FIRST AMENDMENT TO CREDIT
                            AND GUARANTY AGREEMENT


      FIRST AMENDMENT TO CREDIT AND GUARANTY AGREEMENT,  dated as of November 6,
1997 (this "First Amendment"), among IMO INDUSTRIES INC., a Delaware corporation
(the "Borrower"), II ACQUISITION CORP., a Delaware corporation (the "Parent") as
a guarantor,  VHC INC., as a guarantor,  WARREN PUMPS INC., as a guarantor  (VHC
Inc.  and Warren  Pumps  Inc.,  collectively,  the  "Guarantors"),  the  various
financial institutions parties hereto (collectively, the "Lenders") and THE BANK
OF NOVA SCOTIA  ("Scotiabank"),  as administrative agent (in such capacity,  the
"Administrative Agent").


                             W I T N E S S E T H:

      WHEREAS,  the Borrower,  the Parent, the Lenders, the Administrative Agent
and NATIONSBANC CAPITAL MARKETS, INC. ("NationsBanc"),  as syndication agent for
the  Lenders  have  heretofore  entered  into  a  certain  Credit  and  Guaranty
Agreement,  dated as of August 29, 1997 (the "Existing Credit Agreement" and, as
amended by, and together with, this First  Amendment,  the "Credit  Agreement");
and

      WHEREAS,  the  Borrower,  the Parent and the  Lenders  desire to amend the
Existing Credit Agreement to modify certain provisions thereto;

      NOW, THEREFORE,  in consideration of the premises and the other provisions
herein contained, the parties hereto hereby agree as follows:


                                    ARTICLE I
                                   DEFINITIONS

      SECTION I.1. Use of Defined Terms.  Unless otherwise defined herein or the
context otherwise  requires,  terms used in this First Amendment,  including its
preamble and recitals,  have the respective  meanings  provided  therefor in the
Credit Agreement.


                                  ARTICLE II
                      AMENDMENT TO CERTAIN PROVISIONS OF
                             THE CREDIT AGREEMENT

      Subject to receipt by the  Administrative  Agent of  counterparts  of this
First  Amendment duly executed by the Borrower,  the Parent,  the Guarantors and
the Required  Lenders,  certain  terms and  provisions  of the  Existing  Credit
Agreement are hereby  modified and amended in  accordance  with this Article II.
Except as so amended, the Existing Credit Agreement shall continue in full force
and effect in accordance with its terms.


      SECTION II.1. Amendment to definition of Applicable Commitment Fee Margin.
The phrase "Fiscal Quarter ended September 30, 1997" contained in the definition
of Applicable  Commitment Fee Margin in the Existing Credit  Agreement is hereby
amended and replaced by the phrase "Fiscal Quarter ended December 31, 1997".

      SECTION II.2.  Amendment to definition  of Applicable  Margin.  The phrase
"Fiscal  Quarter  ended  September  30,  1997"  contained in the  definition  of
Applicable  Margin  in the  Existing  Credit  Agreement  is hereby  amended  and
replaced by the phrase "Fiscal Quarter ended December 31, 1997".

      SECTION  II.3.  Amendment to Section  7.2.2(d)  ("Indebtedness").  Section
7.2.2(d)  ("Indebtedness") of the Existing Credit Agreement is hereby amended by
deleting  such  section in its  entirety  and  replacing  such  section with the
following:

            (d) Indebtedness of Non-U.S. Subsidiaries in an amount not in excess
      of $45,000,000 (which amount shall automatically be reduced to $25,000,000
      immediately  following  the sale of Roltra  Morse),  provided that no more
      than $40,000,000 of such amount may constitute intercompany  Indebtedness,
      or  if  less  than  such  amount  at  any  time,  the  Permitted   Amount.
      Notwithstanding  anything to the contrary in this  Agreement,  the secured
      Indebtedness  of  Non-U.S.  Subsidiaries  permitted  pursuant  to  Section
      7.2.3(b)(ii)  hereof  may be  refinanced  by such  Non-U.S.  Subsidiaries;
      provided that (i) such refinancing  shall not result in an increase in the
      principal amount of such secured Non-U.S.  Subsidiary Indebtedness (or, in
      the case of any revolving credit facility,  the maximum lender  commitment
      pursuant  thereto),   (ii)  such  refinancing  shall  not  result  in  any
      additional  collateral  being pledged to secure such  Non-U.S.  Subsidiary
      Indebtedness,  and (iii) any secured Non-U.S. Subsidiary Indebtedness that
      has been  repaid and  extinguished  may not be  reborrowed  or reissued as
      secured Non-U.S.  Subsidiary  Indebtedness.  Notwithstanding  clause (iii)
      hereof,  however,  an aggregate amount not in excess of $2,500,000 of such
      secured  Non-U.S.  Subsidiary  Indebtedness  which  has  been  repaid  and
      extinguished  by one or more  Non-U.S.  Subsidiaries  may be reborrowed or
      reissued as secured  Non-U.S.  Subsidiary  Indebtedness by the same or any
      other Non-U.S. Subsidiary from the same or any other lender; provided that
      the market value of any collateral  pledged in connection  therewith shall
      not exceed twice the amount of secured  Non-U.S.  Subsidiary  Indebtedness
      which has been reborrowed or reissued pursuant to this sentence.

      SECTION II.4.  Amendment to Section 7.2.3(b)  ("Liens").  Section 7.2.3(b)
("Liens") of the Existing  Credit  Agreement is hereby  amended by deleting such
subsection in its entirety and replacing such subsection with the following:

            (b) Liens granted to secure payment of Indebtedness described in (i)
      clause (c) of Section  7.2.2 to the extent  such Liens are  identified  in
      Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure Schedule and (ii)
      clause (d) of Section 7.2.2 to the extent such Liens (x) are identified in
      Item 7.2.3(b)(ii)  ("Liens on Foreign Assets") of the Disclosure  Schedule
      or (y) secure  secured  Indebtedness  of a Non-U.S.  Subsidiary  permitted
      pursuant to Section 7.2.2(d);

      SECTION II.5. Amendments to Section 10.1. ("Actions").  The phrase "act as
collateral  Administrative  Agent"  contained in Section 10.1 ("Actions") of the
Existing  Credit  Agreement is hereby amended and replaced by the phrase "act as
collateral  agent".  The phrase  "resulted  solely from the gross  negligence or
wilful misconduct of the Administrative Agent" also contained in Section 10.1 is
hereby amended and replaced by the phrase "resulted from the gross negligence or
wilful misconduct of the Administrative Agent".

      SECTION II.6. Amendments to Section 11.1. ("Waivers,  Amendments,  etc.").
The phrase "extend any Commitment  Termination Date without" contained in clause
(c) of  Section  11.1  ("Waivers,  Amendments,  etc.")  of the  Existing  Credit
Agreement is hereby  amended and replaced by the phrase  "extend any  Commitment
Termination Date shall be effective without".  The phrase "any Letter of Credit"
contained  in clause (d) of Section  11.1 is hereby  amended and replaced by the
phrase "any Letter of Credit shall be effective". The phrase "in its capacity as
Issuer,"  contained in clause (e) of Section 11.1 is hereby amended and replaced
by the phrase "in its capacity as Issuer, shall be effective".

      SECTION II.7. Amendment to Schedule I ("DISCLOSURE SCHEDULE").  Schedule I
("DISCLOSURE  SCHEDULE") to the Existing  Credit  Agreement is hereby amended by
(i) adding at the end of the index page to such  Schedule a  reference  to "ITEM
7.2.3(b)(ii) Liens on Foreign Assets", (ii) replacing ITEM 6.9 thereto with ITEM
6.9 attached hereto as Exhibit A, and (iii) adding ITEM  7.2.3(b)(ii),  attached
hereto as Exhibit B, to Schedule I as ITEM 7.2.3(b)(ii) thereto.


                                   ARTICLE III
                        REPRESENTATIONS AND WARRANTIES

      In order to induce the Lenders and the Administrative  Agent to enter into
this First Amendment,  the Borrower,  the Parent and the Guarantors  jointly and
severally  represent and warrant unto the Administrative  Agent, each Issuer and
each Lender as set forth in this Article III.

      SECTION  III.1.  Compliance  with  Warranties.   The  representations  and
warranties set forth herein,  in Article VI of the Credit  Agreement and in each
other Loan Document  delivered in connection  herewith or therewith are true and
correct in all  material  respects  with the same effect as if made on and as of
the date hereof (unless stated to relate solely to an earlier date).

      SECTION III.2. Due Authorization,  Non-Contravention,  etc. The execution,
delivery and performance by the Borrower,  the Parent and the Guarantors of this
First  Amendment  are within the  Borrower's,  the Parent's and the  Guarantors'
corporate powers,  have been duly authorized by all necessary  corporate action,
and do not (i) contravene either the Borrower's, the Parent's or the Guarantors'
Organic Documents,  (ii) contravene or result in a default under any contractual
restriction,  law or governmental regulation or court decree or order binding on
or affecting either the Borrower, the Parent or the Guarantors,  or (iii) result
in, or require the creation or imposition  of, any Lien (except as  contemplated
in or created by the Loan Documents).

      SECTION III.3. Validity,  etc. This First Amendment has been duly executed
and delivered by the Borrower, the Parent and the Guarantors and constitutes the
legal,  valid  and  binding  obligation  of the  Borrower,  the  Parent  and the
Guarantors  enforceable in accordance with its terms,  subject as to enforcement
to  bankruptcy,  insolvency,  reorganization,  moratorium  or other similar laws
affecting  creditors'  rights  generally  and to general  principles  of equity,
regardless of whether enforcement is sought in a proceeding at law or in equity.

      SECTION  III.4.  Compliance  With  Existing  Credit  Agreement.  As of the
execution and delivery of this First  Amendment and as of the date hereof,  each
of the Borrower,  the Parent, the Guarantors and each other Obligor,  if any, is
in compliance with all the terms and conditions of the Existing Credit Agreement
and the other Loan  Documents  to be observed or performed by it, and no Default
has occurred and is continuing.


                                  ARTICLE IV
                           MISCELLANEOUS PROVISIONS

      SECTION  IV.1.  Ratification  of  and  Limited  Amendment  to  the  Credit
Agreement.  This  First  Amendment  shall be  deemed to be an  amendment  to the
Existing Credit Agreement, and the Existing Credit Agreement, as amended hereby,
is hereby ratified,  approved and confirmed in each and every respect. Except as
specifically  amended or modified  herein,  the Existing Credit  Agreement shall
continue in full force and effect in accordance with the provisions  thereof and
except as expressly set forth herein the provisions  hereof shall not operate as
a waiver of or amendment of any right,  power or privilege of the Administrative
Agent and the  Lenders  nor  shall the  entering  into of this  First  Amendment
preclude  the  Lenders  from  refusing  to enter  into  any  further  or  future
amendments. This First Amendment shall be deemed to be a "Loan Document" for all
purposes of the Credit Agreement.

      SECTION  IV.2.  Consent  and   Acknowledgment  of  Guarantors.   By  their
signatures below,  each of the Parent,  VHC Inc. and Warren Pumps Inc., in their
capacity as a guarantor  and as a grantor of  collateral  security  under a Loan
Document,  hereby acknowledges,  consents and agrees to this First Amendment and
hereby  ratifies  and confirms its  obligations  as a guarantor  under each Loan
Document executed and delivered by it in all respects.

      SECTION IV.3.  Credit  Agreement,  References,  etc. All references to the
Credit Agreement in any other document,  instrument,  agreement or writing shall
hereafter be deemed to refer to the Existing Credit Agreement as amended hereby.
As used in the Credit Agreement, the terms "Agreement", "herein", "hereinafter",
"hereunder", "hereto" and words of similar import shall mean, from and after the
date hereof, the Existing Credit Agreement as amended by this First Amendment.

      SECTION IV.4. Expenses.  The Borrower and the Parent jointly and severally
agree to pay all out-of-pocket  expenses incurred by the Administrative Agent in
connection  with the  preparation,  negotiation,  execution and delivery of this
First Amendment.

      SECTION IV.5. Headings;  Counterparts.  The various headings of this First
Amendment are inserted for convenience  only and shall not affect the meaning or
interpretation  of this First  Amendment or any  provisions  hereof.  This First
Amendment  may be signed in any number of separate  counterparts,  each of which
shall be an  original,  and all of which taken  together  shall  constitute  one
instrument.

      SECTION IV.6. Governing Law; Entire Agreement.  THIS FIRST AMENDMENT SHALL
BE DEEMED TO BE A CONTRACT  MADE UNDER AND  GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK. This First Amendment  constitutes the entire  understanding  among the
parties  hereto with respect to the subject  matter  hereof and  supersedes  any
prior  agreements,  written or oral, with respect thereto.  This First Amendment
and the  provisions  contained  herein may be modified  only by an instrument in
writing  executed by the  Borrower,  the  Administrative  Agent and the Required
Lenders.


      IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                                    IMO INDUSTRIES INC.
                                      as Borrower


                                    By:    John A. Young
                                    Title: Vice President


                                    II ACQUISITION CORP.
                                      as a Guarantor


                                    By:    John A. Young
                                    Title: Vice President

                                    VHC INC.
                                      as a Guarantor


                                    By:    John A. Young
                                    Title: Vice President

                                    THE BANK OF NOVA SCOTIA
                                      as Administrative Agent


                                    By:     James R. Trimble
                                    Title:  Senior Relationship Manager


                                    LENDERS:

                                    THE BANK OF NOVA SCOTIA


                                    By:     James R. Trimble
                                    Title:  Senior Relationship Manager


                                    NATIONSBANK, NA


                                    By:     Chittaranjan D. Swamidasan
                                    Title: Vice President