to the Debtors asbestoscontaining products after those products had been sold into commerce. See, e.g., Frontier Insulation, Inc. v. Merchants Mut. Ins. Co., 690 N.E. 2d 866, 869 (N.Y. 1997) (explaining products hazard coverage)

10 Document Page 10 of 30 WHEREFORE, the Debtors respectfully request that the Court enter an Order, substantially in the form attached to the Settlement Agreement as Exhibit A: A. Approving the Settlement Agreement, and any agreements, documents, or instruments executed in connection with or pursuant to the Settlement Agreement, subject to all terms and conditions therein, including without limitation the condition that the Joint Plan be confirmed and consummated before the Settlement Agreement binds the Coltec Parties; B. Authorizing the parties to the Settlement Agreement to take all actions necessary to implement the terms of the Settlement Agreement; C. Permanently staying, restraining, and enjoining all Entities on notice of the Motion that have held or asserted, that hold or assert, or that may in the future hold or assert any Claims or interests against any of the Employers Mutual Policy, from asserting any such Claim or interest against Employers Mutual and from continuing, commencing, or otherwise proceeding or taking any action against Employers Mutual to enforce such Claim or interest or for the purpose of directly or indirectly collecting, recovering or receiving payments from Employers Mutual under the Employers Mutual Policy with respect to any such Claim or interest; D. Providing that, subject to the occurrence of the Effective Date, Employers Mutual shall be protected from Asbestos Claims under the Plan and Asbestos Channeling Injunction as an Asbestos Protected Party; E. Waiving, to the extent applicable, the notice requirements under Bankruptcy Rule 6004(h); and F. Providing such other and further relief as the Court deems just and proper

11 Document Page 11 of 30 This 12th day of May, Respectfully submitted, /s/ Garland S. Cassada Garland S. Cassada N.C. Bar No Jonathan C. Krisko N.C. Bar No Richard C. Worf, Jr. N.C. Bar No ROBINSON BRADSHAW & HINSON, P.A. 101 North Tryon Street, Suite 1900 Charlotte, North Carolina Telephone: (704) Facsimile: (704) Special Corporate and Litigation Counsel to the Debtors Garlock Sealing Technologies LLC, Garrison Litigation Management Group, Ltd., The Anchor Packing Company, and OldCo, LLC

12 Document Page 12 of 30 Exhibit 1 (Settlement Agreement)

13 Document Page 13 of 30 SETTLEMENT AGREEMENT AND RELEASE BETWEEN THE COLTEC PARTIES AND EMPLOYERS MUTUAL CASUALTY COMPANY This Settlement Agreement and Release ("Agreement") is entered into by and between OldCo, LLC f/k/a Coltec Industries Inc ("OldCo"), EnPro Holdings, Inc. ("EHI"), Garlock Sealing Technologies LLC ("GST"), Garrison Litigation Management Group, Ltd. ("Garrison"), and The Anchor Packing Company ("Anchor," and collectively with Garrison and GST, the "Garlock Debtors;" and the Garlock Debtors together with EHI and OldCo, the "Coltec Parties"); and Employers Mutual Casualty Company and its managing general agent and attorney-in-fact, ProSight Specialty Management Company, Inc., formerly Mutual Marine Office, Inc. (collectively "Employers Mutual"). The Coltec Parties and Employers Mutual shall be referred to collectively herein as the "Parties." RECITALS WHEREAS, Employers Mutual issued certain excess liability insurance policies to Colt Industries, Inc., a predecessor of OldCo; WHEREAS, OldCo and/or the Garlock Debtors have incurred and may in the future incur certain liabilities, costs, expenses, and losses arising out of Asbestos Claims (as defined in the "Plan" defined below); WHEREAS, OldCo and/or the Garlock Debtors have sought coverage from Employers Mutual under the Employers Mutual Policy (as defined below) for certain Asbestos Claims; WHEREAS, on or about June 16, 1995, OldCo's predecessor Coltec Industries Inc ("Coltec") and certain of its excess liability insurers entered into an Excess Insurance Company Funding Agreement (the "EIFA"), addressing those parties' respective rights and obligations under certain excess liability insurance policies for Asbestos Claims brought against the Coltec Parties; WHEREAS, on or about January 24, 2006, Coltec and Employers Mutual entered into an Excess Insurance Company Funding Agreement Subscription by Employers Mutual Casualty Company (the "Subscription Agreement"), under which Employers Mutual subscribed to the EIFA, subject to the terms and conditions set forth in the Subscription Agreement; WHEREAS, pursuant to the Subscription Agreement and the EIFA, Employers Mutual has made periodic payments to or for the benefit of GST in connection with Asbestos Claims; WHEREAS, pursuant to the Subscription Agreement and the EIFA, Employers Mutual has exhausted the applicable products hazard liability limits of the excess liability policies that it issued to predecessors of OldCo (as set forth in the Subscription Agreement), with the exception of the Employers Mutual Policy; WHEREAS, on the Petition Date, each of the Garlock Debtors filed a voluntary petition for relief under chapter 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Western District of North Carolina (the "Bankruptcy Court"), which

14 Document Page 14 of 30 cases are jointly administered and currently pending as Case No (the "Bankruptcy Cases"); WHEREAS, on January 30,2017, OldCo filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code (the "OldCo Chapter 11 Case"), and on February 3, 2017, the Bankruptcy Court issued an order providing for the joint administration of the OldCo Chapter 11 Case with the Bankruptcy Cases; WHEREAS, the Parties anticipate that the Coltec Parties' liability for Asbestos Claims will be resolved as set forth in the Plan (as defined below); WHEREAS, pursuant to the terms of and as defined in the Plan, Employers Mutual is an "Asbestos Insurance Entity," and the limits remaining under the Employers Mutual Policy are "Available Shared Insurance;" and WHEREAS, in consideration of payment of the Settlement Amount (as defined below) and other consideration as more fully set forth herein, the Parties intend to adopt a full, final settlement and policy buyback that releases and terminates all rights, obligations and liabilities of the Parties under the Employers Mutual Policy, as more fully set forth in this Agreement. NOW, THEREFORE, for good and valuable consideration, the Parties agree as follows: AGREEMENT 1. DEFINITIONS The following definitions apply to capitalized terms wherever those terms appear throughout this Agreement or in the schedules, attachments and exhibits to this Agreement. Capitalized terms in the prefatory paragraph and the preceding recitals have the meanings ascribed to them in the prefatory paragraph or recitals, as applicable. Capitalized terms not defined herein have the meanings ascribed to them in the Plan. Each defined term stated in a singular form includes the plural form, each defined term stated in plural form includes the singular form, and each defined term stated in the masculine, feminine or neuter form includes each of the masculine, feminine and neuter forms. The word "including" means "including but not limited to." In construing this Agreement, the definitions set forth in this Agreement shall control in the event of any alleged inconsistency between the definitions in this Agreement and the definitions of the same or similar terms used in the Plan. A. Approval Motion means the motion to be filed by the Garlock Debtors and OldCo in the Bankruptcy Cases under Federal Rule of Bankruptcy Procedure 9019 and Sections 105(a) and 524(g) of the Bankruptcy Code seeking entry of the Approval Order. B. Approval Order means an order of the Bankruptcy Court or the applicable United States District Court exercising its original bankruptcy jurisdiction (the "District Court") approving this Agreement and the compromise and settlement memorialized herein, which order shall be substantially in the form of order attached as Exhibit A or otherwise in form and substance acceptable to the Parties.

15 Document Page 15 of 30 C Asbestos Channeling Injunction has the meaning ascribed to it in the Plan. D. Asbestos Claim has the meaning ascribed to it in the Plan. E. Asbestos Trust has the meaning ascribed to it in the Plan. F. Claim means any and all past, present, or future, actual, alleged or potential demand, liability, duty, obligation, claim, debt, allegation, action, damages, suit, expense, loss, cost, assertion of liability, or cause of action of any type whatsoever, whether in law, in equity, in admiralty, or otherwise, and whether or not presently known, contractual or extra-contractual (including any claims for "bad faith," unfair claims practices, or breach of any implied duty of good faith and fair dealing) and including all "claims" as defined in Section 101(5) of the Bankruptcy Code. G. Claimant means the past, present, or future holder of any Claim. H. Coltec Releasing Parties means (1) the Coltec Parties; (2) EnPro Industries, Inc.; and (3) each of the current subsidiaries and affiliates of the Coltec Parties. I. Coltec Released Parties means (1) the Coltec Parties; (2) EnPro Industries, Inc.; (3) each of the subsidiaries and Affiliates of the Coltec Parties; (4) each of the Coltec Parties' interests in any joint venture in which it participated; (5) each of the Coltec Parties' respective officers, directors, employees, agents, representatives, shareholders and attorneys; and (6) the successors and assigns of any of the foregoing Persons, solely in their capacity as such. J. Confirmation Order has the meaning ascribed to it in the Plan. K. District Court has the meaning ascribed to it in the Plan. L. Effective Date has the meaning ascribed to it in the Plan. M. Emplovers Mutual Policv means policy no. MMO issued by Employers Mutual to Colt Industries, Inc. with a policy term of July 1,1983 to July 1,1984. N. Emplovers Mutual Released Parties means (1) Employers Mutual Casualty Company and its managing general agent and attorney-in-fact, ProSight Specialty Management Company, Inc., formerly Mutual Marine Office, Inc.; (2) their parents and predecessors; (3) their subsidiaries, divisions, affiliates, successors and assigns solely in their capacity as such; and (4) their officers, directors, employees, agents, representatives, shareholders and attorneys, or the successors of any of them, solely in their capacity as such. O. Entitv means any Person or federal, state, local, or foreign government or any governmental or quasi-governmental body or political subdivision, or any agency, department, board, or instrumentality thereof of any federal, state, local, or foreign government. the Parties. P. Execution Date means the earliest date on which this Agreement is signed by all of

16 Document Page 16 of 30 Q. Final Order has the meaning ascribed to it in the Plan. R. Person means any individual, partnership, corporation, limited liability company, limited liability partnership, limited partnership, joint venture company, association, union, organization, or other entity or being of whatever kind, whether or not operating or existing for profit, including, but not limited to, any "person" as such term is defined in the Bankruptcy Code, but excluding any governmental unit. S. Petition Date means June 5,2010. T. Plan means the Modified Joint Plan of Reorganization of Garlock Sealing Technologies LLC, et al. and OldCo, LLC, Proposed Successor By Merger to Col tec Industries, Inc, dated July 29, 2016, as it has been or may be amended or otherwise modified from time to time. U. Settlement Amount means ten million United States dollars ($10,000,000.00). n. CONDITIONS TO EFFECTIVENESS This Agreement shall become effective upon the occurrence of all of the following conditions precedent: (1) execution of this Agreement by the Parties, (2) entry of the Approval Order, and (3) the occurrence of the Effective Date. III. SETTLEMENT PAYMENT A. Subject to all of the terms and conditions of this Agreement, Employers Mutual will pay the Settlement Amount to the Coltec Parties in three installments. Employers Mutual will pay the first installment totaling $3,330,000 within thirty (30) days of Employers Mutuai's receipt of notice from any Coltec Party that the Effective Date has occurred (the "First Installment Payment Date"); Employers Mutual will pay the second installment totaling an additional $3,330,000 within one year of the First Installment Payment Date; and Employers Mutual will pay the third and final installment totaling $3,340,000 within two years of the First Installment Payment Date. Employers Mutual will pay the Settlement Amount installments by check made out to OldCo, LLC and delivered to the contact for the Coltec Parties designated in Section XIII, or to such different payee and address as a Coltec Party may direct. B. Additional Provisions Relating to the Settlement Amount. 1. The Settlement Amount will be used only for the payment of Asbestos Claims, reimbursement of the Coltec Parties for their contributions to the Asbestos Trust under the Plan, or as a contribution to the Asbestos Trust. 2. Employers Mutual will have no liability or responsibility for any allocation of the Settlement Amount among any Claimants asserting Asbestos Claims or their respective attorneys. 3. The Settlement Amount will not be subject to any Claims for deductions, set-offs or charge-backs by Employers Mutual of any kind, including Claims involving

17 Document Page 17 of 30 recoupment or deductibles, self-insured retentions, additional premiums, or retrospective or reinstatement premiums under the Employers Mutual Policy. 4. Employers Mutual may pursue reinsurance claims against any and all reinsurers or retrocessionaires of the Employers Mutual Policy regarding consideration paid by Employers Mutual in connection with this Agreement. 5. Except as provided in Section III.B.4 above. Employers Mutual will not seek reimbursement of any payment that Employers Mutual is obligated to make under this Agreement, or of any other payments Employers Mutual has made to or for the benefit of the Coltec Parties pursuant to the Subscription Agreement, whether by way of a claim for contribution, indemnity, subrogation or otherwise, from any Entity, including any other insurer of the Coltec Parties. This provision, however, does not limit or restrict any claims by Employers Mutual for reinsurance against any and all reinsurers or retrocessionaires. IV. BANKRUPTCY OBLIGATIONS A. The Coltec Parties will designate Employers Mutual as an Asbestos Protected Party entitled to the benefits of an Asbestos Channeling Injunction for Asbestos Claims under Sections and (f) of the Plan. B. Within five (5) business days after the Execution Date, or as soon thereafter as reasonably possible, the Coltec Parties will, at their sole cost and expense, file the Approval Motion and seek entry of the Approval Order. The Approval Order will be substantially in the form of order attached as Exhibit A or otherwise in form and substance acceptable to the Parties. C. The Parties will cooperate in good faith to ensure that the Approval Order is entered and becomes a Final Order. D. Within five (5) business days after the Execution Date, Employers Mutual will withdraw (1) any and all objections (including any and all pending objections to the Plan or Disclosure Statement) and other requests for relief, reservations of rights or similar papers filed with the Bankruptcy Court; and (2) any Claims made (including proofs of claim filed and discovery requests) against the Coltec Parties in the Bankruptcy Cases. Employers Mutual also will not file any further objections to the Plan or Disclosure Statement and will not file any requests for relief, objections, reservations of rights or similar papers with the Bankruptcy Court, including seeking discovery from the Coltec Parties or their counsel. Upon the Execution Date, Employers Mutual will be deemed to have withdrawn any and all Claims made (including proofs of claim filed) against the Coltec Parties in the Bankruptcy Cases and any and all objections (including any and all pending objections to the Plan or Disclosure Statement) and other requests for relief, reservations of rights or similar papers filed with the Bankruptcy Court, and will, upon request of the Coltec Parties and at the sole expense of Employers Mutual, file with the Bankruptcy Court such papers as the Coltec Parties deem reasonably necessary to document and effectuate the formal withdrawal of such Claims, objections, requests for relief or reservation of rights.

18 Document Page 18 of 30 V. POLICY BUY-BACK AND MUTUAL RELEASES A. Release of Employers Mutual Released Parties bv the Coltec Releasing Parties. 1. In consideration of Employers Mutual's payment of the Settlement Amount, and for other good and valuable consideration, and effective upon the Effective Date, the Coltec Releasing Parties will be deemed to forever, permanently, fully and completely remise, release, waive, and discharge the Employers Mutual Released Parties from any and all Claims, demands, causes of action, liabilities, debts, costs, expenses, contracts, covenants, suits and judgments of any kind or description in law or in equity, under the Employers Mutual Policy, whether past, present or future, known or unknown, suspected or unsuspected, asserted or unassorted, in contract, tort or under statute, whether for compensatory, bad faith, punitive or exemplary damages. 2. For the avoidance of doubt, and without limitation, as of the Effective Date: (a) all past, present, and future Claims of the Coltec Releasing Parties against the Employers Mutual Released Parties under or arising out of the Employers Mutual Policy will be deemed to be fully and finally released and extinguished; (b) the Employers Mutual Released Parties will have no further obligations to the Coltec Releasing Parties under or arising out of the Employers Mutual Policy; and (c) the Employers Mutual Released Parties will be completely released by the Coltec Releasing Parties as if Employers Mutual had never issued the Employers Mutual Policy. When effective, the releases contained in this Section V are intended to operate as if the Employers Mutual Policy had never been issued to the Coltec Releasing Parties. B. Release of Coltec Released Parties bv the Emplovers Mutual Released Parties. 1. In consideration of the releases and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and effective upon the Effective Date, the Employers Mutual Released Parties will be deemed to forever, permanently, fully and completely remise, release, waive, and discharge the Coltec Released Parties from any and all Claims, demands, causes of action, liabilities, debts, costs, expenses, contracts, covenants, suits and judgments of any kind or description in law or in equity, under the Employers Mutual Policy, whether past, present or future, known or unknown, suspected or unsuspected, asserted or unassorted, in contract, tort or under statute, whether for compensatory, bad faith, punitive or exemplary damages, including without limitation any such actual or alleged obligations of the Coltec Released Parties to pay any premiums, deductibles, self-insured retentions, retrospective premiums, or other similar charges under the Employers Mutual Policy. 2, For the avoidance of doubt, and without limitation, as of the Effective Date, all past, present, and future Claims of the Employers Mutual Released Parties against the Coltec Released Parties under or arising out of the Employers Mutual Policy will be deemed to be fully and finally released and extinguished; and the Coltec Released Parties will have no further obligations under or arising out of the Employers Mutual Policy. C. The releases provided for in this Section V will not relieve the Parties of any obligations under this Agreement, and will in no way prevent or restrict the Coltec Parties from enforcing their right to payment of the Settlement Amount under this Agreement.

19 Document Page 19 of 30 VI. AVOIDANCE OF FUTURE CONTENTION A. The Parties agree, in consideration of Employers Mutual's payment of the Settlement Amount, and for other good and valuable consideration, and effective upon the Effective Date,: 1. That all outstanding tenders of Asbestos Claims under the Employers Mutual Policy, the EIFA or the Subscription Agreement will be deemed withdrawn; 2. That no Party will tender any further Claims under the Employers Mutual Policy; 3. That no Party will request that any other Party make any payment under the Employers Mutual Policy, the EIFA or the Subscription Agreement; and 4. That Employers Mutual will have no obligation to defend, pay, handle, object to, or otherwise respond to any Claim tendered by the Coltec Parties under the Employers Mutual Policy. B. The Parties will bear, as to each other only, their own costs, expenses, counsel and professional fees in connection with the negotiation, execution, and performance of this Agreement. VII. COOPERATION A. Each Party will use its reasonable efforts to obtain the outcomes sought by this Agreement, and to take such steps and to execute such documents as may be reasonably necessary or proper to effectuate the purpose and intent of this Agreement and to preserve its validity and enforceability. In the event that any action or proceeding is commenced or prosecuted by any Entity to invalidate or prevent the validation, enforcement, or carrying out of all or any of the provisions of this Settlement Agreement, the Parties mutually agree to cooperate fully in opposing such action or proceeding. B. The Coltec Parties agree to cooperate with Employers Mutual in connection with Employers Mutual's claims to its reinsurers and retrocessionaires relating to payment of the Settlement Amount, this Agreement, and/or Asbestos Claims, including but not limited to responding to reasonable requests for information (to the extent such information is available to the Coltec Parties) and meeting with representatives of reinsurers and retrocessionaires, if requested. Employers Mutual will reimburse the Coltec Parties for reasonable and necessary expenses related to such cooperation, including travel, lodging, and attorneys' fees. C. The Coltec Parties agree to cooperate with Employers Mutual in obtaining relevant files, information and documents available from the Asbestos Trust, in accordance with Section of the Plan and Section 12.2 of the Settlement Facility Claims Resolution Procedures attached as Exhibit B to the Plan: (i) concerning Asbestos Claims subject to payment or potential payment with the proceeds of this Agreement, and (ii) that may be required of or necessary to Employers Mutual in connection with any Claims, arbitrations, or litigation concerning

20 Document Page 20 of 30 reinsurance for the Settlement Amount or in connection with this Agreement. Employers Mutual will reimburse the Coltec Parties for reasonable and necessary expenses related to such cooperation, including travel, lodging, and attorneys' fees. Vm. REPRESENTATION BY COUNSEL The Parties acknowledge and agree that this Agreement was bargained for and entered into in good faith and as the result of arms-length settlement negotiations, and that at all relevant times they have been represented by counsel of their own choosing concerning the rights affected by this Agreement, the form and content of it, and the advisability of executing it. This Agreement has been reviewed by counsel for each of the Parties and will not be strictly or presumptively construed against any Party, pursuant to the doctrine of contra proferentem or otherwise. IX. OTHER REPRESENTATIONS, WARRANTIES AND COVENANTS A. Each of the Parties represents that it is the owner of the rights and Claims to be compromised and released by it under this Agreement. B. Each of the Parties agrees that, upon and after the Effective Date, it will not contest the binding nature of this Agreement, including the releases set forth in Section V of this Agreement, or assert that valuable and fair consideration and reasonably equivalent value have not been exchanged pursuant to this Agreement. C. Each of the Parties agrees that, from and after the Effective Date, it will reasonably cooperate with each other Party in responding to and opposing any motion, objection. Claim, assertion, or argument by any third party that this Agreement, including the releases set forth in Section V of this Agreement, are not binding, or should be avoided, or that valuable and fair consideration and reasonably equivalent value have not been exchanged pursuant to this Agreement. D. Each of the Parties represents that it enters into this Agreement for the specific purpose of paying or receiving the benefit of the Settlement Amount, as applicable, and that its payment or receipt of the benefit of the Settlement Amount, as applicable, is based upon such Party's evaluation and determination of the best interests of such Party. E. Each Party represents and warrants that it has authority to execute this Agreement on behalf of itself and, as applicable, any Coltec Releasing Party or Employers Mutual Released Party, as their binding and legal obligation. Each Party represents and warrants that the individual signing this Agreement on its behalf is authorized by such Party to execute this Agreement and that such Party has fully reviewed and understands the terms, conditions, and effects of this Agreement. X. NON-PREJUDICE AND CONSTRUCTION OF AGREEMENT A. This Agreement represents a compromise between the Parties that settles disputed Claims. This Agreement will not be construed as an admission or concession about the Employers Mutual Policy, nor will this Agreement or any provision hereof be construed as a waiver.

21 Document Page 21 of 30 modification or retraction of the positions of the Parties with respect to the interpretation and application of the Employers Mutual Policy, even though all Parties will nonetheless be bound to comply with this Agreement. B. This Agreement is the product of informed, arms-length negotiations and involves compromises of the Parties' previously stated legal positions. Accordingly, this Agreement does not reflect the Parties' views as to their rights and obligations with respect to matters or Entities outside the scope of this Agreement. This Agreement is without prejudice to positions taken by Employers Mutual with regard to other insureds or claimants, and without prejudice to positions taken by the Coltec Parties with regard to other insurers or matters. The Parties specifically disavow any intention to create rights in third parties under or in relation to this Agreement. This Agreement is the jointly-drafted product of negotiations among the Parties and will not be interpreted in favor of or against any Party notwithstanding statutes, rules, or doctrines that presumptively construe agreements or contracts against certain parties, and no provision of this Agreement will be construed against Employers Mutual because of its status as an insurance company or as having issued the Employers Mutual Policy. In particular, but without limitation, this Agreement is not, nor will it be construed as, an insurance policy. XII. NO WAIVER This Agreement may be amended, modified, or superseded, and any of the terms hereof may be waived, only by a written instrument that specifically states that it amends, modifies, or supersedes this Agreement, executed by or on behalf of all of the Parties or, in the case of a waiver, by or on behalf of the Party waiving compliance. The failure of a Party at any time or times to require performance of any provision of this Agreement will in no manner affect that Party's right at a later time to enforce the same or any other provision of this Agreement. No waiver by a Party of any condition, or of any breach of any term, covenant, representation, or warranty contained in this Agreement, in any one or more instances, will be deemed to be or construed as a further or continuing waiver of any such condition or breach, or a waiver of any other condition or of any breach of any other term, covenant, representation, or warranty. The consent by one Party to any act for which such consent was required will not be deemed to imply consent or waiver of the necessity of obtaining such consent for the same or similar acts in the future, and no forbearance by a Party to seek a remedy for noncompliance or breach by another Party will be construed as a waiver of any right or remedy with respect to such noncompliance or breach. XIII. NOTICES A. All notices, requests, demands and other communications required or permitted to be given under this Agreement shall be deemed to have been duly given if in writing and delivered personally, or by registered or certified mail, return receipt requested, or by Federal Express with signature required, and by , addressed as follows:

22 Document Page 22 of 30 The Coltec Parties: With a copy to: Robert S. McLean Chief Administrative Officer, General Counsel and Secretary EnPro Industries, Inc Carnegie Blvd., Suite 500 Charlotte, NC robert.mclean@enproindustries.com Garland S. Cassada Robinson, Bradshaw & Hinson, P.A. 101 N. Tryon St., Suite 1900 Charlotte, NC gcassada@robinsonbradshaw.com and William F. Greaney, Esq. Covington & Burling LLP One CityCenter 850 Tenth Street, NW Washington, DC wgreaney@cov.com Employers Mutual: Michael Gabriele ProSight Specialty Insurance 412 Mt. Kemble Ave., Suite 300C Morristown, NJ mgabriele@prosightspecialty.com With a copy to: Scott M. Salerno Michaels, Schulwolf & Salerno 300 S. Wacker Drive, Suite 1650 Chicago, IL ssalerno@msslawpc.com B. Any Party may change the address at which communications are to be delivered to it by giving notice to the others, in the manner provided in this Section XIII. XIV. INTEGRATION This Agreement, including the schedules, exhibits and attachments to this Agreement, constitutes the entire settlement agreement among the Parties with respect to the subject matter of this Agreement, and supersedes all discussions, agreements and understandings, both written and oral, among the Parties with respect to the subject matter of this Agreement. This Agreement 10

23 Document Page 23 of 30 specifically supersedes the Parties' respective rights and obligations under the EIFA and the Subscription Agreement. XV. EXECUTION This Agreement may be executed in multiple counterparts, each of which will be deemed an original but all of which will constitute one and the same instrument. Execution of this Agreement may be effected by facsimile, PDF, or other electronic transmission of executed copies of the signature pages delivered to counsel for the Parties. XVI. BINDING EFFECT As of the date that each of the Conditions to Effectiveness set forth in Section II of this Agreement has been satisfied or, if not satisfied, waived pursuant to Section XII of this Agreement, this Agreement will be binding upon and inure to the benefit of the Parties, the Coltec Released Parties, the Employers Mutual Released Parties and their respective successors and assigns. XVII. JURISDICTION; GOVERNING LAW A. The Bankruptcy Court shall retain exclusive jurisdiction to enforce this Agreement and to interpret and resolve any disputes relating to this Agreement. If the Bankruptcy Court refuses or declines to exercise jurisdiction over any such dispute, the Parties may submit such dispute to any federal or state court of competent jurisdiction in North Carolina. B. Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules), the laws of the State of North Carolina, without giving effect to its conflicts of laws principles, will govern the construction of this Agreement and any agreements, documents, and instruments executed in connection with this Agreement, except as otherwise expressly provided in such agreements, documents, or instruments. [Remainder of Page Intentionally Blank] 11