May 21, 1996

Mr. Donald N. Rosenberg
Senior Vice President
Human Resources
Imo Industries Inc.
1009 Lenox Drive
Lawrenceville, NJ 08648

Dear Mr. Rosenberg:

The Board of Directors (the "Board") of Imo Industries Inc. (the
"Company") considers it to be in the best interests of its
stockholders to foster the continuous employment of key
management personnel of the Company and its subsidiaries in the
event of a possible change in control of the Company.

In order to induce you, in the event of a possible change in
control of the Company, to remain in the employ of the Company or
its subsidiaries and to give your continued attention and
dedication to your assigned duties without distraction, and in
consideration of your agreement set forth in Section 2(ii)
hereof, the Company agrees that you shall receive the severance
benefits hereinafter set forth in the event your employment with
the Company or its subsidiaries is terminated subsequent to a
"change in control of the Company" (as defined in Section 2
hereof) under the circumstances described below.

     1.   Term of Agreement.  This Agreement shall commence on
the date hereof and shall continue in effect through December 31,
1996 provided, however, that commencing on January 1, 1997 and
each January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless not
later than November 1 of the preceding year, the Company shall
have given notice that it does not wish to extend this Agreement;
and provided, further, that notwithstanding any such notice by
the Company not to extend, this Agreement shall continue in
effect for the lesser of (i) a period of 36 months beyond the
term provided herein or (ii) a period of such number of months to
your 65th birthday, if a change in control of the Company, as
defined in Section 2 hereof, shall have occurred during such
term.

     2.   Change in Control.

          (i)  No benefits shall be payable hereunder unless
there shall have been a change in control of the Company, as set
forth below, and your employment by the Company or its
subsidiaries shall thereafter have been terminated in accordance
with Section 3 hereof.  For purposes of this Agreement, a "change
in control of the Company" shall be deemed to have occurred if
following the date hereof (A) any "person" (as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing
35% or more of the combined voting power of the Company's then
outstanding securities; (B) during the term of this Agreement,
individuals who at the beginning of such term constitute the
board, including for this purpose any new director whose election
or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors still
in office who were directors at the beginning of such term,
cease, for any reason to constitute a majority thereof; or (C)
more than 50% of the assets of the Company, including the
business or businesses for which your services are principally
performed, is disposed of by the Company pursuant to a partial or
complete liquidation of the Company, a sale of assets (including
stock of a subsidiary or subsidiaries) of the Company or
otherwise.

          (ii) For purposes of this Agreement, a "potential
change in control of the Company" shall be deemed to have
occurred if following the date hereof (A) the Company enters into
an agreement, the consummation of which would result in the
occurrence of a change in control of the Company, (B) any person
(including the Company) publicly announces an intention to take
or to consider taking actions which if consummated would
constitute a change in control of the Company; or (C) the Board
of Directors adopts a resolution to the effect that a potential
change in control of the Company for purposes of this Agreement
has occurred.  You agree that, subject to the terms and
conditions of this Agreement, in the event of a potential change
in control of the Company, you will remain in the employ of the
Company or its subsidiaries during the pendency of any such
potential change in control and for a period of one year after
the occurrence of an actual change in control of the Company.
However, nothing in this Agreement shall confer upon you any
right to continue in the employ of the Company or its
subsidiaries prior to an actual change in control of the Company
or shall interfere with or restrict in any way the rights of the
Company or its subsidiaries, which are hereby expressly reserved,
to discharge you at any time prior to an actual change in control
of the Company for any reason whatsoever, with or without cause.

     3.   Termination Following Change in Control.  If any of the
events described in Section 2 hereof constituting a change in
control of the Company shall have occurred, you shall be entitled
to the benefits provided in Section 4 hereof upon the subsequent
termination of your employment by the Company or its subsidiaries
within three years of a change in control of the Company during
the term of this Agreement unless such termination is (A) because
of your Death or Retirement, (B) by the Company for Cause or
Disability, or (C) by you other than for Good Reason.

          (i)  Disability; Retirement.  If, as a result of your
incapacity due to physical or mental illness, you shall have been
absent from your duties with the Company or its subsidiaries on a
full-time basis for six consecutive months, and within thirty
(30) days after written notice of termination is given, you shall
not have returned to the full-time performance of your duties,
the Company may terminate your employment with the Company or its
subsidiaries for "Disability".  Termination by the Company or you
of your employment with the Company or its subsidiaries based on
"Retirement" shall mean termination in accordance with the
retirement policy of the Company, or the subsidiary of the
Company by which you are employed, generally applicable to its
salaried employees, including early retirement, or in accordance
with any retirement arrangement established with your consent
with respect to you.

          (ii) Cause.  Termination by the Company of your
employment with the Company or its subsidiaries for "Cause" shall
mean termination upon the willful engaging by you in misconduct
which is demonstrably and materially injurious to the Company and
its subsidiaries taken as a whole.  No act, or failure to act, on
your part shall be considered "willful" unless done, or omitted
to be done, by you not in good faith and without reasonable
belief that your action or omission was in the best interest of
the Company or its subsidiaries.  Notwithstanding the foregoing,
you shall not be deemed to have been terminated for Cause unless
and until there have been delivered to you a copy of a resolution
duly adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Board at a meeting of
the Board called and held for the purpose (after reasonable
notice to you and an opportunity for you, together with your
counsel, to be heard before the Board), finding that in the good
faith opinion of the Board you were guilty of misconduct set
further above in this Subsection and specifying the particulars
thereof in detail.

          (iii)     Good Reason.  You shall be entitled to
terminate your employment for Good Reason within three years of a
change in control of the Company during the term of this
Agreement.  For purposes of this Agreement, "Good Reason" shall
mean any of the following events which occurs without your
express written consent.

               (A)  the assignment to you of any duties
inconsistent with your status as Senior Vice President of the
Company or a substantial alteration in the nature or status of
your responsibilities from those in effect immediately prior to a
change in control of the Company other than any such alteration
primarily attributable to the fact that the Company may no longer
be a public Company;

               (B)  a reduction by the Company in your annual
base salary as in effect on the date hereof or as the same may be
increased from time to time, except for across-the-board salary
reductions similarly affecting all executives of the Company and
its subsidiaries and all executives of any organization in
control of the Company;

               (C)  the relocation of the Company's principal
executive offices to a location outside the Lawrenceville, New
Jersey area or the Company requiring you to be based anywhere
other than Company's principal executive offices except for
required travel on the Company's business to an extent
substantially consistent with your present travel obligations;

               (D)  the failure by the Company to continue in
effect any compensation plan of the Company in which you
participate, including but not limited to the Company's Equity
Incentive Plan (the "Stock Option Plan") or any substitute or
additional plans adopted prior to the change in control, unless
an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan in
connection with the change in control of the Company, or the
failure by the Company to continue your participation therein;

               (E)  the failure by the Company or its
subsidiaries to continue to provide you with benefits
substantially similar to those enjoyed by you under the Company's
Salaried Employees Stock Savings Plan or any of the pension, life
insurance, medical, health and accident, or disability plans of
the Company or its subsidiaries in which you were participating
at the time of a change in control of the Company, or the taking
of any action by the Company or its subsidiaries which would
directly or indirectly materially reduce any of such benefits or
deprive you of any material fringe benefit enjoyed by you at the
time of the change in control of the Company, or the failure by
the Company or its subsidiaries to provide you with the number of
paid vacation days to which you are entitled on the basis of
years of service with the Company or its subsidiaries in
accordance with the normal vacation policy of the Company or the
subsidiary by which you are employed as in effect at the time of
the change in control;

               (F)  the failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 5 hereof; or

               (G)  any purported termination of your employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection (iv) below (and, if
applicable, Subsection (ii) above); and for purposes of this
Agreement, no such purported termination shall be effective.

     Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due to
physical or mental illness.

          (iv) Notice of Termination.  Any purported termination
by the Company or by you shall be communicated by written Notice
of Termination to the other party hereto in accordance with
Section 7 hereof.  A "Notice of Termination" shall mean a notice
which indicates the specific termination provision in this
Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of your employment.

          (v)  Date of Termination, Etc.  "Date of Termination"
shall mean (A) if your employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the performance of your
duties on a full-time basis during such thirty (30) day period,
and (B) if your employment is terminated pursuant to Subsection
(ii) or (iii) above or for any other reason, the date specified
in the Notice of Termination (which shall be not less than thirty
(30) days from the date such Notice of Termination is given).



     4.   Compensation Upon Termination or During Disability.

          (i)  During any period that you fail to perform your
duties hereunder as a result of incapacity due to physical or
mental illness, you shall continue to receive your full base
salary at the rate then in effect until this Agreement is
terminated pursuant to Section 3(i) hereof.  Thereafter, your
benefits shall be determined in accordance with the Company's
disability program (without regard to any amendment to such
disability program made subsequent to a change in control of the
Company and on or prior to the Date of Termination, which
amendment adversely affects in any way the computation of
benefits thereunder).

          (ii) If your employment shall be terminated for Cause,
the Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of
Termination is given and the Company and its subsidiaries shall
have no further obligations to you under this Agreement.

          (iii)     If your employment by the Company shall be
terminated during the term of this Agreement (a) by the Company
other than for Cause, Retirement or Disability within a period of
three years of a change in control of the Company or (b) by you
for Good Reason within a period of three years of the occurrence
of such a change in control, then you shall be entitled to the
benefits provided below.

               (A)  the Company shall pay for your full base
salary through the Date of Termination at the rate in effect at
the time Notice of Termination is given;

               (B)  in lieu of any further salary payments to you
for periods subsequent to the Date of Termination, the Company
shall pay as severance pay to you, not later than the fifth day
following the Date of Termination, a lump sum severance payment
(together with the payments provided in Subsections (C), (D), (F)
and (G) below (the "Severance Payments")) equal to 299.999% of
your average taxable compensation from the Company during the
five taxable years of the Company, immediately preceding the
change in control of the Company (or, if your employment by the
Company began during such five-years period, during the portion
of the period following your employment); provided that, in the
event there are fewer than 36 whole or partial months remaining
from the Date of Termination to your 65th birthday, the amount
provided for in this Subsection (B) will be reduced by
multiplying it by a fraction the numerator of which is the number
of whole or partial months so remaining to your 65th birthday and
the denominator of which is 36;

               (C)  notwithstanding any provisions of the
Company's bonus plan, the Company shall pay to you, not later
than the fifth day following the Date of Termination, a lump sum
amount equal to the sum of (x) any incentive compensation which
has been allocated for the fiscal year preceding that in which
the Date of Termination occurs but has not yet been paid, and (y)
any award under the Company's bonus plan, if any, which has not
yet been paid for any other period which has closed prior to the
Date of Termination;

               (D)  in lieu of shares of common stock of the
Company ("Company Shares") issuable upon the exercise of
outstanding options ("Options"), if any, granted to you under the
Company's Stock Option Plan or any other stock option plan of the
Company (which Options shall be canceled upon the making of the
payment referred to below), the Company shall pay to you, not
later than the fifth day following the Date of Termination, a
lump sum equal to the sum of:

                    (x)  in the case of Options which are
incentive stock options ("Incentive Stock Options"), as defined
under Section 422A of the Internal Revenue Code of 1986, as it
may hereafter be amended (the "Code"), granted after the date of
this Agreement, the product of (a) the difference (to the Extent
such difference is a positive number) obtained by subtracting the
per share exercise price of each such Incentive Stock Option held
by you (to the extent then exercisable) from the higher of (i)
the closing price of Company Shares as reported on the New York
Stock Exchange on the Date of Termination or (ii) the highest
price per Company Share actually paid in connection with any
change in control of the Company (but not more than the fair
market value per share, within the meaning of Section 422A of the
Code and the regulations promulgated thereunder), on the date of
payment thereof and (b) the number of Company shares covered by
each such Incentive Stock Option;

                    (y)  in the case of all other Options (other
than Incentive Stock Options granted on or before the date of
this Agreement, with respect to which no provision is made herein
for payment and which Incentive Stock Options shall not be
canceled pursuant to this Agreement), the product of (a) the
difference (to the extent that such difference is a positive
number) obtained by subtracting the per share exercise price of
each such Option held by you whether or not then fully
exercisable from the higher of (i) the closing price of Company
Shares as reported on the New York Stock Exchange on the Date of
Termination, or (ii) the highest price per Company Share actually
paid in connection with any change in control of the Company, and
(b) the number of Company Shares covered by such Option;

               (E)  the Company shall also pay to you all legal
fees and expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this
Agreement);

               (F)  the Company shall arrange to provide you, for
a 36-month period after such termination (or such lesser number
of months to your 65th birthday), with life, disability, accident
and health insurance substantially similar to those which you are
receiving immediately prior to the Notice of Termination.
Benefits otherwise receivable by you pursuant to this Section 4
(iii)(F) shall be reduced to the extent comparable benefits are
actually received by you during the 36-month period following
your termination (or such shorter number of months to your 65th
birthday), and any such benefits actually received by you shall
be reported by you to the Company; and

               (G)  in addition to the retirement benefits to
which you are entitled under the qualified and supplemental
pension plans of the Company or any of its subsidiaries in which
you participate (the "Pension Plans") or any successor plans
thereto, the Company shall pay you in one sum in cash on the
fifth day following the Date of Termination, a lump sum equal to
the actuarial equivalent of the excess of (x) the retirement
pension (determined as a straight life annuity commencing at age
65) which you would have accrued under the terms of the Pension
Plans (without regard to any amendment to the Pension Plans made
subsequent to a change in control of the Company and on or prior
to the Date of Termination, which amendment adversely affects in
any manner the computation of retirement benefits thereunder),
determined as if you were fully vested thereunder and had
accumulated (after the Date of Termination) 36 additional months
of benefit accrual and service credit thereunder at your highest
annual rate of compensation during the 12 months immediately
preceding the Date of Termination (but in no event shall you be
deemed to have accumulated additional months of service credit
after your 65th birthday), over (y) the vested retirement pension
(determined as a straight life annuity commencing at age 65)
which you had then accrued pursuant to the provisions of the
Pension Plans.  For purposes of clause (x), the term
"compensation" shall include amounts payable pursuant to Section
4(iii)(B) hereof, and amounts payable pursuant to Section
4(iii)(B) hereof shall be deemed to represent 36 months of
compensation (or such lesser number of months of compensation to
your 65th birthday) for purposes of determining benefits under
the Pension Plans.  For purposes of this Subsection, "actuarial
equivalent" shall be determined using the same methods and
assumptions utilized under the Pension Plans immediately prior to
the change in control of the Company;

               (H)  in the event that any payment or benefit
received or to be received by you in connection with either the
termination of your employment or a change in control of the
Company (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any
successor to the Company or any corporation ("Affiliate")
affiliated with the Company or which becomes so affiliated
pursuant to the transactions resulting in a change in control of
the Company, both within the meaning of Section 1504 of the Code,
(collectively with the Severance Payments, "Total Payment"))
would not be deductible (in whole or part) by the Company or an
Affiliate as a result of Section 280G of the Code, the Severance
Payments shall be reduced (to zero, if necessary) until no
portion of the Total Payments is not deductible as a result of
Section 280G of the Code, or the Severance Payments are not
reduced to zero.  For purposes of this limitation, (i) no portion
of the Total Payments, the receipt or enjoyment of which you
shall have effectively waived in writing prior to the date of
payment of the Severance Payments, shall be taken into account,
(ii) no portion of the Total Payments shall be taken into account
which in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to you does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of
the Code, (iii) the Severance Payments shall be reduced only to
the extent necessary so that the Total Payments (other than those
referred to in clause (ii)) in their entirety constituted
reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code, in the opinion of the
tax counsel referred to in clause (ii), and (iv) the value of any
non-cash benefit or any deferred cash payment included in the
Total Payments shall be determined by the Company's independent
auditors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code.

          (iv) You shall not be required to mitigate the amount
of any payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any
compensation earned by you as the result of employment by another
employer or by retirement benefits after the Date of Termination
or otherwise.

          (v)  In addition to all other amounts payable to you
under this Section 4, you shall be entitled to receive all
benefits payable to you under the Pension Plans, and any other
plan or agreement relating to retirement benefits.

     5.   Letter of Credit Preceding Termination.  In the event a
potential change in control of the Company shall have occurred,
the Company will promptly (and in no event more than seven days
thereafter) establish an irrevocable letter of credit (the
"Letter of Credit") in your favor in an amount equal to the
aggregate of the amounts which would be payable to you pursuant
to Subsections 4(iii)(B), (C), (D) and (E) hereof as if you were
immediately entitled to payment pursuant thereto plus $100,000,
such Letter of Credit to be issued by a commercial bank which is
not an affiliate of the Company, but which is a national banking
association or established under the laws of one of the states of
the United States, and which has equity in excess of $100 million
(the "Bank").  The Letter of Credit shall be in form and
substance reasonably satisfactory to you and the Company and will
provide that the Bank shall pay you the amount of your draft, at
sight, on presentation to the Bank of a statement, signed by you
or your authorized representative, setting forth (i) a statement
that pursuant to any or all of Subsections 4(iii), 4(iv) or 4(v)
of this Agreement you are entitled to payments of not less than
the amount of such draft and (ii) the Date of Termination of your
employment.  Each time you shall draw on the Letter of Credit,
you shall provide the Company with a copy of such draft and the
accompanying statement referred to above.  The Company shall
maintain the Letter of Credit in effect for a period of two years
from the date on which it is issued; provided, however, that if
during any such two-year period any event shall occur which,
pursuant to this Section 5, would have required the Company to
establish a Letter of Credit had none then existed, then the
Company shall maintain the Letter of Credit in effect for a
period to two years following such event, unless further extended
pursuant to this Section 5.  During the period in which a Letter
of Credit is required to be maintained, the Company shall, at six-
month intervals commencing with the date the Letter of Credit is
established, calculate the amount which would be payable to you
pursuant to Subsections 4(iii) (B), (C), (D) and (E) hereof as if
you were immediately entitled to payment pursuant thereto.  If
the amount so calculated plus $100,000 exceeds the amount
available to be drawn upon under the Letter of Credit then in
effect, the Company shall promptly (and in no event later than
seven days thereafter) cause the amount payable under the Letter
of Credit to be increased by the amount of such excess.

          The payment by the Bank of the amount of your draft in
accordance with the terms hereof and of the Letter of Credit
shall not constitute a waiver by the Company of, or in any way
preclude the Company from asserting, any claim against you that
you are not entitled to some or all of such payment.  In
addition, your drawing upon the Letter of Credit shall not
constitute a waiver by you, or in any way preclude you from
asserting, any claim against the Company that you are entitled to
amounts pursuant to this Agreement which were not paid by amounts
received under the Letter of Credit.

     6.   Successors; Binding Agreement.

          (i)  The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place.  Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same
terms as you would be entitled hereunder if you terminate your
employment for Good Reasons, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.  As
used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.

          (ii) This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees.  If you should die while any amount would
still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to your devisee,
legatee or other designee or if there is no such designee, to
your estate.

     7.   Notice.  Notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to
have been duly given when delivered or mailed by the United
States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the
first page of this Agreement, provided that all notices to the
Company shall be directed to the attention of the Board with a
copy to the Secretary of the Company, or to such other address as
either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address
shall be effective only upon receipt.

     8.   Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless in writing and signed by
you and such officer as may be specifically designated by the
Board.  No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time.  No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set
forth in this Agreement.  The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the State of New Jersey.

     9.   Validity.  The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.

If this letter correctly sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed
copy of this letter which will then constitute our agreement on
this subject.

                                   IMO INDUSTRIES INC.



                                   By:   /s/ T. J. Bird

                                   Name:  T.J. Bird

                                   Title: Executive Vice President


Agreed to this 21st day of May, 1996



    /s/ Donald N. Rosenberg
        Name