PURCHASE AND SALE AGREEMENT

                          Dated as of November 29, 1999

                                      among

                        THE ORIGINATORS NAMED HEREIN,



                             IMO INDUSTRIES INC.



                                       and

                            IMO FUNDING COMPANY, LLC

                                TABLE OF CONTENTS

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                                                                            PAGE

                   ARTICLE IAGREEMENT TO PURCHASE AND SELL
1.1.  Agreement to Purchase and Sell      2
1.2.  Timing of Purchases     2
1.3.  Consideration for Purchases   3
1.4.  Purchase and Sale Termination Date  3
1.5.  Intention of the Parties      3

                   ARTICLE IICALCULATION OF PURCHASE PRICE
2.1.  Calculation of Purchase Price 3

                      ARTICLE IIIPAYMENT OF PURCHASE PRICE

3.1.  Initial Purchase Price Payment      4
3.2.  Subsequent Purchase Price Payments  4
3.3.  Settlement as to Specific Receivables     5
3.4.  Reconveyance of Receivables   6

                        ARTICLE IVCONDITIONS OF PURCHASES

4.1.  Conditions Precedent to Initial Purchase  6
4.2.  Certification as to Representations and Warranties    8
4.3.  Addition of Originators.      8

          ARTICLE VREPRESENTATIONS AND WARRANTIES OF THE ORIGINATORS
5.1.  Organization and Good Standing      9
5.2.  Due Qualification 9
5.3.  Power and Authority; Due Authorization    9
5.4.  Valid Sale; Binding Obligations     9
5.5.  No Violation      9
5.6.  Proceedings 9
5.7.  Bulk Sales Act    10
5.8.  Government Approvals    10
5.9.  Financial Condition     10
5.10. Margin Regulations      10
5.11. Quality of Title  10
5.12. Accuracy of Information 11
5.13. Offices     11
5.14. Trade Names 11
5.15. Taxes 11
5.16. Licenses and Labor Controversies    11
5.17. Compliance with Applicable Laws     12
5.18. Reliance on Separate Legal Identity 12
5.19. Purchase Price    12
5.20. Certain Definitions     12

                    ARTICLE VICOVENANTS OF THE ORIGINATORS
6.1.  Affirmative Covenants   14
6.2.  Reporting Requirements  16
6.3.  Negative Covenants      16

  ARTICLE VIIADDITIONAL RIGHTS AND OBLIGATIONS INRESPECT OF THE RECEIVABLES
7.1.  Rights of the Company   17
7.2.  Responsibilities of The Originator  17
7.3.  Further Action Evidencing Purchases 18
7.4.  Application of Collections    18

               ARTICLE VIIIPURCHASE AND SALE TERMINATION EVENTS
8.1.  Purchase and Sale Termination Events      19
8.2.  Remedies    20

                            ARTICLE IXINDEMNIFICATION

9.1.  Indemnities by the Originator 20

                             ARTICLE XMISCELLANEOUS

10.1. Amendments, etc   22
10.2. Notices, etc      22
10.3. No Waiver; Cumulative Remedies      22
10.4. Binding Effect; Assignability 22
10.5. Governing Law     23
10.6. Costs, Expenses and Taxes     23
10.7. Submission to Jurisdiction    23
10.8. Waiver of Jury Trial    24
10.9. Captions and Cross References; Incorporation by Reference   24
10.10.      Execution in Counterparts     24
10.11.      Acknowledgment and Agreement  24
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                                    SCHEDULES

SCHEDULE 5.13     Office Locations
SCHEDULE 5.14     Trade Names

                                    EXHIBITS

EXHIBIT A         Form of Purchase Report
EXHIBIT B         Form of Company Note

EXHIBIT C         Form of Opinion of Originators' Counsel
EXHIBIT D         Form of Joinder Agreement
EXHIBIT E         Form of Originator Assignment Certificate
                           PURCHASE AND SALE AGREEMENT

      THIS  PURCHASE AND SALE  AGREEMENT (as amended,  supplemented  or modified
from time to time,  this  "Agreement"),  dated as of November 29, 1999, is among
IMO INDUSTRIES  INC., a Delaware  corporation  ("IMO"),  individually and as the
initial Servicer, WARREN PUMPS INC. ("Warren"), a Delaware corporation, (IMO and
Warren   collectively   referred  to  herein  as  the   "Originators"  and  each
individually  as an  "Originator"),  and IMO  FUNDING  COMPANY,  LLC, a Delaware
limited liability company (the "Company"), as purchaser.

                                   Definitions

      Unless  otherwise  indicated,  certain terms that are capitalized and used
throughout this Agreement are defined in Exhibit I to the  Receivables  Purchase
Agreement of even date herewith (as amended,  supplemented or otherwise modified
from time to time, the "Receivables Purchase Agreement"),  among the Company, as
Seller, IMO, as Servicer,  LIBERTY STREET FUNDING CORP. (the "Issuer"),  and THE
BANK OF NOVA SCOTIA, as Administrator (together with its successors and assigns,
the "Administrator").

                                   Background

      1.    The Company is a special purpose limited  liability  company,  all
of the membership interests of which are owned by IMO.

      2. In order to finance their respective  businesses,  the Originators wish
to sell certain Receivables and Related Rights from time to time to the Company,
and the Company is willing, on the terms and subject to the conditions set forth
herein, to purchase such Receivables and Related Rights from such Originators.

      3. The Company intends to sell, assign and transfer to Issuer,  all of its
right,  title and interest in and to all of the  Receivables  and Related Rights
pursuant to the Receivables Purchase Agreement in order to finance its purchases
of certain Receivables and Related Rights hereunder.

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:

I.                                    ARTICLE

                         AGREEMENT TO PURCHASE AND SELL

A.  Agreement to Purchase and Sell.  On the terms and subject to the  conditions
set forth in this Agreement  (including Article IV), and in consideration of the
Purchase Price, each Originator  agrees to sell to the Company,  and does hereby
sell to the Company,  and the Company  agrees to purchase from such  Originator,
and does hereby  purchase  from such  Originator,  without  recourse and without
regard to collectibility,  all of such Originator's right, title and interest in
and to:

1.                each  Receivable  of such  Originator  that  existed and was
owing to such  Originator  as of the close of such  Originator's  business  on
November 30, 1999 (the "Closing Date");

1.                each  Receivable  created or originated  by such  Originator
from the  close  of such  Originator's  business  on the  Closing  Date to and
including the Purchase and Sale Termination Date;

1.                all rights to, but not the  obligations  under,  all Related
Security;

1.                all monies  due or to become due with  respect to any of the
foregoing;

1.                all books and records related to any of the foregoing; and

1. all proceeds  thereof (as defined in the applicable UCC) received on or after
the date  hereof  including,  without  limitation,  all funds  which  either are
received by such  Originator,  the Company or the Servicer  from or on behalf of
the  Obligors in payment of any amounts  owed  (including,  without  limitation,
finance charges,  interest and all other charges) in respect of Receivables,  or
are applied to such amounts owed by the Obligors (including, without limitation,
insurance payments,  if any, that such Originator or the Servicer (if other than
such Originator)  applies in the ordinary course of its business to amounts owed
in respect of any Receivable).

All  purchases  hereunder  shall be made  without  recourse,  but  shall be made
pursuant to and in reliance upon the  representations,  warranties and covenants
of each  Originator  set  forth in this  Agreement  and each  other  Transaction
Document.  The Company's  foregoing  commitment to purchase such Receivables and
the proceeds and rights described in subsections (c) through (f) of this Section
1.1  (collectively,  the  "Related  Rights")  is  herein  called  the  "Purchase
Facility."

A.                Timing of Purchases.

1. Closing Date Purchases. Each Originator's entire right, title and interest in
(i) each  Receivable  that  existed and was owing to such  Originator  as of the
close of such  Originator's  business on the Closing Date,  and (ii) all Related
Rights with respect  thereto shall be deemed to have been sold to the Company on
the Closing Date.

1.                Regular  Purchases.  After the Closing Date, each Receivable
created or  originated  by each  Originator  and  described in Section  1.1(b)
hereof and all  Related  Rights  shall be  purchased  and owned by the Company
(without  any  further  action)  upon  the  creation  or  origination  of such
Receivable.

A.                Consideration  for  Purchases.  On the terms and  subject to
the  conditions  set forth in this  Agreement,  the Company agrees to make all
Purchase  Price  payments to the respective  Originators,  in accordance  with
Article III.

A. Purchase and Sale Termination  Date. The "Purchase and Sale Termination Date"
shall  be the  earlier  to  occur  of (a) the  date of the  termination  of this
Agreement pursuant to Section 8.2 and (b) the Payment Date immediately following
the day on which IMO shall have given notice to the Company that the Originators
desire to terminate this Agreement.

      As used  herein,  "Payment  Date" means (i) the Closing Date and (ii) each
Business Day thereafter that the Originators are open for business.

A. Intention of the Parties. It is the express intent of the parties hereto that
the transfers of the  Receivables  and Related Rights by each  Originator to the
Company,  as contemplated by this Agreement be, and be treated as, sales and not
as  loans  secured  by  the  Receivables   and  Related  Rights.   If,  however,
notwithstanding  the  intent of the  parties,  such  transfers  are deemed to be
loans,  such Originator  hereby grants  (effective as of the date hereof) to the
Company a first priority security  interest in all of such  Originator's  right,
title and interest in and to the Receivables and the Related Rights now existing
and hereafter created,  all monies due or to become due and all amounts received
with  respect  thereto,  and  all  proceeds  thereof,  to  secure  all  of  such
Originator's obligations hereunder.

I.                                    ARTICLE

                          CALCULATION OF PURCHASE PRICE

A.  Calculation of Purchase Price. Not later than ten days after the last day of
each Reporting Period (the "Servicer  Report Date"),  the Servicer shall deliver
to the Company,  the Administrator and each Originator a report in substantially
the form of Exhibit A (each such report being herein called a "Purchase Report")
with  respect to the matters set forth  therein and the  Company's  purchases of
Receivables from each Originator

1.                that are to be made on the Closing  Date (in the case of the
Purchase Report to be delivered on the Closing Date), or

1. that were made  during the period  commencing  on the  Servicer  Report  Date
immediately  preceding  such Servicer  Report Date to (but not  including)  such
Servicer Report Date (in the case of each subsequent Purchase Report).

The "Purchase Price" (to be paid to each Originator in accordance with the terms
of Article III) for the  Receivables  and the Related  Rights that are purchased
hereunder shall be determined in accordance with the following formula:

      PP    =     OB X FMVD

      where:

      PP          = Purchase  Price for each  Receivable  as  calculated  on the
                  relevant Payment Date.

                  OB    =     the Outstanding Balance of such Receivable.

                  FMVD  = Fair  Market  Value  Discount,  as  measured  on  such
                        Payment Date, which is equal to the quotient  (expressed
                        as  percentage) of (a) one divided by (b) the sum of (i)
                        one,  plus (ii) the  product  of (A) LIBOR  plus 1.5% on
                        such Payment Date, and (B) a fraction,  the numerator of
                        which is the Days' Sales  Outstanding  (calculated as of
                        the last day of the calendar  month next  preceding such
                        Payment Date) and the denominator of which is 365.

I.                                    ARTICLE

                            PAYMENT OF PURCHASE PRICE

A.                Initial  Purchase  Price  Payment.  On the terms and subject
to the  conditions set forth in this  Agreement,  the Company agrees to pay to
each  Originator the Purchase Price for the purchase of Receivables to be made
on the Closing  Date,  partially in cash in an amount agreed to by the Company
and such  Originator,  in the case of IMO partially in consideration of all of
the membership interest of the Company,  and partially by issuing a promissory
note in the form of Exhibit B to such  Originator  with an  initial  principal
balance equal to the remaining  Purchase Price (as such promissory note may be
amended,  supplemented,  indorsed  or  otherwise  modified  from time to time,
together with all  promissory  notes issued from time to time in  substitution
therefor or renewal  thereof in  accordance  with the  Transaction  Documents,
each a "Company Note").

A.                Subsequent  Purchase  Price  Payments.  On each Business Day
falling  after  the  Closing  Date and on or prior  to the  Purchase  and Sale
Termination  Date,  on the terms and  subject to the  conditions  set forth in
this  Agreement,  the Company shall pay to each  Originator the Purchase Price
for the  Receivables  sold by such  Originator to the Company on such Business
Day, in cash,  to the extent the Company has  received  funds  pursuant to the
Receivables  Purchase Agreement or otherwise has available cash (to the extent
such other  available cash may, in accordance  with the  Receivables  Purchase
Agreement,  be used to  purchase  Receivables),  and to the extent any of such
Purchase Price remains unpaid,  such remaining  portion of such Purchase Price
shall be paid by means of an automatic  increase to the outstanding  principal
amount of the Company Note issued to such Originator.

      Servicer shall make all appropriate record keeping entries with respect to
the Company Notes or otherwise to reflect the foregoing  payments and to reflect
adjustments  pursuant to Section 3.3,  and  Servicer's  books and records  shall
constitute  rebuttable  presumptive  evidence  of the  principal  amount  of and
accrued  interest on any Company Note at any time.  Furthermore,  Servicer shall
hold the Company  Notes for the  benefit of the  Originators,  and all  payments
under the  Company  Notes shall be made to the  Servicer  for the account of the
applicable payee thereof. Each Originator hereby irrevocably authorizes Servicer
to mark the Company  Notes  "CANCELLED"  and to return such Company Notes to the
Company upon the final payment  thereof after the occurrence of the Purchase and
Sale Termination Date.

A.                Settlement as to Specific Receivables and Dilution.

1. If on the day of purchase of any Receivable  from any  Originator  hereunder,
any of the representations or warranties of such Originator set forth in Section
5.4 or 5.11 is not true with  respect to such  Receivable  or as a result of any
action or inaction of such Originator, on any day any of such representations or
warranties  set forth in Section 5.4 or 5.11 is no longer  true with  respect to
such Receivable  (other than a  representation  or warranty set forth in Section
5.11(c) which is no longer true as a result of an Obligor's  payment  obligation
being stayed or discharged in bankruptcy),  then the Purchase Price with respect
to such  Receivable  shall be  reduced  by an  amount  equal to the  Outstanding
Balance of such Receivable and shall be accounted to such Originator as provided
in  subsection  (c) below;  provided,  that if the Company  thereafter  receives
payment on account  of  Collections  due with  respect to such  Receivable,  the
Company promptly shall deliver such funds to such Originator.

1. If, on any day, the Outstanding Balance of any Receivable purchased hereunder
is reduced or adjusted as a result of any defective, rejected, returned goods or
services,  or any  discount  or other  adjustment  made by any  Originator,  the
Company or the Servicer or any offset, setoff or dispute between such Originator
or the Servicer and an Obligor as indicated on the books of the Company (or, for
periods  prior to the  Closing  Date,  the books of such  Originator),  then the
Purchase Price with respect to such Receivable shall be reduced by the amount of
such net  reduction  and shall be  accounted to such  Originator  as provided in
subsection (c) below.

1. Any reduction in the Purchase Price of any Receivable  pursuant to subsection
(a) or (b) above  shall be applied as a credit  for the  account of the  Company
against the Purchase Price of Receivables  subsequently purchased by the Company
from such Originator hereunder;  provided,  however if there are no purchases of
Receivables  from  such  Originator  (or   insufficiently   large  purchases  of
Receivables)  to create a Purchase  Price  sufficient  to so apply  such  credit
against, the amount of such credit

a) shall be paid in cash to the Company by the  Originator in the manner and for
application as described in the following proviso, or b) shall be deemed to be a
payment  under,  and shall be deducted  from the  principal  amount  outstanding
under, the Company Note payable to such Originator to the extent permitted under
Section 1(m) of Exhibit IV of the Receivables Purchase Agreement;

provided,  further,  that at any time (y) when a Termination  Event or Unmatured
Termination Event exists under the Receivables  Purchase  Agreement or (z) on or
after the  Purchase  and Sale  Termination  Date,  the amount of any such credit
shall be paid by such  Originator  to the  Company  by  deposit  in  immediately
available  funds into the Collection  Account for application by Servicer to the
same extent as if Collections  of the  applicable  Receivable in such amount had
actually been received on such date.

1. Each Purchase Report (other than the Purchase Report delivered on the Closing
Date) shall include, in respect of the Receivables  previously generated by each
Originator,  a calculation of the aggregate  reductions  described in subsection
(a) or (b) relating to such Receivables since the last Purchase Report delivered
hereunder,  as indicated on the books of the Company (or, for such periods prior
to the Closing Date, the books of the Originator).

A.  Reconveyance  of  Receivables.  In the event that an Originator  has paid or
credited to the Company the full Outstanding  Balance of any Receivable pursuant
to Section 3.3, the Company shall reconvey such  Receivable to such  Originator,
without recourse and without  representation or warranty,  but free and clear of
all liens created by the Company.

I.                                    ARTICLE

                             CONDITIONS OF PURCHASES

A. Conditions  Precedent to Initial Purchase.  The initial purchase hereunder is
subject to the condition  precedent that the Company shall have received,  on or
before the Closing Date, the following,  each (unless otherwise indicated) dated
the Closing  Date,  and each in form,  substance  and date  satisfactory  to the
Company:

1.                A copy of the  resolutions of the Board of Directors of each
Originator  approving the Transaction  Documents to be delivered by it and the
transactions  contemplated  hereby and thereby,  certified by the Secretary or
Assistant Secretary of such Originator;

1. Good standing  certificates  for each  Originator  issued as of a recent date
acceptable  to Servicer by the  Secretary of State of the  jurisdiction  of such
Originator's  incorporation and the jurisdiction  where such Originator's  chief
executive office is located;

1. A  certificate  of the  Secretary or Assistant  Secretary of each  Originator
certifying  the names and true  signatures  of the officers  authorized  on such
Originator's behalf to sign the Transaction  Documents to be delivered by it (on
which  certificate  the Company and Servicer (if other than an  Originator)  may
conclusively  rely until such time as the Company and the Servicer shall receive
from such  Originator a revised  certificate  meeting the  requirements  of this
subsection (c));

1. The  articles of  incorporation  of each  Originator,  duly  certified by the
Secretary of State of the jurisdiction of such Originator's  incorporation as of
a recent date  acceptable  to Servicer,  together  with a copy of the by-laws of
such Originator,  each duly certified by the Secretary or an Assistant Secretary
of such Originator;

1. Copies of the proper  financing  statements  (Form UCC-1) that have been duly
executed and name each  Originator as the  seller/debtor  and the Company as the
purchaser/secured  party  (and  Issuer  as  assignee  of  the  Company)  of  the
Receivables  generated by such  Originator and Related Rights or other,  similar
instruments  or  documents,  as  may  be  necessary  or,  in  Servicer's  or the
Administrator's   opinion,   desirable   under   the  UCC  of  all   appropriate
jurisdictions or any comparable law of all appropriate  jurisdictions to perfect
the Company's  ownership interest in all Receivables and Related Rights in which
an ownership interest may be assigned to it hereunder;

1. A written  search  report  from a Person  satisfactory  to  Servicer  and the
Administrator   listing  all  effective  financing   statements  that  name  any
Originator  as debtor or  assignor  and that are filed in the  jurisdictions  in
which filings were made pursuant to the foregoing  subsection (e), together with
copies of such financing  statements (none of which,  except for those described
in the  foregoing  subsection  (e),  shall cover any  Receivable  or any Related
Right),  and tax and judgment lien search reports from a Person  satisfactory to
Servicer and the  Administrator  showing no evidence of such liens filed against
any Originator;

1.                Favorable  opinions  of counsel to the  Originators,  in the
forms of Exhibit C;

1. Evidence (i) of the execution and delivery by each of the parties  thereto of
each  of the  other  Transaction  Documents  to be  executed  and  delivered  in
connection  herewith  and (ii)  that  each of the  conditions  precedent  to the
execution,  delivery and effectiveness of such other  Transaction  Documents has
been satisfied to the Company's satisfaction; and

1. A certificate  from an officer of each Originator to the effect that Servicer
and  Originator  have  placed  on the most  recent,  and have  taken  all  steps
reasonably necessary to ensure that there shall be placed on subsequent, summary
master control data processing  reports the following legend (or the substantive
equivalent  thereof):  "THE  RECEIVABLES  DESCRIBED HEREIN HAVE BEEN SOLD TO IMO
FUNDING  COMPANY,  LLC,  PURSUANT TO A PURCHASE AND SALE AGREEMENT,  DATED AS OF
NOVEMBER 29, 1999, AMONG IMO INDUSTRIES INC., THE ORIGINATORS  NAMED THEREIN AND
IMO FUNDING  COMPANY,  LLC; AND AN INTEREST IN THE RECEIVABLES  DESCRIBED HEREIN
HAS BEEN GRANTED TO LIBERTY  STREET  FUNDING  CORP.,  PURSUANT TO A  RECEIVABLES
PURCHASE  AGREEMENT,  DATED AS OF NOVEMBER 29, 1999,  AMONG IMO INDUSTRIES INC.,
IMO FUNDING  COMPANY,  LLC,  LIBERTY STREET FUNDING CORP.,  AND THE BANK OF NOVA
SCOTIA, AS ADMINISTRATOR."

A.  Certification as to  Representations  and Warranties.  Each  Originator,  by
accepting  the  Purchase  Price  related to each  purchase of  Receivables  (and
Related Rights) generated by such Originator,  shall be deemed to have certified
that the  representations  and  warranties  contained  in Article V are true and
correct on and as of such day,  with the same effect as though made on and as of
such day.

A.            Addition  of  Originators.  Additional  Persons  may be added as
Originators hereunder,  with the consent of the Company and the Administrator,
in its  reasonable  discretion,  provided  that the following  conditions  are
satisfied on or before the date of such addition:

a) IMO shall have given the  Administrator  and the Company at least thirty days
prior written notice of such proposed  addition and the identity of the proposed
additional  Originator and shall have provided such  information with respect to
the receivables of such additional  Originator as the  Administrator  shall have
reasonably requested;

a) such proposed additional Originator has executed and delivered to the Company
and the Administrator an agreement  substantially in the form attached hereto as
Exhibit D (each, a "Joinder Agreement");

a)                such  proposed  additional  Originator  has delivered to the
Company  and the  Administrator  each of the  documents  with  respect to such
Originator described in Section 4.1;

a) unless the Receivables  intended to be sold by such Originator to the Company
hereunder are Receivables,  the related  underlying goods of which, are and will
continue to be generated by an already existing  Originator,  the  Administrator
shall have  received a written  statement  from each of Moody's  and  Standard &
Poors  confirming  that the  addition  of such  Originator  will not result in a
downgrade or withdrawal of the current ratings of the Notes; and

a)                the  Purchase  and  Sale  Termination  Date  shall  not have
occurred.


I.                                    ARTICLE

              REPRESENTATIONS AND WARRANTIES OF THE ORIGINATORS

      In order to induce the  Company to enter into this  Agreement  and to make
purchases  hereunder,  each Originator,  hereby makes with respect to itself the
representations and warranties set forth in this Article V.

A.  Organization and Good Standing.  Such Originator has been duly organized and
is validly  existing as a  corporation  in good  standing  under the laws of the
state of its  incorporation,  with  corporate  power  and  authority  to own its
properties and to conduct its business as such  properties  are presently  owned
and such business is presently conducted.

A.                Due  Qualification.  Such  Originator  is duly  licensed  or
qualified  to do business  as a foreign  corporation  in good  standing in the
jurisdiction  where its chief executive office and principal place of business
are located and in all other  jurisdictions in which the ownership or lease of
its  property  or the  conduct of its  business  requires  such  licensing  or
qualification,  in either case,  except where the failure to be so licensed or
qualified could not reasonably be expected to have a Material Adverse Effect.

A. Power and Authority; Due Authorization. Such Originator has (a) all necessary
corporate  power,  authority  and legal  right (i) to execute and  deliver,  and
perform its obligations under, each Transaction Document to which it is a party,
and (ii) to generate,  own, sell,  contribute and assign Receivables and Related
Rights on the terms and subject to the conditions  herein and therein  provided;
and (b) duly authorized such execution and delivery and such sale and assignment
and the performance of such obligations by all necessary corporate action.

A.                Valid Sale; Binding  Obligations.  Each sale, of Receivables
and Related Rights made by such  Originator  pursuant to this Agreement  shall
constitute  a valid sale,  transfer,  and  assignment  thereof to the Company,
enforceable  against  creditors of, and purchasers from, such Originator;  and
this Agreement  constitutes,  and each other Transaction Document to be signed
by such  Originator,  when duly executed and  delivered,  will  constitute,  a
legal,  valid, and binding obligation of such Originator,  enforceable against
such  Originator  in  accordance  with  its  terms;  except  in  each  case as
enforceability may be limited by bankruptcy,  insolvency,  reorganization,  or
other similar laws affecting the  enforcement of creditors'  rights  generally
and  by  general   principles   of   equity,   regardless   of  whether   such
enforceability is considered in a proceeding in equity or at law.

A.                No  Violation.   The   consummation   of  the   transactions
contemplated  by this  Agreement and the other  Transaction  Documents and the
fulfillment of the terms hereof or thereof will not (a) conflict with,  result
in any breach of any of the terms and  provisions  of, or constitute  (with or
without   notice  or  lapse  of  time  or  both)  a  default  under  (i)  such
Originator's  certificate of incorporation or by-laws,  or (ii) any indenture,
loan agreement,  mortgage,  deed of trust, or other agreement or instrument to
which it is a party or by which it is bound,  (b)  result in the  creation  or
imposition  of any Adverse  Claim upon any of its  properties  pursuant to the
terms of any such  indenture,  loan  agreement,  mortgage,  deed of trust,  or
other agreement or instrument,  other than the Transaction  Documents,  or (c)
violate any law or any order,  rule,  or  regulation  applicable  to it of any
court or of any  federal,  state or foreign  regulatory  body,  administrative
agency, or other governmental  instrumentality  having jurisdiction over it or
any of its properties.

A.                Proceedings.   There   is  no   litigation   or,   to   such
Originator's  knowledge,  any proceeding or investigation,  pending before any
court,  regulatory body, arbitrator,  administrative agency, or other tribunal
or   governmental   instrumentality   (a)  asserting  the  invalidity  of  any
Transaction  Document,  (b)  seeking to prevent  the sale of  Receivables  and
Related  Rights  to the  Company  or  the  consummation  of  any of the  other
transactions  contemplated  by any  Transaction  Document,  or (c) seeking any
determination  or ruling that could  reasonably be expected to have a Material
Adverse Effect.

A.                Bulk  Sales  Act.   No   transaction   contemplated   hereby
requires compliance with any bulk sales act or similar law.

A.                Government  Approvals.  Except  for  the  filing  of the UCC
financing  statements  referred  to in Article  IV, all of which,  at the time
required in Article  IV,  shall have been duly made and shall be in full force
and effect,  no authorization or approval or other action by, and no notice to
or filing with, any governmental  authority or regulatory body is required for
such  Originator's due execution,  delivery and performance of any Transaction
Document to which it is a party, as seller.
B.                Financial Condition.

1. On the date  hereof,  and on the  date of each  sale of  Receivables  by each
Originator  to the Company  (both before and after giving  effect to such sale),
such Originator is and shall be Solvent.

1. The consolidated  balance sheets of IMO and its consolidated  subsidiaries as
of  December  31, 1998 and the related  statements  of income and  shareholders'
equity of IMO and its  consolidated  subsidiaries for the fiscal year then ended
certified by IMO's independent accountants,  copies of which have been furnished
to the Company,  present fairly the consolidated  financial  position of IMO and
its  consolidated  subsidiaries  for  the  period  ended  on such  date,  all in
accordance with generally accepted accounting  principles  consistently applied;
and since such date no event has occurred that has had, or is reasonably  likely
to have, a Material Adverse Effect.

A.                Margin  Regulations.  No use of any funds  acquired  by such
Originator  under this  Agreement  will  conflict  with or  contravene  any of
Regulations  T, U and X  promulgated  by the Board of Governors of the Federal
Reserve System from time to time.

A.                Quality of Title.

1. Each Receivable (together with the Related Rights) which is to be sold to the
Company hereunder is or shall be owned by such Originator, free and clear of any
Adverse Claim. Whenever the Company makes a purchase,  hereunder,  it shall have
acquired a valid and perfected ownership interest (free and clear of any Adverse
Claim) in all  Receivables  generated  by such  Originator  and all  Collections
related thereto,  and in such Originator's  entire right,  title and interest in
and to the other Related Rights with respect thereto.

1. No  effective  financing  statement  or other  instrument  similar  in effect
covering any Receivable generated by such Originator or any right related to any
such  Receivable is on file in any recording  office except such as may be filed
in favor of the Company or the  Originators,  as the case may be, in  accordance
with this Agreement or in favor of the Issuer in accordance with the Receivables
Purchase Agreement.

2.                Unless  otherwise  identified  to the Company in the related
Purchase  Report,  each  Receivable  purchased  hereunder  is on the  date  of
purchase an Eligible Receivable.

A. Accuracy of Information.  No factual written  information  furnished or to be
furnished  in  writing by such  Originator,  to the  Company,  the Issuer or the
Administrator for purposes of or in connection with any Transaction  Document or
any  transaction  contemplated  hereby or thereby is, and no other such  factual
written information  hereafter  furnished (and prepared) by such Originator,  to
the Company, the Issuer, or the Administrator  pursuant to or in connection with
any Transaction  Document,  taken as a whole, will be inaccurate in any material
respect as of the date it was furnished or (except as otherwise disclosed to the
Company at or prior to such time) as of the date as of which such information is
dated or  certified,  or shall  contain  any  material  misstatement  of fact or
omitted  or will  omit  to  state  any  material  fact  necessary  to make  such
information, in the light of the circumstances under which any statement therein
was made, not materially  misleading on the date as of which such information is
dated or certified.

A.                Offices.  Such Originator's  principal place of business and
chief  executive  office  is  located  at the  address  set forth  under  such
Originator's  signature  hereto,  and the offices where such Originator  keeps
all its books, records and documents  evidencing the Receivables,  the related
Contracts and all other agreements  related to such Receivables are located at
the  addresses  specified  on  Schedule  5.13  (or at  such  other  locations,
notified to the Servicer and the  Administrator  in  accordance  with Section
6.1(f),  in  jurisdictions  where all action  required by Section 7.3 has been
taken and completed).

A.                Trade Names.

1.                Except as disclosed  on  Schedule 5.14(a),  such  Originator
does not use any trade name other than its actual corporate name.

1. From and after the date that fell five (5) years before the date hereof, such
Originator has not been known by any legal name other than its corporate name as
of the date hereof,  nor has such  Originator  been the subject of any merger or
other  corporate  reorganization,  except in each case as  disclosed on Schedule
5.14(b).

A.                Taxes.  Such  Originator  has filed all material tax returns
and  reports  required  by law to have been filed by it and has paid all taxes
and governmental  charges thereby shown to be owing, except any such taxes and
charges  which are not yet  delinquent  or are being  diligently  contested in
good faith by  appropriate  proceedings  and for which  adequate  reserves  in
accordance with generally accepted  accounting  principles shall have been set
aside on its books.

A.                Licenses and Labor Controversies.

1. Such Originator has not failed to obtain any licenses, permits, franchises or
other governmental  authorizations  necessary to the ownership of its properties
or to the conduct of its business, which violation or failure to obtain would be
reasonably likely to have a Material Adverse Effect; and

1.                There  are  no  labor  controversies  pending  against  such
Originator  that  have  had (or are  reasonably  likely  to  have) a  Material
Adverse Effect.

A.  Compliance with  Applicable  Laws. Such Originator is in compliance,  in all
material  respects,  with the  requirements of (i) all applicable  laws,  rules,
regulations,  and orders of all  governmental  authorities  (including,  without
limitation,  Regulation Z, laws, rules and regulations  relating to usury, truth
in  lending,   fair  credit  billing,   fair  credit  reporting,   equal  credit
opportunity,  fair debt collection  practices and privacy and all other consumer
laws  applicable  to the  Receivables  and related  Contracts)  (excluding  with
respect to environmental  matters which are covered by clause (ii)), and (ii) to
the best of its knowledge, all applicable environmental laws, rules, regulations
and orders of all governmental authorities.

A.                Reliance on Separate  Legal  Identity.  Such  Originator  is
aware that the Issuer and the  Administrator are entering into the Transaction
Documents to which they are parties in reliance  upon the  Company's  identity
as a legal entity separate from such Originator.

A.                Purchase  Price.  The purchase  price payable by the Company
to such  Originator  hereunder  is  intended  by  such  Originator  (and  such
Originator  understands  that it is intended by the Company) to be  consistent
with the terms that would be obtained in an arm's length sale.

A.                Certain  Definitions.  With respect to this  Agreement,  the
terms "Material Adverse Effect" and "Solvent" are defined as follows:

            "Material  Adverse  Effect"  means,  with  respect  to any  event or
circumstance, a material adverse effect on:

            (i)   the  business,   assets,  or  financial   condition  of  any
      Originator and its subsidiaries, taken as a whole;

            (ii) the  ability of any  Originator  or the  Servicer  (if it is an
      Originator) to perform its respective  obligations  under the  Receivables
      Purchase  Agreement  or any other  Transaction  Document  to which it is a
      party or the performance of any such obligations;

            (iii) the validity or enforceability  of the Receivables  Purchase
      Agreement or any other Transaction Document;

            (iv)  with  respect  to  this  Agreement,  the  status,   existence,
      perfection,  priority  or  enforceability  of  Company's  interest  in the
      Receivables or Related Rights; or

            (v)   the validity or enforceability of the Receivables.

            "Solvent" means, with respect to any Person at any time, a condition
under which:

            (i) the fair value and present fair saleable  value of such Person's
      total assets is, on the date of determination,  greater than such Person's
      total liabilities  (including contingent and unliquidated  liabilities) at
      such time;

            (ii)  such  Person is and shall  continue to be able to pay all of
      its liabilities as such liabilities mature; and

            (iii) such  Person does not have  unreasonably  small  capital  with
      which to engage in its current and in its anticipated business.

For purposes of this definition:

            (A) the amount of a Person's contingent or unliquidated  liabilities
      at any time  shall be that  amount  which,  in light of all the  facts and
      circumstances then existing, represents the amount which can reasonably be
      expected to become an actual or matured liability;

            (B) the "fair  value" of an asset  shall be the amount  which may be
      realized  within a reasonable  time either  through  collection or sale of
      such asset at its regular market value;

            (C) the "regular market value" of an asset shall be the amount which
      a capable and diligent business person could obtain for such asset from an
      interested  buyer who is willing to  purchase  such asset  under  ordinary
      selling conditions; and

            (D) the "present fair  saleable  value" of an asset means the amount
      which can be obtained if such asset is sold with reasonable  promptness in
      an arm's length transaction in an existing and not theoretical market.

      5.21.  Year 2000 Problem.  Such  Originator  reasonably  believes that all
internal  computer  operations  that  are  material  to  its  and  each  of  its
Subsidiaries business operations will be able to perform properly date sensitive
functions  for all dates  before,  on and after  January 1, 2000,  except to the
extent  that a  failure  to do so could not  reasonably  be  expected  to have a
Material Adverse Effect.

I.                                    ARTICLE

                          COVENANTS OF THE ORIGINATORS

A.                Affirmative   Covenants.   From  the  date  hereof until the
first day following the Purchase and Sale  Termination  Date,  each Originator
(and IMO as to clause  (h)) will,  unless the  Company  and the  Administrator
shall otherwise consent in writing:
1.                Compliance with Laws,  Etc. Comply in all material  respects
with all applicable laws, rules,  regulations and orders, including those with
respect to the  Receivables  generated  by it and the  related  Contracts  and
other agreements related thereto.

1.  Preservation  of Corporate  Existence.  Preserve and maintain its  corporate
existence,  rights,  franchises  and  privileges  in  the  jurisdiction  of  its
incorporation,  and qualify and remain  qualified in good  standing as a foreign
corporation in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises,  privileges and qualification could reasonably be
expected to have a Material Adverse Effect.

1. Receivables Review. At any time and from time to time during regular business
hours,  upon  reasonable  prior notice  (unless a Purchase and Sale  Termination
Event or Unmatured  Purchase and Sale Termination Event shall exist), (i) permit
the  Company  and/or  the   Administrator,   or  their   respective   agents  or
representatives,  (A) to examine, to audit and make copies of and abstracts from
all books, records and documents (including, without limitation,  computer tapes
and  disks) in the power,  possession  or under the  control of such  Originator
relating to the Receivables and Related Rights,  including,  without limitation,
the  Contracts  and other  agreements  related  thereto,  and (B) to visit  such
Originator's  offices and properties for the purpose of examining such materials
described in the foregoing  clause (A) and  discussing  matters  relating to the
Receivables and Related Rights or such Originator's  performance  hereunder with
any of the  officers or employees of such  Originator  having  knowledge of such
matters; and (ii) without limiting the provisions of clause (i) next above, from
time  to  time  on  request  of  the  Administrator,   permit  certified  public
accountants  or other  auditors  acceptable  to the  Administrator  to conduct a
review of its books and  records  with  respect to the  Receivables  and Related
Rights.  Unless a Purchase and Sale Termination Event or Unmatured  Purchase and
Sale  Termination  Event shall exist,  each Originator shall only be responsible
for the cost of one examination  described in clause (i) or clause (ii) above in
any twelve-month period.

1.                Keeping  of  Records  and  Books  of  Account.  Maintain  an
ability to recreate  records  evidencing  the  Receivables in the event of the
destruction of the originals thereof.

1.  Performance  and Compliance with  Receivables and Contracts.  At its expense
timely and fully  perform and comply with all  provisions,  covenants  and other
promises required to be observed by it under the related Contracts and all other
agreements related to the Receivables and Related Rights.

1. Location of Records. Keep its principal place of business and chief executive
office,  and the  offices  where it keeps its records  concerning  or related to
Receivables and Related Rights,  at the address(es)  referred to in Section 5.13
or, upon 30 days' prior written notice to the Company and the Administrator,  at
such other locations in  jurisdictions  where all action required by Section 7.3
shall have been taken and completed.

1.                Credit  and  Collection  Policies.  Comply  in all  material
respects  with  its  Credit  and  Collection  Policy  in  connection  with the
Receivables and the related Contracts.
2.                Separate  Corporate  Existence  of the  Company.  Take  such
actions as shall be required in order that:

a) the Company's  operating expenses (other than certain  organization  expenses
and  expenses  incurred in  connection  with the  preparation,  negotiation  and
delivery  of the  Transaction  Documents)  will  not be  paid  by IMO  and  such
Originator;

a)                the   Company's   books  and  records  will  be   maintained
separately from those of IMO and such Originator;

a) all financial  statements of IMO and such Originator that are consolidated to
include the Company will contain  detailed notes clearly stating that (A) all of
the Company's assets are owned by the Company, and (B) the Company is a separate
entity with creditors who have received interests in the Company's assets;

a)                IMO and such  Originator  will  strictly  observe  corporate
formalities in its dealing with the Company;

a) Except  as  otherwise  provided  in the  Receivables  Purchase  Agreement  in
connection with the servicing of Receivables,  IMO and such Originator shall not
commingle its funds with any funds of the Company;

a) IMO and such  Originator  will maintain arm's length  relationships  with the
Company, and IMO and such Originator will be compensated at market rates for any
services it renders or otherwise furnishes to the Company; and

a) IMO and such  Originator  will not be,  and will not hold  itself  out to be,
responsible  for the debts of the Company or the decisions or actions in respect
of the daily business and affairs of the Company.

1. Post  Office  Boxes.  Within 30 days  after the date  hereof,  deliver to the
Administrator a certificate from an authorized officer of such Originator to the
effect  that (i) the name of the  renter of all post  office  boxes  into  which
Collections may from time to time be mailed have been changed to the name of the
Company (unless such post office boxes are in the name of the relevant  Lock-Box
Banks) and (ii) all relevant  postmasters  have been  notified  that each of the
Servicer and the  Administrator are authorized to collect mail delivered to such
post office boxes (unless such post office boxes are in the name of the relevant
Lock-Box Bank).

A.                Reporting  Requirements.  From the  date  hereof  until  the
first day following the Purchase and Sale  Termination  Date,  each Originator
shall,  unless the  Administrator  and the Company shall otherwise  consent in
writing, furnish to the Company and the Administrator:

1. Proceedings.  Promptly after such Originator has knowledge  thereof,  written
notice to the Company and the  Administrator of (i) all pending  proceedings and
investigations of the type described in Section 5.6 not previously  disclosed to
the Company and/or the Administrator and (ii) all material adverse  developments
that have  occurred with respect to any  previously  disclosed  proceedings  and
investigations.

1.  Other.  Promptly,  from time to time,  such  other  information,  documents,
records  or reports  respecting  the  Receivables,  the  Related  Rights or such
Originator's  performance  hereunder that the Company or the  Administrator  may
from time to time  reasonably  request in order to protect the  interests of the
Company,  the Issuer, the Administrator or any other Affected Person under or as
contemplated by the Transaction Documents.

A.                Negative  Covenants.  From the date  hereof  until  the date
following  the Purchase and Sale  Termination  Date,  each  Originator  agrees
that,  unless the  Administrator  and the Company shall  otherwise  consent in
writing (which consent shall not be unreasonably withheld), it shall not:

1.  Sales,  Liens,  Etc.  Except as  otherwise  provided  herein or in any other
Transaction  Document,  sell,  assign  (by  operation  of law or  otherwise)  or
otherwise  dispose  of, or create or suffer to exist any  Adverse  Claim upon or
with respect to, any  Receivable  or related  Contract,  Collections  or Related
Security,  or any  interest  therein,  or assign any right to receive  income in
respect thereof.

1.  Extension  or  Amendment of  Receivables.  Except as otherwise  permitted in
Section 4.2(a) of the Receivables  Purchase  Agreement or in accordance with the
Credit and Collection Policy, extend, amend or otherwise modify the terms of any
Receivable in any material respect,  or amend,  modify or waive, in any material
respect,  any term or condition of any Contract  related  thereto (which term or
condition relates to payments under, or the enforcement of, such Contract).

1. Change in Business or Credit and  Collection  Policy.  Make any change in the
character of its business or materially alter its Credit and Collection  Policy,
which  change  would,  in either  case,  materially  change the credit  standing
required of particular Obligors or potential Obligors or impair, in any material
respect, the collectibility of the Receivables generated by it.

1.  Receivables Not to be Evidenced by Promissory  Notes or Chattel Paper.  Take
any action to cause or permit any Receivable generated by it to become evidenced
by any "instrument" or "chattel paper" (as defined in the applicable UCC) unless
such "instrument" or "chattel paper" shall be delivered to the Company (which in
turn shall deliver the same to the Issuer (or the Administrator on its behalf)).

1. Mergers,  Acquisitions,  Sales, etc. Merge or consolidate with another Person
(except  pursuant to a merger or  consolidation  involving such Originator where
such Originator is the surviving  corporation),  or convey,  transfer,  lease or
otherwise  dispose of  (whether in one or in a series of  transactions),  all or
substantially all of its assets (whether now owned or hereafter acquired), other
than pursuant to this Agreement.

1. Lock-Box Banks. Make any changes in its instructions to any Obligor regarding
Collections  or add or terminate  any Lock-Box Bank unless the  requirements  of
Section 1(i) of Exhibit IV to the Receivables Purchase Agreement have been met.

1.                Accounting for  Purchases.  Account for or treat (whether in
financial  statements or otherwise) the  transactions  contemplated  hereby in
any manner  other than as sales of the  Receivables  and  Related  Security by
such Originator to the Company.

1. Transaction Documents. Enter into, execute, deliver or otherwise become bound
by any  agreement,  instrument,  document or other  arrangement  (other than the
Credit  Agreement)  that  restricts  the  right  of such  Originator  to  amend,
supplement,  amend and restate or otherwise modify, or to extend or renew, or to
waive any right under, this Agreement or any other Transaction Documents.

I.                                    ARTICLE

                      ADDITIONAL RIGHTS AND OBLIGATIONS IN

                           RESPECT OF THE RECEIVABLES

A. Rights of the Company.  Each Originator  hereby  authorizes the Company,  the
Servicer and the Administrator or their respective designees to take any and all
steps in such  Originator's  name  necessary or desirable,  in their  respective
determination,  to collect  all amounts  due under any and all  Receivables  and
Related Rights, including, without limitation,  endorsing such Originator's name
on checks and other  instruments  representing  Collections  and enforcing  such
Receivables  and the provisions of the related  Contracts  that concern  payment
and/or enforcement of rights to payment.

A.                Responsibilities  of The Originator.  Anything herein to the
contrary notwithstanding:

1.  Each  Originator  agrees to (A)  direct,  and  hereby  grants to each of the
Company  and  the  Administrator  the  authority  to  direct,  all  Obligors  of
Receivables  originated by such Originator to make payments of such  Receivables
directly  to a Lock-Box  Account at a Lock-Box  Bank,  and (B) to  transfer  any
Collections  that it receives  directly,  to the Servicer (for deposit to such a
Lock-Box  Account) within one Business Day of receipt  thereof,  and agrees that
all such Collections shall be deemed to be received in trust for the Company.

1. Each Originator shall perform its obligations hereunder,  and the exercise by
the Company or its  designee  of its rights  hereunder  shall not  relieve  such
Originator from such obligations.

1. None of the Company, the Servicer, the Issuer or the Administrator shall have
any  obligation  or  liability  to any  Obligor or any other  third  Person with
respect to any  Receivables,  Contracts  related  thereto  or any other  related
agreements, nor shall the Company, the Servicer, the Issuer or the Administrator
be obligated to perform any of the obligations of any Originator thereunder.

1. Each  Originator  hereby  grants to  Administrator  an  irrevocable  power of
attorney, with full power of substitution,  coupled with an interest, to take in
the name of such  Originator  all  steps  necessary  or  advisable  to  indorse,
negotiate or otherwise realize on any writing or other right of any kind held or
transmitted  by such  Originator  or  transmitted  or  received  by the  Company
(whether or not from such  Originator)  in  connection  with any  Receivable  or
Related Right.

A. Further Action Evidencing Purchases. Each Originator agrees that from time to
time,  at its  expense,  it  will  promptly  execute  and  deliver  all  further
instruments  and documents,  and take all further action that the Company or the
Servicer  may  reasonably  request  in order to  perfect,  protect or more fully
evidence the  Receivables  (and the Related  Rights)  purchased  by, the Company
hereunder,  or to enable the  Company to  exercise  or enforce any of its rights
hereunder  or  under  any  other  Transaction  Document.  Without  limiting  the
generality of the foregoing,  upon the request of the Company,  each  Originator
will:

1.                execute and file such financing or continuation  statements,
or amendments  thereto or assignments  thereof,  and such other instruments or
notices, as may be necessary or appropriate; and

1.                mark the summary  master  control  data  processing  records
with the legend set forth in Section 4.1(i).

Each  Originator  hereby  authorizes  the Company or its designee to file one or
more  financing  or  continuation   statements,   and  amendments   thereto  and
assignments thereof,  relative to all or any of the Receivables (and the Related
Rights)  now  existing  or  hereafter  generated  by  such  Originator.  If such
Originator  fails to perform any of its  agreements  or  obligations  under this
Agreement, the Company or its designee may (but shall not be required to) itself
perform, or cause performance of, such agreement or obligation, and the expenses
of the Company or its designee incurred in connection therewith shall be payable
by such non-performing Originator as provided in Section 9.1.

A.  Application  of  Collections.  Any  payment  by an Obligor in respect of any
indebtedness owed by it to any Originator shall,  except as otherwise  specified
by such  Obligor or otherwise  required by contract or law and unless  otherwise
instructed  by  the  Company  or  the  Administrator,  be  applied  first,  as a
Collection of any  Receivables of such Obligor,  in the order of the age of such
Receivables,  starting with the oldest of such  Receivables,  and second, to any
other indebtedness of such Obligor.

I.                                    ARTICLE

                      PURCHASE AND SALE TERMINATION EVENTS

A.                Purchase   and  Sale   Termination   Events.   Each  of  the
following   events  or  occurrences   described  in  this  Section  8.1  shall
constitute a "Purchase and Sale Termination Event":

1.                The Facility Termination Date shall have occurred; or

1.                Any Originator  shall fail to make any payment or deposit to
be made by it hereunder when due and such failure shall remain  unremedied for
two Business Days after written notice; or

1. Any  representation  or warranty made or deemed to be made by any  Originator
(or any of its officers) under or in connection  with this Agreement,  any other
Transaction  Document  or any other  information  or report  delivered  pursuant
hereto or thereto  shall prove to have been false or  incorrect  in any material
respect when made or deemed made (other than with respect to any  Receivable for
which the Purchase  Price has been reduced and accounted for pursuant to Section
3.3); or

1.                Any  Originator  shall  fail to  perform  or  observe in any
material  respect any material  agreement  contained in any of Sections 6.1(h)
or 6.3; or

1. Any Originator  shall fail to perform or observe in any material  respect any
other term,  covenant or agreement contained in this Agreement on its part to be
performed or observed and such failure shall remain  unremedied  for thirty (30)
days after written  notice  thereof  shall have been given by the Servicer,  the
Administrator or the Company to such Originator; or

a) Any Originator or any of its  subsidiaries  shall generally not pay its debts
as such debts  become due, or shall  admit in writing its  inability  to pay its
debts  generally,  or  shall  make a  general  assignment  for  the  benefit  of
creditors;  or any proceeding  shall be instituted by or against such Originator
or any of its subsidiaries seeking to adjudicate it a bankrupt or insolvent,  or
seeking  liquidation,  winding  up,  reorganization,   arrangement,  adjustment,
protection,  relief, or composition of it or its debts under any law relating to
bankruptcy,  insolvency or reorganization  or relief of debtors,  or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar  official for it or for all or any substantial part of its property and,
in the case of any such proceeding  instituted against it (but not instituted by
it), such  proceeding  shall remain  undismissed  or unstayed for a period of 60
days;  or any  Originator  or any of its  subsidiaries  shall take any corporate
action to  authorize  any of the  actions  set forth in clause (i) above in this
Section 8.1(f); or

1. The Internal  Revenue  Service  shall,  or shall  indicate  its  intention in
writing to any  Originator to, file notice of a lien asserting a claim or claims
pursuant to the Code with regard to any of the assets of any Originator,  or the
Pension Benefit Guaranty  Corporation  shall, or shall indicate its intention in
writing to such  Originator  or an ERISA  Affiliate  to, either file notice of a
lien  asserting  a claim  pursuant  to ERISA  with  regard to any assets of such
Originator or an ERISA Affiliate or terminate any benefit plan that has unfunded
benefit liabilities.

A.                Remedies.
a) Optional Termination.  Upon the occurrence of a Purchase and Sale Termination
Event,  the Company shall have the option by notice to the  Originators  (with a
copy to the  Administrator) to declare the Purchase and Sale Termination Date to
have occurred.

a) Remedies  Cumulative.  Upon any termination of the Purchase Facility pursuant
to this Section 8.2, the Company shall have, in addition to all other rights and
remedies  under this  Agreement  or  otherwise,  all other  rights and  remedies
provided  under the UCC of each  applicable  jurisdiction  and other  applicable
laws, which rights shall be cumulative.

I.                                    ARTICLE

                                 INDEMNIFICATION

A. Indemnities by the  Originators.  Without limiting any other rights which the
Company may have hereunder or under applicable law, each  Originator,  severally
and itself alone,  and IMO jointly and  severally  with each  Originator  hereby
agrees to indemnify  the Company and each of its assigns,  officers,  directors,
employees and agents (each of the foregoing Persons being individually  called a
"Purchase and Sale Indemnified  Party"),  forthwith on demand,  from and against
any and all damages,  losses, claims,  judgments,  liabilities and related costs
and expenses, including reasonable attorneys' fees and disbursements (all of the
foregoing being  collectively  called "Purchase and Sale  Indemnified  Amounts")
awarded  against or incurred by any of them arising out of or as a result of the
following:

1.                the  transfer  by  such  Originator  of an  interest  in any
Receivable or Related Right to any Person other than the Company;

1. the breach of any representation or warranty made by such Originator under or
in connection  with this  Agreement or any other  Transaction  Document,  or any
information or report  delivered by such  Originator  pursuant hereto or thereto
which  shall have been false or  incorrect  in any  respect  when made or deemed
made;

1.                the   failure  by  such   Originator   to  comply  with  any
applicable  law,  rule or  regulation  with respect to any  Receivable  or the
related  Contract,  or the  nonconformity  of any  Receivable  or the  related
Contract with any such applicable law, rule or regulation;

1.                the  failure to vest and  maintain  vested in the Company an
ownership  interest in the  Receivables  generated by such  Originator and the
Related Rights free and clear of any Adverse Claim;

1. the failure of such  Originator to file with respect to itself,  or any delay
by such Originator in filing,  financing statements or other similar instruments
or documents under the UCC of any applicable  jurisdiction  or other  applicable
laws with respect to any Receivables or purported  Receivables generated by such
Originator or any Related Rights,  whether at the time of any purchase or at any
subsequent time;

1. any  dispute,  claim,  offset or defense  (other  than  discharge  or stay in
bankruptcy)  of the  Obligor  to the  payment  of any  Receivable  or  purported
Receivable  generated  by such  Originator  (including,  without  limitation,  a
defense  based on such  Receivable  or the related  Contract  not being a legal,
valid  and  binding  obligation  of  such  Obligor  enforceable  against  it  in
accordance  with its  terms),  or any other  claim  resulting  from the goods or
services  related  to any such  Receivable  or the  furnishing  of or failure to
furnish such goods or services;

1.                any product  liability claim arising out of or in connection
with goods or services that are the subject of any Receivable;

1.                any  litigation,  proceeding or  investigation  against such
Originator;

1. any tax or governmental  fee or charge (other than any tax excluded  pursuant
to the proviso  below),  all  interest  and  penalties  thereon or with  respect
thereto, and all out-of-pocket costs and expenses, including the reasonable fees
and expenses of counsel in defending against the same, which may arise by reason
of the purchase or ownership of the  Receivables or any Related Right  connected
with any such Receivables; and

1.                any  failure of such  Originator  to  perform  its duties or
obligations  in accordance  with the provisions of this Agreement or any other
Transaction Document;

excluding,  however,  (i)  Purchase and Sale  Indemnified  Amounts to the extent
resulting from gross negligence or willful  misconduct on the part of a Purchase
and Sale Indemnified  Party,  (ii) any  indemnification  which has the effect of
recourse for  non-payment  or late payment of the  Receivables to any indemnitor
due to credit  reasons,  (iii) any tax based upon or  measured  by net income or
gross receipts,  and (iv) any  withholding  taxes imposed as a result of amounts
paid or payable to such  Purchase and Sale  Indemnified  Party  pursuant to this
Agreement.

      If for any reason the  indemnification  provided above in this Section 9.1
is unavailable to a Purchase and Sale  Indemnified  Party or is  insufficient to
hold  such  Purchase  and Sale  Indemnified  Party  harmless,  then  each of the
Originators, severally and for itself alone, and IMO, jointly and severally with
each  Originator,  shall  contribute  (subject to the provisions in this Section
9.1) to the amount paid or payable by such Purchase and Sale  Indemnified  Party
as a result of such loss,  claim,  damage or  liability  to the  maximum  extent
permitted under applicable law.

I.                                    ARTICLE

                                  MISCELLANEOUS

A.                Amendments, etc.

1. The provisions of this  Agreement may from time to time be amended,  modified
or waived, if such amendment, modification or waiver is in writing and consented
to by the Company, IMO the Administrator and the Originators (with respect to an
amendment) or by the Company (with respect to a waiver or consent by it).

1. No failure or delay on the part of the Company,  Servicer,  any Originator or
any third party  beneficiary  in exercising any power or right  hereunder  shall
operate as a waiver  thereof,  nor shall any single or partial  exercise  of any
such  power or right  preclude  any other or  further  exercise  thereof  or the
exercise of any other power or right. No notice to or demand on the Company, the
Servicer, or any Originator in any case shall entitle it to any notice or demand
in similar or other  circumstances.  No waiver or approval by the Company or the
Servicer under this Agreement  shall,  except as may otherwise be stated in such
waiver or approval,  be  applicable  to  subsequent  transactions.  No waiver or
approval under this Agreement shall require any similar or dissimilar  waiver or
approval thereafter to be granted hereunder.

A.  Notices,  etc. All notices and other  communications  provided for hereunder
shall,  unless  otherwise  stated  herein,  be in writing  (including  facsimile
communication)  and shall be  personally  delivered  or sent by express  mail or
courier or by certified mail, postage-prepaid,  or by facsimile, to the intended
party at the address or facsimile  number of such party set forth under its name
on the signature  pages hereof or at such other  address or facsimile  number as
shall be  designated  by such  party in a written  notice  to the other  parties
hereto.  All  such  notices  and  communications  shall  be  effective,  (i)  if
personally  delivered or sent by express mail or courier or if sent by certified
mail, when received,  and (ii) if transmitted by facsimile,  when sent,  receipt
confirmed by telephone or electronic means.

A.                No  Waiver;   Cumulative   Remedies.   The  remedies  herein
provided are cumulative and not exclusive of any remedies provided by law.

A. Binding Effect; Assignability. This Agreement shall be binding upon and inure
to the  benefit  of  the  Company  and  each  Originator  and  their  respective
successors  and permitted  assigns;  provided,  however,  that no Originator may
assign  its rights  hereunder  or any  interest  herein or  delegate  its duties
hereunder   without   the  prior   written   consent  of  the  Company  and  the
Administrator.  This  Agreement  shall  create  and  constitute  the  continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the date after the Purchase and Sale  Termination
Date on which the Originators  have received payment in full for all Receivables
and Related  Rights  purchased  pursuant  to Section 1.1 hereof.  The rights and
remedies with respect to any breach of any  representation  and warranty made by
any  Originator  pursuant  to  Article  V and the  indemnification  and  payment
provisions of Article IX and Section 10.6 shall be continuing  and shall survive
any termination of this Agreement.

A.                Governing  Law.  THIS  AGREEMENT  SHALL BE GOVERNED  BY, AND
CONSTRUED IN ACCORDANCE  WITH,  THE INTERNAL LAWS, AND NOT THE CONFLICT OF LAW
PRINCIPLES,  OF THE STATE OF NEW YORK EXCEPT TO THE EXTENT  THAT THE  VALIDITY
OR PERFECTION OF A SECURITY INTEREST OR REMEDIES HEREUNDER,  IN RESPECT OF ANY
PARTICULAR  COLLATERAL ARE GOVERNED BY THE LAWS OF A  JURISDICTION  OTHER THAN
THE STATE OF NEW YORK.

A.                Costs,  Expenses and Taxes.  In addition to the  obligations
of the Originators under Article IX, each Originator agrees to pay on demand:

1.                all  reasonable  costs and expenses in  connection  with the
enforcement of this Agreement and the other Transaction Documents; and

1. all stamp and  other  similar  taxes and fees  payable  or  determined  to be
payable in connection with the execution, delivery, filing and recording of this
Agreement  or the other  Transaction  Documents,  and agrees to  indemnify  each
Purchase and Sale  Indemnified  Party against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.

A. Submission to Jurisdiction.  EACH PARTY HERETO HEREBY IRREVOCABLY (a) SUBMITS
TO THE  NON-EXCLUSIVE  JURISDICTION  OF ANY COURT OF THE STATE OF NEW YORK OR OF
THE UNITED  STATES FOR THE  SOUTHERN  DISTRICT  OF NEW YORK,  OVER ANY ACTION OR
PROCEEDING  ARISING OUT OF OR RELATING TO ANY TRANSACTION  DOCUMENT;  (b) AGREES
THAT ALL  CLAIMS  IN  RESPECT  OF SUCH  ACTION  OR  PROCEEDING  MAY BE HEARD AND
DETERMINED  IN SUCH STATE OR UNITED STATES  FEDERAL  COURT;  (c) WAIVES,  TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER  APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; (d) CONSENTS
TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH  ACTION OR  PROCEEDING  BY THE
MAILING OF COPIES OF SUCH  PROCESS TO SUCH  PERSON AT ITS ADDRESS  SPECIFIED  IN
SECTION 10.2; AND (e) TO THE EXTENT ALLOWED BY LAW,  AGREES THAT A NONAPPEALABLE
FINAL  JUDGMENT IN ANY SUCH ACTION OR PROCEEDING  SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER  JURISDICTIONS  BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING IN THIS SECTION 10.7 SHALL AFFECT THE COMPANY'S  RIGHT
TO SERVE  LEGAL  PROCESS IN ANY OTHER  MANNER  PERMITTED  BY LAW OR TO BRING ANY
ACTION OR PROCEEDING  AGAINST THE ORIGINATOR OR ITS  RESPECTIVE  PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTIONS.

A. Waiver of Jury Trial. EACH PARTY HERETO EXPRESSLY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR  PROCEEDING  TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR UNDER ANY AMENDMENT, INSTRUMENT OR
DOCUMENT  DELIVERED  OR WHICH  MAY IN THE  FUTURE  BE  DELIVERED  IN  CONNECTION
HEREWITH  OR ARISING  FROM ANY  RELATIONSHIP  EXISTING IN  CONNECTION  WITH THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT,  AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

A.  Captions  and Cross  References;  Incorporation  by  Reference.  The various
captions  (including,  without  limitation,  the  table  of  contents)  in  this
Agreement are included for convenience  only and shall not affect the meaning or
interpretation of any provision of this Agreement.  References in this Agreement
to any  underscored  Section or Exhibit  are to such  Section or Exhibit of this
Agreement,  as the case may be. The Exhibits  hereto are hereby  incorporated by
reference into and made a part of this Agreement.

A.                Execution in  Counterparts.  This  Agreement may be executed
in any number of  counterparts  and by  different  parties  hereto in separate
counterparts,  each of  which  when  so  executed  shall  be  deemed  to be an
original and all of which when taken  together  shall  constitute  one and the
same Agreement.

A. Acknowledgment and Agreement.  By execution below, each Originator  expressly
acknowledges and agrees that all of the Company's  rights,  title, and interests
in, to, and under this Agreement  shall be assigned by the Company to the Issuer
pursuant to the Receivables Purchase Agreement,  and such Originator consents to
all such  assignments.  Each of the parties hereto  acknowledges and agrees that
the Administrator and the Issuer are third party  beneficiaries of the rights of
the Company arising hereunder and under the other Transaction Documents to which
such Originator is a party.

                           Purchase and Sale Agreement

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

                                 IMO FUNDING COMPANY, LLC


                                 By: ___________________________________
                                 Name:   John A. Young
                                 Title:     Vice President

                                 9211 Forest Hill Avenue
                                 Suite 109
                                 Richmond, Virginia 23235
                                 Attention: John A. Young
                                 Telephone: (804) 327-5673
                                 Facsimile:   (804) 327-5688


                                 IMO INDUSTRIES INC., as initial Servicer

                                 By: ____________________________________
                                 Name:   John A. Young
                                 Title:     Vice President

                                 997 Lenox Drive

                                    Suite 111

                                 Lawrenceville, New Jersey 08648
                                 Attention:    Thomas M. O'Brien
                                 Telephone:  (609) 896-7627
                                 Facsimile:    (609) 896-7633
                                 ORIGINATORS:

                                 IMO INDUSTRIES INC., as an Originator


                                 By: ___________________________________
                                 Name: _________________________________
                                 Title: __________________________________



                                 997 Lenox Drive

                                    Suite 111

                                 Lawrenceville, New Jersey 08648
                                 Attention:    Thomas M. O'Brien
                                 Telephone:  (609) 896-7627
                                 Facsimile:    (609) 896-7633


                                 WARREN PUMPS INC., as an Originator


                                 By: ___________________________________
                                 Name: _________________________________
                                 Title: __________________________________


                                 82 Bridges Avenue
                                 Warren, Massachusetts 01083-0959
                                 Attention: Gary A. Young
                                 Telephone: (413) 436-7711 (x200)
                                 Facsimile:   (413) 436-5605





                                  SCHEDULE 5.13

                                OFFICE LOCATIONS

Imo Industries Inc.

Principal Place of Business and Chief Executive Office:

997 Lenox Drive
Suite 111

Lawrenceville, New Jersey 08648

Additional Offices:

3900 Westinghouse Boulevard
Charlotte, NC 28373
Mecklenburg County

506 South Bickett Boulevard
Louisburg, NC 27549
Franklin County

7970 U.S. 24 Dixie Highway
Florence, KY 41042

13517 Pumice Street
Norwalk, CA

3750 East Market St.
York, PA 17402
York County

1710 Airport Road
Monroe, NC 28111-5020
Union County

479 Industrial Park Road
Columbia, KY 42728
Adair County

21 Clinton Street
Hudson, OH 44236-2899
Summit County

1579 Barber Road
Sarasota, FL 34240
Sarasota County

500 B. Edwards Avenue
New Orleans, LA 23279

9211 Forest Hill Avenue
Suite 109
Richmond, Virginia 23235

12600 SE 38th Street
Suite 230
Bellevue, Washington 98006


Warren Pumps Inc.

Principal Place of Business and Chief Executive Office:

82 Bridges Avenue
Warren, Massachusetts 01083-0959

Additional Offices:

1710 Airport Road
Monroe, NC 28111-5020
Union County

                                SCHEDULE 5.14(a)

                                   TRADE NAMES

Imo Industries Inc.

Boston Gear
Morse Controls
Imo Pump
Fincor
Colfax Pump Group

Colfax Power Transmission

Warren Pumps Inc.

Warren
Colfax Pump Group

                                SCHEDULE 5.14(b)

             PREVIOUS NAMES, MERGERS OR CORPORATE REORGANIZATION


Imo Industries Inc.

None

Warren Pumps Inc.

None

                                    EXHIBIT A

                             FORM OF PURCHASE REPORT

                                    EXHIBIT B

                              FORM OF COMPANY NOTE

                                    EXHIBIT C

                   FORM OF OPINION OF ORIGINATOR'S COUNSEL



                                    EXHIBIT D

                            FORM OF JOINDER AGREEMENT

                                    EXHIBIT E

                  FORM OF ORIGINATOR ASSIGNMENT CERTIFICATE